As filed with the Securities and Exchange Commission on January 26, 1996

1933 Act File No. 2-38613
1940 Act File No. 811-2031

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 41

AND

REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 26

MFS SERIES TRUST V
(Exact Name of Registrant as Specified in Charter)

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

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


(Name and Address of Agent for Service)

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:

It is proposed that this filing will become effective (check appropriate box)

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

|X| on January 28, 1996 pursuant to paragraph (b)

|_| 60 days after filing pursuant to paragraph (a)(i) |_| on [date] pursuant to paragraph (a)(i) |_| 75 days after filing pursuant to paragraph (a)(ii) |_| on [date] pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

|_| this post-effective amendment designates a new effective date for a previously filed post-effective amendment

Pursuant to Rule 24f-2, the Registrant has registered an indefinite number of its Shares of Beneficial Interest, (without par value), under the Securities Act of 1933. The Registrant filed a Rule 24f-2 Notice for its fiscal year ended September 30, 1995 on November 16, 1995.



MFS SERIES TRUST V

MFS TOTAL RETURN FUND
MFS RESEARCH FUND

CROSS REFERENCE SHEET

(Pursuant to Rule 404 showing location in Prospectus and/or Statement of Additional Information of the responses to the Items in Parts A and B of Form N-1A)

                                                               STATEMENT OF
   ITEM NUMBER                                                  ADDITIONAL
FORM N-1A, PART A       PROSPECTUS CAPTION                 INFORMATION CAPTION
- -----------------       ------------------                 -------------------
   1  (a),(b)           Front Cover Page                            *

   2  (a)               Expense Summary                             *

      (b),(c)                 *                                     *

   3  (a)               Condensed Financial Information             *

      (b)                     *                                     *

      (c)               Information Concerning Shares               *
                         of the Fund - Performance
                         Information

      (d)               Condensed Financial Information             *

   4  (a)               The Fund; Investment Objectives             *
                         and Policies

      (b),(c)           Investment Objectives and Policies          *

   5  (a)               The Fund; Management of the                 *
                         Fund - Investment Adviser

      (b)               Front Cover Page; Management                *
                         of the Fund - Investment
                         Adviser; Back Cover Page

      (c)               Management of the Fund                      *

      (d)                     *                                     *

      (e)               Back Cover Page                             *

      (f)               Expense Summary; Condensed                  *
                         Financial Information

      (g)               Investment Objectives and Policies          *

   5A (a),(b)                 **                                    **

   6  (a)               Information Concerning Shares               *
                         of the Fund - Description of
                         Shares, Voting Rights and
                         Liabilities; Information Concerning
                         Shares of the Fund - Redemptions
                         and Repurchases; Information
                         Concerning Shares of the Fund -
                         Purchases

      (b),(c),(d)             *                                     *

      (e)               Shareholder Services                        *

      (f)               Information Concerning Shares               *
                         of the Fund - Dividends and
                         Capital Gain Distributions;
                         Shareholder Services -
                         Distribution Options

      (g)               Information Concerning Shares               *
                         of the Fund - Tax Status;
                         Information Concerning Shares
                         of the Fund - Dividends and
                         Capital Gain Distributions

   7  (a)               Front Cover Page; Management                *
                         of the Fund - Distributor; Back
                         Cover Page

      (b)               Information Concerning Shares               *
                         of the Fund - Purchases

      (c)               Information Concerning Shares               *
                         of the Fund - Purchases;
                         Information Concerning Shares
                         of the Fund - Exchanges;

      (d)               Front Cover Page; Information               *
                         Concerning Shares of the Fund -
                         Purchases

      (e)               Information Concerning Shares               *
                         of the Fund - Distribution Plans;
                         Expense Summary

      (f)               Information Concerning Shares               *
                         of the Fund - Distribution Plans

   8  (a)               Information Concerning Shares               *
                         of the Fund - Redemptions and
                         Repurchases; Information
                         Concerning Shares of the Fund -
                         Purchases

      (b),(c),(d)       Information Concerning Shares               *
                         of the Fund - Redemptions and
                         Repurchases

   9                          *                                     *

  10  (a),(b)                 *                       Front Cover Page

  11                          *                       Front Cover Page

  12                    The Fund                      Definitions

  13  (a),(b),(c)             *                       Investment Objectives;
                                                       Policies and Restrictions

      (d)                     *                                     *

  14  (a),(b)                 *                       Management of the Fund -
                                                       Trustees and Officers

      (c)                     *                                     *

  15  (a)                     *                                     *

      (b),(c)                 *                       Management of the Fund -
                                                       Trustees and Officers

  16  (a)               Management of the Fund -      Management of the Fund -
                         Investment Adviser            Investment Adviser;
                                                      Management of the Fund -
                                                       Trustees and Officers

      (b)               Management of the Fund -      Management of the Fund -
                         Investment Adviser            Investment Adviser

      (c)                     *                                     *

      (d)                     *                       Management of the Fund -
                                                       Investment Adviser

      (e)                     *                       Portfolio Transactions and
                                                       Brokerage Commissions

      (f)               Information Concerning        Distribution Plans
                         Shares of the Fund -
                         Distribution Plans

      (g)                     *                                     *


      (h)                     *                       Management of the Fund -
                                                       Custodian; Independent
                                                       Auditors and Financial
                                                       Statements; Back Cover
                                                       Page


      (i)                     *                       Management of the Fund -
                                                       Shareholder Servicing
                                                       Agent

  17  (a)                     *                       Portfolio Transactions and
                                                       Brokerage Commissions

      (b)                     *                                     *

      (c)                     *                       Portfolio Transactions and
                                                       Brokerage Commissions

      (d)                     *                                     *

      (e)                     *                       Portfolio Transactions and
                                                       Brokerage Commissions

  18  (a)               Information Concerning        Description of Shares
                         Shares of the Fund -          Voting Rights and
                         Description of Shares,        Liabilities
                         Voting Rights and
                         Liabilities

      (b)                     *                                     *

  19  (a)               Information Concerning        Shareholder Services
                         Shares of the Fund -
                         Purchases; Shareholder
                         Services

      (b)               Information Concerning        Management of the Fund -
                         Shares of the Fund -          Principal Underwriter;
                         Net Asset Value;              Determination of Net
                         Information Concerning        Asset Value and
                         Shares of the Fund -          Performance - Net Asset
                         Purchases                     Value

      (c)                     *                                     *

  20                          *                       Tax Status

  21  (a)                     *                       Management of the Fund -
                                                       Principal Underwriter;
                                                       Distribution Plans

      (b)                     *                       Management of the Fund -
                                                       Principal Underwriter;
                                                       Distribution Plans

      (c)                     *                                     *

  22  (a)                     *                                     *

      (b)                     *                       Determination of Net Asset
                                                       Value and Performance


