MFS SERIES TRUST I, 485APOS, 2000-03-15

MFS SERIES TRUST I
485APOS, 2000-03-15

Previous: CAROLINA FIRST CORP, S-4, 2000-03-15

Next: MANATRON INC, 10-Q, 2000-03-15

<PAGE>

As filed with the Securities and Exchange Commission on March 15, 2000

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. 35
AND
REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 37

MFS(R) 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

==============================================================================
<PAGE>

MFS(R) JAPAN EQUITY FUND
MFS(R) GLOBAL TELECOMMUNICATIONS FUND

SUPPLEMENT TO THE JUNE 1, 2000 PROSPECTUS

This Supplement describes the funds' class I shares, and it supplements certain
information in the funds' Prospectus dated June 1, 2000. The caption headings
used in this Supplement correspond with the caption headings used in the
Prospectus.

You may purchase class I shares only if you are an eligible institutional
investor, as described under the caption "Description of Share Classes" below.

1. EXPENSE SUMMARY

EXPENSE TABLE. The "Expense Table" describes the fees and expenses that
you may pay when you buy, redeem and hold shares of the fund. The table is
supplemented as follows:

CLASS I
-------

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price) ............................................ None
Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, whichever is less) ..... None

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

MFS GLOBAL
MFS JAPAN TELECOMMUNICATIONS
EQUITY FUND FUND
----------- ------------------
Management Fees ........................ 1.00% 1.00%
Distribution and Service (12b-1 Fees) .. 0.00% 0.00%
Other Expenses ......................... 1.41% 2.92%
------ -----
Total Annual Fund Operating Expenses ... 2.41% 3.92%
Fee Waiver and/or Expense
Reimbursement(1) ..................... (1.16%) (2.67%)
------ -----
Net Expenses(2) ...................... 1.25% 1.25%

- -----------
(1) MFS has contractually agreed, subject to reimbursement, to bear each funds'
expenses such that "Other Expenses" (after taking into account the expense
offset arrangement described below), do not exceed 0.25%. These contractual
arrangements will continue until at least June 1, 2001, unless changed with
the consent of the board of trustees which oversees the fund.

(2) Each fund has an expense offset arrangement which reduces the fund's
custodian fee based upon the amount of cash maintained by the fund with its
custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the fund's expenses). Any such fee reductions are not
reflected in the table. Had such fee reductions been taken into account,
"Net Expenses" would be lower.

EXAMPLE OF EXPENSES. These expenses are intended to help you compare the cost of
investing in a fund with the cost of investing in other mutual funds. The
"Example of Expenses" table is supplemented as follows:

The examples assume that:

o You invest $10,000 in the fund for the time periods indicated and you
redeem your shares at the end of the time periods;

o Your investment has a 5% return each year and dividends and other
distributions are reinvested; and

o The fund's operating expenses remain the same, except that the fund's
total operating expenses are assumed to be the fund's "Net Expenses" for
the first year, and the fund's "Total Annual Fund Operating Expenses" for
subsequent years (see table above.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

YEAR 1 YEAR 3
------ ------
MFS JAPAN EQUITY FUND
Class I Shares $127 $640

YEAR 1 YEAR 3
------ ------
MFS GLOBAL TELECOMMUNICATIONS FUND
Class I Shares $127 $950

2. DESCRIPTION OF SHARE CLASSES

The "Description of Share Classes" is supplemented as follows:

If you are an eligible institutional investor (as described below), you may
purchase class I shares at net asset value without an initial sales charge or
CDSC upon redemption. Class I shares do not have annual distribution and service
fees, and do not convert to any other class of shares of a fund.

The following eligible institutional investors may purchase class I shares:

o certain retirement plans established for the benefit of employees of MFS
and employees of MFS' affiliates; and

o any fund distributed by MFS, if the fund seeks to achieve its investment
objective by investing primarily in shares of a fund and other MFS funds.

In no event will the fund, MFS, MFD or any of their affiliates pay any sales
commissions or compensation to any third party in connection with the sale of
class I shares. The payment of any such sales commission or compensation would,
under the funds' policies, disqualify the purchaser as an eligible investor in
class I shares.

3. HOW TO PURCHASE, EXCHANGE AND REDEEM SHARES

The discussion of "How to Purchase, Exchange and Redeem Shares" is supplemented
as follows:

You may purchase, redeem and exchange class I shares only through your MFD
representative or by contacting MFSC (see the back cover of the Prospectus for
address and phone number). You may exchange your class I shares for class I
shares of another MFS fund (if you are eligible to purchase them) and for shares
of the MFS Money Market Fund at net asset value.

THE DATE OF THIS SUPPLEMENT IS JUNE 1, 2000
<PAGE>

[LOGO] M F S(R) PROSPECTUS
INVESTMENT MANAGEMENT JUNE 1, 2000
We invented the mutual fund(R)

MFS(R) JAPAN EQUITY FUND
CLASS A SHARES
MFS(R) GLOBAL CLASS B SHARES
TELECOMMUNICATIONS FUND CLASS C SHARES
- -------------------------------------------------------------------------------

This Prospectus describes two funds.

o MFS Japan Equity Fund, which seeks capital appreciation.

o MFS Global Telecommunications Fund, which seeks long-term growth of capital
consistent with the preservation of capital.

THIS PROSPECTUS DESCRIBES THREE CLASSES OF SHARES FOR EACH FUND. CURRENTLY,
ONLY CLASS A SHARES ARE AVAILABLE FOR PURCHASE. THESE CLASS A SHARES ARE ONLY
AVAILABLE FOR PURCHASE AT NET ASSET VALUE AND MAY ONLY BE SOLD TO RESIDENTS OF
MASSACHUSETTS WHO ARE:

o EMPLOYEES (OR CERTAIN RELATIVES OF EMPLOYEES) OF MASSACHUSETTS FINANCIAL
SERVICES COMPANY (REFERRED TO AS MFS OR THE ADVISER) AND ITS AFFILIATES; OR

o MEMBERS OF THE GOVERNING BOARDS OF THE VARIOUS FUNDS SPONSORED BY MFS.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THE FUNDS' SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS
YOU OTHERWISE IS COMMITTING A CRIME.
<PAGE>

- -----------------
TABLE OF CONTENTS
- -----------------

Page
I Risk Return Summary .................................. 1
1. MFS Japan Equity Fund ............................. 1
2. MFS Global Telecommunications Fund ................ 5
II Expense Summary ...................................... 10
III Certain Investment Strategies and Risks .............. 14
IV Management of the Funds .............................. 15
V Description of Share Classes ......................... 17
VI How to Purchase, Exchange and Redeem Shares .......... 21
VII Investor Services and Programs ....................... 25
VIII Other Information .................................... 27
Appendix A -- Investment Techniques and Practices .... A-1
<PAGE>

- ---------------------
I RISK RETURN SUMMARY
- ---------------------

1: MFS JAPAN EQUITY FUND

o INVESTMENT OBJECTIVE

The fund's investment objective is capital appreciation. The fund's
objective may be changed without shareholder approval.

PRINCIPAL INVESTMENT POLICIES

A company's principal activities are determined to be located in Japan
if the company (a) is organized under the laws of, and maintains a
principal office in Japan, (b) has its principal securities trading market
in Japan, (c) derives 50% of its total revenues from goods or services
performed in Japan, or (d) has 50% or more of its assets in Japan.

The fund focuses on Japanese companies of any size that its investment
adviser, Massachusetts Financial Services Company (MFS or the adviser),
believes have above average growth potential. The fund currently intends
to invest at least 80% of its assets in Japanese securities but may also
invest in securities of non-Japanese issuers. The fund's investments may
include securities traded in the over-the-counter markets.

In selecting securities for the fund, MFS looks particularly for
companies which demonstrate:

o a strong franchise, strong cash flows and a recurring revenue stream;

o a solid industry position, where there is

> potential for high profit margins and

> substantial barriers to new entry in the industry;

o a strong management team with a clearly defined strategy; and

o a catalyst that may accelerate growth.

MFS uses a bottom-up, as opposed to a top-down, investment style in
managing the equity-oriented funds (such as the fund) it advises. This
means that securities are selected based upon fundamental analysis (such
as an analysis of earnings, cash-flows, competitive position and
management's abilities) performed by the fund's portfolio manager and MFS'
large group of equity research analysts.

The fund is a non-diversified mutual fund. This means that the fund may
invest a relatively high percentage of its assets in a small number of
issuers.

o PRINCIPAL RISKS

The principal risks of investing in the fund and the circumstances
reasonably likely to cause the value of your investment in the fund to
decline are described below. The share price of the fund generally changes
daily based on market conditions and other factors. Please note that there
are many circumstances which could cause the value of your investment in
the fund to decline, and which could prevent the fund from achieving its
objective, that are not described here.

The principal risks of investing in the fund are:

o Japan Risk: Because the fund will invest a substantial amount of its
assets in issuers located in Japan, the primary factor affecting the
fund's performance will be the performance of the Japanese stock market.
The Japanese stock market's performance (and thus, the fund's performance)
will be closely tied to economic and political conditions in Japan. In
recent years, Japan has experienced weak economic growth and high
unemployment. The Japanese yen has experienced recent periods of
volatility, and for the past several years, Japan's banking industry has
been weakened by a significant amount of problem loans. Japan's political
regime has entered a period of change, and political uncertainty may add
to the risks of investing in Japan. Although MFS believes that the
Japanese market has a favorable investment climate, these political,
regulatory and economic factors may affect the fund's investments in
issuers in Japan.

o Geographic Concentration Risk: The fund invests a substantial amount of
its assets in issuers located in Japan and may also invest in a limited
number of other Asian countries. Because the fund concentrates its
investments in this manner, it assumes the risk that economic, political
and social conditions in those countries will have a significant impact on
its investment performance. The fund's concentration of assets in a single
country or region could hurt the fund's performance or may cause the fund
to be more volatile than a more geographically diversified equity fund.

o Market Risk: This is the risk that the price of a security held by the
fund will fall due to changing economic, political or market conditions or
disappointing earnings results.

o Company Risk: Prices of securities react to the economic condition of the
company that issued the security. The fund's equity investments in an
issuer may rise and fall based on the issuer's actual and anticipated
earnings, changes in management and the potential for takeovers and
acquisitions.

o Non-Diversified Status Risk: Because the fund may invest a higher
percentage of its assets in a small number of issuers, the fund is more
susceptible to any single economic, political or regulatory event
affecting those issuers than is a diversified fund.

o Foreign Securities Risk: Investments in foreign securities involve risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between the regulations to which U.S.
and foreign issuers and markets are subject:

> These risks may include the seizure by the government of company
assets, excessive taxation, withholding taxes on dividends and
interest, limitations on the use or transfer of portfolio assets, and
political or social instability.

> Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments.

> Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may
be less public information about their operations.

> Foreign markets may be less liquid and more volatile than U.S.
markets.

> Foreign securities often trade in currencies other than the U.S.
dollar, and the fund may directly hold foreign currencies and purchase
and sell foreign currencies through forward exchange contracts.
Changes in currency exchange rates will affect the fund's net asset
value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the strength
of the U.S. dollar relative to these other currencies may cause the
value of the fund to decline. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the
currency markets, causing a decline in value or liquidity in the
fund's foreign currency holdings. By entering into forward foreign
currency exchange contracts, the fund may be required to forego the
benefits of advantageous changes in exchange rates, and, in the case
of forward contracts entered into for the purpose of increasing
return, the fund may sustain losses which will reduce its gross
income. Forward foreign currency exchange contracts involve the risk
that the party with which the fund enters the contract may fail to
perform its obligations to the fund.

o Growth Companies Risk: This is the risk that the prices of growth company
securities held by the fund will fall to a greater extent than the overall
Japanese equity markets (e.g., as represented by the MSCI Japan Index) due
to changing economic, political or market conditions or disappointing
growth company earnings results.

o Effect of IPOs: The fund may participate in the initial public offering
("IPO") market, and a significant portion of the fund's returns may be
attributable to its investment in IPO's which may have a magnified
investment performance impact during the periods when the fund has a small
asset base. Like any past performance, there is no assurance that, as the
fund's assets grow, it will continue to experience substantially similar
performance by investment in IPOs.

o Emerging Markets Risk: Emerging markets are generally defined as countries
in the initial stages of their industrialization cycles with low per
capita income. Investments in emerging market securities involve all of
the risks of investments in foreign securities, and also have additional
risks:

> All of the risks of investing in foreign securities are heightened by
investing in emerging markets countries.

> The markets of emerging markets countries have been more volatile than
the markets of developed countries with more mature economies. These
markets often have provided higher rates of return, and significantly
greater risks, to investors.

o As with any mutual fund, you could lose money on your investment in the
fund.

An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

o BAR CHART AND PERFORMANCE TABLE

The bar chart and performance table are not included because the fund has
not had a full calendar year of investment operations.
<PAGE>

2: MFS GLOBAL TELECOMMUNICATIONS FUND

o INVESTMENT OBJECTIVE

The fund's investment objective is to achieve long-term growth of capital
consistent with the preservation of capital. The fund's objective may be
changed without shareholder approval.

o PRINCIPAL INVESTMENT POLICIES

The fund invests, under normal market conditions, at least 65% of its
total assets in common stocks and related securities, such as preferred
stock, convertible securities and depositary receipts, of
telecommunications companies from at least three countries, including the
U.S. Telecommunications companies are broadly defined to include companies
involved in the development, manufacturing, sale or servicing of
telecommunications equipment or services. For example, telecommunications
companies may include:

o issuers in the telephone, wireless communications (including cellular
telephone, microwave and satellite communications, paging and other
emerging wireless technologies), broadcasting, cable, computer, electronic
components, and networking industries;

o issuers involved in the creation and distribution of content including
media, entertainment, communications, software, publishing, information
systems and data generation companies; and

o issuers in other telecommunications related industries including companies
involved in the support and development of the telecommunications
infrastructure.

The fund may also invest in debt securities, including lower rated
securities (i.e. "junk bonds"), and short-term debt securities of
governments, supranational agencies and other corporations. The fund's
investments are not subject to any geographical limitation and may include
securities of issuers in emerging market countries. The fund's securities
may be traded in the over-the-counter markets.

The fund focuses on companies of any size that the fund's investment
adviser, MFS, believes have above average long-term growth potential or
are undervalued in the market relative to their long term potential
(securities with low price-to-book, price-to-sales and/or price-to-
earnings ratios). MFS looks particularly for companies which demonstrate:

o above average earnings growth over a sustained period of time;

o a strong franchise, strong cash flows and a recurring revenue stream;

o a solid industry position, where there is:

> potential for high profit margins; and

> substantial barriers to new entry in the industry;

o a strong management team with a clearly defined strategy; and

o a catalyst that may accelerate growth.

The fund is a non-diversified mutual fund. This means that the fund may
invest a relatively high percentage of its assets in a small number of
issuers. The fund may also invest a substantial amount of its assets (i.e.,
more than 25% of its assets) in issuers located in a single country or a
limited number of countries.

o PRINCIPAL RISKS

The principal risks of investing in the fund are:

o Telecommunications Industry Risk: The value of securities of
telecommunications companies is particularly vulnerable to rapidly
changing technology, relatively high risks of obsolescence caused by
technological advances, and intense competition. For these and other
reasons, securities of telecommunications companies may be more volatile
than the overall market. The telecommunications industry is subject to
certain pro- competitive governmental policies and government regulation
of rates of return and services that may be offered, and changes in these
regulations may adversely affect the value of the telecommunications
company securities held by the fund.

o Sector Concentration Risk: Because the fund will invest a substantial
amount of its assets in issuers located in a group of related industries
(market sector), it assumes the risk that financial, regulatory, business,
economic and political conditions affecting this market sector will have a
significant impact on its investment performance. The fund's investment
performance may also be more volatile because it concentrates its
investments in a single sector.

o Market Risk: This is the risk that the price of a security held by the
fund will fall due to changing economic, political or market conditions or
disappointing earnings results.

o Foreign Markets Risk: Investing in foreign securities involves risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between the regulations to which U.S.
and foreign issuers and markets are subject:

> Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments.

> Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may
be less public information about their operations.

> Foreign markets may be less liquid and more volatile than U.S.
markets.

> Foreign securities often trade in currencies other than the U.S.
dollar, and the fund may directly hold foreign currencies and purchase
and sell foreign currencies through forward exchange contracts.
Changes in currency exchange rates will affect the fund's net asset
value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the strength
of the U.S. dollar relative to these other currencies may cause the
value of the fund to decline. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the
currency markets, causing a decline in value or liquidity in the
fund's foreign currency holdings. By entering into forward foreign
currency exchange contracts, the fund may be required to forego the
benefits of advantageous changes in exchange rates and, in the case of
forward contracts entered into for the purpose of increasing return,
the fund may sustain losses which will reduce its gross income.
Forward foreign currency exchange contracts involve the risk that the
party with which the fund enters the contract may fail to perform its
obligations to the fund.

o Emerging Markets Risk: Emerging markets are generally defined as countries
in the initial stages of their industrialization cycles with low per
capita income. Investments in emerging markets securities involve all of
the risks of investments in foreign securities, and also have additional
risks:

> All of the risks of investing in foreign securities are heightened by
investing in emerging markets countries.

> The markets of emerging markets countries have been more volatile than
the markets of developed countries with more mature economies. These
markets often have provided significantly higher or lower rates of
return than developed markets, and significantly greater risks, to
investors.

o Geographic Concentration Risk: Because the fund may invest a substantial
amount of its assets in issuers located in a single country or a limited
number of countries, economic, political and social conditions in these
countries will have a significant impact on its investment performance.

o Growth Companies Risk: Prices of growth company securities held by the
fund may fall to a greater extent than the overall equity markets (e.g.,
as represented by the Standard and Poor's Composite 500 Index) due to
changing economic, political or market conditions or disappointing growth
company earnings results.

o Undervalued Securities Risk: The fund may invest in securities that are
undervalued based on its belief that the market value of these securities
will rise due to anticipated events and investor perceptions. If these
events do not occur or are delayed, or if investor perceptions about the
securities do not improve, the market price of these securities may not
rise as expected or may fall.

o Over-the-Counter Risk: Over-the-counter (OTC) transactions involve risks
in addition to those associated with transactions in securities traded on
exchanges. OTC-listed companies may have limited product lines, markets or
financial resources. Many OTC stocks and fixed income securities trade
less frequently and in smaller volume than exchange-listed securities. The
values of OTC stocks may be more volatile than exchange-listed stocks, and
the fund may experience difficulty in purchasing or selling these
securities at a fair price. OTC fixed income securities are subject to
liquidity risk. This means that they may be harder to purchase or sell at
a fair price. The inability to purchase or sell these fixed income
securities at a fair price could have a negative impact on the fund's
performance.

o Fixed Income Securities Risk:

> Interest Rate Risk: When interest rates rise, the prices of fixed
income securities in the fund's portfolio will generally fall.
Conversely, when interest rates fall, the prices of fixed income
securities in the fund's portfolio will generally rise.

> Maturity Risk: Interest rate risk will generally affect the price of a
fixed income security more if the security has a longer maturity.
Fixed income securities with longer maturities will therefore be more
volatile than other fixed income securities with shorter maturities.
Conversely, fixed income securities with shorter maturities will be
less volatile but generally provide lower returns than fixed income
securities with longer maturities. The average maturity of the fund's
fixed income investments will affect the volatility of the fund's
share price.

> Credit Risk: Credit risk is the risk that the issuer of a fixed income
security will not be able to pay principal and interest when due.
Rating agencies assign credit ratings to certain fixed income
securities to indicate their credit risk. The price of a fixed income
security will generally fall if the issuer defaults on its obligation
to pay principal or interest, the rating agencies downgrade the
issuer's credit rating or other news affects the market's perception
of the issuer's credit risk.

> Liquidity Risk: The fixed income securities purchased by the fund may
be traded in the over-the-counter market rather than on an organized
exchange and are subject to liquidity risk. This means that they may
be harder to purchase or sell at a fair price. The inability to
purchase or sell these fixed income securities at a fair price could
have a negative impact on the fund's performance.

o Lower Rated Bonds Risk:

> Higher Credit Risk: Junk bonds are subject to a substantially higher
degree of credit risk than higher rated bonds. During recessions, a
high percentage of issuers of junk bonds may default on payments of
principal and interest. The price of a junk bond may therefore
fluctuate drastically due to bad news about the issuer or the economy
in general.

> Higher Liquidity Risk: During recessions and periods of broad market
declines, junk bonds could become less liquid, meaning that they will
be harder to value or sell at a fair price.

o As with any mutual fund, you could lose money on your investment in the
fund.

An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

o BAR CHART AND PERFORMANCE TABLE

The bar chart and performance table are not included because the fund has
not had a full calendar year of investment operations.
<PAGE>

- ------------------
II EXPENSE SUMMARY
- ------------------

o EXPENSE TABLE

This table describes the fees and expenses that you may pay when you buy,
redeem and hold shares of each fund.

1: MFS JAPAN EQUITY FUND

SHAREHOLDER FEES (fees paid directly from your investment):
..........................................................................
CLASS A CLASS B CLASS C
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75% 0.00% 0.00%
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) See Below(1) 4.00% 1.00%

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund
assets):
..........................................................................

Management Fees .............................. 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees(2) ..... 0.35% 1.00% 1.00%
Other Expenses ............................... 1.41% 1.41% 1.41%
------ ------ ------
Total Annual Fund Operating Expenses ......... 2.76% 3.41% 3.41%
Fee Waiver and/or Expense Reimbursement (3) (1.51)% (1.16)% (1.16)%
----- ----- -----
Net Expenses(4) .......................... 1.25% 2.25% 2.25%

------
(1) An initial sales charge will not be deducted from your purchase if you
buy $1 million or more of class A shares, or if you are investing
through a retirement plan and your class A purchase meets certain
requirements. However, in this case, a contingent deferred sales
charge (referred to as a CDSC) of 1% may be deducted from your
redemption proceeds if you redeem your investment within 12 months.
(2) The fund adopted a distribution plan under Rule 12b-1 that permits it
to pay marketing and other fees to support the sale and distribution
of class A, B and C shares and the services provided to you by your
financial adviser (referred to as distribution and service fees).
(3) MFS has contractually agreed, subject to reimbursement, to bear the
fund's expenses such that "Other Expenses" (after taking into account
the expense offset arrangement described below), do not exceed 0.25%.
In addition, the fund's distributor, MFS Fund Distributors, Inc. has
contractually agreed to waive the fund's class A distribution and
service fees. These contractual arrangements will continue until at
least June 1, 2001, unless changed with the consent of the board of
trustees which oversees the fund.
(4) The fund has an expense offset arrangement which reduces the fund's
custodian fee based upon the amount of cash maintained by the fund
with its custodian and dividend disbursing agent. The fund may enter
into other similar arrangements and directed brokerage arrangements,
which would also have the effect of reducing the fund's expenses. Any
such fee reductions are not reflected in the table. Had these fee
reductions been taken into account, "Net Expenses" would be lower.
<PAGE>

o EXAMPLE OF EXPENSES

These examples are intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

The examples assume that:

o You invest $10,000 in the fund for the time periods indicated and you
redeem your shares at the end of the time periods;

o Your investment has a 5% return each year and dividends and other
distributions are reinvested; and

Although your actual costs may be higher or lower, under these assumptions
your costs would be:

SHARE CLASS YEAR 1 YEAR 3
---------------------------------------------------------------------------

Class A shares $695 $1,247
Class B shares(1)
Assuming redemption at end of period $628 $1,240
Assuming no redemption $228 $ 940
Class C shares
Assuming redemption at end of period $328 $ 940
Assuming no redemption $228 $ 940

(1) Class B shares convert to class A shares approximately eight years
after purchase; therefore, years nine and ten reflect class A expenses.
<PAGE>

2: MFS GLOBAL TELECOMMUNICATIONS FUND

SHAREHOLDER FEES (fees paid directly from your investment):
..........................................................................
CLASS A CLASS B CLASS C
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75% 0.00% 0.00%
Maximum Deferred Sales Charge (Load) (as a
percentage of original purchase price or
redemption proceeds, whichever is less) See Below(1) 4.00% 1.00%

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund
assets):
..........................................................................

Management Fees ............................. 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees(2) .... 0.35% 1.00% 1.00%
Other Expenses .............................. 2.92% 2.92% 2.92%
----- ----- -----
Total Annual Fund Operating Expenses ........ 4.27% 4.92% 4.92%
Fee Waiver and/or Expense Reimbursement (3) (3.02)% (2.67)% (2.67)%
----- ----- -----
Net Expenses(4) ......................... 1.25% 2.25% 2.25%

------
(1) An initial sales charge will not be deducted from your purchase if you
buy $1 million or more of class A shares, or if you are investing
through a retirement plan and your class A purchase meets certain
requirements. However, in this case, a contingent deferred sales
charge (referred to as a CDSC) of 1% may be deducted from your
redemption proceeds if you redeem your investment within 12 months.
(2) The fund adopted a distribution plan under Rule 12b-1 that permits it
to pay marketing and other fees to support the sale and distribution
of class A, B and C shares and the services provided to you by your
financial adviser (referred to as distribution and service fees).
(3) MFS has contractually agreed, subject to reimbursement, to bear the
fund's expenses such that "Other Expenses" (after taking into account
the expense offset arrangement described below), do not exceed 0.25%.
In addition, the fund's distributor, MFS Fund Distributors, Inc. has
contractually agreed to waive the fund's class A distribution and
service fees. These contractual arrangements will continue until at
least June 1, 2001, unless changed with the consent of the board of
trustees which oversees the fund.
(4) The fund has an expense offset arrangement which reduces the fund's
custodian fee based upon the amount of cash maintained by the fund
with its custodian and dividend disbursing agent. The fund may enter
into other similar arrangements and directed brokerage arrangements,
which would also have the effect of reducing the fund's expenses. Any
such fee reductions are not reflected in the table. Had such fee
reductions been taken into account, "Net Expenses" would be lower.
<PAGE>

o EXAMPLE OF EXPENSES

These examples are intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

The examples assume that:

o You invest $10,000 in the fund for the time periods indicated and you
redeem your shares at the end of the time periods;

o Your investment has a 5% return each year and dividends and other
distributions are reinvested; and

Although your actual costs may be higher or lower, under these assumptions
your costs would be:

SHARE CLASS YEAR 1 YEAR 3
---------------------------------------------------------------------------

Class A shares $695 $1,536
Class B shares(1)
Assuming redemption at end of period $628 $1,540
Assuming no redemption $228 $1,240
Class C shares
Assuming redemption at end of period $328 $1,240
Assuming no redemption $228 $1,240

(1) Class B shares convert to class A shares approximately eight years
after purchase; therefore, years nine and ten reflect class A expenses.
<PAGE>

- -------------------------------------------
III CERTAIN INVESTMENT STRATEGIES AND RISKS
- -------------------------------------------

o FURTHER INFORMATION ON INVESTMENT STRATEGIES AND RISKS

Each fund may invest in various types of securities and engage in various
investment techniques and practices which are not the principal focus of
the fund and therefore are not described in this Prospectus. The types of
securities and investment techniques and practices in which each fund may
engage, including the principal investment techniques and practices
described above, are identified in Appendix A to this Prospectus, and are
discussed, together with their risks, in the fund's Statement of
Additional Information (referred to as the SAI), which you may obtain by
contacting MFS Service Center, Inc. (see back cover for address and phone
number).

o TEMPORARY DEFENSIVE POLICIES

In addition, each fund may depart from its principal investment strategies
by temporarily investing for defensive purposes when adverse market,
economic or political conditions exist. While a fund invests defensively,
it may not be able to pursue its investment objectives. A fund's defensive
investment position may not be effective in protecting its value.

o ACTIVE OR FREQUENT TRADING

The funds may engage in active and frequent trading to achieve their
principal investment strategies. This may result in the realization and
distribution to shareholders of higher capital gains as compared to a fund
with less active trading policies, which would increase your tax
liability. Frequent trading also increases transaction costs, which could
detract from the fund's performance.
<PAGE>

- --------------------------
IV MANAGEMENT OF THE FUNDS
- --------------------------

o INVESTMENT ADVISER

Massachusetts Financial Services Company (referred to as MFS or the
adviser) is the fund's investment adviser. 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, Massachusetts Investors Trust. Net assets under the management of
the MFS organization were approximately $ billion as of April 30,
2000. MFS is located at 500 Boylston Street, Boston, Massachusetts 02116.

MFS provides investment management and related administrative services
and facilities to each fund (including portfolio management and trade
execution). For these services, MFS is entitled to an annual management
fee as set forth in the Expense Summary.

o PORTFOLIO MANAGERS

MFS JAPAN The fund is managed by a committee of
EQUITY FUND -- various equity research analysts employed
by the adviser under the general
oversight of David A. Antonelli, the
Director of International Research and a
Senior Vice President of the adviser. Mr.
Antonelli has been employed in the
investment management area of MFS since
1991, since 1997 as a portfolio manager.

MFS GLOBAL John E. Lathrop, a Vice President of the
TELECOMMUNICATIONS FUND -- adviser, is the portfolio manager of the
fund. Mr. Lathrop has been employed in
the investment management area of MFS
since 1994 and has been the fund's
portfolio manager since its inception.
Mr. Lathrop is a Chartered Financial
Analyst.
<PAGE>

o ADMINISTRATOR

MFS provides each fund with certain financial, legal, compliance,
shareholder communications and other administrative services. MFS is
reimbursed by each fund for a portion of the costs it incurs in providing
these services.

o DISTRIBUTOR

MFS Fund Distributors, Inc. (referred to as MFD), a wholly owned
subsidiary of MFS, is the distributor of shares of each fund.

o SHAREHOLDER SERVICING AGENT

MFS Service Center, Inc. (referred to as MFSC), a wholly owned subsidiary
of MFS, performs transfer agency and certain other services for each fund,
for which it receives compensation from each fund.
<PAGE>

- ------------------------------
V DESCRIPTION OF SHARE CLASSES
- ------------------------------

Each fund offers class A, B and C shares through this prospectus. Each
fund also offers an additional class of shares, class I shares,
exclusively to certain institutional investors. Class I shares are made
available through a separate prospectus supplement provided to
institutional investors eligible to purchase them. Class A and class I
shares are the only classes presently available for sale.

o SALES CHARGES

You may be subject to an initial sales charge when you purchase, or a CDSC
when you redeem, class A, B or C shares. These sales charges are described
below. In certain circumstances, these sales charges are waived. These
circumstances are described in the SAI. Special considerations concerning
the calculation of the CDSC that apply to each of these classes of shares
are described below under the heading "Calculation of CDSC."

If you purchase your fund shares through a financial adviser (such as a
broker or bank), the adviser may receive commissions or other concessions
which are paid from various sources, such as from the sales charges and
distribution and service fees, or from MFS or MFD. These commissions and
concessions are described in the SAI.

o CLASS A SHARES

You may purchase class A shares at net asset value plus an initial sales
charge (referred to as the offering price), but in some cases you may
purchase class A shares without an initial sales charge but subject to a
1% CDSC upon redemption within one year. Class A shares have annual
distribution and service fees up to a maximum of 0.35% of net assets
annually.

PURCHASES SUBJECT TO AN INITIAL SALES CHARGE. The amount of the initial
sales charge you pay when you buy class A shares differs depending upon
the amount you invest, as follows:

SALES CHARGE* AS PERCENTAGE OF:
-----------------------------
Offering Net Amount
Amount of Purchase Price Invested

Less than $50,000 5.75% 6.10%
$50,000 but less than $100,000 4.75% 4.99%
$100,000 but less than $250,000 4.00 4.17
$250,000 but less than $500,000 2.95 3.04
$500,000 but less than $1,000,000 2.20 2.25
$1,000,000 or more None** None**

------
* Because of rounding in the calculation of offering price, actual sales
charges you pay may be more or less than those calculated using these
percentages.
** A 1% CDSC will apply to such purchases, as discussed below.

PURCHASES SUBJECT TO A CDSC (BUT NOT AN INITIAL SALES CHARGE). You pay no
initial sales charge when you invest $1 million or more in class A shares.
However, a CDSC of 1% will be deducted from your redemption proceeds if
you redeem within 12 months of your purchase.

In addition, purchases made under the following four categories are not
subject to an initial sales charge; however, a CDSC of 1% will be deducted
from redemption proceeds if the redemption is made within 12 months of
purchase:

o Investments in class A shares by certain retirement plans subject to the
Employee Retirement Income Security Act of 1974, as amended (referred to
as ERISA), if, prior to July 1, 1996

> the plan had established an account with MFSC; and

> the sponsoring organization had demonstrated to the satisfaction of
MFD that either;

+ the employer had at least 25 employees; or

+ the total purchases by the retirement plan of class A shares of
the MFS Family of Funds (the MFS Funds) would be in the amount of
at least $250,000 within a reasonable period of time, as
determined by MFD in its sole discretion.

o Investments in class A shares by certain retirement plans subject to
ERISA, if

> the retirement plan and/or sponsoring organization participates in the
MFS Corporate Plan Services 401(k) Program or any similar
recordkeeping system made available by MFSC (referred to as the MFS
participant recordkeeping system);

> the plan establishes an account with MFSC on or after July 1, 1996;

> the total purchases by the retirement plan (or by multiple plans
maintained by the same plan sponsor) of class A shares of the MFS
Funds will be in the amount of at least $500,000 within a reasonable
period of time, as determined by MFD in its sole discretion; and

o Investments in class A shares by certain retirement plans subject to
ERISA, if

> the plan establishes an account with MFSC on or after July 1, 1996;
and

> the plan has, at the time of purchase, either alone or in aggregate
with other plans maintained by the same plan sponsor, a market value
of $500,000 or more invested in shares of any class or classes of the
MFS Funds.

THE RETIREMENT PLANS WILL QUALIFY UNDER THIS CATEGORY ONLY IF THE
PLANS OR THEIR SPONSORING ORGANIZATION INFORMS MFSC PRIOR TO THE
PURCHASES THAT THE PLANS HAVE A MARKET VALUE OF $500,000 OR MORE
INVESTED IN SHARES OF ANY CLASS OR CLASSES OF THE MFS FUNDS; MFSC HAS
NO OBLIGATION INDEPENDENTLY TO DETERMINE WHETHER SUCH PLANS QUALIFY
UNDER THIS CATEGORY; AND

o Investments in class A shares by certain retirement plans subject to
ERISA, if

> the plan established an account with MFSC between July 1, 1997 and
December 31, 1999;

> the plan records are maintained on a pooled basis by MFSC; and

> the sponsoring organization demonstrates to the satisfaction of MFD
that, at the time of purchase, the employer has at least 200 eligible
employees and the plan has aggregate assets of at least $2,000,000.

o CLASS B SHARES

You may purchase class B shares at net asset value without an initial
sales charge, but if you redeem your shares within the first six years you
may be subject to a CDSC (declining from 4.00% during the first year to 0%
after six years). Class B shares have annual distribution and service fees
up to a maximum of 1.00% of net assets annually.

