MFS INSTITUTIONAL TRUST, 497, 1995-12-04

MFS INSTITUTIONAL TRUST
497, 1995-12-04

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<PAGE>
PROSPECTUS
December 1, 1995
Shares of Beneficial Interest

MFS INSTITUTIONAL WORLDWIDE FIXED INCOME FUND (the "Worldwide Fund") -- The
investment objective of the Worldwide Fund is to seek not only preservation,
but also growth of capital, together with moderate current income. The Fund
invests, under normal market conditions, at least 80% of its assets in fixed
income securities and to a lesser extent equity securities.

MFS INSTITUTIONAL EMERGING EQUITIES FUND (the "Emerging Equities Fund") -- The
investment objective of the Emerging Equities Fund is to seek long-term growth
of capital. The Fund invests, under normal market conditions, at least 80% of
its assets in equity securities of small and medium-sized companies that are
early in their life cycle but which may have the potential to become major
enterprises (emerging growth companies).

MFS INSTITUTIONAL EMERGING MARKETS FIXED INCOME FUND (the "Emerging Markets
Fund") -- The investment objective of the Emerging Markets Fund is to seek
total return (high current income and long-term growth of capital). The Fund
invests, under normal market conditions, at least 65% of its total assets in
fixed income securities of government, government-related, supranational and
corporate issuers located or primarily conducting their business in emerging
market countries.

MFS INSTITUTIONAL CORE PLUS FIXED INCOME FUND (the "Core Plus Fund") --
The primary investment objective of the Core Plus Fund is to provide as
high a level of current income as is believed to be consistent with prudent
investment risk. The Fund's secondary objective is to protect shareholders'
capital. The Fund invests, under normal market conditions, at least 65% of its
total assets in convertible and non-convertible fixed income securities,
preferred stock, U.S. Government securities, commercial paper, repurchase
agreements, and cash equivalents.

MFS INSTITUTIONAL RESEARCH FUND (the "Research Fund") -- The investment
objective of the Research Fund is to provide long-term growth of capital and
future income. The Fund invests, under normal market conditions, at least 65%
of its total assets in equity securities of companies believed to possess
better than average prospects for long-term growth.

MFS INSTITUTIONAL MID-CAP GROWTH EQUITY FUND (the "Mid-Cap Fund") -- The
investment objective of the Mid-Cap Fund is to provide long-term growth of
capital. The Fund invests, under normal market conditions, at least 65% of
its total assets in the equity securities of companies with market
capitalizations within the range of approximately $500 million to $4 billion.

MFS INSTITUTIONAL INTERNATIONAL EQUITY FUND (the "International Equity Fund")
- -- The investment objective of the International Equity Fund is to provide
long-term growth of capital. The Fund invests, under normal market conditions,
at least 65% of its total assets in equity securities of companies whose
principal activities are located outside the United States ("U.S.").

THE EMERGING MARKETS FUND MAY INVEST UP TO 100% OF ITS ASSETS IN BONDS ISSUED BY
FOREIGN ISSUERS RATED BELOW INVESTMENT GRADE, WHICH ENTAIL GREATER RISKS OF
UNTIMELY INTEREST AND PRINCIPAL PAYMENTS, DEFAULT AND PRICE VOLATILITY THAN
HIGHER RATED SECURITIES, AND MAY PRESENT PROBLEMS OF LIQUIDITY AND VALUATION.
INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING. (SEE
"ADDITIONAL RISK FACTORS -- EMERGING MARKETS").

No assurance can be given that the investment objective(s) of the Worldwide
Fund, the Emerging Equities Fund, the Emerging Markets Fund, the Core Plus Fund,
the Research Fund, the Mid-Cap Fund or the International Equity Fund
(individually referred to as a "Fund" and collectively referred to as the
"Funds") will be achieved. Each Fund is a diversified series of MFS
Institutional Trust (the "Trust"), an open-end management investment company,
except for the Worldwide Fund andthe Emerging Markets Fund, which are
non-diversified series of the Trust.

The Funds' investment adviser and distributor are Massachusetts Financial
Services Company ("MFS" or the "Adviser") and MFS Fund Distributors, Inc.
("MFD"), respectively, both of which are located at 500 Boylston Street,
Boston, Massachusetts 02116.

The Funds are designed for sale to institutional investor clients of MFS and
MFS Asset Management, Inc., a wholly owned subsidiary of MFS, and other
similar investors. The minimum initial investment is generally $3 million per
investor (see "Purchases").

This Prospectus sets forth concisely the information concerning the Trust and
each Fund that a prospective investor ought to know before investing. The
Trust, on behalf of the Funds, has filed with the Securities and Exchange
Commission (the "SEC") a Statement of Additional Information, dated December
1, 1995, which contains more detailed information about the Trust and the
Funds and is incorporated into this Prospectus by reference. See page 28 for a
further description of the information set forth in the Statement of
Additional Information. A copy of the Statement of Additional Information may
be obtained without charge by contacting the Shareholder Servicing Agent (see
back cover for address and phone number).

INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[Logo] M F S
MFS ASSET MANAGEMENT, INC.

MFS(R) ASSET MANAGEMENT, INC.

MFS(R) INSTITUTIONAL WORLDWIDE
FIXED INCOME FUND

MFS(R) INSTITUTIONAL EMERGING
EQUITIES FUND

MFS(R) INSTITUTIONAL EMERGING MARKETS
FIXED INCOME FUND

MFS(R) INSTITUTIONAL CORE
PLUS FIXED INCOME FUND

MFS(R) INSTITUTIONAL
RESEARCH FUND

MFS(R) INSTITUTIONAL MID-CAP
GROWTH EQUITY FUND

MFS(R) INSTITUTIONAL
INTERNATIONAL EQUITY FUND

(EACH A SERIES OF MFS(R) INSTITUTIONAL TRUST)

<PAGE>

TABLE OF CONTENTS
PAGE
----
1. Expense Summary ........................................................ 3
2. The Funds .............................................................. 4
3. Condensed Financial Information ........................................ 5
4. Investment Objectives and Policies ..................................... 6
Worldwide Fund ..................................................... 6
Emerging Equities Fund ............................................. 7
Emerging Markets Fund .............................................. 8
Core Plus Fund ..................................................... 9
Research Fund ...................................................... 9
Mid-Cap Fund ....................................................... 10
International Equity Fund .......................................... 10
5. Investment Techniques .................................................. 11
6. Additional Risk Factors ................................................ 19
7. Management of the Funds ................................................ 21
8. Information Concerning Shares of the Funds ............................. 23
Purchases .......................................................... 23
Exchanges .......................................................... 24
Redemptions ........................................................ 24
Distributions ...................................................... 25
Tax Status ......................................................... 25
Net Asset Value .................................................... 26
Description of Shares, Voting Rights and Liabilities ............... 26
Performance Information ............................................ 26
Expenses ........................................................... 27
9. Shareholder Services ................................................... 27
Appendix A -- Description of Bond Ratings .............................. A-1

<PAGE>

EMERGING EMERGING
WORLDWIDE EQUITIES MARKETS CORE PLUS RESEARCH MID-CAP INTERNATIONAL
1. EXPENSE SUMMARY FUND FUND FUND FUND FUND FUND EQUITY FUND
--------- -------- -------- --------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases of Shares ............ None None None None None None None
Maximum Sales Load Imposed on
Reinvested Dividends and
Distributions .................. None None None None None None None

ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
Management Fees (after applicable
fee waiver) .................... 0.42%<F1> 0.63%<F1> 0.85% 0.45% 0.60% 0.60% 0.75%
Other Expenses (after expense
reimbursement) ................. 0.23% 0.12% 0.40%<F2><F3> 0.15%<F2><F3> 0.15%<F2><F3> 0.15%<F2><F3>0.20%<F2><F3>
Total Operating Expenses (after
expense waiver and
reimbursement) ................. 0.65%<F4> 0.75%<F4> 1.25%<F3> 0.60%<F3> 0.75%<F3> 0.75%<F3> 0.95%<F3>
<FN>
- ----------
<F1> MFS has voluntarily agreed to waive its management fee and/or pay expenses
of the Worldwide Fund and the Emerging Equities Fund in order to maintain
total expenses of the respective Fund at no more than 0.65% and 0.75%,
respectively, of the Fund's average daily net assets until June 30, 1997.
Absent this expense arrangement, Management Fees for each respective Fund
would have been 0.75% and 0.65% of the Fund's average daily net assets.
Each arrangement may be terminated or revised by MFS at any time.
<F2> "Other Expenses" are based on estimates for each referenced Fund's fiscal
year ending June 30, 1996.
<F3> MFS has agreed to bear, subject to reimbursement by each referenced Fund,
until December 31, 2005, expenses of each Fund such that each Fund's
aggregate expenses do not exceed the following percentage, on an annualized
basis, of its average daily net assets: 1.25% of the Emerging Markets Fund,
0.60% of the Core Plus Fund, 0.75% of the Research Fund, 0.75% of the
Mid-Cap Fund and 0.95% of the International Equity Fund. Each arrangement
may be terminated or revised by MFS at any time. See "Information
Concerning Shares of the Funds -- Expenses" below. Absent these expense
arrangements, estimated "Other Expenses" and "Total Operating Expenses" for
each respective Fund would be, on an annualized basis, 1.58% and 2.43% of
the Emerging Markets Fund, respectively, 3.63% and 4.08% of the Core Plus
Fund, respectively, 3.63% and 4.23% of the Research Fund, respectively,
3.63% and 4.23% of the Mid-Cap Fund, respectively, and 3.63% and 4.38% of
the International Equity Fund, respectively.
<F4> Percentages are based on fees incurred for each referenced Fund during the
fiscal year ended June 30, 1995. Absent the expense arrangements, "Total
Operating Expenses" for the Worldwide Fund and the Emerging Equities Fund
would have been 0.88% and 0.87% of each respective Fund's average daily net
assets.
</TABLE>
EXAMPLE OF EXPENSES
-------------------
An investor would pay the following dollar amounts of expenses on a $1,000
investment in each Fund, assuming (a) 5% annual return and (b) redemption at
the end of each of the time periods indicated:
<TABLE>
<CAPTION>
EMERGING EMERGING
WORLDWIDE EQUITIES MARKETS CORE PLUS RESEARCH MID-CAP INTERNATIONAL
PERIOD FUND FUND FUND FUND FUND FUND EQUITY FUND
- ------ --------- -------- -------- --------- -------- ------- -------------
<C> <C> <C> <C> <C> <C> <C> <C>
1 year ........................... $ 7 $ 8 $13 $ 6 $ 8 $ 8 $10
3 years .......................... $21 $24 $40 $19 $24 $24 $30
5 years .......................... $36 $42 N/A N/A N/A N/A N/A
10 years ......................... $81 $93 N/A N/A N/A N/A N/A

</TABLE>
<PAGE>

The purpose of the expense table above is to assist investors in
understanding the various costs and expenses that a shareholder of each Fund
will bear directly or indirectly. More complete descriptions of the expenses
of each Fund are set forth under the caption "Management of the Funds --
Investment Adviser" and "Information Concerning Shares of the Funds --
Expenses" below.

THE "EXAMPLE" SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OF ANY FUND; ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.

2. THE FUNDS
Each Fund is a series of the Trust, an open-end management investment company
which was organized as a business trust under the laws of The Commonwealth of
Massachusetts in 1990. Each Fund is a diversified Fund except for the
Worldwide Fund and the Emerging Markets Fund, which are non-diversified. The
Trust presently consists of seven separate series, each of which represents a
portfolio with separate investment policies. The Worldwide Fund, the Emerging
Equities Fund, and the Emerging Markets Fund commenced investment operations
in September of 1992, June of 1993 and August of 1995, respectively. It is
anticipated that the four other Funds will commence investment operations in
December of 1995. Shares of each Fund are continuously offered and sold to
investors and each Fund uses the proceeds to buy securities for its portfolio.
The Trust's Board of Trustees provides broad supervision over the affairs of
the Trust and each Fund. The Adviser is responsible for the management of each
Fund's assets and the officers of the Trust are responsible for its
operations. The Adviser manages the portfolio from day to day in accordance
with each Fund's investment objective(s) and policies. Each Fund also offers
to buy back (redeem) its shares from its shareholders at any time at the next
determined net asset value.

<PAGE>

3. CONDENSED FINANCIAL INFORMATION
The following per share information should be read in conjunction with the
financial statements included in the Annual Report to shareholders of the
Worldwide Fund and the Emerging Equities Fund, respectively, which are
incorporated by reference into the Statement of Additional Information in
reliance upon the report of each Fund's independent auditors, as experts in
accounting and auditing. Each Fund's current independent auditors are Deloitte
& Touche LLP.

Further information about the performance of the Worldwide Fund and the
Emerging Equities Fund is contained in each Fund's Annual Report to
shareholders, which can be obtained from the Shareholder Servicing Agent (see
back cover for address and phone number) without charge.

WORLDWIDE FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------
1995 1994 1993<F1>
------ ------ ------
<S> <C> <C> <C>
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD):
Net asset value -- beginning of period ..................................... $ 9.64 $ 10.50 $ 10.00
------- ------- -------
Income from investment operations<F3> --
Net investment income(S) ............................................... $ 0.65 $ 0.63 $ 0.17
Net realized and unrealized gain (loss) on investments and foreign
currency transactions ................................................ 0.70 (0.63) 0.33
------- ------- -------
Total from investment operations ................................... $ 1.35 $ -- $ 0.50
------- ------- -------
Less distributions declared to shareholders --
From net investment income ............................................. $ (0.23) $ (0.31) $ --
In excess of net investment income ..................................... -- (0.55) --
From net realized gain on investments and foreign currency transactions (0.63) -- --
------- ------- -------
Total distributions declared to shareholders ....................... $(0.86) $(0.86) $ --
------- ------- -------
Net asset value -- end of period ........................................... $ 10.13 $ 9.64 $ 10.50
------- ------- -------
TOTAL RETURN ............................................................... 15.10% (0.57)% 5.00%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:<F4>
Expenses ............................................................... 0.72% 0.75% 0.80%<F2>
Net investment income .................................................. 6.66% 6.09% 5.53%<F2>
PORTFOLIO TURNOVER ......................................................... 279% 212% 73%
NET ASSETS AT END OF PERIOD (000 OMITTED) .................................. $76,078 $42,364 $23,966

<FN>
<F1> For the period from the commencement of investment operations, September
30, 1992 to June 30, 1993.
<F2> Annualized.
<F3> Per share data for the periods subsequent to June 30, 1993 is based on
average shares outstanding.
<F4> The investment adviser did not impose a portion of its management fee for
the periods indicated. If this fee had been incurred by the Fund, the net
investment income per share and ratios would have been:
</FN>
Net investment income .............................................. $ 0.61 $ 0.58 $ 0.15
RATIOS (TO AVERAGE NET ASSETS):
Expenses ....................................................... 1.14% 1.23% 1.48%<F2>
Net investment income .......................................... 6.23% 5.61% 4.85%<F2>
</TABLE>

<PAGE>

EMERGING EQUITIES FUND FINANCIAL HIGHLIGHTS
YEAR ENDED JUNE 30,
---------------------------
1995 1994 1993*
------ ------ ------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
Net asset value -- beginning of period $11.75 $10.17 $10.00
------ ------ ------
Income from investment operations# --
Net investment income (loss)(S) $(0.03) $(0.03) $ 0.01
Net realized and unrealized gain on investments 5.04 1.82## 0.16
------ ------ ------
Total from investment operations $ 5.01 $ 1.79 $ 0.17
------ ------ ------
Less distributions declared to shareholders --
From net investment income $ -- $ -- ** $ --
From net realized gain on investments (0.34) (0.21) --
------ ------ ------
Total distributions declared to shareholders $(0.34) (0.21) $ --
------ ------ ------
Net asset value - end of period $16.42 $11.75 $10.17
------ ------ ------
TOTAL RETURN 43.21% 17.50% 1.70%++

RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL
DATA(S):
Expenses 0.75% 0.78% 0.90%+
Net investment income (loss) (0.19)% (0.27)% 2.24%+
PORTFOLIO TURNOVER 86% 94% 0%
NET ASSETS AT END OF PERIOD (000 OMITTED) $107,019 $27,559 $3,052
*For the period from the commencement of investment operations, June 16, 1993
to June 30, 1993.
**The per share distribution from net investment income was $0.00175.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to June 30, 1993 is based on
average shares outstanding.
##The per share data is not in accord with the net realized and unrealized gain
(loss) for the period because of the timing of sales of Fund shares and the
amount of per share realized and unrealized gains and losses at such time.
(S)The investment adviser did not impose a portion of its management fee for the
periods indicated. If this fee had been incurred by the Fund, the net
investment income per share and the ratios would have been:
Net investment loss $ (0.07) $ (0.11) --
RATIOS (TO AVERAGE NET ASSETS):
Expenses 0.98% 1.54% 2.50%+
Net investment income (loss) (0.42)% (1.02)% 0.64%+

4. INVESTMENT OBJECTIVES AND POLICIES

Each Fund has different investment objectives which it pursues through
separate investment policies, as described below. Any investment involves risk
and there can be no assurance that the investment objective(s) of any Fund
will be achieved. The differences in objectives and policies among the Funds
can be expected to affect the market and financial risk to which each Fund is
subject and the performance of each Fund. The investment objective(s) and
policies of each Fund may, unless otherwise specifically stated, be changed by
the Trustees of the Trust without a vote of the shareholders. A change in a
Fund's objective(s) may result in the Fund having investment objective(s)
different from the objective(s) which the shareholder considered appropriate
at the time of investment in that Fund.

WORLDWIDE FUND -- The Worldwide Fund's investment objective is to seek not
only preservation, but also growth of capital, together with moderate current
income.

The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 80% of its assets in an internationally diversified
portfolio of fixed income securities (see "Investment Techniques -- Fixed
Income Securities" and "-- U.S. Government Securities" below). The Fund may
invest up to 100% (and generally expects to invest between 50% and 80%) of its
net assets in foreign securities (not including American Depository Receipts)
(see "Additional Risk Factors -- Foreign Securities" below). Up to 20% of the
Fund's assets may also be invested in equity securities (see "Investment
Techniques -- Equity Securities" below). The Fund attempts to provide
investors with an opportunity to enhance the value and increase the protection
of their investment against inflation and otherwise by taking advantage of
investment opportunities in the United States as well as in other countries
where opportunities may be more rewarding. It is believed that diversification
of assets on an international basis decreases the degree to which events in
any one country, including the United States, can affect the entire portfolio.
Although the percentage of the Fund's assets invested in securities issued
abroad and denominated in foreign currencies ("non-dollar securities") will
vary depending on the state of the economies of the principal countries of the
world, their financial markets and the relationship of their currencies to the
U.S. dollar, under normal conditions the Fund's portfolio is internationally
diversified. However, for defensive reasons or during times of international
political or economic uncertainty or turmoil, most or all of the Fund's
investments may be in the United States.

The Adviser will determine the amount of the Fund's assets to be invested in
the United States and the amount to be invested abroad. The U.S. assets will
be invested in high quality fixed income securities and the remainder of the
assets will be diversified among countries where opportunities for total
return are expected to be most attractive. It is currently expected that
investments within foreign countries will be primarily in government
securities to minimize credit risks. As a non-diversified series of the Trust,
the Fund is limited as to the percentage of its assets which may be invested
in the securities of any one issuer only by its own investment restrictions
and the diversification requirements imposed by the Internal Revenue Code of
1986, as amended (the "Code"). The Fund will not invest 25% or more of the
value of its assets in the securities of any one foreign government and may
invest up to 5% of its net assets in Emerging Market Securities (see
"Investment Techniques -- Emerging Market Securities" and "Additional Risk
Factors -- Emerging Market" below). The Fund's portfolio will be managed
actively and the asset allocations modified as the Adviser deems necessary.

The Fund may engage in certain investment techniques as described below under
the caption "Investment Techniques" and as described in the Statement of
Additional Information under the caption "Investment Policies and
Restrictions." The Fund's investments are subject to certain risks, as
described in the above-referenced sections of this Prospectus and the
Statement of Additional Information and as described below under the caption
"Additional Risk Factors."

EMERGING EQUITIES FUND -- The Emerging Equities Fund's investment objective is
to seek long-term growth of capital.

The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 80% of its assets in equity securities (see "Investment
Techniques -- Equity Securities" below) of small and medium-sized companies
that are early in their life cycle but which may have the potential to become
major enterprises ("Emerging Growth Companies"). Emerging Growth Companies
generally have annual gross revenues ranging from $10 million to $1 billion,
would be expected to show earnings growth over time that is well above the
growth rate of the overall economy and the rate of inflation, and would have
the products, management and market opportunities which are usually necessary
to become more widely recognized as growth companies. However, the Fund may
also invest in more established companies whose rates of earnings growth are
expected to accelerate because of special factors, such as rejuvenated
management, new products, changes in consumer demand or basic changes in the
economic environment. The Fund may invest up to 20% (and generally expects to
invest betweeen 5% and 10%) of its net assets in foreign securities (excluding
American Depository Receipts) (see "Additional Risk Factors -- Foreign
Securities" below).

The Fund has adopted the following policy which is fundamental and which may
not be changed without shareholder approval: while the Fund will invest
primarily in common stocks, the Fund may, to a limited extent, seek
appreciation in other types of securities such as foreign or convertible
securities and warrants when relative values make such purchases appear
attractive either as individual issues or as types of securities in certain
economic environments.

EMERGING MARKETS FUND -- The Emerging Markets Fund's investment objective is
to seek total return (high current income and long-term growth of capital).

The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 65% of its total assets (and currently expects to invest
a substantial portion of its net assets) in fixed income securities of
government, government-related, supranational and corporate issuers located,
or primarily conducting their business, in emerging markets (see "Investment
Techniques -- Fixed Income Securities and -- Emerging Market Securities"
below). The Fund will generally invest not less than 50% of its total assets
in government and government-related issuers. The Fund also may invest in
fixed income securities of companies in emerging market countries.

The Fund may invest in government, government-related and restructured debt
securities which will consist of: (i) debt securities or obligations issued or
guaranteed by governments, governmental agencies or instrumentalities and
political subdivisions located in emerging countries (including loans between
governments and financial institutions); (ii) debt securities or obligations
issued by government owned, controlled or sponsored entities located in
emerging countries; (iii) interests in issuers organized and operated for the
purpose of restructuring the investment characteristics of instruments issued
by any of the entities described above; and (iv) debt obligations issued by
supranational organizations such as the Asian Development Bank and the Inter-
American Development Bank, among others. The restructuring described above
involves the deposit with or purchase by an entity of specific instruments and
the issuance by that entity of one or more classes of securities backed by, or
representing interests in, the underlying instruments. Certain issuers of such
structured securities may be deemed to be "investment companies" as defined in
the Investment Company Act of 1940, as amended (the "1940 Act"). As a result,
the Fund's investment in such securities may be limited by certain investment
restrictions contained in the 1940 Act. See "Investment Techniques --
Structured Securities" and "-- Investment in Other Investment Companies"
below.

The Fund takes a global approach to portfolio management and currently expects
to pursue investment opportunities in Latin America, Asia, Africa, the Middle
East and the developing countries of Europe, primarily in Eastern Europe.
While the Fund is not "diversified" for purposes of the 1940 Act, it intends
to maintain investments, under normal market conditions, in at least five
countries (outside of the United States).

