<PAGE>
MFS(R) EMERGING GROWTH SERIES
MFS(R) GROWTH WITH INCOME SERIES PROSPECTUS
MFS(R) TOTAL RETURN SERIES September 30, 1997
MFS(R) BOND SERIES
- -------------------------------------------------------------------------------
MFS(R) VARIABLE INSURANCE TRUSTSM
MFS Variable Insurance Trust (the "Trust") is an open-end management
investment company offering insurance company separate accounts a selection of
investment vehicles for variable annuity and variable life insurance contracts
(the "Contracts"). Currently the Trust offers shares of beneficial interest of
12 separate mutual fund series (individually or collectively hereinafter
referred to as a "Series" or the "Series"); four of which are offered pursuant
to this Prospectus:
- --MFS EMERGING GROWTH SERIES (the "Emerging Growth Series"), which seeks to
provide long-term growth of capital;
- --MFS GROWTH WITH INCOME SERIES (the "Growth With Income Series"), which seeks
to provide reasonable current income and long-term growth of capital and in-
come;
- --MFS TOTAL RETURN SERIES (the "Total Return Series"), which seeks primarily
to provide above-average income (compared to a portfolio invested entirely
in equity securities) consistent with the prudent employment of capital, and
secondarily to provide a reasonable opportunity for growth of capital and
income; and
- --MFS BOND SERIES (the "Bond Series"), which seeks primarily to provide as
high a level of current income as is believed consistent with prudent in-
vestment risk and secondarily to protect shareholders' capital.
----------------
THE EMERGING GROWTH SERIES AND THE GROWTH WITH INCOME SERIES ARE INTENDED FOR
INVESTORS WHO UNDERSTAND AND ARE WILLING TO ACCEPT THE RISKS ENTAILED IN SEEK-
ING LONG-TERM GROWTH OF CAPITAL OR CAPITAL APPRECIATION. BECAUSE OF THEIR IN-
VESTMENT POLICIES PERMITTING INVESTMENT IN FOREIGN SECURITIES, INVESTMENTS IN
EACH SERIES MAY BE SUBJECT TO A GREATER DEGREE OF RISK THAN INVESTMENTS IN
OTHER INVESTMENT COMPANIES WHICH INVEST ENTIRELY IN DOMESTIC SECURITIES.
----------------
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.
----------------
SHARES OF THE TRUST ARE AVAILABLE AND ARE BEING MARKETED AS A POOLED FUNDING
VEHICLE FOR LIFE INSURANCE COMPANIES WRITING ALL TYPES OF CONTRACTS.
This Prospectus sets forth concisely the information about each Series that a
prospective investor should know before applying for the Contracts offered by
the separate accounts of certain insurance companies ("Participating Insurance
Companies"). Investors are advised to read this Prospectus and the applicable
Contract prospectus carefully and retain them for future reference. If you
require more detailed information, a Statement of Additional Information dated
September 30, 1997, as amended or supplemented from time to time ("SAI"), is
available upon request without charge and may be obtained by calling or by
writing to the Shareholder Servicing Agent (see back cover for address and
phone number). The SAI, which is incorporated by reference into this
Prospectus, has been filed with the Securities and Exchange Commission (the
"SEC"). The SEC maintains an Internet World Wide Web site that contains the
SAI, materials that are incorporated by reference into this Prospectus and the
SAI, and other information regarding the Series. This Prospectus is available
on the Adviser's Internet World Wide Web site at http://www.mfs.com.
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Expense Summary........................................................ 3
2. Investment Concept of the Trust........................................ 4
3. Condensed Financial Information........................................ 5
4. Investment Objectives and Policies..................................... 9
MFS Emerging Growth Series............................................. 9
MFS Growth With Income Series.......................................... 10
MFS Total Return Series................................................ 10
MFS Bond Series........................................................ 11
5. Investment Techniques.................................................. 11
6. Additional Risk Factors................................................ 19
7. Management of the Series............................................... 22
8. Information Concerning Shares of Each Series........................... 24
Purchases and Redemptions.............................................. 24
Net Asset Value........................................................ 25
Distributions.......................................................... 25
Tax Status............................................................. 26
Description of Shares, Voting Rights and Liabilities................... 26
Performance Information................................................ 27
Expenses............................................................... 27
Shareholder Communications............................................. 28
Appendix A -- Description of Bond Ratings................................. A-1
</TABLE>
2
<PAGE>
1.EXPENSE SUMMARY
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
<TABLE>
<CAPTION>
MFS
MFS GROWTH MFS
EMERGING WITH TOTAL MFS
GROWTH INCOME RETURN BOND
SERIES SERIES SERIES SERIES
-------- ------ ------ ------
<S> <C> <C> <C> <C>
Management Fee.............................. 0.75% 0.75% 0.75% 0.60%
Other Expenses (after expense
limitation)/(1)(2)/........................ 0.25% 0.25% 0.25% 0.40%
---- ---- ---- ----
Total Operating Expenses (after expense
limitation)/(2)/........................... 1.00% 1.00% 1.00% 1.00%
</TABLE>
- --------------------
/1/Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series 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 Series' expenses). Any such fee reductions are not
reflected under "Other Expenses."
/2/The Adviser has agreed to bear expenses for each Series, subject to
reimbursement by each Series, such that each Series' "Other Expenses" shall
not exceed the following percentages of the average daily net assets of the
Series during the current fiscal year: 0.40% for the Bond Series and 0.25%
for each remaining Series. See "Information Concerning Shares of Each
Series--Expenses." Otherwise, "Other Expenses" and "Total Operating Expenses"
for each Series would be:
<TABLE>
<CAPTION>
"OTHER EXPENSES" "TOTAL OPERATING
WITHOUT EXPENSES" WITHOUT
SERIES EXPENSE LIMITATION EXPENSE LIMITATION
------ ------------------ ------------------
<S> <C> <C>
Emerging Growth..................... 0.41% 1.16%
Growth With Income.................. 1.32% 2.07%
Total Return........................ 1.35% 2.10%
Bond................................ 8.85% 9.45%
</TABLE>
EXAMPLE OF EXPENSES
An investor would pay the following dollar amounts of expenses on a $1,000
investment in each Series, assuming (a) 5% annual return and (b) redemption at
the end of each of the time periods indicated:
<TABLE>
<CAPTION>
PERIOD
-------------------------------
SERIES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------ ------- ------- --------
<S> <C> <C> <C> <C>
Emerging Growth........................... 10 32 55 122
Growth With Income........................ 10 32 55 122
Total Return.............................. 10 32 55 122
Bond...................................... 10 32 55 122
</TABLE>
The purpose of the expense table above is to assist investors in understand-
ing the various costs and expenses that a shareholder of the Series will bear
directly or indirectly. The Series' annual operating expenses do not reflect
expenses imposed by separate accounts of Participating Insurance Companies
through which an investment in a Series is made or their related Contracts. A
separate account's expenses are disclosed in the prospectus through which the
Contract relating to that separate account is offered for sale.
THE "EXAMPLE" SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OF ANY SERIES; ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.
3
<PAGE>
2.INVESTMENT CONCEPT OF THE TRUST
The Trust is an open-end, registered management investment company comprised
of the following twelve series: Emerging Growth Series, Value Series, Research
Series, Growth With Income Series, Total Return Series, Utilities Series, High
Income Series, World Governments Series, Emerging Markets Equity Series, Bond
Series, Limited Maturity Series and Money Market Series. Each Series is a seg-
regated, separately managed portfolio of securities. All of the Series, except
the Utilities Series and the World Governments Series, are diversified. Addi-
tional series may be created from time to time. The Trust was organized as a
business trust under the laws of The Commonwealth of Massachusetts by a Decla-
ration of Trust dated February 1, 1994.
The Trust currently offers shares of each Series to insurance company sepa-
rate accounts that fund Contracts. Separate accounts may purchase or redeem
shares at net asset value without any sales or redemption charge. Fees and
charges imposed by a separate account, however, will affect the actual return
to the holder of a Contract. A separate account may also impose certain re-
strictions or limitations on the allocation of purchase payments or Contract
value to one or more Series, and not all Series may be available in connection
with a particular Contract. Prospective investors should consult the applica-
ble Contract prospectus for information regarding fees and expenses of the
Contract and separate account and any applicable restrictions or limitations.
The Trust assumes no responsibility for such prospectuses.
Shares of the Series are offered to the separate accounts of Participating
Insurance Companies that are affiliated or unaffiliated ("shared funding").
Shares of the Series may serve as the underlying investments for both variable
annuity and variable life insurance contracts ("mixed funding"). Due to dif-
ferences in tax treatment or other considerations, the interests of various
Contract owners might at some time be in conflict. The Trust currently does
not foresee any such conflict. Nevertheless, the Trust's Trustees intend to
monitor events in order to identify any material irreconcilable conflicts
which may possibly arise and to determine what action, if any, should be taken
in response thereto. If such a conflict were to occur, one or more separate
accounts of the Participating Insurance Companies might be required to with-
draw its investments in one or more Series. This might force a Series to sell
securities at disadvantageous prices.
Individual Contract holders are not the "shareholders" of the Trust. Rather,
the Participating Insurance Companies and their separate accounts are the
shareholders or investors, although such companies may pass through voting
rights to their Contract holders.
The Trust's Board of Trustees provides broad supervision over the affairs of
the Trust and the Series. Massachusetts Financial Services Company, a Delaware
corporation ("MFS" or the "Adviser"), is the investment adviser to each Se-
ries. A majority of the Trustees of the Trust are not affiliated with the Ad-
viser. The Adviser is responsible for the management of the assets of each Se-
ries and the officers of the Trust are responsible for the operations. The Ad-
viser manages the Series' portfolios from day to day in accordance with the
investment objectives and policies of each Series. The selection of invest-
ments and the way they are managed depend on the conditions and trends in the
economy and the financial marketplaces.