  23                          *                       Independent Auditors
                                                       and Financial Statements


*Not Applicable
**Contained in Annual Report

PROSPECTUS

                                           February 1, 1996
MFS(R) TOTAL                               Class A Shares of Beneficial Interest
RETURN FUND                                Class B Shares of Beneficial Interest
(A member of the MFS Family of Funds(R))   Class C Shares of Beneficial Interest
- -----------------------------------------------------------------------

                                                                          Page
                                                                          ----
1. Expense Summary .................................................        2
2. The Fund ........................................................        3
3. Condensed Financial Information .................................        4
4. Investment Objectives and Policies ..............................        5
5. Management of the Fund ..........................................       13
6. Information Concerning Shares of the Fund .......................       15
       Purchases ...................................................       15
       Exchanges ...................................................       18
       Redemptions and Repurchases .................................       19
       Distribution Plans ..........................................       21
       Distributions ...............................................       23
       Tax Status ..................................................       23
       Net Asset Value .............................................       23
       Description of Shares, Voting Rights and Liabilities ........       23
       Performance Information .....................................       24
7. Shareholder Services ............................................       24
   Appendix A ......................................................      A-1
   Appendix B ......................................................      B-1
   Appendix C ......................................................      C-1

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.

MFS TOTAL RETURN FUND
500 Boylston Street, Boston, Massachusetts 02116 (617) 954-5000

The primary investment objective of the MFS Total Return Fund (the "Fund") is to obtain above-average income (compared to a portfolio entirely invested in equity securities) consistent with prudent employment of capital. The Fund's secondary objective is to take advantage of opportunities for growth of capital and income. Generally, at least 25% of the Fund's assets are invested in fixed income securities and at least 40% and no more than 75% of the Fund's assets will be invested in equity securities (see "Investment Objectives and Policies"). The Fund is a diversified series of MFS Series Trust V (the "Trust"), an open-end investment company. The minimum initial investment generally is $1,000 per account (see "Purchases").

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

INVESTMENT PRODUCTS ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY, AND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY FINANCIAL

INSTITUTION. SHARES OF MUTUAL FUNDS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED, AND WILL FLUCTUATE IN VALUE. YOU MAY RECEIVE MORE OR LESS THAN YOU PAID WHEN YOU REDEEM YOUR SHARES.

This Prospectus sets forth concisely the information concerning the Trust and the Fund that a prospective investor ought to know before investing. The Trust, on behalf of the Fund, has filed with the Securities and Exchange Commission (the "SEC") a Statement of Additional Information (the "SAI"), dated February 1, 1996, as amended or supplemented from time to time, which contains more detailed information about the Trust and the Fund. The SAI is incorporated into this Prospectus by reference. See page 26 for a further description of the information set forth in the SAI. A copy of the SAI may be obtained without charge by contacting the Shareholder Servicing Agent (see back cover for address and phone number).

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


1. EXPENSE SUMMARY

                                                                            CLASS A       CLASS B       CLASS C
                                                                            -------       -------       -------
SHAREHOLDER TRANSACTION EXPENSES:
    Maximum Initial Sales Charge Imposed on Purchases of Fund Shares
      (as a percentage of offering price) .............................      4.75%         0.00%         0.00%
    Maximum Contingent Deferred Sales Charge (as a percentage of
      original purchase price or redemption proceeds, as applicable) ..  See Below(1)      4.00%         0.00%
ANNUAL OPERATING EXPENSES OF THE FUND (AS A PERCENTAGE OF AVERAGE NET ASSETS):
    Management Fees ...................................................      0.39%         0.39%         0.39%
    Rule 12b-1 Fees ...................................................      0.35%(2)      1.00%(3)      1.00%(3)
    Other Expenses ....................................................      0.23%         0.32%         0.28%
                                                                             ----          ----          ----
    Total Operating Expenses ..........................................      0.97%         1.71%         1.67%
- ----------
(1) Purchases of $1 million or more are not subject to an initial sales charge;
    however, a Contingent Deferred Sales Charge ("CDSC") of 1% will be imposed
    on such purchases in the event of certain redemption transactions within 12
    months following such purchases. See "Information Concerning Shares of the
    Fund -- Purchases" below.
(2) The Fund has adopted a Distribution Plan for its Class A shares in
    accordance with Rule 12b-1 under the Investment Company Act of 1940, as
    amended (the "1940 Act"), which provides that it will pay distribution/
    service fees aggregating up to (but not necessarily all of) 0.35% per annum
    of the average daily net assets attributable to the Class A shares. See
    "Information Concerning Shares of the Fund -- Distribution Plans" below. The
    0.35% per annum distribution/service fee is reduced to 0.25% per annum for
    shares purchased prior to October 1, 1989. Distribution expenses paid under
    this Plan, together with the initial sales charge, may cause long-term
    shareholders to pay more than the maximum sales charge that would have been
    permissible if imposed entirely as an initial sales charge.
(3) The Fund has adopted separate Distribution Plans for its Class B and its
    Class C shares in accordance with Rule 12b-1 under the 1940 Act, which
    provide that it will pay distribution/service fees aggregating up to 1.00%
    per annum of the average daily net assets attributable to the Class B shares
    under the Class B Distribution Plan and the Class C shares under the Class C
    Distribution Plan. See "Information Concerning Shares of the Fund --
    Distribution Plans" below. Distribution expenses paid under these Plans,
    together with any CDSC payable upon redemption of Class B shares, may cause
    long-term shareholders to pay more than the maximum sales charge that would
    have been permissibie if imposed entirely as an initial sales charge.

EXAMPLE OF EXPENSES

An investor would pay the following dollar amounts of expenses on a $1,000 investment in the Fund, assuming (a) a 5% annual return and (b) redemption at the end of each of the time periods indicated (unless otherwise noted):

  PERIOD                    CLASS A               CLASS B                CLASS C
  ------                    -------     ----------------------------     -------
                                                           (1)
   1 year ...............    $ 57           $ 57           $ 17           $ 17
   3 years ..............      77             84             54             53
   5 years ..............      99            113             93             91
  10 years ..............     161            182(2)         182(2)         198

- ----------
(1) Assumes no redemption.

(2) Class B shares convert to Class A shares approximately eight years after purchase; therefore, years nine and ten reflect Class A expenses.

The purpose of the expense table above is to assist investors in understanding the various costs and expenses that a shareholder of the Fund will bear directly or indirectly. More complete descriptions of the following Fund expenses are set forth in the following sections of the Prospectus: (i) varying sales charges on share purchases -- "Purchases"; (ii) varying CDSCs -- "Purchases"; (iii) management fees -- "Investment Adviser"; and (iv) Rule 12b- 1 (i.e., distribution plan) fees -- "Distribution Plans."

