MFS INSTITUTIONAL TRUST, 485APOS, 1999-08-27

MFS INSTITUTIONAL TRUST
485APOS, 1999-08-27

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<PAGE>

As filed with the Securities and Exchange Commission on August 27, 1999

1933 Act File No. 33-37615
1940 Act File No. 811-6174

==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------

FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 18

AND

REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 22

MFS(R) INSTITUTIONAL TRUST
(Exact Name of Registrant as Specified in Charter)

500 Boylston, Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code: (617) 954-5000
Stephen E. Cavan, Massachusetts Financial Services Company
500 Boylston Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)

|_| immediately upon filing pursuant to paragraph (b)

|_| on [date] pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)

|X| on October 28, 1999 pursuant to paragraph (a)(i)

|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on [date] pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

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

--------------------------
MFS(R) INSTITUTIONAL TRUST
--------------------------
NOVEMBER 1, 1999

PROSPECTUS
- -------------------------------------------------------------------------------

This Prospectus describes each of the 10 funds of the MFS Institutional Trust
(referred to as the Trust):

1. MFS INSTITUTIONAL CORE FIXED INCOME FUND seeks to provide as high a level
of current income as is believed to be consistent with prudent investment
risk; its secondary objective is to seek to protect shareholders' capital
(referred to as the Core Fixed Income Fund).

2. MFS INSTITUTIONAL GLOBAL FIXED INCOME FUND seeks income and capital
appreciation (referred to as the Global Fund).

3. MFS INSTITUTIONAL HIGH YIELD FUND seeks high current income (referred to
as the High Yield Fund).

4. MFS INSTITUTIONAL EMERGING MARKETS DEBT FUND seeks total return (high
current income and long-term growth of capital) (referred to as the
Emerging Markets Fund).

5. MFS INSTITUTIONAL CORE EQUITY FUND seeks long-term growth of capital
generally consistent with that of a diversified large cap portfolio and
income equal to approximately 90% of the dividend yield on the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500") (referred to as the
Core Equity Fund).

6. MFS INSTITUTIONAL RESEARCH FUND seeks long-term growth of capital
(referred to as the Research Fund).

7. MFS INSTITUTIONAL LARGE CAP GROWTH FUND seeks long-term growth of capital
(referred to as the Large Cap Fund).

8. MFS INSTITUTIONAL MID CAP GROWTH FUND seeks long-term growth of capital
(referred to as the Mid Cap Fund).

9. MFS INSTITUTIONAL EMERGING EQUITIES FUND seeks long-term growth of capital
(referred to as the Emerging Equities Fund).

10. MFS INSTITUTIONAL INTERNATIONAL EQUITY FUND seeks long-term growth of
capital (referred to as the International Equity Fund).

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

<PAGE>

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

I Expense Summary .............................................. 1
II Risk Return Summary .......................................... 2
1. Core Fixed Income Fund ................................... 2
2. Global Fund .............................................. 5
3. High Yield Fund .......................................... 9
4. Emerging Markets Fund .................................... 11
5. Core Equity Fund ......................................... 14
6. Research Fund ............................................ 16
7. Large Cap Fund ........................................... 18
8. Mid Cap Fund ............................................. 20
9. Emerging Equities Fund ................................... 23
10. International Equity Fund ................................ 26
III Certain Investment Strategies and Risks ...................... 29
IV Management of the Funds ...................................... 30
V Description of Shares ........................................ 32
VI How to Purchase, Exchange and Redeem Shares .................. 32
VII Other Information ............................................ 34
VIII Financial Highlights ......................................... 36
Appendix A -- Investment Techniques and Practices ............ A-1

<PAGE>

- ----------------------
I EXPENSE SUMMARY
- ----------------------

o EXPENSE TABLE

This table describes the expenses that you may pay when you hold shares of
the funds.