4
<PAGE>
3.CONDENSED FINANCIAL INFORMATION
The following financial information (presented for each Series which com-
menced investment operations prior to December 31, 1996) has been audited
since the commencement of investment operations of such Series and should be
read in conjunction with the financial statements included in the Series' An-
nual Reports to Shareholders. These financial statements are incorporated by
reference into the SAI in reliance upon the report of the Series' independent
auditors given upon their authority as experts in accounting and auditing. The
Series' current independent auditors are Deloitte & Touche llp.
EMERGING GROWTH SERIES
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995*
----------------- ------------------
<S> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value--beginning of period...... $ 11.41 $10.00
-------- ------
Income from investment operations#--
Net investment income (loss)(S).......... $ (0.01) $ 0.01
Net realized and unrealized gain on
investments and foreign currency
transactions............................ 1.95 1.74
-------- ------
Total from investment operations........ $ 1.94 $ 1.75
-------- ------
Less distributions declared to
shareholders--
From net investment income............... $ -- $(0.01)
From net realized gain on investments and
foreign currency transactions........... (0.06) (0.26)
In excess of net realized gain on
investments and foreign currency
transactions............................ (0.05) --
Tax return of capital.................... -- (0.07)
-------- ------
Total distributions declared to
shareholders........................... $ (0.11) $(0.34)
-------- ------
Net asset value--end of period............ $ 13.24 $11.41
======== ======
Total return.............................. 17.02% 17.41%++
Ratios (to average net
assets)/Supplemental data(S):
Expenses................................. 1.00% 1.00%+
Net investment income (loss)............. (0.08)% 0.10%+
Portfolio turnover........................ 96% 73%
Average commission rate###................ $ 0.0401 --
Net assets at end of period (000
omitted)................................. $104,956 $3,869
- --------------------
* For the period from the commencement of investment operations, July 24, 1995
to December 31, 1995.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
### Average commission rate is calculated for Series' with fiscal years
beginning on or after September 1, 1995.
(S) The Adviser voluntarily agreed to maintain the expenses of the Series at not
more than 1.00% of average daily net assets. To the extent actual expenses
were over these limitations, the net investment loss per share and the
ratios would have been:
Net investment loss.................... $(0.03) $(0.18)
Ratios (to average net assets):
Expenses.............................. 1.16% 2.91%+
Net investment loss................... (0.23)% (1.78)%+
</TABLE>
5
<PAGE>
GROWTH WITH INCOME SERIES
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995*
----------------- ------------------
<S> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value--beginning of period...... $ 10.61 $ 10.00
------- -------
Income from investment operations#--
Net investment income(S)................. $ 0.18 $ 0.05
Net realized and unrealized gain on
investments and foreign currency
transactions............................ 2.42 0.61
------- -------
Total from investment operations........ $ 2.60 $ 0.66
------- -------
Less distributions declared to
shareholders--
From net investment income............... $ (0.09) $ (0.05)
From net realized gain on investments and
foreign currency transactions........... (0.13) --
In excess of net realized gain on
investments and foreign currency
transactions............................ (0.01) --
------- -------
Total distributions declared to
shareholders........................... $ (0.23) $ (0.05)
------- -------
Net asset value--end of period............ $ 12.98 $ 10.61
======= =======
Total return.............................. 24.46% 6.64%++
Ratios (to average net
assets)/Supplemental data(S):
Expenses................................. 1.00% 1.00%+
Net investment income.................... 1.52% 2.20%+
Portfolio turnover........................ 41% 2%
Average commission rate###................ $0.0351 --
Net assets at end of period (000
omitted)................................. $ 9,174 $ 365
- --------------------
* For the period from the commencement of investment operations, October 9,
1995 to December 31, 1995.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
### Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
(S) The Adviser voluntarily agreed to maintain the expenses of the Series at
not more than 1.00% of average daily net assets. To the extent actual ex-
penses were over these limitations, the net investment income (loss) per
share and the ratios would have been:
Net investment income (loss)........... $0.05 $ (0.41)
Ratios (to average net assets):
Expenses.............................. 2.07% 21.44%+
Net investment income (loss).......... 0.46% (18.24)%+
</TABLE>
6
<PAGE>
TOTAL RETURN SERIES
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995*
----------------- ------------------
<S> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value--beginning of period...... $ 12.25 $10.00
------- ------
Income from investment operations#--
Net investment income(S)................. $ 0.46 $ 0.41
Net realized and unrealized gain on
investments and foreign currency
transactions............................ 1.30 2.32
------- ------
Total from investment operations........ $ 1.76 $ 2.73
------- ------
Less distributions declared to
shareholders--
From net investment income............... $ (0.21) $(0.25)
From net realized gain on investments and
foreign currency transactions........... (0.09) (0.23)
------- ------
Total distributions declared to
shareholders........................... $ (0.30) $(0.48)
------- ------
Net asset value--end of period............ $ 13.71 $12.25
======= ======
Total return.............................. 14.37% 27.34%++
Ratios (to average net
assets)/Supplemental data(S):
Expenses................................. 1.00% 1.00%+
Net investment income.................... 3.59% 3.83%+
Portfolio turnover........................ 76% 16%
Average commission rate###................ $0.0485 --
Net assets at end of period (000
omitted)................................. $19,250 $2,797
- --------------------
* For the period from the commencement of investment operations, January 3,
1995 to December 31, 1995.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
### Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
(S) The Adviser voluntarily agreed to maintain the expenses of the Series at
not more than 1.00% of average daily net assets. To the extent actual ex-
penses were over these limitations, the net investment income per share and
the ratios would have been:
Net investment income.................. $0.32 $0.22
Ratios (to average net assets):
Expenses.............................. 2.10% 2.49%+
Net investment income................. 2.49% 2.09%+
</TABLE>
7
<PAGE>
BOND SERIES
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995*
----------------- ------------------
<S> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value--beginning of period..... $10.19 $ 10.00
------ -------
Income from investment operations#--
Net investment income(S)................ $ 0.58 $ 0.09
Net realized and unrealized gain (loss)
on investments......................... (0.36) 0.21
------ -------
Total from investment operations....... $ 0.22 $ 0.30
------ -------
Less distributions declared to
shareholders--
From net investment income.............. $(0.35) $ (0.09)
From net realized gain on investments... -- (0.02)
------ -------
Total distributions declared to
shareholders.......................... $(0.35) $ (0.11)
------ -------
Net asset value--end of period........... $10.06 $ 10.19
====== =======
Total return............................. 2.09% 3.02%++
Ratios (to average net
assets)/Supplemental data(S):
Expenses................................ 1.00% 1.00%+
Net investment income................... 5.84% 4.89%+
Portfolio turnover....................... 231% 55%
Net assets at end of period (000
omitted)................................ $ 853 $ 228
- --------------------
* For the period from the commencement of investment operations, October 24,
1995 to December 31, 1995.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
(S) The Adviser voluntarily agreed to maintain the expenses of the Series at not
more than 1.00% of average daily net assets. To the extent actual expenses
were over these limitations, the net investment loss per share and the ra-
tios would have been:
Net investment loss................... $(0.26) $ (0.70)
Ratios (to average net assets):
Expenses............................. 9.45% 43.85%+
Net investment loss.................. (2.61)% (37.96)%+
</TABLE>
8
<PAGE>
4.INVESTMENT OBJECTIVES AND POLICIES
Each Series has different investment objectives which it pursues through
separate investment policies, as described below. The differences in objec-
tives and policies among the Series can be expected to affect the degree of
market and financial risk to which each Series is subject and the return of
each Series. The investment objectives and policies of each Series may, unless
otherwise specifically stated, be changed by the Trustees of the Trust without
a vote of the shareholders. Any investment involves risk and there is no as-
surance that the objectives of any Series will be achieved.
In addition to the specific investment practices described below, each Se-
ries may also engage in certain investment techniques as described under the
caption "Investment Techniques" below and in the SAI under the caption "In-
vestment Techniques." The Series' investments are subject to certain risks, as
described in the above-referenced sections of this Prospectus and the SAI and
as described below under the caption "Additional Risk Factors."
MFS EMERGING GROWTH SERIES -- The Series seeks to provide long-term growth of
capital. Dividend and interest income from portfolio securities, if any, is
incidental to the Series' investment objective of long-term growth of capital.
The Series' policy is to invest primarily (i.e., at least 80% of its assets
under normal circumstances) in common stocks of companies that MFS believes
are early in their life cycle but which have the potential to become major en-
terprises (emerging growth companies). Such companies generally would be ex-
pected 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,
technologies, management and market and other opportunities which are usually
necessary to become more widely recognized as growth companies. Emerging
growth companies can be of any size, and the Series may invest in larger or
more established companies whose rates of earnings growth are expected to ac-
celerate because of special factors, such as rejuvenated management, new prod-
ucts, changes in consumer demand, or basic changes in the economic environ-
ment. While the Series will invest primarily in common stocks, the Series may,
to a limited extent, seek appreciation in other types of securities such as
fixed income securities (which may be unrated), 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.
The Series may invest in non-convertible fixed income securities rated lower
than "investment grade" (rated Ba or lower by Moody's Investors Service, Inc.
("Moody's") or BB or lower by Standard & Poor's Ratings Services ("S&P") or
Fitch Investors Service, Inc. ("Fitch")) (commonly known as "junk bonds") or
in comparable unrated securities, when, in the opinion of the Adviser, such an
investment presents a greater opportunity for appreciation with comparable
risk to an investment in "investment grade" securities. Under normal market
conditions, the Series will invest not more than 5% of its net assets in these
securities. For a description of these ratings, see Appendix A to this Pro-
spectus.
The nature of investing in emerging growth companies involves greater risk
than is customarily associated with investments in more established companies.
Emerging growth companies often have limited product lines, markets or finan-
cial resources, and they may be dependent on one-person management. In addi-
tion, there may be less research available on many promising small and medium
sized emerging growth companies, making it more difficult to find and analyze
these companies. The securities of emerging growth companies may have limited
marketability and may be subject to more abrupt or erratic market movements
than securities of larger, more established growth companies or the market av-
erages in general. Shares of the Series, therefore, are subject to greater
fluctuation in value than shares of a conservative equity fund or of a growth
fund which invests entirely in proven growth stocks.