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

2. THE FUND The Fund is a diversified series of the Trust, an open-end management investment company which was organized as a business trust under the laws of The Commonwealth of Massachusetts in 1984. The Fund and its predecessor have been in business since 1970. The Trust presently consists of two series, each of which represents a portfolio with separate investment objectives and policies. Shares of the Fund are continuously sold to the public and the Fund then uses the proceeds to buy securities (stocks, bonds and other instruments) for its portfolio. Three classes of shares of the Fund currently are offered to the general public. Class A shares are offered at net asset value plus an initial sales charge (or a CDSC in the case of certain purchases of $1 million or more) and subject to a Distribution Plan, providing for an annual distribution fee and a service fee. Class B shares are offered at net asset value without an initial sales charge but subject to a CDSC and a Distribution Plan providing for an annual distribution fee and service fee which are greater than the Class A distribution fee and service fee. Class B shares will convert to Class A shares approximately eight years after purchase. Class C shares are offered at net asset value without an initial sales charge or a CDSC but subject to a Distribution Plan providing for an annual distribution fee and service fee which are equal to the Class B distribution fee and service fee. Class C shares do not convert to any other class of shares of the Fund.

The Trust's Board of Trustees provides broad supervision over the affairs of the Fund. Massachusetts Financial Services Company, a Delaware corporation ("MFS" or the "Adviser"), is the Fund's investment adviser. The Adviser is responsible for the management of the Fund's assets and the officers of the Trust are responsible for the Fund's operations. The Adviser manages the portfolio from day to day in accordance with the Fund's investment objectives and policies. The selection of investments and the way they are managed depend on conditions and trends in the economy and the financial marketplaces. The Fund also offers to buy back (redeem) its shares from its shareholders at any time at net asset value, less any applicable CDSC.


3. CONDENSED FINANCIAL INFORMATION The following information has been audited for at least the latest five fiscal years of the Fund and should be read in conjunction with the financial statements included in the Fund's Annual Report to shareholders which are incorporated by reference into the SAI in reliance upon the report of the Fund's independent auditors given upon their authority, as experts in accounting and auditing. The Fund's current independent auditors are Deloitte & Touche LLP.

FINANCIAL HIGHLIGHTS

                                                                 YEAR ENDED SEPTEMBER 30,
                        ----------------------------------------------------------------------------------------------------------
                          1995       1994       1993       1992       1991       1990       1989       1988       1987       1986
                          ----       ----       ----       ----       ----       ----       ----       ----       ----       ----
                        CLASS A
                        -------
PER SHARE DATA (FOR A
  SHARE OUTSTANDING
  THROUGHOUT EACH PERIOD):
Net asset value --
 beginning of period     $12.80     $13.70     $12.42     $11.82     $10.25     $11.58     $10.13     $11.47     $ 9.77     $ 8.73
                         ------     ------     ------     ------     ------     ------     ------     ------     ------     ------
Income from investment
 operations<F3> --
  Net investment
    income<F1> ......    $ 0.64     $ 0.54     $ 0.45     $ 0.65     $ 0.67     $ 0.64     $ 0.65     $ 0.62     $ 0.56     $ 0.60
  Net realized and
    unrealized gain
    (loss) on
    investments and
    foreign currency
    transactions ....      1.64      (0.69)      1.74       0.75       1.57      (1.25)      1.71      (1.07)      2.07       1.91
                         ------     ------     ------     ------     ------     ------     ------     ------     ------     ------
    Total from
      investment
      operations ....    $ 2.28     $(0.15)    $ 2.19     $ 1.40     $ 2.24     $(0.61)    $ 2.36     $(0.45)    $ 2.63     $ 2.51
                         ------     ------     ------     ------     ------     ------     ------     ------     ------     ------
Less distributions
 declared to
 shareholders --
  From net investment
    income<F5> ......    $(0.61)    $(0.54)    $(0.59)    $(0.66)    $(0.61)    $(0.66)    $(0.63)    $(0.60)     $(0.56)   $(0.59)
  In excess of net
    investment
    income<F3> ......     --          --         --         --         --         --         --         --         --         --
  From net realized
    gain on
    investments and
    foreign currency
    transactions ....     (0.01)     (0.10)     (0.32)     (0.14)     (0.06)     (0.06)     (0.28)     (0.08)     (0.36)     (0.88)
  In excess of net
    realized gain on
    investments and
    foreign currency
    transactions ....     --         (0.11)      --         --         --         --         --         --         --         --
  From paid-in
    capital .........     --          --         --         --         --         --         --        (0.21)     (0.01)      --
                         ------     ------     ------     ------     ------     ------     ------     ------     ------     ------
    Total distributions
      declared to
      shareholders ..    $(0.62)    $(0.75)    $(0.91)    $(0.80)    $(0.67)    $(0.72)    $(0.91)    $(0.89)    $(0.93)    $(1.47)
                         ------     ------     ------     ------     ------     ------     ------     ------     ------     ------
Net asset value --
  end of period .....    $14.46     $12.80     $13.70     $12.42     $11.82     $10.25     $11.58     $10.13     $11.47     $ 9.77
                         ======     ======     ======     ======     ======     ======     ======     ======     ======     ======
TOTAL RETURN<F2> ....    18.36%    (1.07)%     18.32%     12.26%     22.25%    (5.59)%     23.46%    (3.93)%     26.81%     28.45%
RATIOS (TO AVERAGE NET
  ASSETS)/SUPPLEMENTAL
  DATA:<F1>
  Expenses<F6> ......     0.87%      0.85%      0.84%      0.84%      0.87%      0.85%      0.72%      0.71%      0.63%      0.67%
  Net investment
    income ..........     4.82%      4.26%      4.51%      5.40%      5.89%      5.71%      5.97%      6.06%      5.05%      5.67%
PORTFOLIO TURNOVER ..      102%        91%        95%        84%        74%        50%        53%        52%        58%        94%
NET ASSETS AT END OF
  PERIOD (000,000
  OMITTED) ..........    $2,242     $1,857     $1,702     $1,198     $  909     $  707     $  628     $  508     $  551     $  309
<F1> The distributor waived a portion of its distribution fee for the periods indicated. If this fee had been incurred by the
     Fund, the net investment income per share and ratios would have been:

  Net investment
    income ..........     $0.63     $ 0.52       --         --         --         --         --         --         --         --
  Ratios (to average net assets):
    Expenses<F6> ....     0.97%      0.95%       --         --         --         --         --         --         --         --
    Net investment
      income ........     4.72%      4.16%       --         --         --         --         --         --         --         --
- ----------

<F2> Total returns for Class A shares do not include the sales charge (except for reinvested dividends prior to October 1,
     1989). If the charge had been included, the results would have been lower.
<F3> Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.
<F4> For the year ended September 30, 1993, the per share distribution in excess of net investment income on Class A shares was
     $0.0035.
<F5> For the years ended September 30, 1992 and 1991, $0.0508 and $0.0596, respectively, of per share distributions from net
     investment income have been redesignated as distributions from capital gains.
<F6> For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
     indirectly.