Emerging market fixed income securities held by the Fund may include Brady
bonds, Yankee bonds and Eurobonds, loans, loan assignments and interests
issued by entities organized and operated for the purpose of restructuring the
investment characteristics of instruments issued by emerging market issuers.
The Fund is not restricted by limits on weighted average maturity or duration
of an individual issue. Fixed income securities in which the Fund may invest
may have stated maturities ranging from overnight to 30 years.

While the Fund will not invest in equity securities, the Adviser considers a
variety of factors in selecting emerging market fixed income securities to
achieve capital appreciation, including the creditworthiness of issuers,
interest rates, and currency exchange rates.

The Fund may invest up to 100% of its net assets in foreign securities (not
including American Depository Receipts). The Fund is not restricted in the
portion of its assets which may be invested in securities denominated in a
particular currency and up to 100% of the Fund's assets may be invested in
securities denominated in foreign currencies and international currency units.
The portion of the Fund's assets invested in securities denominated in
currencies other than the U.S. dollar will vary depending on market
conditions. Therefore, the value of the Fund's investments may be
significantly affected by changes in currency exchange rates. (See "Additional
Risk Factors -- Foreign Securities" below.)

The Fund may invest up to 100% of its net assets in fixed income securities
rated in the lower rating categories of recognized rating agencies (that is,
ratings of Ba or lower by Moody's Investors Service, Inc. ("Moody's"), or BB
or lower by Standard & Poor's Ratings Group ("S&P") or Fitch Investors
Service, Inc. ("Fitch")) and comparable unrated securities. Emerging market
fixed income securities generally are rated in the lower rating categories of
recognized rating agencies. 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 than securities in the higher rating
categories. (See "Additional Risk Factors -- Lower Rated Fixed Income
Securities" below.) For a description of these ratings, see Appendix A to this
Prospectus.

CORE PLUS FUND -- The Core Plus Fund's primary investment objective is to
provide as high a level of current income as is believed to be consistent with
prudent investment risk. The Fund's secondary objective is to protect
shareholders' capital.

The Fund seeks to achieve its objectives by investing, under normal market
conditions, at least 65% of its total assets in:

(1) convertible and non-convertible corporate debt securities (including
adjustable, variable or floating rate securities) and preferred stock;

(2) U.S. Government Securities (see "Investment Techniques -- U.S.
Government Securities" below);

(3) interests in trusts or other entities representing interests in
obligations that are backed by the full faith and credit of the U.S.
Government or are issued or guaranteed by the U.S. Government, its
agencies, authorities or instrumentalities;

(4) commercial paper, repurchase agreements and cash equivalents (such as
certificates of deposit and bankers' acceptances).

The Fund is designed for investors seeking exposure to a "core" portfolio
comprised of fixed income securities of the type described above along with a
variety of other fixed income securities offering increased income potential.
Accordingly, consistent with its investment objectives and policies, the Fund
may invest in foreign securities, including Emerging Market Securities and
Brady Bonds, lower rated fixed income securities, fixed income securities
issued by or on behalf of states, territories and possessions of the U.S. and
the District of Columbia and their political subdivisions, and asset-backed
securities. Not more than 5% of the Fund's net assets will be invested in
Emerging Market Securities, and not more than 20% of the Fund's net assets
will be invested in securities rated below the four highest grades by S&P or
Fitch (AAA, AA, A or BBB) or by Moody's (Aaa, Aa, A or Baa) and in comparable
unrated securities. For a discussion of the risks of investing in these
securities, see "Additional Risk Factors -- Emerging Markets and -- Lower
Rated Fixed Income Securities" below. For a description of these ratings, see
Appendix A to this Prospectus.

Although the Core Plus Fund may purchase Canadian and other foreign
securities, under normal market conditions it may not invest more than 20% of
its net assets in non-dollar denominated non-Canadian foreign securities.

The Core Plus Fund may not directly purchase common stocks. However, the Fund
may retain up to 10% of its total assets in common stocks which were acquired
either by conversion of fixed income securities or by the exercise of warrants
attached thereto.

RESEARCH FUND -- The Research Fund's investment objective is to provide long-
term growth of capital and future income.

The portfolio securities of the Research Fund are selected by the investment
research analysts in the Equity Research Group of the Adviser. The Fund's
assets are allocated to economic sectors (e.g., health care, technology,
consumer staples), and then to industry groups within these sectors (e.g.,
within the health care sector, the managed care, drug and medical supply
industries). The allocation by sector and industry is determined by the
analysts acting together as a group. Individual analysts are then responsible
for selecting what they view as the best securities for capital appreciation
and future income within their assigned industries.

The Research Fund seeks to achieve its objective by investing, under normal
market conditions, at least 65% of its total assets in equity securities of
companies believed to possess better than average prospects for long-term
growth (see Investment Techniques -- Equity Securities'' below). A smaller
proportion of the assets may be invested in bonds, short-term obligations,
preferred stocks or common stocks whose principal characteristic is income
production rather than growth. Such securities may also offer opportunities
for growth of capital as well as income. In the case of both growth stocks and
income issues, emphasis is placed on the selection of progressive, well-
managed companies. The Funds' non-convertible debt investments, if any, may
consist of "investment grade" securities (rated Baa or better by Moody's or
BBB or better by S&P or by Fitch), and, with respect to no more than 10% of
the Fund's net assets, securities in the lower rated categories (rated Ba or
lower by Moody's or BB or lower by S&P or by Fitch) or securities which the
Adviser believes to be of comparable quality to these lower rated securities
(commonly known as "junk bonds"). For a description of these bond ratings, see
Appendix A to this Prospectus.

Consistent with its investment objective and policies described above, the
Research Fund may invest up to 20% (and expects generally to invest between 5%
and 15%) of its net assets in foreign securities (not including American
Depository Receipts), including foreign growth securities, which are not
traded on a U.S. exchange. In addition, the Fund may also hold foreign
currency received in connection with investments in foreign securities or in
anticipation of purchasing foreign securities. (See "Additional Risk Factors
- -- Foreign Securities" below.)

MID-CAP FUND -- The Mid-Cap Fund's investment objective is to provide long-
term growth of capital.

The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 65% of its total assets in equity securities of companies
with medium market capitalizations ("Mid-Cap Companies") (see "Investment
Techniques -- Equity Securities" below). Mid-Cap Companies are those companies
with a market capitalization within the range of approximately $500 million to
$4 billion. Such companies generally would be expected to show earnings growth
over time that is well above the growth rate of the overall economy and the
rate of inflation, and would have the products, management and market
opportunities which are usually necessary to continue sustained growth.

Consistent with its investment objective and policies described above, the
Fund may invest up to 25% (and generally expects to invest between 0% and 10%)
of its net assets in foreign securities (not including American Depository
Receipts), including foreign growth securities, which are not traded on a U.S.
exchange. In addition, the Fund may hold foreign currency received in
connection with investments in foreign securities or in anticipation of
purchasing foreign securities. (See "Additional Risk Factors -- Foreign
Securities" below.) In addition, the Fund may also hold foreign currency
received in connection with investments in foreign securities or in
anticipation of purchasing foreign securities.

INTERNATIONAL EQUITY FUND -- The International Equity Fund's investment
objective is to provide long-term growth of capital.

The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 65% of its total assets in equity securities of companies
whose principal activities are located outside the U.S. The equity securities
in which the Fund may invest include securities of more established companies
which represent opportunities for long-term growth (see "Investment Techniques
- -- Foreign Growth Securities" below). The Fund may also invest up to 25% of
its net assets in securities of companies located, or primarily conducting
their business in, emerging market countries. The selection of securities is
made solely on the basis of potential for capital appreciation. The Fund does
not intend to emphasize any particular country and, under normal market
conditions, will be invested in at least five countries. In addition, the Fund
may hold foreign currency received in connection with investments in foreign
securities or in anticipation of purchasing foreign securities. (See
"Additional Risk Factors -- Foreign Securities" below.)

In determining where a company's principal activities are located, the Adviser
considers such factors as its country of organization, the principal trading
market for its securities and the source of its revenues and assets. The
company's principal activities are deemed to be located in a particular
country if: (a) the company is organized under the laws of, and maintains a
principal office in that country; (b) the company has its principal securities
trading market in that country, (c) the company derives 50% or more of its
total revenues from goods sold or services performed in that country; or (d)
the company has 50% or more of its assets in that country.

5. INVESTMENT TECHNIQUES

Consistent with each Fund's investment objective(s) and policies, each Fund
may engage in the following investment techniques, many of which are described
more fully in the Statement of Additional Information. See "Investment
Policies and Restrictions" in the Statement of Additional Information.

EQUITY SECURITIES: Each Fund except the Emerging Markets Fund and the Core
Plus 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.

FIXED INCOME SECURITIES: Fixed income securities in which each Fund except the
Research Fund, the Mid-Cap Fund and the International Equity Fund may invest
include bonds, (including zero coupon bonds, deferred interest bonds and
payable in-kind bonds) debentures, mortgage securities, notes, bills,
commercial paper, obligations issued or guaranteed by a government or any of
its political subdivisions, agencies or instrumentalities, and certificates of
deposit, as well as debt obligations which may have a call on common stock by
means of a conversion privilege or attached warrants.

U.S. GOVERNMENT SECURITIES: The Worldwide Fund and the Core Plus Fund, and for
temporary defensive reasons, each other Fund may invest in United States
government securities, including: (1) U.S. Treasury obligations, which differ
only in their interest rates, maturities and times of issuance: U.S. Treasury
bills (maturities of one year or less); U.S. Treasury notes (maturities of one
to ten years); and U.S. Treasury bonds (generally maturities of greater than
ten years), all of which are backed by the full faith and credit of the U.S.
Government; and (2) obligations issued or guaranteed by U.S. Government
agencies, authorities or instrumentalities, some of which are backed by the
full faith and credit of the U.S. Treasury, e.g., direct pass-through
certificates of the Government National Mortgage Association ("GNMA"); some of
which are supported by the right of the issuer to borrow from the U.S.
Government, e.g., obligations of Federal Home Loan Banks; and some of which
are backed only by the credit of the issuer itself, e.g., obligations of the
Student Loan Marketing Association (collectively, "U.S. Government
Securities").

REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements in order
to earn income on available cash or as a temporary defensive measure. Under a
repurchase agreement, a Fund acquires securities subject to the seller's
agreement to repurchase at a specified time and price. If the seller becomes
subject to a proceeding under the bankruptcy laws or its assets are otherwise
subject to a stay order, a Fund's right to liquidate the securities may be
restricted (during which time the value of the securities could decline). As
discussed in the Statement of Additional Information, the Fund has adopted
certain procedures intended to minimize the risks of investing in repurchase
agreements.

LENDING OF PORTFOLIO SECURITIES: Each Fund may seek to increase its income by
lending portfolio securities to entities deemed creditworthy by the Adviser.
Such loans will usually be made to member firms (and subsidiaries thereof) of
the New York Stock Exchange and to member banks of the Federal Reserve System,
and would be required to be secured continuously by collateral in cash,
letters of credit or U.S. Government securities maintained on a current basis
at an amount at least equal to the market value of the securities loaned. If
the Adviser determines to make securities loans, it is intended that the value
of the securities loaned would not exceed 30% of the value of the total assets
of the relevant Fund.

RESTRICTED SECURITIES: Each Fund may also purchase securities that are not
registered under the Securities Act of 1933 (the "1933 Act") ("restricted
securities"), including those that can be offered and sold to "qualified
institutional buyers" under Rule 144A under the 1933 Act ("Rule 144A
securities"). The Trust's Board of Trustees determines, based upon a
continuing review of the trading markets for a specific Rule 144A security,
whether such security is liquid and thus not subject to a Fund's limitation on
investing not more than 15% of its net assets in illiquid investments. The
Board of Trustees has adopted guidelines and delegated to MFS the daily
function of determining and monitoring the liquidity of Rule 144A securities.
The Board, however, will retain sufficient oversight and be ultimately
responsible for the determinations. The Board will carefully monitor each
Fund's investment in Rule 144A securities, focusing on such important factors,
among others, as valuation, liquidity and availability of information. This
investment practice could have the effect of decreasing the level of liquidity
in a Fund to the extent that qualified institutional buyers become for a time
uninterested in purchasing Rule 144A securities held in a Fund's portfolio.
Subject to each Fund's 15% limitation on investments in illiquid investments,
each Fund may also invest in restricted securities that may not be sold under
Rule 144A, which presents certain risks. As a result, each 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, the judgment of the Adviser may at times play a
greater role in valuing these securities than in the case of unrestricted
securities.

WHEN-ISSUED OR FORWARD DELIVERY SECURITIES: Each Fund except the Emerging
Equities Fund may purchase securities on a "when-issued" or on a "forward
delivery" basis, which means that the obligations will be delivered to the
Fund at a future date 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. Although each Fund is not limited in the amount of
securities for which it may have commitments to purchase on such basis, it is
expected that, under normal circumstances, each Fund will not commit more than
30% of its assets to such purchases. The Fund does not pay for the securities
until received or start earning interest on them until the contractual
settlement date. In order to invest its assets immediately, while awaiting
delivery of securities purchased on such basis, a Fund will hold cash, short-
term money market instruments or U.S. Government Securities in a segregated
account to pay for the commitment. Although each Fund does not intend to make
such purchases for speculative purposes, purchases of securities on such basis
may involve more risk than other types of purchases.

AMERICAN DEPOSITARY RECEIPTS: Each Fund except the Emerging Markets Fund and
the Core Plus Fund may invest in American Depositary Receipts ("ADRs"), which
are certificates issued by a U.S. depository (usually a bank) and represent a
specified quantity of shares of an underlying non-U.S. stock on deposit with a
custodian bank as collateral. Because ADRs trade on U.S. securities exchanges,
the Adviser does not treat them as foreign securities. However, they are
subject to many of the risks of foreign securities such as exchange rates and
more limited information about foreign issuers. See "Additional Risk Factors
- -- Foreign Securities" below.

FOREIGN GROWTH SECURITIES: Each Fund except the Emerging Markets Fund and the
Core Plus Fund may invest in securities of foreign growth companies, including
established foreign companies, whose rates of earnings growth are expected to
accelerate because of special factors, such as rejuvenated management, new
products, changes in consumer demand, or basic changes in the economic
environment or which otherwise represent opportunities for long-term growth.
See "Additional Risk Factors -- Foreign Securities" below. It is anticipated
that these companies will primarily be in nations with more developed
securities markets, such as Japan, Australia, Canada, New Zealand and most
Western European countries, including Great Britain.

EMERGING MARKET SECURITIES: Each Fund except the Research Fund may invest in
securities of issuers located in countries or regions with relatively low
gross national product per capita compared to the world's major economies, and
in countries or regions with the potential for rapid economic growth (emerging
markets). Emerging markets include any country: (i) having an "emerging stock
market" as defined by the International Finance Corporation; (ii) with low- to
middle-income economies according to the International Bank for Reconstruction
and Development (the World Bank); (iii) listed in World Bank publications as
developing; or (iv) determined by the Adviser to be an emerging market as
defined above. See "Additional Risk Factors -- Emerging Markets" below. See
"Investment Objectives and Policies -- International Equity Fund" for a
description of the factors considered by the Adviser in determining where a
company or other issuer is located.

BRADY BONDS: The Worldwide Fund, the Emerging Markets Fund and the Core Plus
Fund may invest in Brady Bonds, which are securities created through the
exchange of existing commercial bank loans to public and private entities in
certain emerging markets for new bonds in connection with debt restructurings
under a debt restructuring plan introduced by former U.S. Secretary of the
Treasury Nicholas F. Brady (the "Brady Plan"). Brady Plan debt restructurings
have been implemented to date in Argentina, Brazil, Bulgaria, Costa Rica,
Ecuador, Jordan, Mexico, Nigeria, the Philippines, Poland, Uruguay and
Venezuela. Brady Bonds have been issued only recently, and for that reason do
not have a long payment history. Brady Bonds may be collateralized or
uncollateralized, are issued in various currencies (but primarily the U.S.
dollar) and are actively traded in over-the-counter secondary markets. U.S.
dollar-denominated, collateralized Brady Bonds, which may be fixed-rate bonds
or floating-rate bonds, are generally collateralized in full as to principal
by U.S. Treasury zero coupon bonds having the same maturity as the bonds.
Brady Bonds are often viewed as having three or four valuation components: (i)
the collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest
payments; and (iv) 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.

INVESTMENT IN OTHER INVESTMENT COMPANIES: Each Fund except the Emerging
Equities Fund and the Research Fund may invest in other investment companies
to the extent permitted by the 1940 Act (i) as a means by which a Fund may
invest in securities of certain countries which do not otherwise permit
investment, (ii) as a means to purchase securities of emerging market
companies having limited free float, or (iii) when the Adviser believes such
investments may be more advantageous to a Fund than a direct market purchase
of securities. If a Fund invests in such investment companies, the Fund's
shareholders will bear not only their proportionate share of the expenses of
that particular Fund (including operating expenses and the fees of the
Adviser), but also will indirectly bear similar expenses of the underlying
investment companies.

STRUCTURED SECURITIES: The Emerging Markets Fund may invest a portion of its
assets in entities organized and operated solely for the purpose of
restructuring the investment characteristics of sovereign debt obligations.
This type of restructuring involves the deposit with, or purchase by, an
entity, such as a corporation or trust, or specified instruments (such as
commercial bank loans or Brady Bonds) and the issuance by that entity of one
or more classes of securities ("Structured Securities") backed by, or
representing interests in, the underlying instruments. The cash flow on the
underlying instruments may be apportioned among the newly issued Structured
Securities to create securities with different investment characteristics,
such as varying maturities, payment priorities and interest rate provisions,
and the extent of the payments made with respect to Structured Securities is
dependent on the extent of the cash flow on the underlying instruments.
Because Structured Securities of the type in which the Fund anticipates it
will invest typically involve no credit enhancement, their credit risk
generally will be equivalent to that of the underlying instruments. The Fund
is permitted to invest in a class of Structured Securities that is either
subordinated or unsubordinated to the right of payment of another class.
Subordinated Structured Securities typically have higher yields and present
greater risks than unsubordinated Structured Securities. Structured Securities
are typically sold in private placement transactions, and there currently is
no active trading market for Structured Securities.

LOANS AND OTHER DIRECT INDEBTEDNESS: The Emerging Markets Fund, the Mid-Cap
Fund and the International Equity Fund may each invest a portion of its assets
in loans and other direct indebtedness. By purchasing a loan, a Fund acquires
some or all of the interest of a bank or other lending institution in a loan
to a corporate, government or other borrower. Many such loans are secured, and
most impose restrictive covenants which must be met by the borrower. These
loans are made generally to finance internal growth, mergers, acquisitions,
stock repurchases, leveraged buy-outs and other corporate activities. Such
loans may be in default at the time of purchase. Each Fund may also purchase
trade or other claims against companies, which generally represent money owed
by the company to a supplier of goods and services. These claims may also be
purchased at a time when the company is in default. Certain of the loans
acquired by 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.

The highly leveraged nature of many such loans may make such loans especially
vulnerable to adverse changes in economic or market conditions. Loans and
other direct investments may not be in the form of securities or may be
subject to restrictions on transfer, and only limited opportunities may exist
to resell such instruments. As a result, a Fund may be unable to sell such
investments at an opportune time or may have to resell them at less than fair
market value.

ZERO COUPON BONDS, DEFERRED INTEREST BONDS AND PIK BONDS: Fixed income
securities in which the Worldwide Fund, the Emerging Markets Fund, the Core
Plus Fund and the Research Fund may invest include 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 or purchased at a significant discount from face value. The
discount approximates the total amount of interest the bonds will accrue and
compound over the period until maturity or the first interest payment date at
a rate of interest reflecting the market rate of the security at the time of
issuance. While zero coupon bonds do not require the periodic payment of
interest, deferred interest bonds provide for a period of delay before the
regular payment of interest begins. PIK bonds are debt obligations which
provide that the issuer thereof may, at its option, pay interest on such bonds
in cash or in the form of additional debt obligations. Such investments
benefit the issuer by mitigating its need for cash to meet debt service, but
also require a higher rate of return to attract investors who are willing to
defer receipt of such cash. Such investments may experience greater volatility
in market value due to changes in interest rates and other factors than debt
obligations which make regular payments of interest. A Fund will accrue income
on such investments for tax and accounting purposes, as required, which is
distributable to shareholders and which, because no cash is received at the
time of accrual, may require the liquidation of other portfolio securities
under disadvantageous circumstances to satisfy a Fund's distribution
obligations.

CORPORATE ASSET-BACKED SECURITIES: Each Fund except the Emerging Equities
Fund, the Emerging Markets Fund and the Research Fund may invest in corporate
asset-backed securities. These securities, issued by trusts and special
purpose corporations, are backed by a pool of assets, such as credit card or
automobile loan receivables, representing the obligations of a number of
different parties.

Corporate asset-backed securities present certain risks. For instance, in the
case of credit card receivables, these securities may not have the benefit of
any security interest in the related collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing
the balance due. Most issuers of automobile receivables permit the services 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 often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, the
securities may contain elements of credit support which fall into two
categories: (i) liquidity protection; and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of
payments on the underlying pool occurs in a timely fashion. Protection against
losses resulting from ultimate default ensures payment through insurance
policies or letters of credit obtained by the issuer or sponsor from third
parties. A Fund will not pay any additional or separate fees for credit
support. The degree of credit support provided for each issue is generally
based on historical information respecting the level of credit risk associated
with the underlying assets. Delinquency or loss in excess of that anticipated
or failure of the credit support could adversely affect the return on an
investment in such a security.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS: The Core Plus Fund may enter into
mortgage "dollar roll" transactions with selected banks and broker-dealers
pursuant to which a Fund sells mortgage-backed securities for delivery in the
future (generally within 30 days) and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities on a
specified future date. Each Fund will only enter into covered rolls. A
"covered roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which matures
on or before the forward settlement date of the dollar roll transaction. In
the event that the party with whom the Fund contracts to replace substantially
similar securities on a future date fails to deliver such securities, the Fund
may not be able to obtain such securities at the price specified in such
contract and thus may not benefit from the price differential between the
current sales price and the repurchase price.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH SECURITIES:
The Core Plus 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. Typically, CMOs are
collateralized by certificates issued by the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association ("FNMA") or
the Federal Home Loan Mortgage Corporation ("FHLMC"), but also may be
collateralized by whole loans or private mortgage pass-through securities
(such collateral collectively referred to as "Mortgage Assets"). The Core Plus
Fund may also invest a portion of its assets in multiclass pass-through
securities which are interests in a trust composed of Mortgage Assets. CMOs
(which include multiclass pass-through securities) may be issued by agencies,
authorities or instrumentalities of the U.S. Government or by private
originators of, or investors in, mortgage loans, including savings and loan
associations, mortgage banks, commercial banks, investment banks and special
purpose subsidiaries of the foregoing. Payments of principal of and interest
on the Mortgage Assets, and any reinvestment income thereon, provide the funds
to pay debt service on the CMOs or make scheduled distributions on the
multiclass pass-through securities. In a CMO, a series of bonds or
certificates is usually issued in multiple classes with different maturities.

Each class of CMOs, often referred to as a "tranche," is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final
distribution dates, resulting in a loss of all or part of the premium if any
has been paid. Certain classes of CMOs have priority over others with respect
to the receipt of prepayments on the mortgages. Therefore, depending on the
type of CMOs in which the Core Plus Fund invests, the investment may be
subject to a greater or lesser risk of prepayment than other types of
mortgage-related securities.

The Core Plus Fund may also invest in parallel pay CMOs and Planned
Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to
provide payments of principal on each payment date to more than one class. PAC
Bonds generally require payments of a specified amount of principal on each
payment date. PAC Bonds are always parallel pay CMOs with the required
principal payment on such securities having the highest priority after
interest has been paid to all classes. For a further description of CMOs,
parallel pay CMOs and PAC Bonds and the risks related to transactions therein,
see the Statement of Additional Information.

STRIPPED MORTGAGE-BACKED SECURITIES: The Core Plus Fund may invest a portion
of its assets in stripped mortgage-backed securities, which are derivative
multiclass mortgage securities usually structured with two classes that
receive different proportions of the interest and principal distributions from
an underlying pool of mortgage assets.

MORTGAGE PASS-THROUGH SECURITIES: The Core Plus 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 prepayments 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.

Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by
the full faith and credit of the U.S. Government (in the case of securities
guaranteed by GNMA); or guaranteed by agencies or instrumentalities of the
U.S. Government (such as FNMA or FHLMC, which are supported only by the
discretionary authority of the U.S. Government to purchase the agency's
obligations). Mortgage pass-through securities may also be issued by non-
governmental issuers (such as commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers and other secondary
market issuers). Some of these mortgage pass-through securities may be
supported by various forms of insurance or guarantees.

OPTIONS ON SECURITIES: Each Fund may write (sell) covered put and call options
on securities ("Options") and purchase put and call Options that are traded on
foreign or U.S. securities exchanges and over the counter. A Fund will write
such Options for the purpose of increasing its return and/or protecting the
value of its portfolio. In particular, where a Fund writes an Option which
expires unexercised or is closed out by the Fund at a profit, it will retain
the premium paid for the Option, which will increase its gross income and will
offset in part the reduced value of a portfolio security in connection with
which the Option may have been written or the increased cost of portfolio
securities to be acquired. In contrast, however, if the price of the security
underlying the Option moves adversely to the relevant Fund's position, the
Option may be exercised and the Fund will be required to purchase or sell the
security at a disadvantageous price, resulting in losses which may only be
partially offset by the amount of the premium. Each Fund may also write
combinations of put and call Options on the same security, known as
"straddles." Such transactions can generate additional premium income but also
present increased risk.

Each Fund may purchase put or call Options in anticipation of declines in the
value of portfolio securities or increases in the value of securities to be
acquired. In the event that the expected changes occur, a Fund may be able to
offset the resulting adverse effect on its portfolio, in whole or in part,
through the Options purchased. The risk assumed by a Fund in connection with
such transactions is limited to the amount of the premium and related
transaction costs associated with the Option, although a Fund may be required
to forfeit such amounts in the event that the prices of securities underlying
the Options do not move in the direction or to the extent anticipated.

The Worldwide Fund, the Emerging Markets Fund and the Core Plus Fund may also
enter into options on the yield "spread," or yield differential between two
securities, a transaction referred to as a "yield curve" option, for hedging
and non-hedging purposes. In contrast to other types of options, a yield curve
option is based on the difference between the yields of designated securities
rather than the actual prices of the individual securities. Yield curve
options written by the Funds will be "covered" but could involve additional
risks.

FUTURES CONTRACTS: Each Fund may enter into contracts for the purchase or sale
for future delivery of fixed income securities or foreign currencies or
contracts based on indexes of securities as such instruments become available
for trading ("Futures Contracts"). Such transactions will be entered into for
hedging purposes, in order to protect a Fund's current or intended investments
from the effects of changes in interest or exchange rates, or for non-hedging
purposes, to the extent permitted by applicable law. For example, in the event
that an anticipated decrease in the value of portfolio securities occurs as a
result of a general increase in interest rates or a decline in the dollar
value of foreign currencies in which portfolio securities are denominated, the
adverse effects of such changes may be offset, in whole or part, by gains on
Futures Contracts sold by a Fund. Conversely, the adverse effects of an
increase in the cost of portfolio securities to be acquired, occurring as a
result of a decline in interest rates or a rise in the dollar value of
securities denominated in foreign currencies, may be offset, in whole or in
part, by gains on Futures Contracts purchased by a Fund. Each Fund will incur
brokerage fees when it purchases and sells Futures Contracts, and will be
required to maintain margin deposits. In addition, Futures Contracts entail
risks. Although each Fund believes that use of such contracts will benefit the
Fund, if the Adviser's investment judgment about the general direction of
interest or exchange rates is incorrect, the Fund's overall performance may be
poorer than if it had not entered into any such contract and the Fund may
realize a loss. Transactions entered into for non-hedging purposes involve
greater risk, including the risk of losses which are not offset by gains on
other portfolio assets. The Fund will not enter into any Futures Contract if
immediately thereafter the value of securities and other obligations
underlying all such Futures Contracts would exceed 50% of the value of its
total assets.

OPTIONS ON FUTURES CONTRACTS: Each Fund may purchase and write options on
Futures Contracts ("Options on Futures Contracts") for the purpose of
protecting against declines in the value of portfolio securities or against
increases in the cost of securities to be acquired, or for non-hedging
purposes, to the extent permitted by applicable law. Purchases of Options on
Futures Contracts may present less risk in hedging the portfolio of the Fund
than the purchase or sale of the underlying Futures Contracts, since the
potential loss is limited to the amount of the premium paid for the option,
plus related transaction costs. The writing of such options, however, does not
present less risk than the trading of Futures Contracts, and will constitute
only a partial hedge, up to the amount of the premium received, less related
transaction costs. In addition, if an option is exercised, the Fund may suffer
a loss on the transaction. Transactions entered into for non-hedging purposes
involve greater risk, including the risk of losses which are not offset by
gains on other portfolio assets.

FORWARD CONTRACTS: Each Fund may enter into forward foreign currency exchange
contracts for the purchase and sale of a fixed quantity of a foreign currency
at a future date ("Forward Contracts"). A Fund may enter into Forward
Contracts for hedging purposes as well as for non-hedging purposes. By
entering into transactions in Forward Contracts, however, a Fund may be
required to forego the benefits of advantageous changes in exchange rates and,
in the case of Forward Contracts entered into for non-hedging purposes, the
Fund may sustain losses which will reduce its gross income. Forward Contracts
are traded over-the-counter and not on organized commodities or securities
exchanges. As a result, such contracts operate in a manner distinct from
exchange-traded instruments and their use involves certain risks beyond those
associated with transactions in Futures Contracts or options traded on
exchanges. Each Fund may also enter into a Forward Contract on one currency in
order to hedge against risk of loss arising from fluctuations in the value of
a second currency (referred to as a "cross hedge") if, in the judgment of the
Adviser, a reasonable degree of correlation can be expected between movements
in the values of the two currencies. Each Fund has established procedures
consistent with statements of the SEC and its staff regarding the use of
Forward Contracts by registered investment companies, which requires use of
segregated assets or "cover" in connection with the purchase and sale of such
contracts.

OPTIONS ON FOREIGN CURRENCIES: Each Fund except the Emerging Equities Fund may
purchase and write options on foreign currencies ("Options on Foreign
Currencies") for the purpose of protecting against declines in the dollar
value of portfolio securities and against increases in the dollar cost of
securities to be acquired. As in the case of other types of options, however,
the writing of an Option on Foreign Currency will constitute only a partial
hedge, up to the amount of the premium received, and a Fund may be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an Option on Foreign Currency may constitute
an effective hedge against fluctuations in exchange rates although, in the
event of rate movements adverse to a Fund's position, it may forfeit the
entire amount of the premium paid for the Option plus related transaction
costs. Options on foreign currencies to be written or purchased by a Fund will
be traded on foreign and U.S. exchanges or over-the-counter.

OPTIONS ON STOCK INDICES: Each Fund except the Worldwide Fund, the Emerging
Markets Fund and the Core Plus Fund may write (sell) covered call and put
options and purchase call and put options on domestic or foreign stock indices
("Options on Stock Indices"). Each Fund may write such options for the purpose
of increasing its current income and/or to protect its portfolio against
declines in the value of securities it owns or increases in the value of
securities to be acquired. When a Fund writes an option on a stock index, and
the value of the index moves adversely to the holder's position, the option
will not be exercised, and the Fund will either close out the option at a
profit or allow it to expire unexercised. The Fund will thereby retain the
amount of the premium, less related transaction costs, which will increase its
gross income and offset part of the reduced value of portfolio securities or
the increased cost of securities to be acquired. Such transactions, however,
will constitute only partial hedges against adverse price fluctuations, since
any such fluctuations will be offset only to the extent of the premium
received by a Fund for the writing of the option, less related transaction
costs. In addition, if the value of an underlying index moves adversely to a
Fund's option position, the option may be exercised, and the Fund will
experience a loss which may only be partially offset by the amount of the
premium received.

Each Fund except the Worldwide Fund, the Emerging Markets Fund and the Core
Plus Fund may also purchase put or call options on stock indices in order,
respectively, to hedge its investments against a decline in value or to
attempt to reduce the risk of missing a market or industry segment advance. A
Fund's possible loss in either case will be limited to the premium paid for
the option, plus related transaction costs.

SWAPS AND RELATED TRANSACTIONS: As one way of managing its exposure to
different types of investments, the Worldwide Fund, the Emerging Markets Fund
and the Core Plus Fund may enter into interest rate swaps, currency swaps and
other types of available swap agreements, such as caps, collars and floors.
Swaps involve the exchange by the Fund with another party of cash payments
based upon different interest rate indices, currencies, and other prices or
rates, such as the value of mortgage prepayment rates. For example, in the
typical interest rate swap, a Fund might exchange a sequence of cash payments
based on a floating rate index for cash payments based on a fixed rate.
Payments made by both parties to a swap transaction are based on a principal
amount determined by the parties.

The Worldwide Fund, The Emerging Markets Fund and the Core Plus Fund may also
purchase and sell caps, floors and collars. In a typical cap or floor
agreement, one party agrees to make payments only under specified
circumstances, usually in return for payment of a fee by the counterparty. For
example, the purchase of an interest rate cap entitles the buyer, to the
extent that a specified index exceeds a predetermined interest rate, to
receive payments of interest on a contractually-based principal amount from
the counterparty selling such interest rate cap. The sale of an interest rate
floor obligates the seller to make payments to the extent that a specified
interest rate falls below an agreed-upon level. A collar arrangement combines
elements of buying a cap and selling a floor.

Swap agreements will tend to shift each Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
payments in dollars for payments in foreign currency, in each case based on a
fixed rate, the swap agreement would tend to decrease the Fund's exposure to
U.S. interest rates and increase its exposure to foreign currency and interest
rates. Caps and floors have an effect similar to buying or writing options.
Depending on how they are used, swap agreements may increase or decrease the
overall volatility of the Fund's investments and its share price and yield.

Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a considerable impact on the
Fund's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. A Fund may also suffer losses if
it is unable to terminate outstanding swap agreements or reduce its exposure
through offsetting transactions.

INDEXED SECURITIES: The Emerging Markets Fund and Core Plus Fund may also
invest in indexed securities whose value is linked to foreign currencies,
interest rates, commodities, indices or other financial indicators. Most
indexed securities are short-to intermediate-term fixed income securities
whose values at maturity or interest rates rise or fall according to the
change in one or more specified underlying instruments. Indexed securities may
be positively or negatively indexed (i.e., their value may increase or
decrease if the underlying instrument appreciates), and may have return
characteristics similar to direct investments in the underlying instrument or
to one or more options on the underlying instrument. Indexed securities may be
more volatile than the underlying instrument itself.

DEFENSIVE INVESTMENTS: When the Adviser believes that investing for temporary
defensive reasons is appropriate, such as during times of international,
political or economic uncertainty or turmoil, or in order to meet anticipated
redemption requests, part or all of a Fund's assets may be invested in cash
(including foreign currency) or cash equivalent short-term obligations
including, but not limited to, certificates of deposit, commercial paper,
short-term notes and U.S. Government Securities.

PORTFOLIO TRADING: While it is not generally each Fund's policy to invest or
trade for short-term profits, each Fund may dispose of a portfolio security
whenever the Adviser believes it is appropriate to do so without regard to the
length of time the particular asset may have been held. A high turnover rate
involves greater expenses to a Fund. A Fund engages in portfolio trading if it
believes a transaction net of costs (including custodian charges) will help in
achieving its investment objective.

The primary consideration in placing portfolio security transactions is
execution at the most favorable prices. Consistent with the foregoing primary
consideration, the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and such other policies as the Trustees may
determine, the Adviser may consider sales of shares of each Fund and of the
investment company clients of MFD, a wholly owned subsidiary of MFS and the
principal underwriter of certain funds in the MFS Family of Funds (the "MFS
Funds"), as a factor in the selection of broker-dealers to execute the Fund's
portfolio transactions. From time to time, the Adviser may direct certain
portfolio transactions to broker-dealer firms which, in turn, have agreed to
pay a portion of each Fund's operating expenses (e.g. fee charged by the
custodian of the Fund's assets). For a further discussion of portfolio
trading, see the Statement of Additional Information. It is anticipated that
the portfolio turnover rate of the Emerging Markets Fund, the Core Plus Fund,
the Mid-Cap Fund, the Research Fund and the International Equity Fund will not
exceed 200%, 400%, 100%, 125% and 125%, respectively, during each Fund's
first fiscal year. Because each Fund may have a portfolio turnover rate of
100% or more, transaction costs incurred by each Fund and the realized capital
gains and losses of the Fund may be greater than that of a fund with a lesser
portfolio turnover rate.
----------------

The policies described above are not fundamental and may be changed without
shareholder approval.

The Statement of Additional Information includes a discussion of investment
policies and a listing of specific investment restrictions which govern each
Fund's investment policies. The specific investment restrictions listed in the
Statement of Additional Information may be changed without shareholder
approval unless otherwise indicated. See "Investment Policies and
Restrictions" in the Statement of Additional Information. Each Fund's
investment limitations 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 policy.

6. ADDITIONAL RISK FACTORS

FOREIGN SECURITIES: Transactions involving foreign equity and debt securities
or foreign currencies, and transactions entered into in foreign countries,
involve considerations and risks not typically associated with investing in
U.S. markets. These include changes in currency rates, exchange control
regulations, governmental administration or economic or monetary policy (in
the U.S. 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 or less stringent 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 U.S. 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.

EMERGING MARKETS: The risks of investing in foreign securities may be
intensified in the case of investments in emerging markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than
securities of comparable domestic issuers. Emerging markets also have
different clearance and settlement procedures, and in certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when a portion of the
assets of a Fund is uninvested and no return is earned thereon. The inability
of a Fund to make intended security purchases due to settlement problems could
cause the Fund to miss attractive investment opportunities. Inability to
dispose of portfolio securities due to settlement problems could result either
in losses to a Fund due to subsequent declines in value of the portfolio
security or, if a Fund has entered into a contract to sell the security, in
possible liability to the purchaser. Certain markets may require payment for
securities before delivery, and in such markets a Fund bears the risk that the
securities will not be delivered and that the Fund's payment will not be
returned. Securities prices in emerging markets can be significantly more
volatile than in the more developed nations of the world, reflecting the
greater uncertainties of investing in less established markets and economies.
In particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization of businesses, restrictions
on foreign ownership, or prohibitions of repatriation of assets, and may have
less protection of property rights than more developed countries. The
economies of countries with emerging markets may be predominantly based on
only a few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens or
inflation rates. Local securities markets may trade a small number of
securities and may be unable to respond effectively to increases in trading
volume, potentially making prompt liquidation of substantial holdings
difficult or impossible at times. Securities of issuers located in countries
with emerging markets may have limited marketability and may be subject to
more abrupt or erratic price movements.

Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. A Fund could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the
application to the Fund of any restrictions on investments.

Investment in certain foreign emerging market debt obligations may be
restricted or controlled to varying degrees. These restrictions or controls
may at times preclude investment in certain foreign emerging market debt
obligations and increase the expenses of a Fund.

FIXED INCOME SECURITIES: To the extent a Fund invests in fixed income
securities, the net asset value of the Fund may change as the general levels
of interest rates fluctuate. When interest rates decline, the value of fixed
income securities can be expected to rise. Conversely, when interest rates
rise, the value of fixed income securities can be expected to decline. Each
Fund has no restrictions with respect to the maturities or duration of the
fixed income securities it holds. A Fund's investments in fixed income
securities with longer terms to maturity or greater duration are subject to
greater volatility than the Fund's shorter-term obligations.

LOWER RATED FIXED INCOME SECURITIES: Fixed income securities in which the
Emerging Markets Fund, the Core Plus Fund and the Research Fund may invest may
be rated Baa by Moody's or BBB by S&P or Fitch (and comparable unrated
securities). For a description of these bond ratings, see Appendix A to this
Prospectus. These securities, while normally exhibiting adequate protection
parameters, have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than in the case of higher
grade fixed income securities.

The Emerging Markets Fund, Core Plus Fund and the Research Fund may also
invest in fixed income securities rated Ba or lower by Moody's or BB or lower
by S&P or Fitch (and comparable unrated securities). These securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds".
These securities are considered speculative and, while generally providing
greater yield 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 be affected by
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 securities are also affected by
changes in interest rates as described below). In the past, economic downturns
or an increase in interest rates have, under certain circumstances, caused a
higher incidence of default by the issuers of these securities and may do so
in the future, especially in the case of highly leveraged issuers. During
certain periods, the higher yields on a Fund's lower rated high yielding fixed
income securities are paid primarily because of the increased risk of loss of
principal and income, arising from such factors as the heightened possibility
of default or bankruptcy of the issuers of such securities. Due to the fixed
income payments of these securities, a Fund may continue to earn the same
level of interest income while its net asset value declines due to portfolio
losses, which could result in an increase in the Fund's yield despite the
actual loss of principal. The prices for these securities may be affected by
legislative and regulatory developments. For example, federal rules require
that savings and loan associations gradually reduce their holdings of high-
yield securities. An effect of such legislation may be to depress the prices
of outstanding lower rated high yielding fixed income securities. 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 any 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. A Fund's
achievement of its investment objective may be more dependent on the Adviser's
own credit analysis than in the case of an investment company primarily
investing in higher quality fixed income securities.

OPTIONS, FUTURES CONTRACTS AND FORWARD CONTRACTS: Although each Fund may enter
into transactions in options, Futures Contracts, Options on Futures Contracts,
Forward Contracts and Options on Foreign Currencies for hedging purposes, such
transactions nevertheless involve certain risks. For example, a lack of
correlation between the instrument underlying an option or Futures Contract
and the assets being hedged, or unexpected adverse price movements, could
render a Fund's hedging strategy unsuccessful and could result in losses. The
Funds also may enter into transactions in options, Futures Contracts, Options
on Futures Contracts and Forward Contracts for other than hedging purposes,
which involves greater risk. In particular, such transactions may result in
losses for a Fund which are not offset by gains on other portfolio positions,
thereby reducing gross income. In addition, foreign currency markets may be
extremely volatile from time to time. There also can be no assurance that a
liquid secondary market will exist for any contract purchased or sold, and a
Fund may be required to maintain a position until exercise or expiration,
which could result in losses. The Statement of Additional Information contains
a description of the nature and trading mechanics of options, Futures
Contracts, Options on Futures Contracts, Forward Contracts and Options on
Foreign Currencies, and includes a discussion of the risks related to
transactions therein.

Transactions in Forward Contracts may be entered into only in the over-the-
counter market. Futures Contracts and Options on Futures Contracts may be
entered into on U.S. exchanges regulated by the Commodity Futures Trading
Commission and on foreign exchanges. In addition, the securities and indexes
underlying options, Futures Contracts and Options on Futures Contracts traded
by the Fund will include both domestic and foreign securities.

7. MANAGEMENT OF THE FUNDS

INVESTMENT ADVISER -- The Adviser manages the Worldwide Fund, the Emerging
Equities Fund and the Emerging Markets Fund pursuant to separate Investment
Advisory Agreements dated August 7, 1992, August 7, 1992, and August 1, 1995,
respectively. The Core Plus Fund, the Research Fund, the Mid-Cap Fund and the
International Equity Fund are managed pursuant to separate Investment Advisory
Agreements, each dated November 30, 1995. (These Agreements are collectively
referred to as the "Advisory Agreements"). The Adviser provides each Fund with
overall investment advisory and administrative services, as well as general
office facilities. Subject to such policies as the Trustees may determine, the
Adviser makes investment decisions for each Fund. For its services and
facilities, the Adviser receives a management fee computed and paid monthly in
an amount equal to the following annual rates of the average daily net assets
of each Fund:

PERCENTAGE OF THE AVERAGE
DAILY NET ASSETS
FUND OF EACH FUND
- ---- -------------------------
Worldwide Fund ........................................ 0.65%
Emerging Equities Fund ................................ 0.75%
Emerging Markets Fund ................................. 0.85%
Core Plus Fund ........................................ 0.45%
Research Fund ......................................... 0.60%
Mid-Cap Fund .......................................... 0.60%
International Equity Fund ............................. 0.75%

The management fee of the International Equity Fund and the Emerging Markets
Fund is greater than the fees paid by most funds, but is comparable to fees
paid by funds having similar investment objectives and policies. MFS also
serves as investment adviser to each of the MFS Funds and to MFS Municipal
Income Trust, MFS Multimarket Income Trust, MFS Government Markets Income
Trust, MFS Intermediate Income Trust, MFS Charter Income Trust, MFS Special
Value Trust, MFS Union Standard Trust, MFS Variable Insurance Trust, MFS/Sun
Life Series Trust, Sun Growth Variable Annuity Fund, Inc. and seven variable
accounts, each of which is a registered investment company established by Sun
Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)") in
connection with the sale of various fixed/variable annuity contracts. MFS and
its wholly owned subsidiary, MFS Asset Management, Inc., also provide
investment advice to substantial private clients.

MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund in the U.S., Massachusetts Investors Trust.
Net assets under the management of the MFS organization were approximately
$39.8 billion on behalf of approximately 1.8 million investor accounts as of
October 31, 1995. As of such date, the MFS organization managed approximately
$15.9 billion of assets invested in equity securities, approximately $19.6
billion of assets invested in fixed income securities, and $2.9 billion of
assets invested in securities of foreign issuers and non-U.S. dollar
securities. MFS is a wholly owned subsidiary of Sun Life of Canada (U.S.),
which in turn is a wholly owned subsidiary of Sun Life Assurance Company of
Canada ("Sun Life"). The Directors of MFS are A. Keith Brodkin, Jeffrey L.
Shames, Arnold D. Scott, John D. McNeil and John R. Gardner. Mr. Brodkin is
the Chairman of MFS, Mr. Shames is the President of MFS, Mr. Scott is the
Secretary and a Senior Executive Vice President of MFS, and Messrs. McNeil and
Gardner are the Chairman and President, respectively, of Sun Life. Sun Life, a
mutual life insurance company, is one of the largest international life
insurance companies and has been operating in the U.S. since 1895,
establishing a headquarters office in the U.S. in 1973. The executive officers
of MFS report to the Chairman of Sun Life.

A. Keith Brodkin, the Chairman and a Director of MFS, is also the Chairman,
President and a Trustee of the Trust. W. Thomas London, James O. Yost, Stephen
E. Cavan and James R. Bordewick, Jr., all of whom are officers of MFS, are
officers of the Trust.

MFS has established a strategic alliance with Foreign & Colonial Management
Ltd. ("Foreign & Colonial"). Foreign & Colonial is a subsidiary of two of the
world's oldest financial services institutions, the London-based Foreign &
Colonial Investment Trust PLC, which pioneered the idea of investment
management in 1868, and HYPO-BANK (Bayerische Hypotheken-und Weschsel-Bank
AG), the oldest publicly listed bank in Germany, founded in 1835. As part of
this alliance, the portfolio managers and investment analysts of MFS and
Foreign & Colonial will share their views on a variety of investment-related
issues, such as the economy, securities markets, portfolio securities and
their issuers, investment recommendations, strategies and techniques, risk
analysis, trading strategies and other portfolio management matters. MFS will
have access to the extensive international equity investment expertise of
Foreign & Colonial, and Foreign & Colonial will have access to the extensive
U.S. equity investment expertise of MFS. One or more MFS investment analysts
are expected to work for an extended period with Foreign & Colonial's
portfolio managers and investment analysts at their offices in London. In
return, one or more Foreign & Colonial employees are expected to work in a
similar manner at MFS' Boston offices.

In certain instances there may be securities which are suitable for a Fund's
portfolio as well as for portfolios of other clients of MFS or clients of
Foreign & Colonial. Some simultaneous transactions are inevitable when several
clients receive investment advice from MFS and Foreign & Colonial,
particularly when the same security is suitable for more than one client.
While in some cases this arrangement could have a detrimental effect on the
price or availability of the security as far as a Fund is concerned, in other
cases, however, it may produce increased investment opportunities for a Fund.

The identity and background of the portfolio manager(s) for each Fund is set
forth below.

Worldwide Fund -- Leslie J. Nanberg, a Senior Vice President of the Adviser,
has been employed as a portfolio manager by the Adviser since 1980.

Emerging Equities Fund -- Christian A. Felipe, a Vice President of the
Adviser, has been employed as a portfolio manager by the Adviser since 1986.

Emerging Markets Fund -- Jeffrey A. Kaufman, an Investment Officer of the
Adviser, has been employed by the Adviser since 1994. Prior to joining the
Adviser, he held positions as a Research Consultant with Apogee Research and
Salomon Brothers.

Core Plus Fund -- Geoffrey L. Kurinsky, a Senior Vice President of the
Adviser, has been employed as a portfolio manager by the Adviser since 1987.

Research Fund -- Various equity research analysts employed by the Adviser
comprise a committee that manages the Fund.

Mid-Cap Fund -- John W. Ballen, Chief Equity Officer of the Adviser, has been
employed as a portfolio manager by the Adviser since 1984.

International Equity Fund -- David R. Mannheim, a Vice President of the
Adviser, has been employed as a portfolio manager by the Adviser since 1988.

DISTRIBUTOR -- MFD, a wholly owned subsidiary of MFS, is the distributor of
shares of each Fund and also serves as distributor for each of the other MFS
Funds.

SHAREHOLDER SERVICING AGENT -- MFS Service Center, Inc. (the "Shareholder
Servicing Agent"), a wholly owned subsidiary of MFS, performs transfer agency,
certain dividend disbursing agency and other services for each Fund.

8. INFORMATION CONCERNING SHARES OF THE FUNDS

PURCHASES
Each Fund is designed for sale to institutional investor clients of MFS and
MFS Asset Management, Inc and other similar investors. Shares of each Fund may
be purchased through MFD in cash or in-kind without a sales charge at their
net asset value next computed after acceptance of the purchase order. The
minimum initial investment is generally $3 million. There is no minimum on
additional investments.

Each Fund intends to be as fully invested at all times as is reasonably
practicable in order to maximize total return. In order to make investments
which will immediately generate income, each Fund must have federal funds
available to it (i.e., monies credited to its custodian bank by a Federal
Reserve bank). An order for the purchase of shares of a Fund will be in "good
order" and will be accepted upon receipt of federal funds available for
investment. Payment by federal funds sent by wire is accepted immediately upon
receipt and payment by check is accepted when federal funds become available
for investment, which generally occurs on the next business day after receipt
of a check. Therefore, a non-federal funds investment will remain idle for one
business day after receipt.

All investments in a Fund are credited to the shareholder's account in the
form of full and fractional shares at the net asset value per share next
determined after acceptance of the purchase order. The Funds do not generally
issue share certificates, but the Shareholder Servicing Agent maintains an
account for each shareholder and mails to each shareholder a confirmation of
each purchase or sale of shares in its account.

Purchases and exchanges should be made for investment purposes only. Each Fund
and MFD reserves the right to reject any specific purchase order deemed by MFS
to be abusive or contrary to the best interests of a Fund's other
shareholders.

OPENING AN ACCOUNT: Payments by check should be made to the order of "(insert
name of Fund)" and sent to that particular Fund as follows: MFS Service
Center, Inc., P.O. Box 1400, Boston, MA 02107-9906. Payments of federal funds
should be sent by wire to the custodian of the Fund as follows: State Street
Bank and Trust Company, Attn: Mutual Funds Division, For the account of:
[Shareholder's name], Re: (insert name of Fund) (Account No. 99034795) and
Wire Number: [Assigned by telephone].

Information on how to wire federal funds is available at any national bank or
any state bank which is a member of the Federal Reserve System. Shareholders
should also mail the Account Application to the Shareholder Servicing Agent.

A shareholder must first telephone the Shareholder Servicing Agent (see back
cover for telephone number) to advise of its intended action and, if funds are
to be wired, to obtain a wire order number.

IN-KIND PURCHASES: Subject to applicable state securities laws, shares of each
Fund may be purchased with securities acceptable to that particular Fund. A
Fund need not accept any security offered for an in-kind purchase unless it is
consistent with that Fund's investment objective, policies and restrictions
and is otherwise acceptable to the Fund. Securities accepted in-kind for
shares will be valued in accordance with the Fund's usual valuation procedures
(see "Net Asset Value" below). Investors interested in making an in-kind
purchase of Fund shares must first telephone the Shareholder Servicing Agent
(see back cover for telephone number) to advise of its intended action and
obtain instructions for an in-kind purchase.

EXCHANGES
Subject to the requirements set forth below, some or all of the shares in an
account with a Fund for which payment has been received by that Fund (i.e., an
established account) may be exchanged for shares of any of the other series of
the Trust (if available for sale) at net asset value. Exchanges will be made
only after instructions in writing or by telephone (an "Exchange Request") are
received for an established account by the Shareholder Servicing Agent in
proper form (see "Redemptions" below). If an Exchange Request is being used to
open a new account with any other series of the Trust, the exchange must
involve shares having an aggregate value of at least [$3 million.] If the
Exchange Request is received by the Shareholder Servicing Agent on any
business day prior to the close of regular trading on the Exchange, the
exchange will occur on that day if all the requirements set forth above have
been complied with at that time and subject to a Fund's right to reject
purchase orders. For federal and (generally) state income tax purposes, an
exchange is treated as a sale of the shares exchanged and, therefore, an
exchange could result in a gain or loss to non-tax-exempt shareholders making
the exchange. The exchange privilege (or any aspect of it) may be changed or
discontinued upon sixty days prior written notice to shareholders.

REDEMPTIONS
Shares of a Fund may be redeemed on any business day in cash or in-kind. If
the Adviser determines, in its sole discretion, that it would be detrimental
to the best interests of the remaining shareholders of a Fund, a Fund may make
payment of the redemption price, either totally or partially, by a
distribution in-kind of securities (instead of cash) from that Fund's
portfolio. The securities distributed in such a distribution would be valued
at the same amount as that assigned to them in calculating the net asset value
for the shares being sold (see "Net Asset Value" below). Securities
distributed by a Fund will be selected by the Adviser in light of the Fund's
objective and will not generally represent a pro rata distribution of each
security held in the Fund's portfolio. If a shareholder received a
distribution in-kind, the shareholder would incur brokerage charges when
converting the securities to cash. A distribution in-kind of portfolio
securities may include foreign securities, including securities of issuers in
emerging markets. A shareholder receiving such a redemption in-kind may
encounter difficulties and expenses selling such securities not typically
associated with disposal of U.S. securities. See "Additional Risk Factors --
Foreign Securities" and "-- Emerging Markets" above.

Within seven days after receipt of a redemption request in "good order" by the
Shareholder Servicing Agent, a Fund will make payment in cash in the amount of
(or, as described above, in-kind with a value equal to) the net asset value of
the shares next determined after such redemption request was received, except
during any period in which the right of redemption is suspended or date of
payment is postponed because the New York Stock Exchange (the "Exchange") is
closed or trading on the Exchange is restricted or to the extent otherwise
permitted by the 1940 Act, if an emergency exists. "Good order" generally
means that the stock power, written request for redemption, letter of
instruction or share certificate must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
in the manner set forth below under the caption "Signature Guarantee." In
addition, in some cases "good order" will require the furnishing of additional
documents. The Shareholder Servicing Agent may make certain de minimus
exceptions to the above requirements for redemptions. Redemptions in cash will
be made by transfer of federal funds for payment into the investor's account.
Redemptions in-kind will be made by the transfer and delivery of securities as
directed by the investor.

When opening an account with a Fund, shareholders will be required to
designate the account(s) to which funds or securities may be transferred upon
redemption. Designation of additional accounts and any change in the accounts
originally designated must be made in writing.

The value of shares redeemed may be more or less than the shareholder's cost,
depending on portfolio performance and distributions made during the period
the shareholder owned his shares. Redemptions of shares are taxable events on
which a shareholder that is not an exempt shareholder may realize a gain or
loss (see "Tax Status" below).

The Trust reserves the right to redeem shares in any account for their then-
current value (which will be promptly paid to the shareholder) if at any time
the total investment in such account drops below $500,000 because of
redemptions. Shareholders will be notified that the value of their account is
less than the minimum investment requirement and allowed 60 days to make an
additional investment before the redemption is processed.

SIGNATURE GUARANTEE: In order to protect shareholders to the greatest extent
possible against fraud, each Fund requires in certain instances as indicated
above that the shareholder's signature be guaranteed. In these cases the
shareholder's signature must be guaranteed by an eligible bank, broker,
dealer, credit union, national securities exchange, registered securities
association, clearing agency or savings association. Signature guarantees
shall be accepted in accordance with policies established by the Shareholder
Servicing Agent. With respect to written requests for redemptions, no
signature guarantee or evidence that the individual executing the stock power,
written request for redemption, letter of instruction or certificate will be
required if the amount of the redemption proceeds does not exceed specified
minimums established from time to time by MFD and the proceeds are wired or
mailed to a predesignated account or address.

DISTRIBUTIONS
Each Fund intends to pay substantially all of its net investment income to its
shareholders as dividends on an annual basis. In determining the net
investment income available for distributions, a Fund may rely on projections
of its anticipated net investment income over a longer term, rather than its
actual net investment income for the period. If the Fund earns less than
projected, or otherwise distributes more than its earnings for the year, a
portion of the distributions may constitute a return of capital. A Fund may
make one or more distributions during the calendar year to its shareholders
from any long-term capital gains, and may also make one or more distributions
during the calendar year to its shareholders from short-term capital gains.
Each Fund intends to distribute premiums from options, if any, annually.
Shareholders may elect to receive dividends and capital gain distributions in
either cash or additional shares. See "Information Concerning Shares of the
Funds -- Tax Status" and "Shareholder Services -- Distribution Options" below.

TAX STATUS
In order to minimize the taxes each Fund would otherwise be required to pay,
each Fund intends to qualify each year as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and to make distributions to its shareholders in accordance with the
timing and certain other requirements imposed by the Code. Because each Fund
intends to distribute all of its net investment income and net capital gains
to its shareholders in accordance with the timing requirements imposed by the
Code, it is not expected that any Fund will be required to pay entity level
federal income or excise taxes, although foreign-source income received by any
Fund may be subject to foreign withholding taxes. Shareholders of a Fund
normally will have to pay federal income taxes, and any state or local taxes,
on dividends and capital gain distributions from a Fund whether paid in cash
or additional shares.

Shortly after the end of each calendar year, each individual shareholder will
be sent a statement setting forth the federal income tax status of all
dividends and distributions for that year, including the portion taxable as
ordinary income, the portion taxable as long-term capital gain, the portion if
any, representing a return of capital (which is free of current taxes but
results in a basis reduction) and the amount, if any, of federal income tax
withheld. In certain circumstances, a Fund may elect to "pass through" to
shareholders foreign income taxes paid by that Fund. Under those
circumstances, the Fund will notify shareholders of their pro rata portion of
the foreign income taxes paid by the Fund; shareholders may be eligible for
foreign tax credits or deductions with respect to those taxes, but will be
required to treat the amount of the taxes as an amount distributed to them and
thus includible in their gross income for federal income tax purposes.

Fund distributions will reduce a Fund's net asset value per share.
Shareholders who buy shares shortly before a Fund makes a distribution of
taxable income may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.

Each Fund intends to withhold U.S. federal income tax at a rate of 30% on
dividends and certain other payments that are subject to such withholding, and
that are made to non-exempt persons who are neither citizens nor residents of
the U.S., regardless of whether a lower rate may be permitted under an
applicable law or treaty. Each Fund is also required in certain circumstances
to apply backup withholding of 31% on reportable dividends and redemption
proceeds paid to any shareholder (including a shareholder who is neither a
citizen nor a resident of the U.S.) who does not furnish to the Fund certain
information and certifications or who is otherwise subject to backup
withholding. However, backup withholding will not be applied to such
shareholders payments which have had 30% withholding taken. Prospective
shareholders should read the Account Application for information regarding
backup withholding of federal income tax and should consult their own tax
advisers as to the tax consequences of an investment in the Fund.

NET ASSET VALUE
The net asset value of shares of each Fund is determined each day during which
the Exchange is open for trading. This determination is made once each day as
of the close of regular trading on the Exchange by deducting the amount of a
Fund's liabilities from the value of its assets and dividing the difference by
the number of its shares outstanding. Assets in a Fund's portfolio are valued
on the basis of their market values or otherwise at their fair values, as
described in the Statement of Additional Information. All investments and
assets are expressed in U.S. dollars based upon current currency exchange
rates. A share's net asset value is effective for orders received in "good
order" by a Fund prior to its calculation and received by a Fund prior to the
close of that business day.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust has only one class of shares, entitled Shares of Beneficial Interest
(without par value). The Trust presently has seven series and has reserved the
right to create and issue additional series. Each share of a series represents
an equal proportionate interest in that series with each other share of that
series. The shares of each series participate equally in the earnings,
dividends and assets of the particular series. Shares when issued are fully
paid and non-assessable. Shareholders are entitled to one vote for each share
held. Shares of each series generally vote separately, for example to approve
investment advisory agreements, but shares of all series vote together,
including shares of other series of the Trust, to the extent required under
the 1940 Act, in the election or selection of Trustees and accountants.
Shareholders of each series would be entitled to share pro rata in the net
assets of that series available for distribution to shareholders upon
liquidation of the Trust or that series. The Trust is not required to and has
no current intention to hold annual shareholder meetings, although special
meetings may be called for purposes of electing or removing Trustees, changing
fundamental investment restrictions or approving an investment advisory
agreement.

Because the Adviser has furnished the initial capital of the Core Plus Fund,
the Research Fund, the Mid-Cap Fund and the International Equity Fund, as of
the date of this Prospectus, the Adviser owns 100% of each respective Fund's
shares and, therefore, controls each Fund.

The MFS Pension Plan, 500 Boylston Street, Boston, MA 02116, owns 99.9% of the
Emerging Markets Fund's shares, and, therefore, controls the Fund.

PERFORMANCE INFORMATION
From time to time, a Fund may provide total rate of return and yield
quotations and may also quote fund rankings from various sources, such as the
Lipper Analytical Services, Inc. and Wiesenberger Investment Companies
Service. Total rate of return quotations will reflect the average annual
percentage change over stated periods in the value of an investment in a Fund
made at the net asset value with all distributions reinvested. Yield
quotations are based on the annualized net investment income per share of a
Fund over a 30-day period stated as a percent of the net asset value on the
last day of that period. Each Fund's total rate of return and yield quotations
are based on historical performance and are not intended to indicate future
performance. Total rate of return reflects all components of investment return
over a stated period of time, while yield reflects only net portfolio income
as of a stated time. A Fund's quotations may from time to time be used in
advertisements, shareholder reports or other communications to shareholders.
For a discussion of the manner in which each Fund will calculate its total
rate of return and yield, see the Statement of Additional Information.

EXPENSES
The Trust pays the compensation of its Trustees who are not officers of MFS
and all expenses of each Fund (other than those assumed by MFS) including but
not limited to: governmental fees; interest charges; taxes; membership dues in
the Investment Company Institute allocable to each Fund, fees and expenses of
independent auditors, of legal counsel, and of any transfer agent, registrar
or dividend disbursing agent of each 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 Trust's Custodian, for
all services to a Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of shares of each Fund; and expenses of shareholder meetings. Expenses
relating to the issuance, registration and qualification of shares of each
Fund and the preparation, printing and mailing of prospectuses are borne by
each 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 of the Trust are allocated
among the series in a manner believed by management of the Trust to be fair
and equitable.

The Adviser has voluntarily agreed to waive its management fee and/or pay
expenses of the Worldwide Fund in order to maintain total expenses of the Fund
at no more than 0.65% per annum of the Fund's average daily net assets from
August 1, 1995 through June 30, 1997. Prior to that time, from April 1993
through July 31, 1995, the Adviser had agreed to waive its management fees
and/or pay expenses of the Worldwide Fund in order to maintain total expenses
of the Fund at no more than 0.75% per annum of the Fund's average daily net
assets. The Adviser has voluntarily agreed to waive its management fee and/or
pay expenses of the Emerging Equities Fund in order to maintain total
operating expenses of the Fund at no more than 0.75% per annum of the Fund's
average daily net assets from December 1, 1993 through June 30, 1997. These
obligations to pay expenses may be terminated or revised at any time by MFS
without the consent of the Trust or the Fund by notice in writing from MFS to
the Trust on behalf of the Fund.

MFS has also agreed to pay until December 31, 2005 the expenses of each of the
Emerging Markets Fund, the Core Plus Fund, the Research Fund, the Mid-Cap Fund
and the International Equity Fund such that the aggregate operating expenses
of each Fund do not exceed the following percentage, on an annualized basis,
of its average daily net assets: 1.25% of the Emerging Markets Fund, 0.60% of
the Core Plus Fund, 0.75% of the Research Fund, 0.75% of the Mid-Cap Fund and
0.95% of the International Equity Fund. Each obligation to pay expenses may be
terminated or revised at any time by MFS without the consent of the Trust or
the Fund by notice in writing from MFS to the Trust on behalf of the Fund.
Such payments by MFS are subject to reimbursement by each Fund which will be
accomplished by the payment by each Fund of an expense reimbursement fee to
MFS computed and paid monthly at a percentage of its average daily net assets
for its then current fiscal year, with a limitation that immediately after
such payment the aggregate operating expenses of each Fund would not exceed
the following percentage, on an annualized basis, of its average daily net
assets: 1.25% of the Emerging Markets Fund, 0.60% of the Core Plus Fund, 0.75%
of the Research Fund, 0.75% of the Mid-Cap Fund and 0.95% of the International
Equity Fund. The expense reimbursement agreement terminates for each Fund on
the earlier of the date on which payments made thereunder by the Fund equal
the prior payment of such reimbursable expenses by MFS on December 31, 2005.

9. SHAREHOLDER SERVICES

Shareholders with questions concerning the shareholder services described
below or concerning other aspects of a Fund, should contact the Shareholder
Servicing Agent.

ACCOUNT AND CONFIRMATION STATEMENTS -- Each shareholder will receive
confirmation statements showing the transaction activity in its account. At
the end of each calendar year, each shareholder will receive income tax
information regarding any reportable dividends, capital gain distributions or
other distributions for that year.

DISTRIBUTION OPTIONS -- The following options are available to all accounts
and may be changed as often as desired by notifying the Shareholder Servicing
Agent:

-- Dividends and capital gain distributions reinvested in additional
shares. This option will be assigned if no other option is specified.

-- Dividends in cash; capital gain distributions reinvested in additional
shares.

-- Dividends and capital gain distributions in cash.

Dividends and capital gains distributions will be reinvested (net of any tax
withholding) in additional full and fractional shares at the net asset value
in effect at the close of business on the record date.

Dividends and capital gain distributions in amounts less than $10 will
automatically be reinvested in additional shares of a Fund. Any request to
change a distribution option must be received by the Shareholder Servicing
Agent by the record date for a dividend or distribution in order to be
effective for that dividend or distribution. No interest will accrue on
amounts represented by uncashed distributions or redemption checks.
----------------

The Funds' Statement of Additional Information, dated December 1, 1995,
contains more detailed information about the Trust and the Funds, including,
but not limited to, information related to: (i) each Fund's investment
policies and restrictions, including the purchase and sale of Options, Futures
Contracts, Options on Futures Contracts, Forward Contracts and Options on
Foreign Currencies; (ii) the Trustees, officers and Adviser; (iii) portfolio
trading; (iv) each Fund's shares, including rights and liabilities of
shareholders; (v) tax status of dividends and distributions; and (vi) various
services and privileges provided by each Fund for the benefit of its
shareholders.

<PAGE>

APPENDIX A

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 fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime 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.

ABSENCE OF RATING: Where no rating has been assigned or where a rating has
been suspended or withdrawn, it may be for reasons unrelated to the quality of
the issue.

Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted;
2. the issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy;
3. there is a lack of essential data pertaining to the issue or issuer;
and
4. the issue was privately placed, in which case the rating is not
published in Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.

STANDARD & POOR'S RATINGS GROUP

AAA: Debt rated AAA has the highest rating assigned by S&P's. Capacity to pay
interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

C1: The rating C1 is reserved for income bonds on which no interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

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

NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.

A-1 AND P-1 COMMERCIAL PAPER RATINGS
Description of S&P, Fitch and Moody's highest commercial paper ratings:

The rating "A" is the highest commercial paper rating assigned by S&P and Fitch,
and issues so rated are regarded as having the greatest capacity for timely
payment. Issues in the "A" category are delineated with the numbers 1, 2 and 3
to indicate the relative degree of safety. The A-1 designation indicates that
the degree of safety regarding timely payment is either overwhelming or very
strong. Those A-1 issues determined to possess overwhelming safety
characteristics will be denoted with a plus (+ ) sign designation.

The rating P-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated P-1 have a superior ability for repayment. P-1 repayment capacity
will normally be evidenced by the following characteristics: (1) leading market
positions in well established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structure with moderate reliance on
debt and ample asset protection; (4) broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and (5) well established
access to a range of financial markets and assured sources of alternate
liquidity.

FITCH INVESTORS SERVICE, INC.

AAA:. Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably forseeble events.

AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F- 1+ ".

A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC: Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C: Bonds are in imminent default in payment of interest or principal.

PLUS (+ ) MINUS (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rated category. Plus and
minus signs, however, are not used in the "AAA" category.

NR: Indicates that Fitch does not rate the specific issue.

CONDITIONAL: A conditional rating is premised on the successful completion of
a project or the occurrence of a specific event.

SUSPENDED: A rating is suspended when Fitch deems the amount of information
available from the issuer to be inadequate for rating purposes.

WITHDRAWN: A rating will be withdrawn when an issue matures or is called or
refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper
and timely information.

FITCHALERT: Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the likely direction
of such change. These are designated a "Positive", indicating a potential
upgrade, "Negative", for potential downgrade, or "Evolving", where ratings may
be lowered, FitchAlert is relatively short-term, and should be resolved within
12 months.

<PAGE>

Investment Adviser
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116
(617) 954-5000
(800) 637-8730

Distributor
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116
(617) 954-5000

Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110

Dividend Disbursing Agent
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110

Shareholder Servicing Agent
MFS Service Center, Inc.
500 Boylston Street, Boston, MA 02116
Toll-free: (800) 637-8730

Mailing Address
P.O. Box 1400
Boston, MA 02107-9906

Independent Accountants
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110

[Logo] M F S
MFS ASSET MANAGEMENT, INC.

MFS(R) INSTITUTIONAL WORLDWIDE FIXED INCOME FUND
MFS(R) INSTITUTIONAL EMERGING EQUITIES FUND
MFS(R) INSTITUTIONAL EMERGING MARKETS FIXED INCOME FUND
MFS(R) INSTITUTIONAL CORE PLUS FIXED INCOME FUND
MFS(R) INSTITUTIONAL RESEARCH FUND
MFS(R) INSTITUTIONAL MID-CAP GROWTH EQUITY FUND
MFS(R) INSTITUTIONAL INTERNATIONAL EQUITY FUND

500 Boylston Street
Boston, MA 02116

12/95

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THE FIRST NAME IN MUTUAL FUNDS

MFS(R) INSTITUTIONAL WORLDWIDE FIXED INCOME FUND
MFS(R) INSTITUTIONAL EMERGING EQUITIES FUND
MFS(R) INSTITUTIONAL EMERGING MARKETS FIXED INCOME FUND
MFS(R)INSTITUTIONAL CORE PLUS FIXED INCOME FUND
MFS(R) INSTITUTIONAL RESEARCH FUND
MFS(R) INSTITUTIONAL MID-CAP GROWTH EQUITY FUND
MFS(R) INSTITUTIONAL INTERNATIONAL EQUITY FUND

STATEMENT OF
ADDITIONAL INFORMATION

December 1, 1995

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Page
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1. Definitions ................................................ 2
2. Investment Policies and Restrictions ....................... 2
3. Management of the Funds .................................... 15
Trustees ............................................... 15
Officers ............................................... 15
Investment Adviser ..................................... 15
Custodian .............................................. 16
Shareholder Servicing Agent ............................ 16
Distributor ............................................ 17
4. Portfolio Transactions and Brokerage Commissions ........... 17
5. Tax Status ................................................. 17
6. Determination of Net Asset Value and Performance ........... 19
7. Description of Shares, Voting Rights and Liabilities ....... 20
8. Independent Accountants and Financial Statements ........... 20
Exhibit A - Trustee Compensation Table ......................... 22

This Statement of Additional Information sets forth information which may be of
interest to investors but which is not necessarily included in the Funds'
Prospectus, dated December 1, 1995. This Statement of Additional Information
should be read in conjunction with the Prospectus, a copy of which may be
obtained without charge by contacting the Shareholder Servicing Agent (see back
cover for address and phone number).

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

<PAGE>
1. DEFINITIONS

"Worldwide Fund" -- MFS Institutional Worldwide Fixed Income Fund,
a non- diversified series of MFS Institutional
Trust.

"Emerging Equities Fund" -- MFS Institutional Emerging Equities Fund, a
diversified series of MFS Institutional Trust.

"Emerging Markets Fund" -- MFS Institutional Emerging Markets Fixed
Income Fund, a non-diversified series of MFS
Institutional Trust.

"Core Plus Fund" -- MFS Institutional Core Plus Fixed Income Fund,
a diversified series of MFS Institutional
Trust.

"Research Fund" -- MFS Institutional Research Fund, a diversified
series of MFS Institutional Trust.

"Mid-Cap Fund" -- MFS Institutional Mid-Cap Growth Equity Fund,
a diversified series of MFS Institutional
Trust.

"International Equity Fund" -- MFS Institutional International Equity Fund, a
diversified series of MFS Institutional Trust.

"Funds" -- Worldwide Fund, Emerging Equities Fund,
Emerging Markets Fund, Core Plus Fund,
Research Fund, Mid-Cap Fund and International
Equity Fund.

"MFS" or the "Adviser" -- Massachusetts Financial Services Company, a
Delaware corporation.

"MFD" -- MFS Fund Distributors, Inc., a Delaware
Corporation

"Prospectus" -- The Prospectus of the Funds, dated December
1, 1995.

"Trust" -- MFS Institutional Trust, a Massachusetts
business trust. On June 1, 1992, the Trust
changed its name from Public Funds Investment
Trust. The Trust is currently comprised of
seven series, including the Funds.

2. INVESTMENT POLICIES AND RESTRICTIONS

INVESTMENT POLICIES. The investment objective(s) and policies of the Funds are
described in the Prospectus. The following discussion of the Fund's investment
policies and restrictions supplements and should be read in conjunction with the
information set forth in the "Investment Objectives and Policies" section of the
Prospectus.

EMERGING MARKETS: The Emerging Markets Fund invests primarily in fixed income
securities of government, government-related, supranational and corporate
issuers located or primarily conducting their business in emerging markets. Each
Fund (except the Research Fund) may also invest in Emerging Market Securities.
Such investments entail significant risks as described in the Prospectus under
the caption "Additional Risk Factors -- Emerging Markets" and as more fully
described below.

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 a 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 a Fund's assets should these conditions recur.

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 averages 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 a Fund) may be requested to participate in
the rescheduling of such debt and to extend further loans to governmental
entities. There is no bankruptcy proceeding 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 its 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.

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 a Fund's securities in such markets may
not be readily available. The Trust 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 a 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 a
Fund's identification of such condition until the date of the SEC action, a
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.

DEFAULT; LEGAL RECOURSE -- A 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 a Fund defaults, that 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. A
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.

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.

WITHHOLDING -- Income from securities held by a 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. A 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 CURRENCIES -- The Emerging Markets Fund may invest up to 100% of its
assets in securities denominated in foreign currencies and international
currency units and each other Fund may invest a portion of its assets in foreign
currencies. Accordingly, changes in the value of these currencies and units
against the U.S. dollar may result in corresponding changes in the U.S. dollar
value of the Fund's assets denominated in those currencies and units.

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.

REPURCHASE AGREEMENTS: As described in the Prospectus, each 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 domestic or foreign securities dealers or institutions which
the Adviser has determined to be of comparable creditworthiness. The securities
that a Fund purchases and holds have values that 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 a Fund, or the
purchase and repurchase prices may be the same, with interest at a standard rate
due to a Fund together with the repurchase price on repurchase.

The repurchase agreement provides that in the event the seller fails to pay the
price agreed upon on the agreed upon delivery date or upon demand, as the case
may be, a Fund will have the right to liquidate the securities. If at the time
the Fund is contractually entitled to exercise its right to liquidate the
securities, the seller is subject to a proceeding under the bankruptcy laws or
its assets are otherwise subject to a stay order, the Fund's exercise of its
right to liquidate the securities may be delayed and result in certain losses
and costs to the Fund. Each Fund has adopted and follows procedures which are
intended to minimize the risks of repurchase agreements. For example, each 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 each Fund has the right to make margin
calls at any time if the value of the securities falls below the agreed upon
margin.

LENDING OF PORTFOLIO SECURITIES: Each Fund may seek to increase its income by
lending portfolio securities to entities deemed creditworthy by the Adviser.
Such loans would be required to be secured continuously by collateral in cash,
letters of credit or U.S. Government securities maintained on a current basis at
an amount at least equal to the market value of the securities loaned. A Fund
would have the right to call a loan and obtain the securities loaned at any time
on customary industry settlement notice (which will usually not exceed five
days). During the existence of a loan, a Fund would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive compensation based on investment of the
collateral. The Fund would not, however, have the right to vote any securities
having voting rights during the existence of the loan, but 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 could be earned currently from securities loans
of this type justifies the attendant risk. If the Adviser determines to make
securities loans, it is not intended that the value of the securities loaned
would exceed 30% of the value of each Fund's total assets.

FOREIGN SECURITIES: Each Fund may invest in foreign securities as discussed in
the Prospectus. Investments in foreign issues involve considerations and
possible risks not typically associated with investments in securities issued by
domestic companies or with debt securities issued by foreign governments. There
may be less publicly available information about a foreign company than about a
domestic company, and many foreign companies are not subject to accounting,
auditing and financial reporting standards and requirements comparable to those
to which U.S. companies are subject. Foreign securities markets, while growing
in volume, have substantially less volume than U.S markets, and securities of
many foreign companies are less liquid and their prices more volatile than
securities of comparable domestic companies. Fixed brokerage commissions and
other transaction costs on foreign securities exchanges are generally higher
than in the U.S. There is also less government supervision and regulation of
exchanges, brokers and issuers in foreign countries than there is in the U.S.

WHEN-ISSUED OR FORWARD DELIVERY SECURITIES: If a Fund commits to purchase a
security on a "when-issued" or "forward delivery" basis, it will set up
procedures consistent with the General Statement of Policy of the SEC concerning
such purchases. Since that policy currently recommends that an amount of a
Fund's assets equal to the amount of the purchase be held aside or segregated to
be used to pay for the commitment, the Fund will always have cash, short-term
money market instruments or high quality debt securities sufficient to cover any
commitments. However, although each Fund does not intend to make such purchases
for speculative purposes and intends to adhere to the provisions of the SEC
policy, purchases of securities on such bases may involve more risk than other
types of purchases. For example, a Fund may have to sell assets which have been
set aside in order to meet redemptions. Also, if a Fund determines it necessary
to sell the "when-issued" or "forward delivery" securities before delivery, it
may incur a loss because of market fluctuations since the time the commitment to
purchase such securities was made.

AMERICAN DEPOSITARY RECEIPTS: American Depositary Receipts ("ADRs") are
certificates issued by a U.S. depository (usually a bank) and represent a
specified quantity of shares of an underlying non-U.S. stock on deposit with a
custodian bank as collateral. ADRs may be sponsored or unsponsored. A sponsored
ADR is issued by a depository which has an exclusive relationship with the
issuer of the underlying security. An unsponsored ADR may be issued by any
number of U.S. depositories. Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
depository of an unsponsored ADR, on the other hand, is under no obligation to
distribute shareholder communications received from the issuer of the deposited
securities or to pass through voting rights to ADR holders in respect of the
deposited securities. Each Fund except the Core Plus 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 depository receipts in the
United States can reduce costs and delays as well as potential currency exchange
and other difficulties. A Fund may purchase securities in local markets and
direct delivery of these ordinary shares to the local depository of an ADR agent
bank in the foreign country. Simultaneously, the ADR agents create a certificate
which settles at the Fund's custodian in five days. A 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 the information available to
a U.S. investor will be limited to the information the foreign issuer is
required to disclose in its own country and the market value of an ADR may not
reflect undisclosed material information concerning the issuer of the underlying
security. ADRs may also be subject to exchange rate risks if the underlying
foreign securities are denominated in foreign currency.

INVESTMENT IN OTHER INVESTMENT COMPANIES: A Fund's investment in other
investment companies, as described in the Prospectus, is limited in amount by
the Investment Company Act of 1940, as amended (the "1940 Act"), so that a Fund
may purchase shares in another investment company unless (i) such a purchase
would cause a Fund to own in aggregate more than 3% of the total outstanding
voting stock of the company or (ii) such a purchase would cause a Fund to have
more than 5% of its total assets invested in one investment company or more than
10% of its total assets invested in aggregate in all other investment companies.
Such investment may also involve the payment of substantial premiums above the
value of such investment companies' portfolio securities, and the total return
on such investment will be reduced by the operating expenses and fees of such
other investment companies, including advisory fees.

LOANS AND OTHER DIRECT INDEBTEDNESS: The Emerging Markets Fund, the Mid-Cap Fund
and the International Equity Fund may purchase loans and other direct
indebtedness. In purchasing a loan, a Fund acquires some or all of the interest
of a bank or other lending institution in a loan to a corporate, governmental or
other borrower. Many such loans are secured, although some may be unsecured.
Such loans may be in default at the time of purchase. Loans that are fully
secured offer a Fund more protection than an unsecured loan in the event of
non-payment of scheduled interest or principal. However, there is no assurance
that the liquidation of collateral from a secured loan would satisfy the
corporate borrower's obligation, or that the collateral can be liquidated.

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 loans and is responsible for collecting interest, principal
and other amounts due on its own behalf and on behalf of the others in the
syndicate, and for enforcing its and their other rights against the borrower.
Alternatively, such loans may be structured as a novation, pursuant to which a
Fund would assume all of the rights of the lending institution in a loan, or as
an assignment, pursuant to which a Fund would purchase an assignment of a
portion of a lender's interest in a loan either directly from the lender or
through an intermediary. The Mid-Cap Fund and the International Equity Fund may
also purchase trade or other claims against companies, which generally represent
money owed 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 acquired by a Fund may involve revolving credit facilities
or other standby financing commitments which obligate a Fund to pay additional
cash or a certain date or on demand. These commitments may have the effect of
requiring a Fund to increase its investment in a company at a time when the Fund
might not otherwise decide to do so (including at a time when the company's
financial condition makes it unlikely that such amounts will be repaid). To the
extent that a Fund is committed to advance additional funds, it will at all
times hold and maintain in a segregated account cash or other high grade debt
obligations in an amount sufficient to meet such commitments.

A Fund's ability to receive payments of principal, interest and other amounts
due in connection with these investments will depend primarily on the financial
condition of the borrower. Direct indebtedness of developing countries involves
the risk that the governmental entities responsible for the repayment of the
note may be unable, or unwilling, to pay interest and repay principal where due.
In selecting the loans and other direct investments which a Fund will purchase,
the Adviser will rely upon its (and not that of the original lending
institution's) own credit analysis of the borrower. As a Fund may be required to
rely upon another lending institution to collect and pass on to the Fund amounts
payable with respect to the loan and to enforce a Fund's rights under the loan,
an insolvency, bankruptcy or reorganization of the lending institution may delay
or prevent a Fund from receiving such amounts. In such cases, a Fund will
evaluate the creditworthiness of the lending institution and will treat both the
borrower and the lending institution as an "issuer" of the loan participation
for purposes of certain investment restrictions pertaining to the
diversification of that Fund's portfolio investments. The highly leveraged
nature of many such loans may make such loans especially vulnerable to adverse
changes in economic or market conditions. Investments in such loans may involve
additional risks to a Fund. For example, if a loan is foreclosed, a Fund could
become part owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, a Fund could
be held liable as a co-lender. It is unclear whether loans and other forms of
direct indebtedness offer securities law protections against fraud and
misrepresentation. In the absence of definitive regulatory guidance, a Fund
relies on the Adviser's research in an attempt to avoid situations where fraud
or misrepresentation could adversely affect the Fund. In addition, loans and
other direct investments may not be in the form of securities or may be subject
to restrictions on transfer, and only limited opportunities may exist to resell
such instruments. As a result, a Fund may be unable to sell such investments at
an opportune time or may have to resell them at less than fair market value. To
the extent that the Adviser determines that any such investments are illiquid,
each Fund will include them in the investment limitations described below.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS: As described in the Prospectus, the Core
Plus 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 fore- goes 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 the cash proceeds of the initial sale. The Fund may also
be compensated by receipt of a commitment fee.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH SECURITIES: The
Core Plus 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. Typically, CMOs are collateralized by
certificates issued by the Government National Mortgage Association ("GNMA"),
the Federal National Mortgage Association ("FNMA"), or the Federal Home Loan
Mortgage Association ("FHLMC"), but also may be collateralized by whole loans or
private mortgage pass-through securities (such collateral collectively
hereinafter referred to as "Mortgage Assets"). The Core Plus Fund may also
invest a portion of its assets in multiclass pass-through securities which are
equity interests in a trust composed of Mortgage Assets. Unless the context
indicates otherwise, all references herein to CMOs include multiclass
pass-through securities. Payments of principal of and interest on the Mortgage
Assets, and any reinvestment income thereon, provide the funds to pay debt
service on the CMOs or make scheduuled distributions on the multiclass
pass-through securities. CMOs may be issued by agencies or instrumentalities of
the United States government or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage banks,
commercial banks, investment banks and special purpose subsidiaries of the
foregoing. The issuer of a series of CMOs may elect to be treated as a Real
Estate Mortgage Investment Conduit (a "REMIC").

In a CMO, a series of bonds or certificates are usually issued in multiple
classes with different maturities. Each class of CMOs, often referred to as a
"tranche," is issued at a specific fixed or floating coupon rate and has a
stated maturity or final distribution date. Principal prepayments on the
Mortgage Assets may cause the CMOs to be retired substantially earlier than
their stated maturities or final distribution dates, resulting in a loss of all
or a part of the premium if any has been paid. Interest is paid or accrues on
all classes of the CMOs on a monthly, quarterly or semiannual basis. The
principal of and interest on the Mortgage Assets may be allocated among the
several classes of a series 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 the series 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 primarily of interest payments
or principal payments.

The Core Plus 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. PAC Bonds generally require payments of a specified amount of
principal on each payment date. PAC Bonds are always parallel pay CMOs with the
required principal payment on such securities having the highest priority after
interest has been paid to all classes.

STRIPPED-MORTGAGE-BACKED SECURITIES: The Core Plus Fund may invest a portion of
its assets in stripped mortgage-backed securities ("SMBS") which are derivative
multiclass mortgage securities issued by agencies of or instrumentalities of the
U.S. Government, or by private originators of, or investors in mortgage loans,
including savings and loan institutions, mortgage banks, commmercial banks and
investment banks.

SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions from a pool of mortgage assets. A
common type of SMBS will have one class receiving some of the interest and most
of the principal from the Mortgage Assets, while the other class will receive
most of the interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the interest-only or "IO"
class) while the other class will receive all of the principal (the
principal-only or "PO" class). The yield to maturity on an IO is extremely
sensitive to the rate of principal payments, including prepayments on the
related underlying Mortgage Assets, and a rapid rate of principal payments may
have a material adverse effect on such security's yield to maturity. If the
underlying Mortgage Assets experience greater than anticipated prepayments of
principal, the Core Plus 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.

MORTGAGE PASS-THROUGH SECURITIES: The Core Plus Fund may invest in mortgage
pass-through securities as described in the Prospectus. 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 GNMA, are described as "modified pass-through" securities. These
securities entitle the holder to receive all interest 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 FHA-insured or VA-guaranteed mortgages. These guarantees, however, do
not apply to the market value or yield of mortgage pass-though 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., those 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 was created by Congress in 1970 as a corporate instrumentality of the U.S.
Government for the purpose of increasing the availability of mortgage credit for
residential housing. FHLMC issues Participation Certificates ("PCs") which
represent interests in conventional mortgages (i.e., not federally insured or
guaranteed) from 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.

OPTIONS ON SECURITIES: Each Fund may write (sell) covered call and put options
on securities ("Options") and purchase call and put Options. A Fund may write
Options for the purpose of attempting to increase its return and for hedging
purposes. In particular, if a Fund writes an Option which expires unexercised or
is closed out by the Fund at a profit, the Fund retains the premium paid for the
Option less related transaction costs, which increases its gross income and
offsets in part the reduced value of the portfolio security in connection with
which the Option is written, or the increased cost of portfolio securities to be
acquired. In contrast, however, if the price of the security underlying the
Option moves adversely to the Fund's position, the Option may be exercised and
the Fund will then be required to purchase or sell the security at a
disadvantageous price, which might only partially be offset by the amount of the
premium.

A 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 a Fund determines to write
depends 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.

The writing of covered put Options is similar in terms of risk/return
characteristics to buy-and-write transactions. Put Options may be used by a Fund
in the same market environments in which call Options are used in equivalent
buy-and-write transactions.

A Fund may also write combinations of put and call Options on the same security,
a practice known as a "straddle." By writing a straddle, a Fund undertakes a
simultaneous obligation to sell or 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 a Fund will be required
to sell the underlying security at a below market price. This loss may be
offset, however, in whole or in 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 a security remains
stable and neither the call nor the put is exercised. In an instance 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 on a portfolio security, a Fund limits its opportunity
to profit from any increase in the market value of the underlying security above
the exercise price of the Option. By writing a put Option, a Fund assumes the
risk that it may be required to purchase the underlying security for an exercise
price above its then current market value, resulting in a loss unless the
security subsequently appreciates in value. The writing of Options will not be
undertaken by each Fund solely for hedging purposes, and may involve certain
risks which are not present in the case of hedging transactions. Moreover, even
where Options are written for hedging purposes, such transactions will
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.

A Fund may also purchase put and call Options. Put Options are purchased to
hedge against a decline in the value of securities held in the Fund's portfolio.
If such a decline occurs, the put Options will permit the Fund to sell the
securities underlying such Options at the exercise price, or to close out the
Options at a profit. A Fund will purchase call Options to hedge against an
increase in the price of securities that the Fund anticipates purchasing in the
future. If such an increase occurs, the call Option will permit the Fund to
purchase the securities underlying such Option at the exercise price or to close
out the Option at a profit. The premium paid for a call or put 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
or declines sufficiently, the Option may expire worthless to the Fund. In
addition, in the event that the price of the security in connection with which
an Option was purchased moves in a direction favorable to a Fund, the benefits
realized by a Fund as a result of such favorable movement will be reduced by the
amount of the premium paid for the Option and related transaction costs.

The staff of the SEC has taken the position that purchased over-the-counter
options and certain assets used to cover written over-the-counter options are
illiquid and, therefore, together with other illiquid securities, cannot exceed
a certain percentage of the Fund's assets (the "SEC illiquidity ceiling").
Although the Adviser disagrees with this position, the Adviser intends to limit
each Fund's writing of over-the-counter options in accordance with the following
procedure. Except as provided below, each Fund intends to write over-the-counter
options only with primary U.S. Government securities dealers recognized by the
Federal Reserve Bank of New York. Also, the contracts each Fund has in place
with such primary dealers will provide that the Fund has the absolute right to
repurchase an option it writes at any time at a price which represents the fair
market value, as determined in good faith through negotiation between the
parties, but which in no event will exceed a price determined pursuant to a
formula in the contract. Although the specific formula may vary between
contracts with different primary dealers, the formula will generally be based on
a multiple of the premium received by a Fund for writing the option, plus the
amount, if any, of the option's intrinsic value (i.e., the amount that the
option is in-the-money). The formula may also include a factor to account for
the difference between the price of the security and the strike price of the
option if the option is written out-of- the-money. A Fund will treat all or a
portion of the formula as illiquid for purposes of the SEC illiquidity ceiling
imposed by the SEC staff. A Fund may also write over-the-counter options with
non-primary dealers, including foreign dealers, and will treat the assets used
to cover these options as illiquid for purposes of such SEC illiquidity ceiling.

OPTIONS ON STOCK INDICES: Each fund except the Worldwide Fund, the Emerging
Markets Fund and the Core Plus Fund may write (sell) covered call and put
options and purchase call and put options on stock indices ("Options on Stock
Indices"). Each Fund may cover call Options on Stock Indices by owning
securities whose price changes, in the opinion of the Adviser, are expected to
be similar to those of the underlying index, or by having an absolute and
immediate right to acquire such securities without additional cash consideration
(or for additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other securities in its portfolio.
Where a Fund covers a call option on a stock index through ownership of
securities, such securities may not match the composition of the index and, in
that event, the Fund will not be fully covered and could be subject to risk of
loss in the event of adverse changes in the value of the index. A Fund may also
cover call options on stock indices by holding a call on the same index and in
the same principal amount as the call written where the exercise price of the
call held (a) is equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the difference is
maintained by the Fund in cash or cash equivalents in a segregated account with
its custodian. A Fund may cover put options on stock indices by maintaining cash
or cash equivalents with a value equal to the exercise price in a segregated
account with its custodian, or else by holding a put on the same security 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 difference is
maintained by the Fund in cash or cash equivalents in a segregated account with
its custodian. Put and call options on stock indices may also be covered in such
other manner as may be in accordance with the rules of the exchange on which, or
the counterparty with which, the option is traded and applicable laws and
regulations.

A Fund will receive a premium from writing a put or call option on a stock
index, which increases the Fund's gross income in the event the option expires
unexercised or is closed out at a profit. If the value of an index on which a
Fund has written a call option falls or remains the same, the Fund will realize
a profit in the form of the premium received (less transaction costs) that could
offset all or a portion of any decline in the value of the securities it owns.
If the value of the index rises, however, a Fund will realize a loss in its call
option position, which will reduce the benefit of any unrealized appreciation in
the Fund's stock investment. By writing a put option, a Fund assumes the risk of
a decline in the index. To the extent that the price changes of securities owned
by the Fund correlate with changes in the value of the index, writing covered
put options on indexes will increase a Fund's losses in the event of a market
decline, although such losses will be offset in part by the premium received for
writing the option.

Each Fund except the Worldwide Fund, the Emerging Markets Fund and the Core Plus
Fund may also purchase put options on stock indices to hedge their investments
against a decline in value. By purchasing a put option on a stock index, a Fund
will seek to offset a decline in the value of securities it owns through
appreciation of the put option. If the value of a Fund's investments does not
decline as anticipated, or if the value of the option does not increase, a
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 a Fund's security holdings.

The purchase of call options on stock indices may be used by a Fund to attempt
to reduce the risk of missing a broad market advance, or an advance in an
industry or market segment, at a time when a Fund holds uninvested cash or
short-term debt securities awaiting investment. When purchasing call options for
this purpose, a Fund will also bear the risk of losing all or a portion of the
premium paid if the value of the index does not rise. The purchase of call
options on stock indices when a Fund is substantially fully invested is a form
of leverage, up to the amount of the premium and related transaction costs, and
involves risks of loss and of increased volatility similar to those involved in
purchasing calls on securities a Fund owns.

YIELD CURVE OPTIONS: The Worldwide Fund, the Emerging Markets Fund and the Core
Plus Fund may enter into options on the yield "spread" or yield differential
between two securities, transactions referred to as a "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, a Fund may purchase or write such options for hedging
purposes. For example, a Fund may purchase a call option on the yield spread
between two securities, if it owns one of the securities and anticipates
purchasing the other security and wants to hedge against an adverse change in
the yield spread between the two securities. The Worldwide Fund, the Emerging
Markets Fund and the Core Plus Fund may also purchase or write yield curve
options for other than hedging purposes (i.e., in an effort to increase its
current income) if, in the judgment of the Adviser, the Fund will be able to
profit from movements in the spread between the yields of the underlying
securities. The trading of yield curve options is subject to all of the risks
associated with the trading of other types of options. In addition, however,
such options present risk of loss even if the yield of one of the underlying
securities remains constant, if the spread moves in a direction or to an extent
which was not anticipated. Yield curve options written by a Fund will be
"covered." A call (or put) option is covered if a Fund holds another call (or
put) option on the spread between the same two securities and maintains in a
segregated account with its custodian cash or cash equivalents sufficient to
cover the Fund's net liability under the two options. Therefore, a Fund's
liability for such a covered option is generally limited to the difference
between the amount of the Fund's liability under the option written by the Fund
less the value of the option held by the Fund. Yield curve options may also be
covered in such other manner as may be in accordance with the requirements of
the counter party 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. Because these securities are traded
over-the-counter, the SEC has taken the position that yield curve options are
illiquid and, therefore, cannot exceed the SEC illiquidity ceiling. See "Options
on Securities" above for a discussion of the policies the Adviser intends to
follow to limit a Fund's investment in these securities.

FUTURES CONTRACTS: Each Fund may enter into contracts for the purchase or sale
for future delivery of securities or foreign currencies or contracts based on
indexes of securities as such instruments become available for trading ("Futures
Contracts"). This investment technique is designed to hedge (i.e., to protect)
against anticipated future changes in interest or exchange rates which otherwise
might adversely affect the value of the Fund's portfolio securities or adversely
affect the prices of long-term bonds or other securities which each Fund intends
to purchase at a later date. Futures Contracts may also be entered into for
non-hedging purposes to the extent permitted by applicable law. A "sale" of a
Futures Contract means a contractual obligation to deliver the securities or
foreign currency called for by the contract at a fixed price at a specified time
in the future. A "purchase" of a Futures Contract means a contractual obligation
to acquire the securities or foreign currency at a fixed price at a specified
time in the future.

While Futures Contracts provide for the delivery of securities or currencies,
such deliveries are very seldom made. Generally, a Futures Contract is
terminated by entering into an offsetting transaction. A Fund will incur
brokerage fees when it purchases and sells Futures Contracts. At the time such a
purchase or sale is made, a Fund must allocate cash or securities as a margin
deposit ("initial deposit"). It is expected that the initial deposit will vary
but may be as low as 5% or less of the value of the contract. The Futures
Contract is valued daily thereafter and the payment of "variation margin" may be
required to be paid or received, so that each day a Fund may provide or receive
cash that reflects the decline or increase in the value of the contract.

The purpose of the purchase or sale of a Futures Contract, for hedging purposes
in the case of a portfolio holding long-term debt securities, is to protect a
Fund from fluctuations in interest rates without actually buying or selling
long-term debt securities. For example, if a Fund owned long-term bonds and
interest rates were expected to increase, the Fund might enter into Futures
Contracts for the sale of debt securities. If interest rates did increase, the
value of the debt securities in the portfolio would decline, but the value of
the Fund's Futures Contracts should increase at approximately the same rate,
thereby keeping the net asset value of the Fund from declining as much as it
otherwise would have. A Fund could accomplish similar results by selling bonds
with long maturities and investing in bonds with short maturities when interest
rates are expected to increase or by buying bonds with long maturities and
selling bonds with short maturities when interest rates are expected to decline.
However, since the futures market is more liquid than the cash market, the use
of Futures Contracts as an investment technique allows a Fund to maintain a
defensive position without having to sell its portfolio securities. Transactions
entered into for non-hedging purposes include greater risk, including the risk
of losses which are not offset by gains on other portfolio assets.

Similarly, when it is expected that interest rates may decline, Futures
Contracts may be purchased to hedge against anticipated purchases of long-term
bonds at higher prices. Since the fluctuations in the value of Futures Contracts
should be similar to that of long-term bonds, a Fund could take advantage of the
anticipated rise in the value of long-term bonds without actually buying them
until the market had stabilized. At that time, the Futures Contracts could be
liquidated and a Fund could buy long-term bonds on the cash market. Purchases of
Futures Contracts would be particularly appropriate when the cash flow from the
sale of new shares of a Fund could have the effect of diluting dividend
earnings. To the extent a Fund enters into Futures Contracts for this purpose,
the assets in the segregated asset account maintained to cover a Fund's
obligations with respect to such Futures Contracts will consist of cash, cash
equivalents or short-term money market instruments from the portfolio of the
Fund in an amount equal to the difference between the fluctuating market value
of such Futures Contracts and the aggregate value of the initial and variation
margin payments made by the Fund with respect to such Futures Contracts, thereby
assuring that the transactions are unleveraged.

Futures Contracts on foreign currencies may be used in a similar manner, in
order to protect against declines in the dollar value of portfolio securities
denominated in foreign currencies, or increases in the dollar value of
securities to be acquired.

A Futures Contract on an index of securities provides for the making and
acceptance of a cash settlement based on changes in value of the underlying
index. The Emerging Equities Fund, the Mid-Cap Fund, the International Equity
Fund and the Research Fund may enter into stock index futures contracts in order
to protect the Fund's current or intended stock investments from broad
fluctuations in stock prices and for non-hedging purposes to the extent
permitted by applicable law. For example, a Fund may sell stock index futures
contracts in anticipation of or during a market decline to attempt to offset the
decrease in market value of the Fund's securities portfolio that might otherwise
result. If such decline occurs, the loss in value of portfolio securities may be
offset, in whole or in part, by gains on the futures position. When a Fund is
not fully invested in the securities market and anticipates a significant market
advance, it may purchase stock index futures contracts in order to gain rapid
market exposure that may, in part or in whole, offset increases in the cost of
securities that Fund intends to purchase. As such acquisitions are made, the
corresponding positions in stock index futures contracts will be closed out. In
a substantial majority of these transactions, a Fund will purchase such
securities upon the termination of the futures position, but under unusual
market conditions, a long futures position may be terminated without a related
purchase of securities. Futures Contracts on other securities indexes may be
used in a similar mannner in order to protect the portfolio from broad
fluctuations in securities prices and for non-hedging purposes to the extent
permitted by applicable law.

OPTIONS ON FUTURES CONTRACTS: Each Fund may write and purchase options to buy or
sell Futures Contracts ("Options on Futures Contracts"). The writing of a call
Option on a Futures Contract constitutes a partial hedge against declining
prices of the security or currency underlying the Futures Contract. If the
futures price at expiration of the option is below the exercise price, a Fund
will retain the full amount of the option premium, less related transaction
costs, which provides a partial hedge against any decline that may have occurred
in the Fund's portfolio holdings. The writing of a put Option on a Futures
Contract constitutes a partial hedge against increasing prices of the security
or currency underlying the Futures Contract. If the futures price at expiration
of the option is higher than the exercise price, a Fund will retain the full
amount of the option premium, less related transaction costs, which provides a
partial hedge against any increase in the price of securities which the Fund
intends to purchase. If a put or call option a Fund has written is exercised,
the Fund will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures positions, a
Fund's losses from existing Options on Futures Contracts may to some extent be
reduced or increased by changes in the value of portfolio securities.

A Fund may purchase Options on Futures Contracts for hedging purposes as an
alternative to purchasing or selling the underlying Futures Contracts, or for
non-hedging purposes to the extent permitted by applicable law. For example,
where a decrease in the value of portfolio securities is anticipated as a result
of a projected market-wide decline, a rise in interest rates or a decline in the
dollar value of foreign currencies in which portfolio securities are
denominated, a Fund may, in lieu of selling Futures Contracts, purchase put
options thereon. In the event that such decrease in portfolio value occurs, it
may be offset, in whole or part, by a profit on the option. Conversely, where it
is projected that the value of securities to be acquired by a Fund will increase
prior to acquisition, due to a market advance, or a decline in interest rates or
a rise in the dollar value of foreign currencies in which securities to be
acquired are denominated, a Fund may purchase call Options on Futures Contracts,
rather than purchasing the underlying Futures Contracts. As in the case of
Options, the writing of Options on Futures Contracts may require a Fund to
forego all or a portion of the benefits of favorable movements in the price of
portfolio securities, and the purchase of Options on Futures Contracts may
require a Fund to forego all or a portion of such benefits up to the amount of
the premium paid and related transaction costs. Transactions entered into for
non-hedging purposes include greater risk, including the risk of losses which
are not offset by gains on other portfolio assets.

FORWARD CONTRACTS: Each Fund may enter into forward foreign currency exchange
contracts for the purchase or sale of a specific currency at a future date at a
price set at the time of the contract (a "Forward Contract"). A Fund may enter
into Forward Contracts for hedging purposes as well as for non-hedging purposes.
A Fund may also enter into Forward Contracts for "cross hedging" purposes as
noted in the Prospectus. Transactions in Forward Contracts entered into for
hedging purposes will include forward purchases or sales of foreign currencies
for the purpose of protecting the dollar value of securities denominated in a
foreign currency or protecting the dollar equivalent of interest or dividends to
be paid on such securities. By entering into such transactions, however, a Fund
may be required to forego the benefits of advantageous changes in exchange
rates. A Fund may also enter into transactions in Forward Contracts for other
than hedging purposes, which presents greater profit potential but also involves
increased risk. For example, if the Adviser believes that the value of a
particular foreign currency will increase or decrease relative to the value of
the U.S. dollar, a Fund may purchase or sell such currency, respectively,
through a Forward Contract. If the expected changes in the value of the currency
occur, a Fund will realize profits which will increase its gross income. Where
exchange rates do not move in the direction or to the extent anticipated,
however, a Fund may sustain losses which will reduce its gross income. Such
transactions, therefore, could be considered speculative.

Each Fund has established procedures consistent with statements by the SEC and
its staff regarding the use of Forward Contracts by registered investment
companies, which require the use of segregated assets or "cover" in connection
with the purchase and sale of such contracts. In those instances in which a Fund
satisfies this requirement through segregation of assets, it will maintain, in a
segregated account, cash, cash equivalents or high grade debt securities, which
will be marked to market on a daily basis, in an amount equal to the value of
its commitments under Forward Contracts.

OPTIONS ON FOREIGN CURRENCIES: Each Fund except the Emerging Equities Fund may
purchase and write put and call options on foreign currencies ("Options on
Foreign Currencies") for the purpose of protecting against declines in the
dollar value of foreign portfolio securities and against increases in the dollar
cost of foreign securities to be acquired. For example, a decline in the dollar
value of a foreign currency in which portfolio securities are denominated will
reduce the dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such diminutions in the
value of portfolio securities, a Fund may purchase put options on the foreign
currency. If the value of the currency did decline, a Fund would have the right
to sell such currency for a fixed amount in dollars and would thereby offset, in
whole or 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, a Fund may purchase call options thereon. The purchase of such
options could offset, at least partially, the effects of the adverse movements
in exchange rates. As in the case of other types of options, however, the
benefit to a Fund deriving from purchases of foreign currency options would 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, a 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.

A 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 may, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurred, the option would most likely not be
exercised, and the diminution in value of portfolio securities would 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.

RISK FACTORS: IMPERFECT CORRELATION OF HEDGING INSTRUMENTS WITH THE FUND'S
PORTFOLIO -- Each Fund's ability effectively to hedge all or a portion of its
portfolio through transactions in options, Futures Contracts, and Forward
Contracts will depend on the degree to which price movements in the underlying
instruments correlate with price movements in the relevant portion of that
Fund's portfolio. If the values of portfolio securities being hedged do not move
in the same amount or direction as the instruments underlying options, Futures
Contracts or Forward Contracts traded, a Fund's hedging strategy may not be
successful and a Fund could sustain losses on its hedging strategy which would
not be offset by gains on its portfolio. It is also possible that there may be a
negative correlation between the instrument underlying an option, Future
Contract or Forward Contract traded and the portfolio securities being hedged,
which could result in losses both on the hedging transaction and the portfolio
securities. In such instances, a Fund's overall return could be less than if the
hedging transaction had not been undertaken. In the case of futures and options
based on an index of securities or individual fixed income securities, the
portfolio will not duplicate the components of the index, and in the case of
futures and options on fixed income securities, the portfolio securities which
are being hedged may not be the same type of obligation underlying such
contract. As a result, the correlation probably will not be exact. Consequently,
a 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. In addition, where a Fund enters into Forward Contracts as a "cross
hedge" (i.e., the purchase or sale of a Forward Contract on one currency to
hedge against risk of loss arising from changes in value of a second currency),
a Fund incurs the risk of imperfect correlation between changes in the values of
the two currencies, which could result in losses.

The correlation between prices of securities and prices of options, Futures
Contracts or Forward Contracts may be distorted due to 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 option, Futures
Contract and Forward Contract markets. Due to the possibility of distortion, a
correct forecast of general interest rate trends by the Adviser may still not
result in a successful transaction. The trading of Options on Futures Contracts
also entails the risk that changes in the value of the underlying Futures
Contract will not be fully reflected in the value of the option. The risk of
imperfect correlation, however, generally tends to diminish as the maturity or
termination date of the option, Futures Contract or Forward Contract approaches.

The trading of options, Futures Contracts and Forward Contracts also entails the
risk that, if the Adviser's judgment as to the general direction of interest or
exchange rates is incorrect, a Fund's overall performance may be poorer than if
it had not entered into any such contract. For example, if a Fund has hedged
against the possibility of an increase in interest rates, and rates instead
decline, a Fund will lose part or all of the benefit of the increased value of
the securities being hedged, and may be required to meet ongoing daily variation
margin payments.

It should be noted that a Fund may purchase and write Options not only for
hedging purposes, but also for the purpose of attempting to increase its return.
As a result, a Fund will incur the risk that losses on such transactions will
not be offset by corresponding increases in the value of portfolio securities or
decreases in the cost of securities to be acquired.

POTENTIAL LACK OF A LIQUID SECONDARY MARKET -- Prior to exercise or expiration,
a position in an exchange-traded Option, Futures Contract, Option on a Futures
Contract or Option on a Foreign Currency can only be terminated by entering into
a closing purchase or sale transaction, which requires a secondary market for
such instruments on the exchange on which the initial transaction was entered
into. If no such market exists, it may not be possible to close out a position,
and a Fund could be required to purchase or sell the underlying instrument or
meet ongoing variation margin requirements. The inability to close out option or
futures positions also could have an adverse effect on a Fund's ability
effectively to hedge its portfolio.

The liquidity of a secondary market in an option or Futures Contract may be
adversely affected by "daily price fluctuation limits," established by the
exchanges, which limit the amount of fluctuation in the price of a contract
during a single trading day and prohibit trading beyond such limits once they
have been reached. Such limits could prevent a Fund from liquidating open
positions, which could render its hedging strategy unsuccessful and result in
trading losses. The exchanges on which options and Futures Contracts are traded
have also established a number of limitations governing the maximum number of
positions which may be traded by a trader, whether acting alone or in concert
with others. Further, the purchase and sale of exchange-traded options and
Futures Contracts is subject to the risk of trading halts, suspensions, exchange
or clearing corporation equipment failures, government intervention, insolvency
of a brokerage firm, intervening broker or clearing corporation or other
disruptions of normal trading activity, which could make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.

OPTIONS ON FUTURES CONTRACTS -- In order to profit from the purchase of an
Option on a Futures Contract, it may be necessary to exercise the option and
liquidate the underlying Futures Contract, subject to all of the risks of
futures trading. The writer of an Option on a Futures Contract is subject to the
risks of futures trading, including the requirement of initial and variation
margin deposits.

ADDITIONAL RISKS OF TRANSACTIONS RELATED TO FOREIGN CURRENCIES AND TRANSACTIONS
NOT CONDUCTED ON UNITED STATES EXCHANGES -- The available information on which a
Fund will make trading decisions concerning transactions related to foreign
currencies or foreign securities may not be as complete as the comparable data
on which a Fund makes investment and trading decisions in connection with other
transactions. Moreover, because the foreign currency market is a global, 24-hour
market, and the markets for foreign securities as well as markets in foreign
countries may be operating during non-business hours in the United States,
events could occur in such markets which would not be reflected until the
following day, thereby rendering it more difficult for a Fund to respond in a
timely manner.

In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of a
Fund's position, unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with a Fund. This
could make it difficult or impossible to enter into a desired transaction or
liquidate open positions, and could therefore result in trading losses. Further,
over-the-counter transactions are not subject to the performance guarantee of an
exchange clearing house and a Fund will therefore be subject to the risk of
default by, or the bankruptcy of, a financial institution or other counterparty.

Transactions on exchanges located in foreign countries may not be conducted in
the same manner as those entered into on United States 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. Moreover, the SEC or the Commodities Futures
Trading Commission ("CFTC") has jurisdiction over the trading in the United
States of many types of over-the-counter and foreign instruments, and such
agencies could adopt regulations or interpretations which would make it
difficult or impossible for a Fund to enter into the trading strategies
identified herein or to liquidate existing positions.

As a result of its investments in foreign securities, a Fund may receive
interest or dividend payments, or the proceeds of the sale or redemption of such
securities, in foreign currencies. A Fund may also be required to receive
delivery of the foreign currencies underlying options on foreign currencies or
Forward Contracts it has entered into. This could occur, for example, if an
option written by a Fund is exercised or the Fund is unable to close out a
Forward Contract it has entered into. In addition, a Fund may elect to take
delivery of such currencies. Under such circumstances, the Fund may promptly
convert the foreign currencies into dollars at the then current exchange rate.
Alternatively, a Fund may hold such currencies for an indefinite period of time
if the Adviser believes that the exchange rate at the time of delivery is
unfavorable or if, for any other reason, the Adviser anticipates favorable
movements in such rates.

While the holding of currencies will permit a Fund to take advantage of
favorable movements in the applicable exchange rate, it also exposes the Fund to
risk of loss if such rates move in a direction adverse to a Fund's position.
Such losses could also adversely affect a Fund's hedging strategies. Certain tax
requirements may limit the extent to which a Fund will be able to hold
currencies.

RESTRICTIONS ON THE USE OF OPTIONS AND FUTURES: In order to assure that a Fund
will not be deemed to be a "commodity pool" for purposes of the Commodity
Exchange Act, regulations of the CFTC require that a Fund enter into
transactions in Futures Contracts and Options on Futures Contracts only (i) for
bona fide hedging purposes (as defined in CTFC regulations), or (ii) for
non-hedging purposes, provided that the aggregate initial margin and premiums on
such non-hedging positions does not exceed 5% of the liquidation value of the
Fund's assets. In addition, a Fund must comply with the requirements of various
state securities laws in connection with such transactions.

Each Fund has adopted the additional policy that it will not enter into a
Futures Contract if, immediately thereafter, the value of securities and other
obligations underlying all such Futures Contracts would exceed 50% of the value
of the Fund's total assets. Moreover, each Fund will not purchase put and call
options if, as a result, more than 5% of its total assets would be invested in
such options.

When a Fund purchases a Futures Contract, an amount of cash and cash equivalents
will be deposited in a segregated account with a Fund's custodian so that the
amount so segregated will at all times equal the value of the Futures Contract,
thereby insuring that the leveraging effect of such Futures is minimized.

SWAPS AND RELATED TRANSACTIONS: The Worldwide Fund, the Emerging Markets Fund
and the Core Plus Fund may enter into interest rate swaps, currency swaps and
other types of available swap agreements, such as caps, collars and floors.

Swap agreements may be individually negotiated and structured to include
exposure to a variety of different types of investments or market factors.
Depending on their structure, swap agreements may increase or decrease a Fund's
exposure to long or short-term interest rates (in the U.S. or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors such as securities prices or inflation rates. Swap agreements can take
many different forms and are known by a variety of names. A Fund is not limited
to any particular form or variety of swap agreement if MFS determines it is
consistent with the Fund's investment objective and policies.

A Fund will maintain cash or appropriate liquid assets with its custodian to
cover its current obligations under swap transactions. If a Fund enters into a
swap agreement on a net basis (i.e., the two payment streams are netted out,
with the Fund receiving or paying, as the case may be, only the net amount of
the two payments), the Fund will maintain cash or liquid assets with its
Custodian with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If a Fund enters into a swap agreement
on other than a net basis, it will maintain cash or liquid assets with a value
equal to the full amount of the Fund's accrued obligations under the agreement.

The most significant factor in the performance of swaps, caps, floors and
collars is the change in the specific interest rate, currency or other factor
that determines the amount of payments to be made under the arrangement. If MFS
is incorrect in its forecasts of such factors, the investment performance of a
Fund would be less than what it would have been if these investment techniques
had not been used. If a swap agreement calls for payments by a Fund, the Fund
must be prepared to make such payments when due. In addition, if the
counter-party's creditworthiness declined, the value of the swap agreement would
be likely to decline, potentially resulting in losses. If the counterparty
defaults, a Fund's risk of loss consists of the net amount of payments that the
Fund is contractually entitled to receive. Each Fund anticipates that it will be
able to eliminate or reduce its exposure under these arrangements by assignment
or other disposition or by entering into an offsetting agreement with the same
or another counterparty.

INDEXED SECURITIES: The Emerging Markets Fund and the Core Plus Fund may
purchase securities whose prices are indexed to the prices of foreign
currencies, interest rates, commodities, securities 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. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed securities
may be positively or negatively indexed; that is, their maturity value may
increase when the specified currency value increases, resulting in a security
that performs similarly to a foreign-denominated instrument, or their maturity
value may decline when foreign currencies increase, resulting in a security
whose price characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values of a
number of different foreign currencies relative to each other.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their value may decline
substantially if the issuer's creditworthiness deteriorates.

INVESTMENT RESTRICTIONS. Each Fund has adopted the following restrictions which
cannot be changed without the approval of the holders of a majority of that
Fund's shares (which, as used in this Statement of Additional Information, means
the lesser of (i) more than 50% of its outstanding shares, or (ii) 67% or more
of its outstanding shares present at a meeting at which holders of more than 50%
of its outstanding shares are represented in person or by proxy):

Each Fund except the Worldwide Fund and the Emerging Equities Fund may not:

(1) borrow amounts in excess of 33 1/3% of its assets including amounts
borrowed;

(2) underwrite securities issued by other persons except insofar as the 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 Currencies and any
other type of option, and Futures 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
Currencies and any other type of option, and Futures 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, Options on Futures Contracts, Options on Stock
Indices, Options on Foreign Currencies), Forward Contracts, Futures Contracts
and swap and collateral arrangements with respect to initial and variation
margin are not deemed to be the issuance of a senior security;

(5) make loans to other persons. For these purposes, the purchase of
short-term commercial paper, the purchase of a portion or all of an issue of
debt securities, the lending of portfolio securities, or the investment of a
Fund's assets in repurchase agreements, shall not be considered the making of
a loan; or

(6) purchase any securities of an issuer of a particular industry if, as a
result, 25% or more of its gross assets would be invested in securities of
issuers whose principal business activities are in the same industry (except
obligations issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and repurchase agreements collateralized by such
obligations).

In addition, each Fund except the Worldwide Fund and the Emerging Equities Fund
has adopted the following nonfundamental policies which may be changed without
shareholder approval. Each Fund will not:

(1) invest in illiquid investments, including securities subject to legal or
contractual restrictions on resale or for which there is no readily available
market (e.g., trading in the security is suspended, or, in the case of
unlisted securities, where no market exists) if more than 15% of the 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 Securities Act of
1933, as amended, 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) purchase securities issued by any other investment company in excess of
the amount permitted by the 1940 Act, except when such purchase is part of a
plan of merger or consolidation;

(3) purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the Trust,
or is an officer or a director of the investment adviser of the Fund, if one
or more of such persons also owns beneficially more than 0.5% of the
securities of such issuer, and such persons owning more than 0.5% of such
securities together own beneficially more than 5% of such securities;

(4) purchase any securities or evidences of interest therein on margin,
except that each Fund may obtain such short-term credit as may be necessary
for the clearance of any transaction and except that each Fund, may make
margin deposits in connection with any type of option (including Options on
Futures Contracts, Options, Options on Foreign Currencies and Options on
Stock Indices) and Futures Contracts;

(5) sell any security which a Fund does not own unless by virtue of its
ownership of other securities the Fund has at the time of sale a right to
obtain securities without payment of further consideration equivalent in kind
and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions;

(6) invest more than 5% of its gross assets in companies which, including
predecessors, controlling persons, sponsoring entities, general partners and
guarantors, have a record of less than three years' continuous operation or
relevant business experience;

(7) pledge, mortgage or hypothecate in excess of 33 1/3% of its gross
assets. For purposes of this restriction, collateral arrangements with respect
to any type of option (including Options on Futures Contracts, Options and
Options on Foreign Currencies and Options on Stock Indices), Futures Contracts
and payments of initial and variation margin in connection therewith, are not
considered a pledge of assets;

(8) borrow, except as a temporary measure for extraordinary or emergency
purposes;

(9) purchase or sell any put or call option or any combination thereof,
provided that this shall not prevent (a) the purchase, ownership, holding or
sale of (i) warrants where the grantor of the warrants is the issuer of the
underlying securities or (ii) put or call options or combinations thereof with
respect to securities, indexes of securities, Options, Options on Futures
Contracts, Options on Foreign Currencies or (b) the purchase, ownership,
holding or sale of contracts for the future delivery of securities or
currencies; or

(10) invest for the purpose of exercising control or management.

The Emerging Equities Fund may not:
(1) borrow amounts in excess of 5% of its gross assets, and then only as a
temporary measure for extraordinary purposes, or pledge, mortgage or
hypothecate an amount of its assets taken at market value which would exceed
15% of its gross assets, in each case taken at the lower of cost or market
value. For the purpose of this restriction, collateral arrangements with
respect to options, Futures Contracts, Options on Futures Contracts, Forward
Contracts, and payments of initial and variation margin in connection
therewith are not considered a pledge of assets;

(2) underwrite securities issued by other persons except insofar as the Fund
may technically be deemed an underwriter under the Securities Act of 1933 in
selling a portfolio security;

(3) concentrate investments in any particular industry, but if it is deemed
appropriate for the attainment of the Fund's investment objective, up to 25%
of the Fund's assets, at market value at the time of each investment, may be
invested in any one industry;

(4) purchase or sell real estate (including limited partnership interests
but excluding securities of companies, such as real estate investment trusts,
which deal in real estate or interests therein) or mineral leases, commodities
or commodity contracts (except for options, Futures Contracts, Options on
Futures Contracts and Forward Contracts) in the ordinary course of its
business. The Fund reserves the freedom of action to hold and to sell real
estate or mineral leases, commodities or commodity contracts acquired as a
result of the ownership of securities. The Fund will not purchase securities
for the purpose of acquiring real estate or mineral leases, commodities or
commodity contracts (except for options, Futures Contracts, Options on Futures
Contracts and Forward Contracts);

(5) make loans to other persons except that the Fund may enter into
repurchase agreements. Not more than 15% of the Fund's total assets will be
invested in repurchase agreements maturing in more than seven days. Subject to
the limitation set forth in the policies below, the Fund may purchase a
portion of an issue of debt securities of types commonly distributed to
financial institutions. For these purposes the purchase of short-term
commercial paper or a portion of an issue of debt securities which are part of
an issue to the public shall not be considered the making of a loan;

(6) purchase the securities of any issuer if such purchase, at the time
thereof, would cause more than 5% of the Fund's total assets taken at market
value to be invested in the securities of such issuer, other than U.S.
Government securities;

(7) purchase voting securities of any issuer if such purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of
such issuer to be held by the Fund;

(8) invest for the purpose of exercising control or management;

(9) purchase securities issued by any other registered investment company or
registered investment trust except by purchase in the open market where no
commission or profit to a sponsor or dealer results from such purchase other
than the customary broker's commission, or except when such purchase, though
not made in the open market, is part of a plan of merger or consolidation;
provided, however, that the Fund shall not purchase the securities of any
investment company or investment trust if such purchase at the time thereof
would cause more than 10% of the Fund's total assets, taken at market value,
to be invested in the securities of such issuer; and provided, further, that
the Fund shall not purchase securities issued by any open-end investment
company;

(10) purchase or retain any securities of an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the Trust,
or is a member, officer or Director of the Adviser, if after the purchase of
the securities of such issuer by the Fund one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities, or both, all
taken at market value, of such issuer, and such persons owning more than 1/2
of 1% of such shares or securities together own beneficially more than 5% of
such shares or securities, or both, all taken at market value;

(11) purchase any securities or evidences of interest therein on margin,
except that the Fund may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities and except that the Fund
may make margin deposits in connection with options, Futures Contracts,
Options on Futures Contracts and Forward Contracts;

(12) sell any security which the Fund does not own unless by virtue of its
ownership of other securities the Fund has at the time of sale a right to
obtain securities without payment of further consideration equivalent in kind
and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions; or

(13) issue any senior securities except as permitted by the Investment
Company Act of 1940, as amended (the "1940 Act").

In addition, the Emerging Equities Fund has adopted the following non-
fundamental investment policies which may be changed without shareholder
approval. The Fund will not:

(1) Invest in securities which are 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, market makers do not exist or will not entertain bids or offers)
unless the Board of Trustees has determined that such securities are liquid
based upon trading markets for the specific security, or repurchase agreements
maturing in more than seven days, if more than 15% of the Fund's assets (taken
at market value) would be invested in such securities or such repurchase
agreements;

(2) Invest more than 20% of its total assets in foreign securities
(excluding American Depositary Receipts);

(3) Invest more than 5% of the Fund's net assets in warrants and not more
than 2% of the Fund's net assets, in warrants which are not listed on the New
York or American Stock Exchange; or

(4) Invest more than 5% of its assets in companies which, including their
respective predecessors, have a record of less than three years' continuous
operation.

The Worldwide Fund may not:
(1) Borrow amounts in excess of 10% of its gross assets, and then only as a
temporary measure for extraordinary or emergency purposes, or pledge, mortgage
or hypothecate its assets (taken at market value) to an extent greater than 33
1/3% of its gross assets, in each case taken at the lower of cost or market
value and subject to a 300% asset coverage requirement (for the purpose of
this restriction, collateral arrangements with respect to Options, Futures
Contracts, Options on Futures Contracts, Forward Contracts and Options on
Foreign Currencies and payments of initial and variation margin in connection
therewith are not considered a pledge of assets);

(2) Underwrite securities issued by other persons except insofar as the
Trust may technically be deemed an underwriter under the Securities Act of
1933 in selling a portfolio security;

(3) Invest more than 25% of the market value of its total assets in
securities of issuers in any one industry;

(4) Purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities (except gold, and then
subject to a limit of 10% of its gross assets) or commodity contracts (except
gold futures/forward contracts, Forward Contracts, Futures Contracts, Options,
Options on Futures Contracts and Options on Foreign Currencies) in the
ordinary course of its business. The Fund reserves the freedom of action to
hold and to sell real estate acquired as a result of the ownership of
securities;

(5) Make loans to other persons except through the lending of its portfolio
securities in accordance with, and to the extent permitted by, its investment
objective and policies and except through repurchase agreements. Not more than
15% of the Fund's assets will be invested in repurchase agreements maturing in
more than seven days. For these purposes the purchase of commercial paper or a
portion of an issue of debt securities shall not be considered the making of a
loan;

(6) Purchase the securities of any issuer if such purchase, at the time
thereof, would cause more than 5% of its total assets (taken at market value)
to be invested in the securities of such issuer, other than securities issued
or guaranteed by the U.S. Government, any foreign government or any of their
agencies or instrumentalities;

(7) Purchase voting securities of any issuer if such purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of
such issuer to be held by the Fund; or purchase securities of any issuer if
such purchase at the time thereof would cause more than 10% of any class of
securities of such issuer to be held by the Fund. For this purpose all
indebtedness of an issuer shall be deemed a single class and all preferred
stock of an issuer shall be deemed a single class;

(8) Invest for the purpose of exercising control or management;

(9) Purchase securities issued by any closed-end investment company except
by purchase in the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open market,
is part of a plan of merger or consolidation; provided, however, that the Fund
shall not purchase such securities if such purchase at the time thereof would
cause more than 10% of its total assets (taken at market value) to be invested
in the securities of such issuers, or more than 3% of the total outstanding
voting securities of any closed-end investment company to be held by the Fund.
The Fund shall not purchase securities issued by any open-end investment
company;

(10) Invest more than 5% of its assets in companies which, including
predecessors, have a record of less than three years' continuous operation;

(11) Purchase or retain in its portfolio any securities issued by an issuer
any of whose officers, directors, trustees or security holders is an officer
or Trustee of the Fund, or is a partner, officer, Director or Trustee of the
Adviser, if after the purchase of the securities of such issuer by the Fund
one or more of such persons owns beneficially more than 1/2 of 1% of the
shares or securities, or both, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more
than 5% of such shares or securities, or both;

(12) Purchase any securities, gold or evidences of interest therein on
margin, except that the Fund may obtain such short-term credit as may be
necessary for the clearance of any transactions and except that the Fund may
make margin deposits in connection with Futures Contracts, Options on Futures
Contracts, Options and Options on Foreign Currencies; or

(13) Sell any security which the Fund does not own unless by virtue of its
ownership of other securities the Fund has at the time of sale a right to
obtain securities without payment of further consideration equivalent in kind
and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions.

In addition, the Worldwide Fund has adopted the following non-fundamental
investment policy which may be changed without shareholder approval. The Fund
will not:

(1) Invest in securities which are 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, market makers do not exist or will not entertain bids or offers),
unless the Board of Trustees has determined that such securities are liquid
based upon trading markets for a specific security, if more than 15% of the
Fund's assets (taken at market value) would be invested in such securities.

3. MANAGEMENT OF THE FUNDS
The Trust's Board of Trustees provides broad supervision over the affairs of the
Trust. The Adviser is responsible for the investment management of each Fund's
assets, and the officers of the Trust are responsible for its operations. The
Trustees and officers are listed below, together with their principal
occupations during the past five years. (Their titles may have varied during
that period.)

TRUSTEES
A. KEITH BRODKIN,* Chairman and President
Massachusetts Financial Services Company, Chairman and Director

NELSON J. DARLING, JR.
Director or Trustee of several corporations or trusts, including Eastern
Enterprises (diversified holding company)
Address: 18 Tremont Street, Boston, Massachusetts

WILLIAM R. GUTOW
Vice Chairman, Capitol Entertainment Management Company
Address: 3 Ruedulac, Dallas, Texas

OFFICERS
W. THOMAS LONDON,* Treasurer
Massachusetts Financial Services Company, Senior Vice President and Assistant
Treasurer

STEPHEN E. CAVAN,* Secretary and Clerk
Massachusetts Financial Services Company, Senior Vice President, General
Counsel and Assistant Secretary

JAMES O. YOST,* Assistant Treasurer
Massachusetts Financial Services Company, Vice President

JAMES R. BORDEWICK, JR.,* Assistant Secretary
Massachusetts Financial Services Company, Vice President and Associate General
Counsel
- ----------
*"Interested persons" (as defined in the 1940 Act) of the Adviser, whose address
is 500 Boylston Street, Boston, Massachusetts 02116.

Each Trustee and officer holds comparable positions with certain MFS affiliates
or with certain other funds of which MFS or a subsidiary of MFS is the
investment adviser or distributor.

As of October 31, 1995, all Trustees and officers as a group owned less than 1%
of the Worldwide Fund, the Emerging Equities Fund and the Emerging Markets Fund.

Each Fund pays the compensation of any Trustee who is not affiliated with the
Adviser (who will receive from $1,250 to $1,925 annually depending on attendance
at meetings, plus fees for meetings of special committees, such as the Audit
Committee).

Set forth in Exhibit A hereto is certain information concerning cash
compensation paid to Trustees.

As of September 30, 1995, the following shareholders owned over 5% of the
outstanding shares of the Worldwide Fund: the Massachusetts Financial Services
Company Pension Plan, a defined benefit plan administered under the provisions
of the Trust Agreement for Massachusetts Financial Services Company Retirement
Plans, a trust established under the laws of The Commonwealth of Massachusetts,
500 Boylston Street, Boston, MA, owned 7.12% of the outstanding shares of the
Fund; the Catholic Foreign Mission Society Common Fund, c/o MFS Asset
Management, Inc., 500 Boylston St., Boston, MA, owned 5.60% of the outstanding
shares of the Fund; the Archdiocesan Joint Perpetual Care Fund, c/ o MFS Asset
Management, Inc., 500 Boylston St., Boston, MA, owned 5.08% of the outstanding
shares of the Fund; the Beth Israel Hospital Endowment Fund, c/o MFS Asset
Management, Inc., 500 Boylston St., Boston, MA, owned 5.69% of the outstanding
shares of the Fund; the Beth Israel Hospital Pooled Capital Fund, c/o MFS Asset
Management, Inc., 500 Boylston St., Boston, MA, owned 12.87% of the outstanding
shares of the Fund; The Defined Benefit Plan of Cooperative Banks of Employees
Retirement Association, c/o MFS Asset Management, Inc., 500 Boylston St.,
Boston, MA, owned 9.31% of the outstanding shares of the Fund; Palmer & Dodge
Qualified Plans Fund, c/o MFS Asset Management, Inc., 500 Boylston St., Boston,
MA, owned 6.02% of the outstanding shares of the Fund; The Common Balanced Fund
of the Joint Investment Trust of Christian Church Foundation, Inc., c/o MFS
Asset Management, Inc., 500 Boylston St., Boston, MA owned 13.61% of the
outstanding shares of the Fund; Elkem Metals Company, P.O. Box 266, Pittsburg,
PA, owned 14.03% of the outstanding shares of the Fund. Bost & Co., Affiliated
Publications, c/o One Cabot Road, Medford, MA, owned 10.17% of the outstanding
shares of the Fund and Dallas Area Rapid Transit Master Trust, P.O. Box 660197,
Dallas TX, owned 5.94% of the outstanding shares of the Fund.

As of September 30, 1995, the following shareholders owned over 5% of the
outstanding shares of the Emerging Equities Fund: the University of Miami Growth
Pool, c/o MFS Asset Management, Inc., 500 Boylston St., Boston, MA, owned 6.19%
of the outstanding shares of the Fund; The Jewish Community Federation of
Cleveland, c/o MFS Asset Management, Inc., 500 Boylston St., Boston, MA, owned
5.14% of the outstanding shares of the Fund; Dakota Clinic Ltd. Retirement Plan,
c/o MFS Asset Management, Inc., 500 Boylston St., Boston, MA, owned 12.4% of the
outstanding shares of the Fund; and Rosemount Inc. Master Investment Trust, 733
Marquette Avenue, Minneapolis, MN, owned 21.83% of the outstanding shares of the
Fund.

The Trust's Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, unless, as to liabilities to the Trust or its shareholders, it is finally
adjudicated 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 by a court or other body approving the
settlement or other disposition, or by a reasonable determination based upon a
review of readily available facts, by vote of a majority of disinterested
Trustees or in a written opinion of independent counsel, that such officers and
Trustees have not engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties.

INVESTMENT ADVISER
MFS and its predecessor organizations have a history of money management dating
from 1924. MFS is a wholly owned subsidiary of Sun Life Assurance Company of
Canada (U.S.) which in turn is a wholly owned subsidiary of Sun Life Assurance
Company of Canada. The Prospectus contains information with respect to the
management of the Adviser and other investment companies for which MFS serves as
investment adviser.

The Adviser manages the assets of the Worldwide Fund and the Emerging Equities
Fund pursuant to Investment Advisory Agreements dated August 7, 1992,
respectively, the Emerging Markets Core Plus Fund pursuant to an Investment
Advisory Agreement dated August 1, 1995 and each of the Core Plus Fund, the
Research Fund, the Mid-Cap Fund and the International Equity Fund pursuant to an
Investment Advisory Agreement, dated November 30, 1995, (collectively, the
"Advisory Agreements"). The Adviser provides each Fund with overall investment
advisory and administrative services, as well as general office facilities.
Subject to such policies as the Trustees may determine, the Adviser makes
investment decisions for each Fund. For these services and facilities, the
Adviser receives a management fee computed and paid monthly equal on an
annualized basis to 0.65% of the Worldwide Fund's average daily net assets
(prior to August 1, 1995, the Adviser had voluntarily waived its management fee
and/or paid expenses of the Fund in order to maintain total expenses for the
Fund at no more than 0.75% of the Fund's average daily net assets), 0.75% of the
Emerging Equities Fund's average daily net assets, 0.85% of the Emerging Markets
Fund's average daily net assets, 0.45% of the Core Plus Fund's average daily net
assets, 0.60% of the Research Fund's average daily net assets, 0.60% of the
Mid-Cap Fund's average daily net assets and 0.75% of the International Equity
Fund's average daily net assets.

For the period from the commencement of operations on September 30, 1992 to June
30, 1993 and for the fiscal year ended June 30, 1994 and June 30, 1995, MFS
received management fees under the Advisory Agreement of $54,122 (before a
reduction of $49,073), $243,770 (before a reduction of $153,944), and $395,873
(before a reduction of $222,036), respectively for the Worldwide Fund.

For the period from the commencement of operations on June 16, 1993 to June 30,
1993, and for the fiscal year ended June 30, 1994 and June 30, 1995, MFS
received management fees under the Advisory Agreement of $743 (before a
reduction of $743), and $127,028 (before a reduction of $127,028), and, $540,536
(before a reduction of $168,512), respectively for the Emerging Equities Fund.

MFS pays the compensation of the Trust's officers and any Trustee who is
affiliated with the Adviser. The Adviser also furnishes at its own expense all
necessary administrative services, including office space, equipment, clerical
personnel, investment advisory facilities, and all executive and supervisory
personnel necessary for managing each Fund's investments, effecting each Fund's
portfolio transactions and, in general, administering the Funds' affairs.

The Advisory Agreements of the Worldwide Fund and the Emerging Equities Fund
will remain in effect until August 1, 1996, while the Advisory Agreement of the
Emerging Markets Fund will remain in effect until August 1, 1997. The Advisory
Agreements of each of the Core Plus Fund, the Research Fund, the Mid- Cap Fund
and the International Equity Fund will remain in effect until August 1, 1997.
Each Agreement will continue in effect thereafter only if such continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of each Fund's outstanding voting securities (as defined in "Investment
Policies and Restrictions -- Investment Restrictions") and, in either case, by a
majority of the Trustees who are not parties to the Advisory Agreements or
interested persons of any such party. Each Advisory Agreement terminates
automatically if it is assigned and may be terminated without penalty by vote of
a majority of each Fund's outstanding voting securities (as defined in
"Investment Policies and Restrictions -- Investment Restrictions") or by either
party on not more than 60 days' nor less than 30 days' written notice. Each
Advisory Agreement further provides that MFS may render services to others. Each
Advisory Agreement also provides that neither the Adviser nor its personnel
shall be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of each 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 Agreements.

CUSTODIAN
State Street Bank and Trust Company (the "Custodian") is the custodian of each
Fund's assets. The Custodian's responsibilities include safekeeping and
controlling each Fund's cash and securities, handling the receipt and delivery
of securities, determining income and collecting interest and dividends on each
Fund's investments, maintaining books of original entry for portfolio and fund
accounting and other required books and accounts, and calculating the daily net
asset value of shares of each Fund. The Custodian does not determine the
investment policies of each Fund or decide which securities each Fund will buy
or sell. Each Fund may, however, invest in securities, including repurchase
agreements, issued by the Custodian and may deal with the Custodian as principal
in securities transactions. The Trustees have reviewed and approved as in the
best interests of each Fund except the Emerging Equities Fund and the Worldwide
Fund and its shareholders subcustodial arrangements with the Custodian for
securities of those Funds held outside the United States. The Trustees have
reviewed and approved, as in the best interests of the Emerging Equities Fund
and the Worldwide Fund and their shareholders subcustodial arrangements with the
Chase Manhattan Bank N.A. for securities of those Funds held outside the United
States. The Custodian also acts as the dividend disbursing agent of each Fund.
The Custodian has contracted with the Adviser for the Adviser to perform certain
accounting functions related to option transactions for which the Adviser
receives remuneration on a cost basis.

SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc. (the "Shareholder Servicing Agent"), a wholly owned
subsidiary of MFS, is the Trust's shareholder servicing agent, pursuant to a
Shareholder Servicing Agreement, dated November 30, 1995 (the "Agency
Agreement"). The Shareholder Servicing Agent's responsibilities under the Agency
Agreement include administering and performing transfer agent functions and
keeping records in connection with the issuance, transfer and redemption of the
shares of each Fund. For these services, the Shareholder Servicing Agent will
receive a fee based on the net assets of each Fund computed and paid monthly. In
addition, the Shareholder Servicing Agent will be reimbursed by each Fund for
certain expenses incurred by the Shareholder Servicing Agent on behalf of the
Fund. State Street Bank and Trust Company, the dividend and distribution
disbursing agent of each Fund, has contracted with the Shareholder Servicing
Agent to perform certain dividend and distribution disbursing functions for each
Fund. For the fiscal year ended June 30, 1995, the Worldwide Fund paid the
Shareholder Servicing Agent $2,442 under the Agency Agreement. For the fiscal
year ended June 30, 1995, the Emerging Equities Fund paid the Shareholder
Servicing Agent $3,612 under the Agency Agreement.

DISTRIBUTOR
MFD, a wholly owned subsidiary of MFS, serves as the distributor for the
continuous offering of shares of the Trust pursuant to a Distribution Agreement
dated as of June 15, 1994 (the "Distribution Agreement").

The Distribution Agreement will remain in effect until June 15, 1996 and will
continue in effect thereafter only if such continuance is specifically approved
at least annually by the Board of Trustees or by vote of a majority of the
Trust's shares (as defined in "Investment Restrictions") and in either case, by
a majority of the Trustees who are not parties to such 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.

4. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Funds are made by
employees of the Adviser who are appointed and supervised by its senior
officers. Changes in each Fund's investments are reviewed by its Board of
Trustees. Each Fund's portfolio manager or management committee may serve other
clients of the Adviser or any subsidiary of the Adviser in a similar capacity.

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
United States 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 each Advisory Agreement, be bought from or sold to dealers who have furnished
statistical, research and other information or services to the Adviser. At
present no arrangements for the recapture of commission payments are in effect.

Consistent with the foregoing primary consideration, the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. (the "NASD") and such
other policies as the Trustees may determine, the Adviser may consider sales of
shares of the Trust and of the other investment company clients of MFD, the
principal underwriter of certain funds in the MFS Family of Funds (the "MFS
Funds"), as a factor in the selection of broker-dealers to execute the Trust's
portfolio transactions.

Under the Advisory Agreements and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, the Adviser may cause a Fund to pay a
broker-dealer which provides brokerage and research services to the Adviser an
amount of commission for effecting a securities transaction for the Fund in
excess of the amount other broker-dealers would have charged for the transaction
if the Adviser determines in good faith that the greater commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of either a particular
transaction or their respective overall responsibilities to the Fund or to their
other clients. Not all of such services are useful or of value in advising a
Fund.

The term "brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing, or selling securities,
and the availability of securities or of purchasers or sellers of securities;
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto, such as clearance and settlement.

Although commissions paid on every transaction will, in the judgment of the
Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of a
Fund and the Adviser's other clients in part for providing advice as to the
availability of securities or of purchasers or sellers of securities and
services in effecting securities transactions and performing functions
incidental thereto, such as clearance and settlement.

Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") to the Adviser for no consideration other
than brokerage or underwriting commissions. Securities may be bought or sold
through such broker-dealers, but at present, unless otherwise directed by a
Fund, a commission higher than one charged elsewhere will not be paid to such a
firm solely because it provided such Research.

In certain instances there may be securities which are suitable for a Fund's
portfolio as well as for that of one or more of the other clients of the Adviser
or any subsidiary of the Adviser. Investment decisions for a Fund and for such
other clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed 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 a Fund is
concerned. In other cases, however, the Adviser believes that a Fund's ability
to participate in volume transactions will produce better executions for the
Fund.

5. TAX STATUS
Each Fund intends to elect or has elected to be treated and to qualify each year
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, including requirements as to the nature of the Fund's gross
income, the amount of Fund distributions, and the composition and holding period
of the Fund's portfolio assets. Because each Fund intends to distribute all of
its net investment income and net realized capital gains to shareholders in
accordance with the timing and certain other requirements imposed by the Code,
it is not expected that any Fund will be required to pay any federal income or
excise taxes, although a Fund's foreign-source income may be subject to foreign
withholding taxes. If a Fund should fail to qualify as a "regulated investment
company" in any year, that Fund would incur a regular corporate federal income
tax upon its taxable income and Fund distributions would generally be taxable as
ordinary dividend income to shareholders.

Shareholders of each Fund normally will have to pay federal income taxes, and
any state or local taxes, on the dividends and capital gain distributions they
receive from the Fund. Dividends from income, including certain foreign currency
gains, and any distributions from net short-term capital gains (whether received
in cash or reinvested in additional shares) are taxable to each Fund's
shareholders as ordinary income for federal income tax purposes. Because the
Core Plus Fund expects to earn primarily interest income, it is expected that
none of that Fund's dividends will qualify for the dividends received deduction
for corporations. A portion of the ordinary income dividends paid by each Fund
other than the Core Plus Fund 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 shareholders is subject to certain limitations, and
deducted amounts may be subject to the alternative minimum tax or result in
certain basis adjustments. Distributions of net capital gains (i.e., the excess
of the net long-term capital gains over the short-term capital losses), whether
received in cash or invested in additional shares, are taxable to each Fund's
shareholders as long-term capital gains regardless of how long they have owned
shares in the Fund. Fund dividends declared in October, November or December and
paid the following January will be taxable to shareholders as if received on
December 31 of the year in which they are declared.

Any dividend or distribution will have the effect of reducing the per share net
asset value of shares in the paying Fund by the amount of the dividend or
distribution. Shareholders purchasing shares shortly before the record date of
any distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.

In general, any gain or loss realized upon a taxable disposition of shares of a
Fund by a shareholder that holds such shares as a capital asset will be treated
as long-term capital gain or loss if the shares have been held for more than
twelve months and otherwise as a short-term capital gain or loss. However, any
loss realized upon a disposition of shares in a Fund held for six months or less
will be treated as a long-term capital loss to the extent of any distributions
of net capital gain made with respect to those shares. Any loss realized upon a
redemption of shares may also be disallowed under rules relating to wash sales.
Gain may be increased (or loss reduced) upon a redemption of shares within
ninety days after their purchase followed by any purchase (including purchases
by exchanges or by reinvestment) of that Fund or of another MFS Fund (or other
shares of an MFS Fund generally sold subject to a sales charge) without payment
of an additional sales charge.

Any transactions in options, Futures Contracts and Forward Contracts undertaken
by a Fund will be subject to special tax rules that may affect the amount,
timing and character of distributions to shareholders. For example, certain
positions held by a Fund on the last business day of each taxable year will be
marked to market (i.e., treated as if closed out) on such day, and any gain or
loss associated with such positions will be treated as 60% long-term and 40%
short-term capital gain or loss. Certain positions held by a Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio may constitute "straddles," and may be subject to special tax rules
that may 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. Each Fund will limit its activities in options, Futures Contracts,
Forward Contracts, and Swaps and related transactions to the extent necessary to
meet the requirements of Subchapter M of the Code.

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.

Each Fund's current dividend 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. Each
Fund's investment in zero coupon bonds and certain securities purchased at a
market discount will cause it to realize income prior to the receipt of cash
payments with respect to those securities. In order to distribute this income
and avoid a tax on the Fund, that 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.

Special tax considerations apply with respect to foreign investments of a Fund.
For example, foreign exchange gains and losses (including exchange gains and
losses on Forward Contracts) realized by a Fund will generally be treated as
ordinary income or losses. Use of foreign currencies and Forward Contracts for
nonhedging purposes and investment by a Fund in certain "passive foreign
investment companies" may be limited in order to avoid imposition of a tax on
that Fund. Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
may entitle a Fund to a reduced rate of tax or an exemption from tax on such
income; the Funds intend to qualify for treaty reduced rates where available. It
is impossible to determine the effective rate of foreign tax in advance since
the amount of each Fund's assets to be invested within various countries is not
known.

If a Fund holds more than 50% of its assets in securities of foreign
corporations at the close of its taxable year, the Fund may elect to "pass
through" to that Fund's shareholders foreign income taxes paid. If the Fund so
elects, shareholders will be required to treat their pro rata portion of the
foreign income taxes paid by the Fund as part of the amounts distributed to them
by the Fund and thus includible 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 be able (subject to such limitations) to claim a credit but not
a deduction.

Dividends and certain other payments to non-exempt persons who are not citizens
or residents of the United States ("Non-U.S. Persons") are generally subject to
U.S. tax withholding at the rate of 30%. Each Fund intends to withhold U.S.
Federal income tax at the rate of 30% on any taxable dividends and other
payments made to Non-U.S. Persons that are subject to such withholding,
regardless of whether a lower treaty rate may be permitted. Any amounts
overwithheld may be recovered by such persons by filing a claim for refund with
the U.S. Internal Revenue Service within the time period applicable to such
claims. Distributions received from a Fund by Non-U.S. Persons may also be
subject to tax under the laws of their own jurisdictions. Each Fund is also
required in certain circumstances to apply backup withholding of 31% on taxable
dividends and redemption proceeds paid to any shareholder (including a Non-U.S.
Person) who does not furnish to the Fund certain information and certifications
or who is otherwise subject to backup withholding. However, backup withholding
will not be applied to payments which have had 30% withholding taken.

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

6. DETERMINATION OF NET ASSET VALUE AND PERFORMANCE

NET ASSET VALUE -- The net asset value of shares of each Fund is determined each
day during which the New York Stock Exchange (the "Exchange") is open for
trading. (As of the date of this Statement of Additional Information, such
Exchange is open for trading every week day except for the following holidays or
the days on which they are observed: New Year's Day; President's Day; Good
Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and
Christmas Day.) This determination of net asset value of shares of a Fund is
made once during each such day as of the close of regular trading on such
Exchange by deducting the amount of the Fund's liabilities from the value of its
assets and dividing the difference by the number of its shares outstanding.
Bonds and other fixed income securities (other than short-term obligations but
including listed issues) in a Fund's portfolio are valued on the basis of
valuations furnished by a pricing service which utilizes both dealer-supplied
valuations and electronic data processing techniques which take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon quoted
prices or exchange or over-the-counter prices, since such valuations are
believed by the Board of Trustees to reflect the fair value of such securities.
Use of the pricing service has been approved by the Board of Trustees. Forward
Contracts will be valued using a pricing model taking into consideration market
data from an external pricing source. All other securities, futures contracts
and listed options in a Fund's portfolio (other than short-term obligations) for
which the principal market is one or more securities or commodities exchanges
(whether domestic or foreign) will be valued at the last reported sale price or
at the settlement price prior to the determination (or if there has been no
current sale, at the closing bid price) on the primary exchange on which such
securities, Futures Contracts or options are traded; but, if a securities
exchange is not the principal market for securities, such securities will, if
market quotations are readily available, be valued at current bid prices unless
such securities are reported on the NASDAQ system, in which case they are valued
at the last sale price or, if no sales occurred during the day, at the last
quoted bid price. Short-term securities with a remaining maturity in excess of
60 days will be valued upon dealer supplied valuations. Other short-term
obligations are valued at amortized cost, which constitutes fair value as
determined by the Board of Trustees. 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.

Short-term obligations with a remaining maturity in excess of 60 days will be
valued based upon dealer supplied valuations. Other short-term obligations in a
Fund's portfolio are valued at amortized cost, which constitutes fair value as
determined by the Board of Trustees. 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 New York Stock
Exchange. Occasionally, events affecting the values of such securities may occur
between the times at which they are determined and the close of regular trading
on the Exchange which will not be reflected in the computation of a Fund's net
asset value unless the Trustees deem that such event would materially affect the
net asset value in which case an adjustment would be made.

All investments and assets are expressed in U.S. dollars based upon current
currency exchange rates. A share's net asset value is effective for orders
received by the dealer prior to its calculation and received by MFD, each Fund's
distributor, prior to the close of that business day.

TOTAL RATE OF RETURN: Each Fund will calculate its total rate of return for
certain periods by determining the average annual compounded rates of return
over those periods that would cause an investment of $1,000 (made at net asset
value with all distributions reinvested) to reach the value of that investment
at the end of the periods. Each Fund may also calculate total rates of return
which represent aggregate performance over a period or year-by-year performance.
Total rate of return reflects the performance of both principal and income. The
total rate of return for the Worldwide Fund as of June 30, 1995 for the one-year
period and life of fund were 15.10% and 6.91%, respectively. The total rate of
return for the Emerging Equities Fund as of June 30, 1995 for the one-year
period and life of fund were 43.21% and 30.16%, respectively. Total rates of
return would have been lower if certain fee waivers had not been in place.

YIELD: Any yield quotation of a Fund is based on the annualized net investment
income per share of the Fund over a 30-day period. The yield for the Fund is
calculated by dividing the net investment income per share of the Fund earned
during the period by the net asset value per share of the Fund on the last day
of that period. The resulting figure is then annualized. Net investment income
per share is determined by dividing (i) the dividends and interest earned by the
Fund during the period, minus accrued expenses for the period, by (ii) the
average number of Fund shares entitled to receive dividends during the period
multiplied by the net asset value per share on the last day of the period. The
30-day yield calculation for the Worldwide Fund as of June 30, 1995 was 6.38%
including certain fee waivers. The 30-day yield calculation for the Worldwide
Fund as of June 30, 1995 was 6.05% not including certain fee waivers.

PERFORMANCE INFORMATION: Any yield or total rate of return quotation provided by
a Fund should not be considered as representative of the performance of a Fund
in the future since the net asset value of shares of each Fund will vary based
not only on the type, quality and maturities of the securities held in a Fund's
portfolio, but also on changes in the current value of such securities and on
changes in the expenses of a Fund. These factors and possible differences in the
methods used to calculate yields and total rates of return should be considered
when comparing the yield and total rate of return of a Fund to yields and total
rates of return published for other investment companies or other investment
vehicles.

MFS FIRSTS: MFS has a long history of innovations.

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

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

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

-- 1933 -- Massachusetts Investors Trust is the first mutual fund to register
under the Securities Act of 1933 ("Truth in Securities Act" or "Full
Disclosure Act").

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

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

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

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

-- 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.

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

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

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

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

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

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

-- 1993 -- MFS(R) Union Standard Trust is the first fund to invest solely 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.

7. 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) and to
divide or combine the shares into a greater or lesser number of shares without
thereby changing the proportionate beneficial interests in the Trust. The Trust
presently has seven series and reserves the right to create and issue additional
series of shares. Each share of a series represents an equal proportionate
interest in that series with each other share of that series. Shares of each
series participate equally in the earnings, dividends and assets of the
particular series. Shares of each series vote separately to approve investment
advisory agreements or changes in investment restrictions, but shares of all
series vote together in the election of Trustees or selection of accountants.
Should the Trust be liquidated, shareholders of each series would be entitled to
share pro rata in the net assets of their respective series available for
distribution to shareholders.

Shareholders are entitled to one vote for each share held and may vote in the
election of Trustees and on other matters submitted to meetings of shareholders.
Although Trustees are not elected annually by the shareholders, shareholders
have the right under certain circumstances to remove one or more Trustees. No
material amendment may be made to the Declaration of Trust without the
affirmative vote of the holders of a majority of the Trust's outstanding shares
(as defined in "Investment Policies and Restrictions -- Investment
Restrictions"). Shares have no pre-emptive or conversion rights. Shares when
issued are fully paid and non-assessable. The Trust may be terminated (i) upon
the merger or consolidation of the Trust with another organization or upon the
sale of all or substantially all of its assets, if approved by the vote of the
holders of two-thirds of the outstanding shares of the Trust, except that if the
Trustees recommend such merger, consolidation or sale, the approval by vote of
the holders of more than 50% of the outstanding shares will be sufficient, (ii)
upon liquidation and distribution of the assets of the Trust or the Fund (as
applicable), if approved by the holders of not less than two-thirds of the
outstanding shares of the Trust or the Fund (as applicable), or (iii) by the
Trustees by written notice to the Trust's shareholders or Fund shareholders (as
applicable). 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 the 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, its shareholders, Trustees, officers, employees and agents 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 willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.

8. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Deloitte & Touche LLP are each Fund's independent auditors providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the SEC.

For the Worldwide Fund the Portfolio of Investments at June 30, 1995, the
Statement of Assets and Liabilities, at June 30, 1995, the Statement of
Operations for the year ended June 30, 1995, the Statement of Changes in Net
Assets for the year ended June 30, 1995, June 30, 1994 and for the period
September 30, 1992 (commencement of operations) to June 30, 1993, the Notes to
the Financial Statements and the Independent Auditors' Report, each of which is
included in the Annual Report to shareholders of the Worldwide Fund, are
incorporated by reference into this Statement of Additional Information and have
been so incorporated in reliance upon the report of Deloitte & Touche LLP,
independent auditors, as experts in accounting and auditing. A copy of the
Worldwide Fund's Annual Report accompanies this Statement of Additional
Information.

For the Emerging Equities Fund the Portfolio of Investments at June 30, 1995,
Statement of Assets and Liabilities, as of June 30, 1995, the related Statement
of Operations for the year then ended June 30, 1995 and the Statement of Changes
in Net Assets and the Financial Highlights for the year ended June 30, 1995,
June 30, 1994 and for the period from June 16, 1993 (commencement of operations)
to June 30, 1993, Notes to the Financial Statements and the Independent
Auditors' Report, each of which is included in the Annual Report to shareholders
of the Emerging Equities Fund, are incorporated by reference into this Statement
of Additional Information and have been so incorporated in reliance upon the
report of Deloitte & Touche LLP, independent Auditors', as experts in accounting
and auditing. A copy of the Emerging Equities Fund's Annual Report accompanies
this Statement of Additional Information.
<PAGE>
EXHIBIT A

TRUSTEE COMPENSATION TABLE
<TABLE>
<CAPTION>
TRUSTEE FEES FROM EACH OF THE
EMERGING MARKETS FIXED INCOME FUND,
TRUSTEE FEES TRUSTEE FEES THE CORE PLUS FUND,
FROM THE FROM THE THE RESEARCH FUND, TOTAL TRUSTEE FEES
WORLDWIDE FIXED EMERGING EQUITIES THE MID-CAP FUND AND THE FROM FUND AND
NAME OF TRUSTEE INCOME FUND<F1> FUND<F1> INTERNATIONAL EQUITY FUND<F2> FUND COMPLEX<F3>
- --------------- --------------- ----------------- ---------------------------------- ------------------
<S> <C> <C> <C> <C>
A. Keith Brodkin ......................... $ 0 $ 0 $ 0 $ 0
Nelson J. Darling, Jr. ................... 2,334 2,334 1,770 10,618
William R. Gutow ......................... 2,334 2,334 1,770 10,618

NOTES:
<FN>
<F1> For fiscal year ending June 30, 1995.
<F2> Estimated, for fiscal year ending June 30, 1996.
<F3> For calendar year ended December 31, 1994. All Trustees served as Trustees of 17 funds advised by MFS (having aggregate net
assets at December 31, 1994 of approximately $143 million).
</TABLE>

<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS PAYABLE BY FUND UPON RETIREMENT<F1>

YEARS OF SERVICE
-----------------------------------------------------------------------
AVERAGE TRUSTEE FEES 3 5 7 10 OR MORE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$2,100 $315 $525 $735 $1,050
2,190 329 548 767 1,095
2,280 342 570 798 1,140
2,370 356 593 830 1,185
2,460 369 615 861 1,230
2,550 383 638 893 1,275

<FN>
<F1> Other funds in the MFS fund complex provide similar retirement benefits to the Trustees.
</TABLE>
<PAGE>
MFS EMERGING MARKETS FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 16, 1995

Assets:
Cash $ 100
Deferred organization expenses 17,600
-------
Total assets $17,700

Liabilities:
Accrued expenses 17,600
-------
Net assets for 10.00 shares of beneficial interest
outstanding $ 100
=======
Net Asset Value, Redemption Price and Offering Price Per Share $ 10.00
=======

NOTES:
(1) The MFS Emerging Markets Core Plus Fund (the "Fund") was organized on May
16, 1995 as a series of MFS Institutional Trust (the "Trust"), a business
trust under the laws of The Commonwealth of Massachusetts. The Trust
consists of three series of shares or funds. The Fund has been inactive
except for matters relating to its organization and registration as a series
of the Trust and the sale of 10 shares of beneficial interest (initial
shares) to Massachusetts Financial Services Company.

(2) Organization expenses are being deferred and will be amortized over five
years. The amount paid by the Fund on any redemption by Massachusetts
Financial Services Company, or any current holder of any Fund's initial
shares, will be reduced by the pro rata portion of any unamortized
organization expenses which the number of initial shares redeemed bears to
the total number of initial shares outstanding immediately prior to such
redemption.
<PAGE>
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street, Boston, MA 02116
(617) 954-5000
(800) 637-8730

DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA 02116
(617) 954-5000

CUSTODIAN AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110

SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc.
500 Boylston Street, Boston, MA 02116
Toll free: (800) 637-8730

MAILING ADDRESS:
P.O. Box 1400, Boston, MA 02107-9906

INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston MA 02110

500 BOYLSTON STREET
BOSTON, MA 02116

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12/95