9
<PAGE>
Consistent with its investment objective and policies described above, the
Series may also invest up to 25% (and generally expects to invest not more
than 15%) of its net assets in foreign securities (including emerging market
securities and Brady Bonds) which are not traded on a U.S. exchange.
MFS GROWTH WITH INCOME SERIES -- The Growth With Income Series' investment ob-
jectives are to provide reasonable current income and long-term growth of cap-
ital and income.
Under normal market conditions, the Growth With Income Series will invest at
least 65% of its assets in equity securities of companies that are believed to
have long-term prospects for growth and income. Equity securities in which the
Series may invest include the following: common stocks, preferred stocks and
preference stocks; securities such as bonds, warrants or rights that are con-
vertible into stocks; and depositary receipts for those securities. These se-
curities may be listed on securities exchanges, traded in various over-the-
counter markets or have no organized markets.
Consistent with its investment objective and policies described above, the
Series may also invest up to 75% (and generally expects to invest not more
than 15% ) of its net assets in foreign securities (including emerging market
securities and Brady Bonds) which are not traded on a U.S. exchange.
MFS TOTAL RETURN SERIES -- The Total Return Series' primary investment objec-
tive is to provide above-average income (compared to a portfolio invested en-
tirely in equity securities) consistent with the prudent employment of capi-
tal, and its secondary objective is to provide a reasonable opportunity for
growth of capital and income, since many securities offering a better than av-
erage yield may also possess growth potential. Thus, in selecting securities
for its portfolio, the Series considers each of these objectives. Under normal
market conditions, at least 25% of the Total Return Series' assets will be in-
vested in non-convertible fixed income securities, and at least 40% and no
more than 75% of the Series' assets will be invested in equity securities. Eq-
uity securities in which the Series may invest include the following: common
stocks, preferred stocks and preference stocks; securities such as bonds, war-
rants 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 markets.
The Series' policy is to invest in a broad list of securities, including
short-term obligations. The list may be diversified not only by companies and
industries, but also by type of security. The Total Return Series may vary the
percentage of assets invested in any one type of security in accordance with
the Adviser's interpretation of economic and money market conditions, fiscal
and monetary policy and underlying security values. The Series' non-convert-
ible fixed income investments may consist of both "investment grade" securi-
ties (rated Baa or better by Moody's or BBB or better by S&P or by Fitch) and
securities that are unrated or are in the lower rating categories (rated Ba or
lower by Moody's or BB or lower by S&P or by Fitch) (commonly known as "junk
bonds") including up to 20% of its assets in non-convertible fixed income se-
curities that are in these lower rating categories and comparable unrated se-
curities (see "Additional Risk Factors" below). Generally, most of the Series'
long-term non-convertible fixed income investments will consist of "investment
grade" securities. See Appendix A to this Prospectus for a description of
these ratings.
The Series may also invest in United States government securities, includ-
ing: (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. Trea-
sury 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) obliga-
tions issued or guaranteed by U.S. Government agencies, authorities or instru-
mentalities, 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.,
10
<PAGE>
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 Market-
ing Association (collectively, "U.S. Government Securities"). The term "U.S.
Government Securities" also includes 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. Govern-
ment, its agencies, authorities or instrumentalities.
Consistent with its investment objective and policies described above, the
Series may also invest up to 20% of its net assets in foreign securities (in-
cluding emerging market securities and Brady Bonds) which are not traded on a
U.S. exchange.
MFS BOND SERIES -- The Bond Series' primary investment objective is to provide
as high a level of current income as is believed to be consistent with prudent
investment risk. The Series' secondary objective is to protect shareholders'
capital.
The Series seeks to achieve its investment objectives by investing, under
normal market conditions, at least 65% of its total assets in:
(1) convertible and non-convertible debt securities and preferred stocks;
(2) U.S. Government Securities, as defined in "Investment Objectives and
Policies--MFS Total Return Series" above; and
(3) commercial paper, repurchase agreements and cash or cash equivalents
(such as certificates of deposit and bankers' acceptances).
Not more than 20% of the Series' net assets will be invested in convertible
and non-convertible securities rated below the four highest grades of S&P,
Fitch (AAA, AA, A or BBB) or Moody's (Aaa, Aa, A or Baa) and comparable
unrated securities. For a description of these ratings see Appendix A to this
Prospectus and Appendix C for a chart showing the Series' holdings of fixed
income securities broken down by rating category as of the end of its most re-
cent fiscal year. For a discussion of the risks of investing in these securi-
ties see "Additional Risk Factors" below.
Although the Bond Series may purchase Canadian and other foreign securities,
under normal market conditions, it may not invest more than 10% of its assets
in non-dollar denominated non-Canadian foreign securities, including emerging
market securities and Brady Bonds. The Series may hold foreign currency re-
ceived in connection with investments in foreign securities or in anticipation
of purchasing foreign securities. (See "Investment Techniques" and "Additional
Risk Factors" below.)
The Bond Series may not directly purchase common stocks. However, the Series
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.
5. INVESTMENT TECHNIQUES
LENDING OF PORTFOLIO SECURITIES: Each of the Series may seek to increase its
income by lending portfolio securities. Such loans will usually be made to
member firms (and subsidiaries thereof) of the New York Stock Exchange (the
"Exchange") and to member banks of the Federal Reserve System, and would be
required to be secured continuously by collateral in cash, U.S. Treasury secu-
rities or an irrevocable letter of credit maintained on a current basis at an
amount at least equal to the market value of the securities loaned. If the Ad-
viser determines to make securities loans, it
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is intended that the value of the securities loaned would not exceed 10% of
the value of the net assets of the Series making the loans.
EMERGING MARKET SECURITIES: Consistent with their respective objectives,
each Series may invest in securities of issuers whose principal activities are
located in emerging market countries. Emerging market countries include any
country determined by the Adviser or Sub-Adviser, as applicable, 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 In-
ternational Bank for Reconstruction and Development, the country's foreign
currency debt rating, its political and economic stability and the development
of its financial and capital markets. The Adviser or Sub-Adviser, as applica-
ble, determines whether an issuer's principal activities are located in an
emerging market country by considering such factors as its country of organi-
zation, the principal trading market for its securities and the source of its
revenues and assets. The issuer's principal activities generally are deemed to
be located in a particular country if: (a) the security is issued or guaran-
teed by the government of that country or any of its agencies, authorities or
instrumentalities; (b) the issuer is organized under the laws of, and main-
tains a principal office in that country; (c) the issuer has its principal se-
curities trading market in that country; (d) the issuer derives 50% or more of
its total revenues from goods sold or services performed in that country; or
(e) the issuer has 50% or more of its assets in that country.
BRADY BONDS: Each of the Series may invest in Brady Bonds, which are securi-
ties 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, Dominican Republic, Ecuador, Jordan, Mexico, Nigeria,
Panama, 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 hav-
ing the same maturity as the bonds. Brady Bonds are often viewed as having
three or four valuation components: the collateralized repayment of principal
at final maturity; the collateralized interest payments; the uncollateralized
interest payments; and any uncollateralized repayment of principal at maturity
(these uncollateralized amounts constituting the "residual risk"). In light of
the residual risk of Brady Bonds and the history of defaults of countries is-
suing Brady Bonds with respect to commercial bank loans by public and private
entities, investments in Brady Bonds may be viewed as speculative.
REPURCHASE AGREEMENTS: Each of the Series may enter into repurchase agree-
ments in order to earn income on available cash or as a temporary defensive
measure. Under a repurchase agreement, a Series acquires securities subject to
the seller's agreement to repurchase at a specified time and price. If the
seller becomes subject to a proceeding under the bankruptcy laws or its assets
are otherwise subject to a stay order, the Series' right to liquidate the se-
curities may be restricted (during which time the value of the securities
could decline). As discussed in the SAI, each Series has adopted certain pro-
cedures intended to minimize risk.
"WHEN-ISSUED" SECURITIES: Each of the Series may purchase securities on a
"when-issued" or on a "forward delivery" basis, which means that the securi-
ties will be delivered to the Series at a future date usually beyond customary
settlement time. The commitment to purchase a security for which payment will
be made on a future date may be deemed a separate security. In general, a Se-
ries does not pay for such securities until received, and does not start earn-
ing interest on the securities until the contractual settlement date. While
awaiting delivery of securities purchased on such bases, a Series will nor-
mally invest in liquid assets.
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MORTGAGE "DOLLAR ROLL" TRANSACTIONS: Each of the Total Return Series and the
Bond Series may enter into mortgage "dollar roll" transactions with selected
banks and broker-dealers pursuant to which a Series sells mortgage-backed se-
curities for delivery in the future (generally within 30 days) and simultane-
ously contracts to repurchase substantially similar (same type, coupon and ma-
turity) securities on a specified future date. The Series record these trans-
actions as sale and purchase transactions, rather than as borrowing transac-
tions. A Series will only enter into covered rolls. A "covered roll" is a spe-
cific 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 set-
tlement date of the dollar roll transaction. In the event that the party with
whom the Series contracts to replace substantially similar securities on a fu-
ture date fails to deliver such securities, the Series may not be able to ob-
tain 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.
RESTRICTED SECURITIES: Each Series (except the Growth With Income Series)
may purchase securities that are not registered under the Securities Act of
1933 (the "1933 Act") ("restricted securities"), including those that can be
offered and sold to "qualified institutional buyers" under Rule 144A under the
1933 Act ("Rule 144A securities"). A determination is made based upon a con-
tinuing review of the trading markets for a specific Rule 144A security,
whether such security is liquid and thus not subject to the Series' 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 func-
tion of determining and monitoring the liquidity of Rule 144A securities. The
Board, however, retains oversight, focusing on factors such as valuation, li-
quidity and availability of information. Investing in Rule 144A securities
could have the effect of decreasing the level of liquidity in a Series to the
extent that qualified institutional buyers become for a time uninterested in
purchasing Rule 144A securities held in the Series' portfolio.