FINANCIAL HIGHLIGHTS -- CONTINUED

                                                                  YEAR ENDED SEPTEMBER 30,
                                               --------------------------------------------------------
                                                1995        1994        1993<F1>    1995       1994<F2>
                                               ------      ------      ------      ------      ------
                                               CLASS B                             CLASS C
                                               -------                             -------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD):
Net asset value -- beginning of period ....    $12.80      $13.70      $13.53      $12.80      $12.92
                                               ------      ------      ------      ------      ------
Income from investment operations<F4> --
  Net investment income ...................    $ 0.53      $ 0.39      $ 0.06      $ 0.54      $ 0.08
  Net realized and unrealized gain (loss)
    on investments and foreign currency
    transactions ..........................      1.64       (0.65)       0.16        1.66       (0.13)
                                               ------      ------      ------      ------      ------
    Total from investment operations ......    $ 2.17      $(0.26)     $ 0.22      $ 2.20      $(0.00)
                                               ------      ------      ------      ------      ------
Less distributions declared to shareholders --
  From net investment income ..............    $(0.50)     $(0.43)     $(0.05)     $(0.50)     $(0.07)
  From net realized gain on investments and
    foreign currency transactions .........     (0.01)      (0.10)        --        (0.01)        --
  In excess of net realized gain on
    investments and foreign currency
    transactions ..........................       --        (0.11)        --          --          --
                                               ------      ------      ------      ------      ------
    Total distributions declared to
      shareholders ........................    $(0.51)     $(0.64)     $(0.05)     $(0.51)     $(0.07)
                                               ------      ------      ------      ------      ------
Net asset value -- end of period ..........    $14.46      $12.80      $13.70      $14.49      $12.80
                                               ======      ======      ======      ======      ======
TOTAL RETURN ..............................    17.46%     (1.93)%      15.24%<F3>  17.66%     (0.41)%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
  Expenses<F5> ............................     1.71%       1.70%       1.75%<F3>   1.67%       1.76%<F3>
  Net investment income ...................     3.97%       3.45%       3.98%<F3>   4.14%       4.08%<F3>

PORTFOLIO TURNOVER ........................      102%         91%         95%        102%         91%
NET ASSETS AT END OF PERIOD (000,000 OMITTED)  $1,005        $843        $532         $23          $1

- ----------
<F1> For the period from commencement of offering of Class B shares, August 23, 1993 to September 30, 1993.
<F2> For the period from commencement of offering of Class C shares, August 1, 1994 to September 30, 1994.
<F3> Annualized.
<F4> Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.
<F5> For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
     indirectly.


4. INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVES -- The Fund's primary investment objective is to obtain above-average income (compared to a portfolio entirely invested in equity securities) consistent with the prudent employment of capital. While current income is the primary objective, the Fund believes that there should also be a reasonable opportunity for growth of capital and income, since many securities offering a better than average yield may also possess growth potential. Thus, in selecting securities for its portfolio, the Fund considers each of these objectives. Under normal market conditions, at least 25% of the Fund's assets will be invested in fixed income securities and at least 40% and no more than 75% of the Fund's assets will be invested in equity securities. Any investment involves risk and there can be no assurance that the Fund will achieve its investment objectives.

INVESTMENT POLICIES -- The Fund's 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. Fixed income securities and equity securities (which include: common and preferred stocks; securities such as bonds, warrants or rights that are convertible into stock; and depositary receipts for those securities) may be held by the Fund. Some fixed income securities may also have a call on common stock by means of a conversion privilege or attached warrants. The Fund 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 Fund's debt investments may consist of both "investment grade" securities (rated Baa or better by Moody's Investors Service, Inc. ("Moody's") or BBB or better by Standard and Poor's Ratings Group ("S&P") or Fitch Investors Service, Inc. ("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 Fitch) (commonly known as "junk bonds") including up to 20% of its net assets in nonconvertible fixed income securities that are in these lower rating categories and comparable unrated securities (see "Risk Factors -- Lower Rated Bonds" below). Generally, most of the Fund's long-term debt investments will consist of "investment grade" securities. See Appendix B to this Prospectus for a description of these ratings and Appendix C for a chart showing the Fund's holdings of fixed income securities broken down by rating category as of the end of its most recent fiscal year. It is not the Fund's policy to rely exclusively on ratings issued by established credit rating agencies but rather to supplement such ratings with the Adviser's own independent and ongoing review of credit quality.

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

MORTGAGE PASS-THROUGH SECURITIES: The Fund may invest in mortgage pass-through securities. Mortgage pass-through securities are securities representing interests in "pools" of mortgage loans. Monthly payments of interest and principal by the individual borrowers on mortgages are passed through to the holders of the securities (net of fees paid to the issuer or guarantor of the securities) as the mortgages in the underlying mortgage pools are paid off. Payment of principal and interest on some mortgage pass-through securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of the U.S. Government (in the case of securities guaranteed by GNMA); or guaranteed by U.S. Government-sponsored corporations (such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, which are supported only by the discretionary authority of the U.S. Government to purchase the agency's obligations). Mortgage pass-through securities may also be issued by non-governmental issuers (such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers). See the SAI for a further discussion of these securities.

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

FOREIGN SECURITIES: The Fund may invest up to 20% (and generally expects to invest between 5% and 20%) of its total assets in foreign securities which are not traded on a U.S. exchange (not including American Depositary Receipts). Investing in securities of foreign issuers generally involves risks not ordinarily associated with investing in securities of domestic issuers. These include changes in currency rates, exchange control regulations, governmental administration or economic or monetary policy (in the United States or abroad) or circumstances in dealings between nations. Costs may be incurred in connection with conversions between various currencies. Special considerations may also include more limited information about foreign issuers, higher brokerage costs, different accounting standards and thinner trading markets. Foreign securities markets may also be less liquid, more volatile and less subject to government supervision than in the United States. Investments in foreign countries could be affected by other factors including expropriation, confiscatory taxation and potential difficulties in enforcing contractual obligations and could be subject to extended settlement periods. The Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date, based on anticipated changes in the relevant exchange rate. The Fund 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.

EMERGING MARKET SECURITIES: Consistent with the Fund's objective and policies, the Fund 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 to have an emerging market economy, taking into account a number of factors, including whether the country has a low- to middle-income economy according to the International Bank for Reconstruction and Development, the country's foreign currency debt rating, its political and economic stability and the development of its financial and capital markets. The Adviser determines whether an issuer's principal activities are located in an emerging market country by considering such factors as its country of organization, the principal trading market for 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 scurity is issued or guaranteed by the government of that country or any of its agencies, authorities or instrumentalities; (b) the issuer is organized under the laws of, and maintains a principal office in, that country; (c) the issuer has its principal securities trading market in that country; (d) the issuer derives 50% or more of its total revenues from goods sold or services performed in that country; or (e) the issuer has 50% or more of its assets in that country.

BRADY BONDS: The Fund may invest in Brady Bonds, which are securities created through the exchange of existing commercial bank loans to public and private entities in certain emerging markets for new bonds in connection with debt restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan"). Brady Plan debt restructurings have been implemented to date in Argentina, Brazil, Bulgaria, Costa Rica, 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 having the same maturity as the bonds. Brady Bonds are often viewed as having three or four valuation components: the collateralized repayment of principal at final maturity; the collateralized interest payments; the uncollateralized interest payments; and any uncollateralized repayment of principal at maturity (these uncollateralized amounts constituting the "residual risk"). In light of the residual risk of Brady Bonds and the history of defaults of countries issuing Brady Bonds with respect to commercial bank loans by public and private entities, investments in Brady Bonds may be viewed as speculative.

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

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

LENDING OF SECURITIES: The Fund may seek to increase its income by lending portfolio securities. Such loans will usually be made only to member firms (and subsidiaries thereof) of the New York Stock Exchange and to member banks of the Federal Reserve System, and would be required to be secured continuously by collateral in cash, U.S. Government securities 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. The Fund will continue to collect the equivalent of interest on the securities loaned and will also receive either interest (through investment of cash collateral) or a fee (if the collateral is U.S. Government securities).

"WHEN-ISSUED" SECURITIES: The Fund may purchase securities on a "when-issued" or on a "forward delivery" basis, which means that the securities will be delivered to the Fund at a future date usually beyond customary settlement time. The commitment to purchase a security for which payment will be made on a future date may be deemed a separate security. The Fund does not pay for the securities until received, and does not start earning interest on the securities until the contractual settlement date. In order to invest its assets immediately, while awaiting delivery of securities purchased on such bases, the Fund will normally invest in cash, short-term money market instruments and high quality debt securities.

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

MORTGAGE "DOLLAR ROLL" TRANSACTIONS: The Fund may enter into mortgage "dollar roll" transactions with selected banks and broker-dealers pursuant to which the Fund sells mortgage-backed securities for delivery in the future (generally within 30 days) and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. The Fund will only enter into covered rolls. A "covered roll" is a specific type of dollar roll for which there is an offsetting cash position or a cash equivalent security position which matures on or before the forward settlement date of the dollar roll transaction.

LOAN PARTICIPATIONS AND OTHER DIRECT INDEBTEDNESS: The Fund may invest a portion of its assets in "loan participations." By purchasing a loan participation, the Fund 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 activities. Such loans may be in default at the time of purchase. The Fund may also purchase trade or other claims against companies, which generally represent money owed by the company to a supplier of goods or services. These claims may also be purchased at a time when the company is in default. Certain of the loan participations acquired by the Fund may involve revolving credit facilities or other standby financing commitments which obligate the Fund to pay additional cash on a certain date or on demand.

The highly leveraged nature of many such loans may make such loans especially vulnerable to adverse changes in economic or market conditions. Loan participations and other direct investments may not be in the form of securities or may be subject to restrictions on transfer, and only limited opportunities may exist to resell such instruments. As a result, the Fund 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 discussion of loan participations and the risks related to transactions therein, see the SAI.

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

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

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

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

Swaps, caps, floors and collars are highly specialized activities which involve certain risks. See the SAI for risks involved in these activities.

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

CORPORATE ASSET-BACKED SECURITIES: The Fund may invest in corporate asset- backed securities. These securities, issued by trusts and special purpose corporations, are backed by a pool of assets, such as credit card or automobile loan receivables, representing the obligations of a number of different parties. Corporate asset-backed securities present certain risks. For instance, in the case of credit card receivables, these securities may not have the benefit of any security interest in the related collateral. See the SAI for further information on these securities.

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

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

The Fund may also enter into options on the yield "spread," or yield differential, between two securities, a transaction referred to as a "yield curve" option, for hedging and non-hedging (an effort to increase current income) purposes. In contrast to other types of options, a yield curve option is based on the difference between the yields of designated securities rather than the actual prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is profitable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease. Yield curve options written by the Fund 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 "Risk Factors" 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.

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

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

OPTIONS ON FOREIGN CURRENCIES: The Fund may also purchase and write options on foreign currencies ("Options on Foreign Currencies") for the purpose of protecting against declines in the dollar value of portfolio securities and against increases in the dollar cost of securities to be acquired. As in the case of other types of options, however, the writing of an Option on Foreign Currency will constitute only a partial hedge, up to the amount of the premium received, and the Fund may be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. The purchase of an Option on Foreign Currency may constitute an effective hedge against fluctuations in exchange rates although, in the event of rate movements adverse to the Fund's position, it may forfeit the entire amount of the premium paid for the option plus related transaction costs. The Fund may also choose to, or be required to, receive delivery of the foreign currencies underlying Options on Foreign Currencies it has entered into. Under certain circumstances, such as where the Adviser believes that the applicable exchange rate is unfavorable at the time the currencies are received or the Adviser anticipates, for any other reason, that the exchange rate will improve, the Fund may hold such currencies for an indefinite period of time. See "Investment Objectives and Policies -- Foreign Securities" in the SAI for information on the risks associated with holding foreign currency.

FUTURES CONTRACTS: The Fund may enter into contracts for the purchase or sale for future delivery of fixed income securities or foreign currencies or contracts based on indices of securities or currencies (including any index of U.S. or foreign securities) as such instruments become available for trading ("Futures Contracts"). Such transactions will be entered into for hedging purposes, in order to protect the Fund's current or intended investments from the effects of changes in interest or exchange rates or declines in a securities market, as well as for non-hedging purposes, to the extent permitted by applicable law. The Fund will incur brokerage fees when it purchases and sells Futures Contracts, and will be required to maintain margin deposits. In addition, Futures Contracts entail risks. Although the Adviser believes that use of such contracts will benefit the Fund, if its investment judgment about the general direction of interest or exchange rates or a securities market is incorrect, the Fund's overall performance may be poorer than if it had not entered into any such contract and the Fund may realize a loss. The Fund will not enter into any Futures Contract if immediately thereafter the value of securities and other obligations underlying all such Futures Contracts would exceed 50% of the value of its total assets.

OPTIONS ON FUTURES CONTRACTS: The Fund may purchase and write options on Futures Contracts ("Options on Futures Contracts") for hedging purposes or for non-hedging purposes to the extent permitted by applicable law. Purchases of Options on Futures Contracts may present less risk in hedging the Fund's portfolio than the purchase or sale of the underlying Futures Contracts since the potential loss is limited to the amount of the premium plus related transaction costs, although it may be necessary to exercise the option to realize any profit, which results in the establishment of a futures position. The writing of Options on Futures Contracts, however, does not present less risk than the trading of Futures Contracts and will constitute only a partial hedge, up to the amount of the premium received. In addition, if an option is exercised, the Fund may suffer a loss on the transaction.

FORWARD CONTRACTS: The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a fixed quantity of a foreign currency at a future date ("Forward Contracts"). The Fund may enter into Forward Contracts for hedging purposes as well as for non-hedging purposes (i.e., speculative purposes). By entering into transactions in Forward Contracts, for hedging purposes, the Fund may be required to forego the benefits of advantageous changes in exchange rates and, in the case of Forward Contracts entered into for non-hedging purposes, the Fund may sustain losses which will reduce its gross income. Such transactions, therefore, could be considered speculative. Forward Contracts are traded over-the-counter and not on organized commodities or securities exchanges. As a result, Forward Contracts operate in a manner distinct from exchange-traded instruments, and their use involves certain risks beyond those associated with transactions in Futures Contracts or options traded on exchanges. The Fund may choose to, or be required to, receive delivery of the foreign currencies underlying Forward Contracts it has entered into. Under certain circumstances, such as where the Adviser believes that the applicable exchange rate is unfavorable at the time the currencies are received or the Adviser anticipates, for any other reason, that the exchange rate will improve, the Fund may hold such currencies for an indefinite period of time. The Fund may also enter into a Forward Contract on one currency to hedge against risk of loss arising from fluctuations in the value of a second currency (referred to as a "cross hedge") if, in the judgment of the Adviser, a reasonable degree of correlation can be expected between movements in the values of the two currencies. The Fund has established procedures consistent with statements of the SEC and its staff regarding the use of Forward Contracts by registered investment companies, which requires use of segregated assets or "cover" in connection with the purchase and sale of such contracts. See "Investment Objective and Policies -- Foreign Securities" in the SAI for information on the risks associated with holding foreign currency.

RISK FACTORS --
LOWER RATED BONDS: The Fund may invest in fixed income securities rated Baa by Moody's or BBB by S&P or Fitch and comparable unrated securities. These securities, while normally exhibiting adequate protection parameters, have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than in the case of higher grade fixed income securities.

The Fund may also invest in securities rated Ba or lower by Moody's or BB or lower by S&P or Fitch and comparable unrated securities (commonly known as "junk bonds") to the extent described above. No minimum rating standard is required by the Fund. These securities are considered speculative and, while generally providing greater income than investments in higher rated securities, will involve greater risk of principal and income (including the possibility of default or bankruptcy of the issuers of such securities) and may involve greater volatility of price (especially during periods of economic uncertainty or change) than securities in the higher rating categories. However, since yields vary over time, no specific level of income can ever be assured. These lower rated high yielding fixed income securities generally tend to reflect economic changes and short-term corporate and industry developments to a greater extent than higher rated securities which react primarily to fluctuations in the general level of interest rates (although these lower rated fixed income securities are also affected by changes in interest rates, the market's perception of their credit quality, and the outlook for economic growth). In the past, economic downturns or an increase in interest rates have, under certain circumstances, caused a higher incidence of default by the issuers of these securities and may do so in the future, especially in the case of highly leveraged issuers. During certain periods, the higher yields on the Fund's lower rated high yielding fixed income securities are paid primarily because of the increased risk of loss of principal and income, arising from such factors as the heightened possibility of default or bankruptcy of the issuers of such securities. Due to the fixed income payments of these securities, the Fund may continue to earn the same level of interest income while its net asset value declines due to portfolio losses, which could result in an increase in the Fund's yield despite the actual loss of principal. The market for these lower rated fixed income securities may be less liquid than the market for investment grade fixed income securities, and judgment may at times play a greater role in valuing these securities than in the case of investment grade fixed income securities. Changes in the value of securities subsequent to their acquisition will not affect cash income or yield to maturity to the Fund but will be reflected in the net asset value of shares of the Fund. See the SAI for more information on lower rated securities.

OPTIONS, FUTURES CONTRACTS AND FORWARD CONTRACTS: Although the Fund will enter into transactions in options, Futures Contracts, Options on Futures 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 the Fund's hedging strategy unsuccessful and could result in losses. The Fund also may enter into transactions in options, Futures Contracts, Options on Futures Contracts and Forward Contracts for other than hedging purposes, which involves greater risk. In particular, such transactions may result in losses for the Fund which are not offset by gains on other portfolio positions, thereby reducing gross income. In addition, foreign currency markets may be extremely volatile from time to time. There also can be no assurance that a liquid secondary market will exist for any contract purchased or sold, and the Fund may be required to maintain a position until exercise or expiration, which could result in losses. The SAI contains a description of the nature and trading mechanics of options, Futures Contracts, Options on Futures Contracts, Forward Contracts and Options on Foreign Currencies, and includes a discussion of the risks related to transactions therein.

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

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

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

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


PORTFOLIO TRADING: The primary consideration in placing portfolio security transactions with broker-dealers for execution is to obtain and maintain the availability of execution at the most favorable prices and in the most effective manner possible. Consistent with the foregoing primary consideration, the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD"), and such other policies as the Trustees may determine, the Adviser may consider sales of shares of the Fund and of the other investment company clients of MFD as a factor in the selection of broker-dealers to execute the Fund's portfolio transactions. 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 Fund's operating expenses (e.g., fees charged by the custodian of the Fund's assets). For a further discussion of portfolio trading, see "Portfolio Transactions and Brokerage Commissions" in the SAI. For the fiscal year ended September 30, 1995, the Fund had a portfolio turnover rate in excess of 100%. Transaction costs incurred by the Fund and the realized capital gains and losses of the Fund may be greater than that of a fund with a lesser portfolio turnover rate.

The portfolio will be managed actively with respect to the Fund's fixed income securities and the asset allocations modified as the Adviser deems necessary. Although the Fund does not intend to seek short-term profits, fixed income securities in its portfolio will be sold whenever the Adviser believes it is appropriate to do so without regard to the length of time the particular asset may have been held.

With respect to its equity securities, the Fund does not intend to trade in securities for short-term profits and anticipates that such securities ordinarily will be held for one year or longer. However, the Fund will effect trades whenever it believes that changes in its portfolio securities are appropriate.

The investment objectives and policies described above, including investing in Options, Options on Foreign Currency, Futures Contracts, Options on Futures Contracts and Forward Contracts, are not fundamental and may be changed without shareholder approval. A change in the Fund's investment objectives may result in the Fund having investment objectives different from the objectives which the shareholder considered appropriate at the time of investment in the Fund.

The SAI includes a discussion of other investment policies and a listing of specific investment restrictions which govern the Fund's investment policies. The specific investment restrictions listed in the SAI may be changed without shareholder approval unless indicated otherwise (see "Investment Restrictions" in the SAI). The Fund's investment limitations, policies and rating standards are adhered to at the time of purchase or utilization of assets; a subsequent change in circumstances will not be considered to result in a violation of policy.

5. MANAGEMENT OF THE FUND

INVESTMENT ADVISER -- The Adviser manages the Fund pursuant to an Investment Advisory Agreement, dated January 18, 1985 (the "Advisory Agreement"). The Adviser provides the Fund with overall investment advisory and administrative services, as well as general office facilities. David M. Calabro, a Vice President of the Adviser, Geoffrey L. Kurinsky, a Senior Vice President of the Adviser, Judith N. Lamb, a Vice President of the Adviser, Lisa B. Nurme, a Vice President of the Adviser, and Maura A. Shaughnessy, a Vice President of the Adviser, are the Fund's portfolio managers. Mr. Calabro is the head of this portfolio management team and a manager of the common stock portion of the Fund's portfolio. Mr. Calabro has been employed by the Adviser since 1992 and served as an analyst and sector portfolio manager with Fidelity Investments prior to that time. Mr. Kurinsky, the manager of the Fund's fixed income securities, has been employed by the Adviser since 1987. Ms. Lamb, the manager of the Fund's convertible securities, has been employed by the Adviser since 1992 and served as an analyst with Fidelity Investments prior to that time. Ms. Nurme, a manager of the common stock portion of the Fund's portfolio, has been employed by the Adviser since 1987. Ms. Shaughnessy, also a manager of the common stock portion of the Fund's portfolio, has been employed by the Adviser since 1991 and served as an analyst with Harvard Management Company prior to that time. Subject to such policies as the Trustees may determine, the Adviser makes investment decisions for the Fund. For these services and facilities, the Adviser receives a management fee, computed and paid monthly, fixed by a formula based upon a percentage of the Fund's average daily net assets plus a percentage of the Fund's gross income other than gains from the sale of securities. The applicable percentages are reduced as assets and income reach the following levels:

ANNUAL RATE OF MANAGEMENT FEE BASED         ANNUAL RATE OF MANAGEMENT FEE BASED
  ON AVERAGE DAILY NET ASSETS                  ON GROSS INCOME
- -----------------------------------         -----------------------------------
 .25% of the first $200 million              3.57% of the first $14 million
 .212% of average daily net assets           3.04% of gross income in excess
   in excess of $200 million                  of $14 million

For the Fund's fiscal year ended September 30, 1995, MFS received management fees under the Advisory Agreement of $11,256,389 (of which $6,210,710 was based on average daily net assets and $5,045,679 on gross income), equivalent, on an annualized basis, to 0.39% of the Fund's average daily net assets.

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)/Sun Life Series Trust, MFS Institutional Trust, MFS Union Standard Trust, MFS Variable Insurance Trust, MFS Municipal Income Trust, MFS Government Markets Income Trust, MFS Multimarket Income Trust, MFS Intermediate Income Trust, MFS Charter Income Trust, MFS Special Value Trust, Sun Growth Variable Annuity Fund, Inc. and seven variable accounts, each of which is a registered investment company established by Sun Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)") in connection with the sale of various fixed/variable annuity contracts. MFS and its wholly-owned subsidiary, MFS Asset Management, Inc., also provide investment advice to substantial private clients.

MFS is America's oldest mutual fund organization. MFS and its predecessor organizations have a history of money management dating from 1924 and the founding of the first mutual fund in the United States, Massachusetts Investors Trust. Net assets under the management of the MFS organization were approximately $42.2 billion on behalf of approximately 1.8 million investor accounts as of December 31, 1995. As of such date, the MFS organization managed approximately $20.6 billion of assets in fixed income securities. MFS is a wholly owned subsidiary of Sun Life of Canada (U.S.) which in turn is a wholly owned subsidiary of Sun Life Assurance Company of Canada ("Sun Life"). The Directors of MFS are A. Keith Brodkin, Jeffrey L. Shames, John R. Gardner, John D. McNeil and Arnold D. Scott. Mr. Brodkin is the Chairman, Mr. Shames is the President and Mr. Scott is the Secretary and a Senior Executive Vice President of MFS. Messrs. McNeil and Gardner are the Chairman and the President, respectively, of Sun Life. Sun Life, a mutual life insurance company, is one of the largest international life insurance companies and has been operating in the U.S. since 1895, establishing a headquarters office here in 1973. The executive officers of MFS report to the Chairman of Sun Life.

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

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

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

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

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

6. INFORMATION CONCERNING SHARES OF THE FUND PURCHASES Shares of the Fund may be purchased at the public offering price through any dealer and other financial institutions ("dealers") having a selling agreement with MFD. Dealers may also charge their customers fees relating to investments in the Fund.

The Fund offers three classes of shares (Class A, B and C shares) which bear sales charges and distribution fees in different forms and amounts, as described below:

CLASS A SHARES: Class A shares are generally offered at net asset value plus an initial sales charge, but in certain cases are offered at net asset value without an initial sales charge but subject to a CDSC.

PURCHASES SUBJECT TO INITIAL SALES CHARGE. Class A shares are offered at net asset value plus an initial sales charge as follows:

                                      SALES CHARGE* AS
                                       PERCENTAGE OF:
                              --------------------------------  DEALER ALLOWANCE
                                                   NET AMOUNT   AS A PERCENTAGE
AMOUNT OF PURCHASE               OFFERING PRICE     INVESTED   OF OFFERING PRICE
- ------------------               --------------    ----------- -----------------
Less than $100,000 ..............     4.75%           4.99%           4.00%
$100,000 but less than $250,000 .     4.00            4.17            3.20
$250,000 but less than $500,000 .     2.95            3.04            2.25
$500,000 but less than $1,000,000     2.20            2.25            1.70
$1,000,000 or more ..............     None**          None**        See Below**


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

MFD allows discounts to dealers (which are alike for all dealers) from the applicable public offering price, as shown in the above table. In the case of the maximum sales charge, the dealer retains 4% and MFD retains approximately 3/4 of 1% of the public offering price. The sales charge may vary depending on the number of shares of the Fund as well as certain other MFS Funds owned or being purchased, the existence of an agreement to purchase additional shares during a 13-month period (or 36-month period for purchases of $1 million or more) or other special purchase programs. A description of the Right of Accumulation, Letter of Intent and Group Purchase privileges by which the sales charge may be reduced is set forth in the SAI.

PURCHASES SUBJECT TO A CDSC (but not subject to an initial sales charge). In the following two circumstances, Class A shares are also offered at net asset value without an initial sales charge but subject to a CDSC, equal to 1% of the lesser of the value of the shares redeemed (exclusive of reinvested dividend and capital gain distributions) or the total cost of such shares, in the event of a share redemption within 12 months following the purchase:

(i) on investments of $1 million or more in Class A shares; and

(ii) on investments in Class A shares by certain retirement plans subject to the Employee Retirement Income Security Act of 1974, as amended, if the sponsoring organization demonstrates to the satisfaction of MFD that either
(a) the employer has at least 25 employees or (b) the aggregate purchases by the retirement plan of Class A shares of the MFS Funds will be in an amount of at least $250,000 within a reasonable period of time, as determined by MFD in its sole discretion.

In the case of such purchases, MFD will pay a commission to dealers as follows:
1% on sales up to $5 million, plus 0.25% on the amount in excess of $5 million. Purchases of $1 million or more for each shareholder account will be aggregated over a 12-month period (commencing from the date of the first such purchase) for purposes of determining the level of commissions to be paid during the period with respect to such account. In addition, with respect to sales to retirement plans under the second circumstance described above, MFD may pay a commission, on sales in excess of $5 million to certain retirement plans, of 1% to certain dealers which, at MFD's invitation, enter into an agreement with MFD in which the dealer agrees to return any commission paid to it on the sale (or on a pro rata portion thereof) if the shareholder redeems his or her shares within a period of time after purchase as specified by MFD.

See "Redemptions and Repurchases -- Contingent Deferred Sales Charge" for further discussion of the CDSC.

WAIVERS OF INITIAL SALES CHARGE AND CDSC. In certain circumstances, the initial sales charge imposed upon purchases of Class A shares and the CDSC imposed upon redemptions of Class A shares is waived. These circumstances are described in Appendix A to this Prospectus.

CLASS B SHARES: Class B shares are offered at net asset value without an initial sales charge but subject to a CDSC upon redemption as follows:

   YEAR OF                                               CONTINGENT
 REDEMPTION                                            DEFERRED SALES
AFTER PURCHASE                                              CHARGE
--------------                                         --------------
First ............................................            4%
Second ...........................................            4%
Third ............................................            3%
Fourth ...........................................            3%
Fifth ............................................            2%
Sixth ............................................            1%
Seventh and following ............................            0%

The CDSC imposed is assessed against the lesser of the value of the shares redeemed (exclusive of reinvested dividends and capital gain distributions) or the total cost of such shares. No CDSC is assessed against shares acquired through the automatic reinvestment of dividends or capital gain distributions.

MFD will pay commissions to dealers of 3.75% of the purchase price of Class B shares purchased through dealers. MFD will also advance to dealers the first year service fee payable under the Fund's Class B Distribution Plan (see "Distribution Plans" below) at a rate equal to 0.25% of the purchase price of such shares. Therefore, the total amount paid to a dealer upon the sale of Class B shares is 4% of the purchase price of the shares (commission rate of 3.75% plus a service fee equal to 0.25% of the purchase price).

See "Redemptions and Repurchases -- Contingent Deferred Sales Charge" for further discussion of the CDSC.

WAIVERS OF CDSC. In certain circumstances, the CDSC imposed upon redemption of Class B shares is waived. These circumstances are described in Appendix A to this Prospectus.

CONVERSION OF CLASS B SHARES. Class B shares of the Fund that remain outstanding for approximately eight years will convert to Class A shares of the Fund. Shares purchased through the reinvestment of distributions paid in respect of Class B shares will be treated as Class B shares for purposes of the payment of the distribution and service fees under the Distribution Plan applicable to Class B shares. See "Distribution Plans" below. However, for purposes of conversion to Class A shares, all shares in a shareholder's account that were purchased through the reinvestment of dividends and distributions paid in respect of Class B shares (and which have not converted to Class A shares as provided in the following sentence) will be held in a separate sub-account. Each time any Class B shares in the shareholder's account (other than those in the sub-account) convert to Class A shares, a portion of the Class B shares then in the sub-account will also convert to Class A shares. The portion will be determined by the ratio that the shareholder's Class B shares not acquired through reinvestment of dividends and distributions that are converting to Class A shares bear to the shareholder's total Class B shares not acquired through reinvestment. The conversion of Class B shares to Class A shares is subject to the continuing availability of a ruling from the Internal Revenue Service or an opinion of counsel that such conversion will not constitute a taxable event for federal tax purposes. There can be no assurance that such ruling or opinion will be available, and the conversion of Class B shares to Class A shares will not occur if such ruling or opinion is not available. In such event, Class B shares would continue to be subject to higher expenses than Class A shares for an indefinite period.

CLASS C SHARES: Class C shares are offered at net asset value without an initial sales charge or a CDSC. Class C shares do not convert to any other class of shares of the Fund. The maximum investment in Class C shares that may be made is $5,000,000 per transaction.

Class C shares are not currently available for purchase by any retirement plan qualified under Sections 401(a) or 403(b) of the Internal Revenue Code of 1986, as amended (the "Code"), if the retirement plan and/or the sponsoring organization subscribe to the MFS FUNDamental 401(k) Plan or another similar recordkeeping program made available by the Shareholder Servicing Agent.

GENERAL: The following information applies to purchases of all classes of the Fund's shares.

MINIMUM INVESTMENT. Except as described below, the minimum initial investment is $1,000 per account and the minimum additional investment is $50 per account. Accounts being established for monthly automatic investments and under payroll savings programs and tax-deferred retirement programs (other than IRAs) involving the submission of investments by means of group remittal statements are subject to a $50 minimum on initial and additional investments per account. The minimum initial investment for IRAs is $250 per account and the minimum additional investment is $50 per account. Accounts being established for participation in the Automatic Exchange Plan are subject to a $50 minimum on initial and additional investments per account. There are also other limited exceptions to these minimums for certain tax-deferred retirement programs. Any minimums may be changed at any time at the discretion of MFD. The Fund reserves the right to cease offering its shares at any time.

RIGHT TO REJECT PURCHASE ORDERS/MARKET TIMING. Purchases and exchanges should be made for investment purposes only. The Fund and MFD each reserve the right to reject any specific purchase order or to restrict purchases by a particular purchaser (or group of related purchasers). The Fund or MFD may reject or restrict any purchases by a particular purchaser or group, for example, when such purchase is contrary to the best interests of the Fund's other shareholders or otherwise would disrupt the management of the Fund.

MFD may enter into an agreement with shareholders who intend to make exchanges among certain classes of shares of certain MFS Funds (as determined by MFD) which follow a timing pattern, and with individuