<PAGE>
As filed with the Securities and Exchange Commission on October 18, 1995
1933 Act File No. 33-7638
1940 Act File No. 811-4777
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 21
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 23
MFS SERIES TRUST I
(Exact Name of Registrant as Specified in Charter)
500 Boylston, Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 617-954-5000
Stephen E. Cavan, Massachusetts Financial Services Company
500 Boylston Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b)
|_| on [DATE] pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)
|_| on [DATE] pursuant to paragraph (a)(i)
|X| 75 days after filing pursuant to paragraph (a)(ii)
|_| on [DATE] pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Pursuant to Rule 24f-2, the Registrant has registered an indefinite number of
its shares of Beneficial Interest (without par value), under the Securities Act
of 1933. The Registrant filed a Rule 24f-2 Notice for its fiscal year ended
August 31, 1994 on October 31, 1994 and with respect to its fiscal year ended
August 31, 1995, will file a Rule 24f-2 Notice on or before October 31, 1995.
<PAGE>
MFS SERIES TRUST I
MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND
MFS(R) CORE GROWTH FUND
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
CROSS REFERENCE SHEET
(Pursuant to Rule 404 showing location in Prospectus and/or Statement
of Additional Information of the responses to the Items in Parts A and B of Form
N-1A)
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION
1 (a),(b) Front Cover Page *
2 (a) Expense Summary *
(b),(c) * *
3 (a),(b),(c),(d) * *
4 (a) The Funds; Investment Objectives and *
Policies; Investment Techniques
(b),(c) Investment Objectives and Policies; *
Investment Techniques
5 (a) The Funds; Management of the Funds - *
Investment Adviser
(b) Front Cover Page; Management of the *
Funds - Investment Adviser; Back
Cover Page
(c) Management of the Funds - Investment *
Adviser
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION
(d) Management of the Fund - Investment *
Adviser - Back Cover Page
(e) Back Cover Page *
(f) Expense Summary *
(g) Information Concerning Shares of the *
Fund - Purchases
5A (a),(b),(c) ** **
6 (a) Information Concerning Shares of the *
Funds - Description of Shares, Voting
Rights and Liabilities; Information
Concerning Shares of the Funds
Redemptions and Repurchases;
Information Concerning Shares of
the Funds - Purchases; Information
Concerning Shares of the Funds
Exchanges
(b),(c),(d) * *
(e) Shareholder Services *
(f) Information Concerning Shares of the *
Funds - Distributions; Shareholder
Services - Distribution Options
(g) Information Concerning Shares of the *
Funds - Tax Status; Information
Concerning Shares of the Funds
Distributions
7 (a) Front Cover Page; Management of the *
Funds - Distributor; Back Cover
Page
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION
(b) Information Concerning Shares of the *
Funds - Purchases; Information
Concerning Shares of the Funds -
Net Asset Value
(c) Information Concerning Shares of the *
Funds - Purchases; Information
Concerning Shares of the Funds -
Exchanges; Shareholder Services
(d) Front Cover Page; Information *
Concerning Shares of the Funds -
Purchases; Shareholder Services
(e) Information Concerning Shares of the *
Funds - Distribution Plans;
Information Concerning Shares of
the Funds - Purchases; Expense
Summary
(f) Information Concerning Shares of the *
Funds - Distribution Plans
8 (a) Information Concerning Shares of the *
Funds - Redemptions and Repurchases;
Information Concerning Shares of the
Funds - Purchases; Shareholder Services
(b),(c),(d) Information Concerning Shares of the *
Funds - Redemptions and Repurchases
9 * *
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION
10 (a),(b) * Front Cover Page
11 * Front Cover Page
12 * Definitions
13 (a),(b),(c) * Investment Objectives,
Policies and
Restrictions
(d) * *
14 (a),(b) * Management of the
Funds - Trustees and
Officers
(c) * Management of the
Funds - Trustees and
Officers; Appendix A
15 (a) * *
(b),(c) * Management of the
Funds - Trustees and
Officers
16 (a) Management of the Funds - Management of the
Investment Adviser Funds - Investment
Adviser; Management
of the Funds -
Trustees and Officers
(b) Management of the Funds - Management of the
Investment Adviser Funds - Investment
Adviser
(c) * *
(d) * Management of the
Funds - Investment
Adviser
(e) * Portfolio Transactions
and Brokerage
Commissions
(f) Information Concerning Distribution Plans
Shares of the Funds -
Distribution Plans
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION
(g) * *
(h) * Management of the
Funds - Custodian;
Independent Auditors
and Financial
Statements; Back
Cover Page
(i) * Management of the
Funds - Shareholder
Servicing Agent
17 (a),(b),(c) * Portfolio Transactions
(d),(e) and Brokerage
Commissions
18 (a) Information Concerning Description of Shares
Shares of the Funds - Voting Rights and
Description of Shares, Liabilities
Voting Rights and
Liabilities
(b) * *
19 (a) Information Concerning Shares of *
the Funds - Purchases
(b) Information Concerning Determination of Net
Shares of the Funds - Asset Value and
Net Asset Value; Performance - Net
Information Concerning Asset Value
Shares of the Funds -
Purchases
(c) * *
20 * Tax Status
21 (a),(b) * Management of the
Funds - Distributor;
Distribution Plans
(c) * *
22 (a) * *
(b) * Determination of Net
Asset Value and
Performance
23 * Independent Auditors
and Financial
Statements
- ----------------------
* Not Applicable
** To be contained in Annual Report
<PAGE>
[LOGO]
PROSPECTUS
JANUARY 1, 1996
MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND
MFS(R) CORE GROWTH FUND
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
Class A Shares of Beneficial Interest
(Members of the MFS Family of Funds(R)) Class B Shares of Beneficial Interest
Each a series of MFS Series Trust I Class C Shares of Beneficial Interest
MFS EQUITY INCOME FUND (THE "EQUITY INCOME FUND") -- The investment objective of
the Equity Income Fund is to achieve a yield that exceeds the yield of the
Standard & Poor's 500 Stock Index (the "S&P 500"). The Fund invests, under
normal market conditions, at least 65% of its total assets in income producing
equity securities, and may invest up to 35% of its total assets in fixed income
securities. In selecting investments, the Fund also considers the potential for
capital appreciation.
MFS RESEARCH GROWTH AND INCOME FUND (THE "RESEARCH GROWTH AND INCOME FUND") --
The investment objective of the Research Growth and Income Fund is long-term
growth of capital, current income and growth of income. The Fund invests, under
normal market conditions, at least 65% of its total assets in equity securities
of companies which, in the judgment of the Fund's investment adviser, offer
earnings growth potential while paying current dividends and may invest up to
35% of its total assets in equity securities which do not pay current dividends
but which offer prospects for growth of capital and future income..
MFS CORE GROWTH FUND (THE "CORE GROWTH FUND") -- The investment objective of the
Core Growth Fund is long-term growth of capital. The Fund invests, under normal
market conditions, at least 65% of its total assets in equity securities of
well-known and established companies which the Fund's investment adviser
believes have above-average growth potential. The Fund may invest up to 35% of
its total assets in equity securities of companies in the developing stages of
their life cycle that offer the potential for accelerated earnings or revenue
growth (emerging growth companies).
MFS AGGRESSIVE GROWTH FUND (THE "AGGRESSIVE GROWTH FUND") -- The investment
objective of the Aggressive Growth Fund is capital appreciation. The Fund
invests, under normal market conditions, substantially all of its assets in
equity securities of companies of any size which the Fund's investment adviser
believes have above-average growth potential, including companies in the
developing stages of their life cycle that offer the potential for accelerated
earnings or revenue growth (emerging growth companies).
MFS SPECIAL OPPORTUNITIES FUND (THE "SPECIAL OPPORTUNITIES FUND") -- The
investment objective of the Special Opportunities Fund is capital appreciation.
The Fund invests, under normal market conditions, substantially all of its
assets in equity and fixed income securities which the Fund's investment adviser
believes represent uncommon value by having the potential for significant
capital appreciation over a period of 12 months or longer.
<PAGE>
Each Fund's investment adviser and distributor are Massachusetts Financial
Services Company (the "Adviser" or "MFS") and MFS Fund Distributors, Inc.
("MFD"), respectively, both of which are located at 500 Boylston Street, Boston,
Massachusetts 02116. Each Fund is a series of MFS Series Trust I (the "Trust").
THE SPECIAL OPPORTUNITIES FUND MAY INVEST UP TO 100% OF ITS NET ASSETS IN LOWER
RATED BONDS, COMMONLY KNOWN AS "JUNK BONDS," THAT ENTAIL GREATER RISKS THAN
THOSE FOUND IN HIGHER RATED SECURITIES. INVESTORS SHOULD CAREFULLY CONSIDER
THESE RISKS BEFORE INVESTING (SEE "ADDITIONAL RISK FACTORS - LOWER-RATED
BONDS").
WHILE THREE CLASSES OF SHARES OF EACH FUND ARE DESCRIBED IN THIS PROSPECTUS,
CURRENTLY EACH FUND ONLY OFFERS CLASS A SHARES FOR SALE. CLASS A SHARE ARE
AVAILABLE FOR PURCHASE AT NET ASSET VALUE ONLY BY CERTAIN RETIREMENT PLANS
ESTABLISHED FOR THE BENEFIT OF EMPLOYEES OF MFS AND ITS AFFILIATES AND BY SUCH
EMPLOYEES AND CERTAIN OF THEIR FAMILY MEMBERS WHO ARE ALSO RESIDENTS OF THE
COMMONWEALTH OF MASSACHUSETTS.
This Prospectus sets forth concisely the information concerning each Fund and
the Trust that a prospective investor ought to know before investing. The Trust,
on behalf of each Fund, has filed with the Securities and Exchange Commission
(the "SEC") a Statement of Additional Information, dated January 1, 1996, which
contains more detailed information about the Trust and each Fund and is
incorporated into this Prospectus by reference. See page 30 for a further
description of the information set forth in the Statement of Additional
Information. A copy of the Statement of Additional Information may be obtained
without charge by contacting the Shareholder Servicing Agent (see back cover for
address and phone number).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE
REFERENCE.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. Expense Summary................................................. 3
2. The Funds....................................................... 5
3. Investment Objectives and Policies.............................. 5
Equity Income Fund.............................................. 6
Research Growth and Income Fund................................. 6
Core Growth Fund................................................ 6
Aggressive Growth Fund.......................................... 7
Special Opportunities Fund...................................... 7
4. Investment Techniques........................................... 8
5. Additional Risk Factors......................................... 14
6. Management of the Funds......................................... 17
7. Information Concerning Shares of the Funds...................... 19
Purchases................................................ 19
Exchanges................................................ 22
Redemptions and Repurchases.............................. 23
Distribution Plans....................................... 25
Distributions............................................ 26
Tax Status............................................... 26
Net Asset Value.......................................... 27
Expenses................................................. 27
Description of Shares, Voting Rights and Liabilities..... 27
Performance Information.................................. 28
8. Shareholder Services............................................ 28
Annex A - Waivers of Sales Charges.............................. 31
Appendix A - Description of Bond Ratings........................ 35
<PAGE>
1. EXPENSE SUMMARY
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES: CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on Purchases of
Fund Shares (as a percentage of offering price) 4.75% 0.00% 0.00%
Maximum Contingent Deferred Sales Charge (as a
percentage of original purchase price or redemption
proceeds, as applicable) See Below(1) 4.00% 0.00%
</TABLE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS):
<TABLE>
<CAPTION>
CLASS A SHARES
EQUITY RESEARCH AGGRESSIVE GROWTH SPECIAL
INCOME GROWTH AND CORE GROWTH FUND FUND OPPORTUNITIES
FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C>
Management Fees (after fee 0.00% 0.00 % 0.00 % 0.00 % 0.00 %
reduction)(2)......................................
Rule 12b-1 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Fees(3)............................
Other Expenses(after fee 1.50 % 1.50 % 1.50 % 1.50 % 1.50 %
------ ------ ------ ------ ------
reduction)(5)......................................
TOTAL OPERATING EXPENSES
(AFTER FEE REDUCTION)(6)........... 1.50 % 1.50 % 1.50 % 1.50 % 1.50 %
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES
EQUITY RESEARCH AGGRESSIVE GROWTH SPECIAL
INCOME GROWTH AND CORE GROWTH FUND FUND OPPORTUNITIES
FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C>
Management Fees (after fee 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
reduction)
(2)......................................
Rule 12b-1 1.00 % 1.00 % 1.00 % 1.00 % 1.00 %
Fees(4)...........................
Other Expenses (after fee 1.57 % 1.57 % 1.57 % 1.57 % 1.57 %
------ ------ ------ ------ ------
reduction(5)............................
TOTAL OPERATING EXPENSES
(AFTER ANY FEE 2.57 % 2.57 % 2.57 % 2.57 % 2.57 %
REDUCTION)(6)..........
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS C SHARES
EQUITY RESEARCH AGGRESSIVE GROWTH SPECIAL
INCOME GROWTH AND CORE GROWTH FUND FUND OPPORTUNITIES
FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C>
Management Fees (after fee 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
reduction)
(2)......................................
Rule 12b-1 1.00 % 1.00 % 1.00 % 1.00 % 1.00 %
Fees(4)...........................
Other Expenses (after fee reduction)
1.50% 1.50% 1.50% 1.50% 1.50%
----- ----- ----- ----- -----
(5)...................................................
TOTAL OPERATING EXPENSES
(AFTER ANY FEE 2.50% 2.50 % 2.50 % 2.50 % 2.50 %
REDUCTION)(6).............
- ------------------------------------
<FN>
(1) Purchases of $1 million or more are not subject to an initial sales
charge; however, a contingent deferred sales charge ("CDSC") of 1% will
be imposed on such purchases in the event of certain redemption
transactions within 12 months following such purchases (see
"Purchases").
(2) The Adviser is currently waiving its right to receive management fees
from each Fund. Absent this waiver, "Management Fees" would be 0.75%
per annum for each Fund.
(3) Each Fund has adopted a Distribution Plan for its Class A shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which provides that it will pay
distribution/service fees aggregating up to (but not necessarily all
of) 0.50% per annum of the average daily net assets attributable to
Class A shares (see "Distribution Plans"). Distribution and service
fees under the Class A Distribution Plan are not currently being
imposed. Distribution expenses paid under this Plan, together with the
initial sales charge, may cause long-term shareholders to pay more than
the maximum sales charge that would have been permissible if imposed
entirely as an initial sales charge.
(4) Each Fund has adopted separate Distribution Plans for Class B shares
and Class C shares in accordance with Rule 12b-1 under the 1940 Act,
which provide that it will pay distribution/service fees aggregating up
to (but not necessarily all of) 1.00% per annum of the average daily
net assets attributable to Class B shares under the Class B
Distribution Plan and Class C shares under the Class C Distribution
Plan (see "Distribution Plans"). Distribution expenses paid under these
Plans, together with any CDSC payable upon redemption of Class B
shares, may cause long-term shareholders to pay more than the maximum
sales charge that would have been permissible if imposed entirely as an
initial sales charge.
<PAGE>
(5) "Other Expenses" are based on estimates of payments to be made during
each Fund's current fiscal year. As discussed below in footnote 6, the
Adviser is bearing certain expenses of each Fund, subject to
reimbursement by the Funds. Absent this arrangement, "Other Expenses,"
expressed as a percentage of average daily net assets, would be 3.36%,
3.43% and 3.36% for Class A shares, Class B shares and Class C shares,
respectively, for each Fund.
(6) The Adviser has agreed to bear expenses of each Fund, subject to
reimbursement by the Funds as described under "Information Concerning
Shares of the Funds - Expenses," such that "Total Operating Expenses"
do not exceed, on an annualized basis, 1.50% of a Fund's average daily
net assets with respect to Class A shares, 2.57% of a Fund's average
daily net assets with respect to Class B shares, and 2.50% of a Fund's
average daily net assets with respect to Class C shares, during the
current fiscal year and each fiscal year through August 31, 2006. This
arrangement may be terminated by the Adviser at any time. Absent any
fee waivers and expense reductions, "Total Operating Expenses,"
expressed as a percentage of average daily net assets, would be 4.11%,
5.18% and 5.11% for Class A shares, Class B shares and Class C shares,
respectively, for each Fund.
</FN>
</TABLE>
EXAMPLE OF EXPENSES
An investor would pay the following dollar amounts of expenses on a $1,000
investment in each Fund, assuming (a) a 5% annual return and, unless otherwise
noted, (b) redemption at the end of each of the time periods indicated:
<TABLE>
<CAPTION>
CLASS A SHARES
EQUITY RESEARCH AGGRESSIVE GROWTH SPECIAL
PERIOD INCOME GROWTH AND CORE GROWTH FUND FUND OPPORTUNITIES
FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C>
1 $62 $62 $62 $62 $62
year...................................................
3 93 93 93 93 93
years.................................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES
(ASSUMES REDEMPTION)
EQUITY RESEARCH AGGRESSIVE GROWTH SPECIAL
PERIOD INCOME GROWTH AND CORE GROWTH FUND FUND OPPORTUNITIES
FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C>
1 $66 $66 $66 $66 $66
year...................................................
3 110 110 110 110 110
years.................................................
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES
(ASSUMES NO REDEMPTION)
EQUITY RESEARCH AGGRESSIVE GROWTH SPECIAL
PERIOD INCOME GROWTH AND CORE GROWTH FUND FUND OPPORTUNITIES
FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C>
1 $26 $26 $26 $26 $26
year...................................................
3 80 80 80 80 80
years.................................................
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES
EQUITY RESEARCH AGGRESSIVE GROWTH SPECIAL
PERIOD INCOME GROWTH AND CORE GROWTH FUND FUND OPPORTUNITIES
FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C>
1 $25 $25 $25 $25 $25
year...................................................
3 78 78 78 78 78
years.................................................
</TABLE>
The purpose of the expense table above is to assist investors in understanding
the various costs and expenses that a shareholder of each Fund will bear
directly or indirectly. More complete descriptions of the following Fund
expenses are set forth in the following sections: (i) varying sales charges on
share purchases -- "Purchases"; (ii) varying CDSCs -- "Purchases"; (iii)
management fees -- "Investment Adviser"; and (iv) Rule 12b-1 (I.E., distribution
plan) fees -- "Distribution Plans."
THE "EXAMPLE" SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES OF A FUND; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
2. THE FUNDS
Each Fund is a series of the Trust, an open-end management investment company
which was organized as a business trust under the laws of The Commonwealth of
Massachusetts on July 30, 1986. Each Fund is a diversified Fund except for the
Special Opportunities Fund, which is non-diversified. The Trust presently
consists of eight series, three of which are offered for sale pursuant to
separate prospectuses, and each of which represents a portfolio with separate
investment objectives and policies. Shares of each Fund are sold continuously to
the public and each Fund then uses the proceeds to buy securities for its
portfolio. While each Fund has three classes of shares, Class A shares are the
only class presently available for sale. Class A shares are offered at net asset
value plus an initial sales charge (or a CDSC in the case of certain purchases
of $1 million or more) and subject to a Distribution Plan providing for an
annual distribution fee and service fee. Class B shares are offered at net asset
value without an initial sales charge but subject to a CDSC and Distribution
Plan providing for an annual distribution fee and service fee which are greater
than the Class A distribution fee and service fee; Class B shares will convert
to Class A shares approximately eight years after purchase. Class C shares are
offered at net asset value without an initial sales charge or a CDSC but subject
to a Distribution Plan providing for an annual distribution fee and service fee
which are equal to the Class B annual distribution fee and service fee; Class C
shares do not convert to any other class of shares of a Fund.
<PAGE>
The Trust's Board of Trustees provides broad supervision over the affairs of
each Fund. MFS is each Fund's investment adviser and is responsible for the
management of each Fund's assets. The officers of the Trust are responsible for
its operations. The Adviser manages each Fund's portfolio from day to day in
accordance with each Fund's investment objective and policies. A majority of the
Trustees are not affiliated with the Adviser. The selection of investments and
the way they are managed depend on the conditions and trends in the economies of
the various countries of the world, their financial markets and the relationship
of their currencies to the U.S. dollar. The Trust also offers to buy back
(redeem) shares of each Fund from shareholders at any time at net asset value,
less any applicable CDSC.
3. INVESTMENT OBJECTIVES AND POLICIES
Each Fund has an investment objective which it pursues through separate
investment policies, as described below. The differences in objectives and
policies among the Funds can be expected to affect the market and financial risk
to which each Fund is subject and the performance of each Fund. The investment
objective and polices of each Fund may, unless otherwise specifically stated, be
changed by the Trustees of the Trust without a vote of the shareholders. A
change in a Fund's objective may result in the Fund having an investment
objective different from the objective which shareholders considered appropriate
at the time of investment in the Fund. Any investment involves risk and there is
no assurance that the investment objective of any Fund will be achieved.
<PAGE>
EQUITY INCOME FUND - The Equity Income Fund's investment objective is to achieve
a yield that exceeds the yield of the S&P 500. In selecting investments, the
Fund also considers the potential for capital appreciation.
Under normal market conditions, the Fund invests at least 65% of its total
assets in income producing equity securities (see "Investment Techniques -
Equity Securities" below). The Fund may also invest up to 35% of its total
assets in fixed income securities, including up to 20% of its net assets in
fixed income securities rated BB or lower by Standard & Poor's Rating Group
("S&P") or Fitch Investors Service, Inc. ("Fitch") or Ba or lower by Moody's
Investors Service, Inc. ("Moody's"), or if unrated, determined to be of
equivalent quality by the Adviser (commonly referred to as "junk bonds"). For a
description of these ratings, see Appendix A to this Prospectus. See "Additional
Risk Factors - Lower Rated Bonds" below.
Consistent with its investment objective and policies described above, the Fund
may also invest up to 35% (and generally expects to invest between 5% and 25%)
of its net assets in foreign equity and fixed income securities which are not
traded on a U.S. exchange.
The Fund may engage in certain investment techniques as described under the
caption "Investment Techniques" below and in the Statement of Additional
Information under the caption "Investment Techniques." The Fund's investments
are subject to certain risks, as described in the above-referenced sections of
this Prospectus and the Statement of Additional Information and as described
below under the caption "Additional Risk Factors."
RESEARCH GROWTH AND INCOME FUND - The Research Growth and Income Fund's
investment objective is long-term growth of capital, current income and growth
of income.
Under normal market conditions, the Fund invests at least 65% of its total
assets in equity securities of companies which, in the Adviser's judgment, offer
earnings growth potential while paying current dividends (see "Investment
Techniques - Equity Securities" below). Over time, continued growth of earnings
tends to lead to higher dividends and enhancement of capital value. The Fund may
also invest up to 35% of its total assets in equity securities which do not pay
current dividends but which offer prospects for growth of capital and future
income.
Consistent with its investment objective and policies described above, the Fund
may also invest up to 35% (and generally expects to invest between 5% and 20%)
of its net assets in foreign equity securities which are not traded on a U.S.
exchange.
The portfolio securities of the Fund are selected by the investment research
analysts in the Equity Research Group of the Adviser. The Fund's assets are
allocated to industry groups (E.G., pharmaceuticals, retail and computer
software). The allocation by industry group is determined by the analysts acting
together. Individual analysts are then responsible for selecting what they view
as the securities best suited to meet the Fund's investment objective within
their assigned industry groups.
The Fund may engage in certain investment techniques as described under the
caption "Investment Techniques" below and in the Statement of Additional
Information under the caption "Investment Techniques." The Fund's investments
are subject to certain risks, as described in the above-referenced sections of
this Prospectus and the Statement of Additional Information and as described
below under the caption "Additional Risk Factors."
CORE GROWTH FUND - The Core Growth Fund's investment objective is long-term
growth of capital.
Under normal market conditions, the Fund invests at least 65% of its total
assets in equity securities of well-known and established companies which the
Adviser believes have above-average growth potential (see "Investment Techniques
- - Equity Securities" below). When choosing the Fund's investments, the Adviser
seeks companies that it expects will demonstrate greater long-term earnings
growth than the average company included in the S&P 500. This method of stock
selection is based on the belief that growth in a company's earnings will
eventually translate into growth in the price of its stock. The Fund may also
invest up to 35% of its total assets in equity securities of companies in the
developing stages of their life cycle that offer the potential for accelerated
earnings or revenue growth (emerging growth companies). Such companies generally
would be expected to show earnings growth over time that is well above the
growth rate of the overall economy and the rate of inflation, and would have the
products, management and market opportunities which are usually necessary to
become more widely recognized as growth companies.
<PAGE>
Consistent with its investment objective and policies described above, the Fund
may invest up to 35% (and generally expects to invest up to 20%) of its net
assets in foreign equity securities which are not traded on a U.S. exchange.
The Fund may engage in certain investment techniques as described under the
caption "Investment Techniques" below and in the Statement of Additional
Information under the caption "Investment Techniques." The Fund's investments
are subject to certain risks, as described in the above-referenced sections of
this Prospectus and the Statement of Additional Information and as described
below under the caption "Additional Risk Factors."
AGGRESSIVE GROWTH FUND - The Aggressive Growth Fund's investment objective is
capital appreciation.
Under normal market conditions, the Fund invests substantially all of its assets
in equity securities of companies which the Adviser believes have above-average
growth potential (see "Investment Techniques - Equity Securities" below). In
pursuit of its investment objective, the Fund may invest in companies of any
size, including smaller, lesser known companies in the developing stages of
their life cycle that offer the potential for accelerated earnings or revenue
growth (emerging growth companies). Such companies generally would be expected
to show earnings growth over time that is well above the growth rate of the
overall economy and the rate of inflation, and would have the products,
management and market opportunities which are usually necessary to become more
widely recognized as growth companies.
The Adviser will consider many factors when choosing the Fund's investments,
such as economic and financial trends or the prospective acquisition or
reorganization of a company. Some of the Fund's investments may not respond to
market rallies or downturns. While the Fund may buy securities that provide
income, it does not place any emphasis on income, except when the Adviser
believes this income will have a favorable influence on the security's market
value.
Consistent with its investment objective and policies described above, the Fund
may invest up to 35% (and generally expects to invest between 5% and 20%) of its
net assets in foreign equity securities which are not traded on a U.S. exchange.
The Fund may engage in certain investment techniques as described under the
caption "Investment Techniques" below and in the Statement of Additional
Information under the caption "Investment Techniques." The Fund's investments
are subject to certain risks, as described in the above-referenced sections of
this Prospectus and the Statement of Additional Information and as described
below under the caption "Additional Risk Factors."
SPECIAL OPPORTUNITIES FUND - The Special Opportunities Fund's investment
objective is capital appreciation.
Under normal market conditions, the Fund invests substantially all of its assets
in equity and fixed income securities which the Adviser believes represent
uncommon value by having the potential for significant capital appreciation over
a period of 12 months or longer (see "Investment Techniques - Equity Securities"
below). The issuers of such securities may include companies out-of-favor in the
marketplace or in out-of-favor industries, companies currently performing well
but in industries where the outlook is questionable and over-leveraged companies
with promising longer-term prospects. Some of these companies may be
experiencing financial or operating difficulties, and certain of these companies
may be involved, at the time of acquisition or soon thereafter, in
reorganizations, capital restructurings or bankruptcy proceedings; however, most
of these companies will not be experiencing such financial or operating
difficulties as will, in the Adviser's opinion, lead to reorganizations, capital
restructurings or bankruptcy proceedings. The Adviser will determine the
relative apportionment of the Fund's assets among particular equity and fixed
income investments based on their appreciation potential. The Fund may invest a
substantial amount of its assets in U.S. Government Securities when, in the
judgment of the Adviser, securities with the potential for significant capital
appreciation are not available for purchase by the Fund (see "Investment
Techniques - U.S. Government Securities" below).
<PAGE>
The Fund may invest in companies of any size, including smaller, lesser known
companies in the developing stages of their life cycle that offer the potential
for accelerated earnings or revenue growth (emerging growth companies). Such
companies generally would be expected to show earnings growth over time that is
well above the growth rate of the overall economy and the rate of inflation, and
would have the products, management and market opportunities which are usually
necessary to become more widely recognized as growth companies.
The fixed income securities in which the Fund may invest include fixed income
securities rated BB or lower by S&P or Fitch or Ba or lower by Moody's, or if
unrated, determined to be of equivalent quality by the Adviser (commonly
referred to as "junk bonds"). For a description of these ratings, see Appendix A
to this Prospectus. Up to 100% of the Fund's net assets may be invested in such
lower-rated fixed income securities (see "Additional Risk Factors - Lower Rated
Bonds" below).
<PAGE>
The Fund may engage in short sales of securities which the Adviser expects to
decline in price (see "Investment Techniques - Short Sales" below). The Fund may
also borrow from banks and use the proceeds of such borrowings to invest in
portfolio securities, thereby creating leverage (see "Investment Techniques -
Borrowing and Leverage" below).
Consistent with its investment objective and policies described above, the Fund
may invest up to 35% (and generally expects to invest between 5% and 20%) of its
net assets in foreign equity and fixed-income securities which are not traded on
a U.S. exchange.
The Fund may engage in certain investment techniques as described under the
caption "Investment Techniques" below and in the Statement of Additional
Information under the caption "Investment Techniques." The Fund's investments
are subject to certain risks, as described in the above-referenced sections of
this Prospectus and the Statement of Additional Information and as described
below under the caption "Additional Risk Factors."
4. INVESTMENT TECHNIQUES
The investment techniques described below are applicable to all or certain of
the Funds, as specified. Additional information about certain of these
investment techniques can be found under the caption "Investment Techniques" in
the Statement of Additional Information.
INVESTMENT TECHNIQUES APPLICABLE TO EACH FUND. The following investment
techniques are applicable to each Fund:
EQUITY SECURITIES: Each Fund may invest in all types of equity
securities, including the following: common stocks, preferred stocks and
preference stocks; securities such as bonds, warrants or rights that are
convertible into stocks; and depositary receipts for those securities. These
securities may be listed on securities exchanges, traded in various
over-the-counter markets or have no organized market.
RESTRICTED SECURITIES: Each Fund may purchase securities that are not
registered under the Securities Act of 1933 (the "1933 Act") ("restricted
securities"), including those that can be offered and sold to "qualified
institutional buyers" under Rule 144A under the 1933 Act ("Rule 144A
securities"). The Trust's Board of Trustees determines, based upon a continuing
review of the trading markets for a specific Rule 144A security, whether such
security is liquid and thus not subject to a Fund's limitation on investing not
more than 15% of its net assets in illiquid investments. The Board of Trustees
has adopted guidelines and delegated to the Adviser the daily function of
determining and monitoring the liquidity of Rule 144A securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for the
determinations. The Board will carefully monitor each Fund's investments in Rule
144A securities, focusing on such important factors, among others, as valuation,
liquidity and availability of information. This investment practice could have
the effect of decreasing the level of liquidity in a Fund to the extent that
qualified institutional buyers become for a time uninterested in purchasing Rule
144A securities held in the Fund's portfolio. Subject to each Fund's 15%
limitation on investments in illiquid investments, a Fund may also invest in
restricted securities that may not be sold under Rule 144A, which presents
certain risks. As a result, a Fund might not be able to sell these securities
when the Adviser wishes to do so, or might have to sell them at less than fair
value. In addition, market quotations are less readily available. Therefore,
judgment may at times play a greater role in valuing these securities than in
the case of unrestricted securities.
LENDING OF PORTFOLIO SECURITIES: Each Fund may seek to increase its
income by lending portfolio securities. Such loans will usually be made to
member firms (and subsidiaries thereof) of the New York Stock Exchange (the
"Exchange") and to member banks of the Federal Reserve System, and would be
required to be secured continuously by collateral in cash, irrevocable letters
of credit or U.S. Treasury securities maintained on a current basis at an amount
at least equal to the market value of the securities loaned. If the Adviser
determines to lend portfolio securities, it is intended that the value of the
securities loaned would not exceed 30% of the value of the net assets of the
Fund making the loans.
REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements
in order to earn additional income on available cash or as a temporary defensive
measure. Under a repurchase agreement, a Fund acquires securities subject to the
seller's agreement to repurchase at a specified time and price. If the seller
becomes subject to a proceeding under the bankruptcy laws or its assets are
otherwise subject to a stay order, the Fund's right to liquidate the securities
may be restricted (during which time the value of the securities could decline).
Each Fund has adopted certain procedures intended to minimize the risks of such
transactions.
"WHEN ISSUED" SECURITIES: Each Fund may purchase securities on a
"when-issued" or on a "forward delivery" basis, which means that the securities
will be delivered to a Fund at a future date usually beyond customary settlement
time. The commitment to purchase a security for which payment will be made on a
future date may be deemed a separate security. In general, a Fund does not pay
for such securities until received, and does not start earning interest on the
securities until the contractual settlement date. While awaiting delivery of
securities purchased on such bases, a Fund will normally invest in cash, cash
equivalents and high grade debt securities (if consistent with the Fund's
investment policies).
<PAGE>
U.S. GOVERNMENT SECURITIES: The Equity Income Fund and the Special
Opportunities Fund may generally invest, and each Fund for temporary defensive
purposes, as discussed below, may invest, in United States government
securities, including: (1) U.S. Treasury obligations, which differ only in their
interest rates, maturities and times of issuance: U.S. Treasury bills
(maturities of one year or less); U.S. Treasury notes (maturities of one to ten
years); and U.S. Treasury bonds (generally maturities of greater than ten
years), all of which are backed by the full faith and credit of the U.S.
Government; and (2) obligations issued or guaranteed by U.S. Government
agencies, authorities or instrumentalities, some of which are backed by the full
faith and credit of the U.S. Treasury, E.G., direct pass-through certificates of
the Government National Mortgage Association ("GNMA"); some of which are
supported by the right of the issuer to borrow from the U.S. Government, E.G.,
obligations of Federal Home Loan Banks; and some of which are backed only by the
credit of the issuer itself, E.G., obligations of the Student Loan Marketing
Association (collectively, "U.S. Government Securities"). The term "U.S.
Government Securities" also includes interests in trusts or other entities
issuing interests in obligations that are backed by the full faith and credit of
the U.S. Government or are issued or guaranteed by the U.S Government, its
agencies, authorities or instrumentalities.
INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES: During periods of unusual
market conditions when the Adviser believes that investing for temporary
defensive purposes is appropriate, or in order to meet anticipated redemption
requests, a large portion or all of the assets of a Fund may be invested in cash
(including foreign currency) or cash equivalents including, but not limited to,
obligations of banks (including certificates of deposit, bankers' acceptances,
time deposits and repurchase agreements), commercial paper, short-term notes,
U.S.
Government Securities and related repurchase agreements.
EMERGING MARKETS SECURITIES: Consistent with each Fund's respective
objective and policies, each Fund may invest in securities of issuers (which may
include foreign governments and their subdivisions, agencies or
instrumentalities) located in emerging markets. Emerging markets include any
country: (i) having an "emerging stock market" as defined by the International
Finance Corporation; (ii) with low- to middle-income economies according to the
International Bank for Reconstruction and Development (the World Bank); (iii)
listed in World Bank publications as developing; or (iv) determined by the
Adviser to be an emerging market as defined above. The Adviser determines
whether an issuer's principal activities are located in an emerging market
country by considering such factors as its country of organization, the
principal trading market for its securities and the source of its revenues and
assets. The issuer's principal activities generally are deemed to be located in
a particular country if: (a) the security is issued or guaranteed by the
government of that country or any of its agencies, authorities or
instrumentalities; (b) the issuer is organized under the laws of, and maintains
a principal office in, that country; (c) the issuer has its principal securities
trading market in that country; (d) the issuer derives 50% or more of its total
revenues from goods sold or services performed in that country; or (e) the
issuer has 50% or more of its assets in that country.
INDEXED SECURITIES: Each Fund may invest in indexed securities whose
value is linked to foreign currencies, interest rates, commodities, indices or
other financial indicators. Most indexed securities are short to intermediate
term fixed income securities whose values at maturity and/or interest rates rise
or fall according to the change in one or more specified underlying instruments.
Indexed securities may be positively or negatively indexed (I.E., their value
may increase or decrease if the underlying instrument appreciates), and may have
return characteristics similar to direct investments in the underlying
instrument or to one or more options on the underlying instrument. Indexed
securities may be more volatile than the underlying instrument itself.
<PAGE>
SWAPS AND RELATED TRANSACTIONS: As one way of managing its exposure to
different types of investments, each Fund may enter into interest rate swaps,
currency swaps and other types of available swap agreements, such as caps,
collars and floors. Swaps involve the exchange by a Fund with another party of
cash payments based upon different interest rate indexes, currencies, and other
prices or rates, such as the value of mortgage prepayment rates. For example, in
the typical interest rate swap, a Fund might exchange a sequence of cash
payments based on a floating rate index for cash payments based on a fixed rate.
Payments made by both parties to a swap transaction are based on a principal
amount determined by the parties.
Each Fund may also purchase and sell caps, floors and collars. In a
typical cap or floor agreement, one party agrees to make payments only under
specified circumstances, usually in return for payment of a fee by the
counterparty. For example, the purchase of an interest rate cap entitles the
buyer, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually-based principal amount
from the counterparty selling such interest rate cap. The sale of an interest
rate floor obligates the seller to make payments to the extent that a specified
interest rate falls below an agreed-upon level. A collar arrangement combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from
one type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, in each case based on a
fixed rate, the swap agreement would tend to decrease the Fund's exposure to
U.S. interest rates and increase its exposure to foreign currency and interest
rates. Caps and floors have an effect similar to buying or writing options.
Depending on how they are used, swap agreements may increase or decrease the
overall volatility of a Fund's investments and its share price and yield.
<PAGE>
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks assumed.
As a result, swaps can be highly volatile and may have a considerable impact on
a Fund's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. A Fund may also suffer losses if
it is unable to terminate outstanding swap agreements or reduce its exposure
through offsetting transactions. Swaps, caps, floors and collars are highly
specialized activities which involve certain risks as described in the Statement
of Additional Information.
OPTIONS ON SECURITIES: Each Fund may write (sell) covered put and call
options and purchase put and call options on securities. Each Fund will write
options on securities for the purpose of increasing its return and/or to protect
the value of its portfolio. In particular, where a Fund writes an option that
expires unexercised or is closed out by the Fund at a profit, it will retain the
premium paid for the option which will increase its gross income and will offset
in part the reduced value of the portfolio security underlying the option, or
the increased cost of portfolio securities to be acquired. In contrast, however,
if the price of the underlying security moves adversely to the Fund's position,
the option may be exercised and the Fund will be required to purchase or sell
the underlying security at a disadvantageous price, which may only be partially
offset by the amount of the premium. Each Fund may also write combinations of
put and call options on the same security, known as "straddles." Such
transactions can generate additional premium income but also present increased
risk.
By writing a call option on a security, a Fund limits its opportunity
to profit from any increase in the market value of the underlying security,
since the holder will usually exercise the call option when the market value of
the underlying security exceeds the exercise price of the call. However, the
Fund retains the risk of depreciation in value of securities on which it has
written call options.
Each Fund may also purchase put or call options in anticipation of
market fluctuations which may adversely affect the value of its portfolio or the
prices of securities that a Fund wants to purchase at a later date. In the event
that the expected market fluctuations occur, a Fund may be able to offset the
resulting adverse effect on its portfolio, in whole or in part, through the
options purchased. The premium paid for a put or call option plus any
transaction costs will reduce the benefit, if any, realized by the Fund upon
exercise or liquidation of the option, and, unless the price of the underlying
security changes sufficiently, the option may expire without value to the Fund.
In certain instances, a Fund may enter into options on Treasury
securities that are "reset" options or "adjustable strike" options. These
options provide for periodic adjustment of the strike price and may also provide
for the periodic adjustment of the premium during the term of the option.
OPTIONS ON STOCK INDICES: Each Fund may write (sell) covered call and
put options and purchase call and put options on stock indices. Each Fund may
write options on stock indices for the purpose of increasing its gross income
and to protect its portfolio against declines in the value of securities it owns
or increases in the value of securities to be acquired. When a Fund writes an
option on a stock index, and the value of the index moves adversely to the
holder's position, the option will not be exercised, and the Fund will either
close out the option at a profit or allow it to expire unexercised. A Fund will
thereby retain the amount of the premium, less related transaction costs, which
will increase its gross income and offset part of the reduced value of portfolio
securities or the increased cost of securities to be acquired. Such
transactions, however, will constitute only partial hedges against adverse price
fluctuations, since any such fluctuations will be offset only to the extent of
the premium received by a Fund for the writing of the option, less related
transaction costs. In addition, if the value of an underlying index moves
adversely to a Fund's option position, the option may be exercised, and the Fund
will experience a loss which may only be partially offset by the amount of the
premium received.
<PAGE>
Each Fund may also purchase put or call options on stock indices in
order, respectively, to hedge its investments against a decline in value or to
attempt to reduce the risk of missing a market or industry segment advance. A
Fund's possible loss in either case will be limited to the premium paid for the
option, plus related transaction costs.
"YIELD CURVE" OPTIONS: Each Fund may enter into options on the yield
"spread," or yield differential, between two securities, a transaction referred
to as a "yield curve" option, for hedging and non-hedging (an effort to increase
current income) purposes. In contrast to other types of options, a yield curve
option is based on the difference between the yields of designated securities
rather than the actual prices of the individual securities, and is settled
through cash payments. Accordingly, a yield curve option is profitable to the
holder if this differential widens (in the case of a call) or narrows (in the
case of a put), regardless of whether the yields of the underlying securities
increase or decrease. Yield curve options written by a Fund will be covered as
described in the Statement of Additional Information. The trading of yield curve
options is subject to all the risks associated with trading other types of
options, as discussed below under "Additional Risk Factors" and in the Statement
of Additional Information. In addition, such options present risks of loss even
if the yield on one of the underlying securities remains constant, if the spread
moves in a direction or to an extent which was not anticipated.
<PAGE>
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS: Each Fund may
purchase and sell futures contracts ("Futures Contracts") on stock indices, and
may purchase and sell Futures Contracts on foreign currencies or indices of
foreign currencies. Each Fund may also purchase and write options on such
futures contracts. The Equity Income Fund and the Special Opportunities Fund may
purchase and sell Futures Contracts on foreign or domestic fixed income
securities or indices of such securities, including municipal bond indices and
any other indices of foreign or domestic fixed income securities that may become
available for trading. The Equity Income Fund and the Special Opportunities Fund
may also purchase and write options on such Futures Contracts. All
above-referenced options on Futures Contracts are referred to as "Options on
Futures Contracts."
Such transactions will be entered into for hedging purposes or for
non-hedging purposes to the extent permitted by applicable law. Each Fund will
incur brokerage fees when it purchases and sells Futures Contracts, and will be
required to maintain margin deposits. In addition, Futures Contracts entail
risks. Although the Adviser believes that use of such contracts will benefit the
Funds, if its investment judgment about the general direction of exchange rates
or the stock market is incorrect, a Fund's overall performance may be poorer
than if it had not entered into any such contract and the Fund may realize a
loss. A Fund will not enter into any Futures Contract if immediately thereafter
the value of securities and other obligations underlying all such Futures
Contracts would exceed 50% of the value of its total assets. In addition, a Fund
will not purchase put and call options on Futures Contracts if as a result more
than 5% of its total assets would be invested in such options.
Purchases of Options on Futures Contracts may present less risk in
hedging a Fund's portfolio than the purchase or sale of the underlying Futures
Contracts since the potential loss is limited to the amount of the premium plus
related transaction costs, although it may be necessary to exercise the option
to realize any profit, which results in the establishment of a futures position.
The writing of Options on Futures Contracts, however, does not present less risk
than the trading of Futures Contracts and will constitute only a partial hedge,
up to the amount of the premium received. In addition, if an option is
exercised, a Fund may suffer a loss on the transaction.
Futures Contracts and Options on Futures Contracts that are entered
into by a Fund will be traded on U.S. and foreign exchanges.
FORWARD CONTRACTS: Each Fund may enter into forward foreign currency
exchange contracts for the purchase or sale of a fixed quantity of a foreign
currency at a future date at a price set at the time of the contract ("Forward
Contracts"). Each Fund may enter into Forward Contracts for hedging purposes and
for non-hedging purposes of increasing the Fund's current income.. By entering
into transactions in Forward Contracts for hedging purposes, a Fund may be
required to forego the benefits of advantageous changes in exchange rates and,
in the case of Forward Contracts entered into for non-hedging purposes, a Fund
may sustain losses which will reduce its gross income. Such transactions,
therefore, could be considered speculative. Forward Contracts are traded
over-the-counter and not on organized commodities or securities exchanges. As a
result, Forward Contracts operate in a manner distinct from exchange-traded
instruments, and their use involves certain risks beyond those associated with
transactions in Futures Contracts or options traded on exchanges. A Fund may
choose to, or be required to, receive delivery of the foreign currencies
underlying Forward Contracts it has entered into. Under certain circumstances,
such as where the Adviser believes that the applicable exchange rate is
unfavorable at the time the currencies are received or the Adviser anticipates,
for any other reason, that the exchange rate will improve, a Fund may hold such
currencies for an indefinite period of time. A Fund may also enter into a
Forward Contract on one currency to hedge against risk of loss arising from
fluctuations in the value of a second currency (referred to as a "cross hedge")
if, in the judgment of the Adviser, a reasonable degree of correlation can be
expected between movements in the values of the two currencies. Each Fund has
established procedures consistent with statements of the SEC and its staff
regarding the use of Forward Contracts by registered investment companies, which
requires use of segregated assets or "cover" in connection with the purchase and
sale of such contracts.
<PAGE>
OPTIONS ON FOREIGN CURRENCIES: Each Fund may also purchase and write
options on foreign currencies ("Options on Foreign Currencies") for the purpose
of protecting against declines in the dollar value of portfolio securities and
against increases in the dollar cost of securities to be acquired. As in the
case of other types of options, however, the writing of an Option on Foreign
Currency will constitute only a partial hedge, up to the amount of the premium
received, and a Fund may be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
Option on Foreign Currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate movements adverse
to a Fund's position, it may forfeit the entire amount of the premium paid for
the option plus related transaction costs. A Fund may also choose to, or be
required to, receive delivery of the foreign currencies underlying Options on
Foreign Currencies it has entered into. Under certain circumstances, such as
where the Adviser believes that the applicable exchange rate is unfavorable at
the time the currencies are received or the Adviser anticipates, for any other
reason, that the exchange rate will improve, a Fund may hold such currencies for
an indefinite period of time.
<PAGE>
INVESTMENT TECHNIQUES APPLICABLE TO EQUITY INCOME FUND AND SPECIAL OPPORTUNITIES
FUND. The following investment techniques are applicable only to the Equity
Income Fund and/or the Special Opportunities Fund, as specified:
MORTGAGE "DOLLAR ROLL" TRANSACTIONS: The Equity Income Fund and the
Special Opportunities Fund may enter into mortgage "dollar roll" transactions
with selected banks and broker-dealers pursuant to which a Fund sells
mortgage-backed securities for delivery in the future (generally within 30 days)
and simultaneously contracts to repurchase substantially similar (same type,
coupon and maturity) securities on a specified future date. A Fund will only
enter into covered rolls. A "covered roll" is a specific type of dollar roll for
which there is an offsetting cash position or a cash equivalent security
position which matures on or before the forward settlement date of the dollar
roll transaction. In the event that the party with whom the Fund contracts to
replace substantially similar securities on a future date fails to deliver such
securities, the Fund may not be able to obtain such securities at the price
specified in such contract and thus may not benefit from the price differential
between the current sales price and the repurchase price.
CORPORATE ASSET-BACKED SECURITIES: The Equity Income Fund and the
Special Opportunities Fund may invest in corporate asset-backed securities.
These securities, issued by trusts and special purpose corporations, are backed
by a pool of assets, such as credit card or automobile loan receivables,
representing the obligations of a number of different parties.
Corporate asset-backed securities present certain risks. For instance,
in the case of credit card receivables, these securities may not have the
benefit of any security interest in the related collateral. Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to set off certain amounts owed on the credit cards,
thereby reducing the balance due. Most issuers of automobile receivables permit
the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have a
proper security interest in all of the obligations backing such receivables.
Therefore, there is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.
The underlying assets (E.G., loans) are also subject to prepayments which
shorten the securities' weighted average life and may lower their return.
Corporate asset-backed securities are backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, the
securities may contain elements of credit support which fall into two
categories: (i) liquidity protection and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
resulting from ultimate default ensures payment through insurance policies or
letters of credit obtained by the issuer or sponsor from third parties. A Fund
will not pay any additional or separate fees for credit support. The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquency or loss in excess of that anticipated or failure of the
credit support could adversely affect the return on an investment in such a
security.
<PAGE>
ZERO COUPON BONDS, DEFERRED INTEREST BONDS AND PIK BONDS: The Equity
Income Fund and the Special Opportunities Fund may invest in zero coupon bonds,
deferred interest bonds and payment-in-kind ("PIK") bonds. Zero coupon and
deferred interest bonds are debt obligations which are issued or purchased at a
significant discount from face value. The discount approximates the total amount
of interest the bonds will accrue and compound over the period until maturity or
the first interest payment date at a rate of interest reflecting the market rate
of the security at the time of issuance. While zero coupon bonds do not require
the periodic payment of interest, deferred interest bonds provide for a period
of delay before the regular payment of interest begins. PIK bonds are debt
obligations which provide that the issuer thereof may, at its option, pay
interest on such bonds in cash or in the form of additional debt obligations.
Such investments benefit the issuer by mitigating its need for cash to meet debt
service, but also require a higher rate of return to attract investors who are
willing to defer receipt of such cash. Such investments may experience greater
volatility in market value due to changes in interest rates than debt
obligations which make regular payments of interest. A Fund will accrue income
on such investments for tax and accounting purposes, as required, which is
distributable to shareholders and which, because no cash is received at the time
of accrual, may require the liquidation of other portfolio securities to satisfy
the Fund's distribution obligations.
<PAGE>
COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH
SECURITIES: The Equity Income Fund and the Special Opportunities Fund each may
invest a portion of its assets in collateralized mortgage obligations or "CMOs,"
which are debt obligations collateralized by mortgage loans or mortgage
pass-through securities. Typically, CMOs are collateralized by certificates
issued by GNMA, the Federal National Mortgage Association ("FNMA") or the
Federal Home Loan Mortgage Corporation ("FHLMC"), but also may be collateralized
by whole loans or private mortgage pass-through securities (such collateral
collectively referred to as "Mortgage Assets"). Each of these Funds may also
invest a portion of its assets in multiclass pass-through securities which are
interests in a trust composed of Mortgage Assets. CMOs (which include multiclass
pass-through securities) may be issued by agencies, authorities or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose subsidiaries of
the foregoing. Payments of principal of and interest on the Mortgage Assets, and
any reinvestment income thereon, provide the funds to pay debt service on the
CMOs or make scheduled distributions on the multiclass pass-through securities.
In a CMO, a series of bonds or certificates are usually issued in multiple
classes with different maturities. Each class of CMOs, often referred to as a
"tranche," is issued at a specific fixed or floating coupon rate and has a
stated maturity or final distribution date. Principal prepayments on the
Mortgage Assets may cause the CMOs to be retired substantially earlier than
their stated maturities or final distribution dates, resulting in a loss of all
or part of the premium if any has been paid. Certain classes of CMOs have
priority over others with respect to the receipt of prepayments on the
mortgages. Therefore, depending on the type of CMOs in which a Fund invests, the
investment may be subject to a greater or lesser risk of prepayments than other
types of mortgage-related securities.
The Equity Income Fund and the Special Opportunities Fund may also
invest in parallel pay CMOs and Planned Amortization Class CMOs ("PAC Bonds").
Parallel pay CMOs are structured to provide payments of principal on each
payment date to more than one class. PAC Bonds generally require payments of a
specified amount of principal on each payment date. PAC Bonds are always
parallel pay CMOs with the required principal payment on such securities having
the highest priority after interest has been paid to all classes.
STRIPPED MORTGAGE-BACKED SECURITIES: The Equity Income Fund and the
Special Opportunities Fund may invest in stripped mortgage-backed securities
("SMBS"), which are derivative multiclass mortgage securities usually structured
with two classes that receive different proportions of interest and principal
distributions from an underlying pool of mortgage assets.
LOANS AND OTHER DIRECT INDEBTEDNESS: The Equity Income Fund and the
Special Opportunities Fund may each invest a portion of its assets in loans. By
purchasing a loan, a Fund acquires some or all of the interest of a bank or
other lending institution in a loan to a corporate, government or other
borrower. Many such loans are secured, and most impose restrictive covenants
which must be met by the borrower. These loans are made generally to finance
internal growth, mergers, acquisitions, stock repurchases, leveraged buy-outs
and other corporate activities. Such loans may be in default at the time of
purchase. A Fund may also purchase trade or other claims against companies,
which generally represent money owed by the company to a supplier of goods and
services. These claims may also be purchased at a time when the company is in
default. Certain of the loans acquired by a Fund may involve revolving credit
facilities or other standby financing commitments which obligate a Fund to pay
additional cash on a certain date or on demand.
The highly leveraged nature of many such loans may make such loans
especially vulnerable to adverse changes in economic or market conditions. Loans
may not be in the form of securities or may be subject to restrictions on
transfer, and only limited opportunities may exist to resell such instruments.
As a result, a Fund may be unable to sell such investments at an opportune time
or may have to resell them at less than fair market value.
<PAGE>
MORTGAGE PASS-THROUGH SECURITIES: The Equity Income Fund and the
Special Opportunities Fund may invest in mortgage pass-through securities.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgage loans. Monthly payments of interest and principal by the
individual borrowers on mortgages are passed through to the holders of the
securities (net of fees paid to the issuer or guarantor of the securities) as
the mortgages in the underlying mortgage pools are paid off. Payment of
principal and interest on some mortgage pass-through securities (but not the
market value of the securities themselves) may be guaranteed by the full faith
and credit of the U.S. Government (in the case of securities guaranteed by
GNMA); or guaranteed by U.S. Government-sponsored corporations (such as FNMA or
FHLMC, which are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Mortgage pass-through
securities may also be issued by non-governmental issuers (such as commercial
banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers).
BRADY BONDS: The Equity Income Fund and the Special Opportunities Fund
may invest in Brady Bonds, which are securities created through the exchange of
existing commercial bank loans to public and private entities in certain
emerging markets for new bonds in connection with debt restructurings under a
debt restructuring plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady (the "Brady Plan"). Brady Plan debt restructurings have been
implemented to date in Argentina, Brazil, Bulgaria, Costa Rica, Ecuador, Jordan,
Mexico, Nigeria, the Philippines, Poland, Uruguay and Venezuela. Brady Bonds
have been issued only recently, and for that reason do not have a long payment
history. Brady Bonds may be collateralized or uncollateralized, are issued in
various currencies (but primarily the U.S. dollar) and are actively traded in
over-the-counter secondary markets. U.S. dollar-denominated, collateralized
Brady Bonds, which may be fixed-rate bonds or floating-rate bonds, are generally
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the bonds. Brady Bonds are often viewed as having three or
four valuation components: the collateralized repayment of principal at final
maturity; the collateralized interest payments; the uncollateralized interest
payments; and any uncollateralized repayment of principal at maturity (these
uncollateralized amounts constituting the "residual risk"). In light of the
residual risk of Brady Bonds and the history of defaults of countries issuing
Brady Bonds with respect to commercial bank loans by public and private
entities, investments in Brady Bonds may be viewed as speculative.
<PAGE>
SHORT SALES: If the Special Opportunities Fund anticipates that the
price of a security will decline, it may sell the security short and borrow the
same type of security from a broker or other institution to complete the sale.
The Fund may make a profit or loss depending upon whether the market price of
the security decreases or increases between the date of the short sale and the
date on which the Fund must replace the borrowed security. The Special
Opportunities Fund's short sales must be fully collateralized, and the Fund will
not sell short securities whose underlying value exceeds 25% of its total
assets. The Fund limits short sales of any one issuer's securities to 2% of the
Fund's total assets and to 2% of any one class of the issuer's securities.
BORROWING AND LEVERAGE: The Special Opportunities Fund may borrow from
banks up to one third of its total assets, and may pledge assets in connection
with such borrowings. Additional investments by the Fund while borrowings are
outstanding may be construed as a form of leverage. This leverage may exaggerate
changes in the Fund's share value and the gains and losses on the Fund's
investment. Leverage also creates interest expenses that may exceed the return
on investments made with the borrowings.
5. ADDITIONAL RISK FACTORS
The following discussion of additional risk factors supplements the risk factors
described above. Additional information concerning risk factors can be found
under the caption "Investment Techniques" in the Statement of Additional
Information.
SPECIAL OPPORTUNITIES FUND: The Special Opportunities Fund's
investments will be aggressively managed with a higher risk of loss than that of
more conservatively managed portfolios. Many of the securities offering the
capital appreciation sought by the Fund will involve a high degree of risk. The
Fund will seek to reduce risk by investing in a number of securities markets
(E.G., U.S. Government, corporate fixed income, equity and foreign markets) and
issuers, performing credit analyses of potential investments and monitoring
current developments and trends in both the economy and financial markets.
Some of the Fund's assets may be invested in securities whose issuers
have operating losses, substantial capital needs, negative net worth or are
insolvent or involved in bankruptcy or reorganization proceedings. It is
difficult to value financially distressed issuers and to estimate prospects for
their financial recovery. The issuers may be unable to meet debt service
requirements and the investments may take considerable time to appreciate in
value. Some of the securities acquired by the Fund may not be current on payment
of interest or dividends. In the event that issuers of securities owned by the
Fund become involved in bankruptcy or other insolvency proceedings, additional
risks will be present. Bankruptcy or other insolvency proceedings are highly
complex, can be very costly and may result in unpredictable outcomes. Bankruptcy
courts have extensive powers and under certain circumstances may alter
contractual obligations of the bankrupt company.
Since there may be no public market or only inactive trading markets
for some of the securities in which the Fund invests, the Fund may be required
to retain such investments for indefinite periods or to sell them at substantial
losses. Such securities may involve greater risks, often related to
creditworthiness, solvency, relative liquidity of the secondary market,
potential market losses, vulnerability to rising interest rates and economic
downturns and market price volatility based upon interest rate sensitivity, all
of which may adversely affect the Fund's net asset value. This may be
particularly true of lower rated or unrated securities in which the Fund may
invest (see "Lower Rated Bonds" below). In addition, many of the securities held
by the Fund may not have readily available market prices and may instead be
priced by third party pricing vendors or priced at fair market value by MFS,
subject to the oversight of the Trust's Board of Trustees.
<PAGE>
EMERGING GROWTH COMPANIES: The Core Growth Fund, Aggressive Growth Fund
and Special Opportunities Fund may invest in securities of emerging growth
companies, including established companies. Investing in emerging growth
companies involves greater risk than is customarily associated with investing in
more established companies. Emerging growth companies often have limited product
lines, markets or financial resources, and they may be dependent on one-person
management. The securities of emerging growth companies may be subject to more
abrupt or erratic market movements than securities of larger, more established
companies or the market averages in general. Similarly, many of the securities
offering the capital appreciation sought by these Funds will involve a higher
degree of risk than would established growth stocks.
FIXED INCOME SECURITIES: The Equity Income Fund and Special
Opportunities Fund may generally invest in fixed income securities. To the
extent a Fund invests in fixed income securities, the net asset value of the
Fund may change as the general levels of interest rates fluctuate. When interest
rates decline, the value of fixed income securities can be expected to rise.
Conversely, when interest rates rise, the value of fixed income securities can
be expected to decline. Each such Fund is subject to no restrictions on the
maturities of the fixed income securities it holds. A Fund's investments in
fixed income securities with longer terms to maturity are subject to greater
volatility than the Fund's shorter-term obligations.
<PAGE>
OPTIONS, FUTURES CONTRACTS AND FORWARD CONTRACTS: Although each Fund
may enter into transactions in options, Futures Contracts, Options on Futures
Contracts, Forward Contracts and Options on Foreign Currencies for hedging
purposes, such transactions nevertheless involve certain risks. For example, a
lack of correlation between the instrument underlying an option or Futures
Contract and the assets being hedged, or unexpected adverse price movements,
could render a Fund's hedging strategy unsuccessful and could result in losses.
The Funds also may enter into transactions in options, Futures Contracts,
Options on Futures Contracts and Forward Contracts for other than hedging
purposes, which involves greater risk. In particular, such transactions may
result in losses for a Fund which are not offset by gains on other portfolio
positions, thereby reducing gross income. In addition, foreign currency markets
may be extremely volatile from time to time. There also can be no assurance that
a liquid secondary market will exist for any contract purchased or sold, and a
Fund may be required to maintain a position until exercise or expiration, which
could result in losses. The Statement of Additional Information contains a
description of the nature and trading mechanics of options, Futures Contracts,
Options on Futures Contracts, Forward Contracts and Options on Foreign
Currencies, and includes a discussion of the risks related to transactions
therein.
Transactions in Forward Contracts may be entered into only in the
over-the-counter market. Futures Contracts and Options on Futures Contracts may
be entered into on U.S. exchanges regulated by the Commodity Futures Trading
Commission and on foreign exchanges. In addition, the securities and indices
underlying options, Futures Contracts and Options on Futures Contracts traded by
the Fund will include both domestic and foreign securities.
LOWER RATED BONDS: The Equity Income Fund and the Special Opportunities
Fund may invest in fixed income securities, and each Fund may invest in
convertible securities, rated Baa by Moody's or BBB by S&P or Fitch and
comparable unrated securities. These securities, while normally exhibiting
adequate protection parameters, have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than in the case of higher
grade securities.
The Equity Income Fund and the Special Opportunities Fund may also
invest in securities rated Ba or lower by Moody's or BB or lower by S&P or Fitch
and comparable unrated securities (commonly known as "junk bonds") to the extent
described above. These securities are considered speculative and, while
generally providing greater income than investments in higher rated securities,
will involve greater risk of principal and income (including the possibility of
default or bankruptcy of the issuers of such securities) and may involve greater
volatility of price (especially during periods of economic uncertainty or
change) than securities in the higher rating categories. However, since yields
vary over time, no specific level of income can ever be assured. These lower
rated high yielding fixed income securities generally tend to reflect economic
changes and short-term corporate and industry developments to a greater extent
than higher rated securities which react primarily to fluctuations in the
general level of interest rates (although these lower rated fixed income
securities are also affected by changes in interest rates, the market's
perception of their credit quality, and the outlook for economic growth). In the
past, economic downturns or an increase in interest rates have, under certain
circumstances, caused a higher incidence of default by the issuers of these
securities and may do so in the future, especially in the case of highly
leveraged issuers. During certain periods, the higher yields on a Fund's lower
rated high yielding fixed income securities are paid primarily because of the
increased risk of loss of principal and income, arising from such factors as the
heightened possibility of default or bankruptcy of the issuers of such
securities. Due to the fixed income payments of these securities, a Fund may
continue to earn the same level of interest income while its net asset value
declines due to portfolio losses, which could result in an increase in the
Fund's yield despite the actual loss of principal. The market for these lower
rated fixed income securities may be less liquid than the market for investment
grade fixed income securities, and judgment may at times play a greater role in
valuing these securities than in the case of investment grade fixed income
securities. Changes in the value of securities subsequent to their acquisition
will not affect cash income or yield to maturity to a Fund but will be reflected
in the net asset value of shares of the Fund.
<PAGE>
FOREIGN SECURITIES: Each Fund may invest in dollar denominated and
non-dollar denominated foreign securities. Investing in securities of foreign
issuers generally involves risks not ordinarily associated with investing in
securities of domestic issuers. These include changes in currency rates,
exchange control regulations, securities settlement practices, governmental
administration or economic or monetary policy (in the United States or abroad)
or circumstances in dealings between nations. Costs may be incurred in
connection with conversions between various currencies. Special considerations
may also include more limited information about foreign issuers, higher
brokerage costs, different accounting standards and thinner trading markets.
Foreign securities markets may also be less liquid, more volatile and less
subject to government supervision than in the United States. Investments in
foreign countries could be affected by other factors including expropriation,
confiscatory taxation and potential difficulties in enforcing contractual
obligations and could be subject to extended settlement periods. Each Fund may
hold foreign currency received in connection with investments in foreign
securities when, in the judgment of the Adviser, it would be beneficial to
convert such currency into U.S. dollars at a later date, based on anticipated
changes in the relevant exchange rate. Each Fund may also hold foreign currency
in anticipation of purchasing foreign securities.