CORPORATE ASSET-BACKED SECURITIES: Each of the Emerging Growth Series, the
Total Return Series and the Bond Series may invest in corporate asset-backed
securities. These securities, issued by trusts and special purpose corpora-
tions, are backed by a pool of assets, such as credit card and automobile loan
receivables, representing the obligations of a number of different parties.
Corporate asset-backed securities present certain risks. For instance, in
the case of credit card receivables, these securities may not have the benefit
of any security interest in the related collateral. Credit card receivables
are generally unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which give such
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the balance due. Most issuers of automobile receivables permit the
servicers to retain possession of the underlying obligations. If the servicer
were to sell these obligations to another party, there is a risk that the pur-
chaser would acquire an interest superior to that of the holders of the re-
lated automobile receivables. In addition, because of the large number of ve-
hicles 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 rep-
resenting the obligations of a number of different parties. To lessen the ef-
fect of failures by obligors on underlying assets to make payments, the secu-
rities 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
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through insurance policies or letters of credit obtained by the issuer or
sponsor from third parties. A Series 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.
ZERO COUPON BONDS, DEFERRED INTEREST BONDS AND PIK BONDS: Each of the Total
Return Series, the Bond Series and the Growth With Income Series may invest in
zero coupon bonds. The Total Return Series and the Bond Series may also invest
in deferred interest bonds and PIK bonds. Zero coupon and deferred interest
bonds are debt obligations which are issued or purchased at a significant dis-
count 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 obli-
gations 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 in-
vestments benefit the issuer by mitigating its need for cash to meet debt
service, but also require a higher rate of return to attract investors who are
willing to defer receipt of such cash. Such investments may experience greater
volatility in market value due to changes in interest rates than debt obliga-
tions which make regular payments of interest. Each Series will accrue income
on such investments for tax and accounting purposes, as required, which is
distributable to shareholders and which, because no cash is received at the
time of accrual, may require the liquidation of other portfolio securities to
satisfy the Series' distribution obligations.
COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH SECURITIES:
The Bond Series may invest a portion of its assets in collateralized mortgage
obligations or "CMOs," which are debt obligations collateralized by mortgage
loans or mortgage pass-through securities. Typically, CMOs are collateralized
by certificates issued by GNMA, the Federal National Mortgage Association
("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"), but also may
be collateralized by whole loans or private mortgage pass-through securities
(such collateral collectively referred to as "Mortgage Assets"). The Bond Se-
ries may also invest a portion of its assets in multiclass pass-through secu-
rities which are interests in a trust composed of Mortgage Assets. CMOs (which
include multiclass pass-through securities) may be issued by agencies, author-
ities 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 subsid-
iaries of the foregoing. Payments of principal of and interest on the Mortgage
Assets, and any reinvestment income thereon, provide the funds to pay debt
service on the CMOs or make scheduled distributions on the multiclass pass-
through securities. In a CMO, a series of bonds or certificates are usually
issued in multiple classes with different maturities. Each class of CMOs, of-
ten referred to as a "tranche," is issued at a specific fixed or floating cou-
pon rate and has a stated maturity or final distribution date. Principal pre-
payments on the Mortgage Assets may cause the CMOs to be retired substantially
earlier than their stated maturities or final distribution dates, resulting in
a loss of all or part of the premium if any has been paid. Certain classes of
CMOs have priority over others with respect to the receipt of prepayments on
the mortgages. Therefore, depending on the type of CMOs in which a Series in-
vests, the investment may be subject to a greater or lesser risk of prepay-
ments than other types of mortgage-related securities.
The Bond Series may also invest in parallel pay CMOs and Planned Amortiza-
tion 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 pay-
ment on such securities having the highest priority after interest has
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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 SAI.
STRIPPED MORTGAGE-BACKED SECURITIES: The Bond Series may invest a portion of
its assets in stripped mortgage-backed securities ("SMBS"), which are deriva-
tive multiclass mortgage securities usually structured with two classes that
receive different proportions of interest and principal distributions from an
underlying pool of mortgage assets. For a further description of SMBS and the
risks related to transactions therein, see the SAI.
LOAN PARTICIPATIONS AND OTHER DIRECT INDEBTEDNESS: Each of the Emerging
Growth Series and the Total Return Series may invest a portion of its assets
in "loan participations" and other direct indebtedness. By purchasing a loan
participation, a Series acquires some or all of the interest of a bank or
other lending institution in a loan to a corporate 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 activ-
ities. Such loans may be in default at the time of purchase. A Series may also
purchase other direct indebtedness such as trade or other claims against com-
panies, 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 com-
pany is in default. Certain of the loan participations and other direct in-
debtedness acquired by a Series may involve revolving credit facilities or
other standby financing commitments which obligate a Series to pay additional
cash on a certain date or on demand.
The highly leveraged nature of many such loans and other direct indebtedness
may make such loans especially vulnerable to adverse changes in economic or
market conditions. Loan participations and other direct indebtedness 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 re-
sult, a Series may be unable to sell such investments at an opportune time or
may have to resell them at less than fair market value. For a further discus-
sion of loan participations, other direct indebtedness and the risks related
to transactions therein, see the SAI.
MORTGAGE PASS-THROUGH SECURITIES: Each of the Total Return Series and the
Bond Series may invest in mortgage pass-through securities. Mortgage pass-
through securities are securities representing interests in "pools" of mort-
gage loans. The Utilities Series may invest in mortgage pass-through securi-
ties that are securities issued or guaranteed as to principal and interest by
the U.S. Government, its agencies, authorities or instrumentalities. Monthly
payments of interest and principal by the individual borrowers on mortgages
are passed through to the holders of the securities (net of fees paid to the
issuer or guarantor of the securities) as the mortgages in the underlying
mortgage pools are paid off. Payment of principal and interest on some mort-
gage pass-through securities (but not the market value of the securities them-
selves) may be guaranteed by the full faith and credit of the U.S. Government
(in the case of securities guaranteed by GNMA); or guaranteed by U.S. Govern-
ment-sponsored corporations (such as FNMA or FHLMC, which are supported only
by the discretionary authority of the U.S. Government to purchase the agency's
obligations). Mortgage pass-through securities may also be issued by non-gov-
ernmental issuers (such as commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers and other secondary
market issuers). See the SAI for a further discussion of these securities.
INDEXED SECURITIES: Each of the Total Return Series and the Bond Series may
invest in indexed securities whose value is linked to foreign currencies, in-
terest rates, commodities, indices or other financial indicators. Most indexed
securities are short- to intermediate-term fixed income securities whose val-
ues at maturity (i.e., principal value) and/or interest rates rise or fall ac-
cording to the change in one or more specified underlying instruments. Indexed
securities may be positively or negatively indexed (i.e., their principal
value or interest rates may increase or decrease if the
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underlying instrument appreciates), and may have return characteristics simi-
lar to direct investments in the underlying instrument or to one or more op-
tions on the underlying instrument. Indexed securities may be more volatile
than the underlying instrument itself.
SWAPS AND RELATED TRANSACTIONS: As one way of managing its exposure to dif-
ferent types of investments, the Bond Series may enter into interest rate
swaps, currency swaps and other types of available swap agreements, such as
caps, collars and floors. Swaps involve the exchange by a Series with another
party of cash payments based upon different interest rate indexes, currencies,
and other prices or rates, such as the value of mortgage prepayment rates. For
example, in the typical interest rate swap, a Series 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 Bond Series may also purchase and sell caps, floors and collars. In a
typical cap or floor agreement, one party agrees to make payments only under
specified circumstances, usually in return for payment of a fee by the
counterparty. For example, the purchase of an interest rate cap entitles the
buyer, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually-based principal
amount from the counterparty selling such interest rate cap. The sale of an
interest rate floor obligates the seller to make payments to the extent that a
specified interest rate falls below an agreed-upon level. A collar arrangement
combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a Series' investment exposure from one
type of investment to another. For example, if a Series 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 a Series' exposure to
U.S. interest rates and increase its exposure to foreign currency and interest
rates. Caps and floors have an effect similar to buying or writing options.
Depending on how they are used, swap agreements may increase or decrease the
overall volatility of a Series' 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 a
Series' 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 Series may also suffer losses
if it is unable to terminate outstanding swap agreements or reduce its expo-
sure through offsetting transactions.
Swaps, caps, floors and collars are highly specialized activities which in-
volve certain risks. See the SAI for further information on, and the risks in-
volved in, these activities.
OPTIONS ON SECURITIES: Each of the Series may write (sell) covered put and
call options and purchase put and call options on securities. Each of these
Series will write options on securities for the purpose of increasing its re-
turn and/or to protect the value of its portfolio. In particular, where a Se-
ries writes an option that expires unexercised or is closed out by the Series
at a profit, it will retain the premium paid for the option which will in-
crease its gross income and will offset in part the reduced value of the port-
folio security underlying the option, or the increased cost of portfolio secu-
rities to be acquired. In contrast, however, if the price of the underlying
security moves adversely to the Series' position, the option may be exercised
and the Series will be required to purchase or sell the underlying security at
a disadvantageous price, which may only be partially offset by the amount of
the premium. The Series may also write combinations of put and call options on
the same security, known as "straddles." Such transactions can generate addi-
tional premium income but also present increased risk.
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By writing a call option on a security, a Series limits its opportunity to
profit from any increase in the market value of the underlying security, since
the holder will usually exercise the call option when the market value of the
underlying security exceeds the exercise price of the call. However, the Se-
ries retains the risk of depreciation in value of securities on which it has
written call options.
Each of the Series may also purchase put or call options in anticipation of
market fluctuations which may adversely affect the value of its portfolio or
the prices of securities that a Series wants to purchase at a later date. In
the event that the expected market fluctuations occur, the Series may be able
to offset the resulting adverse effect on its portfolio, in whole or in part,
through the options purchased. The premium paid for a put or call option plus
any transaction costs will reduce the benefit, if any, realized by the Series
upon exercise or liquidation of the option, and, unless the price of the un-
derlying security changes sufficiently, the option may expire without value to
the Series.
In certain instances, the Emerging Growth Series may enter into options on
Treasury securities that are "reset" options or "adjustable strike" options.
These options provide for periodic adjustment of the strike price and may also
provide for the periodic adjustment of the premium during the term of the op-
tion. The SAI contains a further discussion of these investments.
OPTIONS ON STOCK INDICES: Each of the Emerging Growth Series, the Total Re-
turn Series and the Growth With Income Series may write (sell) covered call
and put options and purchase call and put options on stock indices. Each of
these Series may write options on stock indices for the purpose of increasing
its gross income and to protect its portfolio against declines in the value of
securities it owns or increases in the value of securities to be acquired.
When a Series 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 Series will either close out the option at a profit or allow it to ex-
pire unexercised. A Series 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 se-
curities to be acquired. Such transactions, however, will constitute only par-
tial hedges against adverse price fluctuations, since any such fluctuations
will be offset only to the extent of the premium received by a Series for the
writing of the option, less related transaction costs. In addition, if the
value of an underlying index moves adversely to a Series' option position, the
option may be exercised, and the Series will experience a loss which may only
be partially offset by the amount of the premium received.
Each of these Series 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 Series' possible loss in either case will be limited to the premium paid for
the option, plus related transaction costs.
"YIELD CURVE" OPTIONS: Each of the Total Return Series and the Bond Series
may enter into options on the yield "spread," or yield differential, between
two securities, a transaction referred to as a "yield curve" option, for hedg-
ing and non-hedging (an effort to increase current income) purposes. In con-
trast to other types of options, a yield curve option is based on the differ-
ence between the yields of designated securities rather than the actual prices
of the individual securities, and is settled through cash payments. According-
ly, a yield curve option is profitable to the holder if this differential wid-
ens (in the case of a call) or narrows (in the case of a put), regardless of
whether the yields of the underlying securities increase or decrease. Yield
curve options written by a Series will be covered as described in the SAI. The
trading of yield curve options is subject to all the risks associated with
trading other types of options, as discussed below under "Additional Risk Fac-
tors" and in the SAI. In addition, such options present risks of loss even if
the yield on one of the underlying securities remains constant, if the spread
moves in a direction or to an extent which was not anticipated.
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FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS: Each of the Total Return
Series and the Bond Series may purchase and sell futures contracts on foreign
or domestic fixed income securities or indices of such securities, including
municipal bond indices and any other indices of foreign or domestic fixed in-
come securities that may become available for trading ("Futures Contracts").
Each of these Series may also purchase and write options on such Futures Con-
tracts ("Options on Futures Contracts"). Each of the Emerging Growth Series,
the Total Return Series and the Growth With Income Series may purchase and
sell Futures Contracts on stock indices, foreign currencies or indices of for-
eign currencies. Each of these Series may also purchase and write Options on
such Futures Contracts.
Such transactions will be entered into for hedging purposes or for non-hedg-
ing purposes to the extent permitted by applicable law. Each Series will incur
brokerage fees when it purchases and sells Futures Contracts, and will be re-
quired to maintain margin deposits. In addition, Futures Contracts entail
risks. Although the Adviser believes that use of such Contracts will benefit a
Series, if its investment judgment about the general direction of exchange
rates or the stock market is incorrect, the Series' overall performance may be
poorer than if it had not entered into any such contract and the Series may
realize a loss. A Series will not enter into any Futures Contract if immedi-
ately thereafter the value of securities and other obligations underlying all
such Futures Contracts held by such Series would exceed 50% of the value of
its total assets.
Purchases of Options on Futures Contracts may present less risk in hedging a
Series' portfolio than the purchase or sale of the underlying Futures Con-
tracts since the potential loss is limited to the amount of the premium plus
related transaction costs, although it may be necessary to exercise the option
to realize any profit, which results in the establishment of a futures posi-
tion. The writing of Options on Futures Contracts, however, does not present
less risk than the trading of Futures Contracts and will constitute only a
partial hedge, up to the amount of the premium received. In addition, if an
option is exercised, a Series may suffer a loss on the transaction.
Futures Contracts and Options on Futures Contracts that are entered into by
a Series will be traded on U.S. and foreign exchanges.
FORWARD CONTRACTS: Each of the Series may enter into forward foreign cur-
rency exchange contracts for the purchase or sale of a fixed quantity of a
foreign currency at a future date ("Forward Contracts"). Each of the Series
may enter into Forward Contracts for hedging purposes and (except for the Bond
Series) for non-hedging purposes (i.e., speculative purposes). By entering
into transactions in Forward Contracts for hedging purposes, a Series may be
required to forego the benefits of advantageous changes in exchange rates and,
in the case of Forward Contracts entered into for non-hedging purposes, a Se-
ries may sustain losses which will reduce its gross income. Such transactions,
therefore, could be considered speculative. Forward Contracts are traded over-
the-counter and not on organized commodities or securities exchanges. As a re-
sult, Forward Contracts operate in a manner distinct from exchange-traded in-
struments, and their use involves certain risks beyond those associated with
transactions in Futures Contracts or options traded on exchanges. A Series may
choose to, or be required to, receive delivery of the foreign currencies un-
derlying Forward Contracts it has entered into. Under certain circumstances,
such as where the Adviser or Sub-Adviser, as applicable, believes that the ap-
plicable exchange rate is unfavorable at the time the currencies are received
or the Adviser or Sub-Adviser, as applicable, anticipates, for any other rea-
son, that the exchange rate will improve, the Series may hold such currencies
for an indefinite period of time. A Series may also enter into a Forward Con-
tract on one currency to hedge against risk of loss arising from fluctuations
in the value of a second currency (referred to as a "cross hedge") if, in the
judgment of the Adviser or Sub-Adviser, as applicable, a reasonable degree of
correlation can be expected between movements in the values of the two curren-
cies. Each of the Series has established procedures consistent with statements
of the SEC and its staff regarding the use of Forward Contracts by registered
investment
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companies, which requires use of segregated assets or "cover" in connection
with the purchase and sale of such contracts.
OPTIONS ON FOREIGN CURRENCIES: Each of the Series may purchase and write op-
tions 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 Series 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 fluc-
tuations in exchange rates although, in the event of rate movements adverse to
a Series' position, it may forfeit the entire amount of the premium paid for
the option plus related transaction costs. A Series may also choose to, or be
required to, receive delivery of the foreign currencies underlying Options on
Foreign Currencies it has entered into. Under certain circumstances, such as
where the Adviser believes that the applicable exchange rate is unfavorable at
the time the currencies are received or the Adviser anticipates, for any other
reason, that the exchange rate will improve, a Series may hold such currencies
for an indefinite period of time.
6. ADDITIONAL RISK FACTORS
OPTIONS, FUTURES CONTRACTS AND FORWARD CONTRACTS: Although certain Series
will 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 Series' hedging strategy unsuccessful and could result in loss-
es. Certain Series also may enter into transactions in options, Futures Con-
tracts, Options on Futures Contracts and Forward Contracts for other than
hedging purposes, which involves greater risk. In particular, such transac-
tions may result in losses for a Series which are not offset by gains on other
portfolio positions, thereby reducing gross income. In addition, foreign cur-
rency 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 pur-
chased or sold, and a Series may be required to maintain a position until ex-
ercise or expiration, which could result in losses. The SAI contains a de-
scription of the nature and trading mechanics of options, Futures Contracts,
Options on Futures Contracts, Forward Contracts and Options on Foreign Curren-
cies, 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 en-
tered into on U.S. exchanges regulated by the Commodity Futures Trading Com-
mission and on foreign exchanges. In addition, the securities and indexes un-
derlying options, Futures Contracts and Options on Futures Contracts traded by
the Series will include both domestic and foreign securities.
LOWER RATED BONDS: Each of the Emerging Growth Series, the Total Return Se-
ries and the Bond Series may invest in fixed income securities rated Baa by
Moody's or BBB by S&P or Fitch and comparable unrated securities. These secu-
rities, while normally exhibiting adequate protection parameters, have specu-
lative characteristics and changes in economic conditions or other circum-
stances are more likely to lead to a weakened capacity to make principal and
interest payments than in the case of higher grade securities.
Each of these Series may also invest in securities rated Ba or lower by
Moody's or BB or lower by S&P or Fitch and comparable unrated securities (com-
monly known as "junk bonds") to the extent described above. See Appendix A to
this Prospectus for a description of these ratings. These securities are con-
sidered speculative and, while generally providing greater income than invest-
ments in higher rated securities, will involve greater risk of principal and
income
19
<PAGE>
(including the possibility of default or bankruptcy of the issuers of such se-
curities) and may involve greater volatility of price (especially during peri-
ods of economic uncertainty or change) than securities in the higher rating
categories. However, since yields vary over time, no specific level of income
can ever be assured. These lower rated high yielding fixed income securities
generally tend to reflect economic changes and short-term corporate and indus-
try developments to a greater extent than higher rated securities which react
primarily to fluctuations in the general level of interest rates (although
these lower rated fixed income securities are also affected by changes in in-
terest rates, the market's perception of their credit quality, and the outlook
for economic growth). In the past, economic downturns or an increase in inter-
est rates have, under certain circumstances, caused a higher incidence of de-
fault by the issuers of these securities and may do so in the future, espe-
cially in the case of highly leveraged issuers. During certain periods, the
higher yields on a Series' lower rated high yielding fixed income securities
are paid primarily because of the increased risk of loss of principal and in-
come, 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 Series 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 Series' yield despite the actual loss of princi-
pal. The market for these lower rated fixed income securities may be less liq-
uid than the market for investment grade fixed income securities, and judgment
may at times play a greater role in valuing these securities than in the case
of investment grade fixed income securities. Changes in the value of securi-
ties subsequent to their acquisition will not affect cash income or yield to
maturity to a Series but will be reflected in the net asset value of shares of
the Series. See the SAI for more information on lower rated securities.
FOREIGN SECURITIES: Each of the Series may invest in dollar-denominated and
non-dollar-denominated foreign securities. Investing in securities of foreign
issuers generally involves risks not ordinarily associated with investing in
securities of domestic issuers. These include changes in currency rates, ex-
change control regulations, governmental administration or economic or mone-
tary policy (in the U.S. or abroad) or circumstances in dealings between na-
tions. Costs may be incurred in connection with conversions between various
currencies. Special considerations may also include more limited information
about foreign issuers, higher brokerage costs, different accounting standards
and thinner trading markets. Foreign securities markets may also be less liq-
uid, more volatile and less subject to government supervision than in the
United States. Investments in foreign countries could be affected by other
factors including expropriation, confiscatory taxation and potential difficul-
ties in enforcing contractual obligations and could be subject to extended
settlement periods. All of the Series may hold foreign currency received in
connection with investments in foreign securities when, in the judgment of the
Adviser, it would be beneficial to convert such currency into U.S. dollars at
a later date, based on anticipated changes in the relevant exchange rate. Such
Series may also hold foreign currency in anticipation of purchasing foreign
securities. See the SAI for further discussion of foreign securities and the
holding of foreign currency, as well as the associated risks.
AMERICAN DEPOSITARY RECEIPTS: Each of the Series may invest in 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 sub-
ject to many of the risks of foreign securities such as changes in exchange
rates and more limited information about foreign issuers.
EMERGING MARKET SECURITIES: Each of the Series may invest in emerging mar-
kets. In addition to the general risks of investing in foreign securities, in-
vestments in emerging markets involve special risks. Securities of many is-
suers in emerging markets may be less liquid and more volatile than securities
of comparable domestic issuers. These securities may be considered speculative
and, while generally offering higher income and the potential for capital ap-
preciation, may present significantly greater risk. Emerging markets may have
different clearance and settlement procedures, and in certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities
20
<PAGE>
transactions, making it difficult to conduct such transactions. Delays in set-
tlement could result in temporary periods when a portion of the assets of a
Series is uninvested and no return is earned thereon. The inability of a Se-
ries to make intended security purchases due to settlement problems could
cause a Series to miss attractive investment opportunities. Inability to dis-
pose of portfolio securities due to settlement problems could result in losses
to a Series due to subsequent declines in value of the portfolio securities, a
decrease in the level of liquidity in a Series' portfolio, or if a Series has
entered into a contract to sell the security, possible liability to the pur-
chaser. Certain markets may require payment for securities before delivery,
and in such markets a Series bears the risk that the securities will not be
delivered and that the Series' payments will not be returned. Securities
prices in emerging markets can be significantly more volatile than in the more
developed nations of the world, reflecting the greater uncertainties of in-
vesting 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, ad may have less protection of prop-
erty 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 suf-
fer from extreme and volatile debt burdens or inflation rates. Local securi-
ties markets may trade a small number of securities and may be unable to re-
spond effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at times. Securi-
ties of issuers located in countries with emerging markets may have limited
marketability and may be subject to more abrupt or erratic movements.
Certain emerging markets may require governmental approval for the repatria-
tion of investment income, capital or the proceeds of sales of securities by
foreign investors. In addition, if a deterioration occurs in an emerging mar-
ket's balance of payments or for other reasons, a country could impose tempo-
rary restrictions on foreign capital remittances. A Series could be adversely
affected by delays in, or a refusal to grant, any required governmental ap-
proval for repatriation of capital, as well as by the application to the Se-
ries of any restrictions on investments.
Investment in certain foreign emerging market debt obligations may be re-
stricted or controlled to varying degrees. These restrictions or controls may
at times preclude investment in certain foreign emerging market debt obliga-
tions and increase the expenses of a Series.
----------------
SHORT-TERM INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES -- During periods of
unusual market conditions when the Adviser or Sub-Adviser, as applicable, be-
lieves that investing for temporary defensive purposes is appropriate, or in
order to meet anticipated redemption requests, a large portion or all of the
assets of each Series may be invested in cash (including foreign currency) or
cash equivalents including, but not limited to, obligations of banks (includ-
ing certificates of deposit, bankers' acceptances, time deposits and repur-
chase agreements), commercial paper, short-term notes, U.S. Government Securi-
ties and related repurchase agreements.
PORTFOLIO TRADING
Each Series intends to manage its portfolio by buying and selling securi-
ties, as well as holding securities to maturity, to help attain its investment
objectives and policies.
Each Series will engage in portfolio trading if it believes a transaction,
net of costs (including custodian charges), will help in attaining its invest-
ment objectives. In trading portfolio securities, a Series seeks to take ad-
vantage of market developments, yield disparities and variations in the cred-
itworthiness of issuers. For a description of the strategies which may be used
by the Series in trading portfolio securities, see "Portfolio Transactions and
Brokerage Commissions" in the SAI.
21
<PAGE>
Because the Bond Series is expected to have a portfolio turnover rate of
over 100%, transaction costs incurred by the Series and the realized capital
gains and losses of the Series may be greater than that of a fund with a
lesser portfolio turnover rate.
The primary consideration in placing portfolio security transactions with
broker-dealers for execution is to obtain, and maintain the availability of,
execution at the most favorable prices and in the most effective manner possi-
ble. Consistent with the foregoing primary consideration, the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (the "NASD")
and such other policies as the Trustees of the Trust may determine, the Ad-
viser may consider sales of Contracts for which the Trust is an investment op-
tion, together with sales of shares of other investment company clients of MFS
Fund Distributors, Inc., the distributor of shares of the Trust and of the MFS
Family of Funds, as a factor in the selection of broker-dealers to execute
each Series' 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 the Series' operating expenses (e.g., fees charged
by the custodian of the Series' assets). For a further discussion of portfolio
trading, see the SAI.
----------------
The SAI includes a discussion of other investment policies and listing of
specific investment restrictions which govern the investment policies of each
Series. The specific investment restrictions listed in the SAI may be changed
without shareholder approval unless indicated otherwise (see the SAI). The Se-
ries' investment limitations, policies and rating standards are adhered to at
the time of purchase or utilization of assets; a subsequent change in circum-
stances will not be considered to result in a violation of policy.
7.MANAGEMENT OF THE SERIES
The Trust's Board of Trustees, as part of its overall management responsi-
bility, oversees various organizations responsible for each Series' day-to-day
management.
INVESTMENT ADVISER -- MFS manages each Series pursuant to an Amended and Re-
stated Investment Advisory Agreement with the Trust on behalf of each Series
dated April 14, 1994, as amended and restated on October 16, 1997 (the "Advi-
sory Agreement"). Under the Advisory Agreement, MFS provides the Series with
overall investment advisory services. Subject to such policies as the Trustees
may determine, MFS makes investment decisions for each Series. For its serv-
ices and facilities, MFS receives a management fee, computed and paid monthly,
in an amount equal to the following annual rates of the average daily net as-
sets of each Series:
<TABLE>
<CAPTION>
PERCENTAGE OF THE AVERAGE
DAILY NET ASSETS
SERIES OF EACH SERIES
- ------ -------------------------
<S> <C>
Emerging Growth Series................................ 0.75%
Growth With Income Series............................. 0.75%
Total Return Series................................... 0.75%
Bond Series........................................... 0.60%
</TABLE>
MFS or its affiliates will pay a fee to The Guardian Insurance and Annuity
Company ("The Guardian") equal, on an annualized basis, to 0.20% of the aggre-
gate net assets of the Trust up to $300 million and 0.25% of the aggregate net
assets of the Trust over $300 million attributable to Contracts offered by
separate accounts of The Guardian or their affiliates. Such fees will not be
paid by the Series, their shareholders, or by the Contract holders.
22
<PAGE>
For the fiscal year ended December 31, 1996, MFS received the following man-
agement fees from the Series under the Advisory Agreement and assumed the fol-
lowing amounts of the Series' expenses (see "Expenses" below):
<TABLE>
<CAPTION>
MANAGEMENT FEE EXPENSES ASSUMED
SERIES PAID TO MFS BY MFS
- ------ -------------- ----------------
<S> <C> <C>
Emerging Growth Series.......................... $314,262 $62,962
Growth With Income Series....................... 30,792 42,658
Total Return Series............................. 60,979 87,721
Bond Series..................................... 2,924 40,829
</TABLE>
The identity and background of the portfolio managers for each Series is set
forth below. Unless indicated otherwise, each portfolio manager has acted in
that capacity since the commencement of investment operations of each Series.
<TABLE>
<CAPTION>
SERIES PORTFOLIO MANAGERS
------ ------------------
<C> <S>
Emerging Growth Series John W. Ballen, a Senior Vice President of MFS, has
--------
been employed by the Adviser as a portfolio manager
since 1984. Toni Y. Shimura, a Vice President of
MFS, has been employed by the Adviser as a portfolio
manager since 1987. Ms. Shimura became a portfolio
manager of the Series on November 30, 1995.
Growth With Income Series Kevin R. Parke, a Senior Vice President of MFS, has
been employed by the Adviser as a portfolio manager
since 1985. John D. Laupheimer, a Senior Vice
President of MFS, has been employed by the Adviser
as a portfolio manager since 1981.
Total Return Series David M. Calabro, a Vice President of MFS, has been
employed by the Adviser as a portfolio manager since
1992. Mr. Calabro is the head of this portfolio
management team and a manager of the common stock
portion of the Series' portfolio. Geoffrey L.
Kurinsky, a Senior Vice President of MFS, has been
employed by the Adviser as a portfolio manager since
1987. Mr. Kurinsky is the manager of the Series'
fixed income securities. Judith N. Lamb, a Vice
President of MFS, has been employed by the Adviser
as a portfolio manager since 1992. Ms. Lamb is the
manager of the Series' convertible securities. Lisa
B. Nurme, a Vice President of MFS, has been employed
by the Adviser as a portfolio manager since 1987.
Ms. Nurme is a manager of the common stock portion
of the Series' portfolio. Maura A. Shaughnessy, a
Vice President of MFS, has been employed by the
Adviser as a portfolio manager since 1991. Ms.
Shaughnessy is a manager of the common stock portion
of the Series' portfolio. Each individual became a
portfolio manager of the Series on July 19, 1995.
Bond Series Geoffrey L. Kurinsky, a Senior Vice President of the
Adviser, has been employed by the Adviser as a
portfolio manager since 1987.
</TABLE>
MFS also serves as investment adviser to each of the other funds in the MFS
Family of Funds (the "MFS Funds") and to MFS(R) Municipal Income Trust, MFS
Multimarket Income Trust, MFS Government Markets Income Trust, MFS Intermedi-
ate Income Trust, MFS Charter Income Trust, MFS Special Value Trust, MFS In-
stitutional Trust, MFS Union Standard Trust, MFS/Sun Life Series Trust, and
seven variable accounts, each of which is a registered investment company es-
tablished 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 con-
tracts. MFS and its wholly owned subsidiary, MFS Asset Management, Inc., pro-
vide investment advice to substantial private clients.
23
<PAGE>
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 United States, Massachusetts Invest-
ors Trust. Net assets under the management of the MFS organization were ap-
proximately $52.8 billion on behalf of approximately 2.3 million investor ac-
counts as of February 28, 1997. As of such date, the MFS organization managed
approximately $28.9 billion of assets invested in equity securities and ap-
proximately $19.4 billion of assets invested in fixed income securities. Ap-
proximately $4.0 billion of the assets managed by MFS are invested in securi-
ties of foreign issuers and non-U.S. dollar-denominated securities of U.S. is-
suers. MFS is a 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 Donald A. Stewart. Mr. Brodkin is the Chairman, Mr. Shames
is the President and Mr. Scott is the Secretary and a Senior Executive Vice
President of MFS. Messrs. McNeil and Stewart 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 United States since 1895, establishing a headquarters office here in
1973. The executive officers of MFS report to the Chairman of Sun Life.
A. Keith Brodkin, the Chairman and a Director of MFS, is the Chairman and
President and a Trustee of the Trust. W. Thomas London, Stephen E. Cavan,
James R. Bordewick, Jr., and James O. Yost, all of whom are officers of MFS,
are officers of the Trust.
In certain instances there may be securities which are suitable for a Se-
ries' portfolio as well as for portfolios of other clients of MFS. Some simul-
taneous transactions are inevitable when several clients receive investment
advice from MFS, particularly when the same security is suitable for more than
one client. While in some cases this arrangement could have a detrimental ef-
fect on the price or availability of the security as far as a Series is con-
cerned, in other cases, however, it may produce increased investment opportu-
nities for the Series.
From time to time, the Adviser may purchase, redeem and exchange shares of
any Series. The purchase by the Adviser of shares of a Series may have the ef-
fect of lowering that Series' expense ratio, while the redemption by the Ad-
viser of shares of a Series may have the effect of increasing that Series' ex-
pense ratio.
DISTRIBUTOR -- MFS Fund Distributors, Inc. ("MFD"), a wholly owned subsidi-
ary of MFS, is the distributor of shares of each Series and also serves as
distributor for certain of the other mutual funds managed by MFS.
ADMINISTRATOR -- MFS provides the Series with certain administrative serv-
ices pursuant to a Master Administrative Services Agreement dated March 1,
1997. Under this Agreement, MFS provides the Series with certain financial,
legal, compliance, shareholder communications and other administrative servic-
es. As a partial reimbursement for the cost of providing these services, the
Series pays MFS an administrative fee up to 0.015% per annum of the Series'
average daily net assets, provided that the administrative fee is not assessed
on a Series' assets that exceed $3 billion.
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 Series.
8.INFORMATION CONCERNING SHARES OF EACH SERIES
PURCHASES AND REDEMPTIONS
The separate accounts of the Participating Insurance Companies place orders
to purchase and redeem shares of each Series based on, among other things, the
amount of premium payments to be invested and surrender and transfer
24
<PAGE>
requests to be effected on that day pursuant to Contracts. Orders received by
the Trust are effected on days on which the Exchange is open for trading. For
orders received by the Trust before the close of regular trading on the Ex-
change (normally 4 p.m. eastern time), such purchases and redemptions of the
shares of each Series are effected at the respective net asset values per
share determined as of the close of regular trading on the Exchange on that
same day. Participating Insurance Companies shall be the designee of the Trust
for receipt of purchase and redemption orders from Contract holders and re-
ceipt by such designee shall constitute receipt by the Trust; provided that
the Trust receives notice of such order by 9:30 a.m. eastern time on the next
following day on which the Exchange is open for trading. Payment for shares
shall be by federal funds transmitted by wire and must be received by 2:00
p.m. eastern time on the next following day on which the Exchange is open for
trading after the purchase order is received. Redemption proceeds shall be by
federal funds transmitted by wire and shall be sent by 2:00 p.m. eastern time
on the next following day on which the Exchange is open for trading after the
redemption order is received. No fee is charged the shareholders when they re-
deem Series shares.
The offering of shares of any Series may be suspended for a period of time
and each Series reserves the right to refuse any specific purchase order. Pur-
chase orders may be refused if, in the Adviser's opinion, they are of a size
that would disrupt the management of a Series. The Trust may suspend the right
of redemption of shares of any Series and may postpone payment for any period:
(i) during which the Exchange is closed other than customary weekend and holi-
day closings or during which trading on the Exchange is restricted; (ii) when
the SEC determines that a state of emergency exists which may make payment or
transfer not reasonably practicable; (iii) as the SEC may by order permit for
the protection of the security holders of the Trust; or (iv) at any time when
the Trust may, under applicable laws, rules and regulations, suspend payment
on the redemption of its shares.
Should any conflict between Contract holders arise which would require that
a substantial amount of net assets be withdrawn from any Series, orderly port-
folio management could be disrupted to the potential detriment of such Con-
tract.
NET ASSET VALUE
The net asset value per share of each Series is determined each day during
which the Exchange is open for trading. This determination is made once during
each such day as of the close of regular trading on the Exchange by deducting
the amount of the Series' liabilities from the value of the Series' assets and
dividing the difference by the number of shares of the Series outstanding.
Values of assets in a Series' portfolio are determined on the basis of their
market or other fair value (amortized cost value in the case of the Money Mar-
ket Series), as described in the SAI. All investments, assets and liabilities
are expressed in U.S. dollars based upon current currency exchange rates.
DISTRIBUTIONS
Substantially all of each Series' net investment income for any calendar
year is declared as dividends and paid to its shareholders as dividends on an
annual basis. In addition, each Series may make one or more distributions dur-
ing the calendar year to its shareholders from any short-term capital gains.
In determining the net investment income available for distribution, a Series
may rely on projections of its anticipated net investment income (which may
include short-term capital gains from the sales of securities or other assets,
and, if allowed by Series' investment restrictions, premiums from options
written), over a longer term, rather than its actual net investment income for
the period.
Shareholders of any of the Series may elect to receive dividends and capital
gain distributions in either cash or additional shares.
25
<PAGE>
TAX STATUS
Each Series of the Trust is treated as a separate entity for federal income
tax purposes. In order to minimize the taxes each Series would otherwise be
required to pay, each Series intends to qualify each year as a "regulated in-
vestment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended ("the Code"). Because each Series 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 of
the Series will be required to pay entity level federal income or excise tax-
es.
Shares of the Series are offered only to the Participating Insurance Compa-
nies' separate accounts that fund Contracts. See the applicable Contract pro-
spectus for a discussion of the federal income tax treatment of (1) the sepa-
rate accounts that purchase and hold Series shares and (2) the holders of the
Contracts that are funded through those accounts. In addition to the diversi-
fication requirements of Subchapter M of the Code, each Series also intends to
diversify its assets as required by Code Section 817(h)(1) and the regulations
thereunder. See also "Tax Status" in the SAI.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
Each Series currently has one class of shares, entitled Shares of Beneficial
Interest (without par value). The Trust has reserved the right to create and
issue additional classes and series of shares, in which case each class of
shares of a series would participate equally in the earnings, dividends and
assets attributable to that class of that particular series. Shareholders are
entitled to one vote for each share held, and shares of each Series are enti-
tled to vote separately to approve investment advisory agreements or changes
in investment restrictions with respect to that Series, but shares of all Se-
ries vote together in the election of Trustees and selection of accountants.
Additionally, each Series will vote separately on any other matter that af-
fects solely that Series, but will otherwise vote together with all other Se-
ries on all other matters. The Trust does not intend to hold annual share-
holder meetings. The Declaration of Trust provides that a Trustee may be re-
moved from office in certain instances. See "Description of Shares, Voting
Rights and Liabilities" in the SAI.
Each share of a Series represents an equal proportionate interest in the Se-
ries with each share, subject to the liabilities of the particular Series.
Shares have no pre-emptive or conversion rights. Shares are fully paid and
non-assessable. Should a Series be liquidated, shareholders are entitled to
share pro rata in the net assets available for distribution to shareholders.
Shares will remain on deposit with the Shareholder Servicing Agent and certif-
icates will not be issued.
The Trust is an entity of the type commonly known as a "Massachusetts busi-
ness trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable as partners for its obliga-
tions. However, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed (e.g., fidelity bonding and omission insurance) and the
Trust itself was unable to meet its obligations.
As of March 31, 1997, Union Central Life Insurance Company--Group Annuity
and Union Central Life Insurance Company--Individual Annuity, Cincinnati, OH,
own 28.17% and 52.03%, respectively, of the Growth With Income Series' shares,
and, therefore, each controls the Series; CG Variable Annuity--Separate Ac-
count II, Hartford, CT, owns 44.85% of the Total Return Series, and, there-
fore, controls the Series; and Kansas City Life Insurance Company--Variable
Annuity, Kansas City, MO, owns 70.43% of the Bond Series' shares, and, there-
fore, controls the Series.