<TABLE>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets):
........................................................................................................
<CAPTION>
CORE
FIXED HIGH EMERGING CORE
INCOME GLOBAL YIELD MARKETS EQUITY
FUND FUND FUND FUND FUND
------ ------ ------ -------- ------
<S> <C> <C> <C> <C> <C>
Management Fee ......................... 0.45 % 0.65 % 0.50 % 0.85 % 0.60 %
Other Expenses ......................... 0.15 % 0.46 % 4.36 % 1.78 % 0.80 %
----- ----- ----- ----- -----
Total Annual Fund Operating Expenses ... 0.60 % 1.11 % 4.86 % 2.63 % 1.40 %
Fee Waiver/Expense Reimbursement ... (0.10)%(1) (0.44)%(1) (4.18)%(1) (1.32)%(1) (0.74)%(1)
----- ----- ----- ----- -----
Net Expenses(2) .................... 0.50 % 0.67 % 0.68 % 1.31 % 0.66 %
<CAPTION>
LARGE MID EMERGING INTERNATIONAL
RESEARCH CAP CAP EQUITIES EQUITY
FUND FUND FUND FUND FUND
-------- ----- -------- -------------
<S> <C> <C> <C> <C> <C>
Management Fee ......................... 0.60 % 0.75 % 0.60 % 0.75 % 0.75 %
Other Expenses ......................... 0.17 % 0.10 % 0.20 % 0.08 % 0.79 %
---- ---- ---- ---- ----
Total Annual Fund Operating Expenses ... 0.77 % 0.85 % 0.80 % 0.83 % 1.54 %
Fee Waiver/Expense Reimbursement ... (0.11)%(1) 0.05 %(1) N/A N/A (0.67)%(1)
---- ---- ---- ---- ----
Net Expenses(2) .................... 0.66 % 0.80 % 0.80 % 0.83 % 0.87 %

----------
(1) MFS has contractually agreed to bear these funds' expenses, subject to reimbursement in the case of
the Emerging Markets Fund, such that "Other Expenses", after taking into account the expense offset
arrangement described below, do not exceed 0.15% for the High Yield Fund, 0.40% for the Emerging
Markets Fund, 0.10% for the International Equity Fund, 0.00% for the Global Fund and 0.05% for each
remaining fund. These contractual fee arrangements will continue until at least November 1, 2000,
unless changed with the consent of the board of trustees which oversees the funds.
(2) Each fund has an expense offset arrangement which reduces the fund's custodian fee based upon the
amount of cash maintained by the fund with its custodian and dividend disbursing agent, and may enter
into other such arrangements and directed brokerage arrangements (which would also have the effect of
reducing the fund's expenses). Any such fee reductions are not reflected in the table. Had these fee
reductions been taken into account, "Net Expenses" would be lower for certain funds, and would equal:
Core Fixed Income Fund, [ ]%, Global Fund, 0.65%, High Yield Fund, 0.65%, Emerging Markets Fund,
1.25%, Core Equity Fund, 0.65%, Research Fund, 0.65%, Large Cap Fund, [ ]%, Mid Cap Fund, [ ]%,
Emerging Equities Fund, [ ]%, International Equities Fund, 0.85%.
</TABLE>

o EXAMPLE OF EXPENSES

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

The examples assume that:

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

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

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

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

PERIOD
-----------------------------------------------
SERIES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------------
Core Fixed Income Fund $ 51 $ 182 N/A N/A
Global Fund 68 309 $ 569 $1,312
High Yield Fund 69 1,085 2,103 4,661
Emerging Markets Fund 133 692 1,277 2,866
Core Equity Fund 67 370 695 1,616
Research Fund 67 235 417 944
Large Cap Fund 82 266 N/A N/A
Mid Cap Fund 80 237 392 769
Emerging Equities Fund 85 265 460 1,025
International Equities Fund 89 421 776 1,777
<PAGE>

- ---------------------------
II RISK RETURN SUMMARY
- ---------------------------

INVESTMENT STRATEGIES WHICH ARE COMMON TO ALL FUNDS ARE DESCRIBED UNDER
THE CAPTION "CERTAIN INVESTMENT STRATEGIES AND RISKS."

1: CORE FIXED INCOME FUND
...........................................................................

o INVESTMENT OBJECTIVES
The fund's main investment objective is to provide as high a level of
current income as is believed to be consistent with prudent investment
risk. Its secondary objective is to protect shareholders' capital. The
fund's objectives may be changed without shareholder approval.

o PRINCIPAL INVESTMENT POLICIES
The fund invests, under normal market conditions, at least 90% of its
total assets in the following fixed income securities:

o Corporate bonds, which are bonds or other debt obligations issued by
domestic or foreign (including emerging market) corporations or other
similar entities;

o U.S. Government securities, which are bonds or other debt obligations
issued by, or whose principal and interest payments are guaranteed or
supported by, the U.S. Government or one of its agencies or
instrumentalities; and

o Mortgage-backed and asset-backed securities, which represent interests in
a pool of assets such as mortgage loans, car loan receivables or credit
card receivables.

While the fund may purchase corporate bonds which have been assigned
lower credit ratings by credit rating agencies (commonly known as junk
bonds), it focuses on investment grade bonds. These bonds are rated in the
higher rating categories by credit rating agencies or are unrated and
considered by Massachusetts Financial Services Company (referred to as MFS
or the adviser) to be comparable in quality.

The fund may also invest in foreign securities (including emerging
markets securities), through which it may have exposure to foreign
currencies.

In selecting fixed income investments for the fund, MFS considers the
views of its large group of fixed income portfolio managers and research
analysts. This group periodically assesses the three-month total return
outlook for various segments of the fixed income markets. This three-month
"horizon" outlook is used by the portfolio manager(s) of MFS' fixed income
oriented funds (including the fund) as a tool in making or adjusting a
fund's asset allocations to various segments of the fixed income markets.
In assessing the credit quality of fixed income securities, MFS does not
rely solely on the credit ratings assigned by credit rating agencies, but
rather performs its own independent credit analysis.

The fund may invest in derivative securities. Derivatives are securities
whose value may be based on other securities, currencies, interest rates,
or indices. Derivatives include:

o Futures and forward contracts;

o Options on futures contracts, foreign currencies, securities and bond
indices;

o Structured notes and indexed securities; and

o Swaps, caps, floors and collars.

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

The principal risks of investing in the fund are:

o Allocation Risk: The fund will allocate its investments among various
segments of the fixed income markets based upon judgments made by MFS. The
fund could miss attractive investment opportunities by underweighting
markets where there are significant returns, or could lose value
overweighting markets where there are significant declines.

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

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

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

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

o Lower Rated Bonds Risk:

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

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

o Mortgage-Backed and Asset-Backed Securities Risk:

> Maturity Risk:

+ Mortgage-Backed Securities: A mortgage-backed security will mature
when all the mortgages in the pool mature or are prepaid.
Therefore, mortgage-backed securities do not have a fixed
maturity, and their expected maturities may vary when interest
rates rise or fall.

> When interest rates fall, homeowners are more likely to prepay
their mortgage loans. An increased rate of prepayments on the
fund's mortgage-backed securities will result in an unforeseen
loss of interest income to the fund as the fund may be
required to reinvest assets at a lower interest rate. Because
prepayments increase when interest rates fall, the prices of
mortgage-backed securities do not increase as much as other
fixed income securities when interest rates fall.

> When interest rates rise, homeowners are less likely to prepay
their mortgage loans. A decreased rate of prepayments
lengthens the expected maturity of a mortgage-backed security.
Therefore, the prices of mortgage-backed securities may
decrease more than prices of other fixed income securities
when interest rates rise.

+ Collateralized Mortgage Obligations: The fund may invest in
mortgage-backed securities called collateralized mortgage
obligations (CMOs). CMOs are issued in separate classes with
different stated maturities. As the mortgage pool experiences
prepayments, the pool pays off investors in classes with shorter
maturities first. By investing in CMOs, the fund may manage the
prepayment risk of mortgage-backed securities. However,
prepayments may cause the actual maturity of a CMO to be
substantially shorter than its stated maturity.

+ Asset-Backed Securities: Asset-backed securities have prepayment
risks similar to mortgage-backed securities.

> Credit Risk: As with any fixed income security, mortgage-backed and
asset- backed securities are subject to the risk that the issuer will
default on principal and interest payments. It may be difficult to
enforce rights against the assets underlying mortgage-backed and
asset-backed securities in the case of default. The U.S. Government or
its agencies may guarantee the payment of principal and interest on
some mortgage-backed securities. Mortgage-backed securities and
asset-backed securities issued by private lending institutions or
other financial intermediaries may be supported by insurance or other
forms of guarantees.

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

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

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

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

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

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

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

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

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

o Derivatives Risk:

> Hedging Risk: When a derivative is used as a hedge against an opposite
position that the fund also holds, any loss generated by the
derivative should be substantially offset by gains on the hedged
investment, and vice versa. While hedging can reduce or eliminate
losses, it can also reduce or eliminate gains.

> Correlation Risk: When the fund uses derivatives to hedge, it takes
the risk that changes in the value of the derivative will not match
those of the asset being hedged. Incomplete correlation can result in
unanticipated losses.

> Investment Risk: When the fund uses derivatives as an investment
vehicle to gain market exposure, rather than for hedging purposes, any
loss on the derivative investment will not be offset by gains on
another hedged investment. The fund is therefore directly exposed to
the risks of that derivative. Gains or losses from derivative
investments may be substantially greater than the derivative's
original cost.

> Availability Risk: Derivatives may not be available to the fund upon
acceptable terms. As a result, the fund may be unable to use
derivatives for hedging or other purposes.

> Credit Risk: When the fund uses derivatives, it is subject to the risk
that the other party to the agreement will not be able to perform.

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

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

o BAR CHART AND PERFORMANCE TABLE

The bar chart and performance table are not included because the fund had
not commenced operations as of June 30, 1999.

2: GLOBAL FUND
...........................................................................

o INVESTMENT OBJECTIVE
The fund's investment objective is to provide income and capital
appreciation. The fund's objective may be changed without shareholder
approval.

o PRINCIPAL INVESTMENT POLICIES
The fund invests, under normal market conditions, at least 80% of its
total assets in global fixed income securities. These may include:

o Foreign government securities, which are bonds or other debt obligations
issued by foreign governments, including emerging market governments;
these foreign government securities are either:

> Issued, guaranteed or supported as to payment of principal and
interest by foreign governments, foreign government agencies, foreign
semi-governmental entities, or supra-national entities;

> Interests issued by entities organized and operated for the purpose of
restructuring the investment characteristics of foreign government
securities; or

> Brady Bonds, which are long-term bonds issued as part of a
restructuring of defaulted commercial loans to emerging market
countries;

o Corporate bonds, which are bonds or other debt obligations issued by
domestic or foreign (including emerging market) corporations or other
similar entities; the fund may invest in:

> Investment grade bonds, which are bonds assigned higher credit ratings
by credit rating agencies or which are unrated and considered by MFS
to be comparable to higher rated bonds;

> Lower rated bonds, commonly known as junk bonds, which are bonds
assigned low credit ratings by credit rating agencies or which are
unrated and considered by MFS to be comparable to lower rated bonds;
and

> Crossover bonds, which are junk bonds that MFS expects will appreciate
in value due to an anticipated upgrade in the issuer's credit rating
(thereby crossing over into investment grade bonds); and

o Mortgage-backed and asset-backed securities, which represent interests in
a pool of assets such as mortgage loans, car loan receivables or credit
card receivables.

Under normal market conditions, the fund invests in at least three
countries, one of which may be the U.S.

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

The fund may invest in derivative securities. Derivatives are securities
whose value may be based on other securities, currencies, interest rates
or indices. Derivatives include:

o Futures and forward contracts;

o Options on futures contracts, foreign currencies, securities and bond
indices;

o Structured notes and indexed securities; and

o Swaps, caps, floors and collars.

The principal risks of investing in the fund are:

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

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

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

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

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

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

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

o Allocation Risk: The fund will allocate its investments among various
segments of the fixed income markets based upon judgments made by MFS. The
fund could miss attractive investment opportunities by underweighting
markets where there are significant returns, and could lose value by
overweighting markets where there are significant declines.

o Junk Bond Risk:

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

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

o Mortgage and Asset-Backed Securities:

> Maturity Risk:

> When interest rates fall, homeowners are more likely to prepay
their mortgage loans. An increased rate of prepayments on the
fund's mortgage-backed securities will result in an unforeseen
loss of interest income to the fund as the fund may be
required to reinvest assets at a lower interest rate. Because
prepayments increase when interest rates fall, the price of
mortgage-backed securities does not increase as much as other
fixed income securities when interest rates fall.

+ Asset-Backed Securities: Asset-backed securities have prepayment
risks similar to mortgage-backed securities.

> Credit Risk: As with any fixed income security, mortgage-backed and
asset-backed securities are subject to the risk that the issuer will
default on principal and interest payments. It may be difficult to
enforce rights against the assets underlying mortgage-backed and
asset-backed securities in the case of default. The U.S. Government or
its agencies may guarantee the payment of principal and interest on
some mortgage-backed securities. Mortgage-backed securities and
asset-backed securities issued by private lending institutions or
other financial intermediaries may be supported by insurance or other
forms of guarantees.

o Derivatives Risk:

> Availability Risk: Derivatives may not be available to the fund upon
acceptable terms. As a result, the fund may be unable to use
derivatives for hedging or other purposes.

> Credit Risk: When the fund uses derivatives, it is subject to the risk
that the other party to the agreement will not be able to perform.

o Active or Frequent Trading Risk: The fund may engage in active and
frequent trading to achieve its principal investment strategies. This may
result in the realization and distribution to shareholders of higher
capital gains as compared to a fund with less active trading policies,
which could increase your tax liability. Frequent trading also increases
transaction costs, which could detract from the fund's performance.

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

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

o BAR CHART AND PERFORMANCE TABLE
The bar chart and performance table below are intended to indicate some of
the risks of investing in the fund by showing changes in the fund's
performance over time. The performance table also shows how the fund's
performance over time compares with that of one or more broad measures of
market performance. The chart and table provide past performance
information. The fund's past performance does not necessarily indicate how
the fund will perform in the future. The performance information in the
chart and table is based upon calendar year periods, while the performance
information presented under the caption "Financial Highlights" and in the
fund's shareholder reports is based upon the fund's fiscal year.
Therefore, these performance results differ.

BAR CHART
The bar chart shows changes in the annual total returns of the fund's
shares for each calendar year since they were first offered, assuming the
reinvestment of distributions.

1993 16.99%
1994 -5.06%
1995 15.49%
1996 4.78%
1997 -0.40%
1998 15.94%

The total return for the year-to-date period ended June 30, 1999, was
(6.77)%. During the period shown in the bar chart the highest quarterly
return was 10.39% (for the calendar quarter ended September 30, 1998) and
the lowest quarterly return was (5.69)% (for the calendar quarter ended
March 31, 1994).

PERFORMANCE TABLE
This table shows how the average annual total returns of the fund's shares
compares to a broad measure of market performance and assumes the
reinvestment of distributions.

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
............................................................................
1 Year 5 Years Life
Global Fund 15.94% 5.82% 6.57%*
Salomon Brothers World Government Bond Index+**
Average global income fund++

------
* "Life" refers to the period from the commencement of the fund's
investment operations, September 30, 1992, through December 31, 1998.
+ Source: [ ].
++ Source: Lipper Analytical Services, Inc.
** The Salomon Brothers World Government Bond Index is a broad-based,
unmanaged index consisting of complete universes of government bonds
with remaining maturities of at least five years.

3: HIGH YIELD FUND
...........................................................................

o INVESTMENT OBJECTIVE
The fund's investment objective is to seek high current income. The fund's
objective may be changed without shareholder approval.

o PRINCIPAL INVESTMENT POLICIES
The fund invests, under normal market conditions, at least 80% of its
total assets in a professionally managed portfoio of high income fixed
income securities. While the fund may invest in fixed income securities
with any credit rating, the securities offering the high current income
sought by the fund generally are lower rated bonds. These bonds, commonly
known as junk bonds, are assigned lower credit ratings by credit rating
agencies or are unrated and considered by MFS to be comparable to lower
rated bonds.

While the fund focuses its investments on bonds issued by corporations
or other similar entities, it may invest in all types of debt securities.
The fund may invest in foreign securities (including emerging markets
securities), through which it may have exposure to foreign currencies.

Consistent with its objective and policies, the fund may also invest in
equity securities, including common stock and related securities, such as
preferred stock, convertible securities and depositary receipts.
Convertible securities are debt obligations or preferred stock that may be
converted within a specified period of time into a certain amount of
common stock of the same or a different issuer.

The principal risks of investing in the fund are:

o Allocation Risk: The fund will allocate its investments among fixed income
markets based upon judgments made by MFS. The fund could miss attractive
investment opportunities by underweighting markets where there are
significant returns, and could lose value by overweighting markets where
there are significant declines.

o Maturity Risk: Interest rate risk will affect the price of a fixed income
security more if the security has a longer maturity because changes in
interest rates are increasingly difficult to predict over longer periods
of time. Fixed income securities with longer maturities will therefore be
more volatile than other fixed income securities with shorter maturities.
Conversely, fixed income securities with shorter maturities will be less
volatile but generally provide lower returns than fixed income securities
with longer maturities. The average maturity of the fund's fixed income
investments will affect the volatility of the fund's share price.

o Junk Bond Risk:

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

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

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

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

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

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

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

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

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

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

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

o BAR CHART AND PERFORMANCE TABLE

The bar chart and performance table are not included because the fund did
not have a full calendar year of operations on December 31, 1998.

4: EMERGING MARKETS FUND
...........................................................................

o INVESTMENT OBJECTIVE
The fund's investment objective is total return (high current income and
long-term growth of capital). The fund's objective may be changed without
shareholder approval.

o PRINCIPAL INVESTMENT POLICIES
The fund invests, under normal market conditions, at least 65% of its
total assets in fixed income securities of government, government-related,
supranational and corporate issuers located, or primarily conducting their
business, in emerging market countries. Emerging market countries include
any country determined to have an emerging market economy, taking into
account a number of factors, including whether the country has a low-to-
middle-income economy according to the International Bank for
Reconstruction and Development (the World Bank), the country's foreign
currency debt rating, its political and economic stability and the
development of its financial and capital markets. These countries include
those located in Latin America, Asia, Africa, the Middle East and the
developing countries of Europe, primarily Eastern Europe. While the fund
may invest up to 25% of its assets in securities of a single issuer, the
fund expects to maintain investments, under normal market conditions, in
at least five countries outside of the U.S. The fund's investments may
include securities traded in the over-the-counter markets. The fund may
invest in fixed income securities that have stated maturities ranging from
overnight to 30 years.

The fund invests in the following types of foreign securities:

o Fixed income securities of foreign companies (primarily companies in
emerging market countries);

o Fixed income securities issued by foreign governments, (primarily emerging
market governments); these foreign government securities are either:

> Issued or guaranteed as to payment of principal and interest by
foreign governments, foreign government agencies, foreign
semi-governmental entities, or supra-national entities; or

> Interests issued by entities organized and operated for the purpose of
restructuring the investment characteristics of foreign government
securities;

> Debt obligations issued by supranational organizations such as the
Asian Development Bank and the Inter-American Development Bank, among
others; and

> Brady Bonds, which are long-term bonds issued as part of a
restructuring of defaulted commercial loans to emerging market
countries.

Emerging market fixed income securities generally are rated in the lower
rating categories of recognized rating agencies and are commonly known as
junk bonds. The fund may invest up to 100% of its net assets in these
lower rated securities.

Until such time as the net assets of the fund reach $10 million, the
fund intends to invest, under normal market conditions, at least 65% of
its total assets in the fixed income securities listed above, and in
forward foreign currency exchange contracts. The fund intends to enter
into forward contracts as an alternate method of gaining exposure to
certain emerging markets, and expects to achieve a similar benefit from
entering into a forward contract denominated in a country's currency as
from the purchase of an emerging market debt security.

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

In selecting fixed income investments for the fund, MFS pursues a
disciplined, research-intensive investment process that seeks to limit
risk and enhance returns via superior country and security selection in
the context of a globally diversified portfolio. The investment process
includes: the evaluation of global financial and macroeconomic factors and
their impact on the asset class; assessments of economic, financial and
political developments; examination of the creditworthiness of various
regions and individual countries; and utilization of quantitative tools
and models to assist in relative value determinations, portfolio
construction, and forecasting. MFS does not rely on credit ratings or
outside research in making security selections, but rather performs its
own independent research and credit analysis.

The principal risks of investing in the fund are:

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

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

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

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

o Emerging Markets Risk: Investments in emerging markets securities involve
all of the risks of investments in foreign securities, and also have
additional risks:

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

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

o Concentration Risk: The fund may invest a substantial amount of its assets
in issuers located in a single country or a limited number of countries.
If the fund concentrates its investments in this manner, it assumes the
risk that economic, political and social conditions in those countries
will have a significant impact on its investment performance. The fund's
investment performance may also be more volatile if it concentrates its
investments in certain countries, especially emerging market countries.

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

o Lower Rated Bonds Risk:

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

o Active or Frequent Trading Risk: The fund has engaged and may engage in
active and frequent trading to achieve its principal investment
strategies. This may result in the realization and distribution to
shareholders of higher capital gains as compared to a fund with less
active trading policies, which would increase your tax liability. Frequent
trading also increases transaction costs, which could detract from the
fund's performance.

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

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

BAR CHART
The bar chart shows changes in the annual total returns of the fund shares
for each calendar year since they were first offered, assuming the
reinvestment of distributions.

1996 20.43%
1997 9.52%
1998 -7.06%

The total return for the year-to-date period ended June 30, 1999, was
10.02%. During the period shown in the bar chart, the highest quarterly
return was 10.12% (for the calendar quarter ended December 31, 1998) and
the lowest quarterly return was (17.31)% (for the calendar quarter ended
September 30, 1998).

PERFORMANCE TABLE
This table shows how the average annual total returns of the fund's shares
compares to one or more broad measures of market performance and assumes
the reinvestment of distributions.

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
...........................................................................

1 Year Life
Emerging Markets Fund (7.06)% 7.62%*
50% Morgan Emerging Local Markets/50%
Emerging Market Bond Index Plus+** #
J.P. Morgan Emerging Local Markets Index++** #

------
* "Life" refers to the period from the commencement of the fund's
investment operations, August 7, 1995, through December 31, 1998.
# "Life" refers to the period from August 31, 1995 through December 31,
1998.
+ Source: [ ]
++ Source: [ ]
** The Morgan Emerging Local Markets is a broad-based, unmanaged index
consisting of [ ]. The Emerging Market Bond Index is a broad-based,
unmanaged index consisting of [ ].

5: CORE EQUITY FUND
...........................................................................

o INVESTMENT OBJECTIVES
The fund's investment objective is to provide long-term growth of capital
generally consistent with that of a diversified large cap portfolio and
income equal to approximately 90% of the dividend yield of the S&P 500.
The fund's objective may be modified without shareholder approval.

o PRINCIPAL INVESTMENT POLICIES
The fund invests at least 80% of its total assets in common stocks and
related securities, such as preferred stocks, convertible securities and
depositary receipts for those securities, of large well-established
companies similar to those found in the S&P 500. Equity securities may be
listed on a securities exchange or traded in the over-the-counter markets.
The fund focuses on companies that MFS believes have sustainable growth
prospects and attractive valuations based on current and expected earnings
or cash flow.

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

The fund may invest in foreign securities through which it may have
exposure to foreign currencies.

The principal risks of investing in the fund are:

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

o Large Cap Companies Risk: Large cap companies tend to go in and out of
favor based on market and economic conditions. Large cap companies tend to
be less volatile than companies with smaller market capitalizations. In
exchange for this potentially lower risk, the fund's value may not rise as
much as the value of funds that emphasize smaller cap companies.

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

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

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

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

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

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

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

o BAR CHART AND PERFORMANCE TABLE
The bar chart and performance table are not included because the fund did
not have a full calendar year of operations on December 31, 1998.

6: RESEARCH FUND
...........................................................................

o INVESTMENT OBJECTIVE
The fund's investment objective is long-term growth of capital. The fund's
objective may be changed without shareholder approval.

o PRINCIPAL INVESTMENT POLICIES
The fund invests, under normal market conditions, at least 80% of its
total assets in common stocks and related securities, such as preferred
stocks, convertible securities and depositary receipts. The fund focuses
on companies that MFS believes have favorable prospects for long-term
growth, attractive valuations based on current and expected earnings or
cash flow, dominant or growing market share and superior management. The
fund may invest in companies of any size. The fund's investments may
include securities traded on securities exchanges or in the over-the-
counter markets.

A committee of investment research analysts selects portfolio securities
for the fund. This committee includes investment analysts employed not
only by MFS, but also by MFS' foreign advisory affiliates. The committee
allocates the fund's assets among various industries. Individual analysts
then select what they view as the securities best suited to achieve the
fund's investment objective within their assigned industry responsibility.

The fund may also invest in foreign securities, through which it may
have exposure to foreign currencies.

The principal risks of investing in the fund are:

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

o Over-the-Counter Risk: Over-the-counter (OTC) transactions involve risks
in addition to those incurred by transactions in securities traded on
exchanges. OTC listed companies may have limited product lines, markets or
financial resources. Many OTC stocks trade less frequently and in smaller
volume than exchange-listed stocks. The values of these stocks may be more
volatile than exchange-listed stocks, and the fund may experience
difficulty in purchasing or selling these securities at a fair price.

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

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

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

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

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

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

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

BAR CHART
The bar chart shows changes in the annual total returns of the fund shares
for each calendar year since they were first offered, assuming the
reinvestment of distributions.

1997 20.78%
1998 23.98%

The total return for the year-to-date period ended June 30, 1999, was
9.13%. During the period shown in the bar chart, the highest quarterly
return was 22.50% (for the calendar quarter ended December 31, 1998) and
the lowest quarterly return was (14.63)% (for the calendar quarter ended
September 30, 1998).

PERFORMANCE TABLE
This table shows how the average annual total returns of the fund's shares
compares to a broad measure of market performance and assumes the
reinvestment of distributions.

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
...........................................................................

1 Year Life
Research Fund 23.98% 19.97%*
S&P 500**+ #
Average growth fund++ #

------
* "Life" refers to the period from the commencement of the fund's
investment operations, May 20, 1996, through December 31, 1998.
# "Life" refers to the period May 31, 1996 through December 31, 1998.
+ Source: [ ].
++ Source: Lipper Analytical Services, Inc.
** The S&P 500 is a broad-based, popular, unmanaged index commonly used to
measure common stock total return performance. It is composed of 500
widely held common stocks listed on the NYSE, AMEX, and OTC market.

7: LARGE CAP FUND
...........................................................................

o INVESTMENT OBJECTIVE
The fund's investment objective is long-term growth of capital. The fund's
objective may be changed without shareholder approval.

o PRINCIPAL INVESTMENT POLICIES
The fund invests, under normal market conditions, at least 80% of its
total assets in common stocks and related securities, such as preferred
stocks, convertible securities and depositary receipts, of companies with
large market capitalizations which MFS believes have above-average growth
potential. Large market capitalization companies are defined by the fund
as companies with market capitalizations equaling or exceeding $5 billion
at the time of the fund's investment. Companies whose market
capitalization falls below $5 billion after purchase continue to be
considered large-capitalization companies for purposes of the fund's 80%
investment policy. The fund's investments may include securities listed on
a securities exchange or traded in the over-the-counter markets.

MFS looks particularly for companies which demonstrate:

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

o A solid industry position, where there is:

> Potential for high profit margins;

> Substantial barriers to new entry in the industry;

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

o A catalyst that may accelerate growth.

The fund may invest in foreign securities (including emerging market
securities) through which it may have exposure to foreign currencies.

The principal risks of investing in the fund are:

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

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

o Over-the-Counter Risk: OTC transactions involve risks in addition to those
incurred by transactions in securities traded on exchanges. OTC-listed
companies may have limited product lines, markets or financial resources.
Many OTC stocks trade less frequently and in smaller volume than
exchange-listed stocks. The values of these stocks may be more volatile
than exchange-listed stocks, and the fund may experience difficulty in
purchasing or selling these securities at a fair price.

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

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

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

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

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

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

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

o BAR CHART AND PERFORMANCE TABLE
The bar chart and performance table are not included because the fund had
not commenced operations as of June 30, 1999.

8: MID CAP FUND
...........................................................................

o INVESTMENT OBJECTIVE
The fund's investment objective is long-term growth of capital. The fund's
objective may be changed without shareholder approval.

Medium market capitalization companies are defined by the fund as
companies with market capitalizations falling within the range of the
Russell Midcap(TM) Growth Index at the time of the fund's investment. This
Index is a widely recognized, unmanaged index of mid-cap common stock
prices. Companies whose market capitalizations fall outside the range of
the Russell Midcap Growth Index after purchase continue to be considered
medium-capitalization companies for purposes of the fund's 80% investment
policy. The fund's investments may include securities listed on a
securities exchange or traded in the over-the-counter markets.

The fund may invest in foreign securities (including emerging markets
securities) through which it may have exposure to foreign currencies.

The principal risks of investing in the fund are:

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

o Mid-Cap Growth Company Risk: Prices of growth company securities held by
the fund may decline due to changing economic, political or market
conditions, or due to the financial condition of the company which issued
the security, and may decline to a greater extent than the overall equity
markets (e.g., as represented by the S&P 500). Investments in medium
capitalization companies can be riskier and more volatile than investments
in companies with larger market capitalizations.

o Over-the-Counter Risk: OTC transactions involve risks in addition to those
associated with transactions in securities traded on exchanges. OTC-listed
companies may have limited product lines, markets or financial resources.
Many OTC stocks trade less frequently and in smaller volume than
exchange-listed stocks. The values of these stocks may be more volatile
than exchange-listed stocks, and the fund may experience difficulty in
establishing or closing out positions in these stocks at prevailing market
prices.