<PAGE>
AMERICAN DEPOSITARY RECEIPTS: Each Fund may invest in American
Depositary Receipts ("ADRs") which are certificates issued by a U.S. depository
(usually a bank) and represent a specified quantity of shares of an underlying
non-U.S. stock on deposit with a custodian bank as collateral. Because ADRs
trade on United States securities exchanges, the Adviser does not treat them as
foreign securities. However, they are subject to many of the risks of foreign
securities described above such as changes in exchange rates and more limited
information about foreign issuers.
EMERGING MARKET SECURITIES: Each Fund may invest in emerging markets.
In addition to the general risks of investing in foreign securities, investments
in emerging markets involve special risks. Securities of many issuers in
emerging markets may be less liquid and more volatile than securities of
comparable domestic issuers. These securities may be considered speculative and,
while generally offering higher income and the potential for capital
appreciation, may present significantly greater risk. Emerging markets may have
different clearance and settlement procedures, and in certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when a portion of the
assets of a Fund is uninvested and no return is earned thereon. The inability of
a Fund to make intended securities purchases due to settlement problems could
cause a Fund to miss attractive investment opportunities. Inability to dispose
of portfolio securities due to settlement problems could result in losses to a
Fund due to subsequent declines in value of the portfolio security, a decrease
in the level of liquidity in the Fund's portfolio, or, if the Fund has entered
into a contract to sell the security, possible liability to the purchaser.
Certain markets may require payment for securities before delivery, and in such
markets a Fund bears the risk that the securities will not be delivered and that
the Fund's payments will not be returned. Securities prices in emerging markets
can be significantly more volatile than in the more developed nations of the
world, reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets may have
relatively unstable governments, present the risk of nationalization of
businesses, restrictions on foreign ownership, or prohibitions of repatriation
of assets, and may have less protection of property rights than more developed
countries. The economies of countries with emerging markets may be predominantly
based on only a few industries, may be highly vulnerable to changes in local or
global trade conditions, and may suffer from extreme and volatile debt burdens
or inflation rates. Local securities markets may trade a small number of
securities and may be unable to respond effectively to increases in trading
volume, potentially making prompt liquidation of substantial holdings difficult
or impossible at times. Securities of issuers located in countries with emerging
markets may have limited marketability and may be subject to more abrupt or
erratic movements in price.
Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. A Fund could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to the Fund of any restrictions on investments.
Investment in certain foreign emerging market debt obligations may be
restricted or controlled to varying degrees. These restrictions or controls may
at times preclude investment in certain foreign emerging market debt obligations
and increase the expenses of a Fund.
<PAGE>
NON-DIVERSIFICATION: The Special Opportunities Fund is
"non-diversified," as that term is defined in the 1940 Act, but intends to
qualify as a "regulated investment company" ("RIC") for federal income tax
purposes. This means, in general, that although more than 5% of the Fund's total
assets may be invested in the securities of one issuer (including a foreign
government), at the close of each quarter of its taxable year the aggregate
amount of such holdings may not exceed 50% of the value of its total assets, and
no more than 25% of the value of its total assets may be invested in the
securities of a single issuer. To the extent that a non-diversified fund at
times may hold the securities of a smaller number of issuers than if it were
"diversified" (as defined in the 1940 Act), the Fund will at such times be
subject to greater risk with respect to its portfolio securities than a fund
that invests in a broader range of securities, because changes in the financial
condition or market assessment of a single issuer may cause greater fluctuations
in the Fund's total return and the net asset value of its shares.
PORTFOLIO TRADING: Each Fund intends to manage its portfolio by buying
and selling securities, as well as holding securities to maturity, to help
attain its investment objective and policies.
Each Fund will engage in portfolio trading if it believes a
transaction, net of costs (including custodian charges), will help in attaining
its investment objective. In trading portfolio securities, a Fund seeks to take
advantage of market developments, yield disparities and variations in the
creditworthiness of issuers. For a description of the strategies which may be
used by the Funds in trading portfolio securities, see "Portfolio Transactions
and Brokerage Commissions" in the Statement of Additional Information. Because
each Fund is expected to have a portfolio turnover rate of up to 300% during its
current fiscal year, transaction costs incurred by each Fund and the realized
capital gains and losses of each Fund may be greater than that of a fund with a
lower portfolio turnover rate.
<PAGE>
The primary consideration in placing portfolio security transactions
with broker-dealers for execution is to obtain, and maintain the availability
of, execution at the most favorable prices and in the most effective manner
possible. Consistent with the foregoing primary consideration, the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (the "NASD")
and such other policies as the Trustees of the Trust may determine, the Adviser
may consider sales of shares of other investment company clients of MFD, the
distributor of shares of the Trust and of the MFS Family of Funds (the "MFS
Funds"), as a factor in the selection of broker-dealers to execute each Fund's
portfolio transactions. From time to time the Adviser may direct certain
portfolio transactions to broker-dealer firms which, in turn, have agreed to pay
a portion of a Fund's operating expenses (E.G., fees charged by the custodian of
the Fund's assets).
The Statement of Additional Information includes a discussion of other
investment policies and a listing of specific investment restrictions which
govern the investment policies of each Fund. The specific investment
restrictions listed in the Statement of Additional Information may be changed
without shareholder approval unless indicated otherwise (see the Statement of
Additional Information). A Fund's investment limitations, policies and rating
standards are adhered to at the time of purchase or utilization of assets; a
subsequent change in circumstances will not be considered to result in a
violation of policy.
6. MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER -- The Adviser manages each Fund pursuant to separate
Investment Advisory Agreements, each dated January 2, 1996 (the "Advisory
Agreements"). The Adviser provides each Fund with overall investment advisory
and administrative services, as well as general office facilities. Subject to
such policies as the Trustees may determine, the Adviser makes investment
decisions for each Fund. For its services and facilities, the Adviser is
entitled to receive a management fee, computed and paid monthly, in an amount
equal to the following annual rates of the average daily net assets of each
Fund:
PERCENTAGE OF THE AVERAGE DAILY
FUND NET ASSETS OF EACH FUND
Equity Income Fund 0.75%
Research Growth and Income Fund 0.75%
Core Growth Fund 0.75%
Aggressive Growth Fund 0.75%
Special Opportunities Fund 0.75%
The Adviser is currently waiving its right to receive management fees from each
Fund.
The identity and background of the portfolio manager(s) for each Fund is set
forth below. Each portfolio manager has acted in that capacity since the
commencement of investment operations of each Fund.
FUND PORTFOLIO MANAGER(S)
Equity Income Fund Lisa B. Nurme, a Vice President of
the Adviser, has been employed by
the Adviser since 1987.
Research Growth and Income Fund The Fund is managed by a committee
comprised of various equity
research analysts employed by the
Adviser.
Core Growth Fund John D. Laupheimer, Jr., a
Senior Vice President of the
Adviser, has been employed by the
Adviser since 1981. Stephen Pesek,
a Vice President of the Adviser,
has been employed by the Adviser
since 1994 and worked at Fidelity
Research Corporation as an analyst
prior to 1994.
<PAGE>
Aggressive Growth Fund Christian A. Felipe, a Vice
President of the Adviser, has been
employed by the Adviser since 1986.
Special Opportunities Fund Robert J. Manning, a Senior Vice
President of the Adviser, has been
employed by the Adviser since 1984.
John F. Brennan, Jr., a Senior
Vice President of the Adviser, has
been employed by the Adviser since
1985.
<PAGE>
MFS also serves as investment adviser to each of the other MFS Funds and to
MFS(R) Municipal Income Trust, MFS Multimarket Income Trust, MFS Government
Markets Income Trust, MFS Intermediate Income Trust, MFS Charter Income Trust,
MFS Special Value Trust, MFS Union Standard Trust, MFS Institutional Trust, MFS
Variable Insurance Trust, MFS/Sun Life Series Trust, Sun Growth Variable Annuity
Fund, Inc. and seven variable accounts, each of which is a registered investment
company established by Sun Life Assurance Company of Canada (U.S.) ("Sun Life of
Canada (U.S.)") in connection with the sale of various fixed/variable annuity
contracts. MFS and its wholly owned subsidiary, MFS Asset Management, Inc.,
provide investment advice to substantial private clients.
MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund in the U.S., Massachusetts Investors Trust.
Net assets under the management of the MFS organization were approximately $[ ]
billion on behalf of approximately [ ] million investor accounts as of November
30, 1995. As of such date, the MFS organization managed approximately $[ ]
billion of assets invested in fixed income funds and fixed income portfolios,
approximately $[ ] billion of assets invested in foreign securities, and
approximately $[ ] billion of assets invested in equity securities. MFS is a
wholly owned subsidiary of Sun Life of Canada (U.S.), which in turn is a wholly
owned subsidiary of Sun Life Assurance Company of Canada ("Sun Life"). The
Directors of MFS are A. Keith Brodkin, Jeffrey L. Shames, Arnold D. Scott, John
D. McNeil and John R. Gardner. Mr. Brodkin is the Chairman, Mr. Shames is the
President and Mr. Scott is the Secretary and a Senior Executive Vice President
of MFS. Messrs. McNeil and Gardner are the Chairman and President, respectively,
of Sun Life. Sun Life, a mutual life insurance company, is one of the largest
international life insurance companies and has been operating in the U.S. since
1895, establishing a headquarters office here in 1973. The executive officers of
MFS report to the Chairman of Sun Life.
A. Keith Brodkin, the Chairman and a Director of MFS, is also the Chairman,
President and a Trustee of the Trust. W. Thomas London, Stephen E. Cavan, James
O. Yost and James R. Bordewick, Jr., all of whom are officers of MFS, are
officers of the Trust.
MFS has established a strategic alliance with Foreign & Colonial Management Ltd.
("Foreign & Colonial"). Foreign & Colonial is a subsidiary of two of the world's
oldest financial services institutions, the London-based Foreign & Colonial
Investment Trust PLC, which pioneered the idea of investment management in 1868,
and HYPO-BANK (Bayerische Hypotheken-und Weschsel-Bank AG), the oldest publicly
listed bank in Germany, founded in 1835. As part of this alliance, the portfolio
managers and investment analysts of MFS and Foreign & Colonial will share their
views on a variety of investment-related issues, such as the economy, securities
markets, portfolio securities and their issuers, investment recommendations,
strategies and techniques, risk analysis, trading strategies and other portfolio
management matters. MFS will have access to the extensive international equity
investment expertise of Foreign & Colonial, and Foreign & Colonial will have
access to the extensive U.S. equity investment expertise of MFS. One or more MFS
investment analysts are expected to work for an extended period with Foreign &
Colonial's portfolio managers and investment analysts at their offices in
London. In return, one or more Foreign & Colonial employees are expected to work
in a similar manner at MFS' Boston offices.
In certain instances there may be securities which are suitable for a Fund's
portfolio as well as for portfolios of other clients of MFS or clients of
Foreign & Colonial. Some simultaneous transactions are inevitable when several
clients receive investment advice from MFS and Foreign & Colonial, particularly
when the same security is suitable for more than one client. While in some cases
this arrangement could have a detrimental effect on the price or availability of
the security as far as a Fund is concerned, in other cases, however, it may
produce increased investment opportunities for the Funds.
<PAGE>
DISTRIBUTOR -- MFD, a wholly owned subsidiary of MFS, is the distributor of
shares of each Fund and also serves as distributor of each of the other MFS
Funds.
SHAREHOLDER SERVICING AGENT -- MFS Service Center, Inc. (the "Shareholder
Servicing Agent"), a wholly owned subsidiary of MFS, performs transfer agency
and certain other services for each Fund.
7. INFORMATION CONCERNING SHARES OF THE FUNDS
PURCHASES
Shares of each Fund may be purchased at the public offering price through any
dealer and other financial institution ("dealers") having a selling agreement
with MFD. Dealers may also charge their customers fees relating to investments
in each Fund.
Each Fund offers three classes of shares (Class A, B and C shares) which bear
sales charges and distribution fees in different forms and amounts, as described
below (currently, only Class A shares are available for sale):
<PAGE>
CLASS A SHARES: Class A shares are generally offered at net asset value plus an
initial sales charge, but in certain cases are offered at net asset value
without an initial sales charge but subject to a CDSC.
PURCHASES SUBJECT TO INITIAL SALES CHARGE. Class A shares are offered at
net asset value plus an initial sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE* AS PERCENTAGE OF:
DEALER ALLOWANCE
OFFERING NET AMOUNT AS A PERCENTAGE OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE
- -------------------------------------- ------------------ -------------------------- -------------------------
<S> <C> <C> <C>
Less than $100,000......... 4.75 4.99 4.00
$100,000 but less than $250,000....... 4.00 4.17 3.20
$250,000 but less than $500,000....... 2.95 3.04 2.25
$500,000 but less than $1,000,000.... 2.20 2.25 1.70
$1,000,000 or None ** None ** See Below**
more...........................
- -----------
<FN>
* Because of rounding in the calculation of offering price, actual sales
charges may be more or less than those calculated using the percentages
above.
** A CDSC will apply to such purchases, as discussed below.
</FN>
</TABLE>
MFD allows discounts to dealers (which are alike for all dealers) from the
applicable public offering price, as shown in the above table. In the case of
the maximum sales charge, the dealer retains 4% and MFD retains approximately
3/4 of 1% of the public offering price. The sales charge may vary depending on
the number of shares of each Fund as well as certain other MFS Funds owned or
being purchased, the existence of an agreement to purchase additional shares
during a 13-month period (or 36-month period for purchases of $1 million or
more) or other special purchase programs. A description of the Right of
Accumulation, Letter of Intent and Group Purchase privileges by which the sales
charge may be reduced is set forth in the Statement of Additional Information.
PURCHASES SUBJECT TO A CDSC (BUT NOT SUBJECT TO AN INITIAL SALES
CHARGE). In the following two circumstances, Class A shares are also offered at
net asset value without an initial sales charge but subject to a CDSC, equal to
1% of the lesser of the value of the shares redeemed (exclusive of reinvested
dividend and capital gain distributions) or the total cost of such shares, in
the event of a share redemption within 12 months following the purchase:
(i) on investments of $1 million or more in Class A shares; and
<PAGE>
(ii) on investments in Class A shares by certain retirement plans
subject to the Employee Retirement Income Security Act of
1974, as amended, if the sponsoring organization demonstrates
to the satisfaction of MFD that either (a) the employer has at
least 25 employees or (b) the aggregate purchases by the
retirement plan of Class A shares of the MFS Funds will be in
an amount of at least $250,000 within a reasonable period of
time, as determined by MFD in its sole discretion.
In the case of such purchases, MFD will pay a commission to dealers who
initiate and are responsible for purchases of $5 million or more as follows: 1%
on sales up to $5 million, plus 0.25% on the amount in excess of $5 million.
Purchases of $1 million or more for each shareholder account will be aggregated
over a 12-month period (commencing from the date of the first such purchase) for
purposes of determining the level of commissions to be paid during the period
with respect to such account. In addition, with respect to sales to retirement
plans under the second circumstance described above, MFD may pay a commission,
on sales in excess of $5 million to certain retirement plans, of 1% to certain
dealers which, at MFD's invitation, enter into an agreement with MFD in which
the dealer agrees to return any commission paid to it on the sale (or on a pro
rata portion thereof) if the shareholder redeems his or her shares within a
period of time after purchase as specified by MFD.
See "Redemptions and Repurchases - Contingent Deferred Sales Charge" for further
discussion of the CDSC.
WAIVERS OF INITIAL SALES CHARGE AND CDSC. In certain circumstances, the
initial sales charge imposed upon purchases of Class A shares and the CDSC
imposed upon redemptions of Class A shares is waived. These circumstances are
described in Annex A to this Prospectus.
CLASS B SHARES: Class B shares are offered at net asset value without an initial
sales charge but subject to a CDSC upon redemption as follows:
<PAGE>
CONTINGENT
YEAR OF REDEMPTION AFTER DEFERRED SALES
PURCHASE CHARGE
- -----------------------------
First.................................................. 4%
Second................................................. 4%
Third.................................................. 3%
Fourth................................................. 3%
Fifth.................................................. 2%
Sixth.................................................. 1%
Seventh and following.................................. 0%
For Class B shares purchased prior to January 1, 1993*, the CDSC imposed upon
redemption is as follows:
CONTINGENT
YEAR OF REDEMPTION AFTER DEFERRED SALES
PURCHASE CHARGE
- -----------------------------
First.................................................. 6%
Second................................................. 5%
Third.................................................. 4%
Fourth................................................. 3%
Fifth.................................................. 2%
Sixth.................................................. 1%
Seventh and following.................................. 0%
- -----------------
* While Class B shares of the Funds were not offered prior to January 1,
1993, other MFS Funds offered Class B shares prior to this date. This CDSC
schedule will apply to Class B shares of a Fund attributable to shares
exchanged from any such other MFS Fund which were originally purchased
prior to January 1, 1993.
The CDSC imposed is assessed against the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital gain distributions) or
the total cost of such shares. No CDSC is assessed against shares acquired
through the automatic reinvestment of dividends or capital gain distributions.
MFD will pay commissions to dealers of 3.75% of the purchase price of Class B
shares purchased through dealers. MFD will also advance to dealers the first
year service fee payable under each Fund's Class B Distribution Plan (see
"Distribution Plans" below) at a rate equal to 0.25% of the purchase price of
such shares. Therefore, the total amount paid to a dealer upon the sale of Class
B shares is 4% of the purchase price of the shares (commission rate of 3.75%
plus a service fee equal to 0.25% of the purchase price).
See "Redemptions and Repurchases - Contingent Deferred Sales Charge" for further
discussion of the CDSC.
WAIVERS OF CDSC. In certain circumstances, the CDSC imposed upon redemption
of Class B shares is waived. These circumstances are described in Annex A to
this Prospectus.
<PAGE>
CONVERSION OF CLASS B SHARES. Class B shares of each Fund that remain
outstanding for approximately eight years will convert to Class A shares of the
same Fund. Shares purchased through the reinvestment of distributions paid in
respect of Class B shares will be treated as Class B shares for purposes of the
payment of the distribution and service fees under the Distribution Plan
applicable to Class B shares. See "Distribution Plans" below. However, for
purposes of conversion to Class A shares, all shares in a shareholder's account
that were purchased through the reinvestment of dividends and distributions paid
in respect of Class B shares (and which have not converted to Class A shares as
provided in the following sentence) will be held in a separate sub-account. Each
time any Class B shares in the shareholder's account (other than those in the
sub-account) convert to Class A shares, a portion of the Class B shares then in
the sub-account will also convert to Class A shares. The portion will be
determined by the ratio that the shareholder's Class B shares not acquired
through reinvestment of dividends and distributions that are converting to Class
A shares bear to the shareholder's total Class B shares not acquired through
reinvestment. The conversion of Class B shares to Class A shares is subject to
the continuing availability of a ruling from the Internal Revenue Service or an
opinion of counsel that such conversion will not constitute a taxable event for
federal tax purposes. There can be no assurance that such ruling or opinion will
be available, and the conversion of Class B shares to Class A shares will not
occur if such ruling or opinion is not available. In such event, Class B shares
would continue to be subject to higher expenses than Class A shares for an
indefinite period.
<PAGE>
CLASS C SHARES: Class C shares are offered at net asset value without an initial
sales charge or a CDSC. Class C shares do not convert to any other class of
shares. The maximum investment in Class C shares is $5,000,000 per transaction.
Class C shares are not currently available for purchase by any retirement plan
qualified under Sections 401(a) or 403(b) of the Internal Revenue Code of 1986,
as amended (the "Code") if the retirement plan and/or the sponsoring
organization subscribe to the MFS FUNDamental 401(k) Plan or another similar
recordkeeping program made available by the Shareholder Servicing Agent.
GENERAL: The following information applies to purchases of all classes of
each Fund's shares.
MINIMUM INVESTMENT. Except as described below, the minimum initial
investment is $1,000 per account and the minimum additional investment is $50
per account. Accounts being established for monthly automatic investments and
under payroll savings programs and tax-deferred retirement programs (other than
Individual Retirement Accounts ("IRAs")) involving the submission of investments
by means of group remittal statements are subject to a $50 minimum on initial
and additional investments per account. The minimum initial investment for IRAs
is $250 per account and the minimum additional investment is $50 per account.
Accounts being established for participation in the Automatic Exchange Plan are
subject to a $50 minimum on initial and additional investments per account.
There are also other limited exceptions to these minimums for certain
tax-deferred retirement programs. Any minimums may be changed at any time at the
discretion of MFD. Each Fund reserves the right to cease offering its shares at
any time.
RIGHT TO REJECT PURCHASE ORDERS/MARKET TIMING. Purchases and exchanges
should be made for investment purposes only. Each Fund and MFD reserve the right
to reject any specific purchase order or to restrict purchases by a particular
purchaser (or group of related purchasers). Each Fund or MFD may reject or
restrict any purchases by a particular purchaser or group, for example, when
such purchase is contrary to the best interests of the Fund's other shareholders
or otherwise would disrupt the management of the Fund.
MFD may enter into an agreement with shareholders who intend to make exchanges
among certain classes of shares of certain MFS Funds (as determined by MFD)
which follow a timing pattern, and with individuals or entities acting on such
shareholders' behalf (collectively, "market timers"), setting forth the terms,
procedures and restrictions with respect to such exchanges. In the absence of
such an agreement, it is the policy of each Fund and MFD to reject or restrict
purchases by market timers if (i) more than two exchange purchases are effected
in a timed account in the same calendar quarter or (ii) a purchase would result
in shares being held in timed accounts by market timers representing more than
(x) one percent of a Fund's net assets or (y) specified dollar amounts in the
case of certain MFS Funds which may include the Funds and which may change from
time to time. Each Fund and MFD reserve the right to request market timers to
redeem their shares at net asset value, less any applicable CDSC, if either of
these restrictions is violated.
<PAGE>
DEALER CONCESSIONS. Dealers may receive different compensation with respect
to sales of Class A, Class B and Class C shares. In addition, from time to time,
MFD may pay dealers 100% of the applicable sales charge on sales of Class A
shares of certain specified MFS Funds sold by such dealer during a specified
sales period. In addition, MFD or its affiliates may, from time to time, pay
dealers an additional commission equal to 0.50% of the net asset value of all of
the Class B shares of certain specified MFS Funds sold by such dealer during a
specified sales period. In addition, from time to time, MFD, at its expense, may
provide additional commissions, compensation or promotional incentives
("concessions") to dealers which sell shares of a Fund. Such concessions
provided by MFD may include financial assistance to dealers in connection with
preapproved conferences or seminars, sales or training programs for invited
registered representatives, payment for travel expenses, including lodging,
incurred by registered representatives for such seminars or training programs,
seminars for the public, advertising and sales campaigns regarding one or more
MFS Funds, and/or other dealer-sponsored events. From time to time, MFD may make
expense reimbursements for special training of a dealer's registered
representatives in group meetings or to help pay the expenses of sales contests.
Other concessions may be offered to the extent not prohibited by state laws or
any self-regulatory agency, such as the NASD.
SPECIAL INVESTMENT PROGRAMS. For shareholders who elect to participate in
certain investment programs (E.G., the Automatic Investment Plan) or other
shareholder services, MFD or its affiliates may either (i) give a gift of
nominal value, such as a hand-held calculator, or (ii) make a nominal charitable
contribution on their behalf.
<PAGE>
RESTRICTIONS ON ACTIVITIES OF NATIONAL BANKS. The Glass-Steagall Act
prohibits national banks from engaging in the business of underwriting, selling
or distributing securities. Although the scope of the prohibition has not been
clearly defined, MFD believes that such Act should not preclude banks from
entering into agency agreements with MFD. If, however, a bank were prohibited
from so acting, the Trustees would consider what actions, if any, would be
necessary to continue to provide efficient and effective shareholder services in
respect of shareholders who invested in a Fund through a national bank. It is
not expected that shareholders would suffer any adverse financial consequence as
a result of these occurrences. In addition, state securities laws on this issue
may differ from the interpretation of federal law expressed herein and banks and
financial institutions may be required to register as broker-dealers pursuant to
state law.
EXCHANGES
Subject to the requirements set forth below, some or all of the shares in an
account with a Fund for which payment has been received by the Fund (I.E., an
established account) may be exchanged for shares of the same class of any of the
other MFS Funds at net asset value (if available for sale). In addition, Class C
shares may be exchanged for shares of the MFS Money Market Fund at net asset
value. Shares of one class may not be exchanged for shares of any other class.
EXCHANGES AMONG MFS FUNDS (EXCLUDING EXCHANGES FROM MFS MONEY MARKET FUNDS): No
initial sales charge or CDSC will be imposed in connection with an exchange from
shares of an MFS Fund to shares of any other MFS Fund, except with respect to
exchanges from an MFS money market fund to another MFS Fund which is not an MFS
money market fund (discussed below). With respect to an exchange involving
shares subject to a CDSC, the CDSC will be unaffected by the exchange and the
holding period for purposes of calculating the CDSC will carry over to the
acquired shares.
EXCHANGES FROM AN MFS MONEY MARKET FUND: Special rules apply with respect to the
imposition of an initial sales charge or a CDSC for exchanges from an MFS money
market fund to another MFS Fund which is not an MFS money market fund. These
rules are described under the caption "Exchanges" in the Prospectuses of those
MFS money market funds.
<PAGE>
EXCHANGES INVOLVING THE MFS FIXED FUND: Class A shares of any MFS Fund held by
certain qualified retirement plans may be exchanged for units of participation
of the MFS Fixed Fund (a bank collective investment fund) (the "Units"), and
Units may be exchanged for Class A shares of any MFS Fund. With respect to
exchanges between Class A shares subject to a CDSC and Units, the CDSC will
carry over to the acquired shares or Units and will be deducted from the
redemption proceeds when such shares or Units are subsequently redeemed,
assuming the CDSC is then payable (the period during which the Class A shares
and the Units were held will be aggregated for purposes of calculating the
applicable CDSC). In the event that a shareholder initially purchases Units and
then exchanges into Class A shares subject to an initial sales charge of an MFS
Fund, the initial sales charge shall be due upon such exchange, but will not be
imposed with respect to any subsequent exchanges between such Class A shares and
Units with respect to shares on which the initial sales charge has already been
paid. In the event that a shareholder initially purchases Units and then
exchanges into Class A shares subject to a CDSC of an MFS Fund, the CDSC period
will commence upon such exchange, and the applicability of the CDSC with respect
to subsequent exchanges shall be governed by the rules set forth above in this
paragraph.
GENERAL: Exchanges will be made only after instructions in writing or by
telephone (an "Exchange Request") are received for an established account by the
Shareholder Servicing Agent in proper form (I.E., if in writing -- signed by the
record owner(s) exactly as the shares are registered; if by telephone -- proper
account identification is given by the dealer or shareholder of record) and each
exchange must involve either shares having an aggregate value of at least $1,000
($50 in the case of retirement plan participants whose sponsoring organizations
subscribe to the MFS FUNDamental 401(k) Plan or another similar 401(k)
recordkeeping system made available by the Shareholder Servicing Agent) or all
the shares in the account. If an Exchange Request is received by the Shareholder
Servicing Agent on any business day prior to the close of regular trading on the
Exchange (generally, 4:00 p.m., Eastern time), the exchange usually will occur
on that day if all the requirements set forth above have been complied with at
that time. No more than five exchanges may be made in any one Exchange Request
by telephone. Additional information concerning this exchange privilege and
prospectuses for any of the other MFS Funds may be obtained from dealers or the
Shareholder Servicing Agent. A shareholder should read the prospectus of the
other MFS Fund and consider the differences in objectives, policies and
restrictions before making any exchange. For federal and (generally) state
income tax purposes, an exchange is treated as a sale of the shares exchanged
and, therefore, an exchange could result in a gain or loss to the shareholder
making the exchange. Exchanges by telephone are automatically available to most
non-retirement plan accounts and certain retirement plan accounts. For further
information regarding exchanges by telephone, see "Redemptions by Telephone."
The exchange privilege (or any aspect of it) may be changed or discontinued and
is subject to certain limitations, including certain restrictions on purchases
by market timers. Special procedures, privileges and restrictions with respect
to exchanges may apply to market timers who enter into an agreement with MFD, as
set forth in such agreement. See "Purchases - General - Right to Reject Purchase
Orders/Market Timing."
<PAGE>
REDEMPTIONS AND REPURCHASES
A shareholder may withdraw all or any portion of the value of his account on any
date on which a Fund is open for business by redeeming shares at their net asset
value (a redemption) or by selling such shares to a Fund through a dealer (a
repurchase). Certain redemptions and repurchases are, however, subject to a
CDSC. See "Contingent Deferred Sales Charge" below. Because the net asset value
of shares of the account fluctuates, redemptions or repurchases, which are
taxable transactions, are likely to result in gains or losses to the
shareholder. When a shareholder withdraws an amount from his account, the
shareholder is deemed to have tendered for redemption a sufficient number of
full and fractional shares in his account to cover the amount withdrawn. The
proceeds of a redemption or repurchase will normally be available within seven
days, except for shares purchased or received in exchange for shares purchased
by check (including certified checks or cashier's checks). Payment of redemption
proceeds may be delayed for up to 15 days from the purchase date in an effort to
assure that such check has cleared.
REDEMPTION BY MAIL: Each shareholder may redeem all or any portion of the shares
in his account by mailing or delivering to the Shareholder Servicing Agent (see
back cover for address) a stock power with a written request for redemption or
letter of instruction, together with his share certificates (if any were
issued), all in "good order" for transfer. "Good order" generally means that the
stock power, written request for redemption, letter of instruction or
certificate must be endorsed by the record owner(s) exactly as the shares are
registered and the signature(s) must be guaranteed in the manner set forth below
under the caption "Signature Guarantee." In addition, in some cases "good order"
will require the furnishing of additional documents. The Shareholder Servicing
Agent may make certain DE MINIMIS exceptions to the above requirements for
redemption. Within seven days after receipt of a redemption request in "good
order" by the Shareholder Servicing Agent, each Fund will make payment in cash
of the net asset value of the shares next determined after such redemption
request was received, reduced by the amount of any applicable CDSC described
above and the amount of any income tax required to be withheld, except during
any period in which the right of redemption is suspended or date of payment is
postponed because the Exchange is closed or trading on such Exchange is
restricted or to the extent otherwise permitted by the 1940 Act if an emergency
exists. See "Tax Status" below.
REDEMPTION BY TELEPHONE: Each shareholder may redeem an amount from his account
by telephoning the Shareholder Servicing Agent toll-free at (800) 225-2606.
Shareholders wishing to avail themselves of this telephone redemption privilege
must so elect on their Account Application, designate thereon a bank and account
number to receive the proceeds of such redemption, and sign the Account
Application Form with the signature(s) guaranteed in the manner set forth below
under the caption "Signature Guarantee." The proceeds of such a redemption,
reduced by the amount of any applicable CDSC and the amount of any income tax
required to be withheld, are mailed by check to the designated account, without
charge, if the redemption proceeds do not exceed $1,000, and are wired in
federal funds to the designated account if the redemption proceeds exceed
$1,000. If a telephone redemption request is received by the Shareholder
Servicing Agent by the close of regular trading on the Exchange on any business
day, shares will be redeemed at the closing net asset value of the Fund on that
day. Subject to the conditions described in this section, proceeds of a
redemption are normally mailed or wired on the next business day following the
date of receipt of the order for redemption. The Shareholder Servicing Agent may
be liable for any losses resulting from unauthorized telephone transactions if
it does not follow reasonable procedures designed to verify the identity of the
caller. The Shareholder Servicing Agent will request personal or other
information from the caller, and will normally also record calls. Shareholders
should verify the accuracy of confirmation statements immediately after their
receipt.
<PAGE>
REPURCHASE THROUGH A DEALER: If a shareholder desires to sell his shares through
his dealer (a repurchase), the shareholder can place a repurchase order with his
dealer, who may charge the shareholder a fee. IF THE DEALER RECEIVES THE
SHAREHOLDER'S ORDER PRIOR TO THE CLOSE OF REGULAR TRADING ON THE EXCHANGE AND
COMMUNICATES IT TO MFD BEFORE THE CLOSE OF BUSINESS ON THE SAME DAY, THE
SHAREHOLDER WILL RECEIVE THE NET ASSET VALUE CALCULATED ON THAT DAY, REDUCED BY
THE AMOUNT OF ANY APPLICABLE CDSC AND THE AMOUNT OF ANY INCOME TAX REQUIRED TO
BE WITHHELD.
CONTINGENT DEFERRED SALES CHARGE: Investments in Class A or Class B shares
("Direct Purchases") will be subject to a CDSC for a period of 12 months (in the
case of purchases of $1 million or more of Class A shares or purchases by
certain retirement plans of Class A shares) or six years (in the case of
purchases of Class B shares). Purchases of Class A shares made during a calendar
month, regardless of when during the month the investment occurred, will age one
month on the last day of the month and each subsequent month. Class B shares
purchased on or after January 1, 1993 will be aggregated on a calendar month
basis -- all transactions made during a calendar month, regardless of when
during the month they have occurred, will age one year at the close of business
on the last day of such month in the following calendar year and each subsequent
year. For Class B shares of each Fund purchased prior to January 1, 1993,
transactions will be aggregated on a calendar year basis -- all transactions
made during a calendar year, regardless of when during the year they have
occurred, will age one year at the close of business on December 31 of that year
and each subsequent year.
At the time of a redemption, the amount by which the value of a shareholder's
account for a particular class of shares represented by Direct Purchases exceeds
the sum of the six calendar year aggregations (12 months in the case of
purchases of $1 million or more of Class A shares or purchases by certain
retirement plans of Class A shares) of Direct Purchases may be redeemed without
charge ("Free Amount"). Moreover, no CDSC is ever assessed on additional shares
acquired through the automatic reinvestment of dividends or capital gain
distributions ("Reinvested Shares"). Therefore, at the time of redemption of a
particular class, (i) any Free Amount is not subject to the CDSC and (ii) the
amount of the redemption equal to the then-current value of Reinvested Shares is
not subject to the CDSC, but (iii) any amount of the redemption in excess of the
aggregate of the then-current value of Reinvested Shares and the Free Amount is
subject to a CDSC. The CDSC will first be applied against the amount of Direct
Purchases which will result in any such charge being imposed at the lowest
possible rate. The CDSC to be imposed upon redemptions of shares will be
calculated as set forth in "Purchases" above.
<PAGE>
The applicability of a CDSC will be unaffected by exchanges or transfers of
registration, except as described in Annex A hereto.
GENERAL: The following information applies to redemptions and repurchases
of all classes of a Fund's shares.
SIGNATURE GUARANTEE. In order to protect shareholders against fraud, each
Fund requires, in certain instances as indicated above, that the shareholder's
signature be guaranteed. In these cases the shareholder's signature must be
guaranteed by an eligible bank, broker, dealer, credit union, national
securities exchange, registered securities association, clearing agency or
savings association. Signature guarantees shall be accepted in accordance with
policies established by the Shareholder Servicing Agent.
REINSTATEMENT PRIVILEGE. Shareholders of a Fund who have redeemed their
shares have a one-time right to reinvest the redemption proceeds in the same
class of shares of any of the MFS Funds (if shares of such Fund are available
for sale) at net asset value (with a credit for any CDSC paid) within 90 days of
the redemption pursuant to the Reinstatement Privilege. If the shares credited
for any CDSC paid are then redeemed within six years of the initial purchase in
the case of Class B shares or within 12 months of the initial purchase for
certain Class A share purchases, a CDSC will be imposed upon redemption. Such
purchases under the Reinstatement Privilege are subject to all limitations in
the Statement of Additional Information regarding this privilege.
IN-KIND DISTRIBUTIONS. Subject to compliance with applicable regulations,
each Fund has reserved the right to pay the redemption or repurchase price of
shares of the Fund, either totally or partially, by a distribution in-kind of
securities (instead of cash) from the Fund's portfolio. The securities
distributed in such a distribution would be valued at the same amount as that
assigned to them in calculating the net asset value for the shares being sold.
If a shareholder received a distribution in-kind, the shareholder could incur
brokerage or transaction charges when converting the securities to cash.
INVOLUNTARY REDEMPTIONS/SMALL ACCOUNTS. Due to the relatively high cost of
maintaining small accounts, each Fund reserves the right to redeem shares in any
account for their then-current value if at any time the total investment in such
account drops below $500 because of redemptions, except in the case of accounts
being established for monthly automatic investments and certain payroll savings
programs, Automatic Exchange Plan accounts and tax-deferred retirement plans,
for which there is a lower minimum investment requirement. See "Purchases -
General - Minimum Investment." Shareholders will be notified that the value of
their account is less than the minimum investment requirement and allowed 60
days to make an additional investment before the redemption is processed.
DISTRIBUTION PLANS
The Trustees have adopted separate Distribution Plans for Class A, Class B and
Class C shares pursuant to Section 12(b) of the 1940 Act and Rule 12b-1
thereunder (the "Distribution Plans"), after having concluded that there is a
reasonable likelihood that the Distribution Plans would benefit each Fund and
its shareholders.
In certain circumstances, the fees described below have not yet been imposed or
are being waived. These circumstances are described below under the heading
"Current Level of Distribution and Service Fees."
<PAGE>
FEATURES COMMON TO EACH DISTRIBUTION PLAN: The Distribution Plans have
certain common features, as described below.
SERVICE FEES. Each Distribution Plan provides that a Fund may pay MFD a
service fee of up to 0.25% of the average daily net assets attributable to the
class of shares to which the Distribution Plan relates (I.E., Class A, Class B
or Class C shares, as appropriate) (the "Designated Class") annually in order
that MFD may pay expenses on behalf of the Fund relating to the servicing of
shares of the Designated Class. The service fee is used by MFD to compensate
dealers which enter into a sales agreement with MFD in consideration for all
personal services and/or account maintenance services rendered by the dealer
with respect to shares of the Designated Class owned by investors for whom such
dealer is the dealer or holder of record. MFD may from time to time reduce the
amount of the service fees paid for shares sold prior to a certain date. Service
fees may be reduced for a dealer that is the holder or dealer of record for an
investor who owns shares of a Fund having an aggregate net asset value at or
above a certain dollar level. Dealers may from time to time be required to meet
certain criteria in order to receive service fees. MFD or its affiliates are
entitled to retain all service fees payable under each Distribution Plan for
which there is no dealer of record or for which qualification standards have not
been met as partial consideration for personal services and/or account
maintenance services performed by MFD or its affiliates to shareholder accounts.
<PAGE>
DISTRIBUTION FEES. Each Distribution Plan provides that a Fund may pay MFD
a distribution fee in addition to the service fee described above based on the
average daily net assets attributable to the Designated Class as partial
consideration for distribution services performed and expenses incurred in the
performance of MFD's obligations under its distribution agreement with the Fund.
See "Management of the Funds - Distributor" in the Statement of Additional
Information. The amount of the distribution fee paid by a Fund with respect to
each class differs under the Distribution Plans, as does the use by MFD of such
distribution fees. Such amounts and uses are described below in the discussion
of the separate Distribution Plans. While the amount of compensation received by
MFD in the form of distribution fees during any year may be more or less than
the expenses incurred by MFD under its distribution agreement with the Fund, the
Fund is not liable to MFD for any losses MFD may incur in performing services
under its distribution agreement with the Fund.
OTHER COMMON FEATURES. Fees payable under each Distribution Plan are
charged to, and therefore reduce, income allocated to shares of the Designated
Class. The Distribution Plans have substantially identical provisions with
respect to their operating policies and their initial approval, renewal,
amendment and termination.
FEATURES UNIQUE TO EACH DISTRIBUTION PLAN: The Distribution Plans have certain
features that are unique to each class of shares, as described below.
CLASS A DISTRIBUTION PLAN. Class A shares are generally offered pursuant to
an initial sales charge, a substantial portion of which is paid to or retained
by the dealer making the sale (the remainder of which is paid to MFD). See
"Purchases - Class A Shares" above. In addition to the initial sales charge, the
dealer also generally receives the ongoing 0.25% per annum service fee, as
discussed above.
The distribution fee paid to MFD under the Class A Distribution Plan is
equal, on an annual basis, to 0.25% of a Fund's average daily net assets
attributable to Class A shares. As noted above, MFD may use the distribution fee
to cover distribution-related expenses incurred by it under its distribution
agreement with the Fund, including commissions to dealers and payments to
wholesalers employed by MFD (E.G., MFD pays commissions to dealers with respect
to purchases of $1 million or more of Class A shares which are sold at net asset
value but which are subject to a 1% CDSC for one year after purchase).
Distribution fee payments under the Class A Distribution Plan may be used by MFD
to pay securities dealers a distribution fee in an amount equal to 0.25% per
annum of each Fund's average daily net assets attributable to Class A shares
(other than Class A shares that have converted from Class B shares) owned by
investors from whom that securities dealer is the holder or dealer of record.
See "Purchases - Class A Shares" above. In addition, to the extent that the
aggregate service and distribution fees paid under the Class A Distribution Plan
do not exceed 0.50% per annum of the average daily net assets of a Fund
attributable to Class A shares, the Fund is permitted to pay such
distribution-related expenses or other distribution-related expenses.
CLASS B DISTRIBUTION PLAN. Class B shares are offered at net asset value
without an initial sales charge but subject to a CDSC. See "Purchases - Class B
Shares" above. MFD will advance to dealers the first year service fee described
above at a rate equal to 0.25% of the purchase price of such shares and, as
compensation therefor, MFD may retain the service fee paid by a Fund with
respect to such shares for the first year after purchase. Dealers will become
eligible to receive the ongoing 0.25% per annum service fee with respect to such
shares commencing in the thirteenth month following purchase.
<PAGE>
Under the Class B Distribution Plan, a Fund pays MFD a distribution fee
equal, on an annual basis, to 0.75% of the Fund's average daily net assets
attributable to Class B shares. As noted above, this distribution fee may be
used by MFD to cover its distribution-related expenses under its distribution
agreement with the Fund (including the 3.75% commission it pays to dealers upon
purchase of Class B shares, as described under "Purchases - Class B Shares"
above).
CLASS C DISTRIBUTION PLAN. Class C shares are offered at net asset value
without a sales charge or a CDSC. See "Purchases - Class C shares" above. Unlike
the case with respect to the sale of Class A and Class B shares, where the
dealer retains a portion of the initial sales charge (Class A shares) or
receives an up-front payment from MFD (Class B shares), a dealer who sells Class
C shares does not receive any initial payment, but instead receives distribution
and service fees equal, on an annual basis, to 1% of a Fund's average daily net
assets attributable to Class C shares owned by investors for whom the dealer is
the holder or dealer of record.
<PAGE>
This ongoing 1% fee is comprised of the 0.25% per annum service fee paid to
MFD under the Class C Distribution Plan (which MFD in turn pays to dealers), as
discussed above, and a distribution fee paid to MFD (which MFD also in turn pays
to dealers) under the Class C Distribution Plan equal, on an annual basis, to
0.75% of a Fund's average daily net assets attributable to Class C shares.
CURRENT LEVEL OF DISTRIBUTION AND SERVICE FEES: Each Fund's Class A, Class B and
Class C distribution and service fees for its current fiscal year are 0.00%,
1.00% and 1.00%, per annum, respectively. Currently, distribution and service
fees under the Class A Distribution Plan are not being imposed.
DISTRIBUTIONS
Each Fund intends to pay substantially all of its net investment income to its
shareholders as dividends at least annually. In determining the net investment
income available for distributions, each Fund may rely on projections of its
anticipated net investment income over a longer term, rather than its actual net
investment income for the period. If a Fund earns less than projected, or
otherwise distributes more than its earnings for the year, a portion of the
distributions may constitute a return of capital. Each Fund may make one or more
distributions during the calendar year to its shareholders from any long-term
capital gains and may also make one or more distributions during the calendar
year to its shareholders from short-term capital gains. Shareholders may elect
to receive dividends and capital gain distributions in either cash or additional
shares of the same class with respect to which a distribution is made. See "Tax
Status" and "Shareholder Services -- Distribution Options" below. Distributions
paid by a Fund with respect to Class A shares will generally be greater than
those paid with respect to Class B and Class C shares because expenses
attributable to Class B and Class C shares will generally be higher.
TAX STATUS
Each Fund is treated as an entity separate from the other Funds and the other
series of the Trust for federal income tax purposes. In order to minimize the
taxes each Fund would otherwise be required to pay, each Fund intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code,
and to make distributions to its shareholders in accordance with the timing
requirements imposed by the Code. It is expected that the Funds will not be
required to pay entity level federal income or excise taxes, although
foreign-source income received by a Fund may be subject to foreign withholding
taxes.
<PAGE>
Shareholders of a Fund normally will have to pay federal income taxes, and any
state or local taxes, on the dividends and capital gain distributions they
receive from the Fund, whether paid in cash or additional shares. A portion of
the dividends received from each Fund (but none of a Fund's capital gains
distributions) may qualify for the dividends-received deduction for
corporations. Shortly after the end of each calendar year, each shareholder of a
Fund will receive a statement that sets forth the federal income tax status of
all of the Fund's dividends and distributions for that calendar year, including
any portion taxable as ordinary income, any portion taxable as long-term capital
gains, the portion, if any, representing a return of capital (which is generally
free of current taxes but results in a basis reduction) and the amount, if any,
of federal income tax withheld.
Fund distributions will reduce a Fund's net asset value per share. Shareholders
who buy shares just before a Fund makes a distribution may thus pay the full
price for the shares and then effectively receive a portion of the purchase
price back as a taxable distribution.
Each Fund intends to withhold U.S. federal income tax at a rate of 30% on
dividends and any other payments that are subject to such withholding and that
are made to persons who are neither citizens nor residents of the U.S.,
regardless of whether a lower rate may be permitted under an applicable treaty.
Each Fund is also required in certain circumstances to apply backup withholding
at a rate of 31% on taxable dividends and redemption proceeds paid to any
shareholder (including a shareholder who is neither a citizen nor a resident of
the U.S.) who does not furnish to the Fund certain information and
certifications or who is otherwise subject to backup withholding. However,
backup withholding will not be applied on payments which have been subject to
30% withholding. Prospective investors should read the Fund's Account
Application for additional information regarding backup withholding of federal
income tax and should consult their own tax advisers as to the tax consequences
to them of an investment in a Fund.
<PAGE>
NET ASSET VALUE
The net asset value per share of each class of each Fund is determined each day
during which the Exchange is open for trading. This determination is made once
each day as of the close of regular trading on the Exchange by deducting the
amount of the liabilities attributable to the class from the value of the assets
attributable to the class and dividing the difference by the number of shares of
the class outstanding. Assets in a Fund's portfolio are valued on the basis of
their market values or otherwise at their fair values, as described in the
Statement of Additional Information. All investments and assets are expressed in
U.S. dollars based upon current currency exchange rates. The net asset value per
share of each class of shares is effective for orders received by the dealer
prior to its calculation and received by MFD prior to the close of that business
day.
EXPENSES
The Trust pays the compensation of the Trustees who are not officers of MFS and
all expenses of the Funds (other than those assumed by MFS) including but not
limited to: governmental fees; interest charges; taxes; membership dues in the
investment Company Institute allocable to the Funds; fees and expenses of
independent auditors, of legal counsel, and of any transfer agent, registrar or
dividend disbursing agent of the Funds; expenses of repurchasing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses, periodic reports, notices and proxy statements to
shareholders and to governmental officers and commissions; brokerage and other
expenses connected with the execution, recording and settlement of portfolio
security transactions; insurance premiums; fees and expenses of [State Street
Bank and Trust Company], the Funds' custodian, for all services to the Funds,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of shares of the Funds;
and expenses of shareholder meetings. Expenses relating to the issuance,
registration and qualification of shares of the Funds and the preparation,
printing and mailing of prospectuses are borne by the Funds except that the
Distribution Agreement with MFD requires MFD to pay for prospectuses that are to
be used for sales purposes. Expenses of the Trust which are not attributable to
a specific series are allocated between the series in a manner believed by
management of the Trust to be fair and equitable.
Subject to termination or revision at the discretion of MFS, MFS has agreed to
pay until August 31, 2006 the foregoing expenses of each Fund such that a Fund's
aggregate operating expenses do not exceed, on an annualized basis, 1.50% of the
average daily net assets with respect to Class A shares, 2.57% of the average
daily net assets with respect to Class B shares, and 2.50% of the average daily
net assets with respect to Class C shares. Such payments by MFS are subject to
reimbursement by the Fund which will be accomplished by the payment by the Fund
of an expense reimbursement fee to MFS computed and paid monthly as a percentage
of its average daily net assets for its then current fiscal year, with a
limitation that immediately after such payment the aggregate operating expenses
of a Fund would not exceed, on an annualized basis, 1.50% of the average daily
net assets with respect to Class A shares, 2.57% of the average daily net assets
with respect to Class B shares, and 2.50% of the average daily net assets with
respect to Class C shares. The expense reimbursement agreement terminates for
each Fund on the earlier of the date on which payments made thereunder by the
Fund equal the prior payment of such reimbursable expenses by MFS or August 31,
2006.
<PAGE>
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
Each Fund has three classes of shares, entitled Class A, Class B and Class C
shares of Beneficial Interest (without par value). As of the date of this
Prospectus, the Trust has eight series of shares. The Trust has reserved the
right to create and issue additional classes and series of shares, in which case
each class of shares of a series would participate equally in the earnings,
dividends and assets attributable to that class of that particular series.
Shareholders are entitled to one vote for each share held and shares of each
series would be entitled to vote separately to approve investment advisory
agreements or changes in investment restrictions, but shares of all series would
vote together in the election of Trustees and selection of accountants.
Additionally, each class of shares of a series will vote separately on any
material increases in the fees under its Distribution Plan or on any other
matter that affects solely that class of shares, but will otherwise vote
together with all other classes of shares of the series on all other matters.
The Trust does not intend to hold annual shareholder meetings. The Trust's
Declaration of Trust provides that a Trustee may be removed from office in
certain instances (see "Description of Shares, Voting Rights and Liabilities" in
the Statement of Additional Information).
Each share of a class of each Fund represents an equal proportionate interest in
that Fund with each other class share, subject to the liabilities of the
particular class. Shares have no pre-emptive or conversion rights (except as set
forth in "Purchases -- Conversion of Class B shares"). Shares are fully paid and
non-assessable. Should a Fund be liquidated, shareholders of each class are
entitled to share pro rata in the net assets attributable to that class
available for distribution to shareholders. Shares will remain on deposit with
the Shareholder Servicing Agent and certificates will not be issued except in
connection with pledges and assignments and in certain other limited
circumstances.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the risk of a shareholder incurring financial loss on account of
shareholder liability would be limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
<PAGE>
PERFORMANCE INFORMATION
From time to time, each Fund may provide yield, current distribution rate and
total rate of return quotations for each class of shares and may also quote fund
rankings in the relevant fund category from various sources, such as the Lipper
Analytical Services, Inc., and Wiesenberger Investment Companies Service. Yield
quotations are based on the annualized net investment income per share allocated
to each class of a Fund over a 30-day period stated as a percent of the maximum
public offering price of that class on the last day of that period. Yield
calculations for Class B shares assume no CDSC is paid. The current distribution
rate for each class is generally based upon the total amount of dividends per
share paid by a Fund to shareholders of that class during the past 12 months and
is computed by dividing the amount of such dividends by the maximum public
offering price of that class at the end of such period. Current distribution
rate calculations for Class B shares assumes no CDSC is paid. The current
distribution rate differs from the yield calculation because it may include
distributions to shareholders from sources other than dividends and interest,
such as premium income from option writing, short-term capital gains, and return
of invested capital, and is calculated over a different period of time. Total
rate of return quotations will reflect the average annual percentage change over
stated periods in the value of an investment in each class of shares of a Fund
made at the maximum public offering price of the shares of that class with all
distributions reinvested and which, if quoted for periods of six years or less,
will give effect to the imposition of the CDSC assessed upon redemptions of the
Fund's Class B shares. Such total rate of return quotations may be accompanied
by quotations which do not reflect the reduction in value of the initial
investment due to the sales charge or the deduction of the CDSC, and which will
thus be higher. All performance quotations are based on historical performance
and are not intended to indicate future performance. Yield reflects only net
portfolio income as of a stated period of time and current distribution rate
reflects only the rate of distributions paid by a Fund over a stated period of
time, while total rate of return reflects all components of investment return
over a stated period of time. A Fund's quotations may from time to time be used
in advertisements, shareholder reports or other communications to shareholders.
For a discussion of the manner in which a Fund will calculate its yield, current
distribution rate and total rate of return, see the Statement of Additional
Information. In addition to information provided in shareholder reports, each
Fund may, in its discretion, from time to time, make a list of all or a portion
of its holdings available to investors upon request.
8. SHAREHOLDER SERVICES
Shareholders with questions concerning the shareholder services described below
or concerning other aspects of a Fund, should contact the Shareholder Servicing
Agent (see back cover for address and phone number). A shareholder whose shares
are held in the name of, or controlled by, a dealer might not receive many of
the privileges and services from a Fund (such as Right of Accumulation, Letter
of Intent and certain recordkeeping services) that a Fund ordinarily provides.
ACCOUNT AND CONFIRMATION STATEMENTS -- Each shareholder will receive
confirmation statements showing the transaction activity in his account. At the
end of each calendar year, each shareholder will receive information regarding
the tax status of reportable dividends and distributions for that year (see "Tax
Status").
<PAGE>
DISTRIBUTION OPTIONS -- The following options are available to all accounts
(except Systematic Withdrawal Plan accounts described below) and may be changed
as often as desired by notifying the Shareholder Servicing Agent:
-- Dividends and capital gain distributions reinvested in additional
shares. This option will be assigned if no other option is
specified;
-- Dividends (including short-term capital gains) in cash; capital
gain distributions reinvested in additional shares; or
-- Dividends and capital gain distributions in cash.
Reinvestments (net of any tax withholding) will be made in additional full and
fractional shares of the same class of shares at the net asset value in effect
at the close of business on the record date. Dividends and capital gain
distributions in amounts less than $10 will automatically be reinvested in
additional shares of each Fund. If a shareholder has elected to receive
dividends and/or capital gain distributions in cash and the postal or other
delivery service is unable to deliver checks to the shareholder's address of
record, such shareholder's distribution option will automatically be converted
to having all dividends and other distributions reinvested in additional shares.
Any request to change a distribution option must be received by the Shareholder
Servicing Agent by the record date for a dividend or distribution in order to be
effective for that dividend or distribution. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
<PAGE>
INVESTMENT AND WITHDRAWAL PROGRAMS -- For the convenience of shareholders, each
Fund makes available the following programs designed to enable shareholders to
add to their investment in an account with a Fund or withdraw from it with a
minimum of paper work. The programs involve no extra charge to shareholders
(other than a sales charge in the case of certain Class A share purchases) and
may be changed or discontinued at any time by a shareholder or a Fund.
LETTER OF INTENT: If a shareholder (other than a group purchaser as
described in the Statement of Additional Information) anticipates purchasing
$100,000 or more of Class A shares of a Fund alone or in combination with shares
of Class B or Class C shares of a Fund or any of the classes of other MFS Funds
or MFS Fixed Fund (a bank collective investment fund) within a 13-month period
(or 36-month period for purchases of $1 million or more), the shareholder may
obtain such shares at the same reduced sales charge as though the total quantity
were invested in one lump sum, subject to escrow agreements and the appointment
of an attorney for redemptions from the escrow amount if the intended purchases
are not completed, by completing the Letter of Intent section of the Account
Application.
RIGHT OF ACCUMULATION: A shareholder qualifies for cumulative quantity
discounts on purchases of Class A shares when his new investment, together with
the current offering price value of all holdings of any class of shares of that
shareholder in the MFS Funds or MFS Fixed Fund (a bank collective investment
fund) reaches a discount level.
DISTRIBUTION INVESTMENT PROGRAM: Shares of a particular class of a Fund
may be sold at net asset value (and without any applicable CDSC) through the
automatic reinvestment of dividend and capital gain distributions from the same
class of another MFS Fund. Furthermore, distributions made by a Fund may be
automatically invested at net asset value in shares of the same class of another
MFS Fund, if shares of such Fund are available for sale (without a sales charge
and not subject to any applicable CDSC).
SYSTEMATIC WITHDRAWAL PLAN: A shareholder may direct the Shareholder
Servicing Agent to send to him (or any one he designates) regular periodic
payments, as designated on the Account Application and based upon the value of
his account. Each payment under a Systematic Withdrawal Plan (a "SWP") must be
at least $100, except in certain limited circumstances. The aggregate
withdrawals of Class B shares in any year pursuant to a SWP will not be subject
to a CDSC and are generally limited to 10% of the value of the account at the
time of the establishment of the SWP. The CDSC will not be waived in the case of
SWP redemptions of Class A shares which are subject to CDSC.
DOLLAR COST AVERAGING PROGRAMS --
AUTOMATIC INVESTMENT PLAN: Cash investments of $50 or more may be made
through a shareholder's checking account twice monthly, monthly or quarterly.
Required forms are available from the Shareholder Servicing Agent or investment
dealers.
<PAGE>
AUTOMATIC EXCHANGE PLAN: Shareholders having account balances of at
least $5,000 in any MFS Fund may participate in the Automatic Exchange Plan, a
dollar cost averaging program. The Automatic Exchange Plan provides for
automatic monthly or quarterly exchanges of funds from the shareholder's account
in an MFS Fund for investment in the same class of shares of other MFS Funds
selected by the shareholder (if available for sale). Under the Automatic
Exchange Plan, exchanges of at least $50 each may be made to up to four
different funds. A shareholder should consider the objectives and policies of a
fund and review its prospectus before electing to exchange money into such fund
through the Automatic Exchange Plan. No transaction fee is imposed in connection
with exchange transactions under the Automatic Exchange Plan. However, exchanges
of shares of MFS Money Market Fund, MFS Government Money Market Fund or Class A
shares of MFS Cash Reserve Fund will be subject to any applicable sales charge.
For federal and (generally) state income tax purposes, an exchange is treated as
a sale of the shares transferred and, therefore, could result in a capital gain
or loss to the shareholder making the exchange. See the Statement of Additional
Information for further information concerning the Automatic Exchange Plan.
Investors should consult their tax advisers for information regarding the
potential capital gain and loss consequences of transactions under the Automatic
Exchange Plan.
Because a dollar cost averaging program involves periodic purchases of shares
regardless of fluctuating share offering prices, a shareholder should consider
his financial ability to continue his purchases through periods of low price
levels. Maintaining an investment program concurrently with a withdrawal program
would be disadvantageous because of the sales charges included in share
purchases in the case of Class A shares, and because of the assessment of the
CDSC for share redemption (if applicable) in the case of Class A shares.
TAX-DEFERRED RETIREMENT PLANS -- Except as noted under "Purchases -- Class C
Shares," shares of each Fund may be purchased by all types of tax-deferred
retirement plans, including IRAs, Simplified Employee Pension plans, 401(k)
plans, 403(b) plans and other corporate pension and profit-sharing plans.
Investors should consult with their tax advisers before establishing any of the
tax-deferred retirement plans described above.
The Funds' Statement of Additional Information, dated January 1, 1996, contains
more detailed information about each Fund, including information related to: (i)
each Fund's investment policies and restrictions; (ii) the Trustees, officers
and Adviser; (iii) portfolio trading; (iv) the shares, including rights and
liabilities of shareholders; (v) tax status of dividends and distributions; (vi)
the Distribution Plans; and (vii) various services and privileges provided by
each Fund for the benefit of its shareholders, including additional information
with respect to the exchange privilege.
<PAGE>
ANNEX A
WAIVERS OF SALES CHARGES
This Annex sets forth the various circumstances in which all applicable sales
charges are waived (Section I), the initial sales charge and the contingent
deferred sales charge ("CDSC") for Class A shares are waived (Section II), and
the CDSC for Class B shares is waived (Section III).
I. WAIVERS OF ALL APPLICABLE SALES CHARGES
In the following circumstances, the initial sales charge imposed on
purchases of Class A shares and the CDSC imposed on certain redemptions
of Class A shares and on redemptions of Class B shares, as applicable,
are waived:
1. DIVIDEND REINVESTMENT
Shares acquired through dividend or capital gain
reinvestment; and
Shares acquired by automatic reinvestment of distributions
of dividends and capital gains of any fund in the MFS Family
of Funds ("MFS Funds") pursuant to the Distribution
Investment Program.
2. CERTAIN ACQUISITIONS/LIQUIDATIONS
Shares acquired on account of the acquisition or liquidation
of assets of other investment companies or personal holding
companies.
3. AFFILIATES OF AN MFS FUND/CERTAIN DEALERS. Shares acquired by:
Officers, eligible directors, employees (including retired
employees) and agents of Massachusetts Financial Services
Company ("MFS"), Sun Life Assurance Company of Canada ("Sun
Life") or any of their subsidiary companies;
Trustees and retired trustees of any investment company for
which MFS Fund Distributors, Inc. ("MFD") serves as
distributor;
Employees, directors, partners, officers and trustees of any
sub-adviser to any MFS Fund;
Employees or registered representatives of dealers and other
financial institutions ("dealers") which have a sales
agreement with MFD;
Certain family members of any such individual and their
spouses identified above and certain trusts, pension,
profit-sharing or other retirement plans for the sole
benefit of such persons, provided the shares are not resold
except to an MFS Fund; and
Institutional Clients of MFS or MFS Asset Management, Inc.
("AMI").
<PAGE>
4. INVOLUNTARY REDEMPTIONS (CDSC WAIVER ONLY)
Shares redeemed at an MFS Fund's direction due to the small
size of a shareholder's account. See "Redemptions and
Repurchases - General - Involuntary Redemptions/Small
Accounts" in the Prospectus.
5. RETIREMENT PLANS (CDSC WAIVER ONLY). Shares redeemed on
account of distributions made under the following
circumstances:
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS")
Death or disability of the IRA owner.
SECTION 401(A) PLANS ("401(A) PLANS") AND SECTION 403(B)
EMPLOYER SPONSORED PLANS ("ESP PLANS")
Death, disability or retirement of 401(a) or ESP Plan
participant;
Loan from 401(a) or ESP Plan (repayment of loans, however,
will constitute new sales for purposes of assessing sales
charges);
Financial hardship (as defined in Treasury Regulation
Section 1.401(k)-1(d)(2), as amended from time to time);
<PAGE>
Termination of employment of 401(a) or ESP Plan participant
(excluding, however, a partial or other termination of the
Plan);
Tax-free return of excess 401(a) or ESP Plan contributions;
To the extent that redemption proceeds are used to pay
expenses (or certain participant expenses) of the 401(a) or
ESP Plan (E.G., participant account fees), provided that the
Plan sponsor subscribes to the MFS FUNDamental 401(k) Plan
or another similar recordkeeping system made available by
MFS Service Center, Inc. ( the "Shareholder Servicing
Agent"); and
Distributions from a 401(a) or ESP Plan that has invested
its assets in one or more of the MFS Funds for more than 10
years from the later to occur of: (i) January 1, 1993 or
(ii) the date such 401(a) or ESP Plan first invests its
assets in one or more of the MFS Funds. The sales charges
will be waived in the case of a redemption of all of the
401(a) or ESP Plan's shares in all MFS Funds (I.E., all the
assets of the 401(a) or ESP Plan invested in the MFS Funds
are withdrawn), unless immediately prior to the redemption,
the aggregate amount invested by the 401(a) or ESP Plan in
shares of the MFS Funds (excluding the reinvestment of
distributions) during the prior four years equals 50% or
more of the total value of the 401(a) or ESP Plan's assets
in the MFS Funds, in which case the sales charges will not
be waived.
SECTION 403(B) SALARY REDUCTION ONLY PLANS ("SRO PLANS")
Death or disability of SRO Plan participant.
6. CERTAIN TRANSFERS OF REGISTRATION (CDSC WAIVER ONLY). Shares
transferred:
To an IRA rollover account where any sales charges with
respect to the shares being reregistered would have been
waived had they been redeemed; and
From a single account maintained for a 401(a) Plan to
multiple accounts maintained by the Shareholder Servicing
Agent on behalf of individual participants of such Plan,
provided that the Plan sponsor subscribes to the MFS
FUNDamental 401(k) Plan or another similar recordkeeping
system made available by the Shareholder Servicing Agent.
<PAGE>
II. WAIVERS OF CLASS A SALES CHARGES
In addition to the waivers set forth in Section I above, in the
following circumstances the initial sales charge imposed on purchases
of Class A shares and the CDSC imposed on certain redemptions of Class
A shares are waived:
1. INVESTMENT OF REDEMPTION PROCEEDS FROM UNAFFILIATED MUTUAL FUNDS
Shares acquired through the investment of redemption
proceeds from another open-end management investment company
not distributed or managed by MFD or its affiliates if: (i)
the investment is made through a dealer and appropriate
documentation is submitted to MFD; (ii) the redeemed shares
were subject to an initial sales charge or deferred sales
charge (whether or not actually imposed); (iii) the
redemption occurred no more than 90 days prior to the
purchase of Class A shares; and (iv) the MFS Fund, MFD or
its affiliates have not agreed with such company or its
affiliates, formally or informally, to waive sales charges
on Class A shares or provide any other incentive with
respect to such redemption and sale.
2. WRAP ACCOUNT INVESTMENTS
Shares acquired by investments through certain dealers which
have entered into an agreement with MFD which includes a
requirement that such shares be sold for the sole benefit of
clients participating in a "wrap" account or a similar
program under which such clients pay a fee to such dealer.
3. INVESTMENT BY INSURANCE COMPANY SEPARATE ACCOUNTS
Shares acquired by insurance company separate accounts.
<PAGE>
4. RETIREMENT PLANS
ADMINISTRATIVE SERVICES ARRANGEMENTS
Shares acquired by retirement plans whose third party
administrators or dealers have entered into an
administrative services agreement with MFD or one of its
affiliates to perform certain administrative services,
subject to certain operational and minimum size requirements
specified from time to time by MFD or one or more of its
affiliates.
REINVESTMENT OF DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS
Shares acquired through the automatic reinvestment in Class
A shares of Class A or Class B distributions which
constitute required withdrawals from qualified retirement
plans.
SHARES REDEEMED ON ACCOUNT OF DISTRIBUTIONS MADE UNDER THE
FOLLOWING CIRCUMSTANCES:
IRAS
Distributions made on or after the IRA owner has attained
the age of 59 1/2 years old; and
Tax-free returns of excess IRA contributions.
401(A) PLANS
Distributions made on or after the 401(a) Plan participant
has attained the age of 59 1/2 years old; and
Certain involuntary redemptions and redemptions in
connection with certain automatic withdrawals from a 401(a)
Plan.
ESP PLANS AND SRO PLANS
Distributions made on or after the ESP or SRO Plan
participant has attained the age of 59 1/2 years old.
III. WAIVERS OF CLASS B SALES CHARGES
In addition to the waivers set forth in Section I above, in the
following circumstances the CDSC imposed on redemptions of Class B
shares is waived:
1. SYSTEMATIC WITHDRAWAL PLAN
Systematic Withdrawal Plan redemptions with respect to up to
10% per year of the account value at the time of
establishment.
<PAGE>
2. DEATH OF OWNER
Shares redeemed on account of the death of the account owner
if the shares are held solely in the deceased individual's
name or in a living trust for the benefit of the deceased
individual.
3. DISABILITY OF OWNER
Shares redeemed on account of the disability of the account
owner if shares are held either solely or jointly in the
disabled individual's name or in a living trust for the
benefit of the disabled individual (in which case a
disability certification form is required to be submitted to
the Shareholder Servicing Agent.).
4. RETIREMENT PLANS. Shares redeemed on account of
distributions made under the following circumstances:
IRAS, 401(A) PLANS, ESP PLANS AND SRO PLANS
Distributions made on or after the IRA owner or the 401(a),
ESP or SRO Plan participant, as applicable, has attained the
age of 70 1/2 years old, but only with respect to the
minimum distribution under applicable Internal Revenue Code
("Code") rules.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLANS ("SAR-SEP
PLANS")
Distributions made on or after the SAR-SEP Plan participant
has attained the age of 70 1/2 years old, but only with
respect to the minimum distribution under applicable Code
rules; and
Death or disability of a SAR-SEP Plan participant.
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS
MOODY'S
AAA: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
BAA: Bonds which are rated Baa are considered as medium-grade obligations,
(I.E., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Some bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
<PAGE>
ABSENCE OF RATING: Where no rating has been assigned or where a rating has
been suspended or withdrawn, it may be for reasons unrelated to the quality of
the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that are
not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa to B. The modifier 1 indicates that the company
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.
S&P
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
<PAGE>
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.
B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB - rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B - rating.
CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.
C: The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC - debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
CI: The rating CI is reserved for income bonds on which no interest is
being paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The "D" rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition or a plus or minus signed to show relative standing within the major
categories.
NR: indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
<PAGE>
FITCH
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated `AAA'. Because bonds rated
in the `AAA' and `AA' categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated `F-1+'.
A: Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
BB: Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC: Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the `AAA' category.
NR Indicates that Fitch does not rate the specific issue.
CONDITIONAL A conditional rating is premised on the successful completion
of a project or the occurrence of a specific event.
SUSPENDED A rating is suspended when Fitch deems the amount of information
available from the issuer to be inadequate for rating purposes.
WITHDRAWN A rating will be withdrawn when an issue matures or is called or
refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper
and timely information.
FITCHALERT Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the likely direction
of such change. These are designed as "Positive," indicating a potential
upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may
be lowered, FitchAlert is relatively short-term, and should be resolved within
12 months.
<PAGE>
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street, Boston, MA 02116
(617) 954-5000
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA 02116
(617) 954-5000
CUSTODIAN AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc.
500 Boylston Street, Boston, MA 02116
Toll free: 800-225-2606
MAILING ADDRESS:
P.O. Box 2281, Boston, MA 02107-9906
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
[LOGO]
MFS(R) Equity Income Fund
MFS(R) Research Growth and Income Fund
MFS(R) Core Growth Fund
MFS(R) Aggressive Growth Fund
MFS(R) Special Opportunities Fund
500 Boylston Street, Boston, MA 02116
<PAGE>
[LOGO]
MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND STATEMENT OF ADDITIONAL INFORMATION
MFS(R) CORE GROWTH FUND JANUARY 1, 1996
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
(Members of the MFS Family of Funds(R))
PAGE
1. Definitions.......................................................2
2. Investment Objectives, Policies and Restrictions..................2
3. Management of the Funds...........................................21
Trustees.................................................21
Officers.................................................21
Investment Adviser.......................................22
Custodian................................................22
Shareholder Servicing Agent..............................23
Distributor..............................................23
4. Portfolio Transactions and Brokerage Commissions..................24
5. Shareholder Services..............................................25
Investment and Withdrawal Programs.......................25
Exchange Privilege.......................................27
Tax-Deferred Retirement Plans............................28
6. Tax Status........................................................28
7. Distribution Plans................................................30
8. Determination of Net Asset Value and Performance..................31
9. Description of Shares, Voting Rights and Liabilities..............33
10. Independent Auditors and Financial Statements.....................33
Appendix A - Trustee Compensation Table...........................34
MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND
MFS(R) CORE GROWTH FUND
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
Each a series of MFS Series Trust I
500 Boylston Street, Boston, MA 02116
(617)954-5000
This Statement of Additional Information sets forth information which may be of
interest to investors but which is not necessarily included in the Funds'
Prospectus dated January 1, 1996. This Statement of Additional Information
should be read in conjunction with the Prospectus, a copy of which may be
obtained without charge by contacting the Shareholder Servicing Agent (see back
cover for address and phone number).
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
<PAGE>
I. DEFINITIONS
Equity MFS(R) Equity Income Fund, a diversified
Income Fund series of the Trust.
Research MFS(R) Research Growth and Income Fund, a
Growth and diversified series of the Trust.
Income Fund
Core Growth MFS(R) Core Growth Fund, a diversified series
Fund of the Trust.
Aggressive MFS(R) Aggressive Growth Fund, a diversified
Growth Fund series of the Trust.
Special MFS(R) Special Opportunities Fund, a
Opportunities non-diversified series of the Trust.
Fund
"Fund(s)" Equity Income Fund, Research Growth and Income Fund, Core Growth
Fund, Aggressive Growth Fund and Special Opportunities Fund.
"Trust" MFS Series Trust I, a Massachusetts business Trust, was organized
on July 22, 1986. The Trust was known as "MFS Lifetime Managed
Sectors Fund" prior to August 1, 1993, and as "Lifetime Managed
Sectors Trust" prior to August 3, 1992.
"MFS" or
the "Adviser" Massachusetts Financial Services Company, a Delaware corporation.
"MFD" MFS Fund Distributors, Inc., a Delaware corporation.
"Prospectus" The Prospectus, dated January 1, 1996, of the Funds, as amended or
supplemented from time to time.
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES AND POLICIES. The investment objective and policies of
each Fund are described in the Prospectus and below. The following discussion of
each Fund's investment techniques and restrictions supplements and should be
read in conjunction with the information set forth in the "Investment Objectives
and Policies," "Investment Techniques" and "Additional Risk Factors" sections of
the Prospectus.
<PAGE>
INVESTMENT TECHNIQUES
LENDING OF PORTFOLIO SECURITIES: Each Fund may seek to increase its income by
lending portfolio securities. Such loans will usually be made only to member
firms of the New York Stock Exchange (the "Exchange") (and subsidiaries thereof)
and member banks of the Federal Reserve System, and would be required to be
secured continuously by collateral in cash, irrevocable letters of credit or
United States ("U.S.") Treasury securities maintained on a current basis at an
amount at least equal to the market value of the securities loaned. A Fund would
have the right to call a loan and obtain the securities loaned at any time on
customary industry settlement notice (which will not usually exceed five
business days). For the duration of a loan, the Fund would continue to receive
the equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive compensation from the investment of the collateral
(if the collateral is in the form of cash). A Fund would not, however, have the
right to vote any securities having voting rights during the existence of the
loan, but the Fund would call the loan in anticipation of an important vote to
be taken among holders of the securities or of the giving or withholding of
their consent on a material matter affecting the investment. As with other
extensions of credit there are risks of delay in recovery or even loss of rights
in the collateral should the borrower of the securities fail financially.
However, the loans would be made only to firms deemed by the Adviser to be of
good standing, and when, in the judgment of the Adviser, the consideration which
can be earned currently from securities loans of this type justifies the
attendant risk. If the Adviser determines to make securities loans, it is
intended that the value of the securities loaned would not exceed 30% of the
value of a Fund's net assets.
REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements with
sellers who are member firms (or a subsidiary thereof) of the Exchange or
members of the Federal Reserve System, recognized primary U.S. Government
securities dealers or institutions which the Adviser has determined to be of
comparable creditworthiness. The securities that a Fund purchases and holds
through its agent are U.S. Government securities, the values of which are equal
to or greater than the repurchase price agreed to be paid by the seller. The
repurchase price may be higher than the purchase price, the difference being
income to the Fund, or the purchase and repurchase prices may be the same, with
interest at a standard rate due to the Fund together with the repurchase price
on repurchase. In either case, the income to the Fund is unrelated to the
interest rate on the Government securities.
The repurchase agreement provides that in the event the seller fails to pay the
price agreed upon on the agreed upon delivery date or upon demand, as the case
may be, a Fund will have the right to liquidate the securities. If at the time
the Fund is contractually entitled to exercise its right to liquidate the
securities, the seller is subject to a proceeding under the bankruptcy laws or
its assets are otherwise subject to a stay order, the Fund's exercise of its
right to liquidate the securities may be delayed and result in certain losses
and costs to the Fund. Each Fund has adopted and follows procedures which are
intended to minimize the risks of repurchase agreements. For example, a Fund
only enters into repurchase agreements after the Adviser has determined that the
seller is creditworthy, and the Adviser monitors that seller's creditworthiness
on an ongoing basis. Moreover, under such agreements, the value of the
securities (which are marked to market every business day) is required to be
greater than the repurchase price, and the Fund has the right to make margin
calls at any time if the value of the securities falls below the agreed upon
margin.
<PAGE>
"WHEN-ISSUED" SECURITIES: Each Fund may purchase securities on a "when-issued"
or on a "forward delivery" basis. When a Fund commits to purchase these
securities on a "when-issued" or "forward delivery" basis, it will set up
procedures consistent with the General Statement of Policy of the Securities and
Exchange Commission (the "SEC") concerning such purchases. Since that policy
currently recommends that an amount of each Fund's assets equal to the amount of
the purchase be held aside or segregated to be used to pay for the commitment, a
Fund will always have cash, short-term money market instruments or high quality
debt securities (if consistent with the Fund's investment policies) sufficient
to cover any commitments or to limit any potential risk. Although no Fund
intends to make such purchases for speculative purposes and intends to adhere to
the provisions of the SEC policy, purchases of securities on such bases may
involve more risk than other types of purchases. For example, a Fund may have to
sell assets which have been set aside in order to meet redemptions. Also, if a
Fund determines it is necessary to sell the "when-issued" or "forward delivery"
securities before delivery, it may incur a loss because of market fluctuations
since the time the commitment to purchase such securities was made.
FOREIGN SECURITIES: Each Fund may invest in dollar-denominated and non
dollar-denominated foreign securities. As discussed in the Prospectus, investing
in foreign securities generally represents a greater degree of risk than
investing in domestic securities due to possible exchange rate fluctuations,
less publicly available information, more volatile markets, less securities
regulation, less favorable tax provisions, war or expropriation. As a result of
its investments in foreign securities, a Fund may receive interest or dividend
payments, or the proceeds of the sale or redemption of such securities, in the
foreign currencies in which such securities are denominated. Under certain
circumstances, such as where the Adviser believes that the applicable exchange
rate is unfavorable at the time the currencies are received or the Adviser
anticipates, for any other reason, that the exchange rate will improve, a Fund
may hold such currencies for an indefinite period of time. While the holding of
currencies will permit the Fund to take advantage of favorable movements in the
applicable exchange rate, such strategy also exposes the Fund to risk of loss if
exchange rates move in a direction adverse to the Fund's position. Such losses
could reduce any profits or increase any losses sustained by the Fund from the
sale or redemption of securities and could reduce the dollar value of interest
or dividend payments received.
<PAGE>
AMERICAN DEPOSITARY RECEIPTS: Each Fund may invest in American Depositary
Receipts ("ADRs") which are certificates issued by a U.S. depository (usually a
bank) and represent a specified quantity of shares of an underlying non-U.S.
stock on deposit with a custodian bank as collateral. ADRs may be sponsored or
unsponsored. A sponsored ADR is issued by a depository which has an exclusive
relationship with the issuer of the underlying security. An unsponsored ADR may
be issued by any number of U.S. depositories. Under the terms of most sponsored
arrangements, depositories agree to distribute notices of shareholder meetings
and voting instructions, and to provide shareholder communications and other
information to the ADR holders at the request of the issuer of the deposited
securities. The depository of an unsponsored ADR, on the other hand, is under no
obligation to distribute shareholder communications received from the issuer of
the deposited securities or to pass through voting rights to ADR holders in
respect of the deposited securities. Each Fund may invest in either type of ADR.
Although the U.S. investor holds a substitute receipt of ownership rather than
direct stock certificates, the use of the depositary receipts in the U.S. can
reduce costs and delays as well as potential currency exchange and other
difficulties. Each Fund may purchase securities in local markets and direct
delivery of these ordinary shares to the local depository of an ADR agent bank
in the foreign country. Simultaneously, the ADR agents create a certificate
which settles at the Fund's custodian in five days. Each Fund may also execute
trades on the U.S. markets using existing ADRs. A foreign issuer of the security
underlying an ADR is generally not subject to the same reporting requirements in
the U.S. as a domestic issuer. Accordingly the information available to a U.S.
investor will be limited to the information the foreign issuer is required to
disclose in its own country and the market value of an ADR may not reflect
undisclosed material information concerning the issuer of the underlying
security. ADRs may also be subject to exchange rate risks if the underlying
foreign securities are denominated in foreign currency.
MORTGAGE "DOLLAR ROLL" TRANSACTIONS: Each of the Equity Income Fund and the
Special Opportunities Fund may enter into mortgage "dollar roll" transactions
pursuant to which it sells mortgage-backed securities for delivery in the future
and simultaneously contracts to repurchase substantially similar securities on a
specified future date. During the roll period, a Fund foregoes principal and
interest paid on the mortgage-backed securities. Each Fund is compensated for
the lost interest by the difference between the current sales price and the
lower price for the future purchase (often referred to as the "drop") as well as
by the interest earned on the cash proceeds of the initial sale. Each Fund may
also be compensated by receipt of a commitment fee. In the event that the party
with whom the Fund contracts to replace substantially similar securities on a
future date fails to deliver such securities, the Fund may not be able to obtain
such securities at the price specified in such contract and thus may not benefit
from the price differential between the current sales price and the repurchase
price.
CORPORATE ASSET-BACKED SECURITIES: Each of the Equity Income Fund and the
Special Opportunities Fund may invest in corporate asset-backed securities.
These securities, issued by trusts and special purpose corporations, are backed
by a pool of assets, such as credit card and automobile loan receivables,
representing the obligations of a number of different parties.
Corporate asset-backed securities present certain risks. For instance, in the
case of credit card receivables, these securities may not have the benefit of
any security interest in the related collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. Most issuers of automobile receivables permit the servicers to
retain possession of the underlying obligations. If the servicer were to sell
these obligations to another party, there is a risk that the purchaser would
acquire an interest superior to that of the holders of the related automobile
receivables. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of the automobile receivables may not have a proper security
interest in all of the obligations backing such receivables. Therefore, there is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities. The underlying
assets (E.G., loans) are also subject to prepayments which shorten the
securities weighted average life and may lower their return.
<PAGE>
Corporate asset-backed securities are backed by a pool of assets representing
the obligations of a number of different parties. To lessen the effect of
failures by obligors on underlying assets to make payments, the securities may
contain elements of credit support which fall into two categories: (i) liquidity
protection and (ii) protection against losses resulting from ultimate default by
an obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion. Protection against losses resulting from ultimate default ensures
payment through insurance policies or letters of credit obtained by the issuer
or sponsor from third parties. Each Fund will not pay any additional or separate
fees for credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security.
COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH SECURITIES: Each
of the Equity Income Fund and the Special Opportunities Fund may invest a
portion of its assets in collateralized mortgage obligations or "CMOs," which
are debt obligations collateralized by mortgage loans or mortgage pass-through
securities (such collateral referred to collectively as "Mortgage Assets").
Unless the context indicates otherwise, all references herein to CMOs include
multiclass pass-through securities.
Interest is paid or accrues on all classes of the CMOs on a monthly, quarterly
or semi-annual basis. The principal of and interest on the Mortgage Assets may
be allocated among the several classes of a CMO in innumerable ways. In a common
structure, payments of principal, including any principal prepayments, on the
Mortgage Assets are applied to the classes of a CMO in the order of their
respective stated maturities or final distribution dates, so that no payment of
principal will be made on any class of CMOs until all other classes having an
earlier stated maturity or final distribution date have been paid in full.
Certain CMOs may be stripped (securities which provide only the principal or
interest factor of the underlying security). See "Stripped Mortgage-Backed
Securities" below for a discussion of the risks of investing in these stripped
securities and of investing in classes consisting of interest payments or
principal payments.
Each of the Equity Income Fund and the Special Opportunities Fund may also
invest in parallel pay CMOs and Planned Amortization Class CMOs ("'PAC Bonds").
Parallel pay CMOs are structured to provide payments of principal on each
payment date to more than one class. These simultaneous payments are taken into
account in calculating the stated maturity date or final distribution date of
each class, which, as with other CMO structures, must be retired by its stated
maturity date or final distribution date but may be retired earlier.
<PAGE>
STRIPPED MORTGAGE-BACKED SECURITIES: Each of the Equity Income Fund and the
Special Opportunities Fund may invest a portion of its assets in stripped
mortgage-backed securities ("SMBS") which are derivative multiclass mortgage
securities issued by agencies or instrumentalities of the U.S. Government, or by
private originators of, or investors in, mortgage loans, including savings and
loan institutions, mortgage banks, commercial banks and investment banks.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions from a pool of mortgage assets. A
common type of SMBS will have one class receiving some of the interest and most
of the principal from the Mortgage Assets, while the other class will receive
most of the interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the interest-only or "IO"
class) while the other class will receive all of the principal (the
principal-only or "PO" class). The yield to maturity on an IO is extremely
sensitive to the rate of principal payments, including prepayments on the
related underlying Mortgage Assets, and a rapid rate of principal payments may
have a material adverse effect on such security's yield to maturity. If the
underlying Mortgage Assets experience greater than anticipated prepayments of
principal, a Fund may fail to fully recoup its initial investment in these
securities. The market value of the class consisting primarily or entirely of
principal payments generally is unusually volatile in response to changes in
interest rates. Because SMBS were only recently introduced, established trading
markets for these securities have not yet developed, although the securities are
traded among institutional investors and investment banking firms.
LOANS AND OTHER DIRECT INDEBTEDNESS: Each of the Equity Income Fund and the
Special Opportunities Fund may purchase loans and other direct indebtedness. In
purchasing a loan, a Fund acquires some or all of the interest of a bank or
other lending institution in a loan to a corporate, governmental or other
borrower. Many such loans are secured, although some may be unsecured. Such
loans may be in default at the time of purchase. Loans that are fully secured
offer a Fund more protection than an unsecured loan in the event of non-payment
of scheduled interest or principal. However, there is no assurance that the
liquidation of collateral from a secured loan would satisfy the corporate
borrower's obligation, or that the collateral can be liquidated.
<PAGE>
These loans are made generally to finance internal growth, mergers,
acquisitions, stock repurchases, leveraged buy-outs and other corporate
activities. Such loans are typically made by a syndicate of lending
institutions, represented by an agent lending institution which has negotiated
and structured the loan and is responsible for collecting interest, principal
and other amounts due on its own behalf and on behalf of the others in the
syndicate, and for enforcing its and their other rights against the borrower.
Alternatively, such loans may be structured as a novation, pursuant to which a
Fund would assume all of the rights of the lending institution in a loan or as
an assignment, pursuant to which the Fund would purchase an assignment of a
portion of a lender's interest in a loan either directly from the lender or
through an intermediary. A Fund may also purchase trade or other claims against
companies, which generally represent money owned by the company to a supplier of
goods or services. These claims may also be purchased at a time when the company
is in default.
Certain of the loans and the other direct indebtedness acquired by a Fund may
involve revolving credit facilities or other standby financing commitments which
obligate the Fund to pay additional cash on a certain date or on demand. These
commitments may have the effect of requiring a Fund to increase its investment
in a company at a time when the Fund might not otherwise decide to do so
(including at a time when the company's financial condition makes it unlikely
that such amounts will be repaid). To the extent that a Fund is committed to
advance additional funds, it will at all times hold and maintain in a segregated
account cash or other high grade debt obligations in an amount sufficient to
meet such commitments.
A Fund's ability to receive payment of principal, interest and other amounts due
in connection with these investments will depend primarily on the financial
condition of the borrower. In selecting the loans and other direct indebtedness
which a Fund will purchase, the Adviser will rely upon its own (and not the
original lending institution's) credit analysis of the borrower. As a Fund may
be required to rely upon another lending institution to collect and pass onto
the Fund amounts payable with respect to the loan and to enforce the Fund's
rights under the loan and other direct indebtedness, an insolvency, bankruptcy
or reorganization of the lending institution may delay or prevent the Fund from
receiving such amounts. In such cases, the Fund will evaluate as well the
creditworthiness of the lending institution and will treat both the borrower and
the lending institution as an "issuer" of the loan for purposes of certain
investment restrictions pertaining to the diversification of the Fund's
portfolio investments. The highly leveraged nature of many such loans and other
direct indebtedness may make such loans and other direct indebtedness especially
vulnerable to adverse changes in economic or market conditions. Investments in
such loans and other direct indebtedness may involve additional risk to a Fund.
<PAGE>
MORTGAGE PASS-THROUGH SECURITIES: Each of the Equity Income Fund and the Special
Opportunities Fund may invest in mortgage pass-through securities. Mortgage
pass-through securities are securities representing interests in "pools" of
mortgage loans. Monthly payments of interest and principal by the individual
borrowers on mortgages are passed through to the holders of the securities (net
of fees paid to the issuer or guarantor of the securities) as the mortgages in
the underlying mortgage pools are paid off. The average lives of mortgage
pass-throughs are variable when issued because their average lives depend on
prepayment rates. The average life of these securities is likely to be
substantially shorter than their stated final maturity as a result of
unscheduled principal prepayment. Prepayments on underlying mortgages result in
a loss of anticipated interest, and all or part of a premium if any has been
paid, and the actual yield (or total return) to the Fund may be different than
the quoted yield on the securities. Mortgage premiums generally increase with
falling interest rates and decrease with rising interest rates. Like other fixed
income securities, when interest rates rise the value of mortgage pass-through
security generally will decline; however, when interest rates are declining, the
value of mortgage pass-through securities with prepayment features may not
increase as much as that of other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities (but
not the market value of the securities themselves) may be guaranteed by the full
faith and credit of the U.S. Government (in the case of securities guaranteed by
the Government National Mortgage Association ("GNMA")); or guaranteed by
agencies or instrumentalities of the U.S. Government (such as the Federal
National Mortgage Association ("FNMA") or the Federal Home Loan Mortgage
Corporation, ("FHLMC") which are supported only by the discretionary authority
of the U.S. Government to purchase the agency's obligations). Mortgage
pass-through securities may also be issued by non-governmental issuers (such as
commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers). Some of these
mortgage pass-through securities may be supported by various forms of insurance
or guarantees.
Interests in pools of mortgage-related securities differ from other forms of
debt securities, which normally provide for periodic payment of interest in
fixed amounts with principal payments at maturity or specified call dates.
Instead, these securities provide a monthly payment which consists of both
interest and principal payments. In effect, these payments are a "pass-through"
of the monthly payments made by the individual borrowers on their mortgage
loans, net of any fees paid to the issuer or guarantor of such securities.
Additional payments are caused by prepayments of principal resulting from the
sale, refinancing or foreclosure of the underlying property, net of fees or
costs which may be incurred. Some mortgage pass-through securities (such as
securities issued by the GNMA) are described as "modified pass-through." These
securities entitle the holder to receive all interests and principal payments
owed on the mortgages in the mortgage pool, net of certain fees, at the
scheduled payment dates regardless of whether the mortgagor actually makes the
payment.
The principal governmental guarantor of mortgage pass-through securities is
GNMA. GNMA is a wholly owned U.S. Government corporation within the Department
of Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the U.S. Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of Federal Housing Administration ("FHA")-insured or Veterans
Administration ("VA")-guaranteed mortgages. These guarantees, however, do not
apply to the market value or yield of mortgage pass-through securities. GNMA
securities are often purchased at a premium over the maturity value of the
underlying mortgages. This premium is not guaranteed and will be lost if
prepayment occurs.
<PAGE>
Government-related guarantors (I.E., whose guarantees are not backed by the full
faith and credit of the U.S. Government) include FNMA and FHLMC. FNMA is a
government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases conventional residential mortgages (I.E., mortgages not insured
or guaranteed by any governmental agency) from a list of approved
seller/servicers which include state and federally chartered savings and loan
associations, mutual savings banks, commercial banks, credit unions and mortgage
bankers. Pass-through securities issued by FNMA are guaranteed as to timely
payment by FNMA of principal and interest.
FHLMC is also a government-sponsored corporation owned by private stockholders.
FHLMC issues Participation Certificates ("PCs") which represent interests in
conventional mortgages (I.E., not federally insured or guaranteed) for FHLMC's
national portfolio. FHLMC guarantees timely payment of interest and ultimate
collection of principal regardless of the status of the underlying mortgage
loans.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of mortgage loans. Such issuers may also be the originators
and/or servicers of the underlying mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments in the former pools. However, timely
payment of interest and principal of mortgage loans in these pools may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit. The insurance and
guarantees are issued by governmental entities, private insurers and the
mortgage poolers. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee
arrangements. Each Fund may also buy mortgage-related securities without
insurance or guarantees.
ZERO COUPON BONDS, DEFERRED INTEREST BONDS AND PIK BONDS: The Equity Income Fund
and the Special Opportunities Fund may invest in zero coupon bonds, deferred
interest bonds and bonds on which the interest is payable in kind ("PIK bonds").
Zero coupon and deferred interest bonds are debt obligations which are issued at
a significant discount from face value. The discount approximates the total
amount of interest the bonds will accrue and compound over the period until
maturity or the first interest payment date at a rate of interest reflecting the
market rate of the security at the time of issuance. While zero coupon bonds do
not require the periodic payment of interest, deferred interest bonds provide
for a period of delay before the regular payment of interest begins. PIK bonds
are debt obligations which provide that the issuer may, at its option, pay
interest on such bonds in cash or in the form of additional debt obligations.
Such investments benefit the issuer by mitigating its need for cash to meet debt
service, but also require a higher rate of return to attract investors who are
willing to defer receipt of such cash. Such investments may experience greater
volatility in market value than debt obligations which make regular payments of
interest. Each Fund will accrue income on such investments for tax and
accounting purposes, which is distributable to shareholders and which, because
no cash is received at the time of accrual, may require the liquidation of other
portfolio securities to satisfy each Fund's distribution obligations
<PAGE>
SHORT SALES: The Special Opportunities Fund may seek to hedge investments or
realize additional gains through short sales. The Fund may make short sales,
which are transactions in which the Fund sells a security it does not own, in
anticipation of a decline in the market value of that security. To complete such
a transaction, the Fund must borrow the security to make delivery to the buyer.
The Fund then is obligated to replace the security borrowed by purchasing it at
the market price at the time of replacement. The price at such time may be more
or less than the price at which the security was sold by the Fund. Until the
security is replaced, the Fund is required to repay the lender any dividends or
interest which accrue during the period of the loan. To borrow the security, the
Fund also may be required to pay a premium, which would increase the cost of the
security sold. The net proceeds of the short sale will be retained by the
broker, to the extent necessary to meet margin requirements, until the short
position is closed out. The Fund also will incur transaction costs in effecting
short sales.
The Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of the premium,
dividends or interest the Fund may be required to pay in connection with a short
sale.
No securities will be sold short if, after effect is given to any such short
sale, the total market value of all securities sold short would exceed 25% of
the value of the Fund's net assets. The Fund similarly will limit its short
sales of the securities of any single issuer if the market value of the
securities that have been sold short by the Fund would exceed two percent (2%)
of the value of the Fund's net assets or if such securities would constitute
more than two percent (2%) of any class of the issuer's securities.
<PAGE>
Whenever the Fund engages in short sales, its custodian segregates an amount of
cash or U.S. Government securities equal to the difference between (a) the
market value of the securities sold short at the time they were sold short and
(b) any cash or U.S. Government securities required to be deposited with the
broker in connection with the short sale (not including the proceeds from the
short sale). The segregated assets are marked to market daily, provided that at
no time will the amount deposited by the Fund's custodian plus the amount
deposited with the broker be less than the market value of the securities at the
time they were sold short.
In addition, the Fund also may make short sales "against the box," I.E., when a
security identical to one owned by the Fund is borrowed and sold short. If the
Fund enters into a short sale against the box, it is required to segregate
securities equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and is required to
hold such securities while the short sale is outstanding. The Fund will incur
transaction costs, including interest, in connection with opening, maintaining,
and closing short sales against the box.
INDEXED SECURITIES: Each Fund may purchase securities whose prices are indexed
to the prices of other securities, securities indices, currencies, precious
metals or other commodities, or other financial indicators. Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity or coupon rate is determined by reference to a specific instrument or
statistic. Gold-indexed securities, for example, typically provide for a
maturity value that depends on the price of gold, resulting in a security whose
price tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values of
one or more specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed securities
may be positively or negatively indexed; that is, their maturity value may
increase when the specified currency value increases, resulting in a security
that performs similarly to a foreign-denominated instrument, or their maturity
value may decline when foreign currencies increase, resulting in a security
whose price characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values of a
number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
government agencies.
<PAGE>
SWAPS AND RELATED TRANSACTIONS: Each Fund may enter into interest rate swaps,
currency swaps and other types of available swap agreements, such as caps,
collars and floors.
Swap agreements may be individually negotiated and structured to include
exposure to a variety of different types of investments or market factors.
Depending on their structure, swap agreements may increase or decrease a Fund's
exposure to long or short-term interest rates (in the U.S. or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors such as securities prices or inflation rates. Swap agreements can take
many different forms and are known by a variety of names. A Fund is not limited
to any particular form or variety of swap agreement if MFS determines it is
consistent with the Fund's investment objective and policies.
Each Fund will maintain cash or appropriate liquid assets with its custodian to
cover its current obligations under swap transactions. If a Fund enters into a
swap agreement on a net basis (I.E., the two payment streams are netted out,
with the Fund receiving or paying, as the case may be, only the net amount of
the two payments), the Fund will maintain cash or liquid assets with its
custodian with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If a Fund enters into a swap agreement
on other than a net basis, it will maintain cash or liquid assets with a value
equal to the full amount of the Fund's accrued obligations under the agreement.
The most significant factor in the performance of swaps, caps, floors and
collars is the change in the specific interest rate, currency or other factor
that determines the amount of payments to be made under the arrangement. If the
Adviser is incorrect in its forecasts of such factors, the investment
performance of a Fund would be less than what it would have been if these
investment techniques had not been used. If a swap agreement calls for payments
by a Fund, the Fund must be prepared to make such payments when due. In
addition, if the counterparty's creditworthiness declined, the value of the swap
agreement would be likely to decline, potentially resulting in losses.
If the counterparty defaults, a Fund's risk of loss consists of the net amount
of payments that the Fund is contractually entitled to receive. Each Fund
anticipates that it will be able to eliminate or reduce its exposure under these
arrangements by assignment or other disposition or by entering into an
offsetting agreement with the same or another counterparty.
OPTIONS ON SECURITIES: Each Fund may write (sell) covered put and call options,
and purchase put and call options, on securities. Call and put options written
by a Fund may be covered in the manner set forth below.
A call option written by a Fund is "covered" if the Fund owns the security
underlying the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if a Fund holds a call on the same security and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by
the Fund in cash, short-term money market instruments or high quality debt
securities in a segregated account with its custodian. A put option written by a
Fund is "covered" if the Fund maintains cash, short-term money market
instruments or high-quality debt securities with a value equal to the exercise
price in a segregated account with its custodian, or else holds a put on the
same security and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price of
the put written or where the exercise price of the put held is less than the
exercise price of the put written if the difference is maintained by the Fund in
cash, short-term money market instruments or high-quality debt securities in a
segregated account with its custodian. Put and call options written by a Fund
may also be covered in such other manner as may be in accordance with the
requirements of the exchange on which, or the counter party with which, the
option is traded, and applicable laws and regulations. If the writer's
obligation is not so covered, it is subject to the risk of the full change in
value of the underlying security from the time the option is written until
exercise.
<PAGE>
Effecting a closing transaction in the case of a written call option will permit
a Fund to write another call option on the underlying security with either a
different exercise price or expiration date or both, or in the case of a written
put option will permit the Fund to write another put option to the extent that
the exercise price thereof is secured by deposited cash, short-term money market
instruments or high-quality debt securities. Such transactions permit a Fund to
generate additional premium income, which will partially offset declines in the
value of portfolio securities or increases in the cost of securities to be
acquired. Also, effecting a closing transaction will permit the cash or proceeds
from the concurrent sale of any securities subject to the option to be used for
other investments of a Fund, provided that another option on such security is
not written. If a Fund desires to sell a particular security from its portfolio
on which it has written a call option, it will effect a closing transaction in
connection with the option prior to or concurrent with the sale of the security.
A Fund will realize a profit from a closing transaction if the premium paid in
connection with the closing of an option written by the Fund is less than the
premium received from writing the option, or if the premium received in
connection with the closing of an option purchased by a Fund is more than the
premium paid for the original purchase. Conversely, a Fund will suffer a loss if
the premium paid or received in connection with a closing transaction is more or
less, respectively, than the premium received or paid in establishing the option
position. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option previously written by a Fund is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
The Fund may write options in connection with buy-and-write transactions; that
is, a Fund may purchase a security and then write a call option against that
security. The exercise price of the call option the Fund determines to write
will depend upon the expected price movement of the underlying security. The
exercise price of a call option may be below ("in-the-money"), equal to
("at-the-money") or above ("out-of-the-money") the current value of the
underlying security at the time the option is written. Buy-and-write
transactions using in-the-money call options may be used when it is expected
that the price of the underlying security will decline moderately during the
option period. Buy-and-write transactions using out-of-the-money call options
may be used when it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone. If the call options are exercised in such
transactions, a Fund's maximum gain will be the premium received by it for
writing the option, adjusted upwards or downwards by the difference between the
Fund's purchase price of the security and the exercise price, less related
transaction costs. If the options are not exercised and the price of the
underlying security declines, the amount of such decline will be offset in part,
or entirely, by the premium received.
<PAGE>
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and a Fund's gain will be limited to the premium
received, less related transaction costs. If the market price of the underlying
security declines or otherwise is below the exercise price, a Fund may elect to
close the position or retain the option until it is exercised, at which time the
Fund will be required to take delivery of the security at the exercise price; a
Fund's return will be the premium received from the put option minus the amount
by which the market price of the security is below the exercise price, which
could result in a loss. Out-of-the-money, at-the-money and in-the-money put
options may be used by a Fund in the same market environments that call options
are used in equivalent buy-and-write transactions.
Each Fund may also write combinations of put and call options on the same
security, known as "straddles," with the same exercise price and expiration
date. By writing a straddle, a Fund undertakes a simultaneous obligation to sell
and purchase the same security in the event that one of the options is
exercised. If the price of the security subsequently rises sufficiently above
the exercise price to cover the amount of the premium and transaction costs, the
call will likely be exercised and the Fund will be required to sell the
underlying security at a below market price. This loss may be offset, however,
in whole or part, by the premiums received on the writing of the two options.
Conversely, if the price of the security declines by a sufficient amount, the
put will likely be exercised. The writing of straddles will likely be effective,
therefore, only where the price of the security remains stable and neither the
call nor the put is exercised. In those instances where one of the options is
exercised, the loss on the purchase or sale of the underlying security may
exceed the amount of the premiums received.
<PAGE>
By writing a call option, a Fund limits its opportunity to profit from any
increase in the market value of the underlying security above the exercise price
of the option. By writing a put option, a Fund assumes the risk that it may be
required to purchase the underlying security for an exercise price above its
then current market value, resulting in a capital loss unless the security
subsequently appreciates in value. The writing of options on securities will not
be undertaken by a Fund solely for hedging purposes, and could involve certain
risks which are not present in the case of hedging transactions. Moreover, even
where options are written for hedging purposes, such transactions constitute
only a partial hedge against declines in the value of portfolio securities or
against increases in the value of securities to be acquired, up to the amount of
the premium.
Each Fund may also purchase options for hedging purposes or to increase its
return. Put options may be purchased to hedge against a decline in the value of
portfolio securities. If such decline occurs, the put options will permit a Fund
to sell the securities at the exercise price, or to close out the options at a
profit. By using put options in this way, a Fund will reduce any profit it might
otherwise have realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs.
Each Fund may also purchase call options to hedge against an increase in the
price of securities that the Fund anticipates purchasing in the future. If such
increase occurs, the call option will permit the Fund to purchase the securities
at the exercise price, or to close out the options at a profit. The premium paid
for the call option plus any transaction costs will reduce the benefit, if any,
realized by a Fund upon exercise of the option, and, unless the price of the
underlying security rises sufficiently, the option may expire worthless to the
Fund.
<PAGE>
RESET OPTIONS: In certain instances, each Fund may enter into options on U.S.
Treasury securities which provide for periodic adjustment of the strike price
and may also provide for the periodic adjustment of the premium during the term
of each such option. Like other types of options, these transactions, which may
be referred to as "reset" options or "adjustable strike options," grant the
purchaser the right to purchase (in the case of a "call") or sell (in the case
of a "put"), a specified type of U.S. Treasury security at any time up to a
stated expiration date (or, in certain instances, on such date). In contrast to
other types of options, however, the price at which the underlying security may
be purchased or sold under a "reset" option is determined at various intervals
during the term of the option, and such price fluctuates from interval to
interval based on changes in the market value of the underlying security. As a
result, the strike price of a "reset" option, at the time of exercise, may be
less advantageous than if the strike price had been fixed at the initiation of
the option. In addition, the premium paid for the purchase of the option may be
determined at the termination, rather than the initiation, of the option. If the
premium is paid at termination, the Fund assumes the risk that (i) the premium
may be less than the premium which would otherwise have been received at the
initiation of the option because of such factors as the volatility in yield of
the underlying Treasury security over the term of the option and adjustments
made to the strike price of the option, and (ii) the option purchaser may
default on its obligation to pay the premium at the termination of the option.
OPTIONS ON STOCK INDICES: Each Fund may write (sell) covered call and put
options and purchase call and put options on stock indices. In contrast to an
option on a security, an option on a stock index provides the holder with the
right but not the obligation to make or receive a cash settlement upon exercise
of the option, rather than the right to purchase or sell a security. The amount
of this settlement is equal to (i) the amount, if any, by which the fixed
exercise price of the option exceeds (in the case of a call) or is below (in the
case of a put) the closing value of the underlying index on the date of
exercise, multiplied by (ii) a fixed "index multiplier."
Each Fund may cover call options on stock indices by owning securities whose
price changes, in the opinion of the Adviser, are expected to be similar to
those of the underlying index, or by having an absolute and immediate right to
acquire such securities without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian) upon
conversion or exchange of other securities in its portfolio. Where a Fund covers
a call option on a stock index through ownership of securities, such securities
may not match the composition of the index and, in that event, the Fund will not
be fully covered and could be subject to risk of loss in the event of adverse
changes in the value of the index. Each Fund may also cover call options on
stock indices by holding a call on the same index and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by
the Fund in cash, short-term money market instruments or high-quality debt
securities in a segregated account with its custodian. Each Fund may cover put
options on stock indices by maintaining cash, short-term money market
instruments or high-quality debt securities with a value equal to the exercise
price in a segregated account with its custodian, or by holding a put on the
same stock index and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price of
the put written or where the exercise price of the put held is less than the
exercise price of the put written if the difference is maintained by the Fund in
cash, short-term money market instruments or high-quality debt securities in a
segregated account with its custodian. Put and call options on stock indices may
also be covered in such other manner as may be in accordance with the rules of
the exchange on which, or the counterparty with which, the option is traded and
applicable laws and regulations.
Each Fund will receive a premium from writing a put or call option, which
increases the Fund's gross income in the event the option expires unexercised or
is closed out at a profit. If the value of an index on which a Fund has written
a call option falls or remains the same, the Fund will realize a profit in the
form of the premium received (less transaction costs) that could offset all or a
portion of any decline in the value of the securities it owns. If the value of
the index rises, however, the Fund will realize a loss in its call option
position, which will reduce the benefit of any unrealized appreciation in the
Fund's stock investments. By writing a put option, a Fund assumes the risk of a
decline in the index. To the extent that the price changes of securities owned
by a Fund correlate with changes in the value of the index, writing covered put
options on indices will increase a Fund's losses in the event of a market
decline, although such losses will be offset in part by the premium received for
writing the option.
<PAGE>
Each Fund may also purchase put options on stock indices to hedge its
investments against a decline in value. By purchasing a put option on a stock
index, a Fund will seek to offset a decline in the value of securities it owns
through appreciation of the put option. If the value of the Fund's investments
does not decline as anticipated, or if the value of the option does not
increase, the Fund's loss will be limited to the premium paid for the option
plus related transaction costs. The success of this strategy will largely depend
on the accuracy of the correlation between the changes in value of the index and
the changes in value of the Fund's security holdings.
The purchase of call options on stock indices may be used by a Fund to attempt
to reduce the risk of missing a broad market advance, or an advance in an
industry or market segment, at a time when the Fund holds uninvested cash or
short-term debt securities awaiting investment. When purchasing call options for
this purpose, a Fund will also bear the risk of losing all or a portion of the
premium paid if the value of the index does not rise. The purchase of call
options on stock indices when a Fund is substantially fully invested is a form
of leverage, up to the amount of the premium and related transaction costs, and
involves risks of loss and of increased volatility similar to those involved in
purchasing calls on securities the Fund owns.
The index underlying a stock index option may be a "broad-based" index, such as
the Standard & Poor's 500 Index or the New York Stock Exchange Composite Index,
the changes in value of which ordinarily will reflect movements in the stock
market in general. In contrast, certain options may be based on narrower market
indices, such as the Standard & Poor's 100 Index, or on indices of securities of
particular industry groups, such as those of oil and gas or technology
companies. A stock index assigns relative values to the stocks included in the
index and the index fluctuates with changes in the market values of the stocks
so included. The composition of the index is changed periodically.
"YIELD CURVE" OPTIONS: Each Fund may also enter into options on the "spread," or
yield differential, between two fixed income securities, in transactions
referred to as "yield curve" options. In contrast to other types of options, a
yield curve option is based on the difference between the yields of designated
securities, rather than the prices of the individual securities, and is settled
through cash payments. Accordingly, a yield curve option is profitable to the
holder if this differential widens (in the case of a call) or narrows (in the
case of a put), regardless of whether the yields of the underlying securities
increase or decrease.
<PAGE>
Yield curve options may be used for the same purposes as other options on
securities. Specially, a Fund may purchase or write such options for hedging
purposes. For example, a Fund may purchase a call option on the yield spread
between two securities, if it owns one of the securities and anticipates
purchasing the other security and wants to hedge against an adverse change in
the yield spread between the two securities. A Fund may also purchase or write
yield curve options for other than hedging purposes (I.E., in an effort to
increase its current income) if, in the judgment of the Adviser, the Fund will
be able to profit from movements in the spread between the yields of the
underlying securities. The trading of yield curve options is subject to all of
the risks associated with the trading of other types of options. In addition,
however, such options present risk of loss even if the yield of one of the
underlying securities remains constant, if the spread moves in a direction or to
an extent which was not anticipated. Yield curve options written by a Fund will
be "covered". A call (or put) option is covered if the Fund holds another call
(or put) option on the spread between the same two securities and maintains in a
segregated account with its custodian cash or cash equivalents sufficient to
cover the Fund's net liability under the two options. Therefore, a Fund's
liability for such a covered option is generally limited to the difference
between the amount of the Fund's liability under the option written by the Fund
less the value of the option held by the Fund. Yield curve options may also be
covered in such other manner as may be in accordance with the requirements of
the counterparty with which the option is traded and applicable laws and
regulations. Yield curve options are traded over-the-counter and because they
have been only recently introduced, established trading markets for these
securities have not yet developed.
The staff of the SEC has taken the position that purchased over-the-counter
options and assets used to cover written over-the-counter options are illiquid
and, therefore, together with other illiquid securities, cannot exceed a certain
percentage of the Fund's assets (the "SEC illiquidity ceiling"). Although the
Adviser disagrees with this position, the Adviser intends to limit each Fund's
writing of over-the-counter options in accordance with the following procedure.
Except as provided below, the Fund intends to write over-the-counter options
only with primary U.S. Government securities dealers recognized by the Federal
Reserve Bank of New York. Also, the contracts which the Fund has in place with
such primary dealers will provide that the Fund has the absolute right to
repurchase an option it writes at any time at a price which represents the fair
market value, as determined in good faith through negotiation between the
parties, but which in no event will exceed a price determined pursuant to a
formula in the contract. Although the specific formula may vary between
contracts with different primary dealers, the formula will generally be based on
a multiple of the premium received by a Fund for writing the option, plus the
amount, if any, of the option's intrinsic value (I.E., the amount that the
option is in-the-money). The formula may also include a factor to account for
the difference between the price of the security and the strike price of the
option if the option is written out-of-money. Each Fund will treat all or a part
of the formula price as illiquid for purposes of the SEC illiquidity ceiling.
Each Fund may also write over-the-counter options with non-primary dealers,
including foreign dealers, and will treat the assets used to cover these options
as illiquid for purposes of such SEC illiquidity ceiling.
<PAGE>
FUTURES CONTRACTS: Each Fund may purchase and sell futures contracts ("Futures
Contracts") on stock indices, and may purchase and sell Futures Contracts on
foreign currencies or indices of foreign currencies. The Equity Income Fund and
the Special Opportunities Fund may purchase and sell Futures Contracts on
foreign or domestic fixed income securities or indices of such securities
including municipal bond indices and any other indices of foreign or domestic
fixed income securities that may become available for trading. Such investment
strategies will be used for hedging purposes and for non-hedging purposes,
subject to applicable law.
A Futures Contract is a bilateral agreement providing for the purchase and sale
of a specified type and amount of a financial instrument or foreign currency, or
for the making and acceptance of a cash settlement, at a stated time in the
future for a fixed price. By its terms, a Futures Contract provides for a
specified settlement date on which, in the case of the majority of interest rate
and foreign currency futures contracts, the fixed income securities or currency
are delivered by the seller and paid for by the purchaser, or on which, in the
case of stock index futures contracts and certain interest rate and foreign
currency futures contracts, the difference between the price at which the
contract was entered into and the contract's closing value is settled between
the purchaser and seller in cash. Futures Contracts differ from options in that
they are bilateral agreements, with both the purchaser and the seller equally
obligated to complete the transaction. Futures Contracts call for settlement
only on the expiration date and cannot be "exercised" at any other time during
their term.
The purchase or sale of a Futures Contract differs from the purchase or sale of
a security or the purchase of an option in that no purchase price is paid or
received. Instead, an amount of cash or cash equivalents, which varies but may
be as low as 5% or less of the value of the contract, must be deposited with the
broker as "initial margin." Subsequent payments to and from the broker, referred
to as "variation margin," are made on a daily basis as the value of the index or
instrument underlying the Futures Contract fluctuates, making positions in the
Futures Contract more or less valuable - a process known as "mark-to-market."
Purchases or sales of stock index futures contracts are used to attempt to
protect a Fund's current or intended stock investments from broad fluctuations
in stock prices. For example, a Fund may sell stock index futures contracts in
anticipation of or during a market decline to attempt to offset the decrease in
market value of the Fund's securities portfolio that might otherwise result. If
such decline occurs, the loss in value of portfolio securities may be offset, in
whole or part, by gains on the futures position. When a Fund is not fully
invested in the securities market and anticipates a significant market advance,
it may purchase stock index futures contracts in order to gain rapid market
exposure that may, in part or entirely, offset increases in the cost of
securities that the Fund intends to purchase. As such purchases are made, the
corresponding positions in stock index futures contracts will be closed out. In
a substantial majority of these transactions, the Fund will purchase such
securities upon termination of the futures position, but under unusual market
conditions, a long futures position may be terminated without a related purchase
of securities.
<PAGE>
Interest rate Futures Contracts may be purchased or sold to attempt to protect
against the effects of interest rate changes on a Fund's current or intended
investments in fixed income securities. For example, if a Fund owned long-term
bonds and interest rates were expected to increase, that Fund might enter into
interest rate futures contracts for the sale of debt securities. Such a sale
would have much the same effect as selling some of the long-term bonds in that
Fund's portfolio. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of that Fund's interest
rate futures contracts would increase at approximately the same rate, thereby
keeping the net asset value of that Fund from declining as much as it otherwise
would have.
Similarly, if interest rates were expected to decline, interest rate futures
contracts may be purchased to hedge in anticipation of subsequent purchases of
long-term bonds at higher prices. Since the fluctuations in the value of the
interest rate futures contracts should be similar to that of long-term bonds, a
Fund could protect itself against the effects of the anticipated rise in the
value of long-term bonds without actually buying them until the necessary cash
became available or the market had stabilized. At that time, the interest rate
futures contracts could be liquidated and that Fund's cash reserves could then
be used to buy long-term bonds on the cash market. A Fund could accomplish
similar results by selling bonds with long maturities and investing in bonds
with short maturities when interest rates are expected to increase. However,
since the futures market is more liquid than the cash market, the use of
interest rate futures contracts as a hedging technique allows a Fund to hedge
its interest rate risk without having to sell its portfolio securities.
As noted in the Prospectus, a Fund may purchase and sell foreign currency
futures contracts for hedging purposes, to attempt to protect its current or
intended investments from fluctuations in currency exchange rates. Such
fluctuations could reduce the dollar value of portfolio securities denominated
in foreign currencies, or increase the cost of foreign-denominated securities to
be acquired, even if the value of such securities in the currencies in which
they are denominated remains constant. A Fund may sell futures contracts on a
foreign currency, for example, where it holds securities denominated in such
currency and it anticipates a decline in the value of such currency relative to
the dollar. In the event such decline occurs, the resulting adverse effect on
the value of foreign-denominated securities may be offset, in whole or in part,
by gains on the futures contracts.
Conversely, a Fund could protect against a rise in the dollar cost of
foreign-denominated securities to be acquired by purchasing futures contracts on
the relevant currency, which could offset, in whole or in part, the increased
cost of such securities resulting from a rise in the dollar value of the
underlying currencies. Where a Fund purchases futures contracts under such
circumstances, however, and the prices of securities to be acquired instead
decline, the Fund will sustain losses on its futures position which could reduce
or eliminate the benefits of the reduced cost of portfolio securities to be
acquired.
<PAGE>
FORWARD CONTRACTS: Each Fund may enter into contracts for the purchase or sale
of a specific currency at a future date at a price set at the time the contract
is entered into (a "Forward Contract"), for hedging purposes as well as for
non-hedging purposes. Each Fund may also enter into Forward Contracts for
"cross-hedging" purposes as noted in the Prospectus. The Fund will enter into
Forward Contracts for the purpose of protecting its current or intended
investments from fluctuations in currency exchange rates.
A Forward Contract to sell a currency may be entered into where a Fund seeks to
protect against an anticipated increase in the exchange rate for a specific
currency which could reduce the dollar value of portfolio securities denominated
in such currency. Conversely, the Fund may enter into a Forward Contract to
purchase a given currency to protect against a projected increase in the dollar
value of securities denominated in such currency which the Fund intends to
acquire.
If a hedging transaction in Forward Contracts is successful, the decline in the
value of portfolio securities or the increase in the cost of securities to be
acquired may be offset, at least in part, by profits on the Forward Contract.
Nevertheless, by entering into such Forward Contracts, the Fund may be required
to forego all or a portion of the benefits which otherwise could have been
obtained from favorable movements in exchange rates. Each Fund does not
presently intend to hold Forward Contracts entered into until maturity, at which
time it would be required to deliver or accept delivery of the underlying
currency, but will seek in most instances to close out positions in such
Contracts by entering into offsetting transactions, which will serve to fix the
Fund's profit or loss based upon the value of the Contracts at the time the
offsetting transaction is executed.
Each Fund has established procedures consistent with statements by the SEC and
its staff regarding the use of Forward Contracts by registered investment
companies, which require the use of segregated assets or "cover" in connection
with the purchase and sale of such Contracts. In those instances in which the
Fund satisfies this requirement through segregation of assets, it will maintain,
in a segregated account, cash, cash equivalents or high grade debt securities,
which will be marked to market on a daily basis, in an amount equal to the value
of its commitments under Forward Contracts.
OPTIONS ON FUTURES CONTRACTS: Each Fund also may purchase and write options to
buy or sell those Futures Contracts in which it may invest ("Options on Futures
Contracts") as described above under "Futures Contracts." Such investment
strategies will be used for hedging purposes and for non-hedging purposes,
subject to applicable law.
<PAGE>
An Option on a Futures Contract provides the holder with the right to enter into
a "long" position in the underlying Futures Contract, in the case of a call
option, or a "short" position in the underlying Futures Contract, in the case of
a put option, at a fixed exercise price up to a stated expiration date or, in
the case of certain options, on such date. Upon exercise of the option by the
holder, the contract market clearinghouse establishes a corresponding short
position for the writer of the option, in the case of a call option, or a
corresponding long position in the case of a put option. In the event that an
option is exercised, the parties will be subject to all the risks associated
with the trading of Futures Contracts, such as payment of initial and variation
margin deposits. In addition, the writer of an Option on a Futures Contract,
unlike the holder, is subject to initial and variation margin requirements on
the option position.
A position in an Option on a Futures Contract may be terminated by the purchaser
or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same Fund (I.E., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
Options on Futures Contracts that are written or purchased by a Fund on U.S.
exchanges are traded on the same contract market as the underlying Futures
Contract, and, like Futures Contracts, are subject to regulation by the
Commodities Futures Trading Commission (the "CFTC") and the performance
guarantee of the exchange clearinghouse. In addition, Options on Futures
Contracts may be traded on foreign exchanges. A Fund may cover the writing of
call Options on Futures Contracts (a) through purchases of the underlying
Futures Contract, (b) through ownership of the instrument, or instruments
included in the index, underlying the Futures Contract, or (c) through the
holding of a call on the same Futures Contract and in the same principal amount
as the call written where the exercise price of the call held (i) is equal to or
less than the exercise price of the call written or (ii) is greater than the
exercise price of the call written if the difference is maintained by the Fund
in cash or securities in a segregated account with its custodian. A Fund may
cover the writing of put Options on Futures Contracts (a) through sales of the
underlying Futures Contract, (b) through segregation of cash, short-term money
market instruments or high quality debt securities in an amount equal to the
value of the security or index underlying the Futures Contract, or (c) through
the holding of a put on the same Futures Contract and in the same principal
amount as the put written where the exercise price of the put held is equal to
or greater than the exercise price of the put written or where the exercise
price of the put held is less than the exercise price of the put written if the
difference is maintained by the Fund in cash, short-term money market
instruments or high quality debt securities in a segregated account with its
custodian. Put and call Options on Futures Contracts may also be covered in such
other manner as may be in accordance with the rules of the exchange on which the
option is traded and applicable laws and regulations. Upon the exercise of a
call Option on a Futures Contract written by a Fund, the Fund will be required
to sell the underlying Futures Contract which, if the Fund has covered its
obligation through the purchase of such Contract, will serve to liquidate its
futures position. Similarly, where a put Option on a Futures Contract written by
a Fund is exercised, the Fund will be required to purchase the underlying
Futures Contract which, if the Fund has covered its obligation through the sale
of such Contract, will close out its futures position.
<PAGE>
The writing of a call option on a Futures Contract for hedging purposes
constitutes a partial hedge against declining prices of the securities or other
instruments required to be delivered under the terms of the Futures Contract. If
the futures price at expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium, less related transaction
costs, which provides a partial hedge against any decline that may have occurred
in the Fund's portfolio holdings. The writing of a put option on a Futures
Contract constitutes a partial hedge against increasing prices of the securities
or other instruments required to be delivered under the terms of the Futures
Contract. If the futures price at expiration of the option is higher than the
exercise price, a Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities which
the Fund intends to purchase. If a put or call option a Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it receives. Depending on the degree of correlation between changes in
the value of its portfolio securities and the changes in the value of its
futures positions, a Fund's losses from existing Options on Futures Contracts
may to some extent be reduced or increased by changes in the value of portfolio
securities.
Each Fund may purchase Options on Futures Contracts for hedging purposes instead
of purchasing or selling the underlying Futures Contracts. For example, where a
decrease in the value of portfolio securities is anticipated as a result of a
projected market-wide decline or changes in interest or exchange rates, a Fund
could, in lieu of selling Futures Contracts, purchase put options thereon. In
the event that such decrease occurs, it may be offset, in whole or in part, by a
profit on the option. Conversely, where it is projected that the value of
securities to be acquired by a Fund will increase prior to acquisition, due to a
market advance or changes in interest or exchange rates, a Fund could purchase
call Options on Futures Contracts, rather than purchasing the underlying Futures
Contracts. Forward Contracts on Foreign Currency: Each Fund may enter into
forward foreign currency exchange contracts for hedging and non-hedging purposes
(collectively, "Forward Contracts"). Forward Contracts may be used for hedging
to attempt to minimize the risk to the Fund from adverse changes in the
relationship between the U.S. dollar and foreign currencies. Each Fund intends
to enter into Forward Contracts for hedging purposes similar to those described
above in connection with foreign currency futures contracts. In particular, a
Forward Contract to sell a currency may be entered into in lieu of the sale of a
foreign currency futures contract where a Fund seeks to protect against an
anticipated increase in the exchange rate for a specific currency which could
reduce the dollar value of portfolio securities denominated in such currency.
Conversely, a Fund may enter into a Forward Contract to purchase a given
currency to protect against a projected increase in the dollar value of
securities denominated in such currency which the Fund intends to acquire. Each
Fund may also enter into a Forward Contract in order to assure itself of a
predetermined exchange rate in connection with a fixed income security
denominated in a foreign currency. In addition, the Fund may enter into Forward
Contracts for "cross hedging" purposes (E.G., the purchase or sale of a Forward
Contract on one type of currency, as a hedge against adverse fluctuations in the
value of a second type of currency). If a hedging transaction in Forward
Contracts is successful, the decline in the value of portfolio securities or
other assets or the increase in the cost of securities or other assets to be
acquired may be offset, at least in part, by profits on the Forward Contract.
<PAGE>
Nevertheless, by entering into such Forward Contracts, a Fund may be required to
forego all or a portion of the benefits which otherwise could have been obtained
from favorable movements in exchange rates or natural resources prices. Each
Fund does not intend, in most instances, to hold Forward Contracts entered into
until maturity, at which time they would be required to deliver or accept
delivery of the underlying currency, but will usually seek to close out
positions in such contracts by entering into offsetting transactions, which will
serve to fix a Fund's profit or loss based upon the value of the contracts at
the time the offsetting transaction is executed. Each Fund may also enter into
transactions in Forward Contracts for other than hedging purposes, which
presents greater profit potential but also involves increased risk. For example,
a Fund may purchase a given foreign currency through a Forward Contract if, in
the judgment of the Adviser, the value of such currency is expected to rise
relative to the U.S. dollar. Conversely, the Fund may sell the currency through
a Forward Contract if the Adviser believes that its value will decline relative
to the dollar.
Each Fund entering into such transactions will profit if the anticipated
movements in foreign currency exchange rates occurs, which will increase its
gross income. Where exchange rates do not move in the direction or to the extent
anticipated, however, the Fund may sustain losses, which will reduce its gross
income. Such transactions, therefore, could be considered speculative and could
involve significant risk of loss.
Each Fund has established procedures consistent with statements by the SEC and
its staff regarding the use of Forward Contracts by registered investment
companies, which require the use of segregated assets or "cover " in connection
with the purchase and sale of such contracts. In those instances in which the
Fund satisfies this requirement through segregation of assets, it will maintain,
in a segregated account, cash, cash equivalents or high-quality debt securities,
which will be marked to market on a daily basis, in an amount equal to the value
of its commitments under Forward Contracts. While these contracts are not
presently regulated by the CFTC, the CFTC may in the future assert authority to
regulate Forward Contracts. In such event, the Fund's ability to utilize Forward
Contracts in the manner set forth above may be restricted.
<PAGE>
OPTIONS ON FOREIGN CURRENCIES: Each Fund may purchase and write options on
foreign currencies for hedging purposes in a manner similar to that in which
futures contracts on foreign currencies, or Forward Contracts, will be utilized.
For example, a decline in the dollar value of a foreign currency in which
portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
a Fund may purchase put options on the foreign currency. If the value of the
currency does decline, the Fund will have the right to sell such currency for a
fixed amount in dollars and will thereby offset, in whole in part, the adverse
effect on its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which securities
to be acquired are denominated is projected, thereby increasing the cost of such
securities, each Fund may purchase call options thereon. The purchase of such
options could offset, at least partially, the effects of the adverse movements
in exchange rates. As in the case of other types of options, however, the
benefit to the Fund deriving from purchases of foreign currency options will be
reduced by the amount of the premium and related transaction costs. In addition,
where currency exchange rates do not move in the direction or to the extent
anticipated, the Fund could sustain losses on transactions in foreign currency
options which would require it to forego a portion or all of the benefits of
advantageous changes in such rates. Each Fund may write options on foreign
currencies for the same types of hedging purposes. For example, where the Fund
anticipates a decline in the dollar value of foreign-denominated securities due
to adverse fluctuations in exchange rates it could, instead of purchasing a put
option, write a call option on the relevant currency. If the expected decline
occurs, the option will most likely not be exercised, and the diminution in
value of portfolio securities will be offset by the amount of the premium
received.
Similarly, instead of purchasing a call option to hedge against an anticipated
increase in the dollar cost of securities to be acquired, each Fund could write
a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. Foreign currency options written by a Fund
will generally be covered in a manner similar to the covering of other types of
options. As in the case of other types of options, however, the writing of a
foreign currency option will constitute only a partial hedge up to the amount of
the premium, and only if rates move in the expected direction. If this does not
occur, the option may be exercised and a Fund would be required to purchase or
sell the underlying currency at a loss which may not be offset by the amount of
the premium. Through the writing of options on foreign currencies, a Fund also
may be required to forego all or a portion of the benefits which might otherwise
have been obtained from favorable movements in exchange rates.
<PAGE>
ADDITIONAL RISK FACTORS:
OPTIONS, FUTURES AND FORWARD TRANSACTIONS
RISK OF IMPERFECT CORRELATION OF HEDGING INSTRUMENTS WITH A FUND'S PORTFOLIO. A
Fund's ability effectively to hedge all or a portion of its portfolio through
transactions in options, Futures Contracts, Options on Futures Contracts,
Forward Contracts and options on foreign currencies depends on the degree to
which price movements in the underlying index or instrument correlate with price
movements in the relevant portion of the Fund's portfolio. In the case of
futures and options based on an index, the portfolio will not duplicate the
components of the index, and in the case of futures and options on fixed income
securities, the portfolio securities which are being hedged may not be the same
type of obligation underlying such contract. The use of Forward Contracts for
"cross hedging" purposes may involve greater correlation risks. As a result, the
correlation probably will not be exact. Consequently, the Fund bears the risk
that the price of the portfolio securities being hedged will not move in the
same amount or direction as the underlying index or obligation.
For example, if a Fund purchases a put option on an index and the index
decreases less than the value of the hedged securities, the Fund would
experience a loss which is not completely offset by the put option. It is also
possible that there may be a negative correlation between the index or
obligation underlying an option or Futures Contract in which the Fund has a
position and the portfolio securities the Fund is attempting to hedge, which
could result in a loss on both the portfolio and the hedging instrument. In
addition, a Fund may enter into transactions in Forward Contracts or options on
foreign currencies in order to hedge against exposure arising from the
currencies underlying such instruments. In such instances, the Fund will be
subject to the additional risk of imperfect correlation between changes in the
value of the currencies underlying such forwards or options and changes in the
value of the currencies being hedged. It should be noted that stock index
futures contracts or options based upon a narrower index of securities, such as
those of a particular industry group, may present greater risk than options or
futures based on a broad market index. This is due to the fact that a narrower
index is more susceptible to rapid and extreme fluctuations as a result of
changes in the value of a small number of securities. Nevertheless, where a Fund
enters into transactions in options, or futures on narrowly-based indexes for
hedging purposes, movements in the value of the index should, if the hedge is
successful, correlate closely with the portion of the Fund's portfolio or the
intended acquisitions being hedged.
The trading of Futures Contracts, options and Forward Contracts for hedging
purposes entails the additional risk of imperfect correlation between movements
in the futures or option price and the price of the underlying index or
obligation. The anticipated spread between the prices may be distorted due to
the differences in the nature of the markets such as differences in margin
requirements, the liquidity of such markets and the participation of speculators
in the options, futures and forward markets. In this regard, trading by
speculators in options, futures and Forward Contracts has in the past
occasionally resulted in market distortions, which may be difficult or
impossible to predict, particularly near the expiration of such contracts.
<PAGE>
The trading of Options on Futures Contracts also entails the risk that changes
in the value of the underlying Futures Contracts will not be fully reflected in
the value of the option. The risk of imperfect correlation, however, generally
tends to diminish as the maturity date of the Futures Contract or expiration
date of the option approaches.
Further, with respect to options on securities, options on stock indexes,
options on currencies and Options on Futures Contracts, a Fund is subject to the
risk of market movements between the time that the option is exercised and the
time of performance thereunder. This could increase the extent of any loss
suffered by a Fund in connection with such transactions.
In writing a covered call option on a security, index or futures contract, a
Fund also incurs the risk that changes in the value of the instruments used to
cover the position will not correlate closely with changes in the value of the
option or underlying index or instrument. For example, where a Fund covers a
call option written on a stock index through segregation of securities, such
securities may not match the composition of the index, and the Fund may not be
fully covered. As a result, the Fund could be subject to risk of loss in the
event of adverse market movements.
The writing of options on securities, options on stock indexes or Options on
Futures Contracts constitutes only a partial hedge against fluctuations in the
value of a Fund's portfolio. When a Fund writes an option, it will receive
premium income in return for the holder's purchase of the right to acquire or
dispose of the underlying obligation. In the event that the price of such
obligation does not rise sufficiently above the exercise price of the option, in
the case of a call, or fall below the exercise price, in the case of a put, the
option will not be exercised and the Fund will retain the amount of the premium,
less related transaction costs, which will constitute a partial hedge against
any decline that may have occurred in the Fund's portfolio holdings or any
increase in the cost of the instruments to be acquired.
Where the price of the underlying obligation moves sufficiently in favor of the
holder to warrant exercise of the option, however, and the option is exercised,
the Fund will incur a loss which may only be partially offset by the amount of
the premium it received. Moreover, by writing an option, a Fund may be required
to forego the benefits which might otherwise have been obtained from an increase
in the value of portfolio securities or other assets or a decline in the value
of securities or assets to be acquired. In the event of the occurrence of any of
the foregoing adverse market events, a Fund's overall return may be lower than
if it had not engaged in the hedging transactions.
<PAGE>
The Funds may enter transactions in options (except for Options on Foreign
Currencies), Futures Contracts, Options on Futures Contracts and Forward
Contracts for non-hedging purposes as well as hedging purposes. Non-hedging
transactions in such investments involve greater risks and may result in losses
which may not be offset by increases in the value of portfolio securities or
declines in the cost of securities to be acquired. The Funds will only write
covered options, such that cash or securities necessary to satisfy an option
exercise will be segregated at all times, unless the option is covered in such
other manner as may be in accordance with the rules of the exchange on which the
option is traded and applicable laws and regulations. Nevertheless, the method
of covering an option employed by a Fund may not fully protect it against risk
of loss and, in any event, the Fund could suffer losses on the option position
which might not be offset by corresponding portfolio gains. Entering into
transactions in Futures Contracts, Options on Futures Contracts and Forward
Contracts for other than hedging purposes could expose the Fund to significant
risk of loss if foreign currency exchange rates do not move in the direction or
to the extent anticipated.
With respect to the writing of straddles on securities, a Fund incurs the risk
that the price of the underlying security will not remain stable, that one of
the options written will be exercised and that the resulting loss will not be
offset by the amount of the premiums received. Such transactions, therefore,
create an opportunity for increased return by providing a Fund with two
simultaneous premiums on the same security, but involve additional risk, since
the Fund may have an option exercised against it regardless of whether the price
of the security increases or decreases.
RISK OF A POTENTIAL LACK OF A LIQUID SECONDARY MARKET. Prior to exercise or
expiration, a futures or option position can only be terminated by entering into
a closing purchase or sale transaction. This requires a secondary market for
such instruments on the exchange on which the initial transaction was entered
into. While the Funds will enter into options or futures positions only if there
appears to be a liquid secondary market therefor, there can be no assurance that
such a market will exist for any particular contracts at any specific time. In
that event, it may not be possible to close out a position held by a Fund, and
the Fund could be required to purchase or sell the instrument underlying an
option, make or receive a cash settlement or meet ongoing variation margin
requirements. Under such circumstances, if the Fund has insufficient cash
available to meet margin requirements, it will be necessary to liquidate
portfolio securities or other assets at a time when it is disadvantageous to do
so. The inability to close out options and futures positions, therefore, could
have an adverse impact on the Fund's ability effectively to hedge its portfolio,
and could result in trading losses.
The liquidity of a secondary market in a Futures Contract or option thereon may
be adversely affected by "daily price fluctuation limits," established by
exchanges, which limit the amount of fluctuation in the price of a contract
during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures or option positions and requiring
traders to make additional margin deposits. Prices have in the past moved the
daily limit on a number of consecutive trading days.
<PAGE>
The trading of Futures Contracts and options is also subject to the risk of
trading halts, suspensions, exchange or clearinghouse equipment failures,
government intervention, insolvency of a brokerage firm or clearinghouse or
other disruptions of normal trading activity, which could at times make it
difficult or impossible to liquidate existing positions or to recover excess
variation margin payments.
MARGIN. Because of low initial margin deposits made upon the opening of a
futures or forward position and the writing of an option, such transactions
involve substantial leverage. As a result, relatively small movements in the
price of the contract can result in substantial unrealized gains or losses.
Where a Fund enters into such transactions for hedging purposes, any losses
incurred in connection therewith should, if the hedging strategy is successful,
be offset, in whole or in part, by increases in the value of securities or other
assets held by the Fund or decreases in the prices of securities or other assets
the Fund intends to acquire. Where a Fund enters into such transactions for
other than hedging purposes, the margin requirements associated with such
transactions could expose the Fund to greater risk.
TRADING AND POSITION LIMITS. The exchange on which futures and options are
traded may impose limitations governing the maximum number of positions on the
same side of the market and involving the same underlying instrument which may
be held by a single investor, whether acting alone or in concert with others
(regardless of whether such contracts are held on the same or different
exchanges or held or written in one or more accounts or through one or more
brokers). Further, the CFTC and the various contract markets have established
limits referred to as "speculative position limits" on the maximum net long or
net short position which any person may hold or control in a particular futures
or option contract. An exchange may order the liquidation of positions found to
be in violation of these limits and it may impose other sanctions or
restrictions. The Adviser does not believe that these trading and position
limits will have any adverse impact on the strategies for hedging the portfolios
of the Fund.
RISKS OF OPTIONS ON FUTURES CONTRACTS. The amount of risk a Fund assumes when it
purchases an Option on a Futures Contract is the premium paid for the option,
plus related transaction costs. In order to profit from an option purchased,
however, it may be necessary to exercise the option and to liquidate the
underlying Futures Contract, subject to the risks of the availability of a
liquid offset market described herein. The writer of an Option on a Futures
Contract is subject to the risks of commodity futures trading, including the
requirement of initial and variation margin payments, as well as the additional
risk that movements in the price of the option may not correlate with movements
in the price of the underlying security, index, currency or Futures Contract.
<PAGE>
RISKS OF TRANSACTIONS RELATED TO FOREIGN CURRENCIES AND TRANSACTIONS NOT
CONDUCTED ON U.S. EXCHANGES. Transactions in Forward Contracts on foreign
currencies, as well as futures and options on foreign currencies and
transactions executed on foreign exchanges, are subject to all of the
correlation, liquidity and other risks outlined above. In addition, however,
such transactions are subject to the risk of governmental actions affecting
trading in or the prices of currencies underlying such contracts, which could
restrict or eliminate trading and could have a substantial adverse effect on the
value of positions held by a Fund. Further, the value of such positions could be
adversely affected by a number of other complex political and economic factors
applicable to the countries issuing the underlying currencies.
Further, unlike trading in most other types of instruments, there is no
systematic reporting of last sale information with respect to the foreign
currencies underlying contracts thereon. As a result, the available information
on which trading systems will be based may not be as complete as the comparable
data on which a Fund makes investment and trading decisions in connection with
other transactions. Moreover, because the foreign currency market is a global,
24-hour market, events could occur in that market which will not be reflected in
the forward, futures or options market until the following day, thereby making
it more difficult for the Fund to respond to such events in a timely manner.
Settlements of exercises of over-the-counter Forward Contracts or foreign
currency options generally must occur within the country issuing the underlying
currency, which in turn requires traders to accept or make delivery of such
currencies in conformity with any U.S. or foreign restrictions and regulations
regarding the maintenance of foreign banking relationships, fees, taxes or other
charges.
Unlike transactions entered into by a Fund in Futures Contracts and
exchange-traded options, options on foreign currencies, Forward Contracts and
over-the-counter options on securities are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) the SEC. To the contrary, such instruments are traded through financial
institutions acting as market-makers, although foreign currency options are also
traded on certain national securities exchanges, such as the Philadelphia Stock
Exchange and the Chicago Board Options Exchange, subject to SEC regulation. In
an over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer and a
trader of Forward Contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral requirements associated
with such positions.
In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of a
Fund's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Fund. Where
no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of over-the-counter contracts, and a Fund could be required to retain options
purchased or written, or Forward Contracts entered into, until exercise,
expiration or maturity. This in turn could limit the Fund's ability to profit
from open positions or to reduce losses experienced, and could result in greater
losses.
<PAGE>
Further, over-the-counter transactions are not subject to the guarantee of an
exchange clearinghouse, and a Fund will therefore be subject to the risk of
default by, or the bankruptcy of, the financial institution serving as its
counterparty. One or more of such institutions also may decide to discontinue
their role as market-makers in a particular currency or security, thereby
restricting the Fund's ability to enter into desired hedging transactions. A
Fund will enter into an over-the-counter transaction only with parties whose
creditworthiness has been reviewed and found satisfactory by the Adviser.
Options on securities, options on stock indexes, Futures Contracts, Options on
Futures Contracts and options on foreign currencies may be traded on exchanges
located in foreign countries. Such transactions may not be conducted in the same
manner as those entered into on U.S. exchanges, and may be subject to different
margin, exercise, settlement or expiration procedures. As a result, many of the
risks of over-the-counter trading may be present in connection with such
transactions.
Options on foreign currencies traded on national securities exchanges are within
the jurisdiction of the SEC, as are other securities traded on such exchanges.
As a result, many of the protections provided to traders on organized exchanges
will be available with respect to such transactions. In particular, all foreign
currency option positions entered into on a national securities exchange are
cleared and guaranteed by the Options Clearing Corporation (the "OCC"), thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting a Fund to liquidate
open positions at a profit prior to exercise or expiration, or to limit losses
in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on the OCC
or its clearing member, impose special procedures on exercise and settlement,
such as technical changes in the mechanics of delivery of currency, the fixing
of dollar settlement prices or prohibitions on exercise.
<PAGE>
POLICIES ON THE USE OF FUTURES AND OPTIONS ON FUTURES CONTRACTS. In order to
assure that the Fund will not be deemed to be a "commodity pool" for purposes of
the Commodity Exchange Act, regulations of the CFTC require that a Fund enter
into transactions in Futures Contracts and Options on Futures Contracts only (i)
for bona fide hedging purposes (as defined in CFTC regulations), or (ii) for
non-hedging purposes, provided that the aggregate initial margin and premiums on
such non-hedging positions does not exceed 5% of the liquidation value of the
Fund's assets. In addition, the Fund must comply with the requirements of
various state securities laws in connection with such transactions.
Each Fund has adopted the additional restriction that it will not enter into a
Futures Contract if, immediately thereafter, the value of securities and other
obligations underlying all such Futures Contracts would exceed 50% of the value
of such Fund's total assets. In addition, a Fund will not purchase put and call
options on Futures Contracts if as a result more than 5% of its total assets
would be invested in such options.
When a Fund purchases a Futures Contract, an amount of cash or securities will
be deposited in a segregated account with the Fund's custodian so that the
amount so segregated will at all times equal the value of the Futures Contract,
thereby insuring that the use of such futures is unleveraged.
RISKS OF INVESTING IN LOWER RATED BONDS
The Equity Income Fund and the Special Opportunities Fund may invest in fixed
income securities, and each Fund may invest in convertible securities, rated Baa
by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Ratings Group ("S&P") or Fitch Investors Service, Inc. ("Fitch") and comparable
unrated securities. These securities, while normally exhibiting adequate
protection parameters, have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than in the case of higher grade fixed
income securities.
The Equity Income Fund and the Special Opportunities Fund may also invest in
fixed income securities rated Ba or lower by Moody's or BB or lower by S&P or
Fitch and comparable unrated securities (commonly known as "junk bonds") to the
extent described in the Prospectus. No minimum rating standard is required by a
Fund. These securities are considered speculative and, while generally providing
greater income than investments in higher rated securities, will involve greater
risk of principal and income (including the possibility of default or bankruptcy
of the issuers of such securities) and may involve greater volatility of price
(especially during periods of economic uncertainty or change) than securities in
the higher rating categories and because yields vary over time, no specific
level of income can ever be assured. These lower rated high yielding fixed
income securities generally tend to reflect economic changes (and the outlook
for economic growth), short-term corporate and industry developments and the
market's perception of their credit quality (especially during times of adverse
publicity) to a greater extent than higher rated securities which react
primarily to fluctuations in the general level of interest rates (although these
lower rated fixed income securities are also affected by changes in interest
rates). In the past, economic downturns or an increase in interest rates have,
under certain circumstances, caused a higher incidence of default by the issuers
of these securities and may do so in the future, especially in the case of
highly leveraged issuers. The prices for these securities may be affected by
legislative and regulatory developments. The market for these lower rated fixed
income securities may be less liquid than the market for investment grade fixed
income securities. Furthermore, the liquidity of these lower rated securities
may be affected by the market's perception of their credit quality. Therefore,
the Adviser's judgment may at times play a greater role in valuing these
securities than in the case of investment grade fixed income securities, and it
also may be more difficult during times of certain adverse market conditions to
sell these lower rated securities to meet redemption requests or to respond to
changes in the market.
<PAGE>
While the Adviser may refer to ratings issued by established credit rating
agencies, it is not a Fund's policy to rely exclusively on ratings issued by
these rating agencies, but rather to supplement such ratings with the Adviser's
own independent and ongoing review of credit quality. To the extent a Fund
invests in these lower rated securities, the achievement of its investment
objectives may be a more dependent on the Adviser's own credit analysis than in
the case of a fund investing in higher quality fixed income securities. These
lower rated securities may also include zero coupon bonds, deferred interest
bonds and PIK bonds.
Each Fund's limitations, policies and ratings restrictions are adhered to at the
time of purchase or utilization of assets; a subsequent change in circumstances
will not be considered to result in a violation of policy.
The policies stated above are not fundamental and may be changed without
shareholder approval, as may each Fund's investment objective.
INVESTMENT RESTRICTIONS. Each Fund has adopted the following restrictions which
cannot be changed without the approval of the holders of a majority of a Fund's
shares (which, as used in this Statement of Additional Information, means the
lesser of (i) more than 50% of the outstanding shares of the Trust or a series
or class, as applicable or (ii) 67% or more of the outstanding shares of the
Trust or a series or class, as applicable, present at a meeting at which holders
of more than 50% of the outstanding shares of the Trust or a series or class, as
applicable are represented in person or by proxy):
Each Fund may not:
(1) borrow amounts in excess of 331/3 of its assets including amounts
borrowed;
(2) underwrite securities issued by other persons except insofar as a Fund
may technically be deemed an underwriter under the Securities Act of 1933
in selling a portfolio security;
(3) purchase or sell real estate (including limited partnership interests but
excluding securities secured by real estate or interests therein and
securities of companies, such as real estate investment trusts, which
deal in real estate or interests therein), interests in oil, gas or
mineral leases, commodities or commodity contracts (excluding Options,
Options on Futures Contracts, Options on Stock Indices, Options on
Foreign Currency and any other type of option, Futures Contracts, any
other type of futures contract, and Forward Contracts) in the ordinary
course of its business. Each Fund reserves the freedom of action to hold
and to sell real estate, mineral leases, commodities or commodity
contracts (including Options, Options on Futures Contracts, Options on
Stock Indices, Options on Foreign Currency and any other type of option,
Futures Contracts, any other type of futures contract, and Forward
Contracts) acquired as a result of the ownership of securities;
<PAGE>
(4) issue any senior securities except as permitted by the 1940 Act. For
purposes of this restriction, collateral arrangements with respect to any
type of option (including Options on Futures Contracts, Options, Options
on Stock Indices and Options on Foreign Currencies), short sale, Forward
Contracts, Futures Contracts, any other type of futures contract, and
collateral arrangements with respect to initial and variation margin, are
not deemed to be the issuance of a senior security;
(5) make loans to other persons. For these purposes, the purchase of
short-term commercial paper, the purchase of a portion or all of an issue
of debt securities, the lending of portfolio securities, or the
investment of a Fund's assets in repurchase agreements, shall not be
considered the making of a loan; or
(6) purchase any securities of an issuer of a particular industry, if as a
result, more than 25% of its gross assets would be invested in securities
of issuers whose principal business activities are in the same industry
(except obligations issued or guaranteed by the U.S. Government or its
agencies and instrumentalities and repurchase agreements collateralized
by such obligations).
Except with respect to Investment Restriction (1), these investment restrictions
are adhered to at the time of purchase or utilization of assets; a subsequent
change in circumstances will not be considered to result in a violation of
policy.
<PAGE>
In addition, each Fund has the following nonfundamental policies which may be
changed without shareholder approval. Each Fund will not:
(1) invest in illiquid investments, including securities subject to legal or
contractual restrictions on resale or for which there is no readily
available market (E.G., trading in the security is suspended, or, in the
case of unlisted securities, where no market exists), if more than 15% of
a Fund's net assets (taken at market value) would be invested in such
securities. Repurchase agreements maturing in more than seven days will
be deemed to be illiquid for purposes of a Fund's limitation on
investment in illiquid securities. Securities that are not registered
under the 1933 Act and sold in reliance on Rule 144A thereunder, but are
determined to be liquid by the Trust's Board of Trustees (or its
delegee), will not be subject to this 15% limitation;
(2) invest more than 5% of the value of a Fund's net assets, valued at the
lower of cost or market, in warrants. Included within such amount, but
not to exceed 2% of the value of a Fund's net assets, may be warrants
which are not listed on the New York or American Stock Exchange. Warrants
acquired by a Fund in units or attached to securities may be deemed to be
without value;
(3) invest for the purpose of exercising control or management;
(4) purchase securities issued by any other investment company in excess of
the amount permitted by the 1940 Act;
(5) purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of each
Fund, or is an officer or a director of the investment adviser of each
Fund, if one or more of such persons also owns beneficially more than 1/2
of 1% of the securities of such issuer, and such persons owning more than
1/2 of 1% of such securities together own beneficially more than 5% of
such securities;
(6) purchase any securities or evidences of interest therein on margin,
except that a Fund may obtain such short-term credit as may be necessary
for the clearance of any transaction and except that a Fund may make
margin deposits in connection with any type of option (including Options
on Futures Contracts, Options, Options on Stock Indices and Options on
Foreign Currencies), any short sale, any type of futures contract
(including Futures Contracts), and Forward Contracts;
<PAGE>
(7) invest more than 5% of its gross assets in companies which, including
predecessors, controlling persons, sponsoring entities, general partners
and guarantors, have a record of less than three years' continuous
operation or relevant business experience;
(8) pledge, mortgage or hypothecate in excess of 33 1/3% of its gross assets.
For purposes of this restriction, collateral arrangements with respect to
any type of option (including Options on Futures Contracts, Options,
Options on Stock Indices and Options on Foreign Currencies), any short
sale, any type of futures contract (including Futures Contracts), Forward
Contracts and payments of initial and variation margin in connection
therewith, are not considered a pledge of assets; or
(9) purchase or sell any put or call option or any combination thereof,
provided that this shall not prevent (a) the purchase, ownership, holding
or sale of (i) warrants where the grantor of the warrants is the issuer
of the underlying securities or (ii) put or call options or combinations
thereof with respect to securities, indexes of securities, Options on
Foreign Currencies or any type of futures contract (including Futures
Contracts) or (b) the purchase, ownership, holding or sale of contracts
for the future delivery of securities or currencies.
3. MANAGEMENT OF THE FUNDS
The Trust's Board of Trustees provides broad supervision over the affairs of
each Fund. The Adviser is responsible for the investment management of each
Fund's assets, and the officers of the Trust are responsible for its operations.
The Trustees and officers are listed below, together with their principal
occupations during the past five years. (Their titles may have varied during
that period.)
TRUSTEES
A. KEITH BRODKIN,* Chairman and President
Massachusetts Financial Services Company, Chairman
RICHARD B. BAILEY*
Private Investor; Massachusetts Financial Services Company, former Chairman
(until September 30, 1991)
MARSHALL N. COHAN
Private Investor
Address: 2524 Bedford Mews Drive, Wellington, Florida
LAWRENCE H. COHN, M.D.,
Brigham and Women's Hospital, Chief of Cardiac Surgery;
Harvard Medical School, Professor of Surgery
Address: 75 Francis Street, Boston, Massachusetts
THE HON. SIR J. DAVID GIBBONS, KBE
Edmund Gibbons Limited, Chief Executive Officer; The Bank of
N.T. Butterfield & Son Ltd., Chairman
Address: 21 Reid Street, Hamilton, Bermuda
<PAGE>
ABBY M. O'NEILL
Private Investor; Rockefeller Financial Services, Inc. (investment
advisers), Director
Address: 30 Rockefeller Plaza, Room 5600, New York, New York
WALTER E. ROBB, III
Benchmark Advisors, Inc. (corporate financial consultants),
President and Treasurer
Address: 10 Broad Street, Boston, Massachusetts
ARNOLD D. SCOTT*
Massachusetts Financial Services Company, Senior Executive
Vice President and Secretary
JEFFREY L. SHAMES*
Massachusetts Financial Services Company, President
J. DALE SHERRATT
Insight Resources, Inc. (acquisition planning specialists),
President
Address: One Liberty Square, Boston, Massachusetts
WARD SMITH
NACCO Industries (holding company), Chairman (prior to June
1994); Sundstrand Corporation (diversified mechanical manufacturer),
Director; Society Corporation (bank holding company), Director (prior to
April 1992); Society National Bank (commercial bank), Director (prior to
April 1992)
Address: 5875 Landerbrook Drive, Mayfield Heights, Ohio
OFFICERS
W. THOMAS LONDON,* Treasurer
Massachusetts Financial Services Company, Senior Vice
President and Assistant Treasurer
STEPHEN E. CAVAN,* Secretary and Clerk
Massachusetts Financial Services Company, Senior Vice
President, General Counsel and Assistant Secretary
JAMES O. YOST,* Assistant Treasurer
Massachusetts Financial Services Company, Vice President
JAMES R. BORDEWICK, JR.,* Assistant Secretary
Massachusetts Financial Services Company, Vice President and
Associate General Counsel
* "Interested persons" (as defined in the 1940 Act) of the Adviser, whose
address is 500 Boylston Street, Boston, Massachusetts 02116.
<PAGE>
Each Trustee and officer holds comparable positions with certain affiliates of
MFS or with certain other funds of which MFS or a subsidiary is the investment
adviser or distributor. Mr. Brodkin, the Chairman of MFD, Messrs. Shames and
Scott, Directors of MFD, and Mr. Cavan, the Secretary of MFD, hold similar
positions with certain other MFS affiliates. Mr. Bailey is a Director of Sun
Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)"), the
corporate parent of MFS.
Each Fund pays the compensation of the non-interested Trustees and Mr. Bailey
(who currently receive a fee of $[ ] per year plus $[ ] per meeting and
committee meeting attended, together with such Trustee's out-of-pocket
expenses), and have adopted a retirement plan for non-interested Trustees and
Mr. Bailey. Under this plan, a Trustee will retire upon reaching age 75 and if
the Trustee has completed at least 5 years of service, he would be entitled to
annual payments during his lifetime of up to 50% of such Trustee's average
annual compensation (based on the three years prior to his retirement) depending
on his length of service. A Trustee may also retire prior to age 75 and receive
reduced payments if he has completed at least 5 years of service. Under the
plan, a Trustee (or his beneficiaries) will also receive benefits for a period
of time in the event the Trustee is disabled or dies. These benefits will also
be based on the Trustee's average annual compensation and length of service.
There is no retirement plan provided by the Trust for the interested Trustees,
except Mr. Bailey. Each Fund will accrue its allocable portion of compensation
expenses under the retirement plan each year to cover the current year's service
and amortize past service cost.
Set forth in Appendix A hereto is certain information concerning the cash
compensation estimated to be paid by each Fund during its current fiscal year to
non-interested Trustees and Mr. Bailey.
The Declaration of Trust provides that the Trust 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,
as to liabilities of the Trust or its shareholders, it is determined that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or with respect to any
matter, unless it is adjudicated that they did not act in good faith in the
reasonable belief that their actions were in the best interest of the Trust. In
the case of settlement, such indemnification will not be provided unless it has
been determined pursuant to the Declaration of Trust, that they have not engaged
in willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
INVESTMENT ADVISER
MFS and its predecessor organizations have a history of money management dating
from 1924. MFS is a wholly owned subsidiary of Sun Life of Canada (U.S.), which
is a wholly owned subsidiary of Sun Life Assurance Company of Canada ("Sun
Life").
INVESTMENT ADVISORY AGREEMENT -- The Adviser manages each Fund pursuant to
separate Investment Advisory Agreements, each dated January 2, 1996 (the
"Advisory Agreements"). The Adviser provides each Fund with overall investment
advisory and administrative services, as well as general office facilities.
Subject to such policies as the Trustees may determine, the Adviser makes
investment decisions for each Fund. For these services and facilities, the
Adviser receives an annual management fee, computed and paid monthly, as
disclosed in the Prospectus under the heading "Management of the Funds."
<PAGE>
In order to comply with the expense limitations of certain state securities
commissions, the Adviser will reduce its management fee or otherwise reimburse
each Fund for any expenses, exclusive of interest, taxes and brokerage
commissions, incurred by each Fund in any fiscal year to the extent such
expenses exceed the most restrictive of such state expense limitations. The
Adviser will make appropriate adjustments to such reimbursements in response to
any amendment or rescission of the various state requirements.
The Adviser pays the compensation of the Trust's officers and of any Trustee who
is an officer of the Adviser. The Adviser also furnishes at its own expense all
necessary administrative services, including office space, equipment, clerical
personnel, investment advisory facilities, and all executive and supervisory
personnel necessary for managing each Fund's investments, effecting its
portfolio transactions, and, in general, administering its affairs.
Each Advisory Agreement will remain in effect until August 1, 1997 and will
continue in effect thereafter only if such continuance is specifically approved
at least annually by the Board of Trustees or by vote of a majority of the
Fund's shares (as defined in "Investment Objective, Policies and Restrictions")
and, in either case, by a majority of the Trustees who are not parties to the
Advisory Agreement or interested persons of any such party. Each Advisory
Agreement terminates automatically if it is assigned and may be terminated
without penalty by vote of a majority of the Fund's shares (as defined in
"Investment Objectives, Policies and Restrictions"), or by either party on not
more than 60 days' nor less than 30 days' written notice. Each Advisory
Agreement provides that if MFS ceases to serve as the Adviser to the Fund, the
Fund will change its name so as to delete the initials "MFS" and that MFS may
render services to others and may permit other fund clients to use the initials
"MFS" in their names. Each Advisory Agreement also provides that neither the
Adviser nor its personnel shall be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
in the execution and management of the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its or their duties or by reason
of reckless disregard of its or their obligations and duties under the Advisory
Agreement.
CUSTODIAN
State Street Bank and Trust Company (the "Custodian") is the custodian of each
Fund's assets. The Custodian's responsibilities include safekeeping and
controlling each Fund's cash and securities, handling the receipt and delivery
of securities, determining income and collecting interest and dividends on each
Fund's investments, maintaining books of original entry for portfolio and fund
accounting and other required books and accounts, and calculating the daily net
asset value of each class of shares of each Fund. The Custodian does not
determine the investment policies of each Fund or decide which securities a Fund
will buy or sell. Each Fund may, however, invest in securities of the Custodian
and may deal with the Custodian as principal in securities transactions. The
Trustees have reviewed and approved as in the best interests of each Fund and
the shareholders subcustodial arrangements with State Street Bank and Trust
Company for securities of each Fund held outside the United States. The
Custodian also acts as the dividend disbursing agent of each Fund. The Custodian
has contracted with the Adviser for the Adviser to perform certain accounting
functions related to options transactions for which the Adviser receives
remuneration on a cost basis.
<PAGE>
SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc. (the "Shareholder Servicing Agent"), a wholly owned
subsidiary of MFS, is each Fund's shareholder servicing agent, pursuant to an
Amended and Restated Shareholder Servicing Agreement dated January 2, 1996 (the
"Agency Agreement") with the Trust. The Shareholder Servicing Agent's
responsibilities under the Agency Agreement include administering and performing
transfer agent functions and the keeping of records in connection with the
issuance, transfer and redemption of each class of shares of each Fund. For
these services, the Shareholder Servicing Agent will receive a fee based on the
net assets of each class of shares of each Fund computed and paid monthly. In
addition, the Shareholder Servicing Agent will be reimbursed by each Fund for
certain expenses incurred by the Shareholder Servicing Agent on behalf of the
Fund. The Custodian has contracted with the Shareholder Servicing Agent to
perform certain dividend and distribution disbursing functions for the Fund.
DISTRIBUTOR
MFD, a wholly owned subsidiary of MFS, serves as distributor for the continuous
offering of shares of each Fund pursuant to a Distribution Agreement with the
Trust dated as of January 1, 1995 (the "Distribution Agreement").
CLASS A SHARES: MFD acts as agent in selling Class A shares of each Fund to
dealers. The public offering price of Class A shares of each Fund is their net
asset value next computed after the sale plus a sales charge which varies based
upon the quantity purchased. The public offering price of a Class A share of
each Fund is calculated by dividing the net asset value of a Class A share by
the difference (expressed as a decimal) between 100% and the sales charge
percentage of offering price applicable to the purchase (see "Purchases" in the
Prospectus). The sales charge scale set forth in the Prospectus applies to
purchases of Class A shares of each Fund alone or in combination with shares of
all classes of certain other funds in the MFS Family of Funds (the "MFS Funds")
and other funds (as noted under Right of Accumulation) by any person, including
members of a family unit (E.G., husband, wife and minor children) and bona fide
trustees, and also applies to purchases made under the Right of Accumulation or
a Letter of Intent (see "Investment and Withdrawal Programs" below). A group
might qualify to obtain quantity sales charge discounts (see "Investment and
Withdrawal Programs" below).
<PAGE>
Class A shares of each Fund may be sold at their net asset value to certain
persons and in certain instances, as described in the Prospectus. Such sales are
made without a sales charge to promote good will with employees and others with
whom MFS, MFD and/or a Fund have business relationships, and because the sales
effort, if any, involved in making such sales is negligible.
MFD allows discounts to dealers (which are alike for all dealers) from the
applicable public offering price of the Class A shares. Dealer allowances
expressed as a percentage of offering price for all offering prices are set
forth in the Prospectus (see "Purchases" in the Prospectus). The difference
between the total amount invested and the sum of (a) the net proceeds to a Fund
and (b) the dealer commission, is the commission paid to the distributor.
Because of rounding in the computation of offering price, the portion of the
sales charge paid to the distributor may vary and the total sales charge may be
more or less than the sales charge calculated using the sales charge expressed
as a percentage of the offering price or as a percentage of the net amount
invested as listed in the Prospectus. In the case of the maximum sales charge,
the dealer retains 4.00% and MFD retains approximately 3/4 of 1% of the public
offering price. MFD, on behalf of each Fund, pays a commission to dealers who
initiate and are responsible for purchases of $1 million or more as described in
the Prospectus.
CLASS B SHARES AND CLASS C SHARES: MFD acts as agent in selling Class B and
Class C shares of each Fund to dealers. The public offering price of Class B and
Class C shares is their net asset value next computed after the sale (see
"Purchases" in the Prospectus).
GENERAL: Neither MFD nor dealers are permitted to delay placing orders to
benefit themselves by a price change. On occasion, MFD may obtain brokers loans
from various banks, including the custodian banks for the MFS Funds, to
facilitate the settlement of sales of shares of a Fund to dealers. MFD may
benefit from its temporary holding of funds paid to it by investment dealers for
the purchase of Fund shares.
The Distribution Agreement will remain in effect until August 1, 1996 and will
continue in effect thereafter only if such continuance is specifically approved
at least annually by the Board of Trustees or by vote of a majority of the
Trust's shares (as defined in "Investment Objective, Policies and Restrictions
- -- Investment Restrictions") and in either case, by a majority of the Trustees
who are not parties to the Distribution Agreement or interested persons of any
such party. The Distribution Agreement terminates automatically if it is
assigned and may be terminated without penalty by either party on not more than
60 days' nor less than 30 days' notice.
<PAGE>
4. PORTFOLIO TRANSACTIONS AND
BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Funds are made by
persons affiliated with the Adviser. Any such person may serve other clients of
the Adviser, or any subsidiary of the Adviser in a similar capacity. Changes in
each Fund's investments are reviewed by the Board of Trustees.
The primary consideration in placing portfolio security transactions is
execution at the most favorable prices. The Adviser has complete freedom as to
the markets in and broker-dealers through which it seeks this result. In the
U.S. and in some other countries debt securities are traded principally in the
over-the-counter market on a net basis through dealers acting for their own
account and not as brokers. In other countries both debt and equity securities
are traded on exchanges at fixed commission rates. The cost of securities
purchased from underwriters includes an underwriter's commission or concession,
and the prices at which securities are purchased and sold from and to dealers
include a dealer's mark-up or mark-down. The Adviser normally seeks to deal
directly with the primary market makers or on major exchanges unless, in its
opinion, better prices are available elsewhere. Subject to the requirement of
seeking execution at the best available price, securities may, as authorized by
the Advisory Agreement, be bought from or sold to dealers who have furnished
statistical, research and other information or services to the Adviser. At
present no arrangements for the recapture of commission payments are in effect.
Consistent with the foregoing primary consideration, the Rules of Fair Practice
of the NASD and such other policies as the Trustees may determine, the Adviser
may consider sales of shares of a Fund and of the other investment company
clients of MFD as a factor in the selection of broker-dealers to execute the
Fund's portfolio transactions.
Under an Advisory Agreement and as permitted by Section 28(e) of the Securities
Exchange Act of 1934, the Adviser may cause a Fund to pay a broker-dealer which
provides brokerage and research services to the Adviser, an amount of commission
for effecting a securities transaction for the Fund in excess of the amount
other broker-dealers would have charged for the transaction, if the Adviser
determines in good faith that the greater commission is reasonable in relation
to the value of the brokerage and research services provided by the executing
broker-dealer viewed in terms of either a particular transaction or their
respective overall responsibilities to the Fund or to their other clients. Not
all of such services are useful or of value in advising a Fund.
The term "brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or of purchasers or sellers of securities;
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto, such as clearance and settlement.
<PAGE>
Although commissions paid on every transaction will, in the judgment of the
Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of a
Fund and the Adviser's other clients in part for providing advice as to the
availability of securities or of purchasers or sellers of securities and
services in effecting securities transactions and performing functions
incidental thereto, such as clearance and settlement.
Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") to the Adviser for no consideration other
than brokerage or underwriting commissions. Securities may be bought or sold
through such broker-dealers, but at present, unless otherwise directed by a
Fund, a commission higher than one charged elsewhere will not be paid to such a
firm solely because it provided such Research. The Trustees (together with the
Trustees of the other MFS Funds) have directed the Adviser to allocate a total
of $20,000 of commission business from the MFS Funds to the Pershing Division of
Donaldson Lufkin & Jenrette as consideration for the annual renewal of the
Lipper Directors' Analytical Data Service (which provides information useful to
the Trustees in reviewing the relationship between a Fund and the Adviser).
The Adviser's investment management personnel attempt to evaluate the quality of
Research provided by brokers. The Adviser sometimes uses evaluations resulting
from this effort as a consideration in the selection of brokers to execute
portfolio transactions.
The management fee of the Adviser will not be reduced as a consequence of the
Adviser's receipt of brokerage and research service. To the extent a Fund's
portfolio transactions are used to obtain brokerage and research services, the
brokerage commissions paid by the Fund will exceed those that might otherwise be
paid for such portfolio transactions, or for such portfolio transactions and
research, by an amount which cannot be presently determined. Such services would
be useful and of value to the Adviser in serving both a Fund and other clients
and, conversely, such services obtained by the placement of brokerage business
of other clients would be useful to the Adviser in carrying out its obligations
to the Fund. While such services are not expected to reduce the expenses of the
Adviser, the Adviser would, through use of the services, avoid the additional
expenses which would be incurred if it should attempt to develop comparable
information through its own staff.
<PAGE>
In certain instances there may be securities which are suitable for a Fund's
portfolio as well as for that of one or more of the other clients of the Adviser
or any subsidiary of the Adviser. Investment decisions for a Fund and for such
other clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security as far as a Fund is concerned. In
other cases, however, a Fund believes that its ability to participate in volume
transactions will produce better executions for the Fund.
5. SHAREHOLDER SERVICES
INVESTMENT AND WITHDRAWAL PROGRAMS -- Each Fund makes available the following
programs designed to enable shareholders to add to their investment or withdraw
from it with a minimum of paper work. These are described below and, in certain
cases, in the Prospectus. The programs involve no extra charge to shareholders
(other than a sales charge in the case of certain Class A share purchases) and
may be changed or discontinued at any time by a shareholder or a Fund.
LETTER OF INTENT -- If a shareholder (other than a group purchaser described
below) anticipates purchasing $100,000 or more of Class A shares of a Fund alone
or in combination with shares of any class of MFS Funds or MFS Fixed Fund (a
bank collective investment fund) within a 13-month period (or 36-month period,
in the case of purchases of $1 million or more), the shareholder may obtain
Class A shares of the Fund at the same reduced sales charge as though the total
quantity were invested in one lump sum by completing the Letter of Intent
section of the Account Application or filing a separate Letter of Intent
application (available from the Shareholder Servicing Agent) within 90 days of
the commencement of purchases. Subject to acceptance by MFD and the conditions
mentioned below, each purchase will be made at a public offering price
applicable to a single transaction of the dollar amount specified in the Letter
of Intent application. The shareholder or his dealer must inform MFD that the
Letter of Intent is in effect each time shares are purchased. The shareholder
makes no commitment to purchase additional shares, but if his purchases within
13 months (or 36 months in the case of purchases of $1 million or more) plus the
value of shares credited toward completion of the Letter of Intent do not total
the sum specified, he will pay the increased amount of the sales charge as
described below. Instructions for issuance of shares in the name of a person
other than the person signing the Letter of Intent application must be
accompanied by a written statement from the dealer stating that the shares were
paid for by the person signing such Letter. Neither income dividends nor capital
gain distributions taken in additional shares will apply toward the completion
of the Letter of Intent. Dividends and distributions of other MFS Funds
automatically reinvested in shares of a Fund pursuant to the Distribution
Investment Program will also not apply toward completion of the Letter of
Intent.
<PAGE>
Out of the shareholder's initial purchase (or subsequent purchases if
necessary), 5% of the dollar amount specified in the Letter of Intent
application shall be held in escrow by the Shareholder Servicing Agent in the
form of shares registered in the shareholder's name. All income dividends and
capital gain distributions on escrowed shares will be paid to the shareholder or
to his order. When the minimum investment so specified is completed (either
prior to or by the end of the 13-month period or 36-month period, as
applicable), the shareholder will be notified and the escrowed shares will be
released.
If the intended investment is not completed, the Shareholder Servicing Agent
will redeem an appropriate number of the escrowed shares in order to realize
such difference. Shares remaining after any such redemption will be released by
the Shareholder Servicing Agent. By completing and signing the Account
Application or separate Letter of Intent application, the shareholder
irrevocably appoints the Shareholder Servicing Agent his attorney to surrender
for redemption any or all escrowed shares with full power of substitution in the
premises.
RIGHT OF ACCUMULATION -- A shareholder qualifies for cumulative quantity
discounts on the purchase of Class A shares when his new investment, together
with the current offering price value of all holdings of all classes of shares
of that shareholder in the MFS Funds or MFS Fixed Fund reaches a discount level.
See "Purchases" in the Prospectus for the sales charges on quantity discounts.
For example, if a shareholder owns shares with a current offering price value of
$75,000 and purchases an additional $25,000 of Class A shares of a Fund, the
sales charge for the $25,000 purchase would be at the rate of 4.00% (the rate
applicable to single transactions of $100,000). A shareholder must provide the
Shareholder Servicing Agent (or his investment dealer must provide MFD) with
information to verify that the quantity sales charge discount is applicable at
the time the investment is made.
DISTRIBUTION INVESTMENT PROGRAM -- Distributions of dividends and capital gains
made by a Fund with respect to a particular class of shares may be automatically
invested in shares of the same class of one of the other MFS Funds, if shares of
that fund are available for sale. Such investments will be subject to additional
purchase minimums. Distributions will be invested at net asset value (exclusive
of any sales charge) and will not subject to any CDSC. Distributions will be
invested at the close of business on the payable date for the distribution. A
shareholder considering the Distribution Investment Program should obtain and
read the prospectus of the other fund and consider the differences in objectives
and policies before making any investment.
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN -- A shareholder may direct the Shareholder Servicing
Agent to send him (or anyone he designates) regular periodic payments based upon
the value of his account. Each payment under a Systematic Withdrawal Plan
("SWP") must be at least $100, except certain limited circumstances. The
aggregate withdrawals of Class B shares in any year pursuant to a SWP generally
are limited to 10% of the value of the account at the time of establishment of
the SWP. SWP payments are drawn from the proceeds of share redemptions (which
would be a return of principal and, if reflecting a gain, would be taxable).
Redemptions of Class B shares will be made in the following order: (i) any
"Reinvested Shares"; (ii) to the extent necessary, any "Free Amount"; and (iii)
to the extent necessary, the "Direct Purchase" subject to the lowest CDSC (as
such terms are defined in "Contingent Deferred Sales Charge" in the Prospectus).
The CDSC will be waived in the case of redemptions of Class B shares pursuant to
a SWP, but will not be waived in the case of SWP redemptions of Class A shares
which are subject to a CDSC. To the extent that redemptions for such periodic
withdrawals exceed dividend income reinvested in the account, such redemptions
will reduce and may eventually exhaust the number of shares in the shareholder's
account. All dividend and capital gain distributions for an account with a SWP
will be received in full and fractional shares of a Fund at the net asset value
in effect at the close of business on the record date for such distributions. To
initiate this service, shares having an aggregate value of at least $5,000
either must be held on deposit by, or certificates for such shares must be
deposited with, the Shareholder Servicing Agent. With respect to Class A shares,
maintaining a withdrawal plan concurrently with an investment program would be
disadvantageous because of the sales charges included in share purchases and the
imposition of a CDSC on certain redemptions. The shareholder may deposit into
the account additional shares of a Fund, change the payee or change the dollar
amount of each payment. The Shareholder Servicing Agent may charge the account
for services rendered and expenses incurred beyond those normally assumed by a
Fund with respect to the liquidation of shares. No charge is currently assessed
against the account, but one could be instituted by the Shareholder Servicing
Agent on 60 days' notice in writing to the shareholder in the event that a Fund
ceases to assume the cost of these services. Each Fund may terminate any SWP for
an account if the value of the account falls below $5,000 as a result of share
redemptions (other than as a result of a SWP) or an exchange of shares of the
Fund for shares of another MFS Fund. Any SWP may be terminated at any time by
either the shareholder or the Fund.
INVEST BY MAIL -- Additional investments of $50 or more may be made at any time
by mailing a check payable to a Fund directly to the Shareholder Servicing
Agent. The shareholder's account number and the name of his investment dealer
must be included with each investment.
GROUP PURCHASES -- A bona fide group and all its members may be treated as a
single purchaser and, under the Right of Accumulation (but not the Letter of
Intent) obtain quantity sales charge discounts on the purchase of Class A shares
if the group (1) gives its endorsement or authorization to the investment
program so it may be used by the investment dealer to facilitate solicitation of
the membership, thus effecting economies of sales effort; (2) has been in
existence for at least six months and has a legitimate purpose other than to
purchase mutual fund shares at a discount; (3) is not a group of individuals
whose sole organizational nexus is as credit cardholders of a company,
policyholders of an insurance company, customers of a bank or broker-dealer,
clients of an investment Adviser or other similar groups; and (4) agrees to
provide certification of membership of those members investing money in the MFS
Funds upon the request of MFD.
<PAGE>
AUTOMATIC EXCHANGE PLAN -- Shareholders having account balances of at least
$5,000 in any MFS Fund may participate in the Automatic Exchange Plan. The
Automatic Exchange Plan provides for automatic exchanges of funds from the
shareholder's account in an MFS Fund for investment in the same class of shares
of other MFS Funds selected by the shareholder (if available for sale). Under
the Automatic Exchange Plan, exchanges of at least $50 each may be made to up to
four different funds effective on the seventh day of each month or of every
third month, depending whether monthly or quarterly exchanges are elected by the
shareholder. If the seventh day of the month is not a business day, the
transaction will be processed on the next business day. Generally, the initial
transfer will occur after receipt and processing by the Shareholder Servicing
Agent of an application in good order. Exchanges will continue to be made from a
shareholder's account in any MFS Fund, as long as the balance of the account is
sufficient to complete the exchanges. Additional payments made to a
shareholder's account will extend the period that exchanges will continue to be
made under the Automatic Exchange Plan. However, if additional payments are
added to an account subject to the Automatic Exchange Plan shortly before an
exchange is scheduled, such funds may not be available for exchanges until the
following month; therefore, care should be used to avoid inadvertently
terminating the Automatic Exchange Plan through exhaustion of the account
balance.
No transaction fee for exchanges will be charged in connection with the
Automatic Exchange Plan. However, exchanges of shares of MFS Money Market Fund,
MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund
will be subject to any applicable sales charge. Changes in amounts to be
exchanged to each fund, the Funds to which exchanges are to be made and the
timing of exchanges (monthly or quarterly), or termination of a shareholder's
participation in the Automatic Exchange Plan will be made after instructions in
writing or by telephone (an "Exchange Change Request") are received by the
Shareholder Servicing Agent in proper form (I.E., if in writing -- signed by the
record owner(s) exactly as shares are registered; if by telephone -- proper
account identification is given by the dealer or shareholder of record). Each
Exchange Change Request (other than termination of participation in the program)
must involve at least $50. Generally, if an Exchange Change Request is received
by telephone or in writing before the close of business on the last business day
of a month, the Exchange Change Request will be effective for the following
month's exchange.
A shareholder's right to make additional investments in any of the MFS Funds, to
make exchanges of shares from one MFS Fund to another and to withdraw from an
MFS Fund, as well as a shareholder's other rights and privileges are not
affected by a shareholder's participation in the Automatic Exchange Plan.
<PAGE>
The Automatic Exchange Plan is part of the Exchange Privilege. For additional
information regarding the Automatic Exchange Plan, including the treatment of
any CDSC, see "Exchange Privilege" below.
REINSTATEMENT PRIVILEGE -- Shareholders of each Fund and shareholders of the
other MFS Funds (except MFS Money Market Fund, MFS Government Money Market Fund
and holders of Class A shares of MFS Cash Reserve Fund in the case where shares
of such funds are acquired through direct purchase or reinvested dividends) who
have redeemed their shares have a one-time right to reinvest the redemption
proceeds in the same class of shares of any of the MFS Funds (if shares of the
fund are available for sale) at net asset value (without a sales charge) and, if
applicable, with credit for any CDSC paid. In the case of proceeds reinvested in
MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of
MFS Cash Reserve Fund, the shareholder has the right to exchange the acquired
shares for shares of another MFS Fund at net asset value pursuant to the
exchange privilege described below. Such a reinvestment must be made within 90
days of the redemption and is limited to the amount of the redemption proceeds.
If the shares credited for any CDSC paid are then redeemed within six years of
the initial purchase in the case of Class B shares or 12 months of the initial
purchase in the case of certain Class A shares, a CDSC will be imposed upon
redemption. Although redemptions and repurchases of shares are taxable events, a
reinvestment within a certain period of time in the same fund may be considered
a "wash sale" and may result in the inability to recognize currently all or a
portion of a loss realized on the original redemption for federal income tax
purposes. Please see your tax Adviser for further information.
EXCHANGE PRIVILEGE -- Subject to the requirements set forth below, some or all
of the shares of the same class in an account with a Fund for which payment has
been received by the Fund (I.E., an established account) may be exchanged for
shares of the same class of any of the other MFS Funds (if available for sale)
at net asset value. In addition, Class C shares may be exchanged for shares of
MFS Money Market Fund at net asset value. Exchanges will be made only after
instructions in writing or by telephone (an "Exchange Request") are received for
an established account by the Shareholder Servicing Agent.
Each Exchange Request must be in proper form (I.E., if in writing -- signed by
the record owner(s) exactly as the shares are registered; if by telephone --
proper account identification is given by the dealer or shareholder of record),
and each exchange must involve either shares having an aggregate value of at
least $1,000 ($50 in the case of retirement plan participants whose sponsoring
organizations subscribe to MFS FUNDamental 401(k) Plan or another similar 401(k)
recordkeeping system made available by the Shareholder Servicing Agent) or all
the shares in the account. Each exchange involves the redemption of the shares
of the Fund to be exchanged and the purchase at net asset value (I.E., without a
sales charge) of shares of the same class of the other MFS Fund. Any gain or
loss on the redemption of the shares exchanged is reportable on the
shareholder's federal income tax return, unless both the shares received and the
shares surrendered in the exchange are held in a tax-deferred retirement plan or
other tax-exempt account. No more than five exchanges may be made in any one
Exchange Request by telephone. If the Exchange Request is received by the
Shareholder Servicing Agent prior to the close of regular trading on the
Exchange the exchange usually will occur on that day if all the requirements set
forth above have been complied with at that time. However, payment of the
redemption proceeds by a Fund, and thus the purchase of shares of the other MFS
Fund, may be delayed for up to seven days if the Fund determines that such a
delay would be in the best interest of all its shareholders. Investment dealers
which have satisfied criteria established by MFD may also communicate a
shareholder's Exchange Request to MFD by facsimile subject to the requirements
set forth above.
<PAGE>
No CDSC is imposed on exchanges among the MFS Funds, although liability for the
CDSC is carried forward to the exchanged shares. For purposes of calculating the
CDSC upon redemption of shares acquired in an exchange, the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares.
Additional information with respect to any of the MFS Funds, including a copy of
its current prospectus, may be obtained from investment dealers or the
Shareholder Servicing Agent. A shareholder considering an exchange should obtain
and read the prospectus of the other fund and consider the differences in
objectives and policies before making any exchange. Shareholders of the other
MFS Funds (except MFS Money Market Fund, MFS Government Money Market Fund and
Class A Shares of MFS Cash Reserve Fund for shares acquired through direct
purchase and dividends reinvested prior to June 1, 1992) have the right to
exchange their shares for shares of each Fund, subject to the conditions, if
any, set forth in their respective prospectuses. In addition, unitholders of the
MFS Fixed Fund have the right to exchange their units (except units acquired
through direct purchases) for shares of a Fund, subject to the conditions, if
any, imposed upon such unitholders by the MFS Fixed Fund.
Any state income tax advantages for investment in shares of each state-specific
series of MFS Municipal Series Trust may only benefit residents of such states.
Investors should consult with their own tax Advisers to be sure this is an
appropriate investment, based on their residency and each state's income tax
laws. The exchange privilege (or any aspect of it) may be changed or
discontinued and is subject to certain limitations (see "Purchases" in the
Prospectus).
TAX-DEFERRED RETIREMENT PLANS -- Shares of each Fund may be purchased by all
types of tax-deferred retirement plans. MFD makes available through investment
dealers plans and/or custody agreements for the following:
o Individual Retirement Accounts (IRAs) (for individuals and their
Non-employed spouses who desire to make limited contributions to a
Tax-deferred retirement program and, if eligible, to receive a federal
Income tax deduction for amounts contributed);
o Simplified Employee Pension (SEP-IRA) Plans;
o Retirement Plans Qualified under Section 401(k)of the Internal Revenue Code
of 1986, as amended (the "Code"); o 403(b) Plans (deferred
compensation arrangements for employees of public School systems and
certain non-profit organizations); and
o Certain other qualified pension and profit-sharing plans.
<PAGE>
The plan documents provided by MFD designate a trustee or custodian (unless
another trustee or custodian is designated by the individual or group
establishing the plan) and contain specific information about the plans. Each
plan provides that dividends and distributions will be reinvested automatically.
For further details with respect to any plan, including fees charged by the
trustee, custodian or MFD, tax consequences and redemption information, see the
specific documents for that plan. Plan documents other than those provided by
MFD may be used to establish any of the plans described above. Third party
administrative services, available for some corporate plans, may limit or delay
the processing of transactions.
An investor should consult with his tax Adviser before establishing any of the
tax-deferred retirement plans described above.
Class C shares are not currently available for purchase by any retirement plan
qualified under Internal Revenue Code Section 401(a) or 403(b) if the retirement
plan and/or the sponsoring organization subscribe to the MFS FUNDamental 401(k)
Plan or another similar Section 401(a) or 403(b) recordkeeping program made
available by the Shareholder Servicing Agent.
6. TAX STATUS
Each Fund intends to elect to be treated and to qualify each year as a
"regulated investment company" under Subchapter M of the Code by meeting all
applicable requirements of Subchapter M, including requirements as to the nature
of the Fund's gross income, the amount of Fund distributions, and the
composition and holding period of the Fund's portfolio assets. Because each Fund
intends to distribute all of its net investment income and net realized capital
gains to shareholders in accordance with the timing requirements imposed by the
Code, it is not expected that any Fund will be required to pay any federal
income or excise taxes, although a Fund's foreign-source income may be subject
to foreign withholding taxes. If a Fund should fail to qualify as a "regulated
investment company" in any year, the Fund would incur a regular corporate
federal income tax upon its taxable income and Fund distributions would
generally be taxable as ordinary dividend income to the shareholders.
<PAGE>
Shareholders of each Fund will have to pay federal income taxes and any state or
local taxes on the dividends and capital gain distributions they receive from
the Fund. Dividends from ordinary income, and distributions from net short-term
capital gains (whether paid in cash or reinvested in additional shares) are
taxable to shareholders as ordinary income for federal income tax purposes. A
portion of these dividends (but none of the distributions of capital gains) may
be eligible for the dividends-received deduction for corporations if the
recipient otherwise qualifies for that deduction with respect to its holding of
Fund shares. Availability of the deduction for particular shareholders is
subject to certain limitations, and deducted amounts may be subject to the
alternative minimum tax and result in certain basis adjustments. Distributions
from net capital gains (I.E., the excess of net long-term capital gains over net
short-term capital losses), whether paid in cash or reinvested in additional
shares, are taxable to a Fund's shareholders as long-term capital gains for
federal income tax purposes without regard to the length of time shareholders
have owned their shares.
Fund dividends which are declared in October, November or December and paid the
following January to shareholders of record in such a month will be taxable to
shareholders as if received on December 31 of the year in which they are
declared. Any dividend or distribution will have the effect of reducing the per
share net asset value of shares in a Fund by the amount of the dividend or
distribution. Shareholders purchasing shares shortly before the record date of
any taxable dividend or other distribution may thus pay the full price for the
shares and then effectively receive a portion of the purchase price back as a
taxable distribution.
In general, any gain or loss realized upon a taxable disposition of shares of a
Fund by a shareholder that holds such shares as a capital asset will be treated
as long-term capital gain or loss if the shares have been held for more than
twelve months and otherwise as a short-term capital gain or loss. However, any
loss realized upon a disposition of shares in a Fund held for six months or less
will be treated as a long-term capital loss to the extent of any distributions
of net capital gain made with respect to those shares. Any loss realized upon a
redemption of shares may also be disallowed under rules relating to wash sales.
Gain may be increased (or loss reduced) upon a redemption of Class A shares of a
Fund within ninety days after their purchase followed by any purchase (including
purchases by exchange or by reinvestment) without payment of an additional sales
charge of Class A shares of that Fund or of another MFS Fund (or any other
shares of an MFS Fund generally sold subject to a sales charge).
Each Fund's current dividend and accounting policies may affect the amount,
timing, and character of distributions to shareholders and may under certain
circumstances make an economic return of capital taxable to shareholders. A
Fund's investments in zero coupon securities, deferred interest bonds, stripped
securities, PIK bonds, and certain securities purchased at a market discount
will cause it to realize income prior to the receipt of cash payments with
respect to these securities. In order to distribute this income and avoid a tax
on the Fund, the Fund may be required to liquidate portfolio securities that it
might otherwise have continued to hold, potentially resulting in additional
taxable gain or loss to the Fund.
<PAGE>
An investment by the Equity Income Fund or the Special Opportunities Fund in
residual interests of a CMO that has elected to be treated as a real estate
mortgage investment conduit, or "REMIC," can create complex tax problems,
especially if that Fund has state or local governments or other tax-exempt
organizations as shareholders.
Each Fund's transactions in options, Futures Contracts and Forward Contracts
will be subject to special tax rules that may affect the amount, timing and
character of Fund income and distributions to shareholders. For example, certain
positions held by a Fund on the last business day of each taxable year will be
marked to market (I.E., treated as if closed out) on such day, and any gain or
loss associated with the positions will be treated as 60% long-term and 40%
short term capital gain or loss. Certain positions held by a Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio will constitute "straddles," and may be subject to special tax rules
that would cause deferral of Fund losses, adjustments in the holding periods of
Fund securities and conversion of short-term into long-term capital losses.
Certain tax elections exist for straddles which could alter the effects of these
rules. Each Fund will limit its activities in options, Futures Contracts,
Forward Contracts, and swaps and similar transactions to the extent necessary to
meet the requirements of Subchapter M of the Code.
Special tax considerations apply with respect to foreign investments of a Fund.
For example, foreign exchange gains or losses realized by a Fund will generally
be treated as ordinary income or losses. Use of foreign currencies for
non-hedging purposes and investment by a Fund in certain "passive foreign
investment companies" may be limited in order to avoid imposition of a tax on
the Fund.
Investment income received by a Fund from foreign securities may be subject to
foreign income taxes withheld at the source; the Funds do not expect to be able
to pass through to shareholders Foreign tax credits with respect to such foreign
taxes. The United States has entered into tax treaties with many foreign
countries that may entitle a Fund to a reduced rate of tax or an exemption from
tax on such income; each Fund intends to qualify for treaty reduced rates where
available. It is not possible, however, to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to be invested
within various countries is not known.
Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at the rate of 30%. Each Fund intends
to withhold U.S. federal income tax at the rate of 30% on dividends and other
payments made to Non-U.S. Persons that are subject to such withholding,
regardless of whether a lower treaty rate may be permitted. Any amounts
overwithheld may be recovered by such persons by filing a claim for refund with
the U.S. Internal Revenue Service within the time period applicable to such
claims. Distributions received from a Fund by Non-U.S. Persons may also be
subject to tax under the laws of their own jurisdictions. Each Fund is also
required in certain circumstances to apply backup withholding at a rate of 31%
on taxable dividends and the proceeds of redemptions and exchanges paid to any
shareholder (including a Non-U.S. Person) who does not furnish to the Fund
certain information and certifications or who is otherwise subject to backup
withholding. Backup withholding will not, however, be applied to payments that
have been subject to 30% withholding.
<PAGE>
A Fund will not be required to pay Massachusetts income or excise taxes as long
as it qualifies as a regulated investment company under the Code.
7. DISTRIBUTION PLANS
The Trustees have adopted separate Distribution Plans for Class A, Class B and
Class C shares (the "Distribution Plans") pursuant to Section 12(b) of the 1940
Act and Rule 12b-1 thereunder (the "Rule") after having concluded that there is
a reasonable likelihood that each Distribution Plan would benefit each Fund and
the respective class of shareholders. The Distribution Plans are designed to
promote sales, thereby increasing the net assets of each Fund. Such an increase
may reduce the expense ratio to the extent a Fund's fixed costs are spread over
a larger net asset base. Also, an increase in net assets may lessen the adverse
effect that could result were a Fund required to liquidate portfolio securities
to meet redemptions. There is, however, no assurance that the net assets of a
Fund will increase or that the other benefits referred to above will be
realized.
The Distribution Plans are described in the Prospectus under the caption
"Distribution Plans," which is incorporated herein by reference. The following
information supplements this Prospectus discussion.
SERVICE FEES: With respect to the Class A Distribution Plan, no service fees
will be paid: (i) to any dealer who is the holder or dealer or record for
investors who own Class A shares having an aggregate net asset value less than
$750,000, or such other amount as may be determined from time to time by MFD
(MFD, however, may waive this minimum amount requirement from time to time if
the dealer satisfies certain criteria); or (ii) to any insurance company which
has entered into an agreement with the Fund and MFD that permits such insurance
company to purchase Class A shares from a Fund at their net asset value in
connection with annuity agreements issued in connection with the insurance
company's separate accounts. Dealers may from time to time be required to meet
certain other criteria in order to receive service fees.
With respect to the Class B Distribution Plan, except in the case of the first
year service fee, no service fees will be paid to any securities dealer who is
the holder or dealer of record for investors who own Class B shares having an
aggregate net asset value of less than $750,000 or such other amount as may be
determined by MFD from time to time. MFD, however, may waive this minimum amount
requirement from time to time if the dealer satisfies certain criteria. Dealers
may from time to time be required to meet certain other criteria in order to
receive service fees.
MFD or its affiliates shall be entitled to receive any service fee payable under
any Distribution Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by MFD or its affiliates
for shareholder accounts.
<PAGE>
DISTRIBUTION FEES: The purpose of distribution payments to MFD under the
Distribution Plans is to compensate MFD for its distribution services to a Fund.
MFD pays commissions to dealers as well as expenses of printing prospectuses and
reports used for sales purposes, expenses with respect to the preparation and
printing of sales literature and other distribution related expenses, including,
without limitation, the cost necessary to provide distribution-related services,
or personnel, travel, office expense and equipment.
GENERAL: Each of the Distribution Plans will remain in effect until August 1,
1996, and will continue in effect thereafter only if such continuance is
specifically approved at least annually by vote of both the Trustees and a
majority of the Trustees who are not "interested persons" or financially
interested parties of such Plan ("Distribution Plan Qualified Trustees"). Each
of the Distribution Plans also requires that the Fund and MFD each shall provide
the Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended (and purposes therefor) under such Plan. Each of
the Distribution Plans may be terminated at any time by vote of a majority of
the Distribution Plan Qualified Trustees or by vote of the holders of a majority
of the respective class of the Fund's shares (as defined in "Investment
Restrictions"). All agreements relating to any of the Distribution Plans entered
into between the Fund or MFD and other organizations must be approved by the
Board of Trustees, including a majority of the Distribution Plan Qualified
Trustees. Agreements under any of the Distribution Plans must be in writing,
will be terminated automatically if assigned, and may be terminated at any time
without payment of any penalty, by vote of a majority of the Distribution Plan
Qualified Trustees or by vote of the holders of a majority of the respective
class of a Fund's shares. None of the Distribution Plans may be amended to
increase materially the amount of permitted distribution expenses without the
approval of a majority of the respective class of the Fund's shares (as defined
in "Investment Restrictions") or may be materially amended in any case without a
vote of the Trustees and a majority of the Distribution Plan Qualified Trustees.
The selection and nomination of Distribution Plan Qualified Trustees shall be
committed to the discretion of the non-interested Trustees then in office. No
Trustee who is not an "interested person" has any financial interest in any of
the Distribution Plans or in any related agreement.
<PAGE>
8. DETERMINATION OF NET ASSET VALUE AND PERFORMANCE
NET ASSET VALUE: The net asset value per share of each class of each Fund is
determined each day during which the Exchange is open for trading. (As of the
date of this Statement of Additional Information, the Exchange is open for
trading every weekday except for the following holidays (or the days on which
they are observed): New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.) This
determination is made once each day as of the close of regular trading on the
Exchange by deducting the amount of the liabilities attributable to the class
from the value of the assets attributable to the class and dividing the
difference by the number of shares of the class outstanding. Equity securities
in a Fund's portfolio are valued at the last sale price on the exchange on which
they are primarily traded or on the NASDAQ system for unlisted national market
issues, or at the last quoted bid price for listed securities in which there
were no sales during the day or for unlisted securities not reported on the
NASDAQ system. Bonds and other fixed income securities (other than short-term
obligations) of U.S. issuers in a Fund's portfolio are valued on the basis of
valuations furnished by a pricing service which utilizes both dealer-supplied
valuations and electronic data processing techniques which take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data without exclusive reliance upon quoted
prices or exchange or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities. Forward
Contracts will be valued using a pricing model taking into consideration market
data from an external pricing source. Use of the pricing services has been
approved by the Board of Trustees. All other securities, futures contracts and
options in a Fund's portfolio (other than short-term obligations) for which the
principal market is one or more securities or commodities exchanges (whether
domestic or foreign) will be valued at the last reported sale price or at the
settlement price prior to the determination (or if there has been no current
sale, at the closing bid price) on the primary exchange on which such
securities, futures contracts or options are traded; but if a securities
exchange is not the principal market for securities, such securities will, if
market quotations are readily available, be valued at current bid prices, unless
such securities are reported on the NASDAQ system, in which case they are valued
at the last sale price or, if no sales occurred during the day, at the last
quoted bid price. Short-term obligations in a Fund's portfolio are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees. Short-term obligations with a remaining maturity in excess of 60 days
will be valued upon dealer supplied valuations. Portfolio investments for which
there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Board of Trustees.
<PAGE>
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of regular trading on the Exchange.
Occasionally, events affecting the values of such securities may occur between
the times at which they are determined and the close of regular trading on the
Exchange which will not be reflected in the computation of a Fund's net asset
value unless the Trustees deem that such event would materially affect the net
asset value in which case an adjustment would be made.
All investments and assets are expressed in U.S. dollars based upon current
currency exchange rates. A share's net asset value is effective for orders
received by the dealer prior to its calculation and received by MFD prior to the
close of that business day.
PERFORMANCE INFORMATION
TOTAL RATE OF RETURN: Each Fund will calculate its total rate of return for each
class of shares for certain periods by determining the average annual compounded
rates of return over those periods that would cause an investment of $1,000
(made with all distributions reinvested and reflecting the CDSC or the maximum
public offering price) to reach the value of that investment at the end of the
periods. Each Fund may also calculate (i) a total rate of return, which is not
reduced by the CDSC (4% maximum for Class B shares) and therefore may result in
a higher rate of return, (ii) a total rate of return assuming an initial account
value of $1,000, which will result in a higher rate of return since the value of
the initial account will not be reduced by the sales charge (4.75% maximum with
respect to Class A shares) and/or (iii) total rates of return which represent
aggregate performance over a period or year-by-year performance, and which may
or may not reflect the effect of the maximum or other sales charge or CDSC.
YIELD: Any yield quotation for a class of shares of a Fund is based on the
annualized net investment income per share of that class for the 30-day period.
The yield for each class of the Fund is calculated by dividing the net
investment income allocated to that class earned during the period by the
maximum offering price per share of that class of the Fund on the last day of
the period. The resulting figure is then annualized. Net investment income per
share of a class is determined by dividing (i) the dividends and interest
allocated to that class during the period, minus accrued expense of that class
for the period by (ii) the average number of shares of the class entitled to
receive dividends during the period multiplied by the maximum offering price per
share on the last day of the period. The Fund's yield calculations for Class A
shares assume a maximum sales charge of 4.75%. The yield calculation for Class B
shares assumes no CDSC is paid.
CURRENT DISTRIBUTION RATE: Yield, which is calculated according to a formula
prescribed by the SEC, is not indicative of the amounts which were or will be
paid to a Fund's shareholders. Amounts paid to shareholders of each class are
reflected in the quoted "current distribution rate" for that class. The current
distribution rate for a class is computed by dividing the total amount of
dividends per share paid by the Fund to shareholders of that class during the
past 12 months by the maximum public offering price of that class at the end of
such period. Under certain circumstances, such as when there has been a change
in the amount of dividend payout, or a fundamental change in investment
policies, it might be appropriate to annualize the dividends paid over the
period such policies were in effect, rather than using the dividends during the
past 12 months. The current distribution rate differs from the yield computation
because it may include distributions to shareholders from sources other than
dividends and interest, such as premium income from option writing, short-term
capital gains and return of invested capital, and is calculated over a different
period of time. A Fund's current distribution rate calculation for Class A
shares assumes a maximum sales charge of 4.75%. The Fund's current distribution
rate calculation for Class B shares assumes no CDSC is paid.
<PAGE>
GENERAL: From time to time each Fund may, as appropriate, quote Fund rankings or
reprint all or a portion of evaluations of fund performance and operations
appearing in various independent publications, including but not limited to the
following: Money, Fortune, U.S. News and World Report, Kiplinger's Personal
Finance, The Wall Street Journal, Barron's, Investors Business Daily, Newsweek,
Financial World, Financial Planning, Investment Advisor, USA Today, Pensions and
Investments, SmartMoney, Forbes, Global Finance, Registered Representative,
Institutional Investor, the Investment Company Institute, Johnson's Charts,
Morningstar, Lipper Analytical Services, Inc., CDA Wiesenberger, Shearson Lehman
and Salomon Bros. Indices, Ibbotson, Business Week, Lowry Associates, Media
General, Investment Company Data, The New York Times, Your Money, Strangers
Investment Advisor, Financial Planning on Wall Street, Standard and Poor's,
Individual Investor, THE 100 BEST MUTUAL FUNDS YOU CAN BUY, by Gordon K.
Williamson, Consumer Price Index, and Sanford C. Bernstein & Co. Fund
performance may also be compared to the performance of other mutual funds
tracked by financial or business publications or periodicals. Each Fund may also
quote evaluations mentioned in independent radio or television broadcasts and
use charts and graphs to illustrate the past performance of various indices such
as those mentioned above and illustrations using hypothetical rates of return to
illustrate the effects of compounding and tax-deferral. Each Fund may advertise
examples of the effects of periodic investment plans, including the principle of
dollar cost averaging. In such a program, an investor invests a fixed dollar
amount in a fund at periodic intervals, thereby purchasing fewer shares when
prices are high and more shares when prices are low. While such a strategy does
not assure a profit or guard against a loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of shares
are purchased at the same intervals.
MFS FIRSTS: MFS has a long history of innovations.
- -- 1924 -- Massachusetts Investors Trust is
established as the first mutual fund in
America.
- -- 1924 -- Massachusetts Investors Trust is the
first mutual fund to make full public
disclosure of its operations in
shareholder reports.
- -- 1932 -- One of the first internal research
departments is established to provide
in-house analytical capability for an
investment management firm.
- -- 1933 -- Massachusetts Investors Trust is the
first mutual fund to register under the
Securities Act of 1933 ("Truth in
Securities Act" or "Full Disclosure Act").
- -- 1936 -- Massachusetts Investors Trust is the
first mutual fund to let shareholders
take capital gain distributions either in
additional shares or in cash.
- -- 1976 -- MFS Municipal Bond Fund is among the
first municipal bond funds established.
- -- 1979 -- Spectrum becomes the first combination
fixed/ variable annuity with no initial
sales charge.
- -- 1981 -- MFS World Governments Fund is established
as America's first globally diversified
fixed-income mutual fund.
<PAGE>
- - 1984 -- MFS Municipal High Income Fund is the
first mutual fund to seek high tax-free
income from lower-rated municipal
securities.
- -- 1986 -- MFS Managed Sectors Fund becomes the
first mutual fund to target and shift
investments among industry sectors for
shareholders.
- -- 1986 -- MFS Municipal Income Trust is the first
closed-end, high-yield municipal bond
fund traded on the New York Stock
Exchange.
- -- 1987 -- MFS Multimarket Income Trust is the first
closed-end, multimarket high income fund
listed on the New York Stock Exchange.
- -- 1989 -- MFS Regatta becomes America's first
non-qualified market value adjusted
fixed/variable annuity.
- -- 1990 -- MFS World Total Return Fund is the first
global balanced fund.
- -- 1993 -- MFS(R)World Growth Fund is the first
global emerging markets fund to offer the
expertise of two sub-advisers.
- -- 1993 -- MFS(R)Union Standard Fund is the first
mutual fund to invest in companies
deemed to be union-friendly by an
Advisory Board of senior labor officials,
senior managers of companies with
significant labor contracts, academics
and other national labor leaders of
experts.
9. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional Shares of Beneficial Interest (without par value) of one or
more separate series and to divide or combine the shares of any series into a
greater or lesser number of shares without thereby changing the proportionate
beneficial interests in that series. The Trustees have currently authorized
shares of each Fund and three other series. The Declaration of Trust further
authorizes the Trustees to classify or reclassify any series of shares into one
or more classes. Pursuant thereto, the Trustees have authorized the issuance of
three classes of shares of each Fund (Class A, Class B and Class C shares). Each
share of a class of a Fund represents an equal proportionate interest in the
assets of the Fund allocable to that class. Upon liquidation of a Fund,
shareholders of each class of the Fund are entitled to share pro rata in the
Fund's net assets allocable to such class available for distribution to
shareholders. The Trust reserves the right to create and issue a number of
series and additional classes of shares, in which case the shares of each class
of a series would participate equally in the earnings, dividends and assets
allocable to that class of the particular series.
<PAGE>
Shareholders are entitled to one vote for each share held and may vote in the
election of Trustees and on other matters submitted to meetings of shareholders.
Although Trustees are not elected annually by the shareholders, the Declaration
of Trust provides that a Trustee may be removed from office at a meeting of
shareholders by a vote of two-thirds of the outstanding shares of the Trust. A
meeting of shareholders will be called upon the request of shareholders of
record holding in the aggregate not less than 10% of the outstanding voting
securities of the Trust. No material amendment may be made to the Declaration of
Trust without the affirmative vote of a majority of the Trust's outstanding
shares (as defined in "Investment Restrictions"). The Trust or any series of the
Trust may be terminated (i) upon the merger or consolidation of the Trust or any
series of the Trust with another organization or upon the sale of all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by the vote of the holders of
two-thirds of the Trust's or the affected series' outstanding shares voting as a
single class, or of the affected series of the Trust, except that if the
Trustees recommend such merger, consolidation or sale, the approval by vote of
the holders of a majority of the Trust's or the affected series' outstanding
shares will be sufficient, or (ii) upon liquidation and distribution of the
assets of a Fund, if approved by the vote of the holders of two-thirds of its
outstanding shares of the Trust, or (iii) by the Trustees by written notice to
its shareholders. If not so terminated, the Trust will continue indefinitely.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust". Under Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and provides for indemnification
and reimbursement of expenses out of Trust property for any shareholder held
personally liable for the obligations of the Trust. The Declaration of Trust
also provides that the Trust shall maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust and its shareholders and the Trustees, officers, employees and agents of
the Trust covering possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance existed and the
Trust itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Trust are not
binding upon the Trustees individually but only upon the property of the Trust
and that the Trustees will not be liable for any action or failure to act, but
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of his willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office.
10. INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
Ernst & Young LLP are each Fund's independent auditors.
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION TABLE
TOTAL TRUSTEE FEES FROM FUNDS
TRUSTEE FEES FROM EACH AND FUND COMPLEX(2)
TRUSTEE FUND(1)
<S> <C> <C>
Richard B. Bailey.................................... 0 226,221
Marshall N. Cohan.................................... 0 147,274
Dr. Lawrence Cohn.................................... 0 133,524
Sir David Gibbons.................................... 0 132,024
Abby M. O'Neill...................................... 0 125,924
Walter E. Robb, III.................................. 0 147,274
J. Dale Sherratt..................................... 0 147,274
Ward Smith........................................... 0 147,274
<FN>
1) Estimated, for the fiscal year ending August 31, 1996.
2) Information provided is for calendar year 1994. All Trustees served as
Trustes of 36 funds within the MFS fund complex (having aggregate net
assets at December 31, 1994, of approximarely $9.7billion) except Mr.
Baily, who served as Trustee of 56 funds within the MFS fund complex
(having aggregate net assets at Decemer 31, 1994, of approximately
$24.5).
</FN>
</TABLE>
<PAGE>
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street, Boston, MA 02116
(617) 954-5000
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA 02116
(617) 954-5000
CUSTODIAN AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc.
500 Boylston Street, Boston, MA 02116
Toll free: (800) 225-2606
Mailing Address:
P.O. Box 2281, Boston, MA 02107-9906
INDEPENDENT AUDITORS
Ernst & Young, LLP
200 Clarendon Street
Boston, MA 02116
MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND
MFS(R) CORE GROWTH FUND
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
500 BOYLSTON STREET
BOSTON, MA 02116
[LOGO]
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
MFS(R) EQUITY INCOME FUND
(A) FINANCIAL STATEMENTS INCLUDED IN PARTS A AND B:
Included in Part A of this Registration Statement:
None
Included in Part B of this Registration Statement:
None
MFS(R) RESEARCH GROWTH AND INCOME FUND
(A) FINANCIAL STATEMENTS INCLUDED IN PARTS A AND B:
Included in Part A of this Registration Statement:
None
Included in Part B of this Registration Statement:
None
MFS(R) CORE GROWTH FUND
(A) FINANCIAL STATEMENTS INCLUDED IN PARTS A AND B:
Included in Part A of this Registration Statement:
None
Included in Part B of this Registration Statement:
None
MFS(R) AGGRESSIVE GROWTH FUND
(A) FINANCIAL STATEMENTS INCLUDED IN PARTS A AND B:
Included in Part A of this Registration Statement:
None
<PAGE>
Included in Part B of this Registration Statement:
None
MFS(R) SPECIAL OPPORTUNITIES FUND
(A) FINANCIAL STATEMENTS INCLUDED IN PARTS A AND B:
Included in Part A of this Registration Statement:
None
Included in Part B of this Registration Statement:
None
(B) EXHIBITS
1 (a) Amended and Restated Declaration of Trust, dated January 6,
1995. (5)
(b) Amendment to Declaration of Trust, dated October 12, 1995;
filed herewith.
2 Amended and Restated By-Laws dated December 14, 1994. (5)
3 Not Applicable.
4 Form of Share Certificate for Class A, Class B and Class C
Shares. (2)
5 (a) Investment Advisory Agreement for MFS(R) Cash Reserve Fund,
dated September 1, 1993; filed herewith.
(b) Investment Advisory Agreement for MFS(R) Managed Sectors
Fund, dated September 1, 1993; filed herewith.
(c) Investment Advisory Agreement for MFS(R) World Asset
Allocation Fund, dated June 2, 1994; filed herewith.
(d) Form of Investment Advisory Agreement for MFS(R)Equity Income
Fund, dated January 2, 1996; filed herewith.
(e) Form of Investment Advisory Agreement for MFS(R) Research
Growth and Income Fund, dated January 2, 1996; filed
herewith.
<PAGE>
(f) Form of Investment Advisory Agreement for MFS(R) Core
Growth Fund, dated January 2, 1996; filed herewith.
(g) Form of Investment Advisory Agreement for MFS(R) Aggressive
Growth Fund, dated January 2, 1996; filed herewith.
(h) Form of Investment Advisory Agreement for MFS(R) Special
Opportunities Fund, dated January 2, 1996; filed herewith.
6 (a) Distribution Agreement, dated January 1, 1995. (5)
(b) Dealer Agreement between MFS Fund Distributors, Inc., ("MFD")
and a dealer, dated December 28, 1994 and the Mutual Fund
Agreement between MFD and a bank or NASD affiliate, dated
December 28, 1994. (1)
7 Retirement Plan for Non-Interested Person Trustees, dated
January 1, 1991; filed herewith.
8 (a) Custodian Agreement, dated January 28, 1988; filed herewith.
(b) Amendment No. 1 to the Custodian Agreement, dated February
29, 1988 and October 1, 1989, respectively; filed herewith.
(c) Amendment No. 2 to the Custodian Agreement, dated October 9,
1991; filed herewith.
(d) Custodian Agreement between Investors Bank & Trust and MFS(R)
World Asset Allocation Fund dated June 2, 1994; filed
herewith.
9 (a) Shareholder Servicing Agent Agreement, dated September 10,
1986. (6)
(b) Amendment to the Shareholder Servicing Agent Agreement,
dated June 2, 1994; filed herewith.
(c) Exchange Privilege Agreement, dated September 1, 1993. (2)
(d) Loan Agreement by and among MFS Borrowers and The First
National Bank of Boston dated as of September 29, 1989, as
amended through and including the second Amendment dated
April 21, 1994. (3)
<PAGE>
(e) Dividend Disbursing Agent Agreement dated September 10, 1986;
filed herewith.
10 Consent and Opinion of Counsel filed with Registrant's
Rule 24f-2 Notice for fiscal year ended August 31, 1994 on
October 31, 1994.
11 Consent of Deloitte & Touche LLP. (5)
12 Not Applicable.
13 Not Applicable.
14 (a) Forms for Individual Retirement Account Disclosure Statement
as currently in effect. (4)
(b) Forms for MFS 403(b) Custodial Account Agreement as currently
in effect. (4)
(c) Forms for MFS Prototype Paired Defined Contribution Plans as
Trust Agreement as currently in effect. (4)
15 (a) Distribution Plan for Class A Shares of MFS(R) Managed
Sectors Fund, dated December 14, 1994. (5)
(b) Amended and Restated Distribution Plan for Class B Shares of
MFS(R) Managed Sectors Fund, dated December 14, 1994. (5)
(c) Distribution Plan for Class A Shares of MFS(R) Cash Reserve
Fund, dated December 14, 1994. (5)
(d) Distribution Plan for Class B Shares of MFS(R) Cash Reserve
Fund, dated December 14, 1994. (5)
(e) Distribution Plan for Class A Shares of MFS(R) World Asset
Allocation Fund, dated December 14, 1994. (5)
(f) Distribution Plan for Class B Shares of MFS(R) World Asset
Allocation Fund, dated December 14, 1994. (5)
(g) Distribution Plan for Class C Shares of MFS(R) World Asset
Allocation Fund dated December 14, 1994. (5)
<PAGE>
(h) Form of Distribution Plan for Class A Shares of MFS(R)
Equity Income Fund, MFS(R) Research Growth and Income Fund,
MFS(R) Core Growth Fund, MFS(R) Aggressive Growth Fund and
MFS(R) Special Opportunities Fund each dated January 2, 1996;
filed herewith.
(i) Form of Distribution Plan for Class B Shares of MFS(R)
Equity Income Fund, MFS(R) Research Growth and Income Fund,
MFS(R) Core Growth Fund, MFS(R) Aggressive Growth Fund and
MFS(R) Special Opportunities Fund each dated January 2, 1996;
filed herewith.
(j) Form of Distribution Plan for Class C Shares of MFS(R)
Equity Income Fund, MFS(R) Research Growth and Income Fund,
MFS(R) Core Growth Fund, MFS(R) Aggressive Growth Fund and
MFS(R) Special Opportunities Fund each dated January 2, 1996;
filed herewith.
16 Schedule for Computation of Performance Quotations - Yield
Calculation, Average Annual and Aggregate Total Return and
Current Distribution Rate. (1)
17 Not Applicable.
Power of Attorney, dated August 11, 1994; filed herewith.
- ---------------------
(1) Incorporated by reference to MFS Municipal Series Trust (File Nos.
2-92915 and 811-4096) Post-Effective Amendment No. 26 filed with the SEC
via EDGAR on February 22, 1995.
(2) Incorporated by reference to MFS Municipal Series Trust (File Nos.
2-92915 and 811-4096) Post-Effective Amendment No. 28 filed with the SEC
via EDGAR on July 28, 1995.
(3) Incorporated by reference to Amendment No. 8 on Form N-2 for MFS
Municipal Income Trust (File No. 811-4841) filed with the SEC via EDGAR
on February 28, 1995.
(4) Incorporated by reference to MFS Series Trust IX (File Nos. 2-50409 and
811-2464) Post-Effective Amendment No. 32 filed with the SEC via EDGAR on
August 28, 1995.
(5) Incorporated by reference to the Registrant's Post-Effective Amendment
No. 20 filed with the SEC via EDGAR on March 30, 1995.
(6) Incorporated by reference to MFS Series Trust II (File Nos. 33-7637 and
811-4775) Post-Effective Amendment No. 17 filed with the SEC via EDGAR on
October 13, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
FOR MFS MANAGED SECTORS FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 19,028
(without par value) (as of September 29, 1995)
<PAGE>
Class B Shares of Beneficial Interest 18,017
(without par value) (as of September 29, 1995)
FOR MFS CASH RESERVE FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 1,634
(without par value) (as of September 29, 1995)
Class B Shares of Beneficial Interest 14,518
(without par value) (as of September 29, 1995)
FOR MFS WORLD ASSET ALLOCATION FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 5,111
(without par value) (as of September 29, 1995)
Class B Shares of Beneficial Interest 6,168
(without par value) (as of September 29, 1995)
Class C Shares of Beneficial Interest 738
(without par value) (as of September 29, 1995)
FOR MFS EQUITY INCOME FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class B Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class C Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
<PAGE>
FOR MFS RESEARCH GROWTH AND INCOME FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class B Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class C Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
FOR MFS CORE GROWTH FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class B Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class C Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
FOR MFS AGGRESSIVE GROWTH FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class B Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class C Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
<PAGE>
FOR MFS SPECIAL OPPORTUNITIES FUND
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Class A Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class B Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
Class C Shares of Beneficial Interest 0
(without par value) (as of September 29, 1995)
ITEM 27. INDEMNIFICATION
Reference is hereby made to (a) Article V of the Trust's
Declaration of Trust, incorporated by reference to the Registrant's
Post-Effective Amendment No. 20 filed with the SEC via EDGAR on March 30, 1995
and (b) Section 8 of the Shareholder Servicing Agent Agreeement, incorporated by
reference to MFS Series Trust II, Post-Effective Amendment No. 17 filed with the
SEC via EDGAR on October 13, 1995.
The Trustees and officers of the Registrant and the personnel
of the Registrant's investment adviser and principal underwriter are insured
under an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940, as amended
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
MFS serves as investment adviser to the following open-end
Funds comprising the MFS Family of Funds: Massachusetts Investors Trust,
Massachusetts Investors Growth Stock Fund, MFS Growth Opportunities Fund, MFS
Government Securities Fund, MFS Government Limited Maturity Fund, MFS Series
Trust I (which has three series: MFS Managed Sectors Fund, MFS Cash Reserve Fund
and MFS World Asset Allocation Fund), MFS Series Trust II (which has four
series: MFS Emerging Growth Fund, MFS Capital Growth Fund, MFS Intermediate
Income Fund and MFS Gold & Natural Resources Fund), MFS Series Trust III (which
has two series: MFS High Income Fund and MFS Municipal High Income Fund), MFS
Series Trust IV (which has four series: MFS Money Market Fund, MFS Government
Money Market Fund, MFS Municipal Bond Fund and MFS OTC Fund), MFS Series Trust V
(which has two series: MFS Total Return Fund and MFS Research Fund), MFS Series
Trust VI (which has three series: MFS World Total Return Fund, MFS Utilities
Fund and MFS World Equity Fund), MFS Series Trust VII (which has two series: MFS
World Governments Fund and MFS Value Fund), MFS Series Trust VIII (which has two
series: MFS Strategic Income Fund and MFS World Growth Fund), MFS Series Trust
IX (which has three series: MFS Bond Fund, MFS Limited Maturity Fund and MFS
Municipal Limited Maturity Fund), MFS Series Trust X (which has four series: MFS
Government Mortgage Fund, MFS/Foreign & Colonial Emerging Markets Equity Fund,
MFS/Foreign and Colonial International Growth Fund and MFS/Foreign and Colonial
International Growth & Income Fund), and MFS Municipal Series Trust (which has
19
<PAGE>
series: MFS Alabama Municipal Bond Fund, MFS Arkansas Municipal Bond Fund, MFS
California Municipal Bond Fund, MFS Florida Municipal Bond Fund, MFS Georgia
Municipal Bond Fund, MFS Louisiana Municipal Bond Fund, MFS Maryland Municipal
Bond Fund, MFS Massachusetts Municipal Bond Fund, MFS Mississippi Municipal Bond
Fund, MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund,
MFS Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund,
MFS Tennessee Municipal Bond Fund, MFS Texas Municipal Bond Fund, MFS Virginia
Municipal Bond Fund, MFS Washington Municipal Bond Fund, MFS West Virginia
Municipal Bond Fund and MFS Municipal Income Fund) (the "MFS Funds"). The
principal business address of each of the aforementioned Funds is 500 Boylston
Street, Boston, Massachusetts 02116.
MFS also serves as investment adviser of the following
no-load, open-end Funds: MFS Institutional Trust ("MFSIT") (which has seven
series), MFS Variable Insurance Trust ("MVI") (which has twelve series) and MFS
Union Standard Trust ("UST") (which has two series). The principal business
address of each of the aforementioned Funds is 500 Boylston Street, Boston,
Massachusetts 02116.
In addition, MFS serves as investment adviser to the following
closed-end Funds: MFS Municipal Income Trust, MFS Multimarket Income Trust, MFS
Government Markets Income Trust, MFS Intermediate Income Trust, MFS Charter
Income Trust and MFS Special Value Trust (the "MFS Closed-End Funds"). The
principal business address of each of the aforementioned Funds is 500 Boylston
Street, Boston, Massachusetts 02116.
Lastly, MFS serves as investment adviser to MFS/Sun Life
Series Trust ("MFS/SL"), Sun Growth Variable Annuity Funds, Inc. ("SGVAF"),
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. The principal business address of each is One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02181.
MFS International Ltd. ("MIL"), a limited liability company
organized under the laws of the Republic of Ireland and a subsidiary of MFS,
whose principal business address is 41-45 St. Stephen's Green, Dublin 2,
Ireland, serves as investment adviser to and distributor for MFS International
Fund (which has four portfolios: MFS International Funds-U.S. Equity Fund, MFS
International Funds-U.S. Emerging Growth Fund, MFS International
Funds-International Government Fund and MFS International Funds-Charter Income
Fund) (the "MIL Funds"). The MIL Funds are organized in Luxembourg and qualify
as an undertaking for collective investments in transferable securities (UCITS).
The principal business address of the MIL Funds is 47, Boulevard Royal, L-2449
Luxembourg.
MIL also serves as investment adviser to and distributor for
MFS Meridian U.S. Government Bond Fund, MFS Meridian Charter Income Fund, MFS
Meridian Global Government Fund, MFS Meridian U.S. Emerging Growth Fund, MFS
Meridian Global Equity Fund, MFS Meridian Limited Maturity Fund, MFS Meridian
World Growth Fund, MFS Meridian Money Market Fund, MFS Meridian World Total
Return Fund and MFS Meridian U.S. Equity Fund (collectively the "MFS Meridian
Funds"). Each of the MFS Meridian Funds is organized as an exempt company under
the laws of the Cayman Islands. The principal business address of each of the
MFS Meridian Funds is P.O. Box 309, Grand Cayman, Cayman Islands, British West
Indies.
<PAGE>
MFS International (U.K.) Ltd. ("MIL-UK"), a private limited
company registered with the Registrar of Companies for England and Wales whose
current address is 4 John Carpenter Street, London, England ED4Y 0NH, is
involved primarily in marketing and investment research activities with respect
to private clients and the MIL Funds and the MFS Meridian Funds.
MFS Fund Distributors, Inc. ("MFD"), a wholly owned
subsidiary of MFS, serves as distributor for the MFS Funds, MVI, UST and MFSIT.
Clarendon Insurance Agency, Inc. ("CIAI"), a wholly owned
subsidiary of MFS, serves as distributor for certain life insurance and
annuity contracts issued by Sun Life Assurance Company of Canada (U.S.).
MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary
of MFS, serves as shareholder servicing agent to the MFS Funds, the MFS
Closed-End Funds, MFSIT, MVI and UST.
MFS Asset Management, Inc. ("AMI"), a wholly owned
subsidiary of MFS, provides investment advice to substantial private clients.
MFS Retirement Services, Inc. ("RSI"), a wholly owned
subsidiary of MFS, markets MFS products to retirement plans and provides
administrative and record keeping services for retirement plans.
MFS
The Directors of MFS are A. Keith Brodkin, Jeffrey L.
Shames, Arnold D. Scott, John R. Gardner and John D. McNeil. Mr. Brodkin is
the Chairman, Mr. Shames is the President, Mr. Scott is a Senior Executive
Vice President and Secretary, Bruce C. Avery, William S. Harris, William W.
Scott, Jr., and Patricia A. Zlotin are Executive Vice Presidents, James E.
Russell is a Senior Vice President and the Treasurer, Stephen E. Cavan is a
Senior Vice President, General Counsel and an Assistant Secretary, Joseph W.
Dello Russo is a Senior Vice President and Chief Financial Officer, Robert T.
Burns is a Vice President and an Assistant Secretary of MFS, and Mary Kay
Doherty is a Vice President and Assistant Treasurer.
MASSACHUSETTS INVESTORS TRUST
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
MFS GROWTH OPPORTUNITIES FUND
MFS GOVERNMENT SECURITIES FUND
MFS SERIES TRUST I
MFS SERIES TRUST V
MFS SERIES TRUST VI
MFS SERIES TRUST X
MFS GOVERNMENT LIMITED MATURITY FUND
A. Keith Brodkin is the Chairman and President, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Vice
President of MFS, is the Assistant Treasurer, James R. Bordewick, Jr., Vice
President and Associate General Counsel of MFS, is the Assistant Secretary.
<PAGE>
MFS SERIES TRUST II
A. Keith Brodkin is the Chairman and President, Leslie J.
Nanberg, Senior Vice President of MFS, is a Vice President, Stephen E. Cavan
is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the
Assistant Treasurer, and James R. Bordewick, Jr., is the Assistant Secretary.
MFS GOVERNMENT MARKETS INCOME TRUST
MFS INTERMEDIATE INCOME TRUST
A. Keith Brodkin is the Chairman and President, Patricia A.
Zlotin, Executive Vice President of MFS and Leslie J. Nanberg, Senior Vice
President of MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer, and
James R. Bordewick, Jr., is the Assistant Secretary.
MFS SERIES TRUST III
A. Keith Brodkin is the Chairman and President, James T.
Swanson, Robert J. Manning, Cynthia M. Brown and Joan S. Batchelder, Senior
Vice Presidents of MFS, Bernard Scozzafava, Vice President of MFS, and Matthew
Fontaine, Assistant Vice President of MFS, are Vice Presidents, Sheila
Burns-Magnan and Daniel E. McManus, Assistant Vice Presidents of MFS, are
Assistant Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London
is the Treasurer, James O. Yost is the Assistant Treasurer, and James R.
Bordewick, Jr., is the Assistant Secretary.
MFS SERIES TRUST IV
MFS SERIES TRUST IX
A. Keith Brodkin is the Chairman and President, Robert A.
Dennis and Geoffrey L. Kurinsky, Senior Vice Presidents of MFS, are Vice
Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick,
Jr., is the Assistant Secretary.
<PAGE>
MFS SERIES TRUST VII
A. Keith Brodkin is the Chairman and President, Leslie J.
Nanberg and Stephen C. Bryant, Senior Vice Presidents of MFS, are Vice
Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick,
Jr., is the Assistant Secretary.
MFS SERIES TRUST VIII
A. Keith Brodkin is the Chairman and President, Jeffrey L.
Shames, Leslie J. Nanberg, Patricia A. Zlotin, James T. Swanson and John D.
Laupheimer, Jr., Vice President of MFS, are Vice Presidents, Stephen E. Cavan
is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the
Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.
MFS MUNICIPAL SERIES TRUST
A. Keith Brodkin is the Chairman and President, Cynthia M.
Brown and Robert A. Dennis are Vice Presidents, David B. Smith, Geoffrey L.
Schechter and David R. King, Vice Presidents of MFS, are Vice Presidents,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant
Secretary.
MFS VARIABLE INSURANCE TRUST
MFS UNION STANDARD TRUST
MFS INSTITUTIONAL TRUST
A. Keith Brodkin is the Chairman and President, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is
the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant
Secretary.
MFS MUNICIPAL INCOME TRUST
A. Keith Brodkin is the Chairman and President, Cynthia M.
Brown and Robert J. Manning are Vice Presidents, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost, is the Assistant
Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.
MFS MULTIMARKET INCOME TRUST
MFS CHARTER INCOME TRUST
A. Keith Brodkin is the Chairman and President, Patricia A.
Zlotin, Leslie J. Nanberg and James T. Swanson are Vice Presidents, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Vice
President of MFS, is the Assistant Treasurer and James R. Bordewick, Jr., is
the Assistant Secretary.
<PAGE>
MFS SPECIAL VALUE TRUST
A. Keith Brodkin is the Chairman and President, Jeffrey L.
Shames, Patricia A. Zlotin and Robert J. Manning are Vice Presidents, Stephen
E. Cavan is the Secretary, W. Thomas London is the Treasurer, and James O.
Yost, is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant
Secretary.
SGVAF
W. Thomas London is the Treasurer.
MIL
A. Keith Brodkin is a Director and the Chairman, Arnold D.
Scott and Jeffrey L. Shames are Directors, Ziad Malek, Senior Vice President
of MFS, is the President, Thomas J. Cashman, Jr., a Senior Vice President of
MFS, is a Senior Vice President, Stephen E. Cavan is a Director, Senior Vice
President and the Clerk, James R. Bordewick, Jr. is a Director, Vice President
and an Assistant Clerk, Robert T. Burns is an Assistant Clerk, Joseph W. Dello
Russo is the Treasurer and James E. Russell is the Assistant Treasurer.
MIL-UK
A. Keith Brodkin is a Director and the Chairman, Arnold D.
Scott, Jeffrey L. Shames, and James R. Bordewick, Jr., are Directors, Stephen
E. Cavan is a Director and the Secretary, Ziad Malek is the President, Joseph
W. Dello Russo is the Treasurer, and Robert T. Burns is the Assistant
Secretary.
MIL FUND
A. Keith Brodkin is the Chairman, President and a Director,
Richard B. Bailey, John A. Brindle and Richard W. S. Baker are Directors,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant
Secretary, and Ziad Malek is a Senior Vice President.
MFS MERIDIAN FUND
A. Keith Brodkin is the Chairman, President and a Director,
Richard B. Bailey, John A. Brindle, Richard W. S. Baker, Arnold D. Scott and
Jeffrey L. Shames are Directors, Stephen E. Cavan is the Secretary, W. Thomas
London is the Treasurer, James R. Bordewick, Jr., is the Assistant Secretary,
James O. Yost is the Assistant Treasurer, and Ziad Malek is a Senior Vice
President.
<PAGE>
MFD
A. Keith Brodkin is the Chairman and a Director, Arnold D.
Scott and Jeffrey L. Shames are Directors, William W. Scott, Jr., an Executive
Vice President of MFS, is the President, Stephen E. Cavan is the Secretary,
Robert T. Burns is the Assistant Secretary, Joseph W. Dello Russo is the
Treasurer, and James E. Russell is the Assistant Treasurer.
CIAI
A. Keith Brodkin is the Chairman and a Director, Arnold D.
Scott and Jeffrey L. Shames are Directors, Cynthia Orcott is President, Bruce
C. Avery is the Vice President, Joseph W. Dello Russo is the Treasurer, James
E. Russell is the Assistant Treasurer, Stephen E. Cavan is the Secretary, and
Robert T. Burns is the Assistant Secretary.
MFSC
A. Keith Brodkin is the Chairman and a Director, Arnold D.
Scott and Jeffrey L. Shames are Directors, Joseph A. Recomendes, a Senior Vice
President of MFS, is Vice Chairman and a Director, Janet A. Clifford is the
Executive Vice President, Joseph W. Dello Russo is the Treasurer, James E.
Russell is the Assistant Treasurer, Stephen E. Cavan is the Secretary, and
Robert T. Burns is the Assistant Secretary.
AMI
A. Keith Brodkin is the Chairman and a Director, Jeffrey L.
Shames, and Arnold D. Scott are Directors, Thomas J. Cashman, Jr., is the
President and a Director, Leslie J. Nanberg is a Senior Vice President, a
Managing Director and a Director, George F. Bennett, Carol A. Corley, John A.
Gee, Brianne Grady and Kevin R. Parke are Senior Vice Presidents and Managing
Directors, Joseph W. Dello Russo is the Treasurer, James E. Russell is the
Assistant Treasurer and Robert T. Burns is the Secretary.
RSI
William W. Scott, Jr., Joseph A. Recomendes and Bruce C.
Avery are Directors, Arnold D. Scott is the Chairman and a Director, Douglas
C. Grip, a Senior Vice President of MFS, is the President, Joseph W. Dello
Russo is the Treasurer, James E. Russell is the Assistant Treasurer, Stephen
E. Cavan is the Secretary, Robert T. Burns is the Assistant Secretary and
Sharon A. Brovelli is a Senior Vice President.
<PAGE>
In addition, the following persons, Directors or officers of
MFS, have the affiliations indicated:
A. Keith Brodkin Director, Sun Life Assurance Company of
Canada (U.S.), One Sun Life Executive Park,
Wellesley Hills, Massachusetts
Director, Sun Life Insurance and Annuity
Company of New York, 67 Broad Street, New
York, New York
John R. Gardner President and a Director, Sun Life Assurance
Company of Canada, Sun Life Centre, 150 King
Street West, Toronto, Ontario, Canada
(Mr. Gardner is also an officer and/or
Director of various subsidiaries and
affiliates of Sun Life)
John D. McNeil Chairman, Sun Life Assurance Company of
Canada, Sun Life Centre, 150 King Street
West, Toronto, Ontario, Canada (Mr. McNeil
is also an officer and/or Director of
various subsidiaries and affiliates of Sun
Life)
Joseph W. Dello Russo Director of Mutual Fund Operations, The Boston
Company, Exchange Place, Boston,
Massachusetts (until August, 1994)
ITEM 29. DISTRIBUTORS
(a) Reference is hereby made to Item 28 above.
(b) Reference is hereby made to Item 28 above; the principal
business address of each of these persons is 500 Boylston Street, Boston,
Massachusetts 02116.
(c) Not applicable.
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Registrant are located, in
whole or in part, at the office of the Registrant and the following locations:
NAME ADDRESS
Massachusetts Financial Services 500 Boylston Street
Company (investment adviser) Boston, MA 02116
MFS Fund Distributors, Inc. 500 Boylston Street
(distributor) Boston, MA 02116
State Street Bank and Trust Company State Street South
(custodian) 5-West
North Quincy, MA 02171
Investors Bank & Trust Company 89 South Street
(custodian) Boston, MA 02111
MFS Service Center, Inc. 500 Boylston Street
(transfer agent) Boston, MA 02116
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The registrant undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
Shareholders upon request and without a charge.
(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the provisions set forth in Item 27 of
this Part C, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the Securities being Registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts on the 17th day of October, 1995.
MFS SERIES TRUST I
By: JAMES R. BORDEWICK, JR.
Name: James R. Bordewick, Jr.
Title: Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to its Registration Statement has been signed
below by the following persons in the capacities indicated on October 17, 1995.
SIGNATURE TITLE
A. KEITH BRODKIN* Chairman, President (Principal
A. Keith Brodkin Executive Officer) and Trustee
W. THOMAS LONDON* Treasurer (Principal Financial
W. Thomas London Officer and Principal Accounting
Officer)
RICHARD B. BAILEY* Trustee
Richard B. Bailey
MARSHALL N. COHAN* Trustee
Marshall N. Cohan
LAWRENCE H. COHN, M.D.* Trustee
Lawrence H. Cohn, M.D.
SIR J. DAVID GIBBONS* Trustee
Sir J. David Gibbons
<PAGE>
ABBY M. O'NEILL* Trustee
Abby M. O'Neill
WALTER E. ROBB, III* Trustee
Walter E. Robb, III
ARNOLD D. SCOTT* Trustee
Arnold D. Scott
JEFFREY L. SHAMES* Trustee
Jeffrey L. Shames
J. DALE SHERRATT* Trustee
J. Dale Sherratt
WARD SMITH* Trustee
Ward Smith
*By: JAMES R. BORDEWICK, JR.
Name: James R. Bordewick, Jr.
as Attorney-in-fact
Executed by James R. Bordewick, Jr.
on behalf of those indicated pursuant
to a Power of Attorney dated
August 11, 1994; filed herewith.
<PAGE>
POWER OF ATTORNEY
MFS Series Trust I
The undersigned, Trustees and officers of MFS Series Trust I (the
"Registrant"), hereby severally constitute and appoint A. Keith Brodkin, W.
Thomas London, Stephen E. Cavan and James R. Bordewick, Jr., and each of them
singly, as true and lawful attorneys, with full power to them and each of them
to sign for each of the undersigned, in the names of, and in the capacities
indicated below, any Registration Statement and any and all amendments thereto
and to file with the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission for the
purpose of registering the Registrant as a management investment company under
the Investment Company Act of 1940 and/or the shares issued by the Registrant
under the Securities Act of 1933 granting unto our said attorneys, and each of
them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary or desirable to be done in the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys or any of them may
lawfully do or cause to be done by virtue thereof.
In WITNESS WHEREOF, the undersigned have hereunto set their hand on
this 11th day of August, 1994.
Signatures Title(s)
A. KEITH BRODKIN Chairman of the Board; Trustee; and
A. Keith Brodkin Principal Executive Officer
RICHARD B. BAILEY Trustee
Richard B. Bailey
MARSHALL N. COHAN Trustee
Marshall N. Cohan
LAWRENCE H. COHN Trustee
Lawrence H. Cohn
SIR J. DAVID GIBBONS Trustee
Sir J. David Gibbons
<PAGE>
JEFFREY L. SHAMES Trustee
Jeffrey L. Shames
ABBY M. O'NEILL Trustee
Abby M. O'Neill
WALTER E. ROBB, III Trustee
Walter E. Robb, III
J. DALE SHERATT Trustee
J. Dale Sheratt
WARD SMITH Trustee
Ward Smith
ARNOLD D. SCOTT Trustee
Arnold D. Scott
W. THOMAS LONDON Principal Financial and Accounting
W. Thomas London Officer
<PAGE>
MFS SERIES TRUST I
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
1 (b) Amendment to Declaration of Trust, dated October
12, 1995.
5 (a) Investment Advisory Agreement for MFS(R) Cash
Reserve Fund, dated September 1, 1993.
(b) Investment Advisory Agreement for MFS(R) Managed
Sectors Fund, dated September 1, 1993.
(c) Investment Advisory Agreement for MFS(R) World
Asset Allocation Fund dated June 2, 1994.
(d) Form of Investment Advisory Agreement for MFS(R)
Equity Income Fund, dated January 2, 1996.
(e) Form of Investment Advisory Agreement for MFS(R)
Research Growth and Income Fund, dated January
2, 1996.
(f) Form of Investment Advisory Agreement for MFS(R)
Core Growth Fund, dated January 2, 1996.
(g) Form of Investment Advisory Agreement for MFS(R)
Aggressive Growth Fund, dated January 2, 1996.
(h) Form of Investment Advisory Agreement for MFS(R)
Special Opportunities Fund, dated January 2,
1996.
7 Retirement Plan for Non-Interested Person
Trustees, dated January 1, 1991.
8 (a) Custodian Agreement, dated January 28, 1988.
(b) Amendment No. 1 to the Custodian Agreement, dated
February 29, 1988 and October 1, 1989,
respectively.
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
(c) Amendment No. 2 to the Custodian Agreement, dated
October 9, 1991.
(d) Custodian Agreement between Investors Bank &
Trust and MFS(R) World Asset Allocation Fund dated
June 2, 1994.
9 (b) Amendment to the Shareholder Servicing Agent
Agreement, dated June 2, 1994.
(e) Dividend Disbursing Agent Agreement dated
September 10, 1986.
15 (h) Form of Distribution Plan for Class A Shares of
MFS(R)Equity Income Fund, MFS(R)Research Growth
and Income Fund, MFS(R)Core Growth Fund, MFS(R)
Aggressive Growth Fund and MFS(R)Special
Opportunities Fund each dated January 2, 1996.
(i) Form of Distribution Plan for Class B Shares of
MFS(R) Equity Income Fund, MFS(R) Research Growth
and Income Fund, MFS(R) Core Growth Fund, MFS(R)
Aggressive Growth Fund and MFS(R) Special
Opportunities Fund each dated January 2, 1996.
(j) Form of Distribution Plan for Class C Shares of
MFS(R) Equity Income Fund, MFS(R) Research Growth
and Income Fund, MFS(R) Core Growth Fund, MFS(R)
Aggressive Growth Fund and MFS(R) Special
Opportunities Fund each dated January 2, 1996.
<PAGE>
EXHIBIT NO. 99.1(b)
MFS SERIES TRUST I
CERTIFICATION OF AMENDMENT
TO DECLARATION OF TRUST
ESTABLISHMENT AND DESIGNATION
OF SERIES
AND
ESTABLISHMENT AND DESIGNATION
OF CLASSES
Pursuant to Section 6.9 of the Amended and Restated Declaration of
Trust dated January 6, 1995 (the "Declaration") of MFS Series Trust I, a
business trust organized under the laws of The Commonwealth of Massachusetts
(the "Trust"), the undersigned Trustees of the Trust, being a majority of the
Trustees of the Trust, hereby establish and designate five new series of Shares
(as defined in the Declaration), such series to have the following special and
relative rights:
1. The new series shall be designated:
-MFS Aggressive Growth Fund;
-MFS Research Growth and Income Fund;
-MFS Core Growth Fund;
-MFS Equity Income Fund; and
-MFS Special Opportunities Fund
2. The series shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in
the Trust's then currently effective registration statement under
the Securities Act of 1933, as amended, to the extent pertaining
to the offering of Shares of such series. Each Share of the
series shall be redeemable, shall be entitled to one vote or
fraction thereof in respect of a fractional share on matters on
which Shares of the series shall be entitled to vote, shall
represent a pro rata beneficial interest in the assets allocated
or belonging to the series, and shall be entitled to receive its
pro rata share of the net assets of the series upon liquidation
of the series, all as provided in Section 6.9 of the Declaration.
3. Shareholders of each series shall vote separately as a class on
any matter to the extent required by, and any matter shall be
deemed to have been effectively acted upon with respect to the
series as provided in, Rule 18f-2, as from time to time in
effect, under the Investment Company Act of 1940, as amended, or
any successor rule, and by the Declaration.
<PAGE>
4. The assets and liabilities of the Trust shall be allocated among
the previously established and existing series of the Trust and
such new series as set forth in Section 6.9 of the Declaration.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration, the Trustees (including any successor Trustees)
shall have the right at any time and from time to time to
reallocate assets and expenses or to change the designation of
any series now or hereafter created, or to otherwise change the
special and relative rights of any such establishment and
designation of series of Shares.
Pursuant to Section 6.9(h) of the Declaration, this instrument shall be
effective upon the execution by a majority of the Trustees of the Trust.
The undersigned, being a majority of the Trustees of the Trust, acting
pursuant to Section 6.10 of the Declaration, do hereby divide the Shares of MFS
Aggressive Growth Fund, MFS Research Growth and Income Fund, MFS Core Growth
Fund, MFS Equity Income Fund and MFS Special Opportunities Fund to create three
classes of Shares, within the meaning of Section 6.10, as follows:
1. The three classes of shares are designated "Class A Shares,"
"Class B Shares" and "Class C Shares";
2. Class A Shares, Class B Shares and Class C Shares shall be
entitled to all the rights and preferences accorded to shares
under the Declaration of Trust;
3. The purchase price of Class A Shares, Class B Shares and Class C
Shares, the method of determination of the net asset value of
Class A Shares, Class B Shares and Class C Shares, the price,
terms and manner of redemption of Class A Shares, Class B Shares
and Class C Shares, any conversion feature of Class B Shares,
and the relative dividend rights of holders of Class A Shares,
Class B Shares and Class C Shares shall be established by the
Trustees of the Trust in accordance with the Declaration of
Trust and shall be set forth in the current prospectus and
statement of additional information of the Trust or any series
thereof, as amended from time to time, contained in the Trust's
registration statement under the Securities Act of 1933, as
amended;
4. Class A Shares, Class B Shares and Class C Shares shall vote
together as a single class except that shares of a class may vote
separately on matters affecting only that class and shares of a
class not affected by a matter will not vote on that matter; and
5. A class of shares of any series of the Trust may be terminated
by the Trustees by written notice to the Shareholder of the
class.
<PAGE>
IN WITNESS WHEREOF, a majority of the Trustees of the Trust have
executed this amendment, in one or more counterparts, all constituting a single
instrument, as an instrument under seal in The Commonwealth of Massachusetts, as
of this ____ day of October, 1995 and further certify, as provided by the
provisions of Section 9.3(d) of the Declaration, that this amendment was duly
adopted by the undersigned in accordance with the second sentence of Section
9.3(a) of the Declaration.
IN WITNESS WHEREOF, the undersigned have executed this instrument this ____ day
of October, 1995.
A. KEITH BRODKIN WALTER E. ROBB, III
A. Keith Brodkin Walter E. Robb, III
76 Farm Road 35 Farm Road
Sherborn, MA 01770 Sherborn, MA 01770
RICHARD B. BAILEY ARNOLD D. SCOTT
Richard B. Bailey Arnold D. Scott
63 Atlantic Avenue 20 Rowes Wharf
Boston, MA 02110 Boston, MA 02110
MARSHALL N. COHAN JEFFREY L. SHAMES
Marshall N. Cohan Jeffrey L. Shames
2524 Bedford Mews Drive 60 Brookside Road
Wellington, FL 33414 Needham, MA 02192
LAWRENCE H. COHN J. DALE SHERRATT
Lawrence H. Cohn J. Dale Sherratt
45 Singletree Road 86 Farm Road
Chestnut Hill, MA 02167 Sherborn, MA 01770
SIR J. DAVID GIBBONS WARD SMITH
Sir J. David Gibbons Ward Smith
"Leeward" 36080 Shaker Blvd
5 Leeside Drive Huntington Valley, OH 44022
"Point Shares"
Pembroke, Bermuda HM 05
ABBY M. O'NEILL
Abby M. O'Neill
200 Sunset Road
Oyster Bay, NY 11771
<PAGE>
EXHIBIT NO. 99.5(a)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 1st day of September, 1993, by and
between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS CASH RESERVE FUND (the "Fund"), a series of the Trust, and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the Fund on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto as herein set forth, the parties covenant and agree as follows:
ARTICLE 1. Duties of the Adviser. The Adviser shall provide the Fund with
such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its funds. The Adviser shall
act as Adviser to the Fund and as such shall furnish continuously an
investment program and shall determine from time to time what securities shall
be purchased, sold or exchanged and what portion of the assets of the Fund
shall be held uninvested, subject always to the restrictions of the
Declaration of Trust of the Trust, dated July 22, 1986, and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Fund's then-current Prospectus
and Statement of Additional Information. The Adviser shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Fund's portfolio
securities shall be exercised. Should the Trustees at any time, however, make
any definite determination as to the investment policy and notify the Adviser
thereof in writing, the Adviser shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination shall be revoked. The Adviser shall take, on behalf of the
Fund, all actions which it deems necessary to implement the investment
policies determined as provided above, and in particular to place all orders
for the purchase or sale of portfolio securities for the Fund's account with
brokers or dealers selected by it, and to that end, the Adviser is authorized
as the agent of the Fund to give instructions to the Custodian of the Fund as
to the deliveries of securities and payments of cash for the account of the
Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser is directed to seek for the Fund execution
at the most reasonable price by responsible brokerage firms at reasonably
competitive commission rates. In fulfilling this requirement the Adviser
shall not be deemed to have acted unlawfully or to have breached any duty,
created by this Agreement or otherwise, solely by reason of its having caused
the Fund to pay a broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Adviser
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund and to other
clients of the Adviser as to which the Adviser exercises investment discretion.
<PAGE>
ARTICLE 2. Allocation of Charges and Expenses. The Adviser shall furnish at
its own expense investment advisory and administrative services, office space,
equipment and clerical personnel necessary for servicing the investments of
the Fund and maintaining its organization, and investment advisory facilities
and executive and supervisory personnel for managing the investments and
effecting the portfolio transactions of the Fund. The Adviser shall arrange,
if desired by the Trust, for Directors, officers and employees of the Adviser
to serve as Trustees, officers or agents of the Trust if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law. It is understood that the Fund will pay all of
its own expenses including, without limitation, compensation of Trustees "not
affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund;
fees and expenses of independent auditors, of legal counsel, and of any
transfer agent, registrar or dividend disbursing agent of the Fund; expenses
of repurchasing and redeeming shares and servicing shareholder accounts;
expenses of preparing, printing and mailing stock certificates, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions; brokerage and other expenses connected with the execution,
recording and settlement of portfolio security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Fund,
including safekeeping of funds and securities and maintaining required books
and accounts; expenses of calculating the net asset value of shares of the
Fund; expenses of shareholders' meetings; and expenses relating to the
issuance, registration and qualification of shares of the Fund and the
preparation, printing and mailing of prospectuses for such purposes (except to
the extent that any Distribution Agreement to which the Trust is a party on
behalf of the Fund provides that another party is to pay some or all of such
expenses).
ARTICLE 3. Compensation of the Adviser. For the services to be rendered and
the facilities provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at a rate equal to .55% of the Fund's
average daily net assets for its then-current fiscal year. Payment of the
foregoing fee is subject to the provision that within 30 days following the
close of any fiscal year of the Fund, the Adviser will pay to the Fund a sum
equal to the amount by which the aggregate expenses of the Fund, but excluding
interest, taxes, brokerage commissions and extraordinary expenses, incurred
during such fiscal year exceed the sum of (a) 2 1/2% of the first $30 million
of the Fund's average daily net assets, and (b) 2% of the next $70 million of
the Fund's average daily net assets, and (c) 1 1/2% of the remaining average
daily net assets of the Fund. The obligation of the Adviser to reimburse the
Fund for expenses incurred during any year may be terminated or revised at any
time by the Adviser without the consent of the Fund by notice in writing from
the Adviser to the Fund. If the Adviser shall serve for less than the whole
of any period specified in this Article 3, the compensation (including the
expense reimbursement) payable to the Adviser with respect to the Fund will be
prorated.
<PAGE>
ARTICLE 4. Covenants of the Adviser. The Adviser agrees that it will not
deal with itself, or with the Trustees of the Trust or the Trust's principla
underwriter, if any, as principals in making purchases or sales of securities
or other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders
thereunder, will not take a long or short position in the shares of the Fund
except as permitted by the Declaration and will comply with all other
provisions of the Declaration and the By-Laws and the then-current Prospectus
and Statement of Additional Information of the Fund relative to the Adviser
and its Directors and officers.
ARTICLE 5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution and management
of the Fund, except for willful misfeasance, bad faith or gross negligence in
the performance of its duties and obligations hereunder. As used in this
Article 5, the term "Adviser" shall include Directors, officers and employees
of the Adviser as well as that corporation itself.
ARTICLE 6. Activities of the Adviser. The services of the Adviser to the
Fund are not deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Fund agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Fund, the Fund will change its name so as to delete the initials "MFS". It is
understood that the Trustees, officers and shareholders of the Trust are or
may be or become interested in the Adviser, as Directors, officers, employees,
or otherwise and that Directors, officers and employees of the Adviser are or
may become similarly interested in the Fund, and that the Adviser may be or
become interested in the Fund as a shareholder or otherwise.
ARTICLE 7. Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date first above written and shall
govern the relations between the parties hereto thereafter, and shall remain
in force until August 1, 1995 on which date it will terminate unless its
continuance after August 1, 1995 is "specifically approved at least annually"
(i) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust, or by "vote of a majority of the outstanding voting
securities" of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than
sixty days' nor less than thirty days' written notice to the other party.
This Agreement shall automatically terminate in the event of its "assignment".
<PAGE>
This Agreement may be amended only if such amendment is approved by "vote of a
majority of the outstanding voting securities" of the Fund.
The terms "specifically approved at least annually", "vote of a majority of
the outstanding voting securities", "assignment", "affiliated person", and
"interested person", when used in this Agreement, shall have the respective
meanings specified, and shall be construed in a manner consistent with, the
Investment Company Act of 1940 and the Rules and Regulations promulgated
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered in their names and on their behalf by the undersigned, thereunto
duly authorized, and their respective seals to be hereto affixed, all as of
the day and year first written above. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the
Declaration and the obligations of this Agreement are not binding upon any of
the Trustees or shareholders of the Trust, individually, but bind only the
trust estate applicable to the Fund.
MFS SERIES TRUST I on behalf
of MFS CASH RESERVE FUND
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.5(b)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 1st day of September, 1993, by and
between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS LIFETIME MANAGED SECTORS FUND, a series of the Trust (the "Fund"),
and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the Fund on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto as herein set forth, the parties covenant and agree as follows:
ARTICLE 1. Duties of the Adviser. The Adviser shall provide the Fund with such
investment advice and supervision as the latter may from time to time consider
necessary for the proper supervision of its funds. The Adviser shall act as
Adviser to the Fund and as such shall furnish continuously an investment program
and shall determine from time to time what securities shall be purchased, sold
or exchanged and what portion of the assets of the Fund shall be held
uninvested, subject always to the restrictions of the Declaration of Trust of
the Trust, dated July 22, 1986, and By-Laws, each as amended from time to time
(respectively, the "Declaration" and the "By-Laws"), to the provisions of the
Investment Company Act of 1940 and the Rules, Regulations and orders thereunder
and to the Fund's then-current Prospectus and Statement of Additional
Information. The Adviser shall also make recommendations as to the manner in
which voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities shall be exercised. Should the
Trustees at any time, however, make any definite determination as to the
investment policy and notify the Adviser thereof in writing, the Adviser shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination shall be revoked. The
Adviser shall take, on behalf of the Fund, all actions which it deems necessary
to implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of portfolio securities
for the Fund's account with brokers or dealers selected by it, and to that end,
the Adviser is authorized as the agent of the Fund to give instructions to the
Custodian of the Fund as to the deliveries of securities and payments of cash
for the account of the Fund. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed to seek for the
Fund execution at the most reasonable price by responsible brokerage firms at
reasonably competitive commission rates. In fulfilling this requirement the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty, created by this Agreement or otherwise, solely by reason of its having
caused the Fund to pay a broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Adviser
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the fund and to other clients
of the Adviser as to which the Adviser exercises investment discretion.
<PAGE>
ARTICLE 2. Allocation of Charges and Expenses. The Adviser shall furnish at its
own expense investment advisory and administrative services, office space,
equipment and clerical personnel necessary for servicing the investments of the
Fund and maintaining its organization, and investment advisory facilities and
executive and supervisory personnel for managing the investments and effecting
the portfolio transactions of the Fund. The Adviser shall arrange, if desired by
the Trust, for Directors, officers and employees of the Adviser to serve as
Trustees, officers or agents of the Trust if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by law. It is understood that the Fund will pay all of its own expenses
including, without limitation, compensation of Trustees "not affiliated" with
the Adviser; governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute allocable to the Fund; fees and expenses of
independent auditors, of legal counsel, and of any transfer agent, registrar or
dividend disbursing agent of the Fund; expenses of repurchasing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing stock certificates, shareholder reports, notices, proxy statements and
reports to governmental officers and commissions; brokerage and other expenses
connected with the execution, recording and settlement of portfolio security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of shares of the Fund; expenses of shareholders' meetings; and expenses
relating to the issuance, registration and qualification of shares of the Fund
and the preparation, printing and mailing of prospectuses for such purposes
(except to the extent that any Distribution Agreement to which the Trust is a
party on behalf of the Fund provides that another party is to pay some or all of
such expenses).
ARTICLE 3. Compensation of the Adviser. For the services to be rendered and the
facilities provided, the Fund shall pay to the Adviser an investment advisory
fee computed and paid monthly at a rate equal to .75% of the Fund's average
daily net assets for its then-current fiscal year. Payment of the foregoing fee
is subject to the provision that within 30 days following the close of any
fiscal year of the Fund, the Adviser will pay to the Fund a sum equal to the
amount by which the aggregate expenses of the Fund, but excluding interest,
taxes, brokerage commissions and extraordinary expenses, incurred during such
fiscal year exceed the sum of (a) 1 1/2% of the Fund's average daily net assets
during such fiscal up to and including $40 million, and (b) 1% of its average
daily net assets during such fiscal year in excess of $40 million. The
obligation of the Adviser to reimburse the Fund for expenses incurred during any
year may be terminated or revised at any time by the Adviser without the consent
of the Fund by notice in writing from the Adviser to the Fund. If the Adviser
shall serve for less than the whole of any period specified in this Article 3,
the compensation (including the expense reimbursement) payable to the Adviser
with respect to the Fund will be prorated.
<PAGE>
ARTICLE 4. Covenants of the Adviser. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's principal
underwriter, if any, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the Fund except as
permitted by the Declaration, and will comply with all other provisions of the
Declaration and the By-Laws and the then-current Prospectus and Statement of
Additional Information of the Fund relative to the Adviser and its Directors and
officers.
ARTICLE 5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution and management of
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties and obligations hereunder. As used in this Article 5,
the term "Adviser" shall include Directors, officers and employees of the
Adviser as well as that corporation itself.
ARTICLE 6. Activities of the Adviser. The services of the Adviser to the Fund
are not deemed to be exclusive, the Adviser being free to render investment
advisory and/or other services to others. The Adviser may permit other fund
clients to use the initials "MFS" in their names. The Fund agrees that if the
Adviser shall for any reason no longer serve as the Adviser to the Fund, the
Fund will change its name so as to delete the initials "MFS". It is understood
that the Trustees, officers and shareholders of the Trust are or may be or
become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
ARTICLE 7. Duration, Termination and Amendment of this Agreement. This Agreement
shall become effective on the date first above written and shall govern the
relations between the parties hereto thereafter, and shall remain in force until
August 1, 1995 on which date it will terminate unless its continuance after
August 1, 1995 is "specifically approved at least annually" (i) by the vote of a
majority of the Trustees of the Trust who are not "interested persons" of the
Trust or of the Adviser at a meeting specifically called for the purpose of
voting on such approval, and (ii) by the Board of Trustees of the Trust, or by
"vote of a majority of the outstanding voting securities" of the Fund.
This Agreement may be terminated at any time without the payment of any penalty
by the Trustees or by "vote of a majority of the outstanding voting securities"
of the Fund, or by the Adviser, in each case on not more than sixty days' nor
less than thirty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its "assignment".
<PAGE>
This Agreement may be amended only if such amendment is approved by "vote of a
majority of the outstanding voting securities" of the Fund.
The terms "specifically approved at least annually", "vote of a majority of the
outstanding voting securities," "assignment", "affiliated person", and
"interested person", when used in this Agreement, shall have the respective
meanings specified, and shall be construed in a manner consistent with, the
Investment Company Act of 1940 and the Rules and Regulations promulgated
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered in their names and on their behalf by the undersigned, thereunto duly
authorized, and their respective seals to be hereto affixed, all as of the day
and year first written above. The undersigned Trustee of the Trust has executed
this Agreement not individually, but as Trustee under the Declaration and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of the Trust, individually, but bind only the trust estate
applicable to the Fund.
MFS SERIES TRUST I on behalf
of MFS LIFETIME MANAGED SECTORS FUND
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.5(c)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 2nd day of June, 1994, by and between
MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on behalf of
MFS WORLD ASSET ALLOCATION FUND, a series of the Trust (the "Fund"), and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the Fund on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto as herein set forth, the parties covenant and agree as follows:
ARTICLE 1. Duties of the Adviser. The Adviser shall provide the Fund with such
investment advice and supervision as the latter may from time to time consider
necessary for the proper supervision of its funds. The Adviser shall act as
Adviser to the Fund and as such shall furnish continuously an investment program
and shall determine from time to time what securities shall be purchased, sold
or exchanged and what portion of the assets of the Fund shall be held
uninvested, subject always to the restrictions of the Trust's Declaration of
Trust, dated July 22, 1986, and By-Laws, each as amended from time to time
(respectively, the "Declaration" and the "By-Laws"), to the provisions of the
Investment Company Act of 1940 and the Rules, Regulations and orders thereunder
and to the Fund's then-current Prospectus and Statement of Additional
Information. The Adviser shall also make recommendations as to the manner in
which voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities shall be exercised. Should the
Trustees at any time, however, make any definite determination as to the
investment policy and notify the Adviser thereof in writing, the Adviser shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination shall be revoked. The
Adviser shall take, on behalf of the Fund, all actions which it deems necessary
to implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of portfolio securities
for the Fund's account with brokers or dealers selected by it, and to that end,
the Adviser is authorized as the agent of the Fund to give instructions to the
Custodian of the Fund as to the deliveries of securities and payments of cash
for the account of the Fund. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed to seek for the
Fund execution at the most reasonable price by responsible brokerage firms at
reasonably competitive commission rates. In fulfilling this requirement, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty, created by this Agreement or otherwise, solely by reason of its having
caused the Fund to pay a broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Adviser
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund and to other clients
of the Adviser as to which the Adviser exercises investment discretion.
<PAGE>
ARTICLE 2. Allocation of Charges and Expenses. The Adviser shall furnish at its
own expense investment advisory and administrative services, office space,
equipment and clerical personnel necessary for servicing the investments of the
Fund and maintaining its organization, and investment advisory facilities and
executive and supervisory personnel for managing the investments and effecting
the portfolio transactions of the Fund. The Adviser shall arrange, if desired by
the Trust, for Directors, officers and employees of the Adviser to serve as
Trustees, officers or agents of the Trust if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by law. It is understood that the Fund will pay all of its own expenses
including, without limitation, compensation of Trustees "not affiliated" with
the Adviser; governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute allocable to the Fund; fees and expenses of
independent auditors, of legal counsel, and of any transfer agent, registrar or
dividend disbursing agent of the Fund; expenses of repurchasing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing stock certificates, shareholder reports, notices, proxy statements and
reports to governmental officers and commissions; brokerage and other expenses
connected with the execution, recording and settlement of portfolio security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of shares of the Fund; expenses of shareholders' meetings; and expenses
relating to the issuance, registration and qualification of shares of the Fund
and the preparation, printing and mailing of prospectuses for such purposes
(except to the extent that any Distribution Agreement to which the Trust is a
party provides that another party is to pay some or all of such expenses).
ARTICLE 3. Compensation of the Adviser. For the services to be rendered and the
facilities provided, the Fund shall pay to the Adviser an investment advisory
fee computed and paid monthly at an annual rate equal to 0.60% of the Fund's
average daily net assets for its then-current fiscal year. If the Adviser shall
serve for less than the whole of any period specified in this Article 3, the
compensation to the Adviser will be prorated.
<PAGE>
ARTICLE 4. Covenants of the Adviser. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's distributor, if
any, as principals in making purchases or sales of securities or other property
for the account of the Fund, except as permitted by the Investment Company Act
of 1940 and the Rules, Regulations or orders thereunder, will not take a long or
short position in the shares of the Fund except as permitted by the Declaration,
and will comply with all other provisions of the Declaration and the By-Laws and
the then-current Prospectus and Statement of Additional Information of the Fund
relative to the Adviser and its Directors and officers.
ARTICLE 5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution and management of
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties and obligations hereunder. As used in this Article 5,
the term "Adviser" shall include Directors, officers and employees of the
Adviser as well as that corporation itself.
ARTICLE 6. Activities of the Adviser. The services of the Adviser to the Fund
are not deemed to be exclusive, the Adviser being free to render investment
advisory and/or other services to others. The Adviser may permit other fund
clients to use the initials "MFS" in their names. The Fund agrees that if the
Adviser shall for any reason no longer serve as the Adviser to the Fund, the
Fund will change its name so as to delete the initials "MFS". It is understood
that the Trustees, officers and shareholders of the Trust are or may be or
become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Trust, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
ARTICLE 7. Duration, Termination and Amendment of this Agreement. This Agreement
shall become effective on the date first above written and shall govern the
relations between the parties hereto thereafter, and shall remain in force until
August 1, 1996 on which date it will terminate unless its continuance after
August 1, 1996 is "specifically approved at least annually" (i) by the vote of a
majority of the Trustees of the Trust who are not "interested persons" of the
Trust or of the Adviser at a meeting specifically called for the purpose of
voting on such approval, and (ii) by the Board of Trustees of the Trust, or by
"vote of a majority of the outstanding voting securities" of the Fund.
This Agreement may be terminated at any time without the payment of any penalty
by the Trustees or by "vote of a majority of the outstanding voting securities"
of the Fund, or by the Adviser, in each case on not more than sixty days' nor
less than thirty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by "vote of a
majority of the outstanding voting securities" of the Fund.
The terms "specifically approved at least annually", "vote of a majority of the
outstanding voting securities", "assignment", "affiliated person", and
"interested person", when used in this Agreement, shall have the respective
meanings specified, and shall be construed in a manner consistent with, the
Investment Company Act of 1940 and the Rules and Regulations promulgated
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered in their names and on their behalf by the undersigned, thereunto duly
authorized, and their respective seals to be hereto affixed, all as of the day
and year first written above. The undersigned Trustee of the Trust has executed
this Agreement not individually, but as Trustee under the Declaration and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of the Trust, individually, but bind only the trust estate
applicable to the Fund.
MFS SERIES TRUST I on
behalf of MFS WORLD ASSET
ALLOCATION FUND
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.5(d)
FORM OF
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 2nd day of January, 1996, by
and between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS EQUITY INCOME FUND, a series of the Trust (the "Fund"), and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Duties of the Adviser. The Adviser shall provide the Fund
with such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its funds. The Adviser shall
act as Adviser to the Fund and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall be
held uninvested, subject always to the restrictions of the Trust's Amended and
Restated Declaration of Trust, dated January 6, 1995, and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Fund's then-current Prospectus and
Statement of Additional Information. The Adviser shall also make recommendations
as to the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to the investment policy and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination shall be revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities for the Fund's account with brokers or
dealers selected by it, and to that end, the Adviser is authorized as the agent
of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund execution at the most
reasonable price by responsible brokerage firms at reasonably competitive
commission rates. In fulfilling this requirement, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the Fund to pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Adviser determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other clients of the Adviser as
to which the Adviser exercises investment discretion.
<PAGE>
The Adviser may from time to time enter into sub-investment advisory agreements
with one or more investment advisers with such terms and conditions as the
Adviser may determine, provided that such sub-investment advisory agreements
have been approved by a majority of the Trustees of the Trust who are not
"interested persons" of the Trust, the Adviser or the sub-adviser and by "vote
of a majority of the outstanding voting securities" of the Fund. Subject to the
provisions of Article 6, the Adviser shall not be liable for any error of
judgment or mistake of law by any sub-adviser or for any loss arising out of any
investment made by any sub-adviser or for any act or omission in the execution
and management of the Fund by any sub-adviser.
Article 2. Allocation of Charges and Expenses. The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Fund and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Fund. The Adviser
shall arrange, if desired by the Trust, for Directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law. It is understood that the Fund will pay
all of its own expenses including, without limitation, compensation of Trustees
"not affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Fund; expenses of
repurchasing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing stock certificates, shareholder reports,
notices, proxy statements and reports to governmental officers and commissions;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; expenses of shareholders'
meetings; and expenses relating to the issuance, registration and qualification
of shares of the Fund and the preparation, printing and mailing of prospectuses
for such purposes (except to the extent that any Distribution Agreement to which
the Trust is a party provides that another party is to pay some or all of such
expenses).
<PAGE>
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at an annual rate equal to 0.75% of the
Fund's average daily net assets for its then-current fiscal year. If the Adviser
shall serve for less than the whole of any period specified in this Article 3,
the compensation to the Adviser will be prorated.
Article 4. Special Services. Should the Trust have occasion to request
the Adviser to perform services not herein contemplated or to request the
Adviser to arrange for the services of others, the Adviser wil act for the Trust
on behalf of the Fund upon request to the best of its ability, with compensation
for the Adviser's services to be agreed upon with respect to each such occasion
as it arises.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the Fund except as
permitted by the Declaration, and will comply with all other provisions of the
Declaration and the By-Laws and the then-current Prospectus and Statement of
Additional Information of the Fund relative to the Adviser and its Directors and
officers.
Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties and obligations hereunder. As used
in this Article 6, the term "Adviser" shall include Directors, officers and
employees of the Adviser as well as that corporation itself.
Article 7. Activities of the Adviser. The services of the Adviser to
the Fund are not deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Fund agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Fund, the Fund will change its name so as to delete the initials "MFS." It is
understood that the Trustees, officers and shareholders of the Trust are or may
be or become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Trust, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
Article 8. Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until January 2, 1998 on which date it will terminate unless its
continuance after January 2, 1998 is "specifically approved at least annually"
(i) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust, or by "vote of a majority of the outstanding voting
securities" of the Fund.
<PAGE>
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than sixty
days' nor less than thirty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by
"vote of a majority of the outstanding voting securities" of the Fund.
Article 9. Scope of Trust's Obligations.. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust. If this Agreement is executed by the
Trust on behalf of one or more series of the Trust, the Adviser further
acknowledges that the assets and liabilities of each series of the Trust are
separate and distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of the series on whose
behalf the Trust has executed this Agreement.
Article 10. Definitions. The terms "specifically approved at least
annually," "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified, and shall be construed
in a manner consistent with, the Investment Company Act of 1940 and the Rules
and Regulations promulgated thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act.
Article 11. . Record Keeping.. The Adviser will maintain records in a
form acceptable to the Trust and in compliance with the rules and regulations of
the Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the
Declaration.
MFS SERIES TRUST I on
behalf of MFS EQUITY INCOME FUND,
one of its series
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.5(e)
FORM OF
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 2nd day of January, 1996, by
and between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS RESEARCH GROWTH AND INCOME FUND, a series of the Trust (the
"Fund"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation
(the "Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Duties of the Adviser. The Adviser shall provide the Fund
with such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its funds. The Adviser shall
act as Adviser to the Fund and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall be
held uninvested, subject always to the restrictions of the Trust's Amended and
Restated Declaration of Trust, dated January 6, 1995, and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Fund's then-current Prospectus and
Statement of Additional Information. The Adviser shall also make recommendations
as to the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to the investment policy and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination shall be revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities for the Fund's account with brokers or
dealers selected by it, and to that end, the Adviser is authorized as the agent
of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund execution at the most
reasonable price by responsible brokerage firms at reasonably competitive
commission rates. In fulfilling this requirement, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the Fund to pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Adviser determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other clients of the Adviser as
to which the Adviser exercises investment discretion.
<PAGE>
The Adviser may from time to time enter into sub-investment advisory
agreements with one or more investment advisers with such terms and
conditions as the Adviser may determine, provided that such sub-investment
advisory agreements have been approved by a majority of the Trustees of the
Trust who are not "interested persons" of the Trust, the Adviser or the
sub-adviser and by "vote of a majority of the outstanding voting securities" of
the Fund. Subject to the provisions of Article 6, the Adviser shall not be
liable for any error of judgment or mistake of law by any sub-adviser or for any
loss arising out of any investment made by any sub-adviser or for any act or
omission in the execution and management of the Fund by any sub-adviser.
Article 2. Allocation of Charges and Expenses. The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Fund and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Fund. The Adviser
shall arrange, if desired by the Trust, for Directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law. It is understood that the Fund will pay
all of its own expenses including, without limitation, compensation of Trustees
"not affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Fund; expenses of
repurchasing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing stock certificates, shareholder reports,
notices, proxy statements and reports to governmental officers and commissions;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; expenses of shareholders'
meetings; and expenses relating to the issuance, registration and qualification
of shares of the Fund and the preparation, printing and mailing of prospectuses
for such purposes (except to the extent that any Distribution Agreement to which
the Trust is a party provides that another party is to pay some or all of such
expenses).
<PAGE>
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at an annual rate equal to 0.75% of the
Fund's average daily net assets for its then-current fiscal year. If the Adviser
shall serve for less than the whole of any period specified in this Article 3,
the compensation to the Adviser will be prorated.
Article 4. Special Services.. Should the Trust have occasion to request
the Adviser to perform services not herein contemplated or to request the
Adviser to arrange for the services of others, the Adviser wil act for the Trust
on behalf of the Fund upon request to the best of its ability, with compensation
for the Adviser's services to be agreed upon with respect to each such occasion
as it arises.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the Fund except as
permitted by the Declaration, and will comply with all other provisions of the
Declaration and the By-Laws and the then-current Prospectus and Statement of
Additional Information of the Fund relative to the Adviser and its Directors and
officers.
Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties and obligations hereunder. As used
in this Article 6, the term "Adviser" shall include Directors, officers and
employees of the Adviser as well as that corporation itself.
Article 7. Activities of the Adviser. The services of the Adviser to
the Fund are not deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Fund agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Fund, the Fund will change its name so as to delete the initials "MFS." It is
understood that the Trustees, officers and shareholders of the Trust are or may
be or become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Trust, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
Article 8. Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until January 2, 1998 on which date it will terminate unless its
continuance after January 2, 1998 is "specifically approved at least annually"
(i) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust, or by "vote of a majority of the outstanding voting
securities" of the Fund.
<PAGE>
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than sixty
days' nor less than thirty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by
"vote of a majority of the outstanding voting securities" of the Fund.
Article 9. Scope of Trust's Obligations.. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust. If this Agreement is executed by the
Trust on behalf of one or more series of the Trust, the Adviser further
acknowledges that the assets and liabilities of each series of the Trust are
separate and distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of the series on whose
behalf the Trust has executed this Agreement.
Article 10. Definitions. The terms "specifically approved at least
annually," "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified, and shall be construed
in a manner consistent with, the Investment Company Act of 1940 and the Rules
and Regulations promulgated thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act.
Article 11. .Record Keeping.. The Adviser will maintain records in a
form acceptable to the Trust and in compliance with the rules and regulations of
the Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the
Declaration.
MFS SERIES TRUST I on behalf of
MFS RESEARCH GROWTH AND INCOME FUND,
one of its series
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.5(f)
FORM OF
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 2nd day of January, 1996, by
and between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS CORE GROWTH FUND, a series of the Trust (the "Fund"), and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Duties of the Adviser. The Adviser shall provide the Fund
with such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its funds. The Adviser shall
act as Adviser to the Fund and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall be
held uninvested, subject always to the restrictions of the Trust's Amended and
Restated Declaration of Trust, dated January 6, 1995, and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Fund's then-current Prospectus and
Statement of Additional Information. The Adviser shall also make recommendations
as to the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to the investment policy and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination shall be revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities for the Fund's account with brokers or
dealers selected by it, and to that end, the Adviser is authorized as the agent
of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund execution at the most
reasonable price by responsible brokerage firms at reasonably competitive
commission rates. In fulfilling this requirement, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the Fund to pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Adviser determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other clients of the Adviser as
to which the Adviser exercises investment discretion.
<PAGE>
The Adviser may from time to time enter into sub-investment advisory
agreements with one or more investment advisers with such terms and
conditions as the Adviser may determine, provided that such sub-investment
advisory agreements have been approved by a majority of the Trustees of the
Trust who are not "interested persons" of the Trust, the Adviser or the
sub-adviser and by "vote of a majority of the outstanding voting securities" of
the Fund. Subject to the provisions of Article 6, the Adviser shall not be
liable for any error of judgment or mistake of law by any sub-adviser or for any
loss arising out of any investment made by any sub-adviser or for any act or
omission in the execution and management of the Fund by any sub-adviser.
Article 2. Allocation of Charges and Expenses. The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Fund and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Fund. The Adviser
shall arrange, if desired by the Trust, for Directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law. It is understood that the Fund will pay
all of its own expenses including, without limitation, compensation of Trustees
"not affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Fund; expenses of
repurchasing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing stock certificates, shareholder reports,
notices, proxy statements and reports to governmental officers and commissions;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; expenses of shareholders'
meetings; and expenses relating to the issuance, registration and qualification
of shares of the Fund and the preparation, printing and mailing of prospectuses
for such purposes (except to the extent that any Distribution Agreement to which
the Trust is a party provides that another party is to pay some or all of such
expenses).
<PAGE>
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at an annual rate equal to 0.75% of the
Fund's average daily net assets for its then-current fiscal year. If the Adviser
shall serve for less than the whole of any period specified in this Article 3,
the compensation to the Adviser will be prorated.
Article 4. Special Services. Should the Trust have occasion to request
the Adviser to perform services not herein contemplated or to request the
Adviser to arrange for the services of others, the Adviser wil act for the Trust
on behalf of the Fund upon request to the best of its ability, with compensation
for the Adviser's services to be agreed upon with respect to each such occasion
as it arises.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the Fund except as
permitted by the Declaration, and will comply with all other provisions of the
Declaration and the By-Laws and the then-current Prospectus and Statement of
Additional Information of the Fund relative to the Adviser and its Directors and
officers.
Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties and obligations hereunder. As used
in this Article 6, the term "Adviser" shall include Directors, officers and
employees of the Adviser as well as that corporation itself.
Article 7. Activities of the Adviser. The services of the Adviser to
the Fund are not deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Fund agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Fund, the Fund will change its name so as to delete the initials "MFS." It is
understood that the Trustees, officers and shareholders of the Trust are or may
be or become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Trust, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
Article 8. Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until January 2, 1998 on which date it will terminate unless its
continuance after January 2, 1998 is "specifically approved at least annually"
(i) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust, or by "vote of a majority of the outstanding voting
securities" of the Fund.
<PAGE>
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than sixty
days' nor less than thirty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by
"vote of a majority of the outstanding voting securities" of the Fund.
Article 9. .Scope of Trust's Obligations.. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust. If this Agreement is executed by the
Trust on behalf of one or more series of the Trust, the Adviser further
acknowledges that the assets and liabilities of each series of the Trust are
separate and distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of the series on whose
behalf the Trust has executed this Agreement.
Article 10. Definitions. The terms "specifically approved at least
annually," "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified, and shall be construed
in a manner consistent with, the Investment Company Act of 1940 and the Rules
and Regulations promulgated thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act.
Article 11. Record Keeping.. The Adviser will maintain records in a
form acceptable to the Trust and in compliance with the rules and regulations of
the Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the
Declaration.
MFS SERIES TRUST I on behalf of
MFS CORE GROWTH FUND,
one of its series
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.5(g)
FORM OF
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 2nd day of January, 1996, by
and between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS AGGRESSIVE GROWTH FUND, a series of the Trust (the "Fund"), and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Duties of the Adviser. The Adviser shall provide the Fund
with such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its funds. The Adviser shall
act as Adviser to the Fund and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall be
held uninvested, subject always to the restrictions of the Trust's Amended and
Restated Declaration of Trust, dated January 6, 1995, and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Fund's then-current Prospectus and
Statement of Additional Information. The Adviser shall also make recommendations
as to the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to the investment policy and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination shall be revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities for the Fund's account with brokers or
dealers selected by it, and to that end, the Adviser is authorized as the agent
of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund execution at the most
reasonable price by responsible brokerage firms at reasonably competitive
commission rates. In fulfilling this requirement, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the Fund to pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Adviser determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other clients of the Adviser as
to which the Adviser exercises investment discretion.
<PAGE>
The Adviser may from time to time enter into sub-investment advisory
agreements with one or more investment advisers with such terms and
conditions as the Adviser may determine, provided that such sub-investment
advisory agreements have been approved by a majority of the Trustees of the
Trust who are not "interested persons" of the Trust, the Adviser or the
sub-adviser and by "vote of a majority of the outstanding voting securities" of
the Fund. Subject to the provisions of Article 6, the Adviser shall not be
liable for any error of judgment or mistake of law by any sub-adviser or for any
loss arising out of any investment made by any sub-adviser or for any act or
omission in the execution and management of the Fund by any sub-adviser.
Article 2. Allocation of Charges and Expenses. The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Fund and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Fund. The Adviser
shall arrange, if desired by the Trust, for Directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law. It is understood that the Fund will pay
all of its own expenses including, without limitation, compensation of Trustees
"not affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Fund; expenses of
repurchasing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing stock certificates, shareholder reports,
notices, proxy statements and reports to governmental officers and commissions;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; expenses of shareholders'
meetings; and expenses relating to the issuance, registration and qualification
of shares of the Fund and the preparation, printing and mailing of prospectuses
for such purposes (except to the extent that any Distribution Agreement to which
the Trust is a party provides that another party is to pay some or all of such
expenses).
<PAGE>
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at an annual rate equal to 0.75% of the
Fund's average daily net assets for its then-current fiscal year. If the Adviser
shall serve for less than the whole of any period specified in this Article 3,
the compensation to the Adviser will be prorated.
Article 4. Special Services.. Should the Trust have occasion to request
the Adviser to perform services not herein contemplated or to request the
Adviser to arrange for the services of others, the Adviser wil act for the Trust
on behalf of the Fund upon request to the best of its ability, with compensation
for the Adviser's services to be agreed upon with respect to each such occasion
as it arises.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the Fund except as
permitted by the Declaration, and will comply with all other provisions of the
Declaration and the By-Laws and the then-current Prospectus and Statement of
Additional Information of the Fund relative to the Adviser and its Directors and
officers.
Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties and obligations hereunder. As used
in this Article 6, the term "Adviser" shall include Directors, officers and
employees of the Adviser as well as that corporation itself.
Article 7. Activities of the Adviser. The services of the Adviser to
the Fund are not deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Fund agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Fund, the Fund will change its name so as to delete the initials "MFS." It is
understood that the Trustees, officers and shareholders of the Trust are or may
be or become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Trust, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
Article 8. Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until January 2, 1998 on which date it will terminate unless its
continuance after January 2, 1998 is "specifically approved at least annually"
(i) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust, or by "vote of a majority of the outstanding voting
securities" of the Fund.
<PAGE>
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than sixty
days' nor less than thirty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by
"vote of a majority of the outstanding voting securities" of the Fund.
Article 9. Scope of Trust's Obligations. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust. If this Agreement is executed by the
Trust on behalf of one or more series of the Trust, the Adviser further
acknowledges that the assets and liabilities of each series of the Trust are
separate and distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of the series on whose
behalf the Trust has executed this Agreement.
Article 10. Definitions. The terms "specifically approved at least
annually," "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified, and shall be construed
in a manner consistent with, the Investment Company Act of 1940 and the Rules
and Regulations promulgated thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act.
Article 11. .Record Keeping.. The Adviser will maintain records in a
form acceptable to the Trust and in compliance with the rules and regulations of
the Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the
Declaration.
MFS SERIES TRUST I on behalf of
MFS AGGRESSIVE GROWTH FUND,
one of its series
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.5(h)
FORM OF
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 2nd day of January, 1996, by
and between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS SPECIAL OPPORTUNITIES FUND, a series of the Trust (the "Fund"),
and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Duties of the Adviser. The Adviser shall provide the Fund
with such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its funds. The Adviser shall
act as Adviser to the Fund and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall be
held uninvested, subject always to the restrictions of the Trust's Amended and
Restated Declaration of Trust, dated January 6, 1995, and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Fund's then-current Prospectus and
Statement of Additional Information. The Adviser shall also make recommendations
as to the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to the investment policy and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination shall be revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities for the Fund's account with brokers or
dealers selected by it, and to that end, the Adviser is authorized as the agent
of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund execution at the most
reasonable price by responsible brokerage firms at reasonably competitive
commission rates. In fulfilling this requirement, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the Fund to pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Adviser determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other clients of the Adviser as
to which the Adviser exercises investment discretion.
<PAGE>
The Adviser may from time to time enter into sub-investment advisory
agreements with one or more investment advisers with such terms and
conditions as the Adviser may determine, provided that such sub-investment
advisory agreements have been approved by a majority of the Trustees of the
Trust who are not "interested persons" of the Trust, the Adviser or the
sub-adviser and by "vote of a majority of the outstanding voting securities" of
the Fund. Subject to the provisions of Article 6, the Adviser shall not be
liable for any error of judgment or mistake of law by any sub-adviser or for any
loss arising out of any investment made by any sub-adviser or for any act or
omission in the execution and management of the Fund by any sub-adviser.
Article 2. Allocation of Charges and Expenses. The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Fund and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Fund. The Adviser
shall arrange, if desired by the Trust, for Directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law. It is understood that the Fund will pay
all of its own expenses including, without limitation, compensation of Trustees
"not affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Fund; expenses of
repurchasing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing stock certificates, shareholder reports,
notices, proxy statements and reports to governmental officers and commissions;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; expenses of shareholders'
meetings; and expenses relating to the issuance, registration and qualification
of shares of the Fund and the preparation, printing and mailing of prospectuses
for such purposes (except to the extent that any Distribution Agreement to which
the Trust is a party provides that another party is to pay some or all of such
expenses).
<PAGE>
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at an annual rate equal to 0.75% of the
Fund's average daily net assets for its then-current fiscal year. If the Adviser
shall serve for less than the whole of any period specified in this Article 3,
the compensation to the Adviser will be prorated.
Article 4. Special Services. Should the Trust have occasion to request
the Adviser to perform services not herein contemplated or to request the
Adviser to arrange for the services of others, the Adviser wil act for the Trust
on behalf of the Fund upon request to the best of its ability, with compensation
for the Adviser's services to be agreed upon with respect to each such occasion
as it arises.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the Fund except as
permitted by the Declaration, and will comply with all other provisions of the
Declaration and the By-Laws and the then-current Prospectus and Statement of
Additional Information of the Fund relative to the Adviser and its Directors and
officers.
Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties and obligations hereunder. As used
in this Article 6, the term "Adviser" shall include Directors, officers and
employees of the Adviser as well as that corporation itself.
Article 7. Activities of the Adviser. The services of the Adviser to
the Fund are not deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Fund agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Fund, the Fund will change its name so as to delete the initials "MFS." It is
understood that the Trustees, officers and shareholders of the Trust are or may
be or become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Trust, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
Article 8. Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until January 2, 1998 on which date it will terminate unless its
continuance after January 2, 1998 is "specifically approved at least annually"
(i) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust, or by "vote of a majority of the outstanding voting
securities" of the Fund.
<PAGE>
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than sixty
days' nor less than thirty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by
"vote of a majority of the outstanding voting securities" of the Fund.
Article 9. Scope of Trust's Obligations.. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust. If this Agreement is executed by the
Trust on behalf of one or more series of the Trust, the Adviser further
acknowledges that the assets and liabilities of each series of the Trust are
separate and distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of the series on whose
behalf the Trust has executed this Agreement.
Article 10. Definitions. The terms "specifically approved at least
annually," "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified, and shall be construed
in a manner consistent with, the Investment Company Act of 1940 and the Rules
and Regulations promulgated thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act.
Article 11. .Record Keeping.. The Adviser will maintain records in a
form acceptable to the Trust and in compliance with the rules and regulations of
the Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the
Declaration.
MFS SERIES TRUST I on behalf of
MFS SPECIAL SPECIAL OPPORTUNITIES
FUND, one of its series
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. KEITH BRODKIN
A. Keith Brodkin
Chairman
<PAGE>
EXHIBIT NO. 99.7
MFS LIFETIME MANAGED SECTORS FUND
RETIREMENT PLAN FOR NON-INTERESTED PERSON TRUSTEES
MFS Lifetime Managed Sectors Fund (the "Fund") has adopted this Retirement Plan
for Non-Interested Person Trustees (the "Plan"). The Plan has been established
for the purpose of providing certain benefits to eligible Independent Trustees
of the Fund, or their beneficiaries, after termination of the Independent
Trustees' services as such.
1. DEFINITIONS
The following terms shall have the following meanings:
Accrued Benefit: A benefit which is equal to the Normal Retirement
Benefit calculated using an Independent Trustee's Years of Service and Annual
Compensation as of the determination date.
Actuarial Equivalent: A benefit equal in value, based on (a) an
interest rate equal to the immediate annuity rate published by the Pension
Guaranty Corporation for the January of the Plan Year of calculation and (b) the
1983 Individual Annuity Mortality Tables for Males.
Annual Compensation: The average of the total compensation (retainer
and meeting fees) received by an Independent Trustee during each of the last
three Plan Years preceding his termination of services as such for which he
served either as an Independent Trustee or a Nonaffiliated Trustee for the
entire year; provided, that if an Independent Trustee served as an Independent
Trustee and/or a Nonaffiliated Trustee for fewer than three full Plan Years
prior to his termination of services, there shall be taken into account his
annualized compensation for the one or more most recent partial Plan Years (if
any) for which he served as an Independent Trustee or a Nonaffiliated Trustee
that, when aggregated with his full Plan Years, does not exceed three Plan
Years.
Disability: Disability as defined in ss.22(e)(3) of the Internal
Revenue Code of 1986, as amended.
Independent Trustee: A Trustee of the Fund who is not an "interested
person" (as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended) of the Fund, Lifetime Advisers, Inc. ("Lifetime"), Massachusetts
Financial Services Company ("MFS") or MFS Financial Services, Inc. ("FSI").
Nonaffiliated Trustee: A Trustee of the Fund who has no material
business or professional relationship with the Fund, Lifetime, MFS or FSI and
who is subject to being declared an "interested person" solely by reason of his
relationship with the Fund, Lifetime, MFS or FSI during the two most recently
completed fiscal years of the Fund.
<PAGE>
Normal Retirement Benefit: An annual benefit at Normal Retirement Date
equal to 5% of an Independent Trustee's Annual Compensation multiplied by the
Independent Trustee's whole Years of Service, up to a maximum of ten Years of
Service, payable in the Normal Form of Benefit, as defined in ss.3(g).
Normal Retirement Date: The later of December 31 of the Plan Year in
which an Independent Trustee attains age 75 or December 31, 1992.
Plan Year: January 1 through December 31.
Retirement: Termination of service of an Independent Trustee after
having completed at least five Years of Service and having attained age 62,
other than: (1) any termination by reason of death; (ii) any termination by
reason of Disability, provided that any Independent Trustee who suffers a
Disability and who has otherwise satisfied the requirements for Retirement shall
have the right to elect whether his termination is by reason of Retirement or by
reason of Disability; or (iii) any termination resulting from the Independent
Trustee's willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Independent Trustee
("Misconduct").
Year of Service: A Plan Year during which an Independent Trustee
completed at least six months of service as either a Nonaffiliated Trustee or an
Independent Trustee.
2. ELIGIBILITY
No Trustee of the Fund shall be eligible to participate in the Plan or
be entitled to any rights or benefits hereunder until the Trustee becomes an
Independent Trustee. Each individual who completes any service as an Independent
Trustee on or after the Effective Date of this Plan, and who so elects in such
manner as the Committee determines from time to time, will be eligible to
participate in the Plan.
3. RETIREMENT DATE; AMOUNT OF BENEFIT
(a) Retirement. Each Independent Trustee shall retire on that
Independent Trustee's Normal Retirement Date, if he has not previously ceased
to perform services as an Independent Trustee. Each retired Independent
Trustee is referred to as a "Retired Trustee".
(b) Normal Retirement Benefit. Upon an Independent Trustee's
Retirement on his Normal Retirement Date, the Independent Trustee shall
receive, commencing on his Normal Retirement Date, his Normal Retirement
Benefit.
(c) Early Retirement Benefit. Upon an Independent Trustee's Retirement
prior to his Normal Retirement Date, the Independent Trustee shall receive an
Early Retirement Benefit commencing on the Independent Trustee's date of
Retirement. The benefit payable on an Independent Trustee's early Retirement
shall be his Accrued Benefit reduced by 3% for every year that payment of an
Early Retirement Benefit precedes that Trustee's Normal Retirement Date.
<PAGE>
(d) Deferred Termination Benefit. If an Independent Trustee's service
as such terminates, other than (i) termination as a result of his Misconduct or
(ii) termination that constitutes termination by reason of his Retirement,
Disability or death, after he has completed at least five Years of Service, he
shall receive, commencing on the date he attains age 62, his Accrued Benefit
reduced by 39%.
(e) Disability Benefit. If an Independent Trustee's service as such
terminates by reason of his Disability and, if the Independent Trustee is
eligible for Retirement, he elects that his termination be treated as being by
reason of Disability, he shall receive his Accrued Benefit paid for the one
hundred twenty (120) months immediately following the month in which his service
so terminates. In the event the Independent Trustee dies before he has received
one hundred twenty (120) payments, monthly payments in the same amount shall be
paid to his beneficiary until the number of payments to the Independent Trustee
plus the number of payments to the beneficiary equal one hundred twenty (120)
payments.
(f) Death Benefit. Each Independent Trustee who elects to participate
in this Plan shall designate a beneficiary in such form as the Committee
approves from time to time to receive any benefits payable under this Plan in
the event of his death. In the event there is no validly designated beneficiary
in existence on the date of an Independent Trustee's death, his beneficiary
shall be his surviving spouse, if any, or if none, his estate. The beneficiary
of an Independent Trustee who dies during service, and with respect to whom
benefit payments have not commenced, shall be entitled to that Independent
Trustee's Accrued Benefit paid for the one hundred twenty (120) months
immediately following death.
(g) Form of Benefit. Except as otherwise provided in this ss.3,
benefits payable under this ss.3 shall be payable in the form of a monthly
annuity for the life of the Independent Trustee, and, if the Independent Trustee
dies before he has received one hundred twenty (120) payments, monthly payments
in the same amount shall be payable to his beneficiary until the number of
payments to the Independent Trustee plus the number of payments to the
beneficiary equal one hundred twenty (120) payments (the "Normal Form of
Benefit"). However, notwithstanding any other provision of this Section 3 to the
contrary, if an Independent Trustee's beneficiary is entitled to payments under
this Plan upon the Independent Trustee's death, then (i) if the Independent
Trustee's beneficiary is his estate, the lump sum Actuarial Equivalent present
value of those payments shall be paid to the estate in a single lump sum as soon
as administratively reasonable following the Independent Trustee's death, and
(ii) if the Independent Trustee's beneficiary is other than his estate, the
Committee in its sole discretion may direct that the Actuarial Equivalent value
of those payments be paid in such form other than the Normal Form of Benefit
(including without limitation a lump sum) as it determines.
<PAGE>
4. PAYMENT OF BENEFIT; ALLOCATION OF COSTS
The Fund is responsible for the payment of the benefits, as well as all
expenses of administration of the Plan, including without limitation all
accounting, legal and actuarial fees and expenses. The obligations of the Fund
to pay such benefits and expenses will not be secured or funded in any manner,
and the obligations will not have any preference over the lawful claims of the
Fund's creditors and shareholders. The Fund shall be under no obligation to
segregate any assets for the purpose of providing retirement benefits pursuant
to this Plan, and to the extent that any Independent Trustee or beneficiary
acquires a right to receive a benefit under the Plan, such right shall be
limited to that of a recipient of an unfunded, unsecured promise to pay amounts
in the future and such person's position with respect to such amounts shall be
that of a general unsecured creditor of the Fund. To the extent that the Fund
consists of one or more separate portfolios, costs and expenses will be
allocated among the portfolios by the Board of Trustees of the Fund (the
"Board") in a manner that is determined by the Board to be fair and equitable
under the circumstances.
5. ADMINISTRATION
(a) The Committee. Any question involving entitlement to payments under
or the interpretation or administration of the Plan will be referred to a
committee (the "Committee") of Independent Trustees designated by the Board.
Except as otherwise provided herein, the Committee will make all interpretations
and determinations necessary or desirable for the Plan's administration, and
such interpretations and determinations will be final and conclusive.
(b) Powers of the Committee. The Committee will represent and act on
behalf of the Fund in respect of the Plan and, subject to the other provisions
of the Plan, the Committee may adopt, amend or repeal by-laws or other
regulations, relating to the administration of the Plan, the conduct of the
Committee's affairs, its rights or powers or the rights or powers of its members
or of the Board. The Committee will report to the Board from time to time on its
activities in respect of the Plan. The Committee or persons designated by it
will cause such records to be kept as may be necessary for the administration of
the Plan.
6. MISCELLANEOUS PROVISIONS
(a) Rights Not Assignable. The right to receive any payment
under the Plan may not be transferred, assigned, pledged or otherwise
alienated.
(b) Amendment, etc. The Committee, with the concurrence of the Board,
may at any time amend or terminate the Plan or waive any provision of the Plan,
provided that no amendment, termination or waiver will impair the rights of an
Independent Trustee to receive upon Retirement the payments which would have
been made to that Independent Trustee had there been no such amendment,
termination or waiver (based upon that Independent Trustee's Years of Service to
the date of such amendment, termination or waiver) or the rights of a former
Independent Trustee or Retired Trustee to receive any benefit due under the
Plan, without the consent of such present or former Independent Trustee or
Retired Trustee, as the case may be. A present or former Independent Trustee or
Retired Trustee may elect to waive receipt of his benefit by so advising the
Committee.
<PAGE>
Notwithstanding any provision of this Plan to the contrary,
however, in the event of the sale of all or substantially all of the assets of
the Fund, the liquidation or dissolution of the Fund, or any merger or other
similar reorganization of the Fund that the Fund does not survive:
(i) if although the Fund does not survive there is a surviving
entity, all rights and benefits (including without limitation those of Retired
Trustees) under the Plan shall cease upon consummation of such transaction,
unless, and only to the extent that, the board of trustees (or other similar
governing body) of the surviving entity agrees to assume the Plan and/or to
provide any such rights or benefits; and
(ii) if there is no surviving entity, the Board shall have the
right to take specific action to terminate the Plan and/or to cause any or all
rights and benefits (including without limitation those of Retired Trustees)
under the Plan to cease as of the date of such event but, in the absence of any
such specific action, the lump sum Actuarial Equivalent present value of the
Accrued Benefit of each present or former Independent Trustee or Retired Trustee
(or beneficiary thereof) who on the date of liquidation is receiving or entitled
to receive a benefit under the Plan or would be entitled to receive a benefit
under the Plan based on his actual or deemed termination of service as of the
date of such liquidation shall be paid to such person.
(c) No Right to Re-election. Nothing in the Plan will create
any obligation on the part of the Board to nominate any Independent Trustee
for re-election.
(d) Vacancies. Although the Board will retain the right to increase or
decrease its size, it shall be the general policy of the Board to replace each
person who ceases to serve as an Independent Trustee by selecting a new
Independent Trustee from candidates duly proposed.
(e) Consulting. Each Retired Trustee may render such services for the
Fund, for such compensation, as may be agreed upon from time to time by such
Trustee and the Board of the Fund.
(f) Construction. Whenever any masculine terminology is used in this
Plan, it shall be taken to include the feminine, unless the context otherwise
indicates. The titles and headings included herein are for convenience only and
shall not be construed as in any way affecting or modifying the text of this
Plan, which text shall control. This Plan shall be construed and regulated in
accordance with the laws of The Commonwealth of Massachusetts, except to the
extent such state law is preempted by federal law.
(g) Effective Date. This Plan will become effective on January
1, 1991 (the "Effective Date").
<PAGE>
EXHIBIT NO. 99.8(a)
CUSTODIAN CONTRACT
Between
LIFETIME MANAGED SECTORS TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS PAGE
1. Employment of Custodian and Property to be Held By It............. 1
2. Duties of the Custodian with Respect to Property of the Trust Held
by the Custodian.................................................. 1
2.1. Holding Securities...................................... 1
2.2. Delivery of Securities.................................. 2
2.3. Registration of Securities.............................. 4
2.4. Bank Accounts........................................... 5
2.5. Payments for Shares..................................... 5
2.6. Investment and Availability of Federal Funds............ 6
2.7. Collection of Income.................................... 6
2.8. Payment of Trust Monies................................. 6
2.9. Liability for Payment in Advance of Receipt of
Securities Purchased.................................... 8
2.10. Payments for Repurchases or Redemptions of Shares of
the Trust............................................... 8
2.11. Appointment of Agents................................... 9
2.11A. Trust Assets Held in the Custodian's Direct Paper System 9
2.12. Deposit of Trust Assets in Securities System............ 10
2.13. Segregated Account...................................... 12
2.14. Ownership Certificates for Tax Purposes................. 13
2.15. Proxies................................................. 13
2.16. Communications Relating to Trust Portfolio Securities... 13
2.17. Proper Instructions..................................... 14
2.18. Actions Permitted Without Express Authority............. 14
2.19. Evidence of Authority................................... 15
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income..................... 15
4. Records........................................................... 15
5. Opinion of Trust's Independent Accountants ....................... 16
6. Reports to Trust by Independent Public Accountants................ 16
7. Compensation of Custodian......................................... 16
8. Responsibility of Custodian....................................... 16
9. Effective Period, Termination and Amendment....................... 18
10. Successor Custodian............................................... 18
11. Interpretive and Additional Provisions............................ 19
12. Massachusetts Law to Apply........................................ 20
13. Prior Contracts................................................... 20
<PAGE>
CUSTODIAN CONTRACT
This Contract between Lifetime Managed Sectors Trust, a business trust
organized and existing under the laws of The Commonwealth of Massachusetts,
having its principal place of business at 200 Berkeley Street, Boston,
Massachusetts hereinafter called the "Trust", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian".
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It The Trust hereby
employs the Custodian as the custodian of its assets pursuant to the provisions
of the Declaration of Trust including securities and cash it desires to be held
within the United States (collectively "domestic securities") and securities and
cash it desires to be held outside the United States (collectively "foreign
securities"), subject to the terms of Article 3 hereof. The Trust agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Trust from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest ("Shares") of the Trust as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Trust held or
received by the Trust and not delivered to the Custodian.
<PAGE>
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with an applicable vote by the Board of Trustees of the
Trust, and provided that, except as expressly provided in Article 3 hereof, the
Custodian shall have no more or less responsibility or liability to the Trust on
account of any actions or omissions of any subcustodian so employed than any
such subcustodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Trust Held By
the Custodian in the United States.
The provisions of this Article 2 shall apply to the duties of the
Custodian as they relate to domestic securities, held in the United States.
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Trust all non-cash property, including all domestic
securities owned by the Trust to be held in the United States, other than (a)
securities which are maintained pursuant to Section 2.11 in a clearing agency
which acts as a securities depository or in a book-entry system authorized by
the U.S. Department of the Treasury, collectively referred to herein as a
"Securities System"; and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper")
which is deposited and/or maintained in State Street Bank and Trust Company's
Direct Paper Book-Entry System ("Direct Paper System") pursuant to Section
2.11.A.
<PAGE>
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Trust held by the Custodian or in a Securities
System account of the Custodian or in the Direct Paper System only upon receipt
of Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the
Trust and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by the Trust;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.11 hereof;
4) To the depository agent in connection with tender
or other similar offers for portfolio securities of the Trust;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be delivered to
the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Trust or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to Section 2.10
or into the name or nominee name of any subcustodian appointed pursuant to
Article l; or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be delivered to the
Custodian;
<PAGE>
7) Upon the sale of such securities for the account of the
Trust, to the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for such securities
except as may arise from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
<PAGE>
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities
made by the Trust, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Trust, which may be in the form
of cash or obligations issued by the United States government, its agencies or
instrumental-ities, except that in connection with any loans for which
collateral is to be credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will not be
held liable or responsible for the delivery of securities owned by the Trust
prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings
by the Trust requiring a pledge of assets by the Trust, but only against receipt
of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Trust;
<PAGE>
13) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Trust;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Trust, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be described
from time to time the Trust's currently effective prospectus and statement of
additional information ("prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
<PAGE>
15) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee signed by an officer of
the Trust and certified by the Secretary or an Assistant Secretary, setting
forth the purpose for which such delivery is to be made, declaring such purposes
to be proper corporate purposes, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the Trust
or in the name of any nominee of the Trust or in the United States shall be
registered in the name of any nominee of the Trust or in the name of any nominee
of the Trust or of any nominee of the Custodian which nominee shall be assigned
exclusively to the Trust, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered investment
companies having the same investment adviser as the Trust, or in the name or
nominee name of any agent appointed pursuant to Section 2.10 or in the name or
nominee name of any subcustodian appointed pursuant to Article 1. All domestic
securities accepted by the Custodian on behalf of the Trust under the terms of
this Contract shall be in "street name" or other good delivery form.
<PAGE>
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts (the "Trust's Account or Accounts") in the name of the
Trust, subject only to draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such Account or Accounts, subject to
the provisions hereof, all cash received by it from or for the Account of the
Trust, other than cash maintained by the Trust in a bank Account established and
used in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for the Trust may be deposited by it to its credit
as Custodian in the Banking Department of the Custodian or in such other banks
or trust companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940 and that each such
bank or trust company and the funds to be deposited with each such bank or trust
company shall be approved by vote of a majority of the Board of Trustees of the
Trust. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor
for the Trust's Shares or from the Transfer Agent of the Trust and deposit
into the Trust's account such payments as are received for Shares of the Trust
issued or sold from time to time by the Trust. The Custodian will provide timely
notification to the Trust and the Transfer Agent of any receipt by it of
payments for Shares of the Trust.
<PAGE>
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Trust and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions,
1) invest in such instruments as may be set forth in
such instruments as may be set forth in such instructions on the same day as
received all federal funds received after a time agreed upon between the
Custodian and the Trust; and
2) make federal funds available to the Trust as of specified
times agreed upon from time to time by the Trust and the Custodian in the amount
of any checks received in payment for Shares of the Trust which are deposited
into the Trust's Account.
2.7 Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect to registered domestic
securities held hereunder to which the Trust shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer securities if, on the
date of payment by the issuer, such domestic securities are held by the
Custodian or agent thereof and shall credit such income, as collected, to the
Trust's custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on domestic securities held hereunder. Income due the Trust on
domestic securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Trust. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Trust with
such information or data as may be necessary to assist the Trust in arranging
for the timely delivery to the Custodian of the income to which the Trust is
properly entitled.
<PAGE>
2.8 Payment of Trust Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Trust in the following cases only:
1) Upon the purchase of domestic securities for the account
of the Trust but only (a) against the delivery of such securities to the
Custodian (or any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the Investment Company Act of
1940, as amended, to act as a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name of the Trust or in the
name of a nominee of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth in Section 2.11
hereof; (c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11A; or (d) in the case of
repurchase agreements entered into between the Trust and the Custodian, or
another bank, or a broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Trust of securities
owned by the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Trust;
<PAGE>
2) In connection with conversion, exchange or
surrender of domestic securities owned by the Trust as set forth in Section
2.2 hereof;
3) For the redemption or repurchase of Shares issued
by the Trust as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by
the Trust, including but not limited to the following payments for the
account of the Trust: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Trust whether or not such expenses
are to be in whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant
to the governing documents of the Trust;
<PAGE>
6) For payment of the amount of dividends received in
respect of domestic securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee of the Trust signed by an officer of
the Trust and certified by its Secretary or an Assistant Secretary, setting
forth the purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such payment is
to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of domestic securities for
the account of the Trust is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from the
Trust to so pay in advance, the Custodian shall be absolutely liable to the
Trust for such securities to the same extent as if the securities had been
received by the Custodian, except that in the case of repurchase agreements
entered into by the Trust with a bank which is a member of the Federal Reserve
System, the Custodian may transfer funds to the account of such bank prior to
the receipt of written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated non-proprietary
account of the Custodian maintained with the Federal Reserve Bank of Boston or
of the safekeeping receipt, provided that such securities have in fact been so
transferred by book-entry.
<PAGE>
2.10 Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out such of the provisions
of this Article 2 as the Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.11 Deposit of Trust Assets in Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Trust in a
clearing agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and subject to
the following provisions:
<PAGE>
1) The Custodian may keep domestic securities of the Trust in
a Securities System provided that such securities are represented in an account
("Custodian's Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to
domestic securities of the Trust which are maintained in a Securities System
shall identify by book-entry those securities belonging to the Trust;
3) The Custodian shall pay for domestic securities purchased
for the account of the Trust upon (i) receipt of advice from the Securities
System that such securities have been transferred to the Custodian's Account,
and (ii) the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Trust. The Custodian shall transfer
securities sold for the account of the Trust upon (i) receipt of advice from the
Securities System that payment for such securities has been transferred to the
Custodian's Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the Trust.
Copies of all advices from the Securities System of transfers of domestic
securities for the account of the Trust shall identify the Trust, be maintained
for the Trust by the Custodian and be provided to the Trust at its request. Upon
request, the Custodian shall furnish the Trust confirmation of each transfer to
or from the account of the Trust in the form of a written advice or notice and
shall furnish to the Trust copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account of the Trust.
<PAGE>
4) The Custodian shall provide the Trust with any
report obtained by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received the initial or
annual certificate, as the case may be, required by Article 10 hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Trust for any loss or damage to the Trust
resulting from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or of any of its
or their employees or from failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities System; at the
election of the Trust, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claim against the Securities System or any
other person which the Custodian may have as a consequence of any such loss or
damage if and to the extent that the Trust has not been made whole for any such
loss or damage.
<PAGE>
2.11A Trust Assets Held in the Custodian's Direct Paper System The Custodian may
deposit and/or maintain domestic securities owned by the Trust in the Direct
Paper System subject to the following provisions:
1) No transaction relating to domestic securities in
the Direct Paper System will be effected in the absence of Proper Instructions;
2) The Custodian may keep domestic securities of the Trust in
the Direct Paper System only if such securities are represented in an account of
the Custodian in the Direct Paper System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
domestic securities of the Trust which are maintained in the Direct Paper
System shall identify by book-entry those securities belonging to the Trust;
4) The Custodian shall furnish the Trust confirmation of each
transfer of Direct Paper to or from the account of the Trust, in the form of a
written advice or notice on the next business day following such transfer and
shall furnish to the Trust copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account of the Trust;
<PAGE>
5) The Custodian shall pay for domestic securities purchased
for the account of the Trust upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the account of
the Trust. The Custodian shall transfer securities sold for the account of the
Trust upon the making of an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account of the Trust;
6) The Custodian shall provide the Trust with any
report on the system of internal accounting control for the Direct Paper
System that the Custodian receives and as the Trust may reasonably request
from time to time;
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Trust establish and maintain a segregated account or
accounts for and on behalf of the Trust, into which account or accounts may be
transferred cash and/or domestic securities, including securities maintained in
an account by the
<PAGE>
Custodian pursuant to Section 2.11 hereof, (i) in accordance with the provisions
of any agreement among the Trust, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by the
Trust, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Trust or commodity
futures contracts or options thereon purchased or sold by the Trust, (iii) for
the purpose of compliance by the Trust with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other proper
corporate purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee signed by an officer of the Trust and
certified by the Secretary or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring such purposes to be proper
corporate purposes.
<PAGE>
2.13 Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Trust held by it and in connection with
transfers of domestic securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder of
such domestic securities, if the securities are registered otherwise than in the
name of the Trust or a nominee of the Trust, all proxies, without indication of
the manner in which such proxies are to be voted, and shall promptly deliver to
the Trust such proxies, all proxy soliciting materials and all notices relating
to such securities.
2.15 Communications Relating to Trust Portfolio Securities. The Custodian
shall transmit promptly to the Trust all written information (including,
without limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of call
and put options written by the Trust and the maturity of futures contracts
purchased or sold by the Trust) received by the Custodian from issuers of the
domestic securities being held for the Trust. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Trust all written
information received by the Custodian from issuers of the domestic securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Trust desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the Trust
shall notify the Custodian at least three business days prior to the date on
which the Custodian is to take such action.
<PAGE>
2.16 Reports to Trust by Independent Public Accountants
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, which
shall be of sufficient scope and in sufficient detail, as may reasonably be
required by the Trust to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, shall so state.
3. Duties of the Custodian with Respect to Property of the Trust held
Outside of the United States
The provisions of this Article 3 shall apply to the duties of the
Custodian as they relate to foreign securities held outside the United States.
3.1 Appointment of Chase as Subcustodian. The Custodian is authorized
and instructed by the Trust to employ Chase Manhattan Bank N.A. ("Chase")
as subcustodian for the Trust's foreign securities (including cash incidental to
transactions in such securities) on the terms and conditions set forth in the
Subcustody Contract between the Custodian and Chase which is attached hereto as
Exhibit A (the Subcustody Contract"). The Custodian acknowledges that it has
entered into the Subcustody Contract and hereby agrees to provide such services
to the Trust and in accordance with such Subcustody Contract as necessary for
foreign custody services to be provided pursuant thereto.
<PAGE>
3.2 Standard of Care; Liability. Notwithstanding anything to the
contrary in this Contract, the Custodian shall not be liable to the Trust
for any loss, damage, cost, expenses, liability or claim arising out of or in
connection with the maintenance of custody of the Trust's foreign securities by
Chase or by any other banking institution or securities depository employed
pursuant to the terms of the Subcustody Contract, except that the Custodian
shall be liable for any such loss, damage, cost, expense, liability or claim
directly resulting from the failure of the Custodian to exercise reasonable care
in the performance of its duties thereunder. At the election o the Trust, the
Trust shall be entitled to be surrogated to the rights of the Custodian under
the Subcustody contract with respect to any claim arising thereunder against
Chase or any other banking instructions or securities depository employed by
Chase if and to the extent that the Trust has not been made whole therefor.
<PAGE>
3.3 Trust's Responsibility for Rules and Regulations. As between the
Custodian and the Trust, the Trust shall be solely responsible to assure
that the maintenance of foreign securities and cash pursuant to the terms of the
Subcustody Contract comply with all applicable rules, regulations,
interpretations and orders of the Securities and Exchange Commission, and the
Custodian assumes no responsibility and makes no representations as to such
compliance.
4. Payments for Repurchase or Redemptions of Shares of the Trust. From
such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Trust pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of the Trust, the Custodian is authorized upon receipt of
instructions for the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Trust, the Custodian shall honor checks drawn on
the Custodian by the holder of Shares, which checks have been furnished by the
Trust to the holder of Shares, which checks have been furnished by the Trust to
the holder of Shares, which checks have been furnished by the Trust to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon form time to time between
the Trust and the Custodian.
<PAGE>
5. Proper Instructions. Proper Instructions as used throughout this
Contract means a writing signed or initialed by one or more person or
persons as the Board of Trustees shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Trust shall
cause all oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the authorization
by the Board of Trustees of the Trust accompanied by a detailed description of
procedures approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the Custodian are satisfied that
such procedures afford adequate safeguards for the Trust's assets.
6. Actions Permitted without Express Authority. The Custodian may in
its discretion, without express authority from the Trust:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to the Trust;
<PAGE>
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Trust, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Trust except as otherwise
directed by the Board of Trustees of the Trust.
7. Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been properly
executed by or on behalf of the Trust. The Custodian may receive and accept a
certified copy of a vote of the Board of Trustees of the Trust as conclusive
evidence (a) of the authority of any person to act in accordance with such vote
or (b) of any determination or of any action by the Board of Trustees pursuant
to the Declaration of Trust as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.
<PAGE>
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Trust to keep
the books of account of the Trust and/or compute the net asset value per share
of the outstanding shares of the Trust or, if directed in writing to do so by
the Trust, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Trust as described in the Trust's currently effective
prospectus shall advise the Trust and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Trust to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net asset
value per share and the daily income of the Trust shall be made at the time or
times described from time to time in the Trust's currently effective prospectus.
9. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Trust under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Trust. All such records shall be
the property of the Trust and shall at all times during the regular business
hours of the Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at the Trust's request, supply the
Trust with a tabulation of securities owned by the Trust and held by the
Custodian and shall, when requested to do so by the Trust and for such
compensation as shall be agreed upon between the Trust and the Custodian,
include certificate numbers in such tabulations.
<PAGE>
10. Opinion of Trust's Independent Accountant
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions from the
Trust's independent accountants with respect to its activities hereunder in
connection with the preparation of the Trust's Form N-lA, and Form N-SAR or
other annual reports to the Securities and Exchange Commission and with respect
to any other requirements of such Commission.
11. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Trust and the Custodian.
12. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract but shall be kept indemnified by the Trust for
any action taken or omitted by it in the proper execution of instructions from
the Trust. It shall be entitled to rely on and may act upon advice of counsel
for the Trust on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian with respect to redemptions
effected by check shall be in accordance with a separate agreement entered into
between the Custodian and the Trust.
<PAGE>
The Custodian shall be liable for the acts and omissions of Chase
appointed as its subcustodian pursuant to the provision of Article 3 to the
extent set forth in Sections 3.2 and 3.3 hereof.
The Trust agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominee in connection with the performance of this Contract, except such as may
arise from it or its nominee's own negligent action, negligent failure to act or
willful misconduct. The Custodian is authorized to charge any account of the
Trust for such items and its fees. To secure any such authorized charges and any
advances of cash or securities made by the Custodian to or for the benefit of
the Trust for any purpose which results in the Trust incurring an overdraft at
the end of any business day or for extraordinary or emergency purposes during
any business day, the Trust hereby grants to the Custodian a security interest
in and pledges to the Custodian securities held for it by the Custodian, in an
amount not to exceed five percent of the Trust's gross assets, the specific
securities to be designated in writing from time to time by the Trust or its
investment adviser (the "Pledged Securities"). Should the Trust fail to repay
promptly any advances of cash or securities, the Custodian shall be entitled to
use available cash and to dispose of the Pledged Securities as is necessary to
repay any such advances.
<PAGE>
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.11 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Trust have approved the initial use
of a particular Securities System and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of Trustees has reviewed
the use by the Trust of such Securities System, as required in each case by Rule
17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not act under Section 2.11A hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Trustees has approced the initial use of the Direct Paper System and the
receipt of an annual certificate of the Secretary or an Assistant Secretary that
the Board of Trustees has reviewed the use by the Trust of the Direct Paper
System; provided further, however, that the Trust shall not amend or terminate
this Contract in contravention of any applicable federal or state regulations,
or any provision of the Declaration of Trust, and (b) that the Trust may at any
time by action of its Board of Trustees (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
<PAGE>
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
14. Successor Custodian.
If a successor custodian shall be appointed by the Board of Trustees of
the Trust, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Trust's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian and all instruments
held by the Custodian relative thereto and all other property held by it under
this Contract and to transfer to an account of such successor custodian all of
the Trust's securities held in any Securities System. Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
<PAGE>
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Trust. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
16. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
17. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, the
existing custodian contracts between the Trust and the Custodian. Any reference
to the custodian contract between the Trust and the Custodian in documents
executed prior to the date hereof shall be deemed to refer to this Contract.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 28th day of January, 1988.
ATTEST LIFETIME MANAGED SECTORS TRUST
D. M. JAFFE By: RICHARD B. BAILEY
D. M. Jaffe Richard B. Bailey
ATTEST STATE STREET BANK AND TRUST COMPANY
ILLEGIBLE By: ILLEGIBLE
(Illegible), Assistant Secretary (Illegible), Vice President
<PAGE>
EXHIBIT NO. 99.8(b)
AMENDMENT TO CUSTODIAN CONTRACT
Amendment to Custodian Contract between MFS Managed Sectors Trust, a business
trust organized and existing under the laws of Massachusetts, having a principal
place of business at 200 Berkeley Street, Boston, Massachusetts 02116
(hereinafter called the "Fund"), and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts 02110 (hereinafter called the
"Custodian").
WHEREAS: The Fund and the Custodian are parties to a Custodian Contract dated
January 28, 1988 (the "Custodian Contract") ;
WHEREAS: The Fund desires that the Custodian issue a letter of credit (the
"Letter of Credit") on behalf of the Fund for the benefit of ICI Mutual
Insurance Company (the "Company") in accordance with the Continuing Letter of
Credit and Security Agreement and that the Fund's obligations to the Custodian
with respect to the Letter of Credit shall be fully collateralized at all times
while the Letter of Credit is outstanding by, among other things, segregated
assets of the Fund equal to 125% of the face amount to the amount of the Letter
of Credit;
WHEREAS: the Custodian Contract provides for the establishment of segregated
accounts for proper Fund purposes upon Proper Instructions (as defined in the
Custodian Contract); and
WHEREAS: The Fund and the Custodian desire to establish a segregated account
to hold the collateral for the Fund's obligations to the Custodian with
respect to the Letter of Credit and to amend the Custodian Contract to provide
for the establishment and maintenance thereof;
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto hereby amend the Custodian Contract
as follows:
1. Capitalized terms used herein without definition shall have
the meanings ascribed to them in the Custodian Contract.
2. The Fund hereby instructs the Custodian to establish and maintain a
segregated account (the "Letter of Credit Custody Account") for and in behalf of
the Fund as contemplated by Section 2.13(iv) for the purpose of collateralizing
the Fund's obligations under this Amendment to the Custodian Contract.
3. The Fund shall deposit with the Custodian and the Custodian shall
hold in the Letter of Credit Custody Account cash, U.S. government securities
and other high-grade debt securities owned by the Fund acceptable to the
Custodian (collectively "Collateral Securities") equal to 125% of the face
amount to the amount which the Company may draw under the Letter of Credit. Upon
receipt of such Collateral Securities in the Letter of Credit Custody Account,
the Custodian shall issue the Letter of Credit to the Company.
<PAGE>
4. The fund hereby grants to the Custodian a security interest in the
Collateral Securities from time to time in the Letter of Credit Custody Account
(the "Collateral") to secure the performance of the Fund's obligations to the
Custodian with respect to the Letter of Credit, including, without limitation,
under Section 5-114(3) of the Uniform Commercial Code. The Fund shall register
the pledge of Collateral and execute and deliver to the Custodian such powers
and instruments of assignment as may be requested by the Custodian to evidence
and perfect the limited interest in the Collateral granted hereby.
5. The Collateral Securities in the Letter of Credit Custody Account
may be substituted or exchanged (including substitutions or exchanges which
increase or decrease the aggregate value of the Collateral) only pursuant to
Proper Instructions from the Fund after the Fund notifies the Custodian of the
contemplated substitution or exchange and the Custodian agrees that such
substitution or exchange is acceptable to the Custodian.
6. Upon any payment made pursuant to the Letter of Credit by the
Custodian to the Company, after notice to the company, the Custodian may
withdraw from the Letter of Credit Custody Account Collateral Securities in an
amount equal in value to the amount actually so paid. The Custodian shall have
with respect to the Collateral so withdrawn all of the rights of a secured
creditor under the Uniform Commercial Code as adopted in the Commonwealth of
Massachusetts at the time of such withdrawal and all other rights granted or
permitted to it under law.
7. The Custodian will transfer upon receipt all income earned on the
Collateral to the Fund custody account unless the Custodian receives Proper
Instructions from the Fund to the contrary.
8. Upon the drawing by the Company of all amounts which may become
payable to it under the Letter of Credit and the withdrawal of all Collateral
Securities with respect thereto by the Custodian pursuant to Section 6 hereof,
or upon the termination of the Letter of Credit by the Fund with the written
consent of the Company, the Custodian shall transfer any Collateral Securities
then remaining in the Letter of Credit Custody Account to another fund custody
account.
9. Collateral held in the Letter of Credit Custody Account shall be
released only in accordance with the provisions of this Amendment to Custodian
Contract. The Collateral shall at all times until withdrawn pursuant to Section
6 hereof remain the property of the Fund, subject only to the extent of the
interest granted herein to the Custodian.
10. Notwithstanding any other termination of the Custodian Contract,
the Custodian Contract shall remain in full force and effect with respect to the
Letter of Credit Custody Account until transfer of all Collateral Securities
pursuant to Section 8 hereof.
<PAGE>
11. The Custodian shall be entitled to reasonable compensation for its
issuance of the Letter of Credit and for its services in connection with the
Letter of Credit Custody Account as agreed upon from time to time between the
Fund and the Custodian.
12. The Custodian Contract as amended hereby, shall be governed
by, and construed and interpreted under, the laws of the Commonwealth of
Massachusetts.
13. The parties agree to execute and deliver all such further documents
and instruments and to take such further action as may be required to carry out
the purposes of the Custodian Contract, as amended hereby.
14. Except as provided in this Amendment to Custody Contract, the
Custodian Contract shall remain in full force and effect, without amendment or
modification, and all applicable provisions of the Custodian Contract, as
amended hereby, including, without limitation, Section 8 thereof, shall govern
the Letter of Credit Custody Account and the rights and obligations of the Fund
and the Custodian under this Amendment to Custodian Contract. No provision of
this Amendment to Custodian Contract shall be deemed to constitute a waiver of
any rights of the Custodian under the Custodian Contract or under law.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to Custodian
Contract to be executed in its name and behalf by its duly authorized
representatives and its seal to be hereunder affixed as of the 29th day of
February, 1988.
ATTEST:
By: DAN JAFFE By: W. THOMAS LONDON
Dan Jaffe W. Thomas London, Treasurer
ATTEST: STATE STREET BANK AND
TRUST COMPANY
By: ILLEGIBLE By: ILLEGIBLE
(Illegible), Assistant Secretary (Illegible), Vice President
<PAGE>
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made as of this 1st day of October, 1989 by and between State Street
Bank and Trust Company (the "Custodian") and Lifetime Managed Sectors Trust (the
"Trust").
WHEREAS, the Custodian and the Trust are parties to a Custodian Contract dated
January 28, 1988 (the "Custodian Contract") which governs the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Trust;
WHEREAS, the Custodian may delegate to Massachusetts Financial Services Company
("MFS") the performance of certain duties the Custodian would otherwise be
obligated to perform pursuant to the Custodian Agreement;
WHEREAS, the Trust agrees to any such delegation of certain Custodian duties;
NOW THEREFORE, the Custodian and the Trust hereby amend the terms of the
Custodian Contract and mutually agree to the following:
1) Add new Section 18 which shall read as follows:
18) Delegation of Certain Custodian Duties to MFS.
The Custodian may delegate to MFS the performance of any or all of its
duties hereunder relating to (i) accounting for investments in currency and for
financial instruments (including, without limitation, options, contracts,
futures contracts, options on futures contracts, options on foreign currency and
forward foreign currency exchange contracts) and (ii) federal and state
regulatory compliance. The Custodian shall compensate MFS for the performance of
such duties at such fee or fees as MFS shall determine to be equal to MFS's cost
for performing such duties (the "MFS Fees"). Following its payment of the MFS
Fees to MFS, the Custodian shall recover the amount of the MFS Fees and from the
Trust on such terms as the Custodian and the Trust shall agree. MFS assumes
responsibility for all duties delegated to it by the Custodian pursuant to this
Section 18, and the Custodian may rely on MFS for the accuracy and correctness
of the accounting information provided by MFS to the Custodian pursuant to this
Section 18.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have caused this instrument to be
executed in its name and on its behalf by a duly authorized representative as of
the aforementioned day and year.
ATTEST LIFETIME MANAGED
SECTORS TRUST
ILLEGIBLE By: A. KEITH BRODKIN
(Illegible) A. Keith Brodkin
ATTEST STATE STREET BANK AND
TRUST COMPANY
ILLEGIBLE By: ILLEGIBLE
(Illegible), Assistant Secretary (Illegible), Vice President
<PAGE>
EXHIBIT NO. 99.8(c)
AMENDMENT
The Custodian Contract dated January 28, 1988 between Lifetime Managed Sectors
Trust (referred to herein as the "Trust") and State Street Bank and Trust
Company (the "Custodian") is hereby amended as follows:
I. Section 2.1 is amended to read as follows:
"Holding Securities". The Custodian shall hold and physically segregate
for the account of the Trust all non-cash property, including all securities
owned by the Trust, other than (a) securities which are maintained pursuant to
Section 2.11 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System" and (b) commercial paper
of an issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.11A.
II. Section 2.2 is amended to read, in relevant part as follows:
"Delivery of Securities. The Custodian shall release and deliver
securities owned by the Trust held by the Custodian or in a Securities System
account of the Custodian or in the Custodian's Direct Paper book entry system
account ("Direct Paper System Account") only upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, and only in following cases:
1) . . . .
.
.
.
15) . . . ."
III. Section 2.8(1) is amended to read in relevant part as follows:
"Payment of Trust Monies". Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of the Trust in the following cases only:
<PAGE>
1) Upon the purchase of securities, options, futures contracts or
options on futures contracts for the account of the Trust but only (a) against
the delivery of such securities or evidence of title to such options, futures
contracts or options on futures contracts, to the Custodian (or any bank,
banking firm or trust company doing business in the United States or abroad
which is qualified under the Investment Company Act of 1940, as amended, to act
as a custodian and has been designated by the Custodian as its agent for this
purpose) registered in the name of the Trust or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a Securities System, in accordance
with the conditions set forth in Section 2.11 hereof or (c) in the case of a
purchase involving the Direct Paper System, in accordance with the conditions
set forth in Section 2.11A; or (d) in the case of repurchase agreements entered
into between the Trust and the Custodian, or another bank, or a broker-dealer
which is a member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Trust of securities owned by the Custodian
along with written evidence of the agreement by the Custodian to repurchase such
securities from the Trust or (e) for transfer to a time deposit account of the
Trust in any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Trust as defined in Section 5;"
IV. Following Section 2.11 there is inserted a new Section 2.11.A to read
as follows:
2.11.A "Trust Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain securities owned by the Trust in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Trust in the
Direct Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall not include
any assets of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
3) The records of the Custodian with respect to
securities of the Trust which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Trust;
4) The Custodian shall pay for securities purchased for the
account of the Trust upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of the Trust.
The Custodian shall transfer securities sold for the account of the Trust upon
the making of an entry on the records of the Custodian to reflect such transfer
and receipt of payment for the account of the Trust;
5) The Custodian shall furnish the Trust confirmation of each
transfer to or from the account of the Trust, in the form of a written advice or
notice, of Direct Paper on the next business day following such transfer and
shall furnish to the Trust copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of the Trust;
<PAGE>
6) The Custodian shall provide the Trust with any
report on its system of internal accounting control as the Trust may
reasonably request from time to time."
V. Section 13 is hereby amended to read as follows:
"Effective Period, Termination and Amendment. This Contract shall
become effective as of its execution, shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days after the date
of such delivery or mailing; provided, however that the Custodian shall not act
under Section 2.11 hereof in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of Trustees of the Trust
has approved the initial use of a particular Securities System and the receipt
of an annual certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has reviewed the use by the Trust of such Securities System,
as required in each case by Rule 17f-4 under the Investment Company Act of 1940,
as amended and that the Custodian shall not act under Section 2.11A hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the initial use of
the Direct Paper System and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has reviewed the
use by the Trust of the Direct Paper System; provided further, however, that the
Trust shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust, and further provided, that the Trust may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for the Custodian
by giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements."
Except as otherwise expressly amended and modified herein, the
provisions of the Custodian Contract shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed in its name and on its behalf by its duly authorized
representatives and its Seal to be hereto affixed as of the 9th day of October,
1991.
ATTEST: LIFETIME MANAGED SECTORS TRUST
ILLEGIBLE By: W. THOMAS LONDON
(Illegible), Assistant Secretary W. Thomas London, Treasurer
ATTEST: STATE STREET BANK AND
TRUST COMPANY
ILLEGIBLE By: ILLEGIBLE
(Illegible), Assistant Secretary (Illegible), Vice President
<PAGE>
EXHIBIT NO. 99.8(d)
CUSTODIAN AGREEMENT
BETWEEN
MFS SERIES TRUST I
ON BEHALF OF
MFS WORLD ASSET ALLOCATION FUND
AND
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
1. Bank Appointed Custodian........................................... 1
2. Definitions
2.1 Authorized Person........................................... 1
2.2 Security.................................................... 1
2.3 Portfolio Security.......................................... 1
2.4 Officers' Certificate....................................... 2
2.5 Book-Entry System........................................... 2
2.6 Depository.................................................. 2
3. Proper Instructions................................................ 2
4. Separate Accounts.................................................. 2
5. Certification as to Authorized Persons............................. 2
6. Custody of Cash and Securities..................................... 2
6.1 Cash........................................................ 2
(a) Purchase of Securities................................. 3
(b) Redemptions............................................ 3
(c) Distributions and Expenses of Fund..................... 3
(d) Payment in Respect of Securities....................... 3
(e) Repayment of Loans..................................... 3
(f) Repayment of Cash...................................... 3
(g) Foreign Exchange Transactions.......................... 3
(h) Commodities............................................ 3
(i) Other Authorized Payments.............................. 4
(j) Termination............................................ 4
6.2 Securities.................................................. 4
(a) Book-Entry System...................................... 5
(b) Use of a Depository.................................... 6
(c) Use of Book-Entry System for Commercial Paper.......... 7
(d) Use of Bond Immobilization Programs.................... 7
(e) Eurodollar CDs......................................... 8
6.3 Options and Futures Transactions............................ 8
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the Counter....................................... 8
(b) Puts, Calls and Futures Traded on Commodities Exchanges 8
(c) Segregated Account In Connection with Options and Futures
Transactions........................................... 9
6.4 Segregated Account for "When-Issued", "Forward Commitment",
Reverse Repurchase Agreement Transactions and Other Purposes 9
<PAGE>
TABLE OF CONTENTS (Continued)
PAGE
6.5 Interest Bearing Call or Time Deposits...................... 9
7. Transfer of Securities............................................. 9
8. Redemptions ....................................................... 11
9. Merger, Dissolution, etc. of Fund.................................. 11
10. Actions of Bank Without Prior Authorization........................ 11
11. Maintenance of Records; Fund Evaluation,. Accounting Services...... 11
12. Concerning the Bank................................................
12.1 Performance of Duties....................................... 13
12.2 Fees and Expenses of Bank................................... 14
12.3 Advances by Bank............................................ 15
13. Termination ....................................................... 15
14. Notices ....................................................... 16
15. Amendments ....................................................... 16
16. Parties ....................................................... 16
17 . Governing Law...................................................... 16
18. Interpretive and Additional Provisions............................. 16
19. Delegation of Certain Duties to Massachusetts Financial Services
Company ("MFS").................................................... 17
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 2nd day of June, 1994 between MFS SERIES
TRUST I, established as a Massachusetts Business Trust under the laws of the
Commonwealth of Massachusetts (the "Fund") on behalf of its series, MFS WORLD
ASSET ALLOCATION FUND (the "Series"), and INVESTORS BANK & TRUST COMPANY
("Bank").
The Fund, an open end management investment company, desires to place
and maintain all of the securities and cash of the Series in the custody of the
Bank. The Bank has at least the minimum qualifications required by Section
17(f)(1) of the Investment Company Act of 1940 to act as custodian of the
securities and cash of the Series, and has indicated its willingness to so act,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of the securities and cash of the Series delivered to the Bank as
hereinafter described, and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth. Any reference in this Agreement to any actions
to be taken by the Fund shall be deemed to refer to the Fund acting on behalf of
the Series, any reference in this Agreement to any assets of the Fund,
including, without limitation, any portfolio securities and cash and earnings
thereon, shall be deemed to refer only to assets of the Series, any duty or
obligation of the Bank hereunder to the Fund shall be deemed to refer to duties
and obligations with respect to the Series unless the context otherwise requires
and any obligation or liability of the Fund hereunder shall be binding only with
respect to the Series, and shall be discharged only out of the assets of such
Series.
2. Definitions. Whenever used herein, the terms listed below
will have the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of the Board of Trustees of the Fund (the
"Board") or with respect to actions regarding transfers of securities and other
investment activities, those persons duly authorized by the investment adviser
of the Fund.
2.2 Security. The term security as used herein will have the
same meaning as when such term is used in the Securities Act of 1933 as amended,
including, without limitation. any note stock. treasury stock. bond, debenture,
evidence of indebtedness. certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract. voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit. or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing and
futures, forward contracts and options thereon.
2.3 Portfolio Security. Portfolio security will mean
any security owned by the Fund.
<PAGE>
2.4 Officers' Certificate. Officers' Certificate will mean
unless otherwise indicated, any request, direction, instruction, or
certification in writing signed by any Authorized Person or Persons of the Fund
as the Fund shall designate to the Bank in writing from time to time.
2.5 Book-Entry System. Book-Entry System shall mean the
Federal Reserve-Treasury Department Book-Entry System for United States
government, instrumentality and agency securities operated by the Federal
Reserve Banks, its successor or successors and its nominee or nominees.
2.6 Depository. Depository shall mean The Depository Trust
Company ("DTC"), or Participants Trust Company ("PTC"), both of which are
clearing agencies registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, and their respective
successor or successors and nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board.
3. Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of securities for the portfolio
of the Fund, and payments and deliveries in connection therewith, given by an
Authorized Person or Persons as designated by the Fund in writing from time to
time with respect to the Series identified therein, such instructions to be
given in such form and manner as the Bank and the Fund shall agree upon from
time to time, and (ii) instructions (which may be continuing instructions)
regarding other matters signed or initialed by such one or more .authorized
Persons. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by an authorized Person. The Fund
shall cause all oral instructions to be promptly confirmed in writing. The Bank
shall act upon and comply with any subsequent Proper Instruction which modifies
a prior instruction and the Bank shall make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. Proper Instructions may include communication
effected directly between electro-mechanical or electronic devices provided that
the Fund and the Bank are satisfied that such procedures afford adequate
safeguards for the Fund's assets.
4. Separate Accounts. The Bank will segregate the assets of
the Series into a separate account containing the assets of such Series (and
all investment earnings thereon), all as directed from time to time by Proper
Instructions.
5. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of (i)
the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. The Bank will be
entitled to rely and act upon any Officers' Certificate given to it by the Fund
6. Custody of Cash and Securities. As custodian for the Fund,
the Bank will keep safely all of the portfolio securities delivered to the
Bank, and will deposit to the account of the Fund all of the cash of the Fund
delivered to the Bank, as set forth below.
6.1 Cash. The Bank will open and maintain a separate account
or accounts in the name of the Fund or, if directed by the Fund, in the name of
the Bank, as custodian of the Fund, subject only to draft or order by the Bank
acting pursuant to the terms of this Agreement. The Bank will hold in such
account or accounts as custodian, subject to the provisions hereof, all cash
received by it, including borrowed funds, for the account of the Fund. Upon
receipt by the Bank of Proper Instructions (which may be continuing
instructions) or in the case of payments for redemptions and repurchases of
outstanding shares of beneficial interest of the Fund, notification from the
Fund's transfer agent as provided in Section 8, requesting such payment,
designating the payee or the account or accounts to which the Bank will release
funds for deposit, and stating that it is for a purpose permitted under the
terms of this Section 6.1, specifying the applicable subsection. or describing
such purpose with sufficient particularity to permit the Bank to ascertain the
applicable subsection. the Bank will make payments of cash held for the accounts
of the Fund. insofar as funds are available for that purpose, only as permitted
in (a)-(j) below.
<PAGE>
(a) Purchase of Securities: Upon the purchase
of securities for the Fund, against contemporaneous receipt of such securities
by the Bank registered in the name of the Fund or in the name of, or properly
endorsed and in form for transfer to, the Bank, or a nominee of the Bank, or
receipt for the account of the Bank through use of (1) the Book-Entry System
pursuant to Section 6.2(a)(3) below, (2) Depository pursuant to 6.2(b) below, or
(3) Book Entry Paper pursuant to Section 6.2(c) below, each such payment to be
made at the purchase price shown in the Proper Instructions received by the Bank
before such payment is made;
(b) Redemptions: In such amount as may be
necessary for the repurchase or redemption of shares of beneficial interest of
the Fund offered for repurchase or redemption in accordance with Section 8 of
this Agreement;
(c) Distributions and Expenses of Fund: For
the payment on the account of the Fund of dividends or other distributions to
shareholders as may from time to time be declared by the Board, interest, taxes,
management or supervisory fees, distribution fees, fees of the Bank for its
services hereunder and reimbursement of the expenses and liabilities of the Bank
as provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of the Fund:
(d) Payment in Respect of Securities: For
payments in connection with the conversion, exchange or surrender of Portfolio
securities or securities subscribed to by the Fund held by or to be delivered to
the Bank;
(e) Repayment of Loans: To repay loans of
money made to the Fund, but, in the case of final payment, only upon redelivery
to the Bank of any Portfolio securities pledged or hypothecated therefor and
upon surrender of documents evidencing the loan;
(f) Repayment of Cash: To repay the cash
delivered to the Fund for the purpose of collateralizing the obligation to
return to the Fund Portfolio securities borrowed from the Fund but only upon
redelivery to the Bank of such borrowed Portfolio securities:
(g) Foreign Exchange Transactions: For
payments in connection with foreign exchange contracts or options to purchase
and sell foreign currencies for spot and future delivery which may be entered
into by the Bank on behalf of the Fund upon the receipt of Proper Instructions,
such Proper Instructions to specify the currency broker or banking institution
(which may be the Bank, or any other sub custodian or agent hereunder, acting as
principal) with which the contract or option is made, and the Bank shall have no
duty with respect to the selection of such currency brokers or banking
institutions with which the Fund deals or for their failure to comply with the
terms of any contract or option;
(h) Commodities: Upon the purchase of
commodities for the Fund, against contemporaneous receipt of such commodities by
the Bank registered in the name of the Fund or in the name of, or properly
endorsed and in form for transfer to, the Bank, or a nominee of the Bank;
<PAGE>
(i) Other Authorized Payments: For other
authorized transactions of the Fund, or other obligations of the Fund incurred
for proper Fund purposes including, without limitation, payments in connection
with any tender offer by the Fund; provided that before making any such payment
the Bank will also receive an Officer's Certificate naming the person or persons
to whom such payment is to be made, and either describing the transaction for
which payment is to be made and declaring it to be an authorized transaction of
the Fund, or specifying the amount of the obligation for which payment is to be
made, setting forth the purpose for which such obligation was incurred and
declaring such purpose to be a proper corporate purpose; and
(j) Termination: Upon the termination of this
Agreement as hereinafter set forth pursuant to Section 9 and Section 13 of
this Agreement.
The Bank is hereby authorized to endorse for
collection and collect on behalf of and in the name of the Fund all checks,
drafts, or other negotiable or transferable instruments or other orders for the
payment of money received by it for the account of the Fund.
6.2 Securities. Except as otherwise provided herein, the Bank
as custodian, will receive and hold pursuant to the provisions hereof, in a
separate account or accounts and physically segregated at all times from those
of other persons, any and all Portfolio securities which may now or hereafter be
delivered to it by or for the account of the Fund. All such Portfolio securities
will be held or disposed of by the Bank for, and subject at all times to, the
instructions of the Fund pursuant to the terms of this Agreement. Subject to the
specific provisions herein relating to Portfolio securities that are not
physically held by the Bank, the Bank will register all Portfolio securities
(unless otherwise directed by Proper Instructions or an Officers' Certificate),
in the name of a registered nominee of the Bank as defined in the Internal
Revenue Code and any Regulations of the Treasury Department issued thereunder.
and will execute and deliver all such certificates in connection therewith as
may be required by such laws or Regulations or under the laws of any State. The
Bank will ensure that the specific securities physically held by it hereunder
will be at all times identifiable and will exercise prudent care and use its
best efforts to the end that the other securities held by it hereunder will be
at all times identifiable.
The Bank will use the same care with respect to the
safekeeping of portfolio securities and cash of the Fund held by it as it uses
in respect of its own similar property (which will at minimum be reasonable
care) but it need not maintain any special insurance for the benefit of the
Fund. The Bank shall provide to the Fund, at least annually and upon request,
information relating to its insurance coverage. The Bank will also immediately
notify the Fund in the event any of its insurance coverage is materially
changed, canceled or not renewed.
The Fund will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any securities
which it may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
Neither the Bank nor any nominee of the Bank will vote any of
the portfolio securities held hereunder by or for the account of the Fund,
except in accordance with Proper Instructions or an Officers' Certificate.
The Bank will promptly execute and deliver, or cause to be
executed and delivered, to the Fund all notices, proxies and proxy soliciting
materials with respect to such securities, such proxies to be executed by the
registered holder of such securities (if registered otherwise than in the name
of the Fund), but without indicating the manner in which such proxies are to be
voted.
<PAGE>
(a) Book-Entry System. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically
approving deposits of Fund assets in the Book-Entry System, and (ii) for each
year following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that it has withdrawn its approval:
1. The Bank may keep Securities of the Fund in the
Book-Entry System provided that such securities are represented in an
account ("Account") of the Bank (or its agent) in such System which shall not
include any assets of the Bank (or such agent) other than assets held as a
fiduciary, custodian, or otherwise for customers
2. The records of the Bank (and any
such agent) with respect to the Fund's participation in the Book-Entry System
through the Bank (or any such agent) will identify by book entry securities
belonging to the Fund which are included with other securities deposited in the
Account and shall at all times during the regular business hours of the Bank (or
such agent) be open for inspection by duly authorized officers, employees or
agents of the Fund. Where securities are transferred to the Fund's account, the
Bank shall also, by book entry or otherwise, identify as belonging to the Fund a
quantity of securities in fungible bulk of securities (i) registered in the name
of the Bank or its nominee, or (ii) shown on the Bank's account on the books of
the Federal Reserve Bank.
3. The Bank (or its agent) shall pay
for securities purchased for the account of the Fund or shall pay cash
collateral against the return of securities loaned by the Fund upon (i) receipt
of advice from the Book-Entry System that such Securities have been transferred
to the Account, and (ii) the making of an entry on the records of the Bank (or
its agent) to reflect such payment and transfer for the account of the Fund. The
Bank (or its agent) shall transfer securities sold or loaned for the account of
the Fund upon
(i) Receipt of advice from the Book-Entry
System that payment for Securities sold or payment of the initial cash
collateral against the delivery of securities loaned by the Fund has been
transferred to the Account, and
(ii) The making of an entry on
the records of the Bank (or its agent) to reflect such transfer and payment for
the account of the Fund. Copies of all advices from the Book-Entry System of
transfers of Securities or the account of the Fund shall identify the Fund, be
maintained for the Fund by the Bank and shall be provided to the Fund at its
request. The Bank shall send the Fund a confirmation, as defined by Rule 17f-4
under the Investment Company Act of 1940, of any transfers to or from the
account of the Fund.
4. The Bank will promptly provide the
Fund with any report obtained by the Bank or its agent on the Book-Entry
System's accounting system, internal accounting control and procedures for
safeguarding Securities deposited in the Book-Entry System. The Bank will
provide the Fund and cause any such agent to provide, at such times as the Fund
may reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, including Securities deposited in the Book-Entry System, relating to
the services provided by the Bank or such agent under the Agreement.
5. Anything to the contrary in the
Agreement notwithstanding, the Bank shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Book-Entry System by reason of any
negligence, willful misfeasance or bad faith of the Bank or any of its agents or
of any of its or their employees or from any negligent disregard by the Bank or
any such agent of its duty to enforce effectively such rights as it may have
against the Book-Entry System; at the election of the Fund, it shall be entitled
to be subrogated for the Bank in any claim against the Book-Entry System or any
other person which the Bank or its agent may have as a consequence of any such
loss or damage if and to the extent that the Fund has not been made whole for
any loss or damage.
<PAGE>
(b) Use of a Depository. Provided (i) the
Bank has received a certified copy of a resolution of the Fund's Board
specifically approving deposits in DTC and PTC or other such Depository; (ii)
the Bank appoints any such depository its agent; and (iii) for each year
following such Board approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that it has withdrawn its approval:
1. The Bank may use a Depository to
hold, receive, exchange, release, lend, deliver and otherwise deal with the
securities owned by the Fund, including stock dividends, rights and other items
of like nature, and to receive and remit to the Bank on behalf of the Fund all
income and other payments thereon and to take all steps necessary and proper in
connection with the collection thereof, provided that such securities are held
in an account of the Bank (or its agent) in such Depository which shall not
include any assets of the Bank (or such agent) other than assets held as a
fiduciary, custodian, or otherwise for customers. The records of the Bank shall
identify those securities of the Trust held by the Depository.
2. Registration of the Fund's
securities may be made in the name of any nominee or nominees used by such
Depository.
3. Payment for securities purchased
and sold may be made through the clearing medium employed by such Depository for
transactions of participants acting through it. Upon any purchase of securities
for the account of the Fund, payment will be made only upon delivery of the
securities to or for the account of the Fund and the Fund shall pay cash
collateral against the return of securities loaned by the Fund only upon
delivery of the securities to or for the account of the Fund; and upon any sale
of securities for the account of the Fund, delivery of the securities will be
made only against payment thereof or, in the event securities are loaned,
delivery of securities will be made only against receipt of the initial cash
collateral to or for the account of the Fund.
4. Anything to the contrary in the
Agreement notwithstanding, the Bank shall be liable to the Fund for any loss or
damage to the Fund resulting from use of a Depository by reason of any
negligence, willful misfeasance or bad faith of the Bank or any of its agents or
of any of its or their employees or from any negligent disregard by the Bank or
any such agent of its duty to enforce effectively such rights as it may have
against a Depository. at the election of the Fund, it shall be entitled to be
subrogated for the Bank in any claim against a Depository or any other person
which the Bank or its agent may have as a consequence of any such loss or damage
if and to the extent that the Fund has not been made whole for any loss or
damage. In this connection, with respect to the use of the Depository by the
Bank, the Bank, without cost to the Fund, shall ensure that:
(i) The Depository obtains replacement of any
certificated security deposited with it in the event such security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Any proxy materials received by Depository
with respect to securities of the Fund deposited with such Depository are
forwarded immediately to the Bank for prompt transmittal to the Fund;
<PAGE>
(iii) Such Depository immediately forwards to the
Bank confirmation of any purchase or sale of securities for the account of
the Fund and of the appropriate book entry made by such Depository to the Fund's
account;
(iv) Such Depository prepares and delivers to the
Bank such records with respect to the performance of the Bank's obligations
and duties hereunder as may be necessary for the Fund to comply with the record
keeping requirements of Section 31(a) of the Act and Rule 31a thereunder and
such other rules and regulations relating to record keeping requirements of the
Fund as may be enacted from time to time; and
(v) Such Depository delivers to the Bank and the
Fund all internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as the Fund may
reasonably request in order to verify the Fund's securities held by such
Depository.
(c) Use of Book-Entry System for Commercial Paper.
Provided (i) the Bank has received a certified copy of a resolution of the
Board specifically approving participation in a system maintained by the Bank
for the holding of commercial paper in book-entry form ("Book Entry Paper") and
(ii) for each year following such approval the Board has reviewed and approved
the arrangements, upon receipt of Proper Instructions and upon receipt of
confirmation from an Issuer (as defined below) that the Fund has purchased such
Issuer's Book-Entry Paper, the Bank shall issue and hold in book-entry form, on
behalf of the Fund, commercial paper issued by issuers with whom the Bank has
entered into a book-entry agreement (the "Issuers"). In maintaining its
Book-Entry Paper System, the Bank agrees that:
1. The Bank will maintain all Book Entry Paper held
by the Fund in an account of the Bank that includes only assets held by it
for customers; the records of the Bank with respect to the Fund's purchase of
Book Entry Paper through the Bank will identify, by book entry, Commercial Paper
belonging to the Fund which is included in the Book Entry Paper System and shall
at all times during the regular business hours of the Bank be open for
inspection by duly authorized officers, employees or agents of the Fund.
2. (a) The Bank shall pay for Book Entry Paper
purchased for the account of the Fund upon contemporaneous (i) receipt of
advice from the Issuer that such sale of Book Entry Paper has been effected, and
(ii) the making of an entry on the records of the Bank to reflect such payment
and transfer for the account of the Fund
(b) The Bank shall cancel such Book Entry
Paper obligation upon the maturity thereof upon contemporaneous (i) receipt
of advice that payment for such Book Entry Paper has been transferred to the
Fund, and (ii) the making of an entry on the records of the Bank to reflect such
payment for the account of the Fund.
3. The Bank shall transmit to the Fund a transaction
journal confirming each transaction in Book Entry Paper for the account of
the Fund on the next business day following the transaction;
4. The Bank will send to the Fund such reports on
its system of internal accounting control as the Fund may reasonably
request from time to time;
(d) Use of Bond Immobilization Programs. Provided (i)
the Bank has received a certified copy of a resolution of the Board
specifically approving the maintenance of portfolio securities in an
immobilization program operated by a bank which meets the requirements of
Section 26(a)(1) of the Investment Company Act of 1940, and (ii) for each year
following such approval the Board has reviewed and approved the arrangement and
has not delivered an officer's Certificate to the Bank indicating that it has
withdrawn its approval, the Bank shall enter into such immobilization program
with such bank acting as a sub custodian hereunder.
<PAGE>
(e) Eurodollar CDs. Any Eurodollar CDs belonging to
the Fund may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such securities are identified on the books of the Bank as
belonging to the Fund and that the books of the Bank identify the European
branch holding such securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subparagraph (e), the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund, and shall have no liability to the Fund or
its shareholders with respect to the actions, inactions, whether negligent or
otherwise of such European Branch in connection with such Eurodollar CDs. except
for any loss or damage to the Fund resulting from the Bank's own negligence,
willful misfeasance or bad faith in the performance of its duties hereunder.
6.3 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
over-the-counter.
1. The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements in accordance with the provisions of any
agreement entered into upon receipt of Proper Instructions between the Bank, any
broker and, if necessary, the Fund. In the case of a call option written by the
Fund, the Bank will arrange for an escrow receipt to be issued when requested to
do so by the Fund.
2. Unless another agreement requires it to do so, the
Bank shall be under no duty or obligation to see that the Fund has
deposited or is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Bank be under duty or obligation to
present such option to the broker for exercise unless it receives Proper
Instructions from the Fund. The Bank shall, however, comply with all Proper
Instructions regarding margin and exercise of options. The Bank shall have no
responsibility for the legality of any put or call purchased or sold on behalf
of the Fund, the propriety of any such purchase or sale, or the adequacy of any
collateral delivered to a broker in connection with an option or deposited to or
withdrawn from a Segregated Account as described in sub-paragraph c of this
Section 6.3. The Bank specifically, but not by way of limitation, shall not be
under any duty or obligation to: (i) periodically check or notify the Fund that
the amount of such collateral held by a broker or held in a Segregated Account
as described in sub-paragraph (c) of this Section 6.3 is sufficient to protect
such broker of the Fund against any loss; (ii) effect the return of any
collateral delivered to a broker, provided however, the Bank shall, upon
expiration of an option, return to the Fund any collateral held by the Bank
relating to such option; or (iii) advise the Fund that any option it holds, has
or is about to expire. Such duties or obligations shall be the sole
responsibility of the Fund.
(b) Puts Calls and Futures Traded on
Commodities Exchanges.
1. The Bank shall take action as to puts, calls and
futures contracts ("Futures") purchased or sold by the Fund in accordance
with the provisions of any agreement among the Fund, the Bank and a Futures
merchant relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market, or any similar organization or
organizations (including any foreign organization) regarding account deposits in
connection with transactions by the Fund.
<PAGE>
2. The responsibilities and liabilities of the Bank as to
Futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as set
forth in sub-paragraph (a)(2) of this Section 6.3 as if such sub-paragraph
referred to Futures Commission Merchants rather than brokers, and Futures and
puts and calls thereon instead of options.
(c) Segregated Account In Connection with Options and
Futures Transactions. The Bank shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf of the
Fund, into which account or accounts may be transferred cash and/or securities
including securities maintained in an Account by the Bank pursuant to Section
6.2 hereof, (i) in accordance with the provisions of any agreement among the
Fund, the Bank and a broker or any Futures merchant, relating to compliance with
the rules of the Options Clearing Corporation and of any registered national
securities exchange or the Commodity Futures Trading Commission or any
registered contract market, or of any similar organization or organizations
(including any foreign organization) regarding escrow or other arrangements in
connection with transactions by the Fund, and (ii) for the purpose of
segregating cash or securities in connection with options purchased, or written
by the Fund or commodity futures or options thereon purchased or written by the
Fund.
6.4 Segregated Account for "When-Issued". "Forward
Commitment". Reverse Repurchase Agreement Transactions and Other Purposes.
Notwithstanding any other provisions hereof, the Bank will maintain a segregated
account in the name of the Fund (i) for the deposit of liquid assets, such as
cash, U.S. Government securities or other high grade obligations, having a value
(marked to the market on a daily basis by the Bank) at all times equal to not
less than the aggregate purchase price due on the settlement dates (or such
other amount as the Fund shall indicate) of all the Fund's then outstanding
forward commitment or "when-issued" agreements relating to the purchase of
portfolio securities and all the Fund's then outstanding commitments under
reverse repurchase agreements entered into with broker-dealer firms, (ii) for
the deposit of any portfolio securities which the Fund has agreed to sell on a
forward commitment basis, all in accordance with Securities and Exchange
Commission Release No. IC-10666, (iii) for the purposes of compliance by the
Fund with the procedures required by Investment Company Act Release No. 10666,
or any subsequent release or releases or rules or regulations of the Securities
and Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies, (iv) for the purpose of segregating cash or
securities for the ICI Mutual Insurance Company letter of credit, (v) for the
purpose of segregating assets in connection with the Fund's outstanding
obligations under a swap, derivative or synthetic security, and (vi) for other
proper corporate purposes. but only, in the case of clause (vi), upon receipt of
an Officers' Certificate. setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate purposes.
No assets shall be deposited in or withdrawn from the segregated account except
pursuant to Proper Instructions.
6.5 Interest Bearing Call or Time Deposits. The Bank shall,
upon receipt of Proper Instructions relating to the purchase by the Fund of
interest bearing fixed term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed portfolio securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other portfolio securities of the Fund.
<PAGE>
7. Transfer of Securities. The Bank will transfer, exchange, deliver
or release Portfolio securities held by it hereunder, insofar as such
securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will receive
Proper Instructions requesting such transfer, exchange or delivery stating that
it is for a purpose permitted under the terms of this Section 7, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
7.1 Upon sales of Portfolio securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
each such payment to be in the amount of the sale price shown in the Proper
Instructions received by the Bank before such payment is made;
7.2 In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
securities, or for the purpose of tendering shares in the event of a tender
offer therefore, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio securities, the Bank shall have no liability for failure
to so tender in a timely matter unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or sub custodian hereunder) has actual possession
of such security at least two business days prior to the date of tender:
7.3 Upon conversion of Portfolio securities pursuant to
their terms into other securities;
7.4 For the purpose of redeeming in kind shares of
common stock of the Fund upon authorization from the Fund;
7.5 In the case of option contracts owned by the Fund,
for presentation to the endorsing broker;
7.6 When such Portfolio securities are called, redeemed
or retired or otherwise become payable;
7.7 For the purpose of effectuating the pledge of portfolio
securities held by the Bank pursuant to this Agreement in order to collaterals
loans made to the Fund by any bank, including the Bank; provided, however, that
such Portfolio securities will be released only upon payment to the Bank for the
account of the Fund of the moneys borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, and such
fact is made to appear in the Proper Instructions, further portfolio securities
may be released for that purpose without any such payment;
7.8 For the purpose of releasing certificates representing
Portfolio securities of the Fund, against contemporaneous receipt by the Bank of
the fair value of such security, as set forth in Proper Instructions received by
the Bank before such payment is made;
7.9 For the purpose of delivering securities lent by the Fund
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided in Subsections 6.2(a) and (b)
hereof, of adequate collateral as agreed upon from time to time by the Fund and
the Bank, and upon receipt of payment in connection with any repurchase
agreement relating to such securities entered into by the Fund:
<PAGE>
7.10 For other authorized transactions of the Fund or for
other proper corporate purposes; provided that before making such transfer, the
Bank will also receive an Officers' Certificate specifying the portfolio
securities to be delivered, setting forth the transaction in or purpose for
which such delivery is to be made, declaring such transaction to be an
authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made: and
7.11 Upon termination of this Agreement as hereinafter set
forth pursuant to Section 9 and Section 13 of this agreement.
7.12 For delivery in accordance with the provisions of any
agreement among the Fund, the Bank and a broker-dealer relating to compliance
with the rules of the Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or organizations
(including foreign organizations), regarding escrow or other arrangements in
connection with transactions by the Fund;
7.13 For delivery in accordance with the provisions of any
agreement among the Fund, the Bank, and a Futures commission merchant relating
to compliance with the rules of the Commodity Futures Trading Commissions or any
similar organization or organizations (including foreign organizations),
regarding account deposits in connection with transactions by the Fund.
As to any deliveries made by the Bank pursuant to subsections
7.1, 7.2, 7.3, 7.5, 7.6, 7.7, 7.8 and 7.9, securities or cash receivable in
exchange therefor shall be delivered to the Bank.
8. Redemptions. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of its
outstanding shares of beneficial interest, the Bank will rely on written
notification by the Fund's transfer agent of receipt of a request for redemption
and certificates, if issued, in proper form for redemption before such payment
is made. Payment shall be made in accordance with the Declaration of Trust of
the Fund, from assets available for said purpose.
9. Merger. Dissolution. etc. of Fund. In the case of the
following transactions, not in the ordinary course of business, namely, the
merger of the Fund into or the consolidation of the Fund with another
investment company, the sale by the Fund of all, or substantially all of its
assets to another investment company, or the liquidation or dissolution of the
Fund and distribution of its assets, the Bank will deliver the Portfolio
securities held by it under this Agreement and disburse cash only upon the
order of the Fund set forth in an officers' Certificate, accompanied by a
certified copy of a resolution of the Fund's Board authorizing any of the
foregoing transactions. Upon completion of such delivery and disbursement and
the payment of the preapproved fees, disbursements and expenses of the Bank,
this Agreement will terminate.
10. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, it will without prior authorization or
instruction of the Fund or the transfer agent:
10.1 Receive and hold for the account of the Fund
hereunder and deposit in the account or accounts referred to in Section 6
hereof, all income, dividends. interest and other payments or distribution of
cash with respect to the Portfolio securities held thereunder
10.2 Present for payment all coupons and other income items
held by it for the account of the Fund which call for payment upon presentation
and hold the cash received by it upon such payment for the account of the Fund
account or accounts referred to in Section 6 hereof;
<PAGE>
10.3 Receive and hold for the account of the Fund hereunder
and deposit in the account or accounts referred to in Section 6 hereof all
securities received as a distribution on Portfolio securities as a result of a
stock dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio securities held by it hereunder.
10.4 Execute as agent on behalf of the Fund all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof
The Bank will execute and deliver such certificates in connection with Portfolio
securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
10.5 Present for payment all portfolio securities which are
called, redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Fund in the account or accounts referred
to in Section 6 hereof; and
10.6 Exchange interim receipts or temporary securities
for definitive securities.
The Bank shall collect any funds which are collectible arising
from Portfolio securities, including dividends, interest and other income, and
shall transmit promptly to the Fund all written information affecting such
securities including, without limitation, any call for redemption, offer of
exchange, pendency of maturity, notices regarding options and futures contracts,
right of subscription, reorganization or other proceedings.
If Portfolio securities upon which such income is payable are
in default or payment is refused after due demand or presentation, the Bank will
notify the Fund in writing of any default or refusal to pay within two business
days from the day on which it receives knowledge of such default or refusal. In
addition, the Bank will send the Fund a written report once each month showing
any income on any Portfolio security held by it which is more than ten days
overdue on the date of such report.
11. Maintenance of Records; Fund Evaluation: Accounting Services. The
Bank will maintain records with respect to transactions for which the Bank is
responsible pursuant to the terms and conditions of this Agreement, and in
compliance with the applicable rules and regulations of the Investment Company
Act of 1940 as amended, as well as applicable federal and state tax laws and all
other laws and regulations which may be applicable, and will furnish the Fund
daily with a statement of assets and liabilities and a portfolio of investments
of the Fund as well as such other calculations and reports as the Bank and Fund
may agree from time to time. The Bank will furnish to the Fund at the end of
every month, and at the close of each quarter of the Fund's fiscal year as well
as at such other times as the Fund may request, a list of the Portfolio
securities and the aggregate amount of cash held by it for the Fund. The books
and records of the Bank pertaining to its actions under this Agreement and
reports by the Bank or its independent accountants concerning its accounting
system, procedures for safeguarding the Fund's assets and internal accounting
controls, which shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, shall so state, and will be open to inspection and audit
at reasonable times by officers of or auditors employed by the Fund as well as
any other person authorized by the Fund by Proper Instructions. The books and
records relating to the Fund will be preserved by the Bank in the manner and in
accordance with the applicable rules and regulations under the Investment
Company Act of 1940 and shall be the property of the Fund.
As custodian the Bank shall have and perform the following powers and
duties:
<PAGE>
11.1 To keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Fund.
11.2 To compute and, unless otherwise directed by the Board,
determine as of the close of business on the New York Stock Exchange on each day
on which said Exchange is open for trading or as of such other hours, if any, as
may be authorized by said Board the net asset value and the public offering
price of a share of beneficial interest of the Fund, such determination to be
made in accordance with the provisions of the Declaration of Trust of the Fund
and Prospectus and Statement of Additional Information relating to the Fund, as
they may from time to time be amended. and any applicable resolutions of the
Board at the time in force and applicable; and promptly to notify the Fund and
the National Association of Securities Dealers ("NASD") or such other persons as
the Fund may request of the results of such computation and determination. In
computing the net asset value hereunder, the Bank may rely in good faith upon
information furnished in writing to it by any Authorized Person in respect of
(i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by the Bank,
(ii) reserves, if any, authorized by the Board or that no such reserves have
been authorized, (iii) the source of the quotations to be used in computing the
net asset value, (iv) the value to be assigned to any security for which no
price quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
11.3 To assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Concerning the Bank.
12.1 Performance of Duties. In performing its duties hereunder
and any other duties listed on any Schedule hereto, if any, the Bank will be
entitled to receive and act upon the advice of independent counsel of its own
selection, which may be counsel for the Fund, and will be without liability for
any action taken or thing done or omitted to be done in accordance with this
Agreement in good faith in conformity with such advice, if such counsel and such
advice are approved by the Fund, provided however such approval shall not be
unreasonably withheld. In the performance of its duties hereunder, so long as it
exercises reasonable care, the Bank will be protected and not be liable, and
will be indemnified and saved harmless for any action taken or omitted to be
taken by it in good faith reliance upon the terms of this Agreement, any
Officers' Certificate, Proper Instructions, resolution of the Board, telegram,
notice, request, certificate or other instrument reasonably believed by the Bank
to be genuine and to have been sent by an Authorized Person and for any other
loss to the Fund except in the case of the Bank's negligence, willful
misfeasance or misconduct or bad faith in the performance of its duties or
negligent disregard of its obligations and duties hereunder.
<PAGE>
The Bank may employ agents in the performance of its duties
hereunder and the Bank shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder. The Bank may employ sub custodians
upon receipt of Proper Instructions indicating that the Board has so approved
the appointment, provided that any such sub custodian meets at least the minimum
qualifications required by Section 17(f)(1) of the Investment Company Act of
1940 to is act as a custodian of the Fund's assets. In order to comply with Rule
17f-5, (and 17f-4, if applicable) of the Investment Company Act of 1940, the
contract between the Bank and any foreign sub custodian relating to securities
of the Fund shall be subject to approval of the Fund. The appointment of any sub
custodian by the Bank pursuant to this Agreement shall not relieve the Bank of
its responsibilities and liabilities under this Agreement, and the Bank shall be
liable to the Fund, to the extent of the Fund's damages, resulting from the
failure of any sub custodian to exercise reasonable care and to act in good
faith without negligence, provided however, the Bank shall not be liable for any
loss resulting from, or caused by nationalization, expropriation, currency
restrictions, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, acts of God or other similar events or acts not
due to the failure of the Bank or any sub custodians to exercise reasonable care
in the performance of their duties. Notwithstanding the foregoing, in connection
with the Bank's liability for the performance of The Chase Manhattan Bank, N. A.
("Chase") as a sub custodian of the Fund pursuant to an agreement by and between
Chase and the Bank, which form of agreement is attached hereto (the "Chase
Agreement"), and any sub custodian of the Fund appointed under the Chase
Agreement with the approval of the Board, the "Fund's damages" for the purpose
of the preceding sentence will be determined based on the market value of the
property which is the subject of the loss at the date of discovery of such loss
and without reference to any special conditions or circumstances
The Bank will be under no duty or obligation to inquire into
and will not be liable for:
(a) The validity of the issue of any Portfolio securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) The legality of any sale of any portfolio securities by or
for the Fund or the propriety of the amount for which the same are sold;
(c) The legality of an issue or sale of any shares of
beneficial interest of the Fund or the sufficiency of the amount to be
received therefor:
(d) The legality of the repurchase of any shares of beneficial
interest of the Fund or the propriety of the amount to be paid therefor;
(e) The legality of the declaration of any dividend by the Fund
or the legality of the distribution of any Portfolio securities as payment
in kind of such dividend; or
(f) Any property or moneys of the Fund already delivered or paid
by the Bank pursuant to the terms hereof.
Moreover. the Bank will not be under any duty or obligation
to ascertain whether any Portfolio securities at any time delivered to or
held by it for the account of the Fund are such as may properly be held by the
Fund under the provisions of its Declaration of Trust or By-Laws. any federal or
state statutes or any rule or regulation of any governmental agency.
12.2 Fees and Expenses of Bank. The Fund will pay or reimburse
the Bank from time to time for any transfer taxes payable upon transfer of
Portfolio securities made hereunder, and for all necessary proper disbursements,
expenses and charges made or incurred by the Bank in the performance of this
Agreement (including any duties listed on any Schedule hereto, if any) including
any indemnities for any loss, liabilities or expense to the Bank as specifically
provided above. For the services rendered by the Bank hereunder, the Fund will
pay to the Bank such compensation or fees at such rate and at such times as
shall be agreed upon in writing by the parties from time to time. The Bank will
also be entitled to reimbursement by the Fund for all preapproved expenses
incurred in conjunction with termination of this Agreement by the Fund.
<PAGE>
12.3 Advances by Bank. The Bank may, in its sole discretion,
advance funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by the Fund. Should such a payment or payments, with advanced
funds, result in an overdraft (due to insufficiencies of the Fund's account with
the Bank, or for any other reason) this Agreement deems any such or related
indebtedness, a loan made by the Bank to the Fund payable on demand and being
interest at the rate set forth in writing by the Bank concurrently herewith (as
amended from time to time) unless the Fund shall provide the Bank with agreed
upon compensating balances. The Fund agrees that the Bank shall have a
continuing lien and security interest on the assets of the Fund to the extent of
any overdraft, provided that in no event shall the amount of such lien exceed
the lesser of (i) the amount of such overdraft or (ii) 10% of the Fund's gross
assets on the date of such overdraft, and provided further that to the extent
consistent with the foregoing, the Bank will comply with any Proper Instructions
indicating which Portfolio securities and/or which account of the Fund shall be
subject to such lien. If such overdraft is not repaid within a reasonable period
of time, the Bank shall have the right to exercise any rights it may have as a
lien holder or secured party.
13. Termination.
13.1 This Agreement may be terminated at any time without
penalty upon sixty days written notice delivered by either party to the other by
means of registered mail, and upon the expiration of such sixty days this
Agreement will terminate: provided, however, that the effective date of such
termination may be postponed to a date not more than ninety days from the date
of delivery of such notice (i) by the Bank in order to prepare for the transfer
by the Bank of all of the assets of the Fund held hereunder. and (ii) by the
Fund in order to give the Fund an opportunity to make suitable arrangements for
a successor custodian. The Fund may immediately terminate this Agreement: (i) in
the event of the appointment of a conservator or receiver for the Bank or upon
the happening of a like event; (ii) if the Bank shall make a general assignment
for the benefit of creditors; admit in writing its inability to pay its debts as
they become due; file a petition in bankruptcy or a petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future bankruptcy, reorganization,
insolvency or similar statute, law or regulation or seek the appointment of any
trustee, receiver, custodian or liquidator of the Bank or of all or
substantially all of its properties; (iii) if a proceeding is commenced against
the Bank seeking relief or an appointment of a type described in paragraph
13.1(ii) above and such proceeding is not dismissed within 30 days after the
commencement thereof; (iv) if the Bank's insurance is materially adversely
changed. At any time after the termination of this Agreement, the Fund will, at
its request, have access to the records of the Bank relating to the performance
of its duties as custodian.
13.2 In the event of the termination of this Agreement, the
Bank will immediately upon receipt or transmittal, as the case may be, of notice
of termination, commence and prosecute diligently to completion the transfer of
all cash and the delivery of all Portfolio securities duly endorsed and all
records maintained under Section 11 to the successor custodian when appointed by
the Fund. The obligation of the Bank to deliver and transfer over the assets of
the Fund held by it directly to such successor custodian will commence as soon
as such successor is appointed and will continue until completed as aforesaid.
If the Fund does not select a successor custodian within ninety (90) days from
the date of delivery of notice of termination the Bank may, subject to the
provisions of subsection 13.3 of this Section 13, deliver the Portfolio
securities and cash of the Fund held by the Bank to a bank or trust company of
its own selection which meets the requirements of Section 17(f)(1) of the
Investment Company Act of 1940 and has a reported capital, surplus and undivided
profits aggregating not less than $25,000,000, to be held as the property of the
Fund under terms similar to those on which they were held by the Bank, whereupon
such bank or trust company so selected by the Bank will become the successor
custodian of such assets of the Fund with the same effect as though selected by
the Board.
<PAGE>
13.3 Prior to the expiration of ninety (90) days after notice
of termination has been given, the Fund may furnish the Bank with an order of
the Fund advising that a successor custodian cannot be found willing and able to
act upon reasonable and customary terms and that there has been submitted to the
Board of the Fund the question of whether the Fund will be liquidated or will
function without a custodian for the assets of the Fund held by the Bank. In
that event the Bank will deliver the Portfolio securities and cash of the Fund
held by it, subject as aforesaid, in accordance with one of such alternatives
which may be approved by the requisite vote of the Board, upon receipt by the
Bank of a copy of such vote certified by the Fund's Secretary or Assistant
Secretary.
14. Notices. Any notice or other instrument in writing
authorized or required by this Agreement to be given to either party hereto
will be sufficiently given if addressed to such party and mailed or delivered
to it at its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
Treasurer, MFS World Asset Allocation Fund/MFS
Series Trust I
c/o Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
One Lincoln Plaza
P.O. Box 1537
Boston, MA 02205-1537
<PAGE>
or at such other place as such party may from time to time
designate in writing.
15. Amendments. This Agreement may not be altered or amended,
except by an instrument in writing, executed by both parties, and in the case
of the Fund, any alteration or amendment which is material will be authorized
and approved by its Board.
16. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the prior written consent of the Bank or by the Bank without the prior
written consent of the Fund, authorized and approved by its Board; and provided
further that termination proceedings pursuant to Section 13 hereof will not be
deemed to be an assignment within the meaning of this provision.
17. Governing Law. This Agreement and all performance hereunder
will be governed by the laws of the Commonwealth of Massachusetts.
18. Interpretive and Additional Provisions. In connection with the
operation of this Agreement, the Bank and the Fund may from time to time agree
on such provisions interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. Any such interpretive or additional provisions shall be in
writing signed by both parties and shall be annexed hereto and shall be binding
upon the parties hereto as if incorporated into this Agreement, provided
however, no such interpretive or additional provisions shall be deemed to be an
alteration or amendment of this Agreement.
19. Delegation of Certain Duties Of Massachusetts Financial Services
Company ("MFS"). The Bank, with the prior written consent of MFS, may delegate
to MFS the performance of any or all of the duties it has agreed to perform for
the Fund in a separate written agreement relating to (i) accounting for
investments in currency and for financial instruments (including, without
limitation, options contracts, futures contracts, options on futures contracts,
options on foreign currency and forward foreign currency exchange contracts) and
(ii) federal and state regulatory compliance. The Bank shall compensate MFS for
the performance of such duties at such fee or fees as MFS shall determine to be
equal to MFS' cost for performing such duties (the "MFS Fees") Following its
payment of MFS Fees to MFS, the Bank shall recover the amount of the MFS Fees
from the Fund on such terms as the Bank and the Fund shall agree. MFS assumes
responsibility for all duties delegated to it by the Bank pursuant to this
Section 19, and the Bank may rely on MFS for the accuracy and correctness of the
accounting information provided by MFS to the Bank pursuant to this Section 19.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate and their respective corporate seals to be affixed hereto
as of the date first above written by their respective officers there unto duly
authorized.
MFS SERIES TRUST I
on behalf of MFS World Asset
Allocation Fund
By: A. KEITH BRODKIN
A. Keith Brodkin
ATTEST:
INVESTORS BANK & TRUST COMPANY
By: ILLEGIBLE
(Illegible)
ATTEST:
ILLEGIBLE
(Illegible)
The officer of the Fund signing this Agreement is executing this Agreement not
individually but in his capacity as an officer of the Fund. The obligations of
the Fund under this Agreement are not binding upon any of the trustees,
officers, employees, agents or shareholders of the Fund individually, but bind
only the trust estate of the Fund.
<PAGE>
EXHIBIT NO. 99.9(b)
MFS WORLD ASSET ALLOCATION FUND
500 Boylston Street, Boston, Massachusetts 02116
June 2, 1994
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116
Dear Sir/Madam:
This will confirm our understanding that Exhibit B to the Shareholder
Servicing Agent Agreement between us, dated September 10, 1986, as modified by a
letter agreement dated December 31, 1992, is hereby amended, effective
immediately, to read in its entirety as set forth on Attachment 1 hereto.
Please indicate your acceptance of the foregoing by signing below.
Sincerely,
MFS WORLD ASSSET ALLOCATION FUND
By: W. THOMAS LONDON
W. Thomas London
Treasurer
Accepted and Agreed:
MFS SERVICE CENTER, INC.
By: JAMES E. RUSSELL
James E. Russell
Treasurer
<PAGE>
EXHIBIT B TO THE SHAREHOLDER
SERVICING AGENT AGREEMENT BETWEEN
MFS SERVICE CENTER, INC. ("MFSC")
AND MFS WORLD ASSET ALLOCATION FUND (the "Fund")
1. The fees to be paid by the Fund on behalf of its series with respect to
Class A shares of each series of the Fund to MFSC, for MFSC's services as
shareholder servicing agent, shall be:
0.15% of the first $500 million of the assets of the series attributable to
such class;
0.12% of the second $500 million of the assets of the series attributable
to such class;
0.09% over $1 billion of the assets of the series attributable to such
class.
2. The fees to be paid by the Fund on behalf of its series with respect to
Class B shares of each series of the Fund to MFSC, for MFSC's services as
shareholder servicing agent, shall be:
0.22% of the first $500 million of the assets of the series attributable to
such class;
0.18% of the second $500 million of the assets of the series attributable
to such class;
0.13% over $1 billion of the assets of the series attributable to such
class.
3. The fees to be paid by the Fund on behalf of its series with respect to
Class C shares of each series of the Fund to MFSC, for MFSC's services as
shareholder servicing agent, shall be:
0.15% of the first $500 million of the assets of the series attributable to
such class;
0.12% of the second $500 million of the assets of the series attributable
to such class;
0.09% over $1 billion of the assets of the series attributable to such
class.
<PAGE>
EXHIBIT NO. 99.9(e)
LIFETIME MONEY MARKET TRUST
LIFETIME MANAGED MUNICIPAL BOND TRUST
LIFETIME HIGH INCOME TRUST
LIFETIME CAPITAL GROWTH TRUST
LIFETIME EMERGING GROWTH TRUST
LIFETIME MANAGED SECTORS TRUST
LIFETIME GLOBAL EQUITY TRUST
LIFETIME CONSERVATIVE EQUITY TRUST
LIFETIME GOVERNMENT INCOME PLUS TRUST
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Dividend Disbursing Agency Agreement
Dear Sirs:
Each of the above-listed funds (individually, the "Fund") is an
open-end registered investment company organized as a Massachusetts business
trust. Each Fund separately has selected you to act as its Dividend Disbursing
Agent and you hereby agree to act as such Agent and perform the duties and
functions thereof in the manner and on the conditions hereinafter set forth.
Accordingly, each Fund individually hereby agrees with you as follows:
1. Services to be Performed. As Dividend Disbursing Agent ("Agent"),
you shall be responsible for performing dividend and distribution disbursing
agent functions with regard to the Fund's shares of beneficial interest
("Shares"). The details of the operating standards and procedures to be followed
by you shall be determined from time to time by agreement between you and the
Fund.
2. Standard of Service. As Agent for the Fund, you agree to provide
service equal to at least that provided by you or others furnishing dividend and
distribution disbursing services to other open-end investment companies
("Standard") at a fee, as may be agreed to from time to time, comparable to the
fee paid you for your services hereunder. The Standard shall include at least
the following:
(a) Prompt processing of all matters requiring action by you;
(b) Prompt clearance of any daily volume backlog;
(c) Providing innovative services and technological
improvements;
(d) Meeting the requirements of any governmental authority
having jurisdiction over you or the Fund; and
(e) Prompt reconciliation of all bank accounts under your
control belonging to the Fund.
<PAGE>
If the Fund is reasonably of the view that the service provided
by you does not meet the Standard, it shall give you written notice specifying
the particulars, and you then shall have 120 days in which to restore the
service so that it meets the Standard, except that such period shall be 180 days
with respect to meeting that portion of the Standard described above in item (c)
of this paragraph 2. If at the end of such period the Fund remains reasonably of
the view that the service provided by you in the particulars specified, does not
meet the Standard, then the Fund may, by appropriate action, elect to terminate
this Agreement for cause upon 90 days notice to you. Upon termination hereof,
the Fund shall pay you such compensation as may be due to you as of the date of
such termination, and shall likewise reimburse you for any costs, expenses, and
disbursements reasonably incurred by you to such date in the performance of your
duties hereunder.
3. Rights in Data and Confidentiality. You agree that all records,
data, files, input materials, reports, forms and other data received, computed
or stored in the performance of this Agreement are the exclusive property of the
Fund and that all such records and other data shall be furnished without
additional charge, except for actual processing costs, to the Fund in machine
readable as well as printed form immediately upon termination of this Agreement
or at the Fund's request. You shall safeguard and maintain the confidentiality
of the Fund's data and information supplied to you by the Fund and you shall not
transfer or disclose the Fund's data to any third party without the Fund's prior
written consent unless compelled to do so by order of a court or regulatory
authority.
4. Fees. The fee, based upon check clearance and reconciliation work
performed hereunder, shall not be in excess of such amount as shall be agreed in
writing between us. Such fee shall be payable in monthly installments. Such fee
shall be subject to review at least annually and fixed by the parties in good
faith negotiation on the basis of a statement of your expenses, which either you
or the Fund may require to be certified by a major accounting firm acceptable to
the parties. The party requesting such certification shall bear all expenses
thereof. In addition to the foregoing fee, you will be reimbursed by the Fund
for out-of-pocket expenses reasonably incurred by you on behalf of the Fund,
including but not limited to expenses for stationery, postage, telephone and
telegraph line and toll charges and similar items.
5. Record Keeping. You will maintain records in a form acceptable to
the Fund and in compliance with the rules and regulations of the Securities and
Exchange Commission, including, but not limited to, records required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder, which at all times will be the property of the Fund and will be
available for inspection and use by the Fund or the Fund's transfer agent.
<PAGE>
6. Duty of Care and Indemnification. You will at all times act in good
faith in performing your duties hereunder. You will not be liable or responsible
for delays or errors by reason of circumstances beyond your control, including
acts of civil or military authority, national emergencies, labor difficulties,
fire, mechanical breakdown beyond your control, flood or catastrophe, acts of
God, insurrection, war, riots or failure beyond your control of transportation,
communication or power supply. The Fund will indemnify you against and hold you
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from your bad faith or negligence, and
arising out of, or in connection with, your duties on behalf of the Fund
hereunder. In addition, the Fund will indemnify you against and hold you
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit as a result of your acting in accordance with any
instructions reasonably believed by you to have been given executed or orally
communicated by any person duly authorized by the Fund or as a result of acting
in accordance with written or oral advice reasonable believed by you to have
been given by counsel for the Fund, or as a result of acting in accordance with
any instrument or share certificate reasonably believed by you to have been
genuine and signed, countersigned or executed by any person or persons
authorized to sign, countersign or execute the same (unless contributed to by
your gross negligence or bad faith). In any case in which the Fund may be asked
to indemnify you or hold you harmless, the Fund shall be advised of all
pertinent facts concerning the situation in question and you will use reasonable
care to identify and notify the Fund promptly concerning any situation which
presents or appears likely to present a claim for indemnification against the
Fund. The Fund shall have the option to defend you against any claim which may
be the subject of this indemnification, and in the event that the Fund so elects
such defense shall be conducted by counsel chosen by the Fund and satisfactory
to you and it will so notify you, and thereupon the Fund shall take over
complete defense of the claim and you shall sustain no further legal or other
expenses in such situation for which you seek indemnification under this
paragraph, except the expense of any additional counsel retained by you. You
will in no case confess any claim or make any compromise in any case in which
the Fund will be asked to indemnify you except with the Fund's prior written
consent. The obligations of the parties hereto under this paragraph shall
survive the termination of this Agreement.
<PAGE>
7. Insurance. You will notify the Fund should any of your
insurance coverage, as set forth on Exhibit A hereto, be changed for any
reason, such notification to include the date of change and reason or reasons
therefor.
8. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed sufficient if mailed to either party at the
addresses set forth in this Agreement, or at such other addresses as the parties
hereto may designate by notice to each other.
9. Further Assurances. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
10. Use of a Sub-Dividend Disbursing Agent. Notwithstanding any
other provision of this Agreement, it is expressly understood and agreed that
you are authorized in the performance of your duties hereunder to employ one
or more Sub-Dividend Disbursing Agents.
11. Termination. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing, which, except in the case of termination, shall be signed by the party
against which enforcement of such change waiver or discharge is sought. Except
as otherwise provided in paragraph 2 hereof, this Agreement shall continue
indefinitely until terminated by 90 days' written notice given by the Fund to
you or by you to the Fund. Upon termination hereof, the Fund shall pay you such
compensation as may be due to you as of the date of such termination, and shall
likewise reimburse you for any costs, expenses, and disbursements reasonably
incurred by you to such date in the performance of your duties hereunder. You
agree to cooperate with the Fund and provide all necessary assistance in
effectuating an orderly transition upon termination of this Agreement.
12. Successor. In the event that in connection with termination a
successor to any of your duties or responsibilities hereunder is designated by
the Fund by written notice to you, you will, promptly upon such termination and
at the expense of the Fund, transfer to such successor an historical record of
dividends and disbursements and all other relevant books, records,
correspondence, and other data established or maintained by you under this
Agreement in form reasonably acceptable to the Fund (if such form differs from
the form in which you have maintained the same, the Fund shall pay any expenses
associated with transferring the same to such form), and will cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from your cognizant personnel in the establishment of books, records and other
data by such successor.
<PAGE>
13. Miscellaneous. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the Commonwealth of Massachusetts.
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument. This
Agreement has been executed on behalf of the Fund by the undersigned not
individually, but in the capacity indicated, and the obligations of this
Agreement are not binding upon any of the Trustees or shareholders of the Fund
individually, but bind only the trust estate.
If you are in agreement with the foregoing, please sign the form of
acceptance on this letter and the accompanying counterpart of this letter and
return such counterpart to the Fund whereupon this letter shall become a binding
contract between the Fund and you, the Fund having already executed this letter
and its counterpart.
Very truly yours,
RICHARD B. BAILEY
Lifetime Money Market Trust By: Richard B. Bailey
Chairman
RICHARD B. BAILEY
Lifetime High Income Trust By: Richard B. Bailey
Chairman
RICHARD B. BAILEY
Lifetime Managed Sectors Trust By: Richard B. Bailey
Chairman
RICHARD B. BAILEY
Lifetime Managed Municipal By: Richard B. Bailey
Bond Trust Chairman
RICHARD B. BAILEY
Lifetime Capital Growth Trust By: Richard B. Bailey
Chairman
RICHARD B. BAILEY
Lifetime Global Equity Trust By: Richard B. Bailey
Chairman
RICHARD B. BAILEY
Lifetime Government Income Plus By: Richard B. Bailey
Trust Chairman
<PAGE>
RICHARD B. BAILEY
Lifetime Emerging Growth Trust By: Richard B. Bailey
Chairman
RICHARD B. BAILEY
Lifetime Conservative Equity By: Richard B. Bailey
Trust Chairman
Attest: DANIEL M. JAFFE
Daniel M. Jaffe
The foregoing is hereby accepted as of the date thereof.
STATE STREET BANK AND TRUST COMPANY
By: ILLEGIBLE
(Illegible)
<PAGE>
EXHIBIT NO. 99.15(h)
FORM OF
MFS SERIES TRUST I
MFS EQUITY INCOME FUND
DISTRIBUTION PLAN
DISTRIBUTION PLAN with respect to the shares of beneficial interest to be
designated "Class A" of the MFS EQUITY INCOME FUND (the "Fund"), a series of MFS
Series Trust I (the "Trust"), a business trust organized and existing under the
laws of The Commonwealth of Massachusetts, dated this 2nd day of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940 (the "Act");
and
WHEREAS, the Trust intends to distribute the Shares of Beneficial Interest
(without par value) of the Fund designated Class A Shares (the "Shares") in part
in accordance with Rule 12b-1 under the Act, ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of the Trust (the "Board
of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors,
Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the
Distributor provides facilities and personnel and renders services to the Fund
in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that the Distributor will enter into
agreements ("Dealer Agreements") with various securities dealers and other
financial intermediaries ("Dealers") pursuant to which the Dealers will act as
dealers of the Shares in connection with the offering of Shares; and
WHEREAS, the Distribution Agreement provides that a sales charge may be paid by
investors who purchase Shares and that the Distributor and Dealers will receive
such sales charge as partial compensation for their services in connection with
sale of Shares; and
WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and
implement this Plan, has evaluated such information as it deemed necessary to an
informed determination as to whether this Plan should be adopted and implemented
and has considered such pertinent factors as it deemed necessary to form the
basis for a decision to use assets of the Fund for such purposes, and has
determined that there is a reasonable likelihood that the adoption and
implementation of this Plan will benefit the Fund and its Class A shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a
plan of distribution relating to the Shares in accordance with Rule 12b-1 under
the Act, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
ongoing maintenance commissions to Dealers (excluding service fees described in
paragraph 4), all expenses of printing (excluding typesetting) and distributing
prospectuses to prospective shareholders and providing such other related
services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses
described in Section 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. As partial consideration for the services performed as specified in
the Distribution Agreement and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.25% per annum of the
average daily net assets of the Fund attributable to the Shares. Such payments
shall commence following shareholder approval of the Plan but only upon
notification by the Distributor to the Fund of the commencement of the Plan (the
"Commencement Date"). All or a portion of the distribution fee paid by the Fund
to the Distributor may be paid by the Distributor to Dealers in consideration of
the Dealer's services as a dealer of the Shares. The Distributor may from time
to time establish minimum amount requirements and additional or different dealer
qualification standards or other criteria to be met by dealers for payment of
any fee under this paragraph 3. It is understood that the Distributor may, but
is not required to, pay reduced fees or no fees under this paragraph 3 to
Dealers with respect to assets represented by Shares that have converted from
shares of beneficial interest of the Fund designated "Class B."
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its Dealer Agreement, the Fund shall on or after the
Commencement Date pay each Dealer a service fee periodically at a rate not to
exceed 0.25% per annum of the portion of the average daily net assets of the
Fund that is represented by Shares that are owned by investors for whom such
Dealer is the holder or dealer of record. The Distributor may from time to time
reduce the amount of the service fee paid to a Dealer with respect to Shares
sold prior to a certain date.
5. In addition to fees payable pursuant to Sections 3 and 4 hereof, the
expenses permitted to be paid by the Fund pursuant to this Plan on or after the
Commencement Date shall include other distribution related expenses. These other
distribution related expenses may include, but are not limited to, a dealer
commission and a payment to wholesalers employed by the Distributor on net asset
value purchases at or above a certain dollar level.
<PAGE>
The aggregate amount of fees and expenses paid pursuant to Sections 3
and 4 hereof and this Section 5 shall not exceed 0.50% per annum of the average
daily net assets of the Fund attributable to the Shares. No fees shall be paid
pursuant to Section 4 hereof or this Section 5 to any insurance company which
has entered into an agreement with the Trust on behalf of the Fund and the
Distributor that permits such insurance company to purchase Shares from the Fund
at their net asset value in connection with annuity agreements issued in
connection with the insurance company's separate accounts. That portion of the
Fund's average daily net assets on which fees payable under Section 4 hereof and
this Section 5 are calculated may be subject to certain minimum amount
requirements as may be determined, and additional or different dealer or
wholesaler qualification standards that may be established, from time to time by
the Distributor. The Distributor shall be entitled to be paid any fees payable
under Section 4 hereof or this Section 5 with respect to accounts for which no
Dealer of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The fees and expenses payable pursuant to
Section 4 and this Section 5 may from time to time be paid by the Fund to the
Distributor and the Distributor will then pay these expenses on behalf of the
Fund.
6. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
7. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Shares, and (b)
approval by a vote of the Board of Trustees and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the Board of
Trustees and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire 12 months
after the effective date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees;
provided that (a) any amendment to increase materially the amount to be spent
for the services described herein shall be effective only upon approval by a
vote of a "majority of the outstanding voting securities" of the Shares and (b)
any material amendment of this Plan shall be effective only upon approval by a
vote of the Board of Trustees and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Shares.
<PAGE>
10. The Distributor shall provide the Board of Trustees, and the Board
of Trustees shall review, at least quarterly, a written report of the amounts
expended under the Plan and the purposes for which such expenditures were made.
11. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the Act.
In addition, for purposes of determining the fees payable to Dealers and
wholesalers, the value of the Share's net assets shall be computed in the manner
specified in the Fund's then current prospectus for computation of the net asset
value of the Shares.
13. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in Section 10 hereof (collectively
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record keeping.
14. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS RESEARCH GROWTH AND INCOME FUND
DISTRIBUTION PLAN
DISTRIBUTION PLAN with respect to the shares of beneficial interest to be
designated "Class A" of the MFS RESEARCH GROWTH AND INCOME FUND (the "Fund"), a
series of MFS Series Trust I (the "Trust"), a business trust organized and
existing under the laws of The Commonwealth of Massachusetts, dated this 2nd day
of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940 (the "Act");
and
WHEREAS, the Trust intends to distribute the Shares of Beneficial Interest
(without par value) of the Fund designated Class A Shares (the "Shares") in part
in accordance with Rule 12b-1 under the Act, ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of the Trust (the "Board
of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors,
Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the
Distributor provides facilities and personnel and renders services to the Fund
in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that the Distributor will enter into
agreements ("Dealer Agreements") with various securities dealers and other
financial intermediaries ("Dealers") pursuant to which the Dealers will act as
dealers of the Shares in connection with the offering of Shares; and
WHEREAS, the Distribution Agreement provides that a sales charge may be paid by
investors who purchase Shares and that the Distributor and Dealers will receive
such sales charge as partial compensation for their services in connection with
sale of Shares; and
WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and
implement this Plan, has evaluated such information as it deemed necessary to an
informed determination as to whether this Plan should be adopted and implemented
and has considered such pertinent factors as it deemed necessary to form the
basis for a decision to use assets of the Fund for such purposes, and has
determined that there is a reasonable likelihood that the adoption and
implementation of this Plan will benefit the Fund and its Class A shareholders;
NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a
plan of distribution relating to the Shares in accordance with Rule 12b-1 under
the Act, on the following terms and conditions:
<PAGE>
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
ongoing maintenance commissions to Dealers (excluding service fees described in
paragraph 4), all expenses of printing (excluding typesetting) and distributing
prospectuses to prospective shareholders and providing such other related
services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses
described in Section 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. As partial consideration for the services performed as specified in
the Distribution Agreement and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.25% per annum of the
average daily net assets of the Fund attributable to the Shares. Such payments
shall commence following shareholder approval of the Plan but only upon
notification by the Distributor to the Fund of the commencement of the Plan (the
"Commencement Date"). All or a portion of the distribution fee paid by the Fund
to the Distributor may be paid by the Distributor to Dealers in consideration of
the Dealer's services as a dealer of the Shares. The Distributor may from time
to time establish minimum amount requirements and additional or different dealer
qualification standards or other criteria to be met by dealers for payment of
any fee under this paragraph 3. It is understood that the Distributor may, but
is not required to, pay reduced fees or no fees under this paragraph 3 to
Dealers with respect to assets represented by Shares that have converted from
shares of beneficial interest of the Fund designated "Class B."
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its Dealer Agreement, the Fund shall on or after the
Commencement Date pay each Dealer a service fee periodically at a rate not to
exceed 0.25% per annum of the portion of the average daily net assets of the
Fund that is represented by Shares that are owned by investors for whom such
Dealer is the holder or dealer of record. The Distributor may from time to time
reduce the amount of the service fee paid to a Dealer with respect to Shares
sold prior to a certain date.
5. In addition to fees payable pursuant to Sections 3 and 4 hereof,
the expenses permitted to be paid by the Fund pursuant to this Plan on or
after the Commencement Date shall include other distribution related expenses.
These other distribution related expenses may include, but are not limited to, a
dealer commission and a payment to wholesalers employed by the Distributor on
net asset value purchases at or above a certain dollar level.
<PAGE>
The aggregate amount of fees and expenses paid pursuant to Sections 3
and 4 hereof and this Section 5 shall not exceed 0.50% per annum of the average
daily net assets of the Fund attributable to the Shares. No fees shall be paid
pursuant to Section 4 hereof or this Section 5 to any insurance company which
has entered into an agreement with the Trust on behalf of the Fund and the
Distributor that permits such insurance company to purchase Shares from the Fund
at their net asset value in connection with annuity agreements issued in
connection with the insurance company's separate accounts. That portion of the
Fund's average daily net assets on which fees payable under Section 4 hereof and
this Section 5 are calculated may be subject to certain minimum amount
requirements as may be determined, and additional or different dealer or
wholesaler qualification standards that may be established, from time to time by
the Distributor. The Distributor shall be entitled to be paid any fees payable
under Section 4 hereof or this Section 5 with respect to accounts for which no
Dealer of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The fees and expenses payable pursuant to
Section 4 and this Section 5 may from time to time be paid by the Fund to the
Distributor and the Distributor will then pay these expenses on behalf of the
Fund.
6. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
7. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Shares, and (b)
approval by a vote of the Board of Trustees and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the Board of
Trustees and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire 12 months
after the effective date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees;
provided that (a) any amendment to increase materially the amount to be spent
for the services described herein shall be effective only upon approval by a
vote of a "majority of the outstanding voting securities" of the Shares and (b)
any material amendment of this Plan shall be effective only upon approval by a
vote of the Board of Trustees and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Shares.
10. The Distributor shall provide the Board of Trustees, and the Board
of Trustees shall review, at least quarterly, a written report of the amounts
expended under the Plan and the purposes for which such expenditures were made.
<PAGE>
11. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the Act.
In addition, for purposes of determining the fees payable to Dealers and
wholesalers, the value of the Share's net assets shall be computed in the manner
specified in the Fund's then current prospectus for computation of the net asset
value of the Shares.
13. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in Section 10 hereof (collectively
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record keeping.
14. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS CORE GROWTH FUND
DISTRIBUTION PLAN
DISTRIBUTION PLAN with respect to the shares of beneficial interest to be
designated "Class A" of the MFS CORE GROWTH FUND (the "Fund"), a series of MFS
Series Trust I (the "Trust"), a business trust organized and existing under the
laws of The Commonwealth of Massachusetts, dated this 2nd day of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940 (the "Act");
and
WHEREAS, the Trust intends to distribute the Shares of Beneficial Interest
(without par value) of the Fund designated Class A Shares (the "Shares") in part
in accordance with Rule 12b-1 under the Act, ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of the Trust (the "Board
of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors,
Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the
Distributor provides facilities and personnel and renders services to the Fund
in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that the Distributor will enter into
agreements ("Dealer Agreements") with various securities dealers and other
financial intermediaries ("Dealers") pursuant to which the Dealers will act as
dealers of the Shares in connection with the offering of Shares; and
WHEREAS, the Distribution Agreement provides that a sales charge may be paid by
investors who purchase Shares and that the Distributor and Dealers will receive
such sales charge as partial compensation for their services in connection with
sale of Shares; and
WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and
implement this Plan, has evaluated such information as it deemed necessary to an
informed determination as to whether this Plan should be adopted and implemented
and has considered such pertinent factors as it deemed necessary to form the
basis for a decision to use assets of the Fund for such purposes, and has
determined that there is a reasonable likelihood that the adoption and
implementation of this Plan will benefit the Fund and its Class A shareholders;
NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a
plan of distribution relating to the Shares in accordance with Rule 12b-1 under
the Act, on the following terms and conditions:
<PAGE>
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
ongoing maintenance commissions to Dealers (excluding service fees described in
paragraph 4), all expenses of printing (excluding typesetting) and distributing
prospectuses to prospective shareholders and providing such other related
services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses
described in Section 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. As partial consideration for the services performed as specified in
the Distribution Agreement and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.25% per annum of the
average daily net assets of the Fund attributable to the Shares. Such payments
shall commence following shareholder approval of the Plan but only upon
notification by the Distributor to the Fund of the commencement of the Plan (the
"Commencement Date"). All or a portion of the distribution fee paid by the Fund
to the Distributor may be paid by the Distributor to Dealers in consideration of
the Dealer's services as a dealer of the Shares. The Distributor may from time
to time establish minimum amount requirements and additional or different dealer
qualification standards or other criteria to be met by dealers for payment of
any fee under this paragraph 3. It is understood that the Distributor may, but
is not required to, pay reduced fees or no fees under this paragraph 3 to
Dealers with respect to assets represented by Shares that have converted from
shares of beneficial interest of the Fund designated "Class B."
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its Dealer Agreement, the Fund shall on or after the
Commencement Date pay each Dealer a service fee periodically at a rate not to
exceed 0.25% per annum of the portion of the average daily net assets of the
Fund that is represented by Shares that are owned by investors for whom such
Dealer is the holder or dealer of record. The Distributor may from time to time
reduce the amount of the service fee paid to a Dealer with respect to Shares
sold prior to a certain date.
5. In addition to fees payable pursuant to Sections 3 and 4 hereof,
the expenses permitted to be paid by the Fund pursuant to this Plan on or
after the Commencement Date shall include other distribution related expenses.
These other distribution related expenses may include, but are not limited to, a
dealer commission and a payment to wholesalers employed by the Distributor on
net asset value purchases at or above a certain dollar level.
<PAGE>
The aggregate amount of fees and expenses paid pursuant to Sections 3
and 4 hereof and this Section 5 shall not exceed 0.50% per annum of the average
daily net assets of the Fund attributable to the Shares. No fees shall be paid
pursuant to Section 4 hereof or this Section 5 to any insurance company which
has entered into an agreement with the Trust on behalf of the Fund and the
Distributor that permits such insurance company to purchase Shares from the Fund
at their net asset value in connection with annuity agreements issued in
connection with the insurance company's separate accounts. That portion of the
Fund's average daily net assets on which fees payable under Section 4 hereof and
this Section 5 are calculated may be subject to certain minimum amount
requirements as may be determined, and additional or different dealer or
wholesaler qualification standards that may be established, from time to time by
the Distributor. The Distributor shall be entitled to be paid any fees payable
under Section 4 hereof or this Section 5 with respect to accounts for which no
Dealer of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The fees and expenses payable pursuant to
Section 4 and this Section 5 may from time to time be paid by the Fund to the
Distributor and the Distributor will then pay these expenses on behalf of the
Fund.
6. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
7. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Shares, and (b)
approval by a vote of the Board of Trustees and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the Board of
Trustees and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire 12 months
after the effective date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees;
provided that (a) any amendment to increase materially the amount to be spent
for the services described herein shall be effective only upon approval by a
vote of a "majority of the outstanding voting securities" of the Shares and (b)
any material amendment of this Plan shall be effective only upon approval by a
vote of the Board of Trustees and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Shares.
10. The Distributor shall provide the Board of Trustees, and the Board
of Trustees shall review, at least quarterly, a written report of the amounts
expended under the Plan and the purposes for which such expenditures were made.
<PAGE>
11. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the Act.
In addition, for purposes of determining the fees payable to Dealers and
wholesalers, the value of the Share's net assets shall be computed in the manner
specified in the Fund's then current prospectus for computation of the net asset
value of the Shares.
13. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in Section 10 hereof (collectively
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record keeping.
14. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS AGGRESSIVE GROWTH FUND
DISTRIBUTION PLAN
DISTRIBUTION PLAN with respect to the shares of beneficial interest to be
designated "Class A" of the MFS AGGRESSIVE GROWTH FUND (the "Fund"), a series of
MFS Series Trust I (the "Trust"), a business trust organized and existing under
the laws of The Commonwealth of Massachusetts, dated this 2nd day of January,
1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940 (the "Act");
and
WHEREAS, the Trust intends to distribute the Shares of Beneficial Interest
(without par value) of the Fund designated Class A Shares (the "Shares") in part
in accordance with Rule 12b-1 under the Act, ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of the Trust (the "Board
of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors,
Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the
Distributor provides facilities and personnel and renders services to the Fund
in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that the Distributor will enter into
agreements ("Dealer Agreements") with various securities dealers and other
financial intermediaries ("Dealers") pursuant to which the Dealers will act as
dealers of the Shares in connection with the offering of Shares; and
WHEREAS, the Distribution Agreement provides that a sales charge may be paid by
investors who purchase Shares and that the Distributor and Dealers will receive
such sales charge as partial compensation for their services in connection with
sale of Shares; and
WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and
implement this Plan, has evaluated such information as it deemed necessary to an
informed determination as to whether this Plan should be adopted and implemented
and has considered such pertinent factors as it deemed necessary to form the
basis for a decision to use assets of the Fund for such purposes, and has
determined that there is a reasonable likelihood that the adoption and
implementation of this Plan will benefit the Fund and its Class A shareholders;
NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a
plan of distribution relating to the Shares in accordance with Rule 12b-1 under
the Act, on the following terms and conditions:
<PAGE>
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
ongoing maintenance commissions to Dealers (excluding service fees described in
paragraph 4), all expenses of printing (excluding typesetting) and distributing
prospectuses to prospective shareholders and providing such other related
services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses
described in Section 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. As partial consideration for the services performed as specified in
the Distribution Agreement and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.25% per annum of the
average daily net assets of the Fund attributable to the Shares. Such payments
shall commence following shareholder approval of the Plan but only upon
notification by the Distributor to the Fund of the commencement of the Plan (the
"Commencement Date"). All or a portion of the distribution fee paid by the Fund
to the Distributor may be paid by the Distributor to Dealers in consideration of
the Dealer's services as a dealer of the Shares. The Distributor may from time
to time establish minimum amount requirements and additional or different dealer
qualification standards or other criteria to be met by dealers for payment of
any fee under this paragraph 3. It is understood that the Distributor may, but
is not required to, pay reduced fees or no fees under this paragraph 3 to
Dealers with respect to assets represented by Shares that have converted from
shares of beneficial interest of the Fund designated "Class B."
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its Dealer Agreement, the Fund shall on or after the
Commencement Date pay each Dealer a service fee periodically at a rate not to
exceed 0.25% per annum of the portion of the average daily net assets of the
Fund that is represented by Shares that are owned by investors for whom such
Dealer is the holder or dealer of record. The Distributor may from time to time
reduce the amount of the service fee paid to a Dealer with respect to Shares
sold prior to a certain date.
5. In addition to fees payable pursuant to Sections 3 and 4 hereof, the
expenses permitted to be paid by the Fund pursuant to this Plan on or after the
Commencement Date shall include other distribution related expenses. These other
distribution related expenses may include, but are not limited to, a dealer
commission and a payment to wholesalers employed by the Distributor on net asset
value purchases at or above a certain dollar level.
<PAGE>
The aggregate amount of fees and expenses paid pursuant to Sections 3
and 4 hereof and this Section 5 shall not exceed 0.50% per annum of the average
daily net assets of the Fund attributable to the Shares. No fees shall be paid
pursuant to Section 4 hereof or this Section 5 to any insurance company which
has entered into an agreement with the Trust on behalf of the Fund and the
Distributor that permits such insurance company to purchase Shares from the Fund
at their net asset value in connection with annuity agreements issued in
connection with the insurance company's separate accounts. That portion of the
Fund's average daily net assets on which fees payable under Section 4 hereof and
this Section 5 are calculated may be subject to certain minimum amount
requirements as may be determined, and additional or different dealer or
wholesaler qualification standards that may be established, from time to time by
the Distributor. The Distributor shall be entitled to be paid any fees payable
under Section 4 hereof or this Section 5 with respect to accounts for which no
Dealer of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The fees and expenses payable pursuant to
Section 4 and this Section 5 may from time to time be paid by the Fund to the
Distributor and the Distributor will then pay these expenses on behalf of the
Fund.
6. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
7. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Shares, and (b)
approval by a vote of the Board of Trustees and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the Board of
Trustees and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire 12 months
after the effective date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees;
provided that (a) any amendment to increase materially the amount to be spent
for the services described herein shall be effective only upon approval by a
vote of a "majority of the outstanding voting securities" of the Shares and (b)
any material amendment of this Plan shall be effective only upon approval by a
vote of the Board of Trustees and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Shares.
10. The Distributor shall provide the Board of Trustees, and the Board
of Trustees shall review, at least quarterly, a written report of the amounts
expended under the Plan and the purposes for which such expenditures were made.
<PAGE>
11. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the Act.
In addition, for purposes of determining the fees payable to Dealers and
wholesalers, the value of the Share's net assets shall be computed in the manner
specified in the Fund's then current prospectus for computation of the net asset
value of the Shares.
13. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in Section 10 hereof (collectively
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record keeping.
14. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS SPECIAL OPPORTUNITIES FUND
DISTRIBUTION PLAN
DISTRIBUTION PLAN with respect to the shares of beneficial interest to be
designated "Class A" of the MFS SPECIAL OPPORTUNITIES FUND (the "Fund"), a
series of MFS Series Trust I (the "Trust"), a business trust organized and
existing under the laws of The Commonwealth of Massachusetts, dated this 2nd day
of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940 (the "Act");
and
WHEREAS, the Trust intends to distribute the Shares of Beneficial Interest
(without par value) of the Fund designated Class A Shares (the "Shares") in part
in accordance with Rule 12b-1 under the Act, ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of the Trust (the "Board
of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors,
Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the
Distributor provides facilities and personnel and renders services to the Fund
in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that the Distributor will enter into
agreements ("Dealer Agreements") with various securities dealers and other
financial intermediaries ("Dealers") pursuant to which the Dealers will act as
dealers of the Shares in connection with the offering of Shares; and
WHEREAS, the Distribution Agreement provides that a sales charge may be paid by
investors who purchase Shares and that the Distributor and Dealers will receive
such sales charge as partial compensation for their services in connection with
sale of Shares; and
WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and
implement this Plan, has evaluated such information as it deemed necessary to an
informed determination as to whether this Plan should be adopted and implemented
and has considered such pertinent factors as it deemed necessary to form the
basis for a decision to use assets of the Fund for such purposes, and has
determined that there is a reasonable likelihood that the adoption and
implementation of this Plan will benefit the Fund and its Class A shareholders;
NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a
plan of distribution relating to the Shares in accordance with Rule 12b-1 under
the Act, on the following terms and conditions:
<PAGE>
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
ongoing maintenance commissions to Dealers (excluding service fees described in
paragraph 4), all expenses of printing (excluding typesetting) and distributing
prospectuses to prospective shareholders and providing such other related
services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses
described in Section 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. As partial consideration for the services performed as specified in
the Distribution Agreement and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.25% per annum of the
average daily net assets of the Fund attributable to the Shares. Such payments
shall commence following shareholder approval of the Plan but only upon
notification by the Distributor to the Fund of the commencement of the Plan (the
"Commencement Date"). All or a portion of the distribution fee paid by the Fund
to the Distributor may be paid by the Distributor to Dealers in consideration of
the Dealer's services as a dealer of the Shares. The Distributor may from time
to time establish minimum amount requirements and additional or different dealer
qualification standards or other criteria to be met by dealers for payment of
any fee under this paragraph 3. It is understood that the Distributor may, but
is not required to, pay reduced fees or no fees under this paragraph 3 to
Dealers with respect to assets represented by Shares that have converted from
shares of beneficial interest of the Fund designated "Class B."
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its Dealer Agreement, the Fund shall on or after the
Commencement Date pay each Dealer a service fee periodically at a rate not to
exceed 0.25% per annum of the portion of the average daily net assets of the
Fund that is represented by Shares that are owned by investors for whom such
Dealer is the holder or dealer of record. The Distributor may from time to time
reduce the amount of the service fee paid to a Dealer with respect to Shares
sold prior to a certain date.
5. In addition to fees payable pursuant to Sections 3 and 4 hereof,
the expenses permitted to be paid by the Fund pursuant to this Plan on or
after the Commencement Date shall include other distribution related expenses.
These other distribution related expenses may include, but are not limited to, a
dealer commission and a payment to wholesalers employed by the Distributor on
net asset value purchases at or above a certain dollar level.
<PAGE>
The aggregate amount of fees and expenses paid pursuant to Sections 3
and 4 hereof and this Section 5 shall not exceed 0.50% per annum of the average
daily net assets of the Fund attributable to the Shares. No fees shall be paid
pursuant to Section 4 hereof or this Section 5 to any insurance company which
has entered into an agreement with the Trust on behalf of the Fund and the
Distributor that permits such insurance company to purchase Shares from the Fund
at their net asset value in connection with annuity agreements issued in
connection with the insurance company's separate accounts. That portion of the
Fund's average daily net assets on which fees payable under Section 4 hereof and
this Section 5 are calculated may be subject to certain minimum amount
requirements as may be determined, and additional or different dealer or
wholesaler qualification standards that may be established, from time to time by
the Distributor. The Distributor shall be entitled to be paid any fees payable
under Section 4 hereof or this Section 5 with respect to accounts for which no
Dealer of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The fees and expenses payable pursuant to
Section 4 and this Section 5 may from time to time be paid by the Fund to the
Distributor and the Distributor will then pay these expenses on behalf of the
Fund.
6. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
7. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Shares, and (b)
approval by a vote of the Board of Trustees and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the Board of
Trustees and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire 12 months
after the effective date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees;
provided that (a) any amendment to increase materially the amount to be spent
for the services described herein shall be effective only upon approval by a
vote of a "majority of the outstanding voting securities" of the Shares and (b)
any material amendment of this Plan shall be effective only upon approval by a
vote of the Board of Trustees and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Shares.
10. The Distributor shall provide the Board of Trustees, and the Board
of Trustees shall review, at least quarterly, a written report of the amounts
expended under the Plan and the purposes for which such expenditures were made.
<PAGE>
11. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the Act.
In addition, for purposes of determining the fees payable to Dealers and
wholesalers, the value of the Share's net assets shall be computed in the manner
specified in the Fund's then current prospectus for computation of the net asset
value of the Shares.
13. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in Section 10 hereof (collectively
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record keeping.
14. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
EXHIBIT NO. 99.15(i)
FORM OF
MFS SERIES TRUST I
MFS EQUITY INCOME FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be
designated "Class B" of the MFS EQUITY INCOME FUND (the "Fund"), a series of MFS
Series Trust I (the "Trust") a Massachusetts business trust, dated this 2nd day
January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940, as amended
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial interest
(without par value) of the Fund designated Class B Shares (the "Shares") in
accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") (in a form approved by the Board of Trustees of the Trust in a
manner specified in such Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the
services of firms or individuals to act as dealers (the "Dealers") of the Shares
in connection with the offering of Shares, and (b) the Distributor may make
payments for such services to the Dealers out of the fee paid to the Distributor
hereunder, any deferred sales charges imposed by the Distributor in connection
with the repurchase of Shares, its profits or any other source available to it;
and
WHEREAS, the Trust recognizes and agrees that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Shares by the Fund,
and the Distributor may retain (or receive from the Fund, as the case may be)
all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund
should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class B
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for
the Fund as a plan for distribution relating to the Shares in accordance with
Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall provide
facilities, personnel and a program with respect to the offering and sale of
Shares. Among other things, the Distributor shall be responsible for commissions
payable to Dealers, all expenses of printing (excluding typesetting) and
distributing prospectuses to prospective shareholders and providing such other
related services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the extent
specified in the Distribution Agreement in providing the services described in
paragraph 1, including without limitation, the compensation of personnel
necessary to provide such services and all costs of travel, office expenses
(including rent and overhead), equipment, Printing delivery and Mailing costs.
3. It is understood that the Distributor may impose certain deferred sales
charges in connection with the repurchase of Shares by the Fund and the
Distributor may retain (or receive from the Fund, as the case may be) all such
deferred sales charges. As additional consideration for all services performed
and expenses incurred in the performance of its obligations under the
Distribution Agreement, the Fund shall pay the Distributor a distribution fee
periodically at a rate of 0.75% per annum of the Fund's average daily net assets
attributable to the shares.
4. As partial consideration for the personal services and/or account maintenance
services performed by each Dealer in the performance of its obligations under
its dealer agreement with the Distributor, the Fund shall pay each Dealer a
service fee periodically at a rate not to exceed 0.25% per annum of the portion
of the average daily net assets of the Fund that is represented by Shares that
are owned by investors for whom such Dealer is the holder or dealer of record.
That portion of the Fund's average daily net assets on which the fees payable
under this paragraph 4 hereof are calculated may be subject to certain minimum
amount requirements as may be determined, and additional or different dealer
qualification standards that may be established from time to time, by the
Distributor. The Distributor shall be entitled to be paid any fees payable under
this paragraph 4 hereof with respect to Shares for which no Dealer of record
exists or qualification standards have not been met as partial consideration for
personal services and/or account maintenance services provided by the
Distributor to the Shares. The service fee payable pursuant to this paragraph 4
may from time to time be paid by the Fund to the Distributor and the Distributor
will then pay these fees on behalf of the Fund.
5. The Fund understands that agreements between the Distributor and the Dealers
may provide for payment of commissions to Dealers in connection with the sales
of Shares and may provide for a portion (which may be all or substantially all)
of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
<PAGE>
6. The Fund shall pay all fees and expenses of any independent auditor, legal
counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the responsibility for
and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at least a
"majority of the outstanding voting securities" of the Shares, and (b) approval
by a vote of the Board of Trustees and a vote of a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at a
meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees; provided that
this Plan may not be amended to increase materially the amount of permitted
expenses hereunder without the approval of holders of a "majority of the
outstanding voting securities" of the Shares and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of the Shares.
11. The Fund and the Distributor shall provide the Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Plan and the purposes for which such expenditures
were made.
12. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
<PAGE>
13. For the purposes of this Plan, the terms "interested persons", "majority of
the outstanding voting securities" and "specifically approved at least annually"
are used as defined in the 1940 Act. In addition, for purposes of determining
the fees payable to the Distributor hereunder, the value of the Fund's net
assets shall be computed in the manner specified in the Fund's then current
prospectus and statement of additional information for computation of the net
asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 11 hereof (collectively, the
"Records") for a period of six years from the end of the fiscal year in which
such Record was made and each such record shall be kept in an easily accessible
place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS RESEARCH GROWTH AND INCOME FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be
designated "Class B" of the MFS RESEARCH GROWTH AND INCOME FUND (the "Fund"), a
series of MFS Series Trust I (the "Trust") a Massachusetts business trust, dated
this 2nd day January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940, as amended
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial interest
(without par value) of the Fund designated Class B Shares (the "Shares") in
accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") (in a form approved by the Board of Trustees of the Trust in a
manner specified in such Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the
services of firms or individuals to act as dealers (the "Dealers") of the Shares
in connection with the offering of Shares, and (b) the Distributor may make
payments for such services to the Dealers out of the fee paid to the Distributor
hereunder, any deferred sales charges imposed by the Distributor in connection
with the repurchase of Shares, its profits or any other source available to it;
and
WHEREAS, the Trust recognizes and agrees that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Shares by the Fund,
and the Distributor may retain (or receive from the Fund, as the case may be)
all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund
should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class B
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for
the Fund as a plan for distribution relating to the Shares in accordance with
Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall provide
facilities, personnel and a program with respect to the offering and sale of
Shares. Among other things, the Distributor shall be responsible for commissions
payable to Dealers, all expenses of printing (excluding typesetting) and
distributing prospectuses to prospective shareholders and providing such other
related services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the extent
specified in the Distribution Agreement in providing the services described in
paragraph 1, including without limitation, the compensation of personnel
necessary to provide such services and all costs of travel, office expenses
(including rent and overhead), equipment, Printing delivery and Mailing costs.
3. It is understood that the Distributor may impose certain deferred sales
charges in connection with the repurchase of Shares by the Fund and the
Distributor may retain (or receive from the Fund, as the case may be) all such
deferred sales charges. As additional consideration for all services performed
and expenses incurred in the performance of its obligations under the
Distribution Agreement, the Fund shall pay the Distributor a distribution fee
periodically at a rate of 0.75% per annum of the Fund's average daily net assets
attributable to the shares.
4. As partial consideration for the personal services and/or account maintenance
services performed by each Dealer in the performance of its obligations under
its dealer agreement with the Distributor, the Fund shall pay each Dealer a
service fee periodically at a rate not to exceed 0.25% per annum of the portion
of the average daily net assets of the Fund that is represented by Shares that
are owned by investors for whom such Dealer is the holder or dealer of record.
That portion of the Fund's average daily net assets on which the fees payable
under this paragraph 4 hereof are calculated may be subject to certain minimum
amount requirements as may be determined, and additional or different dealer
qualification standards that may be established from time to time, by the
Distributor. The Distributor shall be entitled to be paid any fees payable under
this paragraph 4 hereof with respect to Shares for which no Dealer of record
exists or qualification standards have not been met as partial consideration for
personal services and/or account maintenance services provided by the
Distributor to the Shares. The service fee payable pursuant to this paragraph 4
may from time to time be paid by the Fund to the Distributor and the Distributor
will then pay these fees on behalf of the Fund.
5. The Fund understands that agreements between the Distributor and the Dealers
may provide for payment of commissions to Dealers in connection with the sales
of Shares and may provide for a portion (which may be all or substantially all)
of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
<PAGE>
6. The Fund shall pay all fees and expenses of any independent auditor, legal
counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the responsibility for
and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at least a
"majority of the outstanding voting securities" of the Shares, and (b) approval
by a vote of the Board of Trustees and a vote of a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at a
meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees; provided that
this Plan may not be amended to increase materially the amount of permitted
expenses hereunder without the approval of holders of a "majority of the
outstanding voting securities" of the Shares and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of the Shares.
11. The Fund and the Distributor shall provide the Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Plan and the purposes for which such expenditures
were made.
12. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
<PAGE>
13. For the purposes of this Plan, the terms "interested persons", "majority of
the outstanding voting securities" and "specifically approved at least annually"
are used as defined in the 1940 Act. In addition, for purposes of determining
the fees payable to the Distributor hereunder, the value of the Fund's net
assets shall be computed in the manner specified in the Fund's then current
prospectus and statement of additional information for computation of the net
asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 11 hereof (collectively, the
"Records") for a period of six years from the end of the fiscal year in which
such Record was made and each such record shall be kept in an easily accessible
place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS CORE GROWTH FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be
designated "Class B" of the MFS CORE GROWTH FUND (the "Fund"), a series of MFS
Series Trust I (the "Trust") a Massachusetts business trust, dated this 2nd day
January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940, as amended
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial interest
(without par value) of the Fund designated Class B Shares (the "Shares") in
accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") (in a form approved by the Board of Trustees of the Trust in a
manner specified in such Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the
services of firms or individuals to act as dealers (the "Dealers") of the Shares
in connection with the offering of Shares, and (b) the Distributor may make
payments for such services to the Dealers out of the fee paid to the Distributor
hereunder, any deferred sales charges imposed by the Distributor in connection
with the repurchase of Shares, its profits or any other source available to it;
and
WHEREAS, the Trust recognizes and agrees that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Shares by the Fund,
and the Distributor may retain (or receive from the Fund, as the case may be)
all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund
should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class B
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for
the Fund as a plan for distribution relating to the Shares in accordance with
Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall provide
facilities, personnel and a program with respect to the offering and sale of
Shares. Among other things, the Distributor shall be responsible for commissions
payable to Dealers, all expenses of printing (excluding typesetting) and
distributing prospectuses to prospective shareholders and providing such other
related services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the extent
specified in the Distribution Agreement in providing the services described in
paragraph 1, including without limitation, the compensation of personnel
necessary to provide such services and all costs of travel, office expenses
(including rent and overhead), equipment, Printing delivery and Mailing costs.
3. It is understood that the Distributor may impose certain deferred sales
charges in connection with the repurchase of Shares by the Fund and the
Distributor may retain (or receive from the Fund, as the case may be) all such
deferred sales charges. As additional consideration for all services performed
and expenses incurred in the performance of its obligations under the
Distribution Agreement, the Fund shall pay the Distributor a distribution fee
periodically at a rate of 0.75% per annum of the Fund's average daily net assets
attributable to the shares.
4. As partial consideration for the personal services and/or account maintenance
services performed by each Dealer in the performance of its obligations under
its dealer agreement with the Distributor, the Fund shall pay each Dealer a
service fee periodically at a rate not to exceed 0.25% per annum of the portion
of the average daily net assets of the Fund that is represented by Shares that
are owned by investors for whom such Dealer is the holder or dealer of record.
That portion of the Fund's average daily net assets on which the fees payable
under this paragraph 4 hereof are calculated may be subject to certain minimum
amount requirements as may be determined, and additional or different dealer
qualification standards that may be established from time to time, by the
Distributor. The Distributor shall be entitled to be paid any fees payable under
this paragraph 4 hereof with respect to Shares for which no Dealer of record
exists or qualification standards have not been met as partial consideration for
personal services and/or account maintenance services provided by the
Distributor to the Shares. The service fee payable pursuant to this paragraph 4
may from time to time be paid by the Fund to the Distributor and the Distributor
will then pay these fees on behalf of the Fund.
5. The Fund understands that agreements between the Distributor and the Dealers
may provide for payment of commissions to Dealers in connection with the sales
of Shares and may provide for a portion (which may be all or substantially all)
of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
<PAGE>
6. The Fund shall pay all fees and expenses of any independent auditor, legal
counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the responsibility for
and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at least a
"majority of the outstanding voting securities" of the Shares, and (b) approval
by a vote of the Board of Trustees and a vote of a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at a
meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees; provided that
this Plan may not be amended to increase materially the amount of permitted
expenses hereunder without the approval of holders of a "majority of the
outstanding voting securities" of the Shares and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of the Shares.
11. The Fund and the Distributor shall provide the Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Plan and the purposes for which such expenditures
were made.
12. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
<PAGE>
13. For the purposes of this Plan, the terms "interested persons", "majority of
the outstanding voting securities" and "specifically approved at least annually"
are used as defined in the 1940 Act. In addition, for purposes of determining
the fees payable to the Distributor hereunder, the value of the Fund's net
assets shall be computed in the manner specified in the Fund's then current
prospectus and statement of additional information for computation of the net
asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 11 hereof (collectively, the
"Records") for a period of six years from the end of the fiscal year in which
such Record was made and each such record shall be kept in an easily accessible
place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS AGGRESSIVE GROWTH FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be
designated "Class B" of the MFS AGGRESSIVE GROWTH FUND (the "Fund"), a series of
MFS Series Trust I (the "Trust") a Massachusetts business trust, dated this 2nd
day January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940, as amended
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial interest
(without par value) of the Fund designated Class B Shares (the "Shares") in
accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") (in a form approved by the Board of Trustees of the Trust in a
manner specified in such Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the
services of firms or individuals to act as dealers (the "Dealers") of the Shares
in connection with the offering of Shares, and (b) the Distributor may make
payments for such services to the Dealers out of the fee paid to the Distributor
hereunder, any deferred sales charges imposed by the Distributor in connection
with the repurchase of Shares, its profits or any other source available to it;
and
WHEREAS, the Trust recognizes and agrees that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Shares by the Fund,
and the Distributor may retain (or receive from the Fund, as the case may be)
all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund
should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class B
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for
the Fund as a plan for distribution relating to the Shares in accordance with
Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall provide
facilities, personnel and a program with respect to the offering and sale of
Shares. Among other things, the Distributor shall be responsible for commissions
payable to Dealers, all expenses of printing (excluding typesetting) and
distributing prospectuses to prospective shareholders and providing such other
related services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the extent
specified in the Distribution Agreement in providing the services described in
paragraph 1, including without limitation, the compensation of personnel
necessary to provide such services and all costs of travel, office expenses
(including rent and overhead), equipment, Printing delivery and Mailing costs.
3. It is understood that the Distributor may impose certain deferred sales
charges in connection with the repurchase of Shares by the Fund and the
Distributor may retain (or receive from the Fund, as the case may be) all such
deferred sales charges. As additional consideration for all services performed
and expenses incurred in the performance of its obligations under the
Distribution Agreement, the Fund shall pay the Distributor a distribution fee
periodically at a rate of 0.75% per annum of the Fund's average daily net assets
attributable to the shares.
4. As partial consideration for the personal services and/or account maintenance
services performed by each Dealer in the performance of its obligations under
its dealer agreement with the Distributor, the Fund shall pay each Dealer a
service fee periodically at a rate not to exceed 0.25% per annum of the portion
of the average daily net assets of the Fund that is represented by Shares that
are owned by investors for whom such Dealer is the holder or dealer of record.
That portion of the Fund's average daily net assets on which the fees payable
under this paragraph 4 hereof are calculated may be subject to certain minimum
amount requirements as may be determined, and additional or different dealer
qualification standards that may be established from time to time, by the
Distributor. The Distributor shall be entitled to be paid any fees payable under
this paragraph 4 hereof with respect to Shares for which no Dealer of record
exists or qualification standards have not been met as partial consideration for
personal services and/or account maintenance services provided by the
Distributor to the Shares. The service fee payable pursuant to this paragraph 4
may from time to time be paid by the Fund to the Distributor and the Distributor
will then pay these fees on behalf of the Fund.
5. The Fund understands that agreements between the Distributor and the Dealers
may provide for payment of commissions to Dealers in connection with the sales
of Shares and may provide for a portion (which may be all or substantially all)
of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
<PAGE>
6. The Fund shall pay all fees and expenses of any independent auditor, legal
counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the responsibility for
and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at least a
"majority of the outstanding voting securities" of the Shares, and (b) approval
by a vote of the Board of Trustees and a vote of a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at a
meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees; provided that
this Plan may not be amended to increase materially the amount of permitted
expenses hereunder without the approval of holders of a "majority of the
outstanding voting securities" of the Shares and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of the Shares.
11. The Fund and the Distributor shall provide the Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Plan and the purposes for which such expenditures
were made.
12. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
<PAGE>
13. For the purposes of this Plan, the terms "interested persons", "majority of
the outstanding voting securities" and "specifically approved at least annually"
are used as defined in the 1940 Act. In addition, for purposes of determining
the fees payable to the Distributor hereunder, the value of the Fund's net
assets shall be computed in the manner specified in the Fund's then current
prospectus and statement of additional information for computation of the net
asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 11 hereof (collectively, the
"Records") for a period of six years from the end of the fiscal year in which
such Record was made and each such record shall be kept in an easily accessible
place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS SPECIAL OPPORTUNITIES FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be
designated "Class B" of the MFS SPECIAL OPPORTUNITIES FUND (the "Fund"), a
series of MFS Series Trust I (the "Trust") a Massachusetts business trust, dated
this 2nd day January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940, as amended
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial interest
(without par value) of the Fund designated Class B Shares (the "Shares") in
accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the "Distribution
Agreement") (in a form approved by the Board of Trustees of the Trust in a
manner specified in such Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the
services of firms or individuals to act as dealers (the "Dealers") of the Shares
in connection with the offering of Shares, and (b) the Distributor may make
payments for such services to the Dealers out of the fee paid to the Distributor
hereunder, any deferred sales charges imposed by the Distributor in connection
with the repurchase of Shares, its profits or any other source available to it;
and
WHEREAS, the Trust recognizes and agrees that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Shares by the Fund,
and the Distributor may retain (or receive from the Fund, as the case may be)
all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund
should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class B
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for
the Fund as a plan for distribution relating to the Shares in accordance with
Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall provide
facilities, personnel and a program with respect to the offering and sale of
Shares. Among other things, the Distributor shall be responsible for commissions
payable to Dealers, all expenses of printing (excluding typesetting) and
distributing prospectuses to prospective shareholders and providing such other
related services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the extent
specified in the Distribution Agreement in providing the services described in
paragraph 1, including without limitation, the compensation of personnel
necessary to provide such services and all costs of travel, office expenses
(including rent and overhead), equipment, Printing delivery and Mailing costs.
3. It is understood that the Distributor may impose certain deferred sales
charges in connection with the repurchase of Shares by the Fund and the
Distributor may retain (or receive from the Fund, as the case may be) all such
deferred sales charges. As additional consideration for all services performed
and expenses incurred in the performance of its obligations under the
Distribution Agreement, the Fund shall pay the Distributor a distribution fee
periodically at a rate of 0.75% per annum of the Fund's average daily net assets
attributable to the shares.
4. As partial consideration for the personal services and/or account maintenance
services performed by each Dealer in the performance of its obligations under
its dealer agreement with the Distributor, the Fund shall pay each Dealer a
service fee periodically at a rate not to exceed 0.25% per annum of the portion
of the average daily net assets of the Fund that is represented by Shares that
are owned by investors for whom such Dealer is the holder or dealer of record.
That portion of the Fund's average daily net assets on which the fees payable
under this paragraph 4 hereof are calculated may be subject to certain minimum
amount requirements as may be determined, and additional or different dealer
qualification standards that may be established from time to time, by the
Distributor. The Distributor shall be entitled to be paid any fees payable under
this paragraph 4 hereof with respect to Shares for which no Dealer of record
exists or qualification standards have not been met as partial consideration for
personal services and/or account maintenance services provided by the
Distributor to the Shares. The service fee payable pursuant to this paragraph 4
may from time to time be paid by the Fund to the Distributor and the Distributor
will then pay these fees on behalf of the Fund.
5. The Fund understands that agreements between the Distributor and the Dealers
may provide for payment of commissions to Dealers in connection with the sales
of Shares and may provide for a portion (which may be all or substantially all)
of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
<PAGE>
6. The Fund shall pay all fees and expenses of any independent auditor, legal
counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the responsibility for
and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at least a
"majority of the outstanding voting securities" of the Shares, and (b) approval
by a vote of the Board of Trustees and a vote of a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at a
meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees; provided that
this Plan may not be amended to increase materially the amount of permitted
expenses hereunder without the approval of holders of a "majority of the
outstanding voting securities" of the Shares and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of the Shares.
11. The Fund and the Distributor shall provide the Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Plan and the purposes for which such expenditures
were made.
12. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
<PAGE>
13. For the purposes of this Plan, the terms "interested persons", "majority of
the outstanding voting securities" and "specifically approved at least annually"
are used as defined in the 1940 Act. In addition, for purposes of determining
the fees payable to the Distributor hereunder, the value of the Fund's net
assets shall be computed in the manner specified in the Fund's then current
prospectus and statement of additional information for computation of the net
asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 11 hereof (collectively, the
"Records") for a period of six years from the end of the fiscal year in which
such Record was made and each such record shall be kept in an easily accessible
place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<PAGE>
EXHIBIT NO. 99.15(j)
FORM OF
MFS SERIES TRUST I
MFS EQUITY INCOME FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest
to be designated "Class C" of MFS EQUITY INCOME FUND (the "Fund"), a series of
MFS Series Trust I (the "Trust") a Massachusetts business trust, dated this 2nd
day of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial
interest (without par value) of the Fund designated Class C Shares (the
"Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Distribution Plan (the "Plan") as a plan of distribution
pursuant to such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the
"Distribution Agreement") (in a form approved by the Board of Trustees of the
Trust in a manner specified in Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may
retain the services of firms or individuals to act as dealers (the "Dealers") of
the Shares in connection with the offering of Shares, and (b) the Distributor
may make payments for such services to the Dealers out of the fee paid to the
Distributor hereunder, any deferred sales charges imposed by the Distributor in
connection with the repurchase of Shares, its profits or any other source
available to it; and
WHEREAS, the Trust recognizes and agrees that the Distributor may (but
is not required to) impose certain deferred sales charges in connection with the
repurchase of Shares by the Fund, and the Distributor may retain (or receive
from the Fund, as the case may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Fund should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class C
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Fund as a plan for distribution relating to the Shares in
accordance with Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
commissions payable to Dealers (including any ongoing maintenance commissions),
all expenses of printing (excluding typesetting) and distributing prospectuses
to prospective shareholders and providing such other related services as are
reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the services
described in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. It is understood that the Distributor may (but is not required to)
impose certain deferred sales charges in connection with the repurchase of
Shares by the Fund and the Distributor may retain (or receive from the Fund, as
the case may be) all such deferred sales charges. As additional consideration
for all services performed and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.75% per annum of the
Fund's average daily net assets attributable to the Shares.
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its dealer agreement with the Distributor, the Fund shall pay
each Dealer a service fee periodically at a rate not to exceed 0.25% per annum
of the portion of the average daily net assets of the Fund that is represented
by Shares that are owned by investors for whom such Dealer is the holder or
dealer of record. That portion of the Fund's average daily net assets on which
the fees payable under this paragraph 4 hereof are calculated may be subject to
certain minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established, from time to
time by the Distributor. The Distributor shall be entitled to be paid any fees
payable under this paragraph 4 hereof with respect to Shares for which no Dealer
of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The service fee payable pursuant to this
paragraph 4 may from time to time be paid by the Fund to the Distributor and the
Distributor will then pay these fees to Dealers on behalf of the Fund or retain
them in accordance with this paragraph.
<PAGE>
5. The Fund understands that agreements between the Distributor and the
Dealers may provide for payment of commissions to Dealers in connection with the
sales of Shares and may provide for a portion (which may be all or substantially
all) of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
6. The Fund shall pay all fees and expenses of any independent auditor,
legal counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of Class C, and (b)
approval by a vote of the Board of Trustees and a vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in person
at a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees;
provided that this Plan may not be amended to increase materially the amount of
permitted expenses hereunder without the approval of holders of a "majority of
the outstanding voting securities" of Class C and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of Class C.
<PAGE>
11. The Fund and the Distributor shall provide the Board of Trustees,
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts expended under this Plan and the purposes for which such
expenditures were made.
12. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons",
"majority of the outstanding voting securities" and "specifically approved at
least annually" are used as defined in the 1940 Act. In addition, for purposes
of determining the fees payable to the Distributor hereunder, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
then-current prospectus and statement of additional information for computation
of the net asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof (collectively,
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such record shall be kept in an easily
accessible place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS RESEARCH GROWTH AND INCOME FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest
to be designated "Class C" of MFS RESEARCH GROWTH AND INCOME FUND (the "Fund"),
a series of MFS Series Trust I (the "Trust") a Massachusetts business trust,
dated this 2nd day of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial
interest (without par value) of the Fund designated Class C Shares (the
"Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Distribution Plan (the "Plan") as a plan of distribution
pursuant to such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the
"Distribution Agreement") (in a form approved by the Board of Trustees of the
Trust in a manner specified in Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may
retain the services of firms or individuals to act as dealers (the "Dealers") of
the Shares in connection with the offering of Shares, and (b) the Distributor
may make payments for such services to the Dealers out of the fee paid to the
Distributor hereunder, any deferred sales charges imposed by the Distributor in
connection with the repurchase of Shares, its profits or any other source
available to it; and
WHEREAS, the Trust recognizes and agrees that the Distributor may (but
is not required to) impose certain deferred sales charges in connection with the
repurchase of Shares by the Fund, and the Distributor may retain (or receive
from the Fund, as the case may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Fund should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class C
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Fund as a plan for distribution relating to the Shares in
accordance with Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
commissions payable to Dealers (including any ongoing maintenance commissions),
all expenses of printing (excluding typesetting) and distributing prospectuses
to prospective shareholders and providing such other related services as are
reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the services
described in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. It is understood that the Distributor may (but is not required to)
impose certain deferred sales charges in connection with the repurchase of
Shares by the Fund and the Distributor may retain (or receive from the Fund, as
the case may be) all such deferred sales charges. As additional consideration
for all services performed and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.75% per annum of the
Fund's average daily net assets attributable to the Shares.
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its dealer agreement with the Distributor, the Fund shall pay
each Dealer a service fee periodically at a rate not to exceed 0.25% per annum
of the portion of the average daily net assets of the Fund that is represented
by Shares that are owned by investors for whom such Dealer is the holder or
dealer of record. That portion of the Fund's average daily net assets on which
the fees payable under this paragraph 4 hereof are calculated may be subject to
certain minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established, from time to
time by the Distributor. The Distributor shall be entitled to be paid any fees
payable under this paragraph 4 hereof with respect to Shares for which no Dealer
of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The service fee payable pursuant to this
paragraph 4 may from time to time be paid by the Fund to the Distributor and the
Distributor will then pay these fees to Dealers on behalf of the Fund or retain
them in accordance with this paragraph.
<PAGE>
5. The Fund understands that agreements between the Distributor and the
Dealers may provide for payment of commissions to Dealers in connection with the
sales of Shares and may provide for a portion (which may be all or substantially
all) of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
6. The Fund shall pay all fees and expenses of any independent auditor,
legal counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of Class C, and (b)
approval by a vote of the Board of Trustees and a vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in person
at a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees;
provided that this Plan may not be amended to increase materially the amount of
permitted expenses hereunder without the approval of holders of a "majority of
the outstanding voting securities" of Class C and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of Class C.
<PAGE>
11. The Fund and the Distributor shall provide the Board of Trustees,
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts expended under this Plan and the purposes for which such
expenditures were made.
12. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons",
"majority of the outstanding voting securities" and "specifically approved at
least annually" are used as defined in the 1940 Act. In addition, for purposes
of determining the fees payable to the Distributor hereunder, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
then-current prospectus and statement of additional information for computation
of the net asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof (collectively,
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such record shall be kept in an easily
accessible place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS CORE GROWTH FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest
to be designated "Class C" of MFS CORE GROWTH FUND (the "Fund"), a series of MFS
Series Trust I (the "Trust") a Massachusetts business trust, dated this 2nd day
of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial
interest (without par value) of the Fund designated Class C Shares (the
"Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Distribution Plan (the "Plan") as a plan of distribution
pursuant to such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the
"Distribution Agreement") (in a form approved by the Board of Trustees of the
Trust in a manner specified in Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may
retain the services of firms or individuals to act as dealers (the "Dealers") of
the Shares in connection with the offering of Shares, and (b) the Distributor
may make payments for such services to the Dealers out of the fee paid to the
Distributor hereunder, any deferred sales charges imposed by the Distributor in
connection with the repurchase of Shares, its profits or any other source
available to it; and
WHEREAS, the Trust recognizes and agrees that the Distributor may (but
is not required to) impose certain deferred sales charges in connection with the
repurchase of Shares by the Fund, and the Distributor may retain (or receive
from the Fund, as the case may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Fund should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class C
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Fund as a plan for distribution relating to the Shares in
accordance with Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
commissions payable to Dealers (including any ongoing maintenance commissions),
all expenses of printing (excluding typesetting) and distributing prospectuses
to prospective shareholders and providing such other related services as are
reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the services
described in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. It is understood that the Distributor may (but is not required to)
impose certain deferred sales charges in connection with the repurchase of
Shares by the Fund and the Distributor may retain (or receive from the Fund, as
the case may be) all such deferred sales charges. As additional consideration
for all services performed and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.75% per annum of the
Fund's average daily net assets attributable to the Shares.
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its dealer agreement with the Distributor, the Fund shall pay
each Dealer a service fee periodically at a rate not to exceed 0.25% per annum
of the portion of the average daily net assets of the Fund that is represented
by Shares that are owned by investors for whom such Dealer is the holder or
dealer of record. That portion of the Fund's average daily net assets on which
the fees payable under this paragraph 4 hereof are calculated may be subject to
certain minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established, from time to
time by the Distributor. The Distributor shall be entitled to be paid any fees
payable under this paragraph 4 hereof with respect to Shares for which no Dealer
of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The service fee payable pursuant to this
paragraph 4 may from time to time be paid by the Fund to the Distributor and the
Distributor will then pay these fees to Dealers on behalf of the Fund or retain
them in accordance with this paragraph.
<PAGE>
5. The Fund understands that agreements between the Distributor and the
Dealers may provide for payment of commissions to Dealers in connection with the
sales of Shares and may provide for a portion (which may be all or substantially
all) of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
6. The Fund shall pay all fees and expenses of any independent auditor,
legal counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of Class C, and (b)
approval by a vote of the Board of Trustees and a vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in person
at a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees;
provided that this Plan may not be amended to increase materially the amount of
permitted expenses hereunder without the approval of holders of a "majority of
the outstanding voting securities" of Class C and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of Class C.
<PAGE>
11. The Fund and the Distributor shall provide the Board of Trustees,
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts expended under this Plan and the purposes for which such
expenditures were made.
12. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons",
"majority of the outstanding voting securities" and "specifically approved at
least annually" are used as defined in the 1940 Act. In addition, for purposes
of determining the fees payable to the Distributor hereunder, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
then-current prospectus and statement of additional information for computation
of the net asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof (collectively,
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such record shall be kept in an easily
accessible place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS AGGRESSIVE GROWTH FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest
to be designated "Class C" of MFS AGGRESSIVE GROWTH FUND (the "Fund"), a series
of MFS Series Trust I (the "Trust") a Massachusetts business trust, dated this
2nd day of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial
interest (without par value) of the Fund designated Class C Shares (the
"Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Distribution Plan (the "Plan") as a plan of distribution
pursuant to such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the
"Distribution Agreement") (in a form approved by the Board of Trustees of the
Trust in a manner specified in Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may
retain the services of firms or individuals to act as dealers (the "Dealers") of
the Shares in connection with the offering of Shares, and (b) the Distributor
may make payments for such services to the Dealers out of the fee paid to the
Distributor hereunder, any deferred sales charges imposed by the Distributor in
connection with the repurchase of Shares, its profits or any other source
available to it; and
WHEREAS, the Trust recognizes and agrees that the Distributor may (but
is not required to) impose certain deferred sales charges in connection with the
repurchase of Shares by the Fund, and the Distributor may retain (or receive
from the Fund, as the case may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Fund should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class C
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Fund as a plan for distribution relating to the Shares in
accordance with Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
commissions payable to Dealers (including any ongoing maintenance commissions),
all expenses of printing (excluding typesetting) and distributing prospectuses
to prospective shareholders and providing such other related services as are
reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the services
described in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. It is understood that the Distributor may (but is not required to)
impose certain deferred sales charges in connection with the repurchase of
Shares by the Fund and the Distributor may retain (or receive from the Fund, as
the case may be) all such deferred sales charges. As additional consideration
for all services performed and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.75% per annum of the
Fund's average daily net assets attributable to the Shares.
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its dealer agreement with the Distributor, the Fund shall pay
each Dealer a service fee periodically at a rate not to exceed 0.25% per annum
of the portion of the average daily net assets of the Fund that is represented
by Shares that are owned by investors for whom such Dealer is the holder or
dealer of record. That portion of the Fund's average daily net assets on which
the fees payable under this paragraph 4 hereof are calculated may be subject to
certain minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established, from time to
time by the Distributor. The Distributor shall be entitled to be paid any fees
payable under this paragraph 4 hereof with respect to Shares for which no Dealer
of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The service fee payable pursuant to this
paragraph 4 may from time to time be paid by the Fund to the Distributor and the
Distributor will then pay these fees to Dealers on behalf of the Fund or retain
them in accordance with this paragraph.
<PAGE>
5. The Fund understands that agreements between the Distributor and the
Dealers may provide for payment of commissions to Dealers in connection with the
sales of Shares and may provide for a portion (which may be all or substantially
all) of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
6. The Fund shall pay all fees and expenses of any independent auditor,
legal counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of Class C, and (b)
approval by a vote of the Board of Trustees and a vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in person
at a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees;
provided that this Plan may not be amended to increase materially the amount of
permitted expenses hereunder without the approval of holders of a "majority of
the outstanding voting securities" of Class C and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of Class C.
<PAGE>
11. The Fund and the Distributor shall provide the Board of Trustees,
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts expended under this Plan and the purposes for which such
expenditures were made.
12. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons",
"majority of the outstanding voting securities" and "specifically approved at
least annually" are used as defined in the 1940 Act. In addition, for purposes
of determining the fees payable to the Distributor hereunder, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
then-current prospectus and statement of additional information for computation
of the net asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof (collectively,
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such record shall be kept in an easily
accessible place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
<PAGE>
FORM OF
MFS SERIES TRUST I
MFS SPECIAL OPPORTUNITIES FUND
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest
to be designated "Class C" of MFS SPECIAL OPPORTUNITIES FUND (the "Fund"), a
series of MFS Series Trust I (the "Trust") a Massachusetts business trust, dated
this 2nd day of January, 1996.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the Trust intends to distribute the shares of beneficial
interest (without par value) of the Fund designated Class C Shares (the
"Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Distribution Plan (the "Plan") as a plan of distribution
pursuant to such Rule; and
WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Trust has entered into a distribution agreement (the
"Distribution Agreement") (in a form approved by the Board of Trustees of the
Trust in a manner specified in Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Trust recognizes and agrees that (a) the Distributor may
retain the services of firms or individuals to act as dealers (the "Dealers") of
the Shares in connection with the offering of Shares, and (b) the Distributor
may make payments for such services to the Dealers out of the fee paid to the
Distributor hereunder, any deferred sales charges imposed by the Distributor in
connection with the repurchase of Shares, its profits or any other source
available to it; and
WHEREAS, the Trust recognizes and agrees that the Distributor may (but
is not required to) impose certain deferred sales charges in connection with the
repurchase of Shares by the Fund, and the Distributor may retain (or receive
from the Fund, as the case may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Fund should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class C
shareholders;
<PAGE>
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Fund as a plan for distribution relating to the Shares in
accordance with Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for any
commissions payable to Dealers (including any ongoing maintenance commissions),
all expenses of printing (excluding typesetting) and distributing prospectuses
to prospective shareholders and providing such other related services as are
reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the services
described in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. It is understood that the Distributor may (but is not required to)
impose certain deferred sales charges in connection with the repurchase of
Shares by the Fund and the Distributor may retain (or receive from the Fund, as
the case may be) all such deferred sales charges. As additional consideration
for all services performed and expenses incurred in the performance of its
obligations under the Distribution Agreement, the Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.75% per annum of the
Fund's average daily net assets attributable to the Shares.
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its dealer agreement with the Distributor, the Fund shall pay
each Dealer a service fee periodically at a rate not to exceed 0.25% per annum
of the portion of the average daily net assets of the Fund that is represented
by Shares that are owned by investors for whom such Dealer is the holder or
dealer of record. That portion of the Fund's average daily net assets on which
the fees payable under this paragraph 4 hereof are calculated may be subject to
certain minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established, from time to
time by the Distributor. The Distributor shall be entitled to be paid any fees
payable under this paragraph 4 hereof with respect to Shares for which no Dealer
of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The service fee payable pursuant to this
paragraph 4 may from time to time be paid by the Fund to the Distributor and the
Distributor will then pay these fees to Dealers on behalf of the Fund or retain
them in accordance with this paragraph.
<PAGE>
5. The Fund understands that agreements between the Distributor and the
Dealers may provide for payment of commissions to Dealers in connection with the
sales of Shares and may provide for a portion (which may be all or substantially
all) of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
6. The Fund shall pay all fees and expenses of any independent auditor,
legal counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of Class C, and (b)
approval by a vote of the Board of Trustees and a vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in person
at a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees;
provided that this Plan may not be amended to increase materially the amount of
permitted expenses hereunder without the approval of holders of a "majority of
the outstanding voting securities" of Class C and may not be materially amended
in any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of Class C.
<PAGE>
11. The Fund and the Distributor shall provide the Board of Trustees,
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts expended under this Plan and the purposes for which such
expenditures were made.
12. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons",
"majority of the outstanding voting securities" and "specifically approved at
least annually" are used as defined in the 1940 Act. In addition, for purposes
of determining the fees payable to the Distributor hereunder, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
then-current prospectus and statement of additional information for computation
of the net asset value of the Shares of the Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof (collectively,
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such record shall be kept in an easily
accessible place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