26
<PAGE>
PERFORMANCE INFORMATION
Each Series' performance may be quoted in advertising in terms of yield and,
except for the Money Market Series, total return. Performance is based on his-
torical results and is not intended to indicate future performance. Perfor-
mance quoted for a Series includes the effect of deducting that Series' ex-
penses, but may not include charges and expenses attributable to any particu-
lar insurance product. Excluding these charges from quotations of a Series'
performance has the effect of increasing the performance quoted. Performance
for a Series will vary based on, among other things, changes in market condi-
tions, the level of interest rates and the level of the Series' expenses. For
further information about the Series' performance for the fiscal year ended
December 31, 1996, please see the Series' Annual Reports. A copy of these An-
nual Reports may be obtained without charge by contacting the Shareholder Ser-
vicing Agent (see back cover for address and phone number).
From time to time, quotations of a Series' total return and yield may be in-
cluded in advertisements, sales literature or reports to shareholders or pro-
spective investors. The total return of a Series refers to return assuming an
investment has been held in the Series for one year and for the life of the
Series (the ending date of which will be stated). The total return quotations
may be expressed in terms of average annual or cumulative rates of return for
all periods quoted. Average annual total return refers to the average annual
compound rate of return of an investment in a Series. Cumulative total return
represents the cumulative change in value of an investment in a Series. Both
will assume that all dividends and capital gains distributions were reinvest-
ed. The yield of a Series refers to net investment income generated by a Se-
ries over a specified 30-day (or one month) period. This income is then
"annualized." That is, the amount of income generated by the Series during
that 30-day (or one month) period is assumed to be generated over a 12-month
period and is shown as a percentage of net asset value.
EXPENSES
The Trust pays the compensation of the Trustees who are not officers of MFS
and all expenses of each Series (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 Series; fees and
expenses of independent auditors, of legal counsel, and of any transfer agent,
registrar or dividend disbursing agent of each Series; expenses of repurchas-
ing and redeeming shares and servicing shareholder accounts; expenses of pre-
paring, printing and mailing prospectuses, periodic reports, notices and proxy
statements to shareholders and to governmental officers and commissions; bro-
kerage and other expenses connected with the execution, recording and settle-
ment of portfolio security transactions; insurance premiums; fees and expenses
of Investors Bank & Trust Company, the Trust's Custodian, for all services to
each Series, including safekeeping of funds and securities and maintaining re-
quired books and accounts; expenses of calculating the net asset value of
shares of each Series; and expenses of shareholder meetings. Expenses relating
to the issuance, registration and qualification of shares of each Series and
the preparation, printing and mailing of prospectuses are borne by each Series
except that the Distribution Agreement with MFD requires MFD to pay for pro-
spectuses that are to be used for sales purposes. Expenses of the Trust which
are not attributable to a specific Series are allocated between the Series in
a manner believed by management of the Trust to be fair and equitable.
Subject to termination or revision at the sole discretion of MFS, MFS has
agreed to bear expenses of each of the Series such that the respective Series'
"Other Expenses," which are defined to include all expenses of the Series ex-
cept for management fees, do not exceed the following percentages of the aver-
age daily net assets of the Series (the "Maximum Percentage"): 0.40% for the
Bond Series and 0.25% for each remaining Series. The obligation of MFS to bear
these expenses for a Series terminates on the last day of the Series' fiscal
year in which its "Other Expenses" are less than or equal to the Maximum Per-
centage. The payments made by MFS on behalf of each Series under this arrange-
ment are subject to reimbursement by the Series to MFS, which will be accom-
plished by the payment of an
27
<PAGE>
expense reimbursement fee by the Series to MFS computed and paid monthly at a
percentage of the Series' average daily net assets for its then current fiscal
year, with a limitation that immediately after such payment the Series' "Other
Expenses" will not exceed the Maximum Percentage. This expense reimbursement
by each Series to MFS terminates on the earlier of the date on which payments
made by the Series equal the prior payment of such reimbursable expenses by
MFS or December 31, 2004.
SHAREHOLDER COMMUNICATIONS
Owners of Contracts issued by Participating Insurance Companies for which
shares of one or more Series are the investment vehicle will receive from the
Participating Insurance Companies semi-annual financial statements and audited
year-end financial statements certified by the Trust's independent certified
public accountants. Each report will show the investments owned by the Trust
and the valuations thereof as determined by the Trustees and will provide
other information about the Trust and its operations.
Participating Insurance Companies with inquiries regarding the Trust may
call the Trust's Shareholder Servicing Agent. (See back cover for address and
phone number.)
----------------
The SAI for the Trust, dated September 30, 1997, as amended or supplemented
from time to time, contains more detailed information about each of the Se-
ries, including information related to: (i) the investment policies and re-
strictions of each Series; (ii) the Trustees, officers and investment adviser
of the Trust; (iii) portfolio transactions; (iv) the shares of each Series,
including rights and liabilities of shareholders; (v) the method used to cal-
culate yield and total rate of return quotations of each Series; (vi) the de-
termination of net asset value of shares of each Series; and (vii) certain
voting rights of shareholders of each Series.
28
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS
The ratings of Moody's, S&P and Fitch represent their opinions as to the qual-
ity of various debt instruments. It should be emphasized, however, that rat-
ings 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 exception-
ally stable margin and principal is secure. While the various protective ele-
ments are likely to change, such changes as can be visualized are most un-
likely to impair the fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all stan-
dards. 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 protec-
tive elements may be of greater amplitude or there may be other elements pres-
ent which make the long-term risks appear somewhat larger than in Aaa securi-
ties.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving secu-
rity 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 pay-
ments and principal security appear adequate for the present but certain pro-
tective elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment characteris-
tics 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 char-
acterizes 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 shortcom-
ings.
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.
A-1
<PAGE>
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; or
4. the issue was privately placed, in which case the rating is not pub-
lished 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 SERVICES
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay prin-
cipal and differs from the highest 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 inter-
est and repay principal. Whereas it normally exhibits adequate protection pa-
rameters, 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 in-
adequate capacity to meet timely interest and principal payments. The BB rat-
ing category is also used for debt subordinated to senior debt that is as-
signed 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.
A-2
<PAGE>
C: The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
CI: The rating CI is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are jeopar-
dized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the ad-
dition of a plus or minus sign to show relative standing within the major rat-
ing categories.
NR: Indicates that no public rating has been requested, that there is insuf-
ficient 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 indi-
cates that the degree of safety regarding timely payment is either overwhelm-
ing 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 capac-
ity 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 reli-
ance on debt and ample asset protection; (4) broad margins in earnings cover-
age of fixed financial charges and high internal cash generation; and (5) well
established access to a range of financial markets and assured sources of al-
ternate liquidity.
FITCH INVESTORS SERVICE, INC.
AAA: Bonds considered to be investment grade and of the highest credit qual-
ity. The obligor has an exceptionally strong ability to pay interest and pre-
pay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong, al-
though not quite as strong as bonds rated "AAA'. Because bonds rated in the
"AAA' and "AA' categories are not significantly vulnerable to foreseeable fu-
ture developments, short-term debt of these issuers is generally rated "F-1+'.
A: Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
A-3
<PAGE>
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is consid-
ered 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 as-
sist 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 through-
out 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 of principal.
PLUS(+) MINUS(-): Plus and minus signs are used with a rating symbol to in-
dicate 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 oc-
currence that is likely to result in a rating change and the likely direction
of such change. These are designated a "Positive," indicating a potential up-
grade, "Negative," for potential downgrade, or "Evolving," where ratings may
be lowered. FitchAlert is relatively short-term and should be resolved within
12 months.
DUFF & PHELPS CREDIT RATING CO.
AAA: Bonds considered to be investment grade and of the highest credit qual-
ity. The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and or very high credit quality.
The obligor's ability to pay interest and repay principal is very strong, al-
though not quite as strong as bonds rated "AAA'. Because bonds rated in the
"AAA' and "AA' categories are not significantly vulnerable to foreseeable fu-
ture developments, short-term debt of these issuers is generally rated "D-1+'.
A-4
<PAGE>
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 consid-
ered 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 through-
out 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.
PLUS (+) OR MINUS (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within a rating category. Plus and
minus signs, however, are not used in the "AAA' category.
NR: Indicates that Duff & Phelps does not rate the specific issue.
DUFF & PHELPS SHORT-TERM RATINGS
D-1+: Highest certainty of timely payment. Short-term liquidity, including
internal operation factors and/or access to alternative sources of funds, is
outstanding and safety is just below risk-free U.S. Treasury short-term obli-
gations.
D-1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
D-1: High certainty of timely payment. Liquidity factors are strong and sup-
ported by good fundamental protection factors. Risk factors are very small.
D-2: Good certainty of timely payment. Liquidity factors and company funda-
mentals are sound. Although ongoing funding needs may enlarge total financing
requirements, access to capital markets is good. Risk factors are small.
D-3: Satisfactory liquidity and other protection factors qualify issues as
to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.
D-4: Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service. Operating factors and market access
may be subject to a high degree of variation.
D-5: Issuer failed to meet scheduled principal and/or interest payments.
A-5
<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
Investors Bank & Trust Company 89 South Street, Boston, MA 02111
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) 343-2829, ext. 3500
MAILING ADDRESS:
P.O. Box 1400, Boston, MA 02104-9985
INDEPENDENT AUDITORS
Deloitte & Touche llp 125 Summer Street, Boston, MA 02110
[LOGO OF MFS INVESTMENT MANAGEMENT APPEARS HERE]
MFS(R) VARIABLE INSURANCE TRUST
500 Boylston Street, Boston, MA 02116
--------------------------
MFS(R) EMERGING GROWTH SERIES
MFS(R) GROWTH WITH INCOME SERIES
MFS(R) TOTAL RETURN SERIES
MFS(R) BOND SERIES
[PICTURE APPEARS HERE]
PROSPECTUS
SEPTEMBER 30, 1997
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