The CDSC is imposed according to the following schedule:

CONTINGENT DEFERRED
YEAR OF REDEMPTION AFTER PURCHASE SALES CHARGE
----------------------------------------------------------------------------

First 4%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%

If you hold class B shares for approximately eight years, they will
convert to class A shares of the fund. All class B shares you purchased
through the reinvestment of dividends and distributions will be held in a
separate sub-account. Each time any class B shares in your account convert
to class A shares, a proportionate number of the class B shares in the
sub-account will also convert to class A shares.

o CLASS C SHARES

You may purchase class C shares at net asset value without an initial
sales charge, but if you redeem your shares within the first year you may
be subject to a CDSC of 1.00%. Class C shares have annual distribution and
service fees up to a maximum of 1.00% of net assets annually. Class C
shares do not convert to any other class of shares of the fund.

o CALCULATION OF CDSC

As discussed above, certain investments in class A, B and C shares will be
subject to a CDSC. Two different aging schedules apply to the calculation
of the CDSC:

o Purchases of class A shares made on any day during a calendar month will
age one month on the last day of the month, and each subsequent month.

o Purchases of class C shares, and purchases of class B shares on or after
January 1, 1993, made on any day during a calendar month will age one year
at the close of business on the last day of that month in the following
calendar year, and each subsequent year.

No CDSC is assessed on the value of your account represented by
appreciation or additional shares acquired through the automatic
reinvestment of dividends or capital gain distributions. Therefore, when
you redeem your shares, only the value of the shares in excess of these
amounts (i.e., your direct investment) is subject to a CDSC.

The CDSC will be applied in a manner that results in the CDSC being
imposed at the lowest possible rate, which means that the CDSC will be
applied against the lesser of your direct investment or the total cost of
your shares. The applicability of a CDSC will not be affected by exchanges
or transfers of registration, except as described in the SAI.

o DISTRIBUTION AND SERVICE FEES

Each fund has adopted a plan under Rule 12b-1 that permits it to pay
marketing and other fees to support the sale and distribution of class A,
B and C shares and the services provided to you by your financial adviser.
These annual distribution and service fees may equal up to 0.35% for class
A shares (a 0.10% distribution fee and a 0.25% service fee) and 1.00% for
each of class B and class C shares (a 0.75% distribution fee and a 0.25%
service fee), and are paid out of the assets of these classes. Over time,
these fees will increase the cost of your shares and may cost you more
than paying other types of sales charges. MFD has waived its right to
receive the class A service fee and the class A distribution fee as
described under "Expense Summary."
<PAGE>

- ----------------------------------------------
VI HOW TO PURCHASE, EXCHANGE AND REDEEM SHARES
- ----------------------------------------------

You may purchase, exchange and redeem class A, B and C shares of each fund
in the manner described below. In addition, you may be eligible to
participate in certain investor services and programs to purchase,
exchange and redeem these classes of shares, which are described in the
next section under the caption "Investor Services and Programs."

o HOW TO PURCHASE SHARES

INITIAL PURCHASE. You can establish an account by having your financial
adviser process your purchase. The minimum initial investment is $1,000.
However, in the following circumstances the minimum initial investment is
only $50 per account:

o if you establish an automatic investment plan;

o if you establish an automatic exchange plan; or

o if you establish an account under either:

> tax-deferred retirement programs (other than IRAs) where investments
are made by means of group remittal statements; or

> employer sponsored investment programs.

The minimum initial investment for IRAs is $250 per account. The maximum
investment in class C shares is $1,000,000 per transaction. Class C shares
are not available for purchase by any retirement plan qualified under
Section 401(a) or 403(b) of the Internal Revenue Code if the plan or its
sponsor subscribes to certain recordkeeping services made available by
MFSC, such as the MFS Corporate Plan Services 401(k) Plan.

ADDING TO YOUR ACCOUNT. There are several easy ways you can make
additional investments of at least $50 to your account:

o send a check with the returnable portion of your statement;

o ask your financial adviser to purchase shares on your behalf;

o wire additional investments through your bank (call MFSC first for
instructions); or

o authorize transfers by phone between your bank account and your MFS
account (the maximum purchase amount for this method is $100,000). You
must elect this privilege on your account application if you wish to use
it.

o HOW TO EXCHANGE SHARES

You can exchange your shares for shares of the same class of certain other
MFS funds at net asset value by having your financial adviser process your
exchange request or by contacting MFSC directly. The minimum exchange
amount is generally $1,000 ($50 for exchanges made under the automatic
exchange plan). Shares otherwise subject to a CDSC will not be charged a
CDSC in an exchange. However, when you redeem the shares acquired through
the exchange, the shares you redeem may be subject to a CDSC, depending
upon when you originally purchased the shares you exchanged. For purposes
of computing the CDSC, the length of time you have owned your shares will
be measured from the date of original purchase and will not be affected by
any exchange.

Sales charges may apply to exchanges made from the MFS money market
funds. Certain qualified retirement plans may make exchanges between the
MFS funds and the MFS Fixed Fund, a bank collective investment fund, and
sales charges may also apply to these exchanges. Call MFSC for information
concerning these sales charges.

Exchanges may be subject to certain limitations and are subject to the
MFS funds' policies concerning excessive trading practices, which are
policies designed to protect the funds and their shareholders from the
harmful effect of frequent exchanges. These limitations and policies are
described below under the captions "Right to Reject or Restrict Purchase
and Exchange Orders" and "Excessive Trading Practices." You should read
the prospectus of the MFS fund into which you are exchanging and consider
the differences in objectives, policies and rules before making any
exchange.

o HOW TO REDEEM SHARES

You may redeem your shares either by having your financial adviser process
your redemption or by contacting MFSC directly. The fund sends out your
redemption proceeds within seven days after your request is received in
good order. "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. In
addition, you need to have your signature guaranteed and/or submit
additional documentation to redeem your shares. See "Signature Guarantee/
Additional Documentation" below, or contact MFSC for details (see back
cover page for address and phone number).

Under unusual circumstances such as when the New York Stock Exchange is
closed, trading on the Exchange is restricted or if there is an emergency,
the fund may suspend redemptions or postpone payment. If you purchased the
shares you are redeeming by check, the fund may delay the payment of the
redemption proceeds until the check has cleared, which may take up to 15
days from the purchase date.

REDEEMING DIRECTLY THROUGH MFSC

o BY TELEPHONE. You can call MFSC to have shares redeemed from your account
and the proceeds wired or mailed (depending on the amount redeemed)
directly to a pre- designated bank account. MFSC will request personal or
other information from you and will generally record the calls. MFSC will
be responsible for losses that result from unauthorized telephone
transactions if it does not follow reasonable procedures designed to
verify your identity. You must elect this privilege on your account
application if you wish to use it.

o BY MAIL. To redeem shares by mail, you can send a letter to MFSC with the
name of your fund, your account number, and the number of shares or dollar
amount to be sold.

REDEEMING THROUGH YOUR FINANCIAL ADVISER. You can call your financial
adviser to process a redemption on your behalf. Your financial adviser
will be responsible for furnishing all necessary documents to MFSC and may
charge you for this service.

SIGNATURE GUARANTEE/ADDITIONAL DOCUMENTATION. In order to protect against
fraud, each fund requires that your signature be guaranteed in order to
redeem your shares. Your signature may be guaranteed by an eligible bank,
broker, dealer, credit union, national securities exchange, registered
securities association, clearing agency, or savings association. MFSC may
require additional documentation for certain types of registrations and
transactions. Signature guarantees and this additional documentation shall
be accepted in accordance with policies established by MFSC, and MFSC may
make certain de minimis exceptions to these requirements.

o OTHER CONSIDERATIONS

RIGHT TO REJECT OR RESTRICT PURCHASE AND EXCHANGE ORDERS. Purchases and
exchanges should be made for investment purposes only. The MFS Funds each
reserve the right to reject or restrict any specific purchase or exchange
request. Because an exchange request involves both a request to redeem
shares of one fund and to purchase shares of another fund, the MFS Funds
consider the underlying redemption and purchase requests conditioned upon
the acceptance of each of these underlying requests. Therefore, in the
event that the MFS Funds reject an exchange request, neither the
redemption nor the purchase side of the exchange will be processed. When a
fund determines that the level of exchanges on any day may be harmful to
its remaining shareholders, the fund may delay the payment of exchange
proceeds for up to seven days to permit cash to be raised through the
orderly liquidation of its portfolio securities to pay the redemption
proceeds. In this case, the purchase side of the exchange will be delayed
until the exchange proceeds are paid by the redeeming fund.

EXCESSIVE TRADING PRACTICES. The MFS Funds do not permit market-timing or
other excessive trading practices. Excessive, short-term (market-timing)
trading practices may disrupt portfolio management strategies and harm
fund performance. As noted above, the MFS Funds reserve the right to
reject or restrict any purchase order (including exchanges) from any
investor. To minimize harm to the MFS Funds and their shareholders, the
MFS Funds will exercise these rights if an investor has a history of
excessive trading or if an investor's trading, in the judgment of the MFS
Funds, has been or may be disruptive to a fund. In making this judgment,
the MFS Funds may consider trading done in multiple accounts under common
ownership or control.

REINSTATEMENT PRIVILEGE. After you have redeemed shares, you have a one-
time right to reinvest the proceeds within 90 days of the redemption at
the current net asset value (without an initial sales charge). If the
redemption involved a CDSC, your account will be credited with the
appropriate amount of the CDSC paid; however, your new shares will be
subject to a CDSC which will be determined from the date you originally
purchased the shares redeemed.

IN-KIND DISTRIBUTIONS. The MFS funds have reserved the right to pay
redemption proceeds by a distribution in-kind of portfolio securities
(rather than cash). In the event that a fund makes an in-kind
distribution, you could incur the brokerage and transaction charges when
converting the securities to cash. None of the funds expects to make in-
kind distributions, and if a fund does, it will pay, during any 90-day
period, your redemption proceeds in cash up to either $250,000 or 1% of
the fund's net assets, whichever is less.

INVOLUNTARY REDEMPTIONS/SMALL ACCOUNTS. Because it is costly to maintain
small accounts, the MFS funds have generally reserved the right to
automatically redeem shares and close your account when it contains less
than $500 due to your redemptions or exchanges. Before making this
automatic redemption, you will be notified and given 60 days to make
additional investments to avoid having your shares redeemed.
<PAGE>

- ----------------------------------
VII INVESTOR SERVICES AND PROGRAMS
- ----------------------------------

As a shareholder of a fund, you have available to you a number of services
and investment programs. Some of these services and programs may not be
available to you if your shares are held in the name of your financial
adviser or if your investment in a fund is made through a retirement plan.

o DISTRIBUTION OPTIONS

The following distribution options are generally available to all accounts
and you may change your distribution option as often as you desire by
notifying MFSC:

o Dividend and capital gain distributions reinvested in additional shares
(this option will be assigned if no other option is specified);

o Dividend distributions in cash; capital gain distributions reinvested in
additional shares; or

o Dividend 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 as of the close of business on the record date. Distributions in
amounts less than $10 will automatically be reinvested in additional
shares of the fund. If you have elected to receive distributions in cash,
and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from MFSC with
regard to uncashed distribution checks, your distribution option will
automatically be converted to having all distributions reinvested in
additional shares. Your request to change a distribution option must be
received by MFSC by the distribution record date for a distribution in
order to be effective for that distribution. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.

o PURCHASE AND REDEMPTION PROGRAMS

For your convenience, the following purchase and redemption programs are
made available to you with respect to class A, B and C shares, without
extra charge:

AUTOMATIC INVESTMENT PLAN. You can make cash investments of $50 or more
through your checking account or savings account on any day of the month.
If you do not specify a date, the investment will automatically occur on
the first business day of the month.

AUTOMATIC EXCHANGE PLAN. If you have an account balance of at least $5,000
in any MFS fund, you may participate in the automatic exchange plan, a
dollar-cost averaging program. This plan permits you to make automatic
monthly or quarterly exchanges from your account in an MFS fund for shares
of the same class of shares of other MFS funds. You may make exchanges of
at least $50 to up to six different funds under this plan. Exchanges will
generally be made at net asset value without any sales charges. If you
exchange shares out of the MFS Money Market Fund or MFS Government Money
Market Fund, or if you exchange class A shares out of the MFS Cash Reserve
Fund, into class A shares of any other MFS fund, you will pay the initial
sales charge if you have not already paid this charge on these shares.

REINVEST WITHOUT A SALES CHARGE. You can reinvest dividend and capital
gain distributions into your account without a sales charge to add to your
investment easily and automatically.

DISTRIBUTION INVESTMENT PROGRAM. You may purchase shares of any MFS fund
without paying an initial sales charge or a CDSC upon redemption by
automatically reinvesting a minimum of $50 of dividend and capital gain
distributions from the same class of another MFS fund.

LETTER OF INTENT (LOI). If you intend to invest $50,000 or more in the MFS
funds (including the MFS Fixed Fund) within 13 months, you may buy class A
shares of the funds at the reduced sales charge as though the total amount
were invested in class A shares in one lump sum. If you intend to invest
$1 million or more under this program, the time period is extended to 36
months. If the intended purchases are not completed within the time
period, shares will automatically be redeemed from a special escrow
account established with a portion of your investment at the time of
purchase to cover the higher sales charge you would have paid had you not
purchased your shares through this program.

RIGHT OF ACCUMULATION. You will qualify for a lower sales charge on your
purchases of class A shares when your new investment in class A shares,
together with the current (offering price) value of all your holdings in
the MFS funds (including the MFS Fixed Fund), reaches a reduced sales
charge level.

SYSTEMATIC WITHDRAWAL PLAN. You may elect to automatically receive (or
designate someone else to receive) regular periodic payments of at least
$100. Each payment under this systematic withdrawal is funded through the
redemption of your fund shares. For class B and C shares, you can receive
up to 10% (15% for certain IRA distributions) of the value of your account
through these payments in any one year (measured at the time you establish
this plan). You will incur no CDSC on class B and C shares redeemed under
this plan. For class A shares, there is no similar percentage limitation;
however, you may incur the CDSC (if applicable) when class A shares are
redeemed under this plan.
<PAGE>

- ----------------------
VIII OTHER INFORMATION
- ----------------------

o PRICING OF FUND SHARES

The price of each class of each fund's shares is based on its net asset
value. The net asset value of each class of shares is determined at the
close of regular trading each day that the New York Stock Exchange is open
for trading (generally, 4:00 p.m., Eastern time) (referred to as the
valuation time). The New York Stock Exchange is closed on most national
holidays and Good Friday. To determine net asset value, each fund values
its assets at current market values, or at fair value as determined by the
Adviser under the direction of the Board of Trustees that oversees the
fund if current market values are unavailable. Fair value pricing may be
used by each fund when current market values are unavailable or when an
event occurs after the close of the exchange on which the fund's portfolio
securities are principally traded that is likely to have changed the value
of the securities. The use of fair value pricing by a fund may cause the
net asset value of its shares to differ significantly from the net asset
value that would be calculated using current market values.

You will receive the net asset value next calculated, after the
deduction of applicable sales charges and any required tax withholding, if
your order is complete (has all required information) and MFSC receives
your order by:

o the valuation time, if placed directly by you (not through a financial
adviser such as a broker or bank) to MFSC; or

o MFSC's close of business, if placed through a financial adviser, so long
as the financial adviser (or its authorized designee) received your order
by the valuation time.

Each fund invests in certain securities which are primarily listed on
foreign exchanges that trade on weekends and other days when the fund does
not price its shares. Therefore, the value of a fund's shares may change
on days when you will not be able to purchase or redeem the fund's shares.

- -

DISTRIBUTIONS

Each fund intends to pay substantially all of its net income (including
any realized net capital gains) to shareholders at least annually.

o TAX CONSIDERATIONS

The following discussion is very general. You are urged to consult your
tax adviser regarding the effect that an investment in a fund may have on
your particular tax situation.

TAXABILITY OF DISTRIBUTIONS. As long as a fund qualifies for treatment as
a regulated investment company (which each fund intends to do in its first
and each subsequent taxable year), it pays no federal income tax on the
earnings it distributes to shareholders.

You will normally have to pay federal income taxes, and any state or local
taxes, on the distributions you receive from a fund, whether you take the
distributions in cash or reinvest them in additional shares. Distributions
designated as capital gain dividends are taxable as long-term capital
gains. Other distributions are generally taxable as ordinary income. Some
dividends paid in January may be taxable as if they had been paid the
previous December.

The Form 1099 that is mailed to you every January details your
distributions and how they are treated for federal tax purposes.

Each fund's distributions will reduce that fund's net asset value per
share. Therefore, if you buy shares shortly before the record date of a
distribution, you may pay the full price for the shares and then
effectively receive a portion of the purchase price back as a taxable
distribution.

Each fund may be eligible to elect to "pass through" to you foreign income
taxes that it pays. If a fund makes this election, you will be required to
include your share of those taxes in gross income as a distribution from
that fund. You will then be allowed to claim a credit (or a deduction, if
you itemize deductions) for such amounts on your federal income tax
return, subject to certain limitations.

If you are neither a citizen nor a resident of the U.S., each fund will
withhold U.S. federal income tax at the rate of 30% on taxable dividends
and other payments that are subject to such withholding. You may be able
to arrange for a lower withholding rate under an applicable tax treaty if
you supply the appropriate documentation required by that fund. Each fund
is also required in certain circumstances to apply backup withholding at
the 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 that 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. Prospective investors in a fund
should read that fund's Account Application for additional information
regarding backup withholding of federal income tax.

TAXABILITY OF TRANSACTIONS. When you redeem, sell or exchange shares, it
is generally considered a taxable event for you. Depending on the purchase
price and the sale price of the shares you redeem, sell or exchange, you
may have a gain or a loss on the transaction. You are responsible for any
tax liabilities generated by your transaction.

o UNIQUE NATURE OF FUNDS

MFS may serve as the investment adviser to other funds which have
investment goals and principal investment policies and risks similar to
those of the funds, and which may be managed by a fund's portfolio
manager(s). While each fund may have many similarities to these other
funds, its investment performance will differ from their investment
performance. This is due to a number of differences between the funds,
including differences in sales charges, expense ratios and cash flows.

o PROVISION OF ANNUAL AND SEMIANNUAL REPORTS AND PROSPECTUSES

Each fund produces financial reports every six months and updates its
prospectus annually. To avoid sending duplicate copies of materials to
households, only one copy of a fund's annual and semiannual report and
prospectus will be mailed to shareholders having the same residential
address on the fund's records. However, any shareholder may contact MFSC
(see back cover for address and phone number) to request that copies of
these reports and prospectuses be sent personally to that shareholder.
<PAGE>

- ---------- ---------------------
APPENDIX A MFS JAPAN EQUITY FUND
- ---------- ---------------------

o INVESTMENT TECHNIQUES AND PRACTICES

In pursuing its investment objective, the MFS Japan Equity Fund may engage
in the following principal and non-principal investment techniques and
practices. Investment techniques and practices which are the principal
focus of the fund are described, together with their risks, in the Risk
Return Summary of the Prospectus. Both principal and non-principal
investment techniques and practices are described, together with their
risks, in the SAI.

INVESTMENT TECHNIQUES/PRACTICES
..........................................................................
SYMBOLS x permitted -- not permitted
--------------------------------------------------------------------------

Debt Securities Inverse Floating Rate
Asset-Backed Securities Obligations --
Collateralized Mortgage Obligations Investment in Other Investment
and Multiclass Pass-Through Companies
Securities -- Open-End Funds x
Corporate Asset-Backed Securities x Closed-End Funds x
Mortgage Pass-Through Securities x Lending of Portfolio Securities x
Stripped Mortgage-Backed Leveraging Transactions
Securities -- Bank Borrowings --
Corporate Securities x Mortgage "Dollar-Roll"
Loans and Other Direct Indebtedness x Transactions --
Lower Rated Bonds x Reverse Repurchase Agreements --
Municipal Bonds -- Options
Speculative Bonds x Options on Foreign Currencies x
U.S. Government Securities x Options on Futures Contracts x
Variable and Floating Rate Options on Securities x
Obligations x Options on Stock Indices x
Zero Coupon Bonds, Deferred Reset Options --
Interest Bonds and PIK Bonds -- "Yield Curve" Options --
Equity Securities x Repurchase Agreements x
Foreign Securities Exposure Restricted Securities x
Brady Bonds x Short Sales --
Depositary Receipts x Short Sales Against the Box x
Dollar-Denominated Foreign Debt Short Term Instruments x
Securities x Swaps and Related Derivative
Emerging Markets x Instruments x
Foreign Securities x Temporary Borrowings x
Forward Contracts x Temporary Defensive Positions x
Futures Contracts x Warrants x
Indexed Securities/Structured "When-Issued" Securities x
Products --
<PAGE>

- ---------- ----------------------------------
APPENDIX A MFS GLOBAL TELECOMMUNICATIONS FUND
- ---------- ----------------------------------

o INVESTMENT TECHNIQUES AND PRACTICES

In pursuing its investment objective, the MFS Global Telecommunications
Fund may engage in the following principal and non-principal investment
techniques and practices. Investment techniques and practices which are
the principal focus of the fund are described, together with their risks,
in the Risk Return Summary of the Prospectus. Both principal and non-
principal investment techniques and practices are described, together with
their risks, in the SAI.

Debt Securities Inverse Floating Rate
Asset-Backed Securities Obligations --
Collateralized Mortgage Obligations Investment in Other Investment
and Multiclass Pass-Through Companies
Securities -- Open-End Funds x
Corporate Asset-Backed Securities x Closed-End Funds x
Mortgage Pass-Through Securities x Lending of Portfolio Securities x
Stripped Mortgage-Backed Leveraging Transactions
Securities -- Bank Borrowings --
Corporate Securities x Mortgage "Dollar-Roll"
Loans and Other Direct Indebtedness x Transactions --
Lower Rated Bonds x Reverse Repurchase Agreements --
Municipal Bonds -- Options
Speculative Bonds x Options on Foreign Currencies x
U.S. Government Securities x Options on Futures Contracts x
Variable and Floating Rate Options on Securities x
Obligations x Options on Stock Indices x
Zero Coupon Bonds, Deferred Reset Options --
Interest Bonds and PIK Bonds x "Yield Curve" Options --
Equity Securities x Repurchase Agreements x
Foreign Securities Exposure Restricted Securities x
Brady Bonds x Short Sales --
Depositary Receipts x Short Sales Against the Box x
Dollar-Denominated Foreign Debt Short Term Instruments x
Securities x Swaps and Related Derivative
Emerging Markets x Instruments x
Foreign Securities x Temporary Borrowings x
Forward Contracts x Temporary Defensive Positions x
Futures Contracts x Warrants x
Indexed Securities/Structured "When-Issued" Securities x
Products --
<PAGE>

MFS(R) JAPAN EQUITY FUND
MFS(R) GLOBAL TELECOMMUNICATIONS FUND

If you want more information about a fund, the following documents are
available free
upon request:

ANNUAL/SEMIANNUAL REPORTS. These reports contain information about a fund's
actual investments. Annual reports discuss the effect of recent market
conditions and the fund's investment strategy on the fund's performance during
its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI). The SAI, dated June 1, 2000,
provides more detailed information about the funds and is incorporated into
this prospectus by reference.

YOU CAN GET FREE COPIES OF THE ANNUAL/SEMIANNUAL REPORTS, THE SAI AND OTHER
INFORMATION ABOUT THE FUNDS, AND MAKE INQUIRIES ABOUT THE FUNDS, BY
CONTACTING:

MFS Service Center, Inc.
2 Avenue de Lafayette
Boston, MA 02111-1738
Telephone: 1-800-225-2606
Internet: HTTP://WWW.MFS.COM

Information about a fund (including its prospectus, SAI and shareholder
reports) can be reviewed and copied at the:

Public Reference Room
Securities and Exchange Commission
Washington, D.C., 20549-0102

Information on the operation of the Public Reference Room may be obtained by
calling the Commission at (202) 942-8090. Reports and other information about
the funds are available on the EDGAR database on the Commission's Internet
website at http://www.sec.gov, and copies of this information may be obtained,
upon payment of a duplicating fee, by electronic request at [email protected]
or by writing the Public Reference Section at the above address.

The funds' Investment Company Act file number is 811-4777.

INC-1-V 01/00 1M
<PAGE>
[LOGO] M F S(R) STATEMENT OF ADDITIONAL
INVESTMENT MANAGEMENT INFORMATION
We invented the mutual fund(R)
JUNE 1, 2000

MFS(R) JAPAN EQUITY FUND
MFS(R) GLOBAL TELECOMMUNICATIONS FUND

EACH A SERIES OF MFS SERIES TRUST I
500 BOYLSTON STREET, BOSTON, MA 02116
(617) 954-5000

This Statement of Additional Information, as amended or supplemented from time
to time (the "SAI"), sets forth information which may be of interest to
investors but which is not necessarily included in the Funds' Prospectus dated
June 1, 2000. This SAI should be read in conjunction with the Prospectus a
copy of which may be obtained without charge by contacting MFS Service Center,
Inc. (see back cover of Part II of this SAI for address and phone number).

This SAI is divided into two Parts -- Part I and Part II. Part I contains
information that is particular to each Fund, while Part II contains
information that generally applies to each of the funds in the MFS Family of
Funds (the "MFS Funds"). Each Part of the SAI has a variety of appendices
which can be found at the end of Part I and Part II, respectively.

THIS SAI IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.

INC-13-V 01/00 300
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
PART I
Part I of this SAI contains information that is particular to each Fund.

- -----------------
TABLE OF CONTENTS
- -----------------
Page
I Definitions ..................................................... 3
II Management of the Funds ......................................... 3
The Funds ....................................................... 3
Trustees and Officers -- Identification and Background .......... 3
Trustee Compensation ............................................ 3
Affiliated Service Provider Compensation ........................ 3
III Sales Charges and Distribution Plan Payments .................... 3
Sales Charges ................................................... 3
Distribution Plan Payments ..................................... 3
IV Portfolio Transactions and Brokerage Commissions ................ 3
V Share Ownership ................................................. 3
VI Performance Information ......................................... 3
VII Investment Techniques, Practices, Risks and Restrictions ........ 3
Investment Techniques, Practices and Risks ...................... 3
Investment Restrictions ......................................... 4
VIII Tax Considerations .............................................. 4
IX Independent Auditors and Financial Statements ................... 4
Appendix A -- Trustees and Officers -- Identification and
Background .................................................... A-1
Appendix B -- Trustee Compensation .............................. B-1
Appendix C -- Affiliated Service Provider Compensation .......... C-1
Appendix D -- Sales Charges and Distribution Plan Payments ...... D-1
Appendix E -- Portfolio Transactions and Brokerage Commissions .. E-1
Appendix F -- Share Ownership ................................... F-1
Appendix G -- Performance Information ........................... G-1
<PAGE>

I DEFINITIONS
"Funds" - MFS Japan Equity Fund and MFS Global Telecommunications Fund,
each a series of the Trust.

"Trust" - MFS Series Trust I, a Massachusetts business trust, 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.

"MFSC" - MFS Service Center, Inc., a Delaware corporation.

"Prospectus" - The Prospectus of the Fund, dated June 1, 2000, as amended
or supplemented from time to time.

II MANAGEMENT OF THE FUNDS

THE FUNDS
Each Fund is a non-diversified series of the Trust. The Trust is an open-
end management investment company.

Each Fund and its Adviser, any retained sub-advisers, and its distributor
have adopted codes of ethics under Rule 17j-1 of the Investment Company
Act of 1940. These codes of ethics permit personnel subject to the codes
to invest in securities, including securities that may be purchased or
held by the Fund. These codes are on public file with, and are available
from the SEC. See the back cover of the prospectus for information on
obtaining a copy.

TRUSTEES AND OFFICERS - IDENTIFICATION AND BACKGROUND
The identification and background of the Trustees and officers of the
Trust are set forth in Appendix A of this Part I.

TRUSTEE COMPENSATION
Compensation paid to the non-interested Trustees and to Trustees who are
not officers of the Trust, for certain specified periods, is set forth in
Appendix B of this Part I.

AFFILIATED SERVICE PROVIDER COMPENSATION
Compensation paid by each Fund to its affiliated service providers -- to
MFS, for investment advisory and administrative services, and to MFSC, for
transfer agency services -- for certain specified periods is set forth in
Appendix C to this Part I.

III SALES CHARGES AND DISTRIBUTION PLAN PAYMENTS

SALES CHARGES
Sales charges paid in connection with the purchase and sale of Fund shares
for certain specified periods are set forth in Appendix D to this Part I,
together with each Fund's schedule of dealer reallowances.

DISTRIBUTION PLAN PAYMENTS
Payments made by each Fund under the Distribution Plan for its most recent
fiscal year end are set forth in Appendix D to this Part I.

IV PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Brokerage commissions paid by each Fund for certain specified periods, and
information concerning purchases by each Fund of securities issued by its
regular broker-dealers for its most recent fiscal year, are set forth in
Appendix E to this Part I.

Broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Adviser for no consideration other
than brokerage or underwriting commissions. Securities may be bought or
sold from time to time through such broker-dealers, on behalf of each
Fund. The Trustees (together with the Trustees of certain other MFS funds)
have directed the Adviser to allocate a total of $43,800 of commission
business from certain MFS funds (including the Funds) to the Pershing
Division of Donaldson Lufkin & Jenrette as consideration for the annual
renewal of certain publications provided by Lipper Analytical Securities
Corporation (which provides information useful to the Trustees in
reviewing the relationship between the Funds and the Adviser).

V SHARE OWNERSHIP
Information concerning the ownership of Fund shares by Trustees and
officers of the Trust as a group, by investors who control a Fund, if any,
and by investors who own 5% or more of any class of Fund shares, if any,
is set forth in Appendix F to this Part I.

VI PERFORMANCE INFORMATION
Performance information as quoted by the Funds in sales literature and
marketing materials, is set forth in Appendix G to this Part I.

VII INVESTMENT TECHNIQUES, PRACTICES, RISKS AND RESTRICTIONS

INVESTMENT TECHNIQUES, PRACTICES AND RISKS
The investment objective and principal investment policies of each Fund
are described in the Prospectus. In pursuing its investment objective and
principal investment policies, each Fund may engage in a number of
investment techniques and practices, which involve certain risks. These
investment techniques and practices, which may be changed without
shareholder approval unless indicated otherwise, are identified in
Appendix A to the Prospectus, and are more fully described, together with
their associated risks, in Part II of this SAI. The following percentage
limitations, as a percentage of such Fund's net assets, apply to these
investment techniques and practices:

PERCENTAGE
INVESTMENT LIMITATION
LIMITATION (BASED ON NET ASSETS)
---------- ---------------------

1. MFS JAPAN EQUITY FUND
Emerging Market Securities
and Brady Bonds ................ up to, but not including, 20%
Lower Rated Bonds .......................................... 10%
Securities Lending ......................................... 30%

2. MFS GLOBAL TELECOMMUNICATIONS FUND
Lower Rated Bonds .................up to, but not including, 20%
Emerging Market Securities
and Brady Bonds .................up to, but not including, 20%
Securities Lending ......................................... 30%

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 SAI, 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).

Except for Investment Restriction (1) and nonfundamental investment policy
(1), these investment restrictions and policies 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 any of the
restrictions. In the event of a violation of non-fundamental investment
policy (1), each Fund will reduce the percentage of its assets invested in
illiquid investments in due course, taking into account the best interests
of shareholders.

Terms used below (such as Options and Futures Contracts) are defined in
Part II of this SAI.

Each Fund, may not:

(1) Borrow amounts in excess of 33 1/3% of its total 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.

(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.

In addition, each Fund has the folowing 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 for the purpose of exercising control or management.

VIII TAX CONSIDERATIONS
For a discussion of tax considerations, see Part II of this SAI.

IX INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
Ernst & Young LLP are the Funds' independent auditors, providing audit
services, tax services, and assistance and consultation with respect to
the preparation of filings with the Securities and Exchange Commission.
<PAGE>

- -------------------
PART I - APPENDIX A
- -------------------

TRUSTEES AND OFFICERS - IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust are listed below, together with
their principal occupations during the past five years. (Their titles may
have varied during that period.)

TRUSTEES

JEFFREY L. SHAMES* Chairman and President (born 6/2/55)
Massachusetts Financial Services Company, Chairman and Chief Executive
Officer

RICHARD B. BAILEY (born 9/14/26)
Private Investor, Massachusetts Financial Services Company, former
Chairman (prior to September 30, 1991); Cambridge Bancorp, Director;
Cambridge Trust Company, Director
Address: Boston, Massachusetts

MARSHALL N. COHAN (born 11/14/26)
Private Investor. Address: Wellington, Florida

LAWRENCE H. COHN, M.D. (born 3/11/37)
Brigham and Women's Hospital, Chief of Cardiac Surgery; Harvard Medicial
School, Professor of Surgery
Address: Boston, Massachusetts

THE HON. SIR J. DAVID GIBBONS, KBE (born 6/15/27)
Edmund Gibbons Limited, Chief Executive Officer; Colonial Insurance
Company Ltd., Director and Chairman
Address: Hamilton, Bermuda

ABBY M. O'NEILL (born 4/27/28)
Private Investor; Rockefeller Financial Services, Inc. (investment
advisers), Chairman and Chief Executive Officer
Address: New York, New York

WALTER E. ROBB, III (born 8/18/26)
Benchmark Advisors, Inc. (corporate financial consultants), President and
Treasurer; Benchmark Consulting Group, Inc. (office services), President;
CitiFunds and CitiSelect Folios (mutual funds), Trustee
Address: Boston, Massachusetts

ARNOLD D. SCOTT* (born 12/16/42)
Massachusetts Financial Services Company, Senior Executive Vice President
and Director

J. DALE SHERRATT (born 9/23/38)
Insight Resources, Inc. (acquisition planning specialists), President;
Wellfleet Investments (investor in health care companies), Managing
General Partner (since 1993); Cambridge Nutraceuticals (professional
nutritional products), Chief Executive Officer
Address: Boston, Massachusetts

WARD SMITH (born 9/13/30)
Retired. NACCO Industries (holding company), Chairman (prior to June,
1994); Sundstrand Corporation (diversified mechanical manufacturer),
Director
Address: Hunting Valley, Ohio

OFFICERS

W. THOMAS LONDON,* Treasurer (born 3/1/44)
Massachusetts Financial Services Company, Senior Vice President

JAMES O. YOST,* Assistant Treasurer (born 6/12/60)
Massachusetts Financial Services Company, Senior Vice President

ELLEN MOYNIHAN*, Assistant Treasurer (born 11/13/57)
Massachusetts Financial Services Company, Vice President (since September
1996); Deloitte & Touche LLP, Senior Manager (until September 1996)

MARK E. BRADLEY*, Assistant Treasurer (born 11/23/59)
Massachusetts Financial Services Company, Vice President (since March
1997); Putnam Investments, Vice President (from September 1994 until March
1997); Ernst & Young, Senior Tax Manager (until September 1994)

STEPHEN E. CAVAN,* Secretary and Clerk
(born 11/6/53)
Massachusetts Financial Services Company, Senior Vice President, General
Counsel and Secretary

JAMES R. BORDEWICK, JR.,* Assistant Secretary and
Assistant Clerk (born 3/6/59)
Massachusetts Financial Services Company, Senior Vice President and
Associate General Counsel

----------------
*"Interested persons" (as defined in the Investment Company Act of 1940)
of the Adviser, whose address is 500 Boylston Street, Boston,
Massachusetts 02116.

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. 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.), an indirect subsidiary of Sun
Life Assurance Company of Canada.
<PAGE>

<TABLE>
- -------------------
PART I - APPENDIX B
- -------------------

TRUSTEE COMPENSATION
While each Fund pays the compensation of non-interested Trustees and of Trustees who are not officers of the Trust, the
Trustees are currently waiving their rights to receive these fees. In addition, the Trust has a retirement plan for these
Trustees as described under the caption "Management of the Funds -- Trustee Retirement Plan" in Part II. The Retirement Age
under the plan is 75.

<CAPTION>
TRUSTEE COMPENSATION TABLE
.............................................................................................................................

TRUSTEES FEES RETIREMENT
TRUSTEES FEES FROM MFS BENEFIT ESTIMATED TOTAL TRUSTEE
FROM MFS GLOBAL ACCRUED AS CREDITED FEES FROM
JAPAN EQUITY TELECOMMUNICATIONS PART OF FUND YEARS OF FUNDS AND
TRUSTEE FUND(1) FUND(1) EXPENSES(1) SERVICE(2) FUND COMPLEX(3)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard B. Bailey $0 $0 $0 2 $262,305
Marshall N. Cohan 0 0 0 2 149,167
Lawrence H. Cohn, M.D. 0 0 0 13 142,207
The Hon. Sir J. David Gibbons, KBE 0 0 0 3 135,292
Abby M. O'Neill 0 0 0 4 135,292
Walter E. Robb, III 0 0 0 2 156,082
Arnold D. Scott 0 0 0 N/A N/A
Jeffrey L. Shames 0 0 0 N/A N/A
J. Dale Sherratt 0 0 0 14 155,992
Ward Smith 0 0 0 6 149,167

----------------
(1) These fees are estimated for the Funds' current fiscal year. The Trustees are currently waiving their right to receive
fees.
(2) Based upon normal retirement age (75).
(3) Information provided is provided for calendar year 1999. All Trustees served as Trustees of 42 funds within the MFS fund
complex (having aggregate net assets at December 31, 1999, of approximately $35.2 billion) except Mr. Bailey, who served
as Trustee of 76 funds within the MFS complex (having aggregate net assets at December 31, 1999 of approximately 93.8
billion).

<CAPTION>
ESTIMATED ANNUAL BENEFITS PAYABLE BY FUNDS UPON RETIREMENT(4)
.............................................................................................................................

YEARS OF SERVICE
AVERAGE
TRUSTEE FEES 3 5 7 10 OR MORE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$0 $0 $0 $0 $0

---------------------
(4) Other funds in the MFS Fund complex provide retirement benefits to the Trustees. The fees for the Funds are currently
being waived by the Trustees.
</TABLE>
<PAGE>
<TABLE>

- -------------------
PART I - APPENDIX C
- -------------------

AFFILIATED SERVICE PROVIDER COMPENSATION
.....................................................................................................................

Each Fund paid compensation to its affiliated service providers over the specified periods as follows:

<CAPTION>
MFS JAPAN EQUITY FUND
.....................................................................................................................

PAID TO MFS AMOUNT PAID TO MFS FOR PAID TO MFSC AMOUNT AGGREGATE
FISCAL FOR ADVISORY WAIVED ADMINISTRATIVE FOR TRANSFER WAIVED AMOUNT PAID TO
YEAR ENDED SERVICES BY MFS SERVICES AGENCY SERVICES BY MFSC MFS AND MFSC
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Not Applicable

<CAPTION>
MFS GLOBAL TELECOMMUNICATIONS FUND
.....................................................................................................................

----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Not Applicable
</TABLE>
<PAGE>

<TABLE>
- -------------------
PART I - APPENDIX D
- -------------------

SALES CHARGES AND DISTRIBUTION PLAN PAYMENTS

<CAPTION>
SALES CHARGES
...................................................................................................................

The following sales charges were paid during the specified periods:

CLASS A INITIAL SALES CHARGES: CDSC PAID TO MFD ON:

RETAINED REALLOWED CLASS A CLASS B CLASS C
FISCAL YEAR END TOTAL BY MFD TO DEALERS SHARES SHARES SHARES
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Not Applicable

DEALER REALLOWANCES
...................................................................................................................
As shown above, MFD pays (or "reallows") a portion of the Class A initial sales charge to dealers. The dealer
reallowance as expressed as a percentage of each Fund's Class A shares' offering price is:

...................................................................................................................

<CAPTION>
DEALER REALLOWANCE AS A
AMOUNT OF PURCHASE PERCENT OF OFFERING PRICE
-------------------------------------------------------------------------------------------------------------------
<S> <C>
Less than $50,000 5.00%
$50,000 but less than $100,000 4.00%
$100,000 but less than $250,000 3.20%
$250,000 but less than $500,000 2.25%
$500,000 but less than $1,000,000 1.70%
$1,000,000 or more None*

----------------
*A CDSC will apply to such purchase.

DISTRIBUTION PLAN PAYMENTS
...................................................................................................................

The Funds are newly organized and have not made payments under the Distribution Plan as of the date of this SAI.

Distribution plan payments retained by MFD are used to compensate MFD for commissions advanced by MFD to dealers
upon sale of fund shares.
</TABLE>
<PAGE>

- -------------------
PART I - APPENDIX E
- -------------------

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

BROKERAGE COMMISSIONS
...........................................................................
The Funds are newly organized and have not paid brokerage commissions as
of the date of this SAI.

SECURITIES ISSUED BY REGULAR BROKER-DEALERS
..........................................................................
The Funds are newly organized and have not purchased securities issued by
their regular broker-dealers as of the date of this SAI.
<PAGE>

- -------------------
PART I - APPENDIX F
- -------------------

SHARE OWNERSHIP

OWNERSHIP BY TRUSTEES AND OFFICERS
Not Applicable

25% OR GREATER OWNERSHIP
The following table identifies those investors who own 25% or more of a
Fund's shares (all share classes taken together) and are therefore
presumed to control the Fund.

JURISDICTION OF
ORGANIZATION PERCENTAGE
NAME AND ADDRESS OF INVESTOR (IF A COMPANY) FUND OWNERSHIP
---------------------------------------------------------------------------
Not Applicable

5% OR GREATER OWNERSHIP OF SHARE CLASS
The following table identifies those investors who own 5% or more of any
class of a Fund's shares:

PERCENTAGE
NAME AND ADDRESS OF INVESTOR FUND OWNERSHIP
...........................................................................
Not Applicable
<PAGE>

- -------------------
PART I - APPENDIX G
- -------------------

PERFORMANCE INFORMATION
..........................................................................

The Funds are newly organized and have no performance quotations as of the
date of this SAI.
<PAGE>

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

PART II

Part II of this SAI describes policies and practices that apply to each of the
Funds in the MFS Family of Funds. References in this Part II to a "Fund" means
each Fund in the MFS Family of Funds, unless noted otherwise. References in this
Part II to a "Trust" means the Massachusetts business trust of which the Fund is
a series, or, if the Fund is not a series of a Massachusetts business trust,
references to a "Trust" shall mean the Fund.

-----------------
TABLE OF CONTENTS
-----------------
PAGE
I Management of the Fund .......................................... 1
Trustees/Officers ............................................... 1
Investment Adviser .............................................. 1
Administrator ................................................... 2
Custodian ....................................................... 2
Shareholder Servicing Agent ..................................... 2
Distributor ..................................................... 2
II Principal Share Characteristics ................................. 2
Class A Shares .................................................. 2
Class B Shares, Class C Shares and Class I Shares ............... 2
Waiver of Sales Charges ......................................... 3
Dealer Commissions and Concessions .............................. 3
General ......................................................... 3
III Distribution Plan ............................................... 3
Features Common to Each Class of Shares ......................... 3
Features Unique to Each Class of Shares ......................... 4
IV Investment Techniques, Practices and Risks ...................... 5
V Net Income and Distributions .................................... 5
Money Market Funds .............................................. 5
Other Funds ..................................................... 5
VI Tax Considerations .............................................. 5
Taxation of the Fund ............................................ 5
Taxation of Shareholders ........................................ 6
Special Rules for Municipal Fund Distributions .................. 7
VII Portfolio Transactions and Brokerage Commissions ................ 8
VIII Determination of Net Asset Value ................................ 9
Money Market Funds .............................................. 9
Other Funds ..................................................... 10
IX Performance Information ......................................... 10
Money Market Funds .............................................. 10
Other Funds ..................................................... 11
General ......................................................... 12
MFS Firsts ...................................................... 12
X Shareholder Services ............................................ 13
Investment and Withdrawal Programs .............................. 13
Exchange Privilege .............................................. 15
Tax-Deferred Retirement Plans ................................... 16
XI Description of Shares, Voting Rights and Liabilities ............ 17
Appendix A -- Waivers of Sales Charges .......................... A-1
Appendix B -- Dealer Commissions and Concessions ................ B-1
Appendix C -- Investment Techniques, Practices and Risks ........ C-1
Appendix D -- Description of Bond Ratings ....................... D-1

<PAGE>

I MANAGEMENT OF THE FUND

TRUSTEES/OFFICERS
BOARD OVERSIGHT -- The Board of Trustees which oversees the Fund provides
broad supervision over the affairs of the Fund. The Adviser is responsible
for the investment management of the Fund's assets, and the officers of
the Trust are responsible for its operations.

TRUSTEE RETIREMENT PLAN -- The Trust has a retirement plan for Trustees
who are non-interested Trustees and Trustees who are not officers of the
Trust. Under this plan, a Trustee will retire upon reaching a specified
age (see Part I -- "Appendix B ") ("Retirement Age") 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 his
Retirement Age 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. The 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.

INDEMNIFICATION OF TRUSTEES AND OFFICERS -- The Declaration of Trust of
the 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
The Trust has retained Massachusetts Financial Services Company ("MFS" or
the "Adviser") as the Fund's investment adviser. MFS and its predecessor
organizations have a history of money management dating from 1924. MFS is
a subsidiary of Sun Life of Canada (U.S.) Financial Services Holdings,
Inc., which in turn is an indirect wholly owned subsidiary of Sun Life of
Canada (an insurance company).

MFS has retained, on behalf of certain MFS Funds, sub-investment
advisers to assist MFS in the management of the Fund's assets. A
description of these sub-advisers, the services they provide and their
compensation is provided under the caption "Management of the Fund -- Sub-
Adviser" in Part I of this SAI for Funds which use sub-advisers.

INVESTMENT ADVISORY AGREEMENT -- The Adviser manages the Fund pursuant to
an Investment Advisory Agreement (the "Advisory Agreement"). Under the
Advisory Agreement, the Adviser provides the Fund with overall investment
advisory services. Subject to such policies as the Trustees may determine,
the Adviser makes investment decisions for the 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 Fund[s]."

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 the Fund's
investments and effecting its portfolio transactions.

The Trust pays the compensation of the Trustees who are not officers of
MFS and all expenses of the Fund (other than those assumed by MFS)
including but not limited to: advisory and administrative services;
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 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 Fund's 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; and expenses of shareholder meetings. Expenses relating to the
issuance, registration and qualification of shares of the Fund and the
preparation, printing and mailing of prospectuses are borne by the Fund
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.

The Advisory Agreement has an initial two year term and continues 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 Restrictions" in Part I of this
SAI) 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.
The 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 Restrictions" in Part I of this SAI), or by
either party on not more than 60 days" nor less than 30 days" written
notice. The 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. The 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.

ADMINISTRATOR
MFS provides the Fund with certain financial, legal, compliance,
shareholder communications and other administrative services pursuant to a
Master Administrative Services Agreement. Under this Agreement, the Fund
pays MFS an administrative fee up to 0.015% per annum of the Fund's
average daily net assets. This fee reimburses MFS for a portion of the
costs it incurs to provide such services.

CUSTODIAN
State Street Bank and Trust Company (the "Custodian") is the custodian of
the Fund's assets. The Custodian's responsibilities include safekeeping
and controlling the Fund's cash and securities, handling the receipt and
delivery of securities, determining income and collecting interest and
dividends on the 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 the
Fund. The Custodian does not determine the investment policies of the Fund
or decide which securities the Fund will buy or sell. The Fund may,
however, invest in securities of the Custodian and may deal with the
Custodian as principal in securities transactions. The Custodian also acts
as the dividend disbursing agent of the Fund.

SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary of MFS, is
the Fund's shareholder servicing agent, pursuant to an Amended and
Restated Shareholder Servicing Agreement (the "Agency Agreement"). 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 the Fund. For these services, MFSC
will receive a fee calculated as a percentage of the average daily net
assets of the Fund at an effective annual rate of up to 0.1125%. In
addition, MFSC will be reimbursed by the Fund for certain expenses
incurred by MFSC on behalf of the Fund. The Custodian has contracted with
MFSC to perform certain dividend disbursing agent functions for the Fund.

DISTRIBUTOR
MFS Fund Distributors, Inc. ("MFD"), a wholly owned subsidiary of MFS,
serves as distributor for the continuous offering of shares of the Fund
pursuant to an Amended and Restated Distribution Agreement (the
"Distribution Agreement"). The Distribution Agreement has an initial two
year term and continues 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
Restrictions" in Part I of this SAI) 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.

II PRINCIPAL SHARE CHARACTERISTICS
Set forth below is a description of Class A, B, C and I shares offered by
the MFS Family of Funds. Some MFS Funds may not offer each class of shares
-- see the Prospectus of the Fund to determine which classes of shares the
Fund offers.

CLASS A SHARES
MFD acts as agent in selling Class A shares of the Fund to dealers. The
public offering price of Class A shares of the 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 the 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
"How to Purchase, Exchange and Redeem Shares" in the Prospectus). The
sales charge scale set forth in the Prospectus applies to purchases of
Class A shares of the Fund alone or in combination with shares of all
classes of certain other funds in the MFS Family of 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). Certain
purchases of Class A shares may be subject to a 1% CDSC instead of an
initial sales charge, as described in the Fund's Prospectus.

CLASS B SHARES, CLASS C SHARES AND CLASS I SHARES
MFD acts as agent in selling Class B, Class C and Class I shares of the
Fund. The public offering price of Class B, Class C and Class I shares is
their net asset value next computed after the sale. Class B and C shares
are generally subject to a CDSC, as described in the Fund's Prospectus.

WAIVER OF SALES CHARGES
In certain circumstances, the initial sales charge imposed upon purchases
of Class A shares and the CDSC imposed upon redemptions of Class A, B and
C shares are waived. These circumstances are described in Appendix A of
this Part II. Such sales are made without a sales charge to promote good
will with employees and others with whom MFS, MFD and/or the Fund have
business relationships, because the sales effort, if any, involved in
making such sales is negligible, or in the case of certain CDSC waivers,
because the circumstances surrounding the redemption of Fund shares were
not foreseeable or voluntary.

DEALER COMMISSIONS AND CONCESSIONS
MFD pays commission and provides concessions to dealers that sell Fund
shares. These dealer commissions and concessions are described in Appendix
B of this Part II.

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 the Fund to dealers. MFD
may benefit from its temporary holding of funds paid to it by investment
dealers for the purchase of Fund shares.

III DISTRIBUTION PLAN
The Trustees have adopted a Distribution Plan for Class A, Class B and
Class C shares (the "Distribution Plan") 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 the Distribution Plan would
benefit the Fund and each respective class of shareholders. The provisions
of the Distribution Plan are severable with respect to each Class of
shares offered by the Fund. The Distribution Plan is designed to promote
sales, thereby increasing the net assets of the Fund. Such an increase may
reduce the expense ratio to the extent the 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 the Fund required to liquidate
portfolio securities to meet redemptions. There is, however, no assurance
that the net assets of the Fund will increase or that the other benefits
referred to above will be realized.

In certain circumstances, the fees described below may not be imposed,
are being waived or do not apply to certain MFS Funds. Current
distribution and service fees for each Fund are reflected under the
caption "Expense Summary" in the Prospectus.

FEATURES COMMON TO EACH CLASS OF SHARES
There are features of the Distribution Plan that are common to each Class
of shares, as described below.

SERVICE FEES -- The Distribution Plan provides that the 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 the 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 the 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.

DISTRIBUTION FEES -- The Distribution Plan provides that the 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. 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. The amount of the distribution fee
paid by the Fund with respect to each class differs under the Distribution
Plan, as does the use by MFD of such distribution fees. Such amounts and
uses are described below in the discussion of the provisions of the
Distribution Plan relating to each Class of shares. 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 the Distribution Plan are
charged to, and therefore reduce, income allocated to shares of the
Designated Class. The provisions of the Distribution Plan relating to
operating policies as well as initial approval, renewal, amendment and
termination are substantially identical as they relate to each Class of
shares covered by the Distribution Plan.

The Distribution Plan remains in effect from year to year only if its
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"). The Distribution Plan 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. The Distribution Plan 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" in Part I of this SAI).
All agreements relating to the Distribution Plan 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 the Distribution Plan 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 the Fund's shares. The Distribution Plan may not 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" in Part I of this
SAI) or may not 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
the Distribution Plan or in any related agreement.

FEATURES UNIQUE TO EACH CLASS OF SHARES
There are certain features of the Distribution Plan that are unique to
each class of shares, as described below.

CLASS A SHARES -- 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). In addition to the initial sales charge, the dealer also generally
receives the ongoing 0.25% per annum service fee, as discussed above.

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); 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 the Fund at their
net asset value in connection with annuity agreements issued in connection
with the insurance company's separate accounts.

The distribution fee paid to MFD under the Distribution Plan is equal,
on an annual basis, to 0.10% of the Fund's average daily net assets
attributable to Class A shares (0.25% per annum for certain Funds). 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 and purchases by certain retirement plans
of Class A shares which are sold at net asset value but which are subject
to a 1% CDSC for one year after purchase). In addition, to the extent that
the aggregate service and distribution fees paid under the Distribution
Plan do not exceed 0.35% per annum of the average daily net assets of the
Fund attributable to Class A shares (0.50% per annum for certain Funds),
the Fund is permitted to pay such distribution-related expenses or other
distribution-related expenses.

CLASS B SHARES -- Class B shares are offered at net asset value without an
initial sales charge but subject to a CDSC. 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 the 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.

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.

Under the Distribution Plan, the 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).

CLASS C SHARES -- Class C shares are offered at net asset value without an
initial sales charge but subject to a CDSC of 1.00% upon redemption during
the first year. MFD will pay a commission to dealers of 1.00% of the
purchase price of Class C shares purchased through dealers at the time of
purchase. In compensation for this 1.00% commission paid by MFD to
dealers, MFD will retain the 1.00% per annum Class C distribution and
service fees paid by the Fund with respect to such shares for the first
year after purchase, and dealers will become eligible to receive from MFD
the ongoing 1.00% per annum distribution and service fees paid by the Fund
to MFD with respect to such shares commencing in the thirteenth month
following purchase.

This ongoing 1.00% fee is comprised of the 0.25% per annum service fee
paid to MFD under the 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 Distribution Plan, equal, on
an annual basis, to 0.75% of the Fund's average daily net assets
attributable to Class C shares.

IV INVESTMENT TECHNIQUES, PRACTICES AND RISKS
Set forth in Appendix C of this Part II is a description of investment
techniques and practices which the MFS Funds may generally use in pursuing
their investment objectives and principal investment policies, and the
risks associated with these investment techniques and practices. The Fund
will engage only in certain of these investment techniques and practices,
as identified in Part I. Investment practices and techniques that are not
identified in Part I do not apply to the Fund.

V NET INCOME AND DISTRIBUTIONS

MONEY MARKET FUNDS
The net income attributable to each MFS Fund that is a money market fund
is determined each day during which the New York Stock Exchange is open
for trading (see "Determination of Net Asset Value" below for a list of
days the Exchange is closed).

For this purpose, the net income attributable to shares of a money
market fund (from the time of the immediately preceding determination
thereof) shall consist of (i) all interest income accrued on the portfolio
assets of the money market fund, (ii) less all actual and accrued expenses
of the money market fund determined in accordance with generally accepted
accounting principles, and (iii) plus or minus net realized gains and
losses and net unrealized appreciation or depreciation on the assets of
the money market fund, if any. Interest income shall include discount
earned (including both original issue and market discount) on discount
paper accrued ratably to the date of maturity.

Since the net income is declared as a dividend each time the net income
is determined, the net asset value per share (i.e., the value of the net
assets of the money market fund divided by the number of shares
outstanding) remains at $1.00 per share immediately after each such
determination and dividend declaration. Any increase in the value of a
shareholder's investment, representing the reinvestment of dividend
income, is reflected by an increase in the number of shares in the
shareholder's account.

It is expected that the shares of the money market fund will have a
positive net income at the time of each determination thereof. If for any
reason the net income determined at any time is a negative amount, which
could occur, for instance, upon default by an issuer of a portfolio
security, the money market fund would first offset the negative amount
with respect to each shareholder account from the dividends declared
during the month with respect to each such account. If and to the extent
that such negative amount exceeds such declared dividends at the end of
the month (or during the month in the case of an account liquidated in its
entirety), the money market fund could reduce the number of its
outstanding shares by treating each shareholder of the money market fund
as having contributed to its capital that number of full and fractional
shares of the money market fund in the account of such shareholder which
represents its proportion of such excess. Each shareholder of the money
market fund will be deemed to have agreed to such contribution in these
circumstances by its investment in the money market fund. This procedure
would permit the net asset value per share of the money market fund to be
maintained at a constant $1.00 per share.

OTHER FUNDS
Each MFS Fund other than the MFS money market funds intends to distribute
to its shareholders dividends equal to all of its net investment income
with such frequency as is disclosed in the Fund's prospectus. These Funds'
net investment income consists of non-capital gain income less expenses.
In addition, these Funds intend to distribute net realized short- and
long-term capital gains, if any, at least annually. Shareholders will be
informed of the tax consequences of such distributions, including whether
any portion represents a return of capital, after the end of each calendar
year.

VI TAX CONSIDERATIONS
The following discussion is a brief summary of some of the important
federal (and, where noted, state) income tax consequences affecting the
Fund and its shareholders. The discussion is very general, and therefore
prospective investors are urged to consult their tax advisors about the
impact an investment in the Fund may have on their own tax situations.

TAXATION OF THE FUND
FEDERAL TAXES -- The Fund (even if it is a fund in a Trust with multiple
series) is treated as a separate entity for federal income tax purposes
under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund
has elected (or in the case of a new Fund, intends to elect) to be, and
intends to qualify to be treated 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 its distributions (as a percentage
of both its overall income and any tax-exempt income), and the composition
of its portfolio assets. As a regulated investment company, the Fund will
not be subject to any federal income or excise taxes on its net investment
income and net realized capital gains that it distributes to shareholders
in accordance with the timing requirements imposed by the Code. The Fund's
foreign-source income, if any, may be subject to foreign withholding
taxes. If the Fund failed to qualify as a "regulated investment company"
in any year, it would incur a regular federal corporate income tax on all
of its taxable income, whether or not distributed, and Fund distributions
would generally be taxable as ordinary dividend income to the
shareholders.

MASSACHUSETTS TAXES -- As long as it qualifies as a regulated investment
company under the Code, the Fund will not be required to pay Massachusetts
income or excise taxes.

TAXATION OF SHAREHOLDERS
TAX TREATMENT OF DISTRIBUTIONS -- Subject to the special rules discussed
below for Municipal Funds, shareholders of the Fund normally will have to
pay federal income tax and any state or local income taxes on the
dividends and capital gain distributions they receive from the Fund. Any
distributions from ordinary income and from net short-term capital gains
are taxable to shareholders as ordinary income for federal income tax
purposes whether paid in cash or reinvested in additional shares.
Distributions of net capital gain (i.e., the excess of net long-term
capital gain over net short-term capital loss), whether paid in cash or
reinvested in additional shares, are taxable to shareholders as long-term
capital gains for federal income tax purposes without regard to the length
of time the shareholders have held their shares. Any Fund dividend that is
declared in October, November, or December of any calendar year, payable
to shareholders of record in such a month, and paid during the following
January will be treated as if received by the shareholders on December 31
of the year in which the dividend is declared. The Fund will notify
shareholders regarding the federal tax status of its distributions after
the end of each calendar year.

Any Fund distribution, other than dividends that are declared by the
Fund on a daily basis, will have the effect of reducing the per share net
asset value of Fund shares by the amount of the distribution. Shareholders
purchasing shares shortly before the record date of any such distribution
(other than an exempt-interest dividend) may thus pay the full price for
the shares and then effectively receive a portion of the purchase price
back as a taxable distribution.

DIVIDENDS-RECEIVED DEDUCTION -- If the Fund receives dividend income from
U.S. corporations, a portion of the Fund's ordinary income dividends is
normally 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
corporate shareholders is subject to certain limitations, and deducted
amounts may be subject to the alternative minimum tax or result in certain
basis adjustments.

DISPOSITION OF SHARES -- In general, any gain or loss realized upon a
disposition of Fund shares by a shareholder that holds such shares as a
capital asset will be treated as a 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 Fund shares 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
disposition 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 Fund shares held for 90 days or less followed by any purchase (including
purchases by exchange or by reinvestment) without payment of an additional
sales charge of Class A shares of the Fund or of any other shares of an
MFS Fund generally sold subject to a sales charge.

DISTRIBUTION/ACCOUNTING POLICIES -- The Fund's current distribution and
accounting policies will affect the amount, timing, and character of
distributions to shareholders and may, under certain circumstances, make
an economic return of capital taxable to shareholders.

U.S. TAXATION OF NON-U.S. PERSONS -- Dividends and certain other payments
(but not including distributions of net capital gains) 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%. The Fund intends to withhold at that rate on taxable dividends and
other payments to Non-U.S. Persons that are subject to such withholding.
The Fund may withhold at a lower rate permitted by an applicable treaty if
the shareholder provides the documentation required by the Fund. 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
appropriate to such claims.

BACKUP WITHHOLDING -- The Fund is also required in certain circumstances
to apply backup withholding at the rate of 31% on taxable dividends and
capital gain distributions (and redemption proceeds, if applicable) paid
to any non-corporate 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.

FOREIGN INCOME TAXATION OF NON-U.S. PERSONS -- Distributions received from
the Fund by Non-U.S. Persons may also be subject to tax under the laws of
their own jurisdictions.

STATE AND LOCAL INCOME TAXES: U.S. GOVERNMENT SECURITIES -- Dividends paid
by the Fund that are derived from interest on obligations of the U.S.
Government and certain of its agencies and instrumentalities (but
generally not distributions of capital gains realized upon the disposition
of such obligations) may be exempt from state and local income taxes. The
Fund generally intends to advise shareholders of the extent, if any, to
which its dividends consist of such interest. Shareholders are urged to
consult their tax advisors regarding the possible exclusion of such
portion of their dividends for state and local income tax purposes.

CERTAIN SPECIFIC INVESTMENTS -- Any investment in zero coupon bonds,
deferred interest bonds, payment-in-kind bonds, certain stripped
securities, and certain securities purchased at a market discount will
cause the Fund to recognize income prior to the receipt of cash payments
with respect to those securities. To distribute this income (as well as
non-cash income described in the next two paragraphs) 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. Any investment 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 the Fund has state or local governments or other tax-exempt
organizations as shareholders.

OPTIONS, FUTURES CONTRACTS, AND FORWARD CONTRACTS -- The Fund's
transactions in options, Futures Contracts, Forward Contracts, short sales
"against the box," and swaps and related transactions 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 the Fund on the last business day of each taxable year
will be marked to market (i.e., treated as if closed out) on that 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 the Fund that substantially diminish its risk of loss with respect to
other positions in its portfolio may 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 that may alter the effects of these rules. The Fund will limit
its activities in options, Futures Contracts, Forward Contracts, short
sales "against the box" and swaps and related transactions to the extent
necessary to meet the requirements of Subchapter M of the Code.

FOREIGN INVESTMENTS -- Special tax considerations apply with respect to
foreign investments by the Fund. Foreign exchange gains and losses
realized by the Fund may be treated as ordinary income and loss. Use of
foreign currencies for non-hedging purposes and investment by the Fund in
certain "passive foreign investment companies" may be limited in order to
avoid a tax on the Fund. The Fund may elect to mark to market any
investments in "passive foreign investment companies" on the last day of
each year. This election may cause the Fund to recognize income prior to
the receipt of cash payments with respect to those investments; 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.

FOREIGN INCOME TAXES -- Investment income received by the Fund and gains
with respect to foreign securities may be subject to foreign income taxes
withheld at the source. The United States has entered into tax treaties
with many foreign countries that may entitle the Fund to a reduced rate of
tax or an exemption from tax on such income; the Fund intends to qualify
for treaty reduced rates where available. It is not possible, however, to
determine the Fund's effective rate of foreign tax in advance, since the
amount of the Fund's assets to be invested within various countries is not
known.

If the Fund holds more than 50% of its assets in foreign stock and
securities at the close of its taxable year, it may elect to "pass
through" to its shareholders foreign income taxes paid by it. If the Fund
so elects, shareholders will be required to treat their pro rata portions
of the foreign income taxes paid by the Fund as part of the amounts
distributed to them by it and thus includable in their gross income for
federal income tax purposes. Shareholders who itemize deductions would
then be allowed to claim a deduction or credit (but not both) on their
federal income tax returns for such amounts, subject to certain
limitations. Shareholders who do not itemize deductions would (subject to
such limitations) be able to claim a credit but not a deduction. No
deduction will be permitted to individuals in computing their alternative
minimum tax liability. If the Fund is not eligible, or does not elect, to
"pass through" to its shareholders foreign income taxes it has paid,
shareholders will not be able to claim any deduction or credit for any
part of the foreign taxes paid by the Fund.

SPECIAL RULES FOR MUNICIPAL FUND DISTRIBUTIONS The following special rules
apply to shareholders of funds whose objective is to invest primarily in
obligations that pay interest that is exempt from federal income tax
("Municipal Funds").

TAX EXEMPT DISTRIBUTIONS -- The portion of a Municipal Fund's
distributions of net investment income that is attributable to interest
from tax-exempt securities will be designated by the Fund as an "exempt-
interest dividend" under the Code and will generally be exempt from
federal income tax in the hands of shareholders so long as at least 50% of
the total value of the Fund's assets consists of tax-exempt securities at
the close of each quarter of the Fund's taxable year. Distributions of
tax-exempt interest earned from certain securities may, however, be
treated as an item of tax preference for shareholders under the federal
alternative minimum tax, and all exempt-interest dividends may increase a
corporate shareholder's alternative minimum tax. Except when the Fund
provides actual monthly percentage breakdowns, the percentage of income
designated as tax-exempt will be applied uniformly to all distributions by
the Fund of net investment income made during each fiscal year of the Fund
and may differ from the percentage of distributions consisting of
tax-exempt interest in any particular month. Shareholders are required to
report exempt-interest dividends received from the Fund on their federal
income tax returns.

TAXABLE DISTRIBUTIONS -- A Municipal Fund may also earn some income that
is taxable (including interest from any obligations that lose their
federal tax exemption) and may recognize capital gains and losses as a
result of the disposition of securities and from certain options and
futures transactions. Shareholders normally will have to pay federal
income tax on the non-exempt-interest dividends and capital gain
distributions they receive from the Fund, whether paid in cash or
reinvested in additional shares. However, the Fund does not expect that
the non-tax-exempt portion of its net investment income, if any, will be
substantial. Because the Fund expects to earn primarily tax-exempt
interest income, it is expected that no Fund dividends will qualify for
the dividends-received deduction for corporations.

CONSEQUENCES OF DISTRIBUTIONS BY A MUNICIPAL FUND: EFFECT OF ACCRUED TAX-
EXEMPT INCOME -- Shareholders redeeming shares after tax-exempt income has
been accrued but not yet declared as a dividend should be aware that a
portion of the proceeds realized upon redemption of the shares will
reflect the existence of such accrued tax-exempt income and that this
portion will be subject to tax as a capital gain even though it would have
been tax-exempt had it been declared as a dividend prior to the
redemption. For this reason, if a shareholder wishes to redeem shares of a
Municipal Fund that does not declare dividends on a daily basis, the
shareholder may wish to consider whether he or she could obtain a better
tax result by redeeming immediately after the Fund declares dividends
representing substantially all the ordinary income (including tax-exempt
income) accrued for that month.

CERTAIN ADDITIONAL INFORMATION FOR MUNICIPAL FUND SHAREHOLDERS -- Interest
on indebtedness incurred by shareholders to purchase or carry Fund shares
will not be deductible for federal income tax purposes. Exempt-interest
dividends are taken into account in calculating the amount of social
security and railroad retirement benefits that may be subject to federal
income tax. Entities or persons who are "substantial users" (or persons
related to "substantial users") of facilities financed by private activity
bonds should consult their tax advisors before purchasing Fund shares.

CONSEQUENCES OF REDEMPTION OF SHARES -- Any loss realized on a redemption
of Municipal Fund shares held for six months or less will be disallowed to
the extent of any exempt-interest dividends received with respect to those
shares. If not disallowed, any such loss 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.

STATE AND LOCAL INCOME TAXES: MUNICIPAL OBLIGATIONS -- The exemption of
exempt-interest dividends for federal income tax purposes does not
necessarily result in exemption under the income tax laws of any state or
local taxing authority. Some states do exempt from tax that portion of an
exempt-interest dividend that represents interest received by a regulated
investment company on its holdings of securities issued by that state and
its political subdivisions and instrumentalities. Therefore, the Fund will
report annually to its shareholders the percentage of interest income
earned by it during the preceding year on Municipal Bonds and will
indicate, on a state-by-state basis only, the source of such income.

VII PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Fund 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 the Fund's investments are reviewed by the Trust's
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 Conduct Rules
of the National Association of Securities Dealers, Inc. ("NASD") and such
other policies as the Trustees may determine, the Adviser may consider
sales of shares of the 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 the Advisory Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, the Adviser may cause the 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 the 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.

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 the 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 from time to time through such broker-dealers, on
behalf of the Fund.

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
the 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 the 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.

In certain instances there may be securities which are suitable for the
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
the 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
by the adviser 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 the Fund is concerned. In other cases, however,
the Fund believes that its ability to participate in volume transactions
will produce better executions for the Fund.

VIII DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined each
day during which the New York Stock Exchange is open for trading. (As of
the date of this SAI, 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; Martin Luther King 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.

MONEY MARKET FUNDS
Portfolio securities of each MFS Fund that is a money market fund are
valued at amortized cost, which the Board of Trustees which oversees the
money market fund has determined in good faith constitutes fair value for
the purposes of complying with the 1940 Act. This valuation method will
continue to be used until such time as the Board of Trustees determines
that it does not constitute fair value for such purposes. Each money
market fund will limit its portfolio to those investments in U.S.
dollar-denominated instruments which its Board of Trustees determines
present minimal credit risks, and which are of high quality as determined
by any major rating service or, in the case of any instrument that is not
so rated, of comparable quality as determined by the Board of Trustees.
Each money market fund has also agreed to maintain a dollar-weighted
average maturity of 90 days or less and to invest only in securities
maturing in 13 months or less. The Board of Trustees which oversees each
money market fund has established procedures designed to stabilize its net
asset value per share, as computed for the purposes of sales and
redemptions, at $1.00 per share. If the Board determines that a deviation
from the $1.00 per share price may exist which may result in a material
dilution or other unfair result to investors or existing shareholders, it
will take corrective action it regards as necessary and appropriate, which
action could include the sale of instruments prior to maturity (to realize
capital gains or losses); shortening average portfolio maturity;
withholding dividends; or using market quotations for valuation purposes.

OTHER FUNDS
The following valuation techniques apply to each MFS Fund that is not a
money market fund.

Equity securities in the Fund's portfolio are valued at the last sale
price on the exchange on which they are primarily traded or on the Nasdaq
stock market 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 stock market
system. Bonds and other fixed income securities (other than short-term
obligations) of U.S. issuers in the 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 the 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
stock market 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 the 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.

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 the 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.

IX PERFORMANCE INFORMATION

MONEY MARKET FUNDS
Each MFS Fund that is a money market fund will provide current annualized
and effective annualized yield quotations based on the daily dividends of
shares of the money market fund. These quotations may from time to time be
used in advertisements, shareholder reports or other communications to
shareholders.

Any current yield quotation of a money market fund which is used in
such a manner as to be subject to the provisions of Rule 482(d) under the
1933 Act shall consist of an annualized historical yield, carried at least
to the nearest hundredth of one percent based on a specific seven calendar
day period and shall be calculated by dividing the net change in the value
of an account having a balance of one share of that class at the beginning
of the period by the value of the account at the beginning of the period
and multiplying the quotient by 365/7. For this purpose the net change in
account value would reflect the value of additional shares purchased with
dividends declared on the original share and dividends declared on both
the original share and any such additional shares, but would not reflect
any realized gains or losses from the sale of securities or any unrealized
appreciation or depreciation on portfolio securities. In addition, any
effective yield quotation of a money market fund so used shall be
calculated by compounding the current yield quotation for such period by
multiplying such quotation by 7/365, adding 1 to the product, raising the
sum to a power equal to 365/7, and subtracting 1 from the result. These
yield quotations should not be considered as representative of the yield
of a money market fund in the future since the yield will vary based on
the type, quality and maturities of the securities held in its portfolio,
fluctuations in short-term interest rates and changes in the money market
fund's expenses.

OTHER FUNDS
Each MFS Fund that is not a money market fund may quote the following
performance results.

TOTAL RATE OF RETURN -- The 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. The Fund may also
calculate (i) a total rate of return, which is not reduced by any
applicable CDSC 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 any applicable sales charge 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.

The Fund offers multiple classes of shares which were initially offered
for sale to, and purchased by, the public on different dates (the class
"inception date"). The calculation of total rate of return for a class of
shares which has a later class inception date than another class of shares
of the Fund is based both on (i) the performance of the Fund's newer class
from its inception date and (ii) the performance of the Fund's oldest
class from its inception date up to the class inception date of the newer
class.

As discussed in the Prospectus, the sales charges, expenses and expense
ratios, and therefore the performance, of the Fund's classes of shares
differ. In calculating total rate of return for a newer class of shares in
accordance with certain formulas required by the SEC, the performance will
be adjusted to take into account the fact that the newer class is subject
to a different sales charge than the oldest class (e.g., if the newer
class is Class A shares, the total rate of return quoted will reflect the
deduction of the initial sales charge applicable to Class A shares; if the
newer class is Class B shares, the total rate of return quoted will
reflect the deduction of the CDSC applicable to Class B shares). However,
the performance will not be adjusted to take into account the fact that
the newer class of shares bears different class specific expenses than the
oldest class of shares (e.g., Rule 12b-1 fees). Therefore, the total rate
of return quoted for a newer class of shares will differ from the return
that would be quoted had the newer class of shares been outstanding for
the entire period over which the calculation is based (i.e., the total
rate of return quoted for the newer class will be higher than the return
that would have been quoted had the newer class of shares been outstanding
for the entire period over which the calculation is based if the class
specific expenses for the newer class are higher than the class specific
expenses of the oldest class, and the total rate of return quoted for the
newer class will be lower than the return that would be quoted had the
newer class of shares been outstanding for this entire period if the class
specific expenses for the newer class are lower than the class specific
expenses of the oldest class).

Any total rate of return quotation provided by the Fund should not be
considered as representative of the performance of the Fund in the future
since the net asset value of shares of the Fund will vary based not only
on the type, quality and maturities of the securities held in the Fund's
portfolio, but also on changes in the current value of such securities and
on changes in the expenses of the Fund. These factors and possible
differences in the methods used to calculate total rates of return should
be considered when comparing the total rate of return of the Fund to total
rates of return published for other investment companies or other
investment vehicles. Total rate of return reflects the performance of both
principal and income. Current net asset value and account balance
information may be obtained by calling 1-800-MFS-TALK (637-8255).

YIELD -- Any yield quotation for a class of shares of the 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 assume a maximum sales charge of
5.75% in the case of Class A shares and no payment of any CDSC in the case
of Class B and Class C shares.

TAX-EQUIVALENT YIELD -- The tax-equivalent yield for a class of shares of
a Fund is calculated by determining the rate of return that would have to
be achieved on a fully taxable investment in such shares to produce the
after-tax equivalent of the yield of that class. In calculating tax-
equivalent yield, a Fund assumes certain federal tax brackets for
shareholders and does not take into account state taxes.

CURRENT DISTRIBUTION RATE -- Yield, which is calculated according to a
formula prescribed by the Securities and Exchange Commission, is not
indicative of the amounts which were or will be paid to the 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 (i) annualizing the
distributions (excluding short-term capital gains) of the class for a
stated period; (ii) adding any short-term capital gains paid within the
immediately preceding twelve-month period; and (iii) dividing the result
by the maximum offering price or net asset value per share on the last day
of the period. 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 for
option writing, short-term capital gains and return of invested capital,
and may be calculated over a different period of time. The Fund's current
distribution rate calculation for Class B shares and Class C shares
assumes no CDSC is paid.

GENERAL
From time to time the 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 Securities
Corporation, 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. The 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. The 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.

From time to time, the Fund may discuss or quote its current portfolio
manager as well as other investment personnel, including such persons'
views on: the economy; securities markets; portfolio securities and their
issuers; investment philosophies, strategies, techniques and criteria used
in the selection of securities to be purchased or sold for the Fund; the
Fund's portfolio holdings; the investment research and analysis process;
the formulation and evaluation of investment recommendations; and the
assessment and evaluation of credit, interest rate, market and economic
risks, and similar or related matters.

The Fund may also use charts, graphs or other presentation formats to
illustrate the historical correlation of its performance to fund
categories established by Morningstar (or other nationally recognized
statistical ratings organizations) and to other MFS Funds.

From time to time the Fund may also discuss or quote the views of its
distributor, its investment adviser and other financial planning, legal,
tax, accounting, insurance, estate planning and other professionals, or
from surveys, regarding individual and family financial planning. Such
views may include information regarding: retirement planning, including
issues concerning social security; tax management strategies; estate
planning; general investment techniques (e.g., asset allocation and
disciplined saving and investing); business succession; ideas and
information provided through the MFS Heritage Planning(SM) program, an
intergenerational financial planning assistance program; issues with
respect to insurance (e.g., disability and life insurance and Medicare
supplemental insurance); issues regarding financial and health care
management for elderly family members; the history of the mutual fund
industry; investor behavior; and other similar or related matters.

From time to time, the Fund may also advertise annual returns showing
the cumulative value of an initial investment in the Fund in various
amounts over specified periods, with capital gain and dividend
distributions invested in additional shares or taken in cash, and with no
adjustment for any income taxes (if applicable) payable by shareholders.

MFS FIRSTS
MFS has a long history of innovations.

o 1924 -- Massachusetts Investors Trust is established as the first
open-end mutual fund in America.

o 1924 -- Massachusetts Investors Trust is the first mutual fund to make
full public disclosure of its operations in shareholder reports.

o 1932 -- One of the first internal research departments is established
to provide in-house analytical capability for an investment management
firm.

o 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").

o 1936 -- Massachusetts Investors Trust is the first mutual fund to allow
shareholders to take capital gain distributions either in additional
shares or in cash.

o 1976 -- MFS(R) Municipal Bond Fund is among the first municipal bond
funds established.

o 1979 -- Spectrum becomes the first combination fixed/ variable annuity
with no initial sales charge.

o 1981 -- MFS(R) Global Governments Fund is established as America's
first globally diversified fixed-income mutual fund.

o 1984 -- MFS(R) Municipal High Income Fund is the first open-end mutual
fund to seek high tax-free income from lower-rated municipal
securities.

o 1986 -- MFS(R) Managed Sectors Fund becomes the first mutual fund to
target and shift investments among industry sectors for shareholders.

o 1986 -- MFS(R) Municipal Income Trust is the first closed-end,
high-yield municipal bond fund traded on the New York Stock Exchange.

o 1987 -- MFS(R) Multimarket Income Trust is the first closed-end,
multimarket high income fund listed on the New York Stock Exchange.

o 1989 -- MFS(R) Regatta becomes America's first non-qualified market
value adjusted fixed/variable annuity.

o 1990 -- MFS(R) Global Total Return Fund is the first global balanced
fund.

o 1993 -- MFS(R) Global Growth Fund is the first global emerging markets
fund to offer the expertise of two sub-advisers.

o 1993 -- MFS(R) becomes money manager of MFS(R) Union Standard(R) Equity
Fund, the first fund to invest principally 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 or experts.

X SHAREHOLDER SERVICES

INVESTMENT AND WITHDRAWAL PROGRAMS
The 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 programs 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 the
Fund.

LETTER OF INTENT -- If a shareholder (other than a group purchaser
described below) anticipates purchasing $50,000 or more of Class A shares
of the 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 MFSC) 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 the
Fund pursuant to the Distribution Investment Program will also not apply
toward completion of the Letter of Intent.

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 MFSC 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, MFSC 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
MFSC. By completing and signing the Account Application or separate Letter
of Intent application, the shareholder irrevocably appoints MFSC 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 Class A,
Class B and Class C 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. A shareholder must provide MFSC
(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.

SUBSEQUENT INVESTMENT BY TELEPHONE -- Each shareholder may purchase
additional shares of any MFS Fund by telephoning MFSC toll-free at (800)
225-2606. The minimum purchase amount is $50 and the maximum purchase
amount is $100,000. Shareholders wishing to avail themselves of this
telephone purchase privilege must so elect on their Account Application
and designate thereon a bank and account number from which purchases will
be made. If a telephone purchase request is received by MFSC on any
business day prior to the close of regular trading on the Exchange
(generally, 4:00 p.m., Eastern time), the purchase will occur at the
closing net asset value of the shares purchased on that day. MFSC 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. MFSC 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.

DISTRIBUTION INVESTMENT PROGRAM -- Distributions of dividends and capital
gains made by the 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
be 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.

SYSTEMATIC WITHDRAWAL PLAN -- A shareholder may direct MFSC 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 in certain limited circumstances. The
aggregate withdrawals of Class B and Class C 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 and Class C
shares will be made in the following order: (i) shares representing
reinvested distributions; (ii) shares representing undistributed capital
gains and income; and (iii) to the extent necessary, shares representing
direct investments subject to the lowest CDSC. The CDSC will be waived in
the case of redemptions of Class B and Class C 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 the 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, MFSC. 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 the Fund, change the payee
or change the dollar amount of each payment. MFSC may charge the account
for services rendered and expenses incurred beyond those normally assumed
by the Fund with respect to the liquidation of shares. No charge is
currently assessed against the account, but one could be instituted by
MFSC on 60 days' notice in writing to the shareholder in the event that
the Fund ceases to assume the cost of these services. The 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 the Fund directly to MFSC. 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 at
MFD's discretion 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.

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 six 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 MFSC 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 the 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 MFSC 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. 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 the 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 Class C shares and 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 the 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 and if the purchaser is eligible to purchase the Class of shares) 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 MFSC.

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 "How
to Purchase, Exchange and Redeem Shares" in the Prospectuses of those MFS
money market funds.

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 -- 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 MFSC) or all the shares in the
account. Each exchange involves the redemption of the shares of the Fund
to be exchanged and the purchase 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 MFSC 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 the 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.

Additional information with respect to any of the MFS Funds, including
a copy of its current prospectus, may be obtained from investment dealers
or MFSC. 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.

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 imposed
from time to time at the discretion of the Funds in order to protect the
Funds.

TAX-DEFERRED RETIREMENT PLANS
Shares of the Fund may be purchased by all types of tax-deferred
retirement plans. MFD makes available, through investment dealers, plans
and/or custody agreements, the following:

o Traditional Individual Retirement Accounts (IRAs) (for individuals 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 Roth Individual Retirement Accounts (Roth IRAs) (for individuals who
desire to make limited contributions to a tax-favored retirement
program);

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.

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 MFSC.

XI 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 Declaration of
Trust further authorizes the Trustees to classify or reclassify any series
of shares into one or more classes. Each share of a class of the Fund
represents an equal proportionate interest in the assets of the Fund
allocable to that class. Upon liquidation of the 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.

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. To the extent a shareholder of the Fund owns a controlling
percentage of the Fund's shares, such shareholder may affect the outcome
of such matters to a greater extent than other Fund 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" in Part I of this SAI). 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.

<PAGE>

- --------------------
PART II - APPENDIX A
- --------------------

WAIVERS OF SALES CHARGES
This Appendix sets forth the various circumstances in which all applicable
sales charges are waived (Section I), the initial sales charge and the CDSC
for Class A shares are waived (Section II), and the CDSC for Class B and
Class C shares is waived (Section III). Some of the following information
will not apply to certain funds in the MFS Family of Funds, depending on
which classes of shares are offered by such fund. As used in this Appendix,
the term "dealer" includes any broker, dealer, bank (including bank trust
departments), registered investment adviser, financial planner and any other
financial institutions having a selling agreement or other similar agreement
with MFD.

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 and Class C shares, as
applicable, are waived:

DIVIDEND REINVESTMENT
o Shares acquired through dividend or capital gain reinvestment; and

o Shares acquired by automatic reinvestment of distributions of dividends
and capital gains of any fund in the MFS Funds pursuant to the
Distribution Investment Program.

CERTAIN ACQUISITIONS/LIQUIDATIONS
o Shares acquired on account of the acquisition or liquidation of assets
of other investment companies or personal holding companies.

AFFILIATES OF AN MFS FUND/CERTAIN DEALERS.
Shares acquired by:
o Officers, eligible directors, employees (including retired employees)
and agents of MFS, Sun Life or any of their subsidiary companies;

o Trustees and retired trustees of any investment company for which MFD
serves as distributor;

o Employees, directors, partners, officers and trustees of any
sub-adviser to any MFS Fund;

o Employees or registered representatives of dealers;

o Certain family members of any such individual and their spouses or
domestic partners 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 the MFS Fund
which issued the shares; and

o Institutional Clients of MFS or MFS Institutional Advisors, Inc.

INVOLUNTARY REDEMPTIONS (CDSC WAIVER ONLY)
o 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.

RETIREMENT PLANS (CDSC WAIVER ONLY).
Shares redeemed on account of distributions made under the following
circumstances:

o Individual Retirement Accounts ("IRAs")

> Death or disability of the IRA owner.

o 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;

> Financial hardship (as defined in Treasury Regulation Section
1.401(k)-1(d)(2), as amended from time to time);

> 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 MFSC (the "MFS Participant
Recordkeeping System");

> 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; and

> Shares purchased by certain retirement plans or trust accounts if:
(i) the plan is currently a party to a retirement plan
recordkeeping or administration services agreement with MFD or one
of its affiliates and (ii) the shares purchased or redeemed
represent transfers from or transfers to plan investments other
than the MFS Funds for which retirement plan recordkeeping services
are provided under the terms of such agreement.

o Section 403(b) Salary Reduction Only Plans ("SRO Plans")

> Death or disability of SRO Plan participant.

o Nonqualified deferred compensation plans (currently a party to a
retirement plan recordkeeping or administrative services agreement with
MFD or one of its affiliates)

> Eligible participant distributions, such as distributions due to
death, disability, financial hardship, retirement and termination
of employment.

CERTAIN TRANSFERS OF REGISTRATION
(CDSC WAIVER ONLY).
Shares transferred:
o 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

o From a single account maintained for a 401(a) Plan to multiple accounts
maintained by MFSC 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 MFSC.

LOAN REPAYMENTS
o Shares acquired pursuant to repayments by retirement plan participants
of loans from 401(a) or ESP Plans with respect to which such Plan or
its sponsoring organization subscribes to the MFS FUNDamental 401(k)
Program or the MFS Recordkeeper Plus Program (but not the MFS
Recordkeeper Program).

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:

WRAP ACCOUNT AND FUND "SUPERMARKET"
INVESTMENTS
o Shares acquired by investments through certain dealers (including
registered investment advisers and financial planners) which have
established certain operational arrangements with MFD which include a
requirement that such shares be sold for the sole benefit of clients
participating in a "wrap" account, mutual fund "supermarket" account or
a similar program under which such clients pay a fee to such dealer.

INVESTMENT BY INSURANCE COMPANY SEPARATE
ACCOUNTS
o Shares acquired by insurance company separate accounts.

RETIREMENT PLANS
o Administrative Services Arrangements

> Shares acquired by retirement plans or trust accounts 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.

o 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.

o Reinvestment of Redemption Proceeds from Class B Shares

> Shares acquired by a retirement plan whose sponsoring organization
subscribes to the MFS Participant Recordkeeping System where the
purchase represents the immediate reinvestment of proceeds from the
plan's redemption of its Class B shares of the MFS Funds and is
equal to or exceeds $500,000, either alone or in aggregate with the
current market value of the plan's existing Class A shares.

SHARES REDEEMED ON ACCOUNT OF DISTRIBUTIONS MADE UNDER THE FOLLOWING
CIRCUMSTANCES:

o 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.

o 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.

o 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.

o 401(a) Plans and ESP Plans

> where the retirement plan and/or sponsoring organization does not
subscribe to the MFS Participant Recordkeeping System; and

> where the retirement plan and/or sponsoring organization
demonstrates to the satisfaction of, and certifies to, MFSC that
the retirement plan has, at the time of certification or will have
pursuant to a purchase order placed with the certification, a
market value of $500,000 or more invested in shares of any class or
classes of the MFS Family of Funds and aggregate assets of at least
$10 million;

provided, however, that the CDSC will not be waived (i.e., it will be
imposed) (a) with respect to plans which establish an account with MFSC on
or after November 1, 1997, in the event that the plan makes a complete
redemption of all of its shares in the MFS Family of Funds, or (b) with
respect to plans which establish an account with MFSC prior to November 1,
1997, in the event that there is a change in law or regulations which result
in a material adverse change to the tax advantaged nature of the plan, or in
the event that the plan and/or sponsoring organization: (i) becomes
insolvent or bankrupt; (ii) is terminated under ERISA or is liquidated or
dissolved; or (iii) is acquired by, merged into, or consolidated with any
other entity.

PURCHASES OF AT LEAST $5 MILLION
(CDSC WAIVER ONLY)

o Shares acquired of Eligible Funds (as defined below) if the
shareholder's investment equals or exceeds $5 million in one or more
Eligible Funds (the "Initial Purchase") (this waiver applies to the
shares acquired from the Initial Purchase and all shares of Eligible
Funds subsequently acquired by the shareholder); provided that the
dealer through which the Initial Purchase is made enters into an
agreement with MFD to accept delayed payment of commissions with
respect to the Initial Purchase and all subsequent investments by the
shareholder in the Eligible Funds subject to such requirements as may
be established from time to time by MFD (for a schedule of the amount
of commissions paid by MFD to the dealer on such investments, see
"Purchases -- Class A Shares -- Purchases subject to a CDSC" in the
Prospectus). The Eligible Funds are all funds included in the MFS
Family of Funds, except for Massachusetts Investors Trust,
Massachusetts Investors Growth Stock Fund, MFS Municipal Bond Fund, MFS
Municipal Limited Maturity Fund, MFS Money Market Fund, MFS Government
Money Market Fund and MFS Cash Reserve Fund.

BANK TRUST DEPARTMENTS AND LAW FIRMS

o Shares acquired by certain bank trust departments or law firms acting
as trustee or manager for trust accounts which have entered into an
administrative services agreement with MFD and are acquiring such
shares for the benefit of their trust account clients.

INVESTMENT OF PROCEEDS FROM CERTAIN REDEMPTIONS OF CLASS I SHARES.

o The initial sales charge imposed on purchases of Class A shares, and
the contingent deferred sales charge imposed on certain redemptions of
Class A shares, are waived with respect to Class A shares acquired of
any of the MFS Funds through the immediate reinvestment of the proceeds
of a redemption of Class I shares of any of the MFS Funds.

III WAIVERS OF CLASS B AND CLASS C 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 and Class C shares
is waived:

SYSTEMATIC WITHDRAWAL PLAN
o Systematic Withdrawal Plan redemptions with respect to up to 10% per
year (or 15% per year, in the case of accounts registered as IRAs where
the redemption is made pursuant to Section 72(t) of the Internal
Revenue Code of 1986, as amended) of the account value at the time of
establishment.

DEATH OF OWNER
o 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.

DISABILITY OF OWNER
o 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 MFSC).

RETIREMENT PLANS.
Shares redeemed on account of distributions made under the following
circumstances:

o 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
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.

o 401(a) and ESP Plans Only (Class B CDSC Waiver Only)

> By a retirement plan whose sponsoring organization subscribes to
the MFS Participant Recordkeeping System and which established an
account with MFSC between July 1, 1996 and December 31, 1998;
provided, however, that the CDSC will not be waived (i.e., it will
be imposed) in the event that there is a change in law or
regulations which results in a material adverse change to the tax
advantaged nature of the plan, or in the event that the plan and/or
sponsoring organization: (i) becomes insolvent or bankrupt; (ii) is
terminated under ERISA or is liquidated or dissolved; or (iii) is
acquired by, merged into, or consolidated with any other entity.

> By a retirement plan whose sponsoring organization subscribes to
the MFS Recordkeeper Plus product and which established its account
with MFSC on or after January 1, 1999 (provided that the plan
establishment paperwork is received by MFSC in good order on or
after November 15, 1998). A plan with a pre-existing account(s)
with any MFS Fund which switches to the MFS Recordkeeper Plus
product will not become eligible for this waiver category.

<PAGE>

--------------------
PART II - APPENDIX B
--------------------

DEALER COMMISSIONS AND CONCESSIONS
This Appendix describes the various commissions paid and concessions made to
dealers by MFD in connection with the sale of Fund shares. As used in this
Appendix, the term "dealer" includes any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner
and any other financial institutions having a selling agreement or other
similar agreement with MFD.

CLASS A SHARES
Purchases Subject to an Initial Sales Charge. For purchases of Class A
shares subject to an initial sales charge, MFD reallows a portion of the
initial sales charge to dealers (which are alike for all dealers), as shown
in Appendix D to Part I of this SAI. The difference between the total amount
invested and the sum of (a) the net proceeds to the Fund and (b) the dealer
reallowance, is the amount of the initial sales charge retained by MFD (as
shown in Appendix D to Part I of this SAI). Because of rounding in the
computation of offering price, the portion of the sales charge retained by
MFD 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.

Purchases Subject to a CDSC (but not an Initial Sales Charge). For
purchases of Class A shares subject to a CDSC, MFD pays commissions to
dealers on new investments made through such dealers as follows:

COMMISSION
PAID BY MFD
TO DEALERS CUMULATIVE PURCHASE AMOUNT
------------------------------------------------------

1.00% On the first $2,000,000, plus
0.80% Over $2,000,000 to $3,000,000, plus
0.50% Over $3,000,000 to $50,000,000, plus
0.25% Over $50,000,000

Except for those employer sponsored retirement plans described below, for
purposes of determining the level of commissions to be paid to dealers with
respect to a shareholder's new investment in Class A shares purchases for
each shareholder account (and certain other accounts for which the
shareholder is a record or beneficial holder) will be aggregated over a
12-month period (commencing from the date of the first such purchase).

In the case of employer sponsored retirement plans whose account
application or other account establishment paperwork is received in good
order after December 31, 1999, purchases will be aggregated as described
above but the cumulative purchase amount will not be re-set after the date
of the first such purchase.

CLASS B SHARES

For purchases of Class B shares, 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 the
Fund's Distribution Plan 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).

For purchases of Class B shares by a retirement plan whose sponsoring
organization subscribes to the MFS Participant Recordkeeping System and
which established its account with MFSC between July 1, 1996 and December
31, 1998, MFD pays an amount to dealers equal to 3.00% of the amount
purchased through such dealers (rather than the 4.00% payment described
above), which is comprised of a commission of 2.75% plus the advancement of
the first year service fee equal to 0.25% of the purchase price payable
under the Fund's Distribution Plan.

For purchases of Class B shares by a retirement plan whose sponsoring
organization subscribes to the MFS Recordkeeper Plus product and which has
established its account with MFSC on or after January 1, 1999 (provided that
the plan establishment paperwork is received by MFSC in good order on or
after November 15, 1998), MFD pays no up front commissions to dealers, but
instead pays an amount to dealers equal to 1% per annum of the average daily
net assets of the Fund attributable to plan assets, payable at the rate of
0.25% at the end of each calendar quarter, in arrears. This commission
structure is not available with respect to a plan with a pre-existing
account(s) with any MFS Fund which seeks to switch to the MFS Recordkeeper
Plus product.

CLASS C SHARES
For purchases of Class C shares, MFD will pay dealers 1.00% of the purchase
price of Class C shares purchased through dealers and, as compensation
therefor, MFD will retain the 1.00% per annum distribution and service fee
paid under the Fund's Distribution Plan to MFD for the first year after
purchase.

ADDITIONAL DEALER COMMISSIONS/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 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 and/or Class C shares of certain specified 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 or arrange for the sale of
shares of the 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
and other employees, payment for travel expenses, including lodging,
incurred by registered representatives and other employees for such seminars
or training programs, seminars for the public, advertising and sales
campaigns regarding one or more 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 and other employees 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.

<PAGE>

--------------------
PART II - APPENDIX C
--------------------

INVESTMENT TECHNIQUES, PRACTICES AND RISKS
Set forth below is a description of investment techniques and practices
which the MFS Funds may generally use in pursuing their investment
objectives and principal investment policies, and the risks associated with
these investment techniques and practices. The Fund will engage only in
certain of these investment techniques and practices, as identified in
Appendix A of the Fund's Prospectus. Investment practices and techniques
that are not identified in Appendix A of the Fund's Prospectus do not apply
to the Fund.

INVESTMENT TECHNIQUES AND PRACTICES
DEBT SECURITIES
To the extent the Fund invests in the following types of debt securities,
its net asset value may change as the general levels of interest rates
fluctuate. When interest rates decline, the value of debt securities can be
expected to rise. Conversely, when interest rates rise, the value of debt
securities can be expected to decline. The Fund's investment in debt
securities with longer terms to maturity are subject to greater volatility
than the Fund's shorter-term obligations. Debt securities may have all types
of interest rate payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and auction rate
features.

ASSET-BACKED SECURITIES: The Fund may purchase the following types of
asset-backed securities:

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH
SECURITIES: The 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.

The 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.

CORPORATE ASSET-BACKED SECURITIES: The 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. These 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. The 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.

MORTGAGE PASS-THROUGH SECURITIES: The 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 a 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.
In the event of an increase in interest rates which results in a decline in
mortgage prepayments, the anticipated maturity of mortgage pass-through
securities held by the Fund may increase, effectively changing a security
which was considered short or intermediate-term at the time of purchase into
a long-term security. Long- term securities generally fluctuate more widely
in response to changes in interest rates than short or intermediate-term
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.

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. The Fund
may also buy mortgage-related securities without insurance or guarantees.

STRIPPED MORTGAGE-BACKED SECURITIES: The 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 "I0" class) while the other class will
receive all of the principal (the principal-only or "P0" class). The yield
to maturity on an I0 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, the 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.

CORPORATE SECURITIES: The Fund may invest in debt securities, such as
convertible and non-convertible bonds, notes and debentures, issued by
corporations, limited partnerships and other similar entities.

LOANS AND OTHER DIRECT INDEBTEDNESS: The Fund may purchase loans and other
direct indebtedness. In purchasing a loan, the 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 the 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 borrowers obligation, or
that the collateral can be liquidated.

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 the 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 lenders interest in a
loan either directly from the lender or through an intermediary. The 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 the
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 the 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 the 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.

The 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 the Fund will purchase, the Adviser will rely upon
its own (and not the original lending institution's) credit analysis of the
borrower. As the 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
the Fund.

LOWER RATED BONDS: The Fund may invest in fixed income securities rated Ba
or lower by Moody's or BB or lower by S&P, Fitch or Duff & Phelps and
comparable unrated securities (commonly known as "junk bonds"). See Appendix
D for a description of bond ratings. No minimum rating standard is required
by the 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.

While the Adviser may refer to ratings issued by established credit rating
agencies, it is not the 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.

MUNICIPAL BONDS: The Fund may invest in debt securities issued by or on
behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies or
instrumentalities, the interest on which is exempt from federal income tax
("Municipal Bonds"). Municipal Bonds include debt securities which pay
interest income that is subject to the alternative minimum tax. The Fund may
invest in Municipal Bonds whose issuers pay interest on the Bonds from
revenues from projects such as multifamily housing, nursing homes, electric
utility systems, hospitals or life care facilities.

If a revenue bond is secured by payments generated from a project, and the
revenue bond is also secured by a lien on the real estate comprising the
project, foreclosure by the indenture trustee on the lien for the benefit of
the bondholders creates additional risks associated with owning real estate,
including environmental risks.

Housing revenue bonds typically are issued by a state, county or local
housing authority and are secured only by the revenues of mortgages
originated by the authority using the proceeds of the bond issue. Because of
the impossibility of precisely predicting demand for mortgages from the
proceeds of such an issue, there is a risk that the proceeds of the issue
will be in excess of demand, which would result in early retirement of the
bonds by the issuer. Moreover, such housing revenue bonds depend for their
repayment upon the cash flow from the underlying mortgages, which cannot be
precisely predicted when the bonds are issued. Any difference in the actual
cash flow from such mortgages from the assumed cash flow could have an
adverse impact upon the ability of the issuer to make scheduled payments of
principal and interest on the bonds, or could result in early retirement of
the bonds. Additionally, such bonds depend in part for scheduled payments of
principal and interest upon reserve funds established from the proceeds of
the bonds, assuming certain rates of return on investment of such reserve
funds. If the assumed rates of return are not realized because of changes in
interest rate levels or for other reasons, the actual cash flow for
scheduled payments of principal and interest on the bonds may be inadequate.
The financing of multi-family housing projects is affected by a variety of
factors, including satisfactory completion of construction within cost
constraints, the achievement and maintenance of a sufficient level of
occupancy, sound management of the developments, timely and adequate
increases in rents to cover increases in operating expenses, including
taxes, utility rates and maintenance costs, changes in applicable laws and
governmental regulations and social and economic trends.

Electric utilities face problems in financing large construction programs
in inflationary periods, cost increases and delay occasioned by
environmental considerations (particularly with respect to nuclear
facilities), difficulty in obtaining fuel at reasonable prices, the cost of
competing fuel sources, difficulty in obtaining sufficient rate increases
and other regulatory problems, the effect of energy conservation and
difficulty of the capital market to absorb utility debt.

Health care facilities include life care facilities, nursing homes and
hospitals. Life care facilities are alternative forms of long-term housing
for the elderly which offer residents the independence of condominium life
style and, if needed, the comprehensive care of nursing home services. Bonds
to finance these facilities have been issued by various state industrial
development authorities. Since the bonds are secured only by the revenues of
each facility and not by state or local government tax payments, they are
subject to a wide variety of risks. Primarily, the projects must maintain
adequate occupancy levels to be able to provide revenues adequate to
maintain debt service payments. Moreover, in the case of life care
facilities, since a portion of housing, medical care and other services may
be financed by an initial deposit, there may be risk if the facility does
not maintain adequate financial reserves to secure estimated actuarial
liabilities. The ability of management to accurately forecast inflationary
cost pressures weighs importantly in this process. The facilities may also
be affected by regulatory cost restrictions applied to health care delivery
in general, particularly state regulations or changes in Medicare and
Medicaid payments or qualifications, or restrictions imposed by medical
insurance companies. They may also face competition from alternative health
care or conventional housing facilities in the private or public sector.
Hospital bond ratings are often based on feasibility studies which contain
projections of expenses, revenues and occupancy levels. A hospital's gross
receipts and net income available to service its debt are influenced by
demand for hospital services, the ability of the hospital to provide the
services required, management capabilities, economic developments in the
service area, efforts by insurers and government agencies to limit rates and
expenses, confidence in the hospital, service area economic developments,
competition, availability and expense of malpractice insurance, Medicaid and
Medicare funding, and possible federal legislation limiting the rates of
increase of hospital charges.

The Fund may invest in municipal lease securities. These are undivided
interests in a portion of an obligation in the from of a lease or
installment purchase which is issued by state and local governments to
acquire equipment and facilities. Municipal leases frequently have special
risks not normally associated with general obligation or revenue bonds.
Leases and installment purchase or conditional sale contracts (which
normally provide for title to the leased asset to pass eventually to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and
statutory requirements for the issuance of debt. The debt-issuance
limitations are deemed to be inapplicable because of the inclusion in many
leases or contracts of "non-appropriation" clauses that provide that the
governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. Although
the obligations will be secured by the leased equipment or facilities, the
disposition of the property in the event of non-appropriation or foreclosure
might, in some cases, prove difficult. There are, of course, variations in
the security of municipal lease securities, both within a particular
classification and between classifications, depending on numerous factors.

The Fund may also invest in bonds for industrial and other projects, such
as sewage or solid waste disposal or hazardous waste treatment facilities.
Financing for such projects will be subject to inflation and other general
economic factors as well as construction risks including labor problems,
difficulties with construction sites and the ability of contractors to meet
specifications in a timely manner. Because some of the materials, processes
and wastes involved in these projects may include hazardous components,
there are risks associated with their production, handling and disposal.

SPECULATIVE BONDS: The Fund may invest in fixed income and convertible
securities rated Baa by Moody's or BBB by S&P, Fitch or Duff & Phelps and
comparable unrated securities. See Appendix D for a description of bond
ratings. 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.

U.S. GOVERNMENT SECURITIES: The Fund may invest in U.S. Government
Securities including (i) U.S. Treasury obligations, all of which are backed
by the full faith and credit of the U.S. Government and (ii) U.S. Government
Securities, some of which are backed by the full faith and credit of the
U.S. Treasury, e.g., direct pass-through certificates of the GNMA; some of
which are backed only by the credit of the issuer itself, e.g., obligations
of the Student Loan Marketing Association; and some of which are supported
by the discretionary authority of the U.S. Government to purchase the
agency's obligations, e.g., obligations of the FNMA.

U.S. Government Securities also include interests in trust or other
entities representing interests in obligations that are issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities.

VARIABLE AND FLOATING RATE OBLIGATIONS: The Fund may invest in floating or
variable rate securities. Investments in floating or variable rate
securities normally will involve industrial development or revenue bonds
which provide that the rate of interest is set as a specific percentage of a
designated base rate, such as rates on Treasury Bonds or Bills or the prime
rate at a major commercial bank, and that a bondholder can demand payment of
the obligations on behalf of the Fund on short notice at par plus accrued
interest, which amount may be more or less than the amount the bondholder
paid for them. The maturity of floating or variable rate obligations
(including participation interests therein) is deemed to be the longer of
(i) the notice period required before the Fund is entitled to receive
payment of the obligation upon demand or (ii) the period remaining until the
obligation's next interest rate adjustment. If not redeemed by the Fund
through the demand feature, the obligations mature on a specified date which
may range up to thirty years from the date of issuance.

ZERO COUPON BONDS, DEFERRED INTEREST BONDS AND PIK BONDS: The 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. The 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 the Fund's distribution obligations.

EQUITY SECURITIES
The 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.

FOREIGN SECURITIES EXPOSURE
The Fund may invest in various types of foreign securities, or securities
which provide the Fund with exposure to foreign securities or foreign
currencies, as discussed below:

BRADY BONDS: The 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, Croatia, Dominican Republic, Ecuador, Jordan,
Mexico, Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Slovenia,
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.

DEPOSITARY RECEIPTS: The Fund may invest in American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs") and other types of depositary
receipts. ADRs are certificates by a U.S. depositary (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. GDRs and other types of
depositary receipts are typically issued by foreign banks or trust companies
and evidence ownership of underlying securities issued by either a foreign
or a U.S. company. Generally, ADRs are in registered form and are designed
for use in U.S. securities markets and GDRs are in bearer form and are
designed for use in foreign securities markets. For the purposes of the
Fund's policy to invest a certain percentage of its assets in foreign
securities, the investments of the Fund in ADRs, GDRs and other types of
depositary receipts are deemed to be investments in the underlying
securities.

ADRs may be sponsored or unsponsored. A sponsored ADR is issued by a
depositary 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. The 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 United States can reduce costs and delays as well as potential currency
exchange and other difficulties. The Fund may purchase securities in local
markets and direct delivery of these ordinary shares to the local depositary
of an ADR agent bank in foreign country. Simultaneously, the ADR agents
create a certificate which settles at the Fund's custodian in five days. The
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 United States as a domestic issuer.
Accordingly, information available to a U.S. investor will be limited to the
information the foreign issuer is required to disclose in its 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 a foreign currency.

DOLLAR-DENOMINATED FOREIGN DEBT SECURITIES: The Fund may invest in
dollar-denominated foreign debt securities. Investing in dollar-denominated
foreign debt represents a greater degree of risk than investing in domestic
securities, due to less publicly available information, less securities
regulation, war or expropriation. Special considerations may include higher
brokerage costs and thinner trading markets. Investments in foreign
countries could be affected by other factors including extended settlement
periods.

EMERGING MARKETS: The Fund may invest in securities of government,
government-related, supranational and corporate issuers located in emerging
markets. Emerging markets include any country determined by the Adviser to
have an emerging market economy, taking into account a number of factors,
including whether the country has a low- to middle-income economy according
to the International Bank for Reconstruction and Development, the country's
foreign currency debt rating, its political and economic stability and the
development of its financial and capital markets. 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 securities, the source of its revenues and the
location of its assets. Such investments entail significant risks as
described below.

o Company Debt -- Governments of many emerging market countries have
exercised and continue to exercise substantial influence over many
aspects of the private sector through the ownership or control of many
companies, including some of the largest in any given country. As a
result, government actions in the future could have a significant effect
on economic conditions in emerging markets, which in turn, may adversely
affect companies in the private sector, general market conditions and
prices and yields of certain of the securities in the Fund's portfolio.
Expropriation, confiscatory taxation, nationalization, political,
economic or social instability or other similar developments have
occurred frequently over the history of certain emerging markets and
could adversely affect the Fund's assets should these conditions recur.

o Default; Legal Recourse -- The Fund may have limited legal recourse in
the event of a default with respect to certain debt obligations it may
hold. If the issuer of a fixed income security owned by the Fund
defaults, the Fund may incur additional expenses to seek recovery. Debt
obligations issued by emerging market governments differ from debt
obligations of private entities; remedies from defaults on debt
obligations issued by emerging market governments, unlike those on
private debt, must be pursued in the courts of the defaulting party
itself. The Fund's ability to enforce its rights against private issuers
may be limited. The ability to attach assets to enforce a judgment may be
limited. Legal recourse is therefore somewhat diminished. Bankruptcy,
moratorium and other similar laws applicable to private issuers of debt
obligations may be substantially different from those of other countries.
The political context, expressed as an emerging market governmental
issuer's willingness to meet the terms of the debt obligation, for
example, is of considerable importance. In addition, no assurance can be
given that the holders of commercial bank debt may not contest payments
to the holders of debt obligations in the event of default under
commercial bank loan agreements.

o Foreign Currencies -- The securities in which the Fund invests may be
denominated in foreign currencies and international currency units and
the Fund may invest a portion of its assets directly in foreign
currencies. Accordingly, the weakening of these currencies and units
against the U.S. dollar may result in a decline in the Fund's asset
value.

Some emerging market countries also may have managed currencies, which
are not free floating against the U.S. dollar. In addition, there is risk
that certain emerging market countries may restrict the free conversion
of their currencies into other currencies. Further, certain emerging
market currencies may not be internationally traded. Certain of these
currencies have experienced a steep devaluation relative to the U.S.
dollar. Any devaluations in the currencies in which a Fund's portfolio
securities are denominated may have a detrimental impact on the Fund's
net asset value.

o Inflation -- Many emerging markets have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had and may continue to
have adverse effects on the economies and securities markets of certain
emerging market countries. In an attempt to control inflation, wage and
price controls have been imposed in certain countries. Of these
countries, some, in recent years, have begun to control inflation through
prudent economic policies.

o Liquidity; Trading Volume; Regulatory Oversight -- The securities markets
of emerging market countries are substantially smaller, less developed,
less liquid and more volatile than the major securities markets in the
U.S. Disclosure and regulatory standards are in many respects less
stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors
in such markets.

The limited size of many emerging market securities markets and limited
trading volume in the securities of emerging market issuers compared to
volume of trading in the securities of U.S. issuers could cause prices to
be erratic for reasons apart from factors that affect the soundness and
competitiveness of the securities issuers. For example, limited market
size may cause prices to be unduly influenced by traders who control
large positions. Adverse publicity and investors' perceptions, whether or
not based on in-depth fundamental analysis, may decrease the value and
liquidity of portfolio securities.

The risk also exists that an emergency situation may arise in one or more
emerging markets, as a result of which trading of securities may cease or
may be substantially curtailed and prices for the Fund's securities in
such markets may not be readily available. The Fund may suspend
redemption of its shares for any period during which an emergency exists,
as determined by the Securities and Exchange Commission (the "SEC").
Accordingly, if the Fund believes that appropriate circumstances exist,
it will promptly apply to the SEC for a determination that an emergency
is present. During the period commencing from the Fund's identification
of such condition until the date of the SEC action, the Fund's securities
in the affected markets will be valued at fair value determined in good
faith by or under the direction of the Board of Trustees.

o Sovereign Debt -- Investment in sovereign debt can involve a high degree
of risk. The governmental entity that controls the repayment of sovereign
debt may not be able or willing to repay the principal and/or interest
when due in accordance with the terms of such debt. A governmental
entity's willingness or ability to repay principal and interest due in a
timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative
size of the debt service burden to the economy as a whole, the
governmental entity's policy towards the International Monetary Fund and
the political constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected disbursements
from foreign governments, multilateral agencies and others abroad to
reduce principal and interest on their debt. The commitment on the part
of these governments, agencies and others to make such disbursements may
be conditioned on a governmental entity's implementation of economic
reforms and/or economic performance and the timely service of such
debtor's obligations. Failure to implement such reforms, achieve such
levels of economic performance or repay principal or interest when due
may result in the cancellation of such third parties' commitments to lend
funds to the governmental entity, which may further impair such debtor's
ability or willingness to service its debts in a timely manner.
Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt (including the Fund) may be requested to
participate in the rescheduling of such debt and to extend further loans
to governmental entities. There is no bankruptcy proceedings by which
sovereign debt on which governmental entities have defaulted may be
collected in whole or in part.

Emerging market governmental issuers are among the largest debtors to
commercial banks, foreign governments, international financial
organizations and other financial institutions. Certain emerging market
governmental issuers have not been able to make payments of interest on
or principal of debt obligations as those payments have come due.
Obligations arising from past restructuring agreements may affect the
economic performance and political and social stability of those issuers.

The ability of emerging market governmental issuers to make timely
payments on their obligations is likely to be influenced strongly by the
issuer's balance of payments, including export performance, and its
access to international credits and investments. An emerging market whose
exports are concentrated in a few commodities could be vulnerable to a
decline in the international prices of one or more of those commodities.
Increased protectionism on the part of an emerging market's trading
partners could also adversely affect the country's exports and tarnish
its trade account surplus, if any. To the extent that emerging markets
receive payment for their exports in currencies other than dollars or
non-emerging market currencies, its ability to make debt payments
denominated in dollars or non-emerging market currencies could be
affected.

To the extent that an emerging market country cannot generate a trade
surplus, it must depend on continuing loans from foreign governments,
multilateral organizations or private commercial banks, aid payments from
foreign governments and on inflows of foreign investment. The access of
emerging markets to these forms of external funding may not be certain,
and a withdrawal of external funding could adversely affect the capacity
of emerging market country governmental issuers to make payments on their
obligations. In addition, the cost of servicing emerging market debt
obligations can be affected by a change in international interest rates
since the majority of these obligations carry interest rates that are
adjusted periodically based upon international rates.

Another factor bearing on the ability of emerging market countries to
repay debt obligations is the level of international reserves of the
country. Fluctuations in the level of these reserves affect the amount of
foreign exchange readily available for external debt payments and thus
could have a bearing on the capacity of emerging market countries to make
payments on these debt obligations.

o Withholding -- Income from securities held by the Fund could be reduced
by a withholding tax on the source or other taxes imposed by the emerging
market countries in which the Fund makes its investments. The Fund's net
asset value may also be affected by changes in the rates or methods of
taxation applicable to the Fund or to entities in which the Fund has
invested. The Adviser will consider the cost of any taxes in determining
whether to acquire any particular investments, but can provide no
assurance that the taxes will not be subject to change.

FOREIGN SECURITIES: The Fund may invest in dollar-denominated and non
dollar-denominated foreign securities. 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.

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. As a result
of its investments in foreign securities, the 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, the 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. The Fund's investments in foreign securities may
also include "privatizations." Privatizations are situations where the
government in a given country, including emerging market countries, sells
part or all of its stakes in government owned or controlled enterprises. In
certain countries, the ability of foreign entities to participate in
privatizations may be limited by local law and the terms on which the
foreign entities may be permitted to participate may be less advantageous
than those afforded local investors.

FORWARD CONTRACTS
The 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 (e.g., to protect its
current or intended investments from fluctuations in currency exchange
rates) as well as for non-hedging purposes.

A Forward Contract to sell a currency may be entered into where the 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 dollar value of portfolio securities or the increase in the dollar
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. The Fund does not presently intend to hold Forward
Contracts entered into until the value date, 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.

The Fund will also enter into transactions in Forward Contracts for other
than hedging purposes, which presents greater profit potential but also
involves increased risk. For example, the 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.

The Fund will profit if the anticipated movements in foreign currency
exchange rates occur, 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.

The use by the Fund of Forward Contracts also involves the risks described
under the caption "Special Risk Factors -- Options, Futures, Forwards, Swaps
and Other Derivative Transactions" in this Appendix.

FUTURES CONTRACTS
The Fund may purchase and sell futures contracts ("Futures Contracts") on
stock indices, foreign currencies, interest rates or interest-rate related
instruments, indices of foreign currencies or commodities. The Fund may also
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, foreign
currency or commodity, 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 month in which, in
the case of the majority of commodities, interest rate and foreign currency
futures contracts, the underlying commodities, fixed income securities or
currency are delivered by the seller and paid for by the purchaser, or on
which, in the case of 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 the Fund's current or intended stock investments from broad
fluctuations in stock prices. For example, the 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 the 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.

Interest rate Futures Contracts may be purchased or sold to attempt to
protect against the effects of interest rate changes on the Fund's current
or intended investments in fixed income securities. For example, if the Fund
owned long-term bonds and interest rates were expected to increase, the 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 the Fund's portfolio. If interest rates did increase,
the value of the debt securities in the portfolio would decline, but the
value of the Fund's interest rate futures contracts would increase at
approximately the same rate, subject to the correlation risks described
below, thereby keeping the net asset value of the 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, the 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
the Fund's cash reserves could then be used to buy long-term bonds on the
cash market. The 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 may be
more liquid than the cash market in certain cases or at certain times, the
use of interest rate futures contracts as a hedging technique may allow the
Fund to hedge its interest rate risk without having to sell its portfolio
securities.

The 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 dollar 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. The 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, the 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 the 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.

The use by the Fund of Futures Contracts also involves the risks described
under the caption "Special Risk Factors -- Options, Futures, Forwards, Swaps
and Other Derivative Transactions" in this Appendix.

INDEXED SECURITIES
The Fund may purchase securities with principal and/or interest payments
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. The Fund may also
purchase indexed deposits with similar characteristics. 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. Certain indexed securities may expose the Fund to the risk of
loss of all or a portion of the principal amount of its investment and/or
the interest that might otherwise have been earned on the amount invested.

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-sponsored entities.

INVERSE FLOATING RATE OBLIGATIONS
The Fund may invest in so-called "inverse floating rate obligations" or
"residual interest bonds" or other obligations or certificates relating
thereto structured to have similar features. In creating such an obligation,
a municipality issues a certain amount of debt and pays a fixed interest
rate. Half of the debt is issued as variable rate short term obligations,
the interest rate of which is reset at short intervals, typically 35 days.
The other half of the debt is issued as inverse floating rate obligations,
the interest rate of which is calculated based on the difference between a
multiple of (approximately two times) the interest paid by the issuer and
the interest paid on the short-term obligation. Under usual circumstances,
the holder of the inverse floating rate obligation can generally purchase an
equal principal amount of the short term obligation and link the two
obligations in order to create long-term fixed rate bonds. Because the
interest rate on the inverse floating rate obligation is determined by
subtracting the short-term rate from a fixed amount, the interest rate will
decrease as the short-term rate increases and will increase as the
short-term rate decreases. The magnitude of increases and decreases in the
market value of inverse floating rate obligations may be approximately twice
as large as the comparable change in the market value of an equal principal
amount of long-term bonds which bear interest at the rate paid by the issuer
and have similar credit quality, redemption and maturity provisions.

INVESTMENT IN OTHER INVESTMENT COMPANIES
The Fund may invest in other investment companies. The total return on such
investment will be reduced by the operating expenses and fees of such other
investment companies, including advisory fees.

OPEN-END FUNDS. The Fund may invest in open-end investment companies.

CLOSED-END FUNDS. The Fund may invest in closed-end investment companies.
Such investment may involve the payment of substantial premiums above the
value of such investment companies' portfolio securities.

LENDING OF PORTFOLIO SECURITIES
The 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, an irrevocable letter 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. The 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. The Fund would also receive a fee from the borrower
or compensation from the investment of the collateral, less a fee paid to
the borrower (if the collateral is in the form of cash). The 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.

LEVERAGING TRANSACTIONS
The Fund may engage in the types of transactions described below, which
involve "leverage" because in each case the Fund receives cash which it can
invest in portfolio securities and has a future obligation to make a
payment. The use of these transactions by the Fund will generally cause its
net asset value to increase or decrease at a greater rate than would
otherwise be the case. Any investment income or gains earned from the
portfolio securities purchased with the proceeds from these transactions
which is in excess of the expenses associated from these transactions can be
expected to cause the value of the Fund's shares and distributions on the
Fund's shares to rise more quickly than would otherwise be the case.
Conversely, if the investment income or gains earned from the portfolio
securities purchased with proceeds from these transactions fail to cover the
expenses associated with these transactions, the value of the Fund's shares
is likely to decrease more quickly than otherwise would be the case and
distributions thereon will be reduced or eliminated. Hence, these
transactions are speculative, involve leverage and increase the risk of
owning or investing in the shares of the Fund. These transactions also
increase the Fund's expenses because of interest and similar payments and
administrative expenses associated with them. Unless the appreciation and
income on assets purchased with proceeds from these transactions exceed the
costs associated with them, the use of these transactions by a Fund would
diminish the investment performance of the Fund compared with what it would
have been without using these transactions.

BANK BORROWINGS: The Fund may borrow money for investment purposes from
banks and invest the proceeds in accordance with its investment objectives
and policies.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS: The 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, the Fund foregoes principal and interest paid on the
mortgage-backed securities. The 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, and gains from, the investment of the cash proceeds of the
initial sale. The Fund may also be compensated by receipt of a commitment
fee.

If the income and capital gains from the Fund's investment of the cash
from the initial sale do not exceed the income, capital appreciation and
gain or loss that would have been realized on the securities sold as part of
the dollar roll, the use of this technique will diminish the investment
performance of the Fund compared with what the performance would have been
without the use of the dollar rolls. Dollar roll transactions involve the
risk that the market value of the securities the Fund is required to
purchase may decline below the agreed upon repurchase price of those
securities. If the broker/dealer to whom the Fund sells securities becomes
insolvent, the Fund's right to purchase or repurchase securities may be
restricted. Successful use of mortgage dollar rolls may depend upon the
Adviser's ability to correctly predict interest rates and prepayments. There
is no assurance that dollar rolls can be successfully employed.

REVERSE REPURCHASE AGREEMENTS: The Fund may enter into reverse repurchase
agreements. In a reverse repurchase agreement, the Fund will sell securities
and receive cash proceeds, subject to its agreement to repurchase the
securities at a later date for a fixed price reflecting a market rate of
interest. There is a risk that the counter party to a reverse repurchase
agreement will be unable or unwilling to complete the transaction as
scheduled, which may result in losses to the Fund. The Fund will invest the
proceeds received under a reverse repurchase agreement in accordance with
its investment objective and policies.

OPTIONS
The Fund may invest in the following types of options, which involve the
risks described under the caption "Special Risk Factors -- Options, Futures,
Forwards, Swaps and Other Derivative Transactions" in this Appendix:

OPTIONS ON FOREIGN CURRENCIES: The Fund may purchase and write options on
foreign currencies for hedging and non-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, the 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, the Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effect 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. The
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 less related
transaction costs. As in the case of other types of options, therefore, the
writing of Options on Foreign Currencies will constitute only a partial
hedge.

Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the
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 the 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 the 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, the 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. The use of
foreign currency options for non-hedging purposes, like the use of other
types of derivatives for such purposes, presents greater profit potential
but also significant risk of loss and could be considered speculative.

OPTIONS ON FUTURES CONTRACTS: The 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.

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 type (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
Fund's profit or loss on the transaction.

Options on Futures Contracts that are written or purchased by the 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 Commodity 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. The 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 Fund owns liquid
and unencumbered assets equal to the difference. The Fund may cover the
writing of put Options on Futures Contracts (a) through sales of the
underlying Futures Contract, (b) through the ownership of liquid and
unencumbered assets 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 (i) is equal to or greater than the
exercise price of the put written or where the exercise price of the put
held (ii) is less than the exercise price of the put written if the Fund
owns liquid and unencumbered assets equal to the difference. 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 the 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 the 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.

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, the 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, the 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 the 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, the 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.

The 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, the 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 the Fund will increase prior to acquisition, due to a market
advance or changes in interest or exchange rates, the Fund could purchase
call Options on Futures Contracts rather than purchasing the underlying
Futures Contracts.

OPTIONS ON SECURITIES: The Fund may write (sell) covered put and call
options, and purchase put and call options, on securities. Call and put
options written by the Fund may be covered in the manner set forth below.

A call option written by the 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 if the Fund owns liquid and unencumbered
assets equal to the amount of cash consideration) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if the 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 Fund owns
liquid and unencumbered assets equal to the difference. A put option written
by the Fund is "covered" if the Fund owns liquid and unencumbered assets
with a value equal to the exercise price, 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 Fund owns liquid and
unencumbered assets equal to the difference. Put and call options written by
the Fund may also be covered in such other manner as may be in accordance
with the requirements of the exchange on which, or the counterparty 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.

Effecting a closing transaction in the case of a written call option will
permit the 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 Fund owns liquid and unencumbered assets. Such
transactions permit the 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 the Fund, provided that another option on such security is
not written. If the 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.

The 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 the Fund
is more than the premium paid for the original purchase. Conversely, the
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 the 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, the 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, the 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.

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 the 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, the
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; the 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
the Fund in the same market environments that call options are used in
equivalent buy-and-write transactions.

The 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, the 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.

By writing a call option, the 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, the 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 the 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.

The 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
the 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, the 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.

The 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 the Fund upon exercise of the
option, and, unless the price of the underlying security rises sufficiently,
the option may expire worthless to the Fund.

OPTIONS ON STOCK INDICES: The 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 generally 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." The Fund may cover written 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 if the Fund owns
liquid and unencumbered assets equal to the amount of cash consideration)
upon conversion or exchange of other securities in its portfolio. Where the
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. The 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 Fund owns liquid and unencumbered assets equal to the
difference. The Fund may cover put options on stock indices by owning liquid
and unencumbered assets with a value equal to the exercise price, 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 (a) is equal to or
greater than the exercise price of the put written or (b) is less than the
exercise price of the put written if the Fund owns liquid and unencumbered
assets equal to the difference. 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.

The 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
the 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, the Fund assumes the risk of a decline in the index. To the
extent that the price changes of securities owned by the Fund correlate with
changes in the value of the index, writing covered put options on indices
will increase the 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.

The 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, the 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 the 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, the 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 the 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.

RESET OPTIONS:
In certain instances, the Fund may purchase or write 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 for a reset option written by the Fund 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. Conversely,
where the Fund purchases a reset option, it could be required to pay a
higher premium than would have been the case at the initiation of the
option.

"YIELD CURVE" OPTIONS: The 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.

Yield curve options may be used for the same purposes as other options on
securities. Specifically, the Fund may purchase or write such options for
hedging purposes. For example, the 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. The 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 the 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 owns liquid and unencumbered
assets sufficient to cover the Fund's net liability under the two options.
Therefore, the 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.

REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with sellers who are member
firms (or a subsidiary thereof) of the New York Stock 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 the 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 amount agreed upon on the agreed upon delivery date or upon demand,
as the case may be, the 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. The Fund has
adopted and follows procedures which are intended to minimize the risks of
repurchase agreements. For example, the 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 collateral.

RESTRICTED SECURITIES
The Fund may purchase securities that are not registered under the
Securities Act of 1933, as amended ("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") and
commercial paper issued under Section 4(2) of the 1933 Act ("4(2) Paper"). A
determination is made, based upon a continuing review of the trading markets
for the Rule 144A security or 4(2) Paper, whether such security is liquid
and thus not subject to the Fund's limitation on investing in illiquid
investments. The Board of Trustees has adopted guidelines and delegated to
MFS the daily function of determining and monitoring the liquidity of Rule
144A securities and 4(2) Paper. The Board, however, retains oversight of the
liquidity determinations focusing on factors such as valuation, liquidity
and availability of information. Investing in Rule 144A securities could
have the effect of decreasing the level of liquidity in the Fund to the
extent that qualified institutional buyers become for a time uninterested in
purchasing these Rule 144A securities held in the Fund's portfolio. Subject
to the Fund's limitation on investments in illiquid investments, the Fund
may also invest in restricted securities that may not be sold under Rule
144A, which presents certain risks. As a result, the 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.

SHORT SALES
The 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 price of the security declines 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.

Whenever the Fund engages in short sales, it identifies liquid and
unencumbered assets in an amount that, when combined with the amount of
collateral deposited with the broker connection with the short sale, equals
the current market value of the security sold short.

SHORT SALES AGAINST THE BOX
The Fund 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.

SHORT TERM INSTRUMENTS

The Fund may hold cash and invest in cash equivalents, such as short-term
U.S. Government Securities, commercial paper and bank instruments.

SWAPS AND RELATED DERIVATIVE INSTRUMENTS
The Fund may enter into interest rate swaps, currency swaps and other types
of available swap agreements, including swaps on securities, commodities and
indices, and related types of derivatives, such as caps, collars and floors.
A swap is an agreement between two parties pursuant to which each party
agrees to make one or more payments to the other on regularly scheduled
dates over a stated term, based on different interest rates, currency
exchange rates, security or commodity prices, the prices or rates of other
types of financial instruments or assets or the levels of specified indices.
Under a typical swap, one party may agree to pay a fixed rate or a floating
rate determined by reference to a specified instrument, rate or index,
multiplied in each case by a specified amount (the "notional amount"), while
the other party agrees to pay an amount equal to a different floating rate
multiplied by the same notional amount. On each payment date, the
obligations of parties are netted, with only the net amount paid by one
party to the other. All swap agreements entered into by the Fund with the
same counterparty are generally governed by a single master agreement, which
provides for the netting of all amounts owed by the parties under the
agreement upon the occurrence of an event of default, thereby reducing the
credit risk to which such party is exposed.

Swap agreements are typically individually negotiated and structured to
provide exposure to a variety of different types of investments or market
factors. Swap agreements may be entered into for hedging or non-hedging
purposes and therefore may increase or decrease the Fund's exposure to the
underlying instrument, rate, asset or index. Swap agreements can take many
different forms and are known by a variety of names. The Fund is not limited
to any particular form or variety of swap agreement if the Adviser
determines it is consistent with the Fund's investment objective and
policies.

For example, the Fund may enter into an interest rate swap in order to
protect against declines in the value of fixed income securities held by the
Fund. In such an instance, the Fund would agree with a counterparty to pay a
fixed rate (multiplied by a notional amount) and the counterparty would
agree to pay a floating rate multiplied by the same notional amount. If
interest rates rise, resulting in a diminution in the value of the Fund's
portfolio, the Fund would receive payments under the swap that would offset,
in whole or part, such diminution in value. The Fund may also enter into
swaps to modify its exposure to particular markets or instruments, such as a
currency swap between the U.S. dollar and another currency which would have
the effect of increasing or decreasing the Fund's exposure to each such
currency. The Fund might also enter into a swap on a particular security, or
a basket or index of securities, in order to gain exposure to the underlying
security or securities, as an alternative to purchasing such securities.
Such transactions could be more efficient or less costly in certain
instances than an actual purchase or sale of the securities.

The Fund may enter into other related types of over-the-counter
derivatives, such as "caps", "floors", "collars" and options on swaps, or
"swaptions", for the same types of hedging or non-hedging purposes. Caps and
floors are similar to swaps, except that one party pays a fee at the time
the transaction is entered into and has no further payment obligations,
while the other party is obligated to pay an amount equal to the amount by
which a specified fixed or floating rate exceeds or is below another rate
(multiplied by a notional amount). Caps and floors, therefore, are also
similar to options. A collar is in effect a combination of a cap and a
floor, with payments made only within or outside a specified range of prices
or rates. A swaption is an option to enter into a swap agreement. Like other
types of options, the buyer of a swaption pays a non-refundable premium for
the option and obtains the right, but not the obligation, to enter into the
underlying swap on the agreed-upon terms.

The Fund will maintain liquid and unencumbered assets to cover its current
obligations under swap and other over-the-counter derivative transactions.
If the 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 liquid and unencumbered assets 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 the Fund enters into a swap agreement on other than a net
basis, it will maintain liquid and unencumbered 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 underlying price, rate or index level 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 the 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 the Fund, the Fund must be prepared to make such payments when
due. In addition, if the counterparty's creditworthiness would decline, the
value of the swap agreement would be likely to decline, potentially
resulting in losses.

If the counterparty defaults, the Fund's risk of loss consists of the net
amount of payments that the Fund is contractually entitled to receive. The
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, but
there can be no assurance that it will be able to do so.

The uses by the Fund of swaps and related derivative instruments also
involves the risks described under the caption "Special Risk Factors --
Options, Futures, Forwards, Swaps and Other Derivative Transactions" in
this Appendix.

TEMPORARY BORROWINGS
The Fund may borrow money for temporary purposes (e.g., to meet redemption
requests or settle outstanding purchases of portfolio securities).

TEMPORARY DEFENSIVE POSITIONS
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 the 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.

WARRANTS
The Fund may invest in warrants. Warrants are securities that give the Fund
the right to purchase equity securities from the issuer at a specific price
(the "strike price") for a limited period of time. The strike price of
warrants typically is much lower than the current market price of the
underlying securities, yet they are subject to similar price fluctuations.
As a result, warrants may be more volatile investments than the underlying
securities and may offer greater potential for capital appreciation as well
as capital loss. Warrants do not entitle a holder to dividends or voting
rights with respect to the underlying securities and do not represent any
rights in the assets of the issuing company. Also, the value of the warrant
does not necessarily change with the value of the underlying securities and
a warrant ceases to have value if it is not exercised prior to the
expiration date. These factors can make warrants more speculative than other
types of investments.

"WHEN-ISSUED" SECURITIES
The Fund may purchase securities on a "when-issued" or on a "forward
delivery" basis which means that the securities will be delivered to the
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, the 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 identify liquid
and unencumbered assets equal to its forward delivery commitment.

SPECIAL RISK FACTORS -- OPTIONS, FUTURES, FORWARDS, SWAPS AND OTHER
DERIVATIVE TRANSACTIONS

RISK OF IMPERFECT CORRELATION OF HEDGING INSTRUMENTS WITH THE FUND'S
PORTFOLIO: The Fund's ability effectively to hedge all or a portion of its
portfolio through transactions in derivatives, including options, Futures
Contracts, Options on Futures Contracts, Forward Contracts, swaps and other
types of derivatives 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 derivative
instruments based on an index, the portfolio will not duplicate the
components of the index, and in the case of derivative instruments on fixed
income securities, the portfolio securities which are being hedged may not
be the same type of obligation underlying such derivatives. The use of
derivatives for "cross hedging" purposes (such as a transaction in a Forward
Contract on one currency to hedge exposure to a different currency) may
involve greater correlation risks. 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.

If the 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. 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 the Fund enters into transactions
in options or futures on narrowly-based indices 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 derivatives for hedging purposes entails the additional
risk of imperfect correlation between movements in the price of the
derivative 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 derivatives markets. In this regard, trading by
speculators in derivatives has in the past occasionally resulted in market
distortions, which may be difficult or impossible to predict, particularly
near the expiration of such instruments.

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 indices,
options on currencies and Options on Futures Contracts, the 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 the Fund in connection with such
transactions.

In writing a covered call option on a security, index or futures contract,
the 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
the 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 indices or Options
on Futures Contracts constitutes only a partial hedge against fluctuations
in the value of the Fund's portfolio. When the 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, the
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,
the Fund's overall return may be lower than if it had not engaged in the
hedging transactions. Furthermore, the cost of using these techniques may
make it economically infeasible for the Fund to engage in such transactions.

RISKS OF NON-HEDGING TRANSACTIONS: The Fund may enter transactions in
derivatives for non-hedging purposes as well as hedging purposes. Non-
hedging transactions in such instruments 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 Fund will only write covered options, such that liquid and unencumbered
assets necessary to satisfy an option exercise will be identified, unless
the option is 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. Nevertheless, the method of
covering an option employed by the 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. The
Fund may also enter into futures, Forward Contracts or swaps for non-hedging
purposes. For example, the Fund may enter into such a transaction as an
alternative to purchasing or selling the underlying instrument or to obtain
desired exposure to an index or market. In such instances, the Fund will be
exposed to the same economic risks incurred in purchasing or selling the
underlying instrument or instruments. However, transactions in futures,
Forward Contracts or swaps may be leveraged, which could expose the Fund to
greater risk of loss than such purchases or sales. Entering into
transactions in derivatives for other than hedging purposes, therefore,
could expose the Fund to significant risk of loss if the prices, rates or
values of the underlying instruments or indices do not move in the direction
or to the extent anticipated.

With respect to the writing of straddles on securities, the 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 the 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 Fund 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
contract at any specific time. In that event, it may not be possible to
close out a position held by the 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 to the daily limit on a number of consecutive trading days.

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 establishment
of a futures, forward or swap position (certain of which may require no
initial margin deposits) 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 the 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 the Fund
enters into such transactions for other than hedging purposes, the margin
requirements associated with such transactions could expose the Fund to
greater risk.

POTENTIAL BANKRUPTCY OF A CLEARINGHOUSE OR BROKER: When the Fund enters into
transactions in exchange-traded futures or options, it is exposed to the
risk of the potential bankruptcy of the relevant exchange clearinghouse or
the broker through which the Fund has effected the transaction. In that
event, the Fund might not be able to recover amounts deposited as margin, or
amounts owed to the Fund in connection with its transactions, for an
indefinite period of time, and could sustain losses of a portion or all of
such amounts. Moreover, the performance guarantee of an exchange
clearinghouse generally extends only to its members and the Fund could
sustain losses, notwithstanding such guarantee, in the event of the
bankruptcy of its broker.

TRADING AND POSITION LIMITS: The exchanges 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 the 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.

RISKS OF TRANSACTIONS IN FOREIGN CURRENCIES AND OVER-THE-COUNTER DERIVATIVES
AND OTHER 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
the 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 the 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 the Fund in Futures Contracts and
exchange-traded options, options on foreign currencies, Forward Contracts,
over-the-counter options on securities, swaps and other over-the-counter
derivatives 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
the 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 the Fund could be
required to retain options purchased or written, or Forward Contracts or
swaps 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.

Further, over-the-counter transactions are not subject to the guarantee of
an exchange clearinghouse, and the 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. The 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 indices, 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 the 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.

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
the Fund enter into transactions in Futures Contracts, Options on Futures
Contracts and Options on Foreign Currencies traded on a CFTC- regulated
exchange only (i) for bona fide hedging purposes (as defined in CFTC
regulations), or (ii) for non-bona fide hedging purposes, provided that the
aggregate initial margin and premiums required to establish such non-bona
fide hedging positions does not exceed 5% of the liquidation value of the
Fund's assets, after taking into account unrealized profits and unrealized
losses on any such contracts the Fund has entered into, and excluding, in
computing such 5%, the in-the-money amount with respect to an option that is
in-the-money at the time of purchase.

<PAGE>

--------------------
PART II - APPENDIX D
--------------------

DESCRIPTION OF BOND RATINGS

The ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of various debt instruments. It should be emphasized, however, that
ratings are not absolute standards of quality. Consequently, debt
instruments with the same maturity, coupon and rating may have different
yields while debt instruments of the same maturity and coupon with different
ratings may have the same yield.

MOODY'S INVESTORS SERVICE, INC.

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 the 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. Such 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.

STANDARD & POOR'S RATINGS SERVICES

AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is EXTREMELY STRONG.

AA: An obligation rated AA differs from the highest rated obligations only
in small degree. The obligor's capacity to meet its financial commitment on
the obligation is VERY STRONG.

A: An obligation rated A is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still STRONG.

BBB: An obligation rated BBB exhibits ADEQUATE protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation
and C the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties
or major exposures to adverse conditions.

BB: An obligation rated BB is LESS VULNERABLE to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.

B: An obligation rated B is MORE VULNERABLE to nonpayment than obligations
rated BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet
its financial commitment on the obligation.

CCC: An obligation rated CCC is CURRENTLY VULNERABLE to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation. In the event
of adverse business, financial, or economic conditions the obligor is not
likely to have the capacity to meet its financial commitment on the
obligation.

CC: An obligation rated CC is CURRENTLY HIGHLY VULNERABLE to nonpayment.

C: Subordinated debt or preferred stock obligation rated C is CURRENTLY
HIGHLY VULNERABLE to nonpayment. The C rating may be used to cover a
situation where a bankruptcy petition has been filed or similar action has
been taken, but payments on this obligation are being continued. A C rating
will also be assigned to a preferred stock issue in arrears on dividends or
sinking fund payments, but that is currently paying.

D: An obligation rated D is in payment default. The D rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's 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 or the taking of a
similar action if payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-) The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

R: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk -- such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.

FITCH IBCA

AAA: Highest credit quality. AAA ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.

AA: Very high credit quality. AA ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.

A: High credit quality. A ratings denote a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered
strong. This capacity may, nevertheless, be more vulnerable to changes in
circumstances or in economic conditions than is the case for higher ratings.

BBB: Good credit quality. BBB ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and
in economic conditions are more likely to impair this capacity. This is the
lowest investment-grade category.

Speculative Grade

BB: Speculative. BB ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change
over time; however, business or financial alternatives may be available to
allow financial commitments to be met. Securities rated in this category
are not investment grade.

B: Highly speculative. B ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent
upon a sustained, favorable business and economic environment.

CCC, CC, C: High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A CC rating indicates that default of
some kind appears probable. C ratings signal imminent default.

DDD, DD, D: Default. The ratings of obligations in this category are based
on their prospects for achieving partial or full recovery in a
reorganization or liquidation of the obligor. While expected recovery values
are highly speculative and cannot be estimated with any precision, the
following serve as general guidelines. DDD obligations have the highest
potential for recovery, around 90% - 100% of outstanding amounts and accrued
interest. DD indicates expected recoveries in the range of 50% - 90% and D
the lowest recovery potential, i.e. below 50%.

DUFF & PHELPS CREDIT RATING CO.

AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic
conditions.

A+, A, A-: Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB-: Below-average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

BB+, BB, BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may
move up or down frequently within this category.

B+, B, B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or
into a higher or lower rating grade.

CCC: Well below investment grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.

DD: Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.

DP: Preferred stock with dividend arrearages.

<PAGE>

INVESTMENT ADVISER
MFS Investment Management(R)
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.
2 Avenue de Lafayette, Boston, MA 02111-1738
Toll free: (800) 225-2606

MAILING ADDRESS:
P.O. Box 2281, Boston, MA 02107-9906

[logo] M F S (R)
INVESTMENT MANAGEMENT
WE INVENTED THE MUTUAL FUND(R)

500 Boylston Street, Boston, MA 02116

MFS-13P2 - 1/00

<PAGE>

MFS SERIES TRUST I

MFS(R) JAPAN EQUITY FUND
MFS(R) GLOBAL TELECOMMUNICATIONS FUND

PART C

ITEM 23. FINANCIAL STATEMENTS AND EXHIBITS

(A) FINANCIAL STATEMENTS INCLUDED IN PARTS A AND B:

Not Applicable.

(B) EXHIBITS:

1 (a) Amended and Restated Declaration of Trust, dated
January 6, 1995. (1)

(b) Amendment to Declaration of Trust, dated October
12, 1995. (15)

(d) Amendment to Declaration of Trust, dated June 12, 1996. (4)

(e) Amendment to Declaration of Trust, dated October 9,
1996. (5)

(f) Amendment to Declaration of Trust, dated December 19, 1996
to redesignate Class P Shares as Class I Shares. (8)

(g) Amendment to Declaration of Trust, dated April 9, 1997 to
redesignate MFS Aggressive Growth Fund as MFS Strategic
Growth Fund. (8)

(h) Amendment to Declaration of Trust, dated February 19, 1998
to add a new series. (11)

(i) Amendment to Declaration of Trust, dated August 24, 1998 to
redesignate name of MFS World Asset Allocation Fund to MFS
Global Asset Allocation Fund. (13)

(j) Amendment to Declaration of Trust, dated October 30, 1998
to terminate MFS Real Estate Investment Fund. (13)

(k) Amendment to Declaration of Trust, dated February 22, 1999
to terminate MFS Special Opportunities Fund; filed
herewith.

(l) Amendment to the Declaration of Trust, dated October 28,
1999, regarding the Establishment and Designation of Class
J shares of MFS Strategic Growth Fund; filed herewith.

(m) Amendment to Declaration of Trust, dated December 23, 1999
to terminate MFS Blue Chip Fund and MFS Convertible
Securities Fund; filed herewith.

(n) Amendment to Declaration of Trust to establish MFS Japan
Equity Fund and MFS Global Telecommunications Fund as new
series; filed herewith.

2 Amended and Restated By-Laws dated December 14, 1994. (1)

3 Form of Share Certificate for Classes of shares. (4)

4 (a) Investment Advisory Agreement for MFS Cash Reserve Fund,
dated September 1, 1993. (15)

(b) Investment Advisory Agreement for MFS Managed Sectors Fund,
dated September 1, 1993. (15)

(d) Investment Advisory Agreement for MFS Equity Income Fund,
dated January 2, 1996. (3)

(e) Amendment to Investment Advisory Agreement for MFS Research
Growth and Income Fund, dated January 2, 1997. (8)

(f) Investment Advisory Agreement for MFS Core Growth Fund,
dated January 2, 1996. (3)

(g) Investment Advisory Agreement for MFS Aggressive Growth
Fund, dated January 2, 1996. (3)

(h) Investment Advisory Agreement for MFS Special Opportunities
Fund, dated January 2, 1996. (3)

(i) Investment Advisory Agreement for MFS Convertible
Securities Fund, dated January 2, 1997. (8)

(j) Investment Advisory Agreement for MFS Blue Chip Fund, dated
January 2, 1997. (8)

(k) Investment Advisory Agreement for MFS New Discovery Fund,
dated October 30, 1997. (10)

(l) Investment Advisory Agreement for MFS Science and
Technology Fund, dated January 2, 1997. (8)

(m) Investment Advisory Agreement for MFS Research
International Fund, dated January 2, 1997. (8)

(n) Amendment to Investment Advisory Agreement dated July 1,
1998. (13)

(o) Form of Investment Advisory Agreement for MFS Japan Equity
Fund; filed herewith.

(p) Form of Investment Advisory Agreement for MFS Global
Telecommunications Fund; filed herewith.

5 (a) Distribution Agreement, dated January 1, 1995. (1)

(b) Dealer Agreement between MFS Fund Distributors, Inc.,
("MFD") and a dealer and the Mutual Fund Agreement between
MFD and a bank effective November 29, 1999. (17)

6 Retirement Plan for Non-Interested Person
Trustees, as amended and restated February 10,
1999. (2)

7 (a) Custodian Agreement, dated January 28, 1988. (15)

(b) Amendment No. 1 to the Custodian Agreement, dated February
29, 1988 and October 1, 1989, respectively. (15)

8 (a) Shareholder Servicing Agent Agreement, dated September
10, 1986. (15)

(b) Amendment to Shareholder Servicing Agent Agreement to amend
fee schedule, dated April 1, 1999. (16)

(d) Dividend Disbursing Agent Agreement dated September 10,
1986. (15)

(e) Master Administrative Services Agreement dated March 1,
1997, as amended and restated April 1, 1999. (12)

(f) Trustee Fee Deferral Plan adopted February 10, 1999. (16)

9 Opinion and Consent of Counsel, dated March 13, 2000;
filed herewith.

10 (a) Auditor's Consent Letter for Deloitte & Touche LLP
regarding MFS Managed Sectors Fund and MFS Cash Reserve
Fund. (16)

(b) Auditor's Consent Letter for Ernst & Young LLP regarding
MFS Global Asset Allocation Fund, MFS Equity Income Fund,
MFS Research Growth and Income Fund, MFS Strategic Growth
Fund, MFS Core Growth Fund, MFS Convertible Securities
Fund, MFS Blue Chip Fund, MFS Science and Technology Fund,
MFS New Discovery Fund and MFS Research International Fund.
(16)

11 Not Applicable.

12 Not Applicable.

13 (a) Master Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 effective January 1, 1997,
as amended and restated December 8, 1999. (18)

(b) Exhibits as revised April 12, 2000 to the Amended and
Restated Master Distribution Plan; filed herewith.

14 Not Applicable.

15 (a) Plan pursuant to Rule 18f-3(d) under the Investment Company
Act of 1940, as amended and restated May 27, 1998. (6).

(b) Exhibits as revised April 12, 2000 to the Amended and
Restated Plan pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940; filed herewith.

16 (a) Form of Code of Ethics for the fund pursuant to Rule 17j-1
under the Investment Company Act of 1940; filed herewith.

(b) Code of Ethics for the fund's advisor and distributor
pursuant to Rule 17j-1 under the Investment Company Act of
1940; filed herewith.

Power of Attorney, dated August 11, 1994. (1)
Power of Attorney, dated February 10, 1999; filed herewith.

(1) Incorporated by reference to the Registrant's Post-Effective Amendment No.
20 filed with the SEC via EDGAR on March 30, 1995.
(2) Incorporated by reference to MFS(R) Government Limited Maturity Fund (File
Nos. 2-96738 and 811-4253) Post-Effective Amendment No. 20 filed with the
SEC via EDGAR on February 26, 1999.
(3) Incorporated by reference to Registrant's Post-Effective Amendment No. 23
filed with the SEC via EDGAR on March 29, 1996.
(4) Incorporated by reference to Registrant's Post-Effective Amendment No. 25
filed with the SEC via EDGAR on August 27, 1996.
(5) Incorporated by reference to Registrant's Post-Effective Amendment No. 26
filed with the SEC via EDGAR on October 15, 1996.
(6) Incorporated by reference to MFS(R) Series Trust II (File Nos. 33-7637 and
811-4775) Post-Effective Amendment No. 27 filed with the SEC via EDGAR on
May 28, 1998.
(7) Incorporated by reference to MFS(R) Series Trust III (File Nos. 2-60491 and
811-2794) Post-Effective Amendment No. 24 filed with the SEC via EDGAR on
May 29, 1997.
(8) Incorporated by reference to the Registrant's Post-Effective Amendment No.
28 filed with the SEC on June 26, 1997.
(9) Incorporated by reference to Massachusetts Investors Growth Stock Fund
(File Nos. 2-14677 and 811-859) Post-Effective Amendment No. 64 filed with
the SEC on October 29, 1997.
(10) Incorporated by reference to the Registrant's Post-Effective Amendment No.
29 filed with the SEC on December 24, 1997.
(11) Incorporated by reference to Registrant's Post-Effective Amendment No. 30
filed with the SEC via EDGAR on March 11, 1998.
(12) Incorporated by reference to MFS(R) Series Trust III (File Nos. 2-60491 and
811-2794) Post-Effective Amendment No. 28 filed with the SEC via EDGAR on
March 31, 1999.
(13) Incorporated by reference to Registrant's Post-Effective Amendment No. 32
filed with the SEC via EDGAR on November 17, 1998.
(14) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4492) Post-Effective Amendment No. 25 filed with the SEC via EDGAR on
May 14, 1999.
(15) Incorporated by reference to Registrant's Post-Effective Amendment No. 21
filed with the SEC via EDGAR on October 17, 1995.
(16) Incorporated by reference to Registrant's Post-Effective Amendment No. 34
filed with the SEC via EDGAR on October 29, 1999.
(17) Incorporated by reference to MFS Series Trust V (File Nos. 2-38613 and
811-2031) Post-Effective Amendment No. 48 filed with the SEC via EDGAR on
November 29, 1999.
(18) Incorporated by reference to MFS Series Trust VI (File Nos. 33-34502 and
811-6102) Post-Effective Amendment No. 15 filed with the SEC via EDGAR on
February 28, 2000.
<PAGE>

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Not applicable.

ITEM 25. 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 Agreement, incorporated by reference to Registrant's
Post-Effective Amendment No. 21 filed with the SEC via EDGAR on October 17,
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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

MFS serves as investment adviser to the following open-end Funds
comprising the MFS Family of Funds (except the Vertex Funds mentioned below):
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 ten series: MFS Managed
Sectors Fund, MFS Cash Reserve Fund, MFS Global Asset Allocation Fund, MFS
Strategic Growth Fund, MFS Research Growth and Income Fund, MFS Core Growth
Fund, MFS Equity Income Fund, MFS New Discovery Fund, MFS Science and Technology
Fund and MFS Research International Fund), MFS Series Trust II (which has four
series: MFS Emerging Growth Fund, MFS Large Cap Growth Fund, MFS Intermediate
Income Fund and MFS Charter Income Fund), MFS Series Trust III (which has three
series: MFS High Income Fund, MFS Municipal High Income Fund and MFS High Yield
Opportunities Fund), MFS Series Trust IV (which has four series: MFS Money
Market Fund, MFS Government Money Market Fund, MFS Municipal Bond Fund and MFS
Mid Cap Growth Fund), MFS Series Trust V (which has five series: MFS Total
Return Fund, MFS Research Fund, MFS International Opportunities Fund, MFS
International Strategic Growth Fund and MFS International Value Fund), MFS
Series Trust VI (which has three series: MFS Global Total Return Fund, MFS
Utilities Fund and MFS Global Equity Fund), MFS Series Trust VII (which has two
series: MFS Global Governments Fund and MFS Capital Opportunities Fund), MFS
Series Trust VIII (which has two series: MFS Strategic Income Fund and MFS
Global Growth Fund), MFS Series Trust IX (which has eight series: MFS Bond Fund,
MFS Limited Maturity Fund, MFS Municipal Limited Maturity Fund, MFS Research
Bond Fund, MFS Intermediate Investment Grade Bond Fund, MFS Mid Cap Value Fund,
MFS Large Cap Value Fund and MFS High Quality Bond Fund), MFS Series Trust X
(which has ten series: MFS Government Mortgage Fund, MFS Emerging Markets Equity
Fund, MFS International Growth Fund, MFS International Growth and Income Fund,
MFS Strategic Value Fund, MFS Emerging Markets Debt Fund, MFS Income Fund, MFS
European Equity Fund, MFS High Yield Fund and MFS Concentrated Growth Fund), MFS
Series Trust XI (which has three series: MFS Union Standard Equity Fund, Vertex
All Cap Fund and Vertex Contrarian Fund), and MFS Municipal Series Trust (which
has 18 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 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 Virginia Municipal Bond Fund, MFS West Virginia Municipal Bond Fund,
MFS Municipal Income Fund, MFS New York High Income Tax Free Fund and MFS
Massachusetts High Income Tax Free Fund) (the "MFS Funds"). The principal
business address of each of the MFS Funds is 500 Boylston Street, Boston,
Massachusetts 02116.

MFS also serves as investment adviser of the following open-end Funds:
MFS Institutional Trust ("MFSIT") (which has nine series) and MFS Variable
Insurance Trust ("MVI") (which has sixteen 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 MFS Closed-End Funds is 500 Boylston
Street, Boston, Massachusetts 02116.

Lastly, MFS serves as investment adviser to MFS/Sun Life Series Trust
("MFS/SL") (which has 26 series), Money Market Variable Account, High Yield
Variable Account, Capital Appreciation Variable Account, Government Securities
Variable Account, Global Governments Variable Account, Total Return Variable
Account and Managed Sectors Variable Account (collectively, the "Accounts"). The
principal business address of MFS/SL is 500 Boylston Street, Boston,
Massachusetts 02116. The principal business address of each of the
aforementioned Accounts is One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02181.

VERTEX INVESTMENT MANAGEMENT, INC., a Delaware corporation and a wholly
owned subsidiary of MFS, whose principal business address is 500 Boylston
Street, Boston, Massachusetts 02116 ("Vertex"), serves as investment adviser to
Vertex All Cap Fund, Vertex U.S. All Cap Fund and Vertex Contrarian Fund, each a
series of MFS Series Trust XI. The principal business address of the
aforementioned Funds is 500 Boylston Street, Boston, Massachusetts 02116.

MFS INTERNATIONAL LTD. ("MIL"), a limited liability company organized
under the laws of Bermuda and a subsidiary of MFS, whose principal business
address is Cedar House, 41 Cedar Avenue, Hamilton HM12 Bermuda, serves as
investment adviser to and distributor for MFS American Funds known as the MFS
Funds after January 1999 (which will have 11 portfolios as of January 1999):
U.S. Equity Fund, U.S. Emerging Growth Fund, U.S. High Yield Bond Fund, U.S.
Dollar Reserve Fund, Charter Income Fund, U.S. Research Fund, U.S. Strategic
Growth Fund, Global Equity Fund, European Equity Fund and European Corporate
Bond 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 Governments Fund, MFS Meridian U.S. Emerging Growth Fund, MFS
Meridian Global Equity Fund, MFS Meridian Limited Maturity Fund, MFS Meridian
Global Growth Fund, MFS Meridian Money Market Fund, MFS Meridian Global Balanced
Fund, MFS Meridian U.S. Equity Fund, MFS Meridian Research Fund, MFS Meridian
U.S. High Yield Fund, MFS Meridian Emerging Markets Debt Fund, MFS Meridian
Strategic Growth Fund and MFS Meridian Global Asset Allocation Fund and the MFS
Meridian Research International 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.

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 Eversheds, Senator House, 85 Queen Victoria Street, London, England
EC4V 4JL, is involved primarily in marketing and investment research activities
with respect to private clients and the MIL Funds and the MFS Meridian Funds.

MFS INSTITUTIONAL ADVISORS (AUSTRALIA) LTD. ("MFSI-AUSTRALIA"), a
private limited company organized under the Corporations Law of New South Wales,
Australia whose current address is Level 27, Australia Square, 264 George
Street, Sydney, NSW2000, Australia, is involved primarily in investment
management and distribution of Australian superannuation unit trusts and acts as
an investment adviser to institutional accounts.

MFS HOLDINGS AUSTRALIA PTY LTD. ("MFS HOLDINGS AUSTRALIA"), a private
limited company organized pursuant to the Corporations Law of New South Wales,
Australia whose current address is Level 27, Australia Square, 264 George
Street, Sydney, NSW2000 Australia, and whose function is to serve primarily as a
holding company.

MFS FUND DISTRIBUTORS, INC. ("MFD"), a wholly owned subsidiary of MFS,
serves as distributor for the MFS Funds, MVI and MFSIT.

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 and MVI.

MFS INSTITUTIONAL ADVISORS, INC. ("MFSI"), 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.

MASSACHUSETTS INVESTMENT MANAGEMENT CO., LTD. ("MIMCO"), a wholly owned
subsidiary of MFS, is a corporation incorporated in Japan. MIMCO, whose address
is Kamiyacho-Mori Building, 3-20, Tranomon 4-chome, Minato-ku, Tokyo, Japan, is
involved in investment management activities.

MFS HERITAGE TRUST COMPANY ("MFS TRUST"), a New Hampshire-chartered
limited-purpose trust company whose current address is 650 Elm Street, Suite
404, Manchester, NH 03101, provides directed trustee services to retirement
plans.

MFS

The Directors of MFS are Jeffrey L. Shames, Arnold D. Scott, John W.
Ballen, Kevin R. Parke, Thomas J. Cashman, Jr., Joseph W. Dello Russo, William
W. Scott, Donald A. Stewart, James Prieur and William W. Stinson. Mr. Shames is
the Chairman and Chief Executive Officer, Mr. Ballen is President and Chief
Investment Officer, Mr. Arnold Scott is a Senior Executive Vice President, Mr.
William Scott, Mr. Cashman, Mr. Dello Russo and Mr. Parke are Executive Vice
Presidents (Mr. Dello Russo is also Chief Financial Officer and Chief
Administrative Officer and Mr. Parke is also Chief Equity Officer), Stephen E.
Cavan is a Senior Vice President, General Counsel and Secretary, Robert T. Burns
is a Senior Vice President, Associate General Counsel and an Assistant Secretary
of MFS, and Thomas B. Hastings is a Vice President and Treasurer of MFS.

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

Jeffrey L. Shames is Chairman and President, Stephen E. Cavan is the
Secretary, W. Thomas London, a Senior Vice President of MFS, is the Treasurer,
James O. Yost, Ellen M. Moynihan and Mark E. Bradley, Vice Presidents of MFS,
are the Assistant Treasurers, James R. Bordewick, Jr., Senior Vice President and
Associate General Counsel of MFS, is the Assistant Secretary.

MFS SERIES TRUST II

Jeffrey L. Shames is Chairman and President, Leslie J. Nanberg, Senior
Vice President and Chief Economist of MFS, is a Vice President, Stephen E. Cavan
is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Ellen M.
Moynihan and Mark E. Bradley are the Assistant Treasurers, and James R.
Bordewick, Jr. is the Assistant Secretary.

MFS GOVERNMENT MARKETS INCOME TRUST
MFS INTERMEDIATE INCOME TRUST

Jeffrey L. Shames is 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, Ellen M. Moynihan and Mark E.
Bradley are the Assistant Treasurers, and James R. Bordewick, Jr. is the
Assistant Secretary.

MFS SERIES TRUST III

Jeffrey L. Shames is Chairman and President, James T. Swanson, Robert
J. Manning and Joan S. Batchelder, Senior Vice Presidents of MFS (Mr. Manning is
also Director of Fixed Income Research and Chief of Fixed Income Strategy and
Ms. Batchelder is also Chief Fixed Income Officer), and Bernard Scozzafava, Vice
President of MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E.
Bradley are the Assistant Treasurers, and James R. Bordewick, Jr. is the
Assistant Secretary.

MFS SERIES TRUST IV
MFS SERIES TRUST IX

Jeffrey L. Shames is 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, Ellen M. Moynihan and Mark E. Bradley are the Assistant Treasurers and
James R. Bordewick, Jr. is the Assistant Secretary.

MFS SERIES TRUST VII

Jeffrey L. Shames is 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,
Ellen M. Moynihan and Mark E. Bradley are the Assistant Treasurers and James R.
Bordewick, Jr. is the Assistant Secretary.

MFS SERIES TRUST VIII

Jeffrey L. Shames is Chairman and President, Leslie J. Nanberg, James
T. Swanson and John D. Laupheimer, Jr., a Senior Vice President of MFS, are Vice
Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the
Assistant Treasurers and James R. Bordewick, Jr. is the Assistant Secretary.

MFS MUNICIPAL SERIES TRUST

Jeffrey L. Shames is Chairman and President, Robert A. Dennis is Vice
President, Geoffrey L. Schechter, Vice President of MFS, is Vice President,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant Treasurers and
James R. Bordewick, Jr. is the Assistant Secretary.

MFS VARIABLE INSURANCE TRUST
MFS SERIES TRUST XI
MFS INSTITUTIONAL TRUST

Jeffrey L. Shames is the President and Chairman, Stephen E. Cavan is
the Secretary, W. Thomas London is the Treasurer, James O. Yost, Ellen M.
Moynihan and Mark E. Bradley are the Assistant Treasurers and James R.
Bordewick, Jr. is the Assistant Secretary.

MFS MUNICIPAL INCOME TRUST

Jeffrey L. Shames is Chairman and President, Robert J. Manning is Vice
President, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer,
James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant
Treasurers and James R. Bordewick, Jr. is the Assistant Secretary.

MFS MULTIMARKET INCOME TRUST
MFS CHARTER INCOME TRUST

Jeffrey L. Shames is Chairman and President, 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, Ellen M. Moynihan and Mark E.
Bradley are the Assistant Treasurers and James R. Bordewick, Jr. is the
Assistant Secretary.

MFS SPECIAL VALUE TRUST

MFS/SUN LIFE SERIES TRUST

C. James Prieur, President and Director of Sun Life Assurance Company
of Canada, is the President, Stephen E. Cavan is the Secretary, W. Thomas London
is the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the
Assistant Treasurers and James R. Bordewick, Jr., is the Assistant Secretary.

MONEY MARKET VARIABLE ACCOUNT
HIGH YIELD VARIABLE ACCOUNT
CAPITAL APPRECIATION VARIABLE ACCOUNT
GOVERNMENT SECURITIES VARIABLE ACCOUNT
TOTAL RETURN VARIABLE ACCOUNT
GLOBAL GOVERNMENTS VARIABLE ACCOUNT
MANAGED SECTORS VARIABLE ACCOUNT

C. James Prieur is the President, Stephen E. Cavan is the Secretary,
and James R. Bordewick, Jr., is the Assistant Secretary.

MIL FUNDS

Jeffrey L. Shames is Chairman, Richard B. Bailey, John A. Brindle,
Richard W. S. Baker, Arnold D. Scott and William F. Waters are Directors,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant Treasurers and
James R. Bordewick, Jr. is the Assistant Secretary.

MFS MERIDIAN FUNDS

Jeffrey L. Shames is Chairman, Richard B. Bailey, John A. Brindle,
Richard W. S. Baker, Arnold D. Scott and William F. Waters are Directors,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James R.
Bordewick, Jr. is the Assistant Secretary and James O. Yost, Ellen M. Moynihan
and Mark E. Bradley are the Assistant Treasurers.

VERTEX

Jeffrey L. Shames is the Chairman and President, Arnold D. Scott is a
Director, Kevin R. Parke and John W. Ballen are Executive Vice Presidents, John
D. Laupheimer is a Senior Vice President, Brian E. Stack is a Vice President,
Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the Assistant
Treasurer, Stephen E. Cavan is the Secretary and Robert T. Burns is the
Assistant Secretary.

MIL

Peter D. Laird is President and a Director, Arnold D. Scott, Jeffrey L.
Shames and Thomas J. Cashman, Jr. are Directors, Stephen E. Cavan is a Director,
Senior Vice President and the Clerk, Robert T. Burns is an Assistant Clerk,
Joseph W. Dello Russo, Executive Vice President and Chief Financial Officer of
MFS, is the Treasurer and Thomas B. Hastings is the Assistant Treasurer.

MIL-UK

Peter D. Laird is President and a Director, Thomas J. Cashman, Arnold
D. Scott and Jeffrey L. Shames are Directors, Stephen E. Cavan is a Director and
the Secretary, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer and Robert T. Burns is the Assistant Secretary.

MFSI - AUSTRALIA

Thomas J. Cashman, Jr. is President and a Director, Graham E. Lenzer,
John A. Gee and David Adiseshan are Directors, Stephen E. Cavan is the
Secretary, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer, and Robert T. Burns is the Assistant Secretary.

MFS HOLDINGS - AUSTRALIA

Jeffrey L. Shames is the President and a Director, Arnold D. Scott,
Thomas J. Cashman, Jr., and Graham E. Lenzer are Directors, Stephen E. Cavan is
the Secretary, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer, and Robert T. Burns is the Assistant Secretary.

MFD

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 Thomas B. Hastings is the Assistant Treasurer.

MFSC

Arnold D. Scott and Jeffrey L. Shames are Directors, Joseph A.
Recomendes, a Senior Vice President and Chief Information Officer of MFS, is
Vice Chairman and a Director, Janet A. Clifford is the President, Joseph W.
Dello Russo is the Treasurer, Thomas B. Hastings is the Assistant Treasurer,
Stephen E. Cavan is the Secretary, and Robert T. Burns is the Assistant
Secretary.

MFSI

Thomas J. Cashman, Jr. is Chairman and a Director, Jeffrey L. Shames,
and Arnold D. Scott are Directors, Joseph J. Trainor is the President and a
Director, Leslie J. Nanberg is a Senior Vice President, a Managing Director and
a Director, Kevin R. Parke is the Executive Vice President and a Managing
Director, George F. Bennett, Jr., John A. Gee, Brianne Grady, Joseph A.
Kosciuszek and Joseph J. Trainor are Senior Vice Presidents and Managing
Directors, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer and Robert T. Burns is the Secretary.

RSI

Arnold D. Scott is the Chairman and a Director, Martin E. Beaulieu is
the President, William W. Scott, Jr. is a Director, Joseph W. Dello Russo is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer, Stephen E. Cavan is
the Secretary and Robert T. Burns is the Assistant Secretary.

MIMCO

Jeffrey L. Shames, Arnold D. Scott and Mamoru Ogata are Directors,
Shaun Moran is the Representative Director, Joseph W. Dello Russo is the
Statutory Auditor, Robert DiBella is the President and Thomas B. Hastings is the
Assistant Statutory Auditor.

MFS TRUST

The Directors of MFS Trust are Martin E. Beaulieu, Stephen E. Cavan,
Janet A. Clifford, Joseph W. Dello Russo and Joseph A. Kosciuszek. Mr. Cavan is
President, Mr. Dello Russo is Treasurer, and Robert T. Burns is Clerk of MFS
Trust.

In addition, the following persons, Directors or officers of MFS, have
the affiliations indicated:

Donald A. Stewart Chairman, Sun Life Assurance Company of
Canada, Sun Life Centre, 150 King Street
West, Toronto, Ontario, Canada (Mr. Stewart
is also an officer and/or Director of
various subsidiaries and affiliates of Sun
Life)

C. James Prieur President and a Director, Sun Life Assurance
Company of Canada, Sun Life Centre, 150 King
Street West, Toronto, Ontario, Canada (Mr.
Prieur is also an officer and/or Director of
various subsidiaries and affiliates of Sun
Life)

William W. Stinson Director, Sun Life Assurance Company of
Canada, Sun Life Centre, 150 King Street
West, Toronto, Ontario, Canada; Director,
United Dominion Industries Limited,
Charlotte, N.C.; Director, PanCanadian
Petroleum Limited, Calgary, Alberta;
Director, LWT Services, Inc., Calgary
Alberta; Director, Western Star Trucks,
Inc., Kelowna, British Columbia; Director,
Westshore Terminals Income Fund, Vancouver,
British Columbia; Director (until 4/99),
Canadian Pacific Ltd., Calgary, Alberta

ITEM 27. DISTRIBUTORS

(a) Reference is hereby made to Item 26 above.

(b) Reference is hereby made to Item 26 above; the principal business
address of each of these persons is 500 Boylston Street, Boston, Massachusetts
02116.

ITEM 28. 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

MFS Service Center, Inc. 2 Avenue de LaFayette
(transfer agent) Boston, MA 02111-1738

ITEM 29. MANAGEMENT SERVICES

Not applicable.

ITEM 30. UNDERTAKINGS

Not applicable.
<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 13th day of March, 2000.

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 March 13, 2000.

SIGNATURE TITLE
--------- -----

Chairman, President (Principal
JEFFREY L. SHAMES* Executive Officer) and Trustee
- ---------------------------
Jeffrey L. Shames

Treasurer (Principal Financial Officer
W. THOMAS LONDON* and Principal Accounting Officer)
- ---------------------------
W. Thomas London

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

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
(i) a Power of Attorney dated August
11, 1994, incorporated by reference to
Registrant's Post-Effective Amendment
No. 21 filed with the SEC via EDGAR on
October 17, 1995, and (ii) a Power of
Attorney dated February 10, 1999,
filed herewith.
<PAGE>

POWER OF ATTORNEY

MFS Series Trust I

The undersigned officer of MFS Series Trust I (the "Registrant") hereby
severally constitutes and appoints Arnold D. Scott, Stephen E. Cavan, W. Thomas
London, 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 the undersigned,
in the name of, and in the capacity indicated below, any Registration Statement
and any and all amendments thereto and to file 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 my 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 has hereunto set his hand as of this
10th day of February, 1999.

Signature Title
--------- -----

JEFFREY L. SHAMES Principal Executive Officer
----------------------
Jeffrey L. Shames
<PAGE>

INDEX TO EXHIBITS

EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
- ----------- ---------------------- --------

1 (k) Amendment to Declaration of Trust, dated
February 22, 1999 to terminate MFS Special
Opportunities Fund.

(l) Amendment to the Declaration of Trust, dated
October 28, 1999, regarding the
Establishment and Designation of Class J
shares of MFS Strategic Growth Fund.

(m) Amendment to Declaration of Trust, dated
December 23, 1999 to terminate MFS Blue
Chip Fund and MFS Convertible Securities
Fund.

(n) Amendment to Declaration of Trust to establish
MFS Japan Equity Fund and MFS Global
Telecommunications Fund as new series.

4 (o) Form of Investment Advisory Agreement
for MFS Japan Equity Fund.

(p) Form of Investment Advisory Agreement
for MFS Global Telecommunications Fund.

9 Opinion and Consent of Counsel, dated
March 13, 2000.

13 (b) Exhibits as revised April 12, 2000 to
the Amended and Restated Master
Distribution Plan.

15 (b) Exhibits as revised April 12, 2000 to the
Amended and Restated Plan pursuant to Rule
18f-3(d) under the Investment Company Act
of 1940.

16 (a) Form of Code of Ethics for the fund pursuant
to Rule 17j-1 under the Investment Company
Act of 1940.

(b) Code of Ethics for the fund's advisor
and distributor pursuant to Rule 17j-1
under the Investment Company Act of 1940.

Power of Attorney dated February 10, 1999.

<PAGE>

EXHIBIT NO. 99.1(k)

MFS SERIES TRUST I

MFS SPECIAL OPPORTUNITIES FUND

Pursuant to Section 9.2(b) of the Amended and Restated Declaration of
Trust, dated January 6, 1995, as amended, (the "Declaration"), of MFS Series
Trust I (the "Trust"), the undersigned, constituting a majority of the Trustees
of the Trust, do hereby certify that MFS Special Opportunities Fund, a series of
the Trust, has been terminated.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this certificate this
22nd day of February, 1999.

RICHARD B. BAILEY WALTER E. ROBB, III
- ------------------------------- -------------------------------
Richard B. Bailey Walter E. Robb, III
63 Atlantic Avenue 35 Farm Road
Boston, MA 02110 Sherborn, MA 01770

MARSHALL N. COHAN ARNOLD D. SCOTT
- ------------------------------- -------------------------------
Marshall N. Cohan Arnold D. Scott
2524 Bedford Mews Drive 20 Rowes Wharf
Wellington, FL 33414 Boston, MA 02110

LAWRENCE H. COHN JEFFREY L. SHAMES
- ------------------------------- -------------------------------
Lawrence H. Cohn Jeffrey L. Shames
45 Singletree Road 38 Lake Avenue
Chestnut Hill, MA 02167 Newton, MA 02159

SIR J. DAVID GIBBONS J. DALE SHERRATT
- ------------------------------- -------------------------------
Sir J. David Gibbons J. Dale Sherratt
"Leeward" 86 Farm Road
5 Leeside Drive Sherborn, MA 01770
"Point Shares"
Pembroke, Bermuda HM 05

ABBY M. O'NEILL WARD SMITH
- ------------------------------- -------------------------------
Abby M. O'Neill Ward Smith
200 Sunset Road 36080 Shaker Blvd
Oyster Bay, NY 11771 Hunting Valley, OH 44022

<PAGE>

EXHIBIT NO. 99.1(l)

MFS SERIES TRUST I

CERTIFICATION OF AMENDMENT
TO THE DECLARATION OF TRUST

ESTABLISHMENT AND DESIGNATION
OF CLASS J SHARES

Pursuant to Section 6.10 of the Amended and Restated Declaration of Trust
dated January 6, 1995 (the "Declaration") of MFS Series Trust I, as amended, 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, do hereby divide the shares of MFS Strategic Growth Fund,
a series of MFS Series Trust I, to create an additional class of shares, within
the meaning of Section 6.10 as follows

1. The additional class of shares is designated "Class
J Shares";

2. Class J Shares shall be entitled to all the rights
and preferences accorded to shares under the
Declaration;

3. The purchase price of Class J Shares, the method of
determination of the net asset value of Class J
Shares, the price, terms and manner of redemption
of Class J Shares, and the relative dividend rights
of holders of Class J Shares shall be established
by the Trustees of the Trust in accordance with the
Declaration 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, and the Investment Company Act of 1940, as
amended;

4. Class J 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
Shareholders 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 28th day of October, 1999 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 Toronto, Ontario, Canada, in accordance with the
second sentence of Section 9.3(a) of the Declaration.

JEFFREY L. SHAMES
- ------------------------------- -------------------------------
Lawrence H. Cohn Jeffrey L. Shames
45 Singletree Road 38 Lake Avenue
Chestnut Hill, MA 02167 Newton, MA 02159

ABBY M. O'NEILL WARD SMITH
- ------------------------------- -------------------------------
Abby M. O'Neill Ward Smith
200 Sunset Road 36080 Shaker Blvd
Oyster Bay, NY 11771 Hunting Valley, OH 44022

<PAGE>

EXHIBIT NO. 99.1(m)

MFS SERIES TRUST I

ON BEHALF OF

MFS BLUE CHIP FUND
AND
MFS CONVERTIBLE SECURITIES FUND

Pursuant to Section 9.2(b) of the Amended and Restated Declaration of
Trust, dated January 6, 1995, as amended, of MFS Series Trust I (the "Trust"),
the undersigned, constituting a majority of the Trustees of the Trust, do hereby
certify that MFS Blue Chip Fund and MFS Convertible Securities Fund, each a
series of the Trust, have been terminated.

IN WITNESS WHEREOF, the undersigned have executed this certificate this
23rd day of December, 1999.

ABBY M. O'NEILL WARD SMITH
- ------------------------------- -------------------------------
Abby M. O'Neill Ward Smith
200 Sunset Road 36080 Shaker Blvd
Oyster Bay, NY 11771 Hunting Valley, OH 44022

<PAGE>

EXHIBIT NO. 99.1(n)

MFS SERIES TRUST I

CERTIFICATION OF AMENDMENT
TO THE 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, as amended (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 two 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 Japan Equity Fund; and
- MFS Global Telecommunications 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.

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
Japan Equity Fund and MFS Global Telecommunications Fund to create four classes
of Shares, within the meaning of Section 6.10, as follows:

1. The four classes of Shares are designated "Class A Shares," "Class B
Shares," "Class C Shares" and "Class I Shares";

2. Class A Shares, Class B Shares, Class C Shares and Class I Shares shall
be entitled to all the rights and preferences accorded to shares under
the Declaration;

3. The purchase price of Class A Shares, Class B Shares, Class C Shares
and Class I Shares, the method of determination of the net asset value
of Class A Shares, Class B Shares, Class C Shares and Class I Shares,
the price, terms and manner of redemption of Class A Shares, Class B
Shares, Class C Shares and Class I Shares, any conversion feature of
Class B Shares, and relative dividend rights of holders of Class A
Shares, Class B Shares, Class C Shares and Class I Shares shall be
established by the Trustees of the Trust in accordance with the
Declaration 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, Class C Shares and Class I 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 Shareholders 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 13th day of March, 2000 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.

WALTER E. ROBB, III
- ------------------------------- -------------------------------
Richard B. Bailey Walter E. Robb, III
63 Atlantic Avenue 35 Farm Road
Boston, MA 02110 Sherborn, MA 01770

- ------------------------------- -------------------------------
Abby M. O'Neill Ward Smith
200 Sunset Road 36080 Shaker Blvd
Oyster Bay, NY 11771 Hunting Valley, OH 44022

<PAGE>

EXHIBIT NO. 99.4(o)

FORM OF

INVESTMENT ADVISORY AGREEMENT

INVESTMENT ADVISORY AGREEMENT, dated this 31st day of May, 2000, by and
between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS JAPAN EQUITY 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 December 14, 1994, 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.

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 in accordance with applicable provisions of the Investment
Company Act of 1940. 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).

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 annually at a rate equal 1.00% of the Fund's
average daily net assets. 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 will 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 May 30, 2002 on which date it will terminate unless its continuance
after May 30, 2002 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.

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 JAPAN EQUITY FUND, one of
its series

By:
----------------------------
James R. Bordewick, Jr.
Assistant Secretary

MASSACHUSETTS FINANCIAL
SERVICES COMPANY

By:
----------------------------
Jeffrey L. Shames
Chairman

<PAGE>
EXHIBIT NO. 99.4(p)

FORM OF

INVESTMENT ADVISORY AGREEMENT

INVESTMENT ADVISORY AGREEMENT, dated this 31st day of May, 2000, by and
between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS GLOBAL TELECOMMUNICATIONS 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:

This Agreement may be amended only if such amendment is approved by "vote
of a majority of the outstanding voting securities" of the Fund.

MFS SERIES TRUST I, on behalf of
MFS GLOBAL TELECOMMUNICATIONS
FUND, one of its series

By:
----------------------------
James R. Bordewick, Jr.
Assistant Secretary

MASSACHUSETTS FINANCIAL
SERVICES COMPANY

By:
----------------------------
Jeffrey L. Shames
Chairman

<PAGE>

EXHIBIT NO. 99.9

MASSACHUSETTS FINANCIAL SERVICES COMPANY
500 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116-5741
(617) 954-5000

March 13, 2000

MFS(R) Series Trust I
500 Boylston Street
Boston, MA 02116

Ladies and Gentlemen:

I am a Senior Vice President and Associate General Counsel of
Massachusetts Financial Services Company, which serves as investment adviser to
MFS Series Trust I (the "Trust"), and the Assistant Secretary of the Trust. I am
admitted to practice law in The Commonwealth of Massachusetts. The Trust was
created under a written Declaration of Trust dated July 22, 1986, executed and
delivered in Boston, Massachusetts (the "Declaration of Trust"). The beneficial
interest thereunder is represented by transferable shares without par value. The
Trustees have the powers set forth in the Declaration of Trust, subject to the
terms, provisions and conditions therein provided.

I am of the opinion that the legal requirements have been complied with in
the creation of the Trust, and that said Declaration of Trust is legal and
valid.

Under Article III, Section 3.4 and Article VI, Section 6.4 of the
Declaration of Trust, the Trustees are empowered, in their discretion, from time
to time to issue shares of the Trust for such amount and type of consideration,
at such time or times and on such terms as the Trustees may deem best. Under
Article VI, Section 6.1, it is provided that the number of shares of beneficial
interest authorized to be issued under the Declaration of Trust is unlimited.

By vote adopted on February 2, 1995, the Trustees of the Trust determined
to sell to the public the authorized but unissued shares of beneficial interest
of the Trust for cash at a price which will net the Trust (before taxes) not
less than the net asset value thereof, as defined in the Trust's By-Laws,
determined next after the sale is made or at some later time after such sale.
<PAGE>

MFS Series Trust I
Page Two
March 13, 2000

The Trust has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933.

I am of the opinion that all necessary Trust action precedent to the issue
of all the authorized but unissued shares of beneficial interest of the Trust,
including the Shares, has been duly taken, and that all the Shares were legally
and validly issued, and when sold, will be fully paid and non-assessable,
assuming the receipt by the Trust of the cash consideration therefore in
accordance with the terms of the February 2, 1995 vote of the Trustees,
described above, except as described below. I express no opinion as to
compliance with the Securities Act of 1933, the Investment Company Act of 1940,
or applicable state "Blue Sky" or securities laws in connection with the sale of
the Shares.

The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given
in each agreement, obligation, or instrument entered into or executed by the
Trust or the Trustees. The Declaration of Trust provides for indemnification
out of the Trust property for all loss and expense of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations.

I consent to your filing this opinion with the Securities and Exchange
Commission.

Very truly yours,

JAMES R. BORDEWICK, JR.
James R. Bordewick, Jr.

<PAGE>

EXHIBIT NO. 99.13(b)

MFS FUNDS
AMENDED AND RESTATED MASTER DISTRIBUTION PLAN PURSUANT TO
RULE 12B-1 UNDER THE
INVESTMENT COMPANY ACT OF 1940

Effective January 1, 1997,
Amended and Restated December 8, 1999

This Distribution Plan (the "Plan") has been adopted by each of the
registered investment companies identified from time to time on Exhibit A hereto
(the "Trust" or "Trusts"), severally and not jointly, pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"), and sets
forth the material aspects of the financing of the distribution of the classes
of shares representing interests in the same portfolio issued by the Trusts.

WITNESSETH:

WHEREAS, each Trust is engaged in business as an open-end management investment
company and is registered under the 1940 Act, some consisting of multiple
investment portfolios or series, each of which has separate investment
objectives and policies and segregated assets (the "Fund" or "Funds"); and

WHEREAS, each Fund intends to distribute its Shares of Beneficial Interest
(without par value) ("Shares") in accordance with Rule 12b-1 under the 1940 Act,
and desires to adopt this Distribution Plan as a plan of distribution pursuant
to such Rule; and

WHEREAS, each Fund presently offers multiple classes of Shares, some Funds
presently offering only certain classes of Shares to investors;

WHEREAS, each Trust has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of each 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 each Fund in connection with the offering and distribution of Shares; and

WHEREAS, each Trust recognizes and agrees that 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

WHEREAS, the Distribution Agreement provides that: (a) a sales charge may be
paid by investors who purchase certain classes of Shares (i.e., Class A shares
and Class J shares) and that the Distributor and Dealers will receive such sales
charge as partial compensation for their services in connection with the sale of
these classes of Shares, and (b) the Distributor may (but is not required to)
impose certain deferred sales charges in connection with the repurchase of
Shares and the Distributor may retain or receive from a fund, as the case may
be, all such deferred sales charges; and

WHEREAS, the Board of Trustees of each Trust, in considering whether each 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 a 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
shareholders; and

NOW THEREFORE, the Board of Trustees of each Trust hereby adopts this Plan for
each Fund as a plan of distribution in accordance with Rule 12b-1, relating to
the classes of Shares each Fund from time to time offers, on the following terms
and conditions:

1. SERVICES PROVIDED AND EXPENSES BORNE BY DISTRIBUTOR.

1.1. 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.

1.2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the
services described in Section 1.1, 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.

2. DISTRIBUTION FEES AND SERVICE FEES.

2.1 Distribution and Service Fees Common to Each Class of Shares.

2.1.1. Service Fees. 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, each 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 the Class of 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 Section 2.1.1. 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 Section 2.1.1.
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 those Shares. The service
fee payable pursuant to this Section 2.1.1. may from time to time be
paid by a 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.

2.1.2. Distribution Fees. 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, a Fund shall pay the Distributor a
distribution fee periodically at a rate based on the average daily
net assets of a Fund attributable to the designated Class of Shares.
The amount of the distribution fee paid by the Fund differs with
respect to each Class of Shares, as does the use by the Distributor
of such distribution fees.

2.2. Distribution Fees Relating to Class A Shares

2.2.1. It is understood that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Class A
Shares by a Fund and the Distributor may retain (or receive from the
Fund, as the case may be) all such deferred sales charges. Each Fund
listed on Exhibit B hereto shall pay the Distributor a distribution
fee periodically at a rate of 0.10% per annum of average daily net
assets of the Fund attributable to Class A Shares. Each Fund listed
on Exhibit C hereto shall pay the Distributor a distribution fee
periodically at a rate not to exceed 0.25% per annum of average
daily net assets of the Fund attributable to Class A 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").

2.2.2. The aggregate amount of fees and expenses paid pursuant to
Sections 2.1. and 2.2. hereof shall not exceed 0.35% per annum and
0.50% per annum of the average daily net assets attributable to
Class A Shares of each Fund listed on Exhibit B hereto and Exhibit
C, hereto, respectively. No fees shall be paid pursuant to Section
2.2.1. hereof or this Section 2.2.2. to any insurance company which
has entered into an agreement with the Trust on behalf of a Fund and
the Distributor 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.

2.3. Distribution Fees Relating to Class B Shares

2.3.1. It is understood that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Class B
Shares by a 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 relating to Class B Shares, a 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 Class B Shares.

2.3.2. Each Fund understands that agreements between the Distributor
and the Dealers may provide for payment of commissions to Dealers in
connection with the sale of Class B Shares and may provide for a
portion (which may be all or substantially all) of the fees payable
by a 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 Class B Shares. Except as
described in Section 2.1., nothing in this Plan shall be construed
as requiring a Fund to make any payment to any Dealer or to have any
obligations to any Dealer in connection with services as a dealer of
Class B 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 Section 2.1., 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.

2.4. Distribution Fees Relating to Class C Shares

2.4.1. It is understood that the Distributor may (but is not
required to) impose certain deferred sales charges in connection
with the repurchase of Class C Shares by a 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 relating to Class C
Shares, a 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 Class C Shares.

2.4.2. Each Fund understands that agreements between the Distributor
and the Dealers may provide for payment of commissions to Dealers in
connection with the sales of Class C Shares and may provide for a
portion (which may be all or substantially all) of the fees payable
by a Fund to the Distributor under the Distribution Agreement to be
paid to the Dealers in consideration of the Dealer's services as a
dealer of the Class C Shares. Except as described in Section 2.1.,
nothing in this Plan shall be construed as requiring a Fund to make
any payment to any Dealer or to have any obligations to any Dealer
in connection with services as a dealer of Class C 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 Section 2.1., 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.

2.5. Distribution Fees Relating to Class J Shares

2.5.1. It is understood that the Distributor may (but is not
required to) impose certain deferred sales charges in connection
with the repurchase of Class J Shares by a 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 relating to Class J
Shares, a Fund shall pay the Distributor a distribution fee
periodically at a rate not to exceed 0.50% (in the case of the MFS
Emerging Growth Fund), 0.70% (in the case of the MFS Global Equity
Fund) or 0.75% (in the case of the MFS Strategic Growth Fund) per
annum of the Fund's average daily net assets attributable to Class J
Shares.

2.5.2. Each Fund understands that agreements between the Distributor
and the Dealers may provide for payment of commissions to Dealers in
connection with the sale of Class J Shares and may provide for a
portion (which may be all or substantially all) of the fees payable
by a 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 Class J Shares. Except as
described in Section 2.1., nothing in this Plan shall be construed
as requiring a Fund to make any payment to any Dealer or to have any
obligations to any Dealer in connection with services as a dealer of
Class J 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 Section 2.1., 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.

3. EXPENSES BORNE BY FUND. Each 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 a Fund, except that the Distributor
shall be responsible for the distribution-related expenses as provided in
Section 1 hereof.

4. ACTION TAKEN BY THE TRUST. Nothing herein contained shall be deemed to
require a 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 a Fund.

5. EFFECTIVENESS OF PLAN. This Plan shall become effective upon (a) approval
by a vote of at least a "majority of the outstanding voting securities" of
each particular class of Shares (unless previously so approved), 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.

6. DURATION OF PLAN. This Plan shall continue in effect indefinitely;
provided however, that such continuance is "specifically approved at least
annually" by vote of both a majority of the Trustees of the Trust and a
majority of the Qualified Trustees, such votes to be cast in person at a
meeting called for the purpose of voting on the continuance of this Plan.
If such annual approval is not obtained, this Plan, with respect to the
classes of Shares with respect to which such approval was not obtained,
shall expire 12 months after the effective date of the last approval.

7. AMENDMENTS OF PLAN. 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
affected Class of 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 Shares.

8. REVIEW BY BOARD OF TRUSTEES. Each 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.

9. SELECTION AND NOMINATION OF QUALIFIED TRUSTEES. 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.

10. DEFINITIONS; COMPUTATION OF FEES. 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 or the rules and regulations adopted thereunder. All references herein
to "Fund" shall be deemed to refer to a Trust where such Trust does not
have multiple portfolios or series. In addition, for purposes of
determining the fees payable to the Distributor hereunder, (i) the value
of a Fund's net assets shall be computed in the manner specified in each
Fund's then-current prospectus and statement of additional information for
computation of the net asset value of Shares of the Fund and (ii) the net
asset value per Share of a particular class shall reflect any plan adopted
under Rule 18f-3 under the 1940 Act.

11. RETENTION OF PLAN RECORDS. Each Trust shall preserve copies of this Plan,
and each agreement related hereto and each report referred to in Section
8.1 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.

12. APPLICABLE LAW. This Plan shall be construed in accordance with the laws
of The Commonwealth of Massachusetts and the applicable provisions of the
1940 Act.

13. SEVERABILITY OF PLAN. 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. The provisions of this Plan are
severable with respect to each Class of Shares offered by a Fund and with
respect to each Fund.

14. SCOPE OF TRUST'S OBLIGATION. A copy of the Declaration of Trust of each
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts. It is acknowledged that the obligations of or arising out
of this Plan 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 in accordance with its
proportionate interest hereunder. If this Plan is adopted by the Trust on
behalf of one or more series of the Trust, it is further acknowledged 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 Plan are
binding solely upon the assets or property of the series on whose behalf
the Trust has adopted this Plan. If the Trust has adopted this Plan on
behalf of more than one series of the Trust, it is also acknowledged that
the obligations of each series hereunder shall be several and not joint,
in accordance with its proportionate interest hereunder, and no series
shall be responsible for the obligations of another series.
<PAGE>

EXHIBIT A

FUNDS AND SHARE CLASSES COVERED BY RULE 12B-1 PLAN
AS OF: APRIL 12, 2000

- ---------------------------------------------------------------------------
CLASSES OF SHARES
COVERED BY RULE
12B-1 PLAN
DATE RULE 12B-1
FUND PLAN ADOPTED
- -------------------------------------------------------------------------------
MFS Managed Sectors Fund A,B January 1, 1997
MFS Cash Reserve Fund A,B,C January 1, 1997
MFS Global Asset Allocation Fund A,B,C January 1, 1997
MFS Strategic Growth Fund A,B,C,J January 1, 1997;
December 8, 1999
(J shares)
MFS Research Growth and Income Fund A,B,C January 1, 1997
MFS Core Growth Fund A,B,C January 1, 1997
MFS Equity Income Fund A,B,C January 1, 1997
MFS New Discovery Fund A,B,C January 1, 1997
MFS Research International Fund A,B,C January 1, 1997
MFS Technology Fund A,B,C January 1, 1997
MFS Global Telecommunications Fund A, B, C April 12, 2000
MFS Japan Equity Fund A, B, C April 12, 2000
MFS Emerging Growth Fund A,B,C, J January 1, 1997;
May 27, 1998 (J shares)
MFS Large Cap Growth Fund A,B January 1, 1997
MFS Intermediate Income Fund A,B January 1, 1997
MFS Charter Income Fund B,C,J* May 27, 1998
MFS Global Total Return Fund A,B,C January 1, 1997
MFS Utilities Fund A,B,C January 1, 1997
MFS Global Equity Fund A,B,C,J January 1, 1997;
April 14, 1999 (J shares)
MFS Strategic Income Fund A,B,C January 1, 1997
MFS Global Growth Fund A,B,C January 1, 1997

- --------
* The Class J shares of CIF have the same characteristics as Class A shares of
the other MFS Funds identified above.
<PAGE>

EXHIBIT A
(Continued)

- ---------------------------------------------------------------------------

CLASSES OF SHARES
COVERED BY RULE
12B-1 PLAN
DATE RULE 12B-1
FUND PLAN ADOPTED

MFS Alabama Municipal Bond Fund A,B January 1, 1997
MFS Arkansas Municipal Bond Fund A,B January 1, 1997
MFS California Municipal Bond Fund A,B,C January 1, 1997
MFS Florida Municipal Bond Fund A,B January 1, 1997
MFS Georgia Municipal Bond Fund A,B January 1, 1997
MFS Maryland Municipal Bond Fund A,B January 1, 1997
MFS Massachusetts Municipal Bond Fund A,B January 1, 1997
MFS Mississippi Municipal Bond Fund A,B January 1, 1997
MFS New York Municipal Bond Fund A,B January 1, 1997
MFS North Carolina Municipal Bond Fund A,B,C January 1, 1997
MFS Pennsylvania Municipal Bond Fund A,B January 1, 1997
MFS South Carolina Municipal Bond Fund A,B January 1, 1997
MFS Tennessee Municipal Bond Fund A,B January 1, 1997
MFS Virginia Municipal Bond Fund A,B,C January 1, 1997
MFS West Virginia Municipal Bond Fund A,B January 1, 1997
MFS Municipal Income Fund A,B,C January 1, 1997
MFS Massachusetts High Income Tax Free Fund A, B June 11, 1999
MFS New York High Income Tax Free Fund A, B June 11, 1999
MFS Government Limited Maturity Fund A,B,C January 1, 1997
<PAGE>
EXHIBIT B

AS OF: FEBRUARY 9, 2000

MFS Managed Sect ors Fund
MFS Cash Reserve Fund
MFS Research Growth & Income Fund
MFS Emerging Growth Fund
MFS Large Cap Growth Fund
MFS Intermediate Income Fund
MFS Global Total Return Fund
MFS Utilities Fund
MFS Global Equity Fund
MFS Strategic Income Fund
MFS Global Growth Fund
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 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 Virginia Municipal Bond Fund
MFS West Virginia Municipal Bond Fund
MFS Municipal Income Fund
MFS Government Limited Maturity Fund
MFS Strategic Growth Fund
MFS New Discovery Fund
MFS Equity Income Fund
MFS Research International Fund
MFS Charter Income Fund
MFS Massachusetts High Income Tax Free Fund
MFS New York High Income Tax Free Fund
MFS Core Growth Fund
MFS Technology Fund
<PAGE>

EXHIBIT C

AS OF: APRIL 12, 2000

MFS Global Asset Allocation Fund
MFS Global Telecommunications Fund
MFS Japan Equity Fund

<PAGE>

EXHIBIT NO. 99.15(b)

MFS FUNDS
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18F-3(D) UNDER THE
INVESTMENT COMPANY ACT OF 1940

Effective September 6, 1996, as amended and restated May 27, 1998 (Crimson
Board) and
June 17, 1998 (Red Board)

This Plan relating to Multiple Classes of Shares (the "Plan") has been
adopted by each of the registered investment companies (the "Trust" or
"Trusts"), identified on behalf of its various series from time to time on
Exhibit A hereto, severally and not jointly, pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "1940 Act"), and sets forth the
differences in expenses among the classes of shares representing interests in
the same portfolio issued by the Trusts under a multiple distribution
arrangement and the conversion and exchange feature, if any, of each such class
of shares (the "Multiple Distribution System").

A. THE TRUSTS AND FUNDS

Each Trust is an open-end management investment company registered under
the 1940 Act, some consisting of multiple investment portfolios or series,
each of which has separate investment objectives and policies and
segregated assets (the "Fund" or "Funds").

Each Trust (if it has no series) and each Trust on behalf of each Fund (if
it has series) has entered into an investment advisory agreement with
Massachusetts Financial Services Company or an affiliate thereof ("MFS")
pursuant to which MFS, subject to the general supervision of the Board of
Trustees of the Trust, provides portfolio management services. Each Trust
has also entered into an administrative services agreement with MFS
pursuant to which MFS provides financial operations, legal and other
administrative services to each Fund. Each Trust has also entered into a
distribution agreement with MFS Fund Distributors, Inc. ("MFD") to provide
certain distribution services for the Fund, pursuant to which MFD acts as
each Fund's distributor. Certain Funds have adopted a distribution plan (a
"Rule 12b-1 Plan") in accordance with Rule 12b-1 under the 1940 Act.
Transfer agency and recordkeeping functions are provided to each Fund by
MFS Service Center, Inc. ("MFSC") pursuant to a shareholder servicing
agent agreement.

B. THE MULTIPLE DISTRIBUTION SYSTEM

Under the Multiple Distribution System, each Fund may provide investors
with the option of purchasing shares either (1) with a front-end sales
load (except sales of $1 million or more and purchases by certain
retirement plans, which are subject to a contingent deferred sales charge
("CDSC")) which may vary among Funds and, in some cases, a distribution
fee and/or service fee pursuant to a Rule 12b-1 Plan ("Class A shares") or
(2) without a front-end sales load, but subject to a CDSC as well as a
distribution fee and/or a service fee pursuant to a Rule 12b-1 Plan
("Class B shares") or (3) without a front-end load, but subject to a CDSC,
(which may differ from the CDSC applicable to Class B shares) as well as a
distribution fee and/or service fee pursuant to a Rule 12b-1 Plan ("Class
C shares"), (4) without a front-end load or CDSC and without a
distribution or service fee pursuant to a Rule 12b-1 plan ("Class I
shares") or (5) with a lower front-end sales load than Class A shares and
a higher distribution fee and/or service fee pursuant to a Rule 12b-1 Plan
than Class A shares ("Class J shares"). Some of the Funds presently offer
only certain of these classes of shares to investors. This Plan shall
apply to the classes of shares of each Fund only to the extent each Trust
has designated particular classes of shares for that Fund. The Funds may
from time to time create one or more additional classes of shares, the
terms of which may differ from the Class A shares, Class B shares, Class C
shares, Class I shares and Class J shares described below.

1. Class A Shares

Class A shares are offered to investors at net asset value plus a
front-end sales load (except for certain sales, which are subject to
a CDSC). The sales load is at rates competitive in the industry and
is subject to reduction for larger purchases and under a right of
accumulation or a letter of intention. In accordance with Section
22(d) of the 1940 Act, the front-end sales load is waived for
certain types of investors or in connection with certain classes of
transactions. Class A shareholders are assessed an ongoing service
fee and/or distribution fee under a Rule 12b-1 Plan based upon a
percentage of the average daily net asset value of the Class A
shares. Proceeds from the front-end load, service fee and
distribution fee are used by MFD primarily to pay initial
commissions, ongoing service fees and certain distribution-related
expenses, respectively. Amounts payable under the Rule 12b-1 Plan
are subject to such further limitations as the Trustees may from
time to time determine and as set forth in the registration
statement of each Trust as from time to time in effect.

2. Class B Shares

Class B shares are offered to investors at net asset value without
the imposition of a sales load at the time of purchase. However, an
investor's proceeds from a redemption of Class B shares (on which a
dealer commission has been paid) within a specified period of time
after purchase may be subject to a CDSC. The CDSC is paid to and
retained by MFD. The amount of any applicable CDSC will be based
upon the lower of the net asset value at the time of purchase or at
the time of redemption as required by Rule 6c-10 under the 1940 Act.
Class B shares that are redeemed will not be subject to a CDSC to
the extent that the shares represent (1) reinvestment of dividends
or capital gain distributions, (2) shares redeemed after a defined
period of time, or (3) increases in the value of an account due to
capital appreciation. Class B shareholders are assessed a
distribution fee and/or service fee pursuant to a Rule 12b-1 Plan.
Class B shares that are outstanding for a specified period of time
will convert to Class A shares of the Fund. See "Conversion
Features" below. Amounts payable under the Rule 12b-1 Plan are
subject to such further limitations as the Trustees may from time to
time determine and as set forth in the registration statement of
each Trust as from time to time in effect.

3. Class C Shares

Class C shares are offered to investors at net asset value without
the imposition of a front-end sales load. Class C shareholders are
assessed a distribution fee and/or service fee pursuant to a Rule
12b-1 Plan. In addition, an investor's proceeds from a redemption of
Class C shares (on which a dealer commission has been paid) within a
specified period of time after purchase may be subject to a CDSC.
The CDSC is paid to and retained by MFD. Class C shares that are
redeemed will not be subject to a CDSC to the extent that the shares
represent (i) reinvestment of dividends or capital gains
distributions, (ii) shares redeemed after a defined period of time,
or (iii) increases in the value of an account due to capital
appreciation. Class C shares differ from Class B shares in that (i)
the Class C shares would be subject to a lower CDSC than the Class B
shares (ii) the CDSC would be imposed on the Class C shares for a
shorter period of time than the Class B shares and (iii) Class C
shares do not convert to any other class of shares. Amounts payable
under the Rule 12b-1 Plan are subject to such further limitations as
the Trustees may from time to time determine and as set forth in the
registration statement of each Trust as from time to time in effect.

4. Class I Shares

Class I shares are offered to certain investors at net asset value
without the imposition of a front-end load or a CDSC and without a
distribution fee and/or service fee pursuant to a Rule 12b-1 Plan.

5. Class J Shares

Class J shares are offered exclusively to investors in Japan at net
asset value plus a front-end sales load. The sales load is at rates
competitive for investment products offered to retail investors in
Japan. In accordance with Section 22(d) of the 1940 Act, the
front-end sales load may be waived for certain types of investors or
in connection with certain classes of transactions. Class J
shareholders are assessed an ongoing service fee and/or distribution
fee under a Rule 12b-1 Plan based upon a percentage of the average
daily net asset value of the Class J shares. Proceeds from the
front-end load, service fee and distribution fee are used by MFD
primarily to pay initial commissions, ongoing service fees and
certain distribution-related expenses, respectively. Amounts payable
under the Rule 12b-1 Plan are subject to such further limitations as
the Trustees may from time to time determine and as set forth in the
registration statement of each Trust as from time to time in effect.

C. EXPENSES

Under the Multiple Distribution System, all expenses incurred by a Fund
are borne proportionately by each class of shares based on the relative
net assets attributable to each such class, except for the (i) different
distribution and service fees (and any other costs relating to
implementing the Rule 12b-1 Plan or an amendment to such Plan including
obtaining shareholder approval of the Rule 12b-1 Plan or an amendment to
such Plan); (ii) printing and postage expenses; and (iii) shareholder
servicing fees attributable to a class, which will be borne directly by
each respective class.

D. CONVERSION FEATURES

1. Conversion of Class B shares

If a shareholder's Class B shares of a Fund remain outstanding for a
specified period of time, they will automatically convert to Class A
shares of that Fund at the relative net asset values of each of the
classes, and will thereafter be subject to the lower fee under the
Class A Rule 12b-1 Plan. 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 Rule 12b-1 Plan applicable to Class B
shares. However, for purposes of conversion to Class A, all shares
in a shareholder's account that were purchased through the
reinvestment of distributions paid in respect of Class B shares (and
which have not converted to Class A shares as provided above) 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, a portion of the Class B shares then in the
sub-account will also convert to Class A. The portion will be
determined by the ratio that the shareholder's Class B shares not
acquired through distributions that are converting to Class A bears
to the shareholder's total Class B shares not acquired through
distributions.

2. Conversion of Other Classes

Any other class of shares may provide that shares in that class (the
"Purchase Class") will, after a period of time, automatically
convert into another class of shares (the "Target Class") in
accordance with the provisions of Rule 18f-3. Such a conversion
feature would be described in the relevant Fund's prospectus.

3. General

Any conversion of shares of one class to shares of another class
would be subject to the continuing availability of a ruling of the
Internal Revenue Service or an opinion of legal counsel to the
effect that the conversion of these shares does not constitute a
taxable event under federal tax law. Any such conversion may be
suspended if such a ruling or opinion is no longer available. In the
event such conversion does not occur, these shares would continue to
be subject for an indefinite period to the higher distribution fees
and, in some cases, higher shareholder servicing fees of the class.

E. EXCHANGE FEATURES

Each class of shares may have different exchange features applicable to
the shares of that class. Currently, Class A shares of a Fund may be
exchanged, either all or in part, at net asset value for Class A shares of
another Fund. Class A shares of MFS Cash Reserve Fund may be exchanged for
Class A shares of another Fund at net asset value plus that Fund's normal
front-end load (except in certain situations described in MFS Cash Reserve
Fund's prospectus). Class B shares may be exchanged, either all or in
part, at net asset value for Class B shares of another Fund. Class C
shares may be exchanged, either all or in part, at net asset value for
Class C shares of another Fund. Class I shares may be exchanged, either
all or in part, at net asset value for Class I shares of another Fund
available for purchase by the shareholder and for shares of the MFS Money
Market Fund. Class J shares of a Fund may be exchanged, either all or in
part, at net asset value for Class J shares of another Fund. 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. Each exchange
is subject to share availability and must involve shares having an
aggregate minimum value as set forth in the Fund's prospectus. Shares of
one class may not be exchanged for shares of any other class.

F. PLAN DURATION

This Plan shall continue in effect indefinitely unless terminated or
amended as provided herein.

G. TERMINATION AND AMENDMENT PROCEDURE

This Plan may be terminated at any time by a vote of a majority of the
Trustees who are not "interested persons" of the Trust ("Disinterested
Trustees") or by a vote of the holders of a "majority of the outstanding
voting securities" of the Trust. No material amendment may be made to this
Plan without the approval of a majority of the Trustees, including a
majority of the Disinterested Trustees, after a finding that the Plan is
in the best interests of each class of shares individually and each Fund
as a whole. This Plan may be amended without Trustee approval to make a
change that is not material which includes, by way of example, to supply
any omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof.

H. SCOPE OF TRUST'S OBLIGATIONS

A copy of the Declaration of Trust of each Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. It is
acknowledged that the obligations of or arising out of this Plan 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 in accordance with its proportionate interest
hereunder. If this Plan is adopted by the Trust on behalf of one or more
series of the Trust, it is further acknowledged 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 Plan are binding solely upon the
assets or property of the series on whose behalf the Trust has adopted
this Plan. If the Trust has adopted this Plan on behalf of more than one
series of the Trust, it is also acknowledged that the obligations of each
series hereunder shall be several and not joint, in accordance with its
proportionate interest hereunder, and no series shall be responsible for
the obligations of another series.

I. MISCELLANEOUS PROVISIONS

As used in this Plan, the terms "interested person" and "majority of the
outstanding voting securities" are used as defined in the 1940 Act. This
Plan shall be administered and construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the
1940 Act and the Rules and Regulations promulgated thereunder. 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 A

Dated: April 12, 2000
MFS(R) SERIES TRUST I:
MFS(R) Managed Sectors Fund
MFS(R) Cash Reserve Fund
MFS(R) Global Asset Allocation Fund
MFS(R) Strategic Growth Fund
MFS(R) Research Growth and Income Fund
MFS(R) Core Growth Fund
MFS(R) Equity Income Fund
MFS(R) New Discovery Fund
MFS(R) Science and Technology Fund
MFS(R) Research International Fund
MFS(R) Global Telecommunications Fund
MFS(R) Japan Equity Fund

MFS(R) SERIES TRUST II:
MFS(R) Emerging Growth Fund
MFS(R) Large Cap Growth Fund
MFS(R) Intermediate Income Fund
MFS(R) Charter Income Fund

MFS SERIES TRUST III:
MFS(R) High Income Fund
MFS(R) Municipal High Income Fund
MFS(R) High Yield Opportunities Fund

MFS SERIES TRUST IV:
MFS(R) Municipal Bond Fund
MFS(R) Mid Cap Growth Fund

MFS SERIES TRUST V:
MFS(R) Total Return Fund
MFS(R) Research Fund
MFS(R) International Opportunities Fund
MFS(R) International Strategic Growth Fund
MFS(R) International Value Fund

MFS SERIES TRUST VI:
MFS(R) Global Total Return Fund
MFS(R) Utilities Fund
MFS(R) Global Equity Fund

MFS SERIES TRUST VII:
MFS(R) Global Governments Fund
MFS(R) Capital Opportunities Fund

MFS SERIES TRUST VIII:
MFS(R) Strategic Income Fund
MFS(R) Global Growth Fund

MFS SERIES TRUST IX:
MFS(R) Bond Fund
MFS(R) Limited Maturity Fund
MFS(R) Municipal Limited Maturity Fund
MFS(R) Intermediate Investment Grade Bond Fund
MFS(R) Research Bond Fund
MFS(R) Mid Cap Value Fund
MFS(R) Large Cap Value Fund
MFS(R) High Quality Bond Fund

MFS SERIES TRUST X:
MFS(R) Government Mortgage Fund
MFS(R) Emerging Markets Equity Fund
MFS(R) International Growth Fund
MFS(R) International Growth and Income Fund
MFS(R) Strategic Value Fund
MFS(R) Emerging Markets Debt Fund
MFS(R) Income Fund
MFS(R) European Equity Fund
MFS(R) High Yield Fund
MFS(R) Concentrated Growth Fund

MFS SERIES TRUST XI:
MFS(R) Union Standard Equity Fund
Vertex All Cap Fund
Vertex Contrarian Fund
<PAGE>

MFS MUNICIPAL SERIES TRUST:
MFS(R) Alabama Municipal Bond Fund
MFS(R) Arkansas Municipal Bond Fund
MFS(R) California Municipal Bond Fund
MFS(R) Florida Municipal Bond Fund
MFS(R) Georgia Municipal Bond Fund
MFS(R) Maryland Municipal Bond Fund
MFS(R) Massachusetts Municipal Bond Fund
MFS(R) Mississippi Municipal Bond Fund
MFS(R) New York Municipal Bond Fund
MFS(R) North Carolina Municipal Bond Fund
MFS(R) Pennsylvania Municipal Bond Fund
MFS(R) South Carolina Municipal Bond Fund
MFS(R) Tennessee Municipal Bond Fund
MFS(R) Virginia Municipal Bond Fund
MFS(R) West Virginia Municipal Bond Fund
MFS(R) Municipal Income Fund
MFS(R) New York High Income Tax Free Fund
MFS(R) Massachusetts High Income Tax Free Fund

Massachusetts Investors Trust

Massachusetts Investors Growth Stock Fund

MFS(R) Growth Opportunities Fund

MFS(R) Government Securities Fund

MFS(R) Government Limited Maturity Fund

<PAGE>

EXHIBIT NO. 99.16(a)

FORM OF

CODE OF ETHICS

[Name of Fund] (the "Fund") has determined to adopt this Code of Ethics
("Code") with respect to certain types of personal securities transactions by
officers and Trustees of the Fund which might be deemed to create possible
conflicts of interest and to establish reporting requirements and enforcement
procedures with respect to such transactions.

I. Rules Applicable to Affiliated Officers and Trustees

A. Incorporation of MFS' Code of Ethics.

The provisions of the Statement of Policy on Personal Security
Transactions of Massachusetts Financial Services Company [the parent
of] the Fund's Investment adviser ("MFS") (the "MFS Code of
Ethics"), which is attached as Appendix A hereto, are hereby
incorporated herein as the Fund's Code of Ethics applicable to
officers and Trustees of the Fund who are not Disinterested
Trustees. A violation of the MFS Code of Ethics shall constitute a
violation of the Fund's Code.

B. Reports.

Officers and Trustees of the Fund other than Disinterested Trustees
shall file the reports required by the MFS Code of Ethics. Such
filings shall be deemed a filing under this Code of Ethics and shall
be available to the Fund upon request.

C. Review.

(1) Reports filed by officers and Trustees of the Fund other than
Disinterested Trustees as required by the MFS Code of Ethics
shall be reviewed as provided by the MFS Code of Ethics. Any
facts that could give rise to a violation of the Code by any
such individual shall be reported to the Secretary of the Fund.
The Secretary of the Fund shall determine whether a violation of
the Code may have occurred. Before making any determination that
a violation has been committed by any person, the Secretary
shall give such person an opportunity to supply additional
explanatory material.

(2) If the Secretary determines that a material violation of this
Code has or may have occurred, he shall submit his written
determination, together with the transaction report and any
additional explanatory material provided by the individual, to
the Chairman of MFS, who shall make an independent determination
of whether a violation has occurred.

D. Sanctions.

If the Chairman of MFS finds that a material violation has occurred,
he shall report the violation and any sanction imposed by MFS to the
Trustees of the Fund. if a securities transaction of the Chairman of
MFS is under consideration, another member of the Executive
Committee of MFS shall act in all respects in the manner prescribed
herein for the Chairman of MFS.

II. Rules Application to Disinterested Trustees of the Funds.

A. Definitions.

(1) "Beneficial ownership" shall be interpreted in the same manner
as it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder. Application of this
definition is explained in more detail in Appendix B hereto.

(2) "Control" means the power to exercise a controlling influence
over the management or policies of a company, unless such power
is solely the result of an official position with such company.

(3) "Disinterested Trustee" means a Trustee of a Fund who is not an
"Interested Person" of the Fund within the meaning of the
Investment Company Act.

(4) "Purchase or sale of a security" includes, among other things,
the writing of an option to purchase or sell a security.

(5) "Security" shall have the same meaning as that set forth in
Section 2(a)(36) of the Investment Company Act (in effect, all
securities) except that it shall not include securities issued
by the Government of the United States or an agency thereof,
bankers' acceptances, bank certificates of deposit, commercial
paper and shares of registered open-end investment companies.

B. Prohibited Purchases and Sales.

No Disinterested Trustee of any of the Funds shall purchase or sell,
directly or indirectly, any Security in which he has or by reason of
such transaction acquires, any direct or indirect beneficial
ownership and which to his actual knowledge at the time of such
purchase of sale:

(1) Is being considered for purchase or sale by the Fund.

(2) Is being purchase or sold by the Fund.

C. Exempted Transactions.

The prohibitions of Section IIB of this Code shall not apply to:

(1) Purchases or sales effected in any account over which the
Disinterested Trustee has no direct or indirect influence or
control.

(2) Purchases or sales which are non-volitional on the part of
either the Disinterested Trustee or the Fund.

(3) Purchases which are part of an automatic dividend reinvestment
plan.

(4) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.

(5) Purchases or sales other than those exempted in (1) through (4)
above which do not cause the Disinterested Trustee to gain
improperly a personal benefit through his relationship with the
Funds and are only remotely potentially harmful to a Fund
because they would be very unlikely to affect a highly
institutional market, and are previously approved by MFS' Legal
Department, which approval shall be confirmed in writing.

D. Reporting.

(1) Whether or not one of the exemptions listed in IIC applies,
every Disinterested Trustee of a Fund shall file with the
Secretary of the Fund a report containing the information
described in Section IID(2) of the Code with respect to
transactions in any Security in which such Disinterested Trustee
has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership of such Trustee, at the time of
that transaction, knew, or in the ordinary course of fulfilling
his official duties as a Trustee of the Fund, should have known
that, during the 15-day period immediately preceding or after
the date of the transaction by the Trustee:

(a) such Security was or is to be purchased or sold by the Fund
or

(b) such Security was or is being considered for purchase or
sale by the Fund;

provided, however, that a Disinterested Trustee shall not be
required to make a report with respect to transactions effected
for any account over which such person does not have any direct
or indirect influence or control.

(2) Every report shall be made not later than 10 days after the end
of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:

(a) the date of the transaction, the title and the number of
shares, and principal amount of each Security involved;

(b) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);

(d) the name of the broker, dealer or bank with or through whom
the transaction was effected.

(3) Every report concerning a purchase or sale prohibited under
Section IIB hereof with respect to which the reporting person
relies upon one of the exemptions provided in Section IIC shall
contain a brief statement of the exemption relied upon and the
circumstances of the transaction.

(4) Any such report may contain a statement that the report shall
not be construed as an admission by the person making such
report that he has any direct or indirect beneficial ownership
in the security to which the report relates.

E. Review.

(1) The Secretary of the Fund shall compare the reported personal
securities transactions with completed and contemplated
portfolio transactions of the Fund to determine whether any
transaction ("Reviewable Transactions") listed in Section IIB
(disregarding exemptions provided by Section IIC (1) through
(5)) may have occurred.

(2) If the Secretary determines that a Reviewable Transaction may
have occurred, he shall submit the pertinent information
regarding the transaction to counsel for the Disinterested
Trustees. Such counsel shall determine whether a material
violation of this Code may have occurred, taking into account
all the exemptions provided under Section IIC. Before making any
determination that a violation has occurred, such counsel shall
give the person involved an opportunity to supply additional
information regarding the transaction in question.

F. Sanctions.

If such counsel determines that a material violation of this
Code has occurred, they shall so advise the Chairman or
President of the Fund and an ad hoc committee consisting of
the Disinterested Trustees of the Fund, other than the person
whose transaction is under consideration, and shall provide
the committee with a report of the matter, including any
additional information supplied by such person. The committee
may impose such sanction as it deems appropriate.

III. Miscellaneous.

A. Amendments to MFS' Code of Ethics.

Any amendment to the MFS Code of Ethics shall be deemed an amendment
to Section IA of this Code effective 30 days after written notice of
such amendment shall have been received by the Disinterested
Trustees of the Funds unless the Disinterested Trustees expressly
determine that such amendment shall become effective at an earlier
or later date or shall not be adopted.

B. Records.

The Funds shall maintain records in the manner and to the extent set
forth below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the Investment
Company Act and shall be available for examination by
representatives of the Securities and Exchange Commission.

(1) A copy of this Code and any other Code which is, or any time
within the past fives years has been, in effect shall be
preserved in an easily accessible place.

(2) A record of any violation of this Code and of any action taken
as a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs.

(3) A copy of each report made by an officer or Trustee pursuant to
this Code shall be preserved for a period of not less than five
years from the end of the fiscal year in which it is made, the
first two years in an easily accessible place.

(4) A list of all persons who are, or within the past five years
have been, required to make reports pursuant to this Code shall
be maintained in an easily accessible place.

C. Confidentiality.

All reports of securities transactions and any other information
filed with any Fund pursuant to this Code shall be treated as
confidential, but are subject to review as provided herein and by
personnel of the Securities and Exchange Commission.

D. Interpretation of Provisions.

The Trustees may from time to time adopt such interpretations of
this Code as they deem appropriate.

<PAGE>

EXHIBIT NO. 16(b)

MASSACHUSETTS FINANCIAL SERVICES COMPANY
STATEMENT OF POLICY ON
PERSONAL SECURITIES TRANSACTIONS
(CODE OF ETHICS)

AS ADOPTED BY THE AUDIT COMMITTEE
EFFECTIVE AS OF MARCH 1, 2000

As an investment advisory organization with substantial responsibilities
to clients, Massachusetts Financial Services Company ("MFS") has an obligation
to implement and maintain a meaningful policy governing the securities
transactions of its Directors, officers and employees ("MFS
representatives").(1) This policy is intended to minimize conflicts of interest,
and even the appearance of conflicts of interest, between members of the MFS
organization and its clients in the securities markets as well as to effect
compliance with the Investment Company Act, the Investment Advisers Act and the
Securities Exchange Act. This policy inevitably will restrict MFS
representatives in their securities transactions, but this is the necessary
consequence of undertaking to furnish investment advice to clients. In addition
to complying with the specific rules, we all must be sensitive to the need to
recognize any conflict, or the appearance of conflict, of interest whether or
not covered by the rules. When such situations occur, the interests of our
clients must supersede the interest of MFS representatives.

- --------
(1) Employees of MFS Institutional Advisors, Inc., MFS Fund Distributors,
Inc., MFS Retirement Services, Inc., MFS International Ltd., MFS International
(U.K.) Ltd., MFS Service Center, Inc., Vertex Investment Management Inc. and MFS
Heritage Trust Company also are covered by this Code of Ethics.

1. GENERAL FIDUCIARY PRINCIPLES. All personal investment activities
conducted by MFS representatives are subject to compliance with the following
principles: (i) the duty at all times to place the interests of MFS' clients
first; (ii) the requirement that all personal securities transactions be
conducted consistent with this Code of Ethics and in such a manner as to avoid
any actual or potential conflict of interest or any abuse of an individual's
position of trust and responsibility; and (iii) the fundamental standard that
MFS representatives should not take inappropriate advantage of their positions.

2. APPLICABILITY OF RESTRICTIONS AND PROCEDURES. In recognition of the
different circumstances surrounding each MFS representative's employment,
various categories of MFS employees are subject to different restrictions under
this Code of Ethics. For purposes of applying this Code of Ethics, MFS employees
are divided into the general categories of Portfolio Managers, Investment
Personnel, Access Persons and Non-Access Persons, as each such term is defined
in Appendix A to this Code of Ethics, as amended from time to time by the Audit
Committee.

As used in this Code of Ethics, the term "securities" includes not only
publicly traded equity securities, but also privately issued equity securities,
shares of closed-end funds, fixed income securities (including municipal bonds
and many types of U.S. Government securities), futures, options, warrants,
rights, swaps, commodities and other similar instruments. Moreover, the
restrictions of this Code of Ethics apply to transactions by Access Persons
involving securities and other instruments related to, but not necessarily the
same as, securities held or to be acquired on behalf of an MFS client.

3. RESTRICTIONS ON PERSONAL SECURITIES TRANSACTIONS. No Access Person
shall trade in any security which is subject to a pending "buy" or "sell" order,
or has been considered for purchase of sale,(2) for a client of MFS until such
order is executed or withdrawn. In addition, no Investment Personnel shall trade
in any security after an MFS client trades in such security or such security has
been considered for purchase or sale on behalf of an MFS client until: (i) the
next business day following such trade or consideration (in the case of a
proposed trade by an Investment Personnel in the same direction as the MFS
client); or (ii) the eighth calendar day thereafter (in the case of a proposed
trade by an Investment Personnel in the opposite direction from the MFS client's
trade). No Portfolio Manager shall trade in any security within at least seven
calendar days before or after an MFS client whose account he or she manages
trades in such security or such security has been considered for purchase or
sale on behalf of such an MFS client. Any profits realized on trades within
these proscribed periods must be disgorged to the affected MFS client or, in the
event that the amount to be disgorged is relatively minor or difficult to
allocate, to charity. In addition, no MFS representative shall provide any
information about such transaction or recommendation to any person other than in
connection with the proper execution of such purchase or sale for an MFS
client's account.

- ----------
(2) A security is deemed to have been "considered for purchase or sale"
when a recommendation to purchase or sell such security has been made and
communicated to a portfolio manager and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.

Portfolio Managers should consider the problems inherent in purchasing for
their own account securities that are or may be suitable for a client's
portfolio. For example, a fortuitous early sale by the Manager for his or her
personal account may be criticized in hindsight if the same security later is
sold from the client's account at a lower price.

GIFTS AND TRANSFERS. A gift or transfer shall be excluded from the
preclearance requirements provided that the recipient represents in
writing that he, she, they or it has no present intention of selling the
donated security.

SHORT SALES. No Access Person shall effect a short sale in any security
held in a portfolio managed by MFS. Access Persons may engage in
transactions in options and futures, subject to special preclearance rules
applicable to certain of those transactions as described in Section 5
below.

INITIAL PUBLIC OFFERINGS. The purchase by Access Persons of securities
(other than securities of registered open-end investment companies)
offered at fixed public offering price by underwriters or a selling group
is prohibited.(3) Rights (including rights purchased to acquire an
additional full share) issued in respect of securities any Access Persons
owns may be exercised, subject to preclearance; the decision whether or
not to grant preclearance shall take into account, among other factors,
whether the investment opportunity should be reserved for an MFS client
and whether the investment opportunity is being or was offered to the
individual by virtue of his or her position with MFS.

- ----------
(3) The reason for this rule is that it precludes any possibility that
Access Persons might use MFS' clients' market stature as a means of obtaining
for themselves "hot" issues which otherwise might not be offered to them. In
addition, this rule eliminates the possibility that underwriters and selling
group members might seek by this means to gain favor with individuals in order
to obtain preferences from MFS.

PRIVATE PLACEMENTS. Any acquisition by Access Persons of securities issued
in a private placement is subject to preclearance. The decision whether or
not to grant preclearance shall take into account, among other factors,
whether the investment opportunity should be reserved for an MFS client
and whether the investment opportunity is being offered to the individual
by virtue of his or her position with MFS. Investment Personnel who have
been precleared to acquire securities in a private placement are required
to disclose that investment when they play a part in any subsequent
consideration of an investment in the issuer for an MFS client. In such
circumstances, the decision to purchase securities of the issuer for the
MFS client shall be subject to an independent review by Investment
Personnel with no personal interest in the issuer.

NOTE: Acquisitions of securities in private placements by country clubs,
yacht clubs and other similar entities need not be precleared, but are
subject to the reporting, disclosure and independent review requirements.

PROHIBITION ON SHORT-TERM TRADING PROFITS. All Investment Personnel are
prohibited from profiting in the purchase and sale, or sale and purchase,
of the same (or equivalent) securities within 60 calendar days. Any
profits realized on such short-term trades must be disgorged to the
affected MFS client (if any) or, in the event that the amount to be
disgorged is relatively minor or difficult to allocate, to charity. This
restriction on short-term trading profits shall not apply to transactions
exempt from preclearance requirements, as described in Section 8 below.

It is expected that all MFS representatives will follow these restrictions
in good faith and conduct their personal trading in keeping with the intended
purpose of this Code of Ethics. Note: Any Non-Access Person who receives any
information about any particular investment recommendation or executed or
proposed transaction for any MFS client is required to comply with all
preclearance and other requirements of this Code of Ethics applicable to Access
Persons. Any individual should feel free to take up with the Audit Committee any
case in which he or she feels inequitably burdened by these policies. The Audit
Committee may, in its sole discretion, grant appropriate exceptions from the
requirements of this Code of Ethics where warranted by applicable facts and
circumstances.

4. BENEFICIAL OWNERSHIP. The requirements of this Code of Ethics apply to
any account in which an MFS representative has (i) "direct or indirect
beneficial ownership" or (ii) any "direct or indirect influence or control."
Under applicable SEC interpretations, such "beneficial ownership" includes
accounts of a spouse, minor children and dependent relatives resident in the MFS
representative's house, as well as any other contract, relationship,
understanding or other arrangement which results in an opportunity for the MFS
representative to profit or share profits from a transaction in securities.

NOTE: The exception for accounts with respect to which an MFS
representative lacks "direct or indirect influence or control" is extremely
narrow, and should only be relied upon in cases which have been pre-approved in
writing by Stephen E. Cavan or Robert T. Burns of the Legal Department. Certain
"blind trust" arrangements approved by the Legal Department may be excluded from
the preclearance (but not the quarterly reporting) requirements of this Code of
Ethics.

5. PRECLEARANCE REQUIREMENTS. In order to facilitate compliance with this
Code of Ethics, preclearance requests must be made and approved before any
transaction may be made by an Access Person. A preclearance request in the form
set forth in MFS' automated Code of Ethics system, as amended from time to time,
should be completed and submitted electronically for any order for an Access
Person's own account or one described in Section 4 above, or, in the case of an
Access Person who wishes to preclear while outside of the Boston area, should
either: (i) be completed in the form attached hereto, as amended from time to
time, signed and submitted by facsimile machine, to the Compliance Department;
or (ii) be submitted by telephone call to the Compliance Department. Any
preclearance request received before 3:00 p.m. on a business day will be
responded to as soon as available on the following business day. Preclearance
requests will be reviewed by Equity and Fixed Income Department personnel who
will be kept apprised of recommendations and orders to purchase and sell
securities on behalf of MFS clients, the completion or cancellation of such
orders and the securities currently held in portfolios managed by MFS. Their
advice will be forwarded to the Compliance Department.

The preclearance process imposes significant burdens on the investment and
administrative departments within MFS. Accordingly, if the MFS Audit Committee
determines that an Access Person is making an excessive number of preclearance
requests, it reserves the right to limit such Access Person to a certain number
of preclearance requests per day or per period.

An Access Person who obtains electronic or written notice from the
Compliance Department indicating consent to an order which the Access Person
proposes to enter for his or her own account or one described in Section 4 above
may execute that order only on the day when such notice is received unless
otherwise stated on the notice. Such notices will always be electronic or in
writing; however, in the case of an Access Person who wishes to preclear a
transaction while outside the Boston area, the Compliance Department will also
provide oral confirmation of the content of the written notice.

Preclearance requests may be denied for any number of appropriate reasons,
most of which are confidential. For example, a preclearance request for a
security that is being considered for purchase or sale on behalf of an MFS
client may be denied for an extended period (e.g. 10 business days).
Accordingly, an Access Person is not entitled to receive any explanation or
reason if his or her preclearance request is denied, and any request for an
explanation by an Access Person may be deemed a violation of this Code of
Ethics.

SIGNIFICANT OWNERSHIP BY MFS CLIENTS. In cases where MFS clients own, in
the aggregate, 8% or more of the outstanding equity securities of an
issuer, requests by Access Persons to purchase the securities of such
issuer will be denied. Requests to preclear sales of such securities may
be granted, subject to the standard requirements set forth in Section 3
above.

SECURITIES SUBJECT TO AUTOMATIC PURCHASES AND SALES FOR MFS CLIENTS.
Certain MFS funds and institutional accounts are managed such that the
securities held in such portfolios are regularly purchased or sold on an
equal proportionate basis so as to preserve specified percentage
weightings of such securities across such portfolios. Requests to preclear
purchases of securities held in such portfolios will be denied. Requests
to sell such securities may be granted, subject to the standard
preclearance requirements set forth in Section 3 above.

OPTIONS AND FUTURES TRANSACTIONS. Access Persons may purchase (to open)
and sell (to close) call and put options and futures contracts on
securities, subject to the preclearance and other requirements of this
Code of Ethics; however, an Access Person may neither buy a put option on
any security held in a portfolio managed by MFS nor write (sell to open)
options and futures contracts. In the case of purchased put and call
options, the preclearance of the exercise of such options as well as their
purchase and sale, is required. Preclearance of the exercise of purchased
put and call options shall be requested on the day before the proposed
exercise or, if notice to the writer of such options is required before
the proposed exercise date, the date before notice is proposed to be
given, setting forth the proposed exercise date as well as the proposed
notice date.(4) Purchases and sales of options or futures contracts to
"close out" existing options or futures contracts must be precleared.(5)

- ----------
(4) Access Persons should note that this requirement may result in their
not being allowed to exercise an option purchased by them on the exercise date
they desire, and in the case of a "European" option on the only date on which
exercise is permitted by the terms of the option.

(5) Access Persons should note that as a result of this requirement, they
may not be able to obtain preclearance consent to close out an option or futures
contract before the settlement date. If such an option or futures contract is
automatically closed out, the gain, if any, on such transaction will be
disgorged in the manner described in Section 3 above.

MFS CLOSED-END FUNDS. All transactions effected by any MFS representative
in shares of any closed-end fund for which MFS or one of its affiliates
acts as investment adviser shall be subject to preclearance and reporting
in accordance with this Code of Ethics. Non-Access Persons are exempt from
the preclearance and reporting requirements set forth in this Code of
Ethics with respect to transactions in any other type of securities, so
long as they have not received any information about any particular
investment recommendation or executed or proposed transaction for any MFS
client with respect to such security.

6. DUPLICATE CONFIRMATION STATEMENT REQUIREMENT. In order to implement and
enforce the above policies, every Access Person shall arrange for his or her
broker to send MFS duplicate copies of all confirmation statements issued with
respect to the Access Person's transactions and all periodic statements for such
Access Person's securities accounts. The Compliance Department will coordinate
with brokerage firms in order to assist Access Persons in complying with this
requirement.

7. REPORTING REQUIREMENT. Each Access Person shall report on or before the
tenth day of each calendar quarter any securities transactions during the prior
quarter in accounts covered by Section 4 above. Employees who fail to complete
and file such quarterly reports on a timely basis will be reported to the Audit
Committee and will be subject to sanctions. Reports shall be reviewed by the
Compliance Department.

In filing the reports for accounts within these rules, please note:

(i) You must file a report for every calendar quarter even if you had no
reportable transactions in that quarter; all such reports shall be
completed and submitted in the form set forth in MFS' automated Code
of Ethics system.

(ii) Reports must show any sales, purchases or other acquisitions or
dispositions, including gifts, exercises of conversion rights and
exercises or sales of subscription rights. See Section 8 below for
certain exceptions to this requirement.

(iii) Reports will be treated confidentially unless a review of particular
reports with the representative is required by the Audit Committee.

(v) Reports are made available for review by the Boards of Trustees of
MFS investment company clients upon their request.

NOTE: Any Access Person who maintains all of his or her personal
securities accounts with one or more broker-dealer firms that send
confirmation and periodic account statements in an electronic format
approved by the Compliance Department, and who arranges for such firms to
send such statements (no less frequently than quarterly) required by
Section 6 above, shall not be required to prepare and file the quarterly
reports required by this Section 7. However, each such Access Person shall
be required to verify the accuracy and completeness of all such statements
on at least an annual basis.

8. CERTAIN EXCEPTIONS.

MUTUAL FUNDS. Transactions in shares of any open-end investment companies,
including funds for which the MFS organization is investment adviser, need not
be precleared or reported.

CLOSED-END FUNDS. Automatic reinvestments of distributions of closed-end
funds advised by MFS pursuant to dividend reinvestment plans of such funds need
only be reported. All other closed-end fund transactions must be precleared and
reported.

MFS COMMON STOCK. Transactions in shares of stock of MFS need not be
precleared or reported.

LARGE CAPITALIZATION STOCKS. Transactions in securities issued by
companies with market capitalizations of at least $5] billion generally will be
eligible for automatic preclearance (subject to certain exceptions), but must be
reported and are subject to post-trade monitoring. The Compliance Department
will maintain a list of issuers that meet this market capitalization
requirement. A preclearance request for a large capitalization company will be
denied whenever deemed appropriate.

U.S. GOVERNMENT SECURITIES. Transactions in U.S. Treasury securities
(including options and futures contracts and other derivatives with respect to
such securities) need not be precleared or reported. Option and futures
contracts on U.S. Government obligations (other than U.S. Treasury securities)
and securities indices need not be precleared but must be reported. Transactions
in U.S. Government securities offered on the basis of "non-competitive tender"
need not be precleared or reported. However, U.S. Government obligations (other
than U.S. Treasury securities) offered by "subscription" must be precleared and
reported.

OTHER EXCEPTIONS. Transactions in money market instruments and in options
on broad-based indices need not be precleared, although such transactions must
be reported. In addition, the following types of transactions need not be
precleared or reported: (i) stock dividends and stock splits; (ii) foreign
currency transactions; and (iii) transactions in real estate limited partnership
interests.

9. DISCLOSURE OF PERSONAL SECURITIES HOLDINGS. All Access Persons are
required to disclose all personal securities holdings upon becoming an Access
Person (i.e. upon commencement of employment with MFS or transfer within MFS to
an Access Person position) and thereafter on an annual basis. Reports shall be
reviewed by the Compliance Department.

10. GIFTS, ENTERTAINMENT AND FAVORS. MFS representatives must not make
business decisions that are influenced or appear to be influenced by giving or
accepting gifts, entertainment or favors. Investment Personnel are prohibited
from receiving any gift or other thing of more than de minimis value from any
person or entity that does business with or on behalf of MFS or its clients.
Invitations to an occasional meal, sporting event or other similar activity will
not be deemed to violate this restriction unless the occurrence of such events
is so frequent or lavish as to suggest an impropriety.

11. SERVICE AS A DIRECTOR. All MFS representatives are prohibited from
serving on the boards of directors of commercial business enterprises, absent
prior authorization by the Management Committee based upon a determination that
the board service would be consistent with the interests of MFS' clients. In the
relatively small number of instances in which board service is authorized, MFS
representatives serving as directors may be isolated from other MFS
representatives through "Chinese Wall" or other appropriate procedures.

12. CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS. All MFS
representatives (including Non-Access Persons) shall be required to certify
annually that (i) they have read and understand this Code of Ethics and
recognize that they are subject to its requirements applicable to them and (ii)
they have complied with all requirements of this Code of Ethics applicable to
them, and (in the case of Access Persons) have reported all personal securities
transactions (whether pursuant to quarterly reports from the Access Person or
duplicate confirmation statements and periodic reports from the Access Person's
broker-dealer) required to be reported pursuant to this Code of Ethics.

13. BOARDS OF TRUSTEES OF MFS FUNDS. Any material amendment to this Code
of Ethics shall be subject to the approval by each of the Boards of Trustees
(including a majority of the disinterested Trustees on each such Board) of each
of the registered investment companies with respect to which MFS, or any
subsidiary of MFS, acts as investment adviser. In addition, on at least an
annual basis, MFS shall provide each such Board with a written report that: (i)
describes issues that arose during the preceding year under this Code of Ethics,
including without limitation information about any material violations of this
Code of Ethics and any sanctions imposed with respect to such violations; and
(ii) certifies to each such Board that MFS has adopted procedures reasonably
necessary to prevent Access Persons from violating this Code of Ethics.

14. SANCTIONS. Any trading for an MFS representative's account which does
not evidence a good faith effort to comply with these rules will be subject to
Audit Committee review. If the Audit Committee determines that a violation of
this Code of Ethics or its intent has occurred, it may impose such sanctions as
it deems appropriate including forfeiture of any profit from a transaction
and/or termination of employment. Any violations resulting in sanctions will be
reported to the Boards of Trustees of MFS investment company clients and will be
reflected in the employee's personnel file.
<PAGE>

APPENDIX A

CERTAIN DEFINED TERMS

As used in this Code of Ethics, the following shall terms shall have the
meanings set forth below, subject to revision from time to time by the Audit
Committee:

PORTFOLIO MANAGERS -- employees who are authorized to make
investment decisions for a mutual fund or client portfolio.
Note: research analysts are deemed to be Portfolio Managers with
respect to the entire portfolio of any fund managed collectively
by a committee of research analysts (e.g. MFS Research Fund).

INVESTMENT PERSONNEL -- all Portfolio Managers as well as research
analysts, traders and other members of the Equity Trading, Fixed Income
and Equity Research Departments.

ACCESS PERSONS -- all Portfolio Managers, Investment Personnel and other
members of the following departments or groups: Institutional Advisors;
Compliance; Fund Accounting; Investment Communications; and Technology
Services & Solutions ("TS&S") (excluding, however, TS&S employees who are
employed at Lafayette Corporate Center and certain TS&S employees who may
be specifically excluded by the Compliance or Legal Departments); also
included are members of the MFS Management Committee, the MFS
Administrative Committee and the MFS Operations Committee. In certain
instances, non-employee consultants and other independent contractors may
be deemed Access Persons and therefore be subject to some or all of the
requirements set forth in this Code of Ethics.

NON-ACCESS PERSONS -- all employees of the following departments or
groups: Corporate Communications; Corporate Finance; Facilities
Management; Human Resources; Internal Audit (unless undergoing an audit of
an access area); Legal; MFS Service Center, Inc. (other than TS&S
employees who are employed at 500 Boylston Street); Retired Partners;
Travel and Conference Services; the International Division; MFS
International Ltd.; MFS Fund Distributors, Inc.; and MFS Retirement
Services, Inc. Note: Any Non-Access Person who receives any information
about any particular investment recommendation or executed or proposed
transaction for any MFS client is required to comply with all preclearance
and other requirements of this Code of Ethics applicable to Access
Persons. Any Non-Access Person who regularly receives such information
will be reclassified as an Access Person. In addition, transactions in
shares of the MFS closed-end funds are subject to all such preclearance
and reporting requirements by all MFS representatives (see Section 5 of
this Code of Ethics).
<PAGE>

PERSONAL SECURITIES TRANSACTION
PRECLEARANCE REQUEST

[ONLY FOR USE BY MFS EMPLOYEES
NOT LOCATED IN BOSTON]

Date:_________________________, _____

All transactions must be precleared, regardless of their size, except those in
certain specific categories of securities that are exempted under the MFS Code
of Ethics. If necessary, continue on the reverse side. Please note that special
rules apply to the preclearance of option and futures transactions. If the
transaction is to be other than a straightforward sale or purchase of
securities, mark it with an asterisk and explain the nature of the transaction
on the reverse side. Describe the nature of each account in which the
transaction is to take place, i.e., personal, spouse, children, charitable
trust, etc.

SALES

CUSIP/TICKER AMOUNT OR NATURE* OF
SECURITY NO. OF SHARES BROKER ACCOUNT
-------- ------------- ------ -------

--------------------------------------------------------------------------

PURCHASES

--------------------------------------------------------------------------

I represent that I am not in possession of material non-public information
concerning the securities listed above or their issuer. If I am an MFS access
person charged with making recommendations to MFS with respect to any of the
securities listed above, I represent that I have not determined or been
requested to make a recommendation in that security except as permitted by the
MFS Code of Ethics.

---------------------------------------
Signature and Date

---------------------------------------
Name of MFS Access Person

(please print)

EXPLANATORY NOTES: This form must be filed by 3:00 p.m. on the business day
prior to the business day on which you wish to trade and covers all accounts
in which you have an interest, direct or indirect. This includes any account
in which you have "beneficial ownership" (unless you have no influence or
control over it) and non-client accounts over which you act in an advisory or
supervisory capacity. No trade can be effected until approval from the
Compliance Department has been obtained.

- -----------------------
* Check if you wish to claim that the reporting of the account or the securities
transaction shall not be construed as an admission that you have any direct or
indirect beneficial ownership in such account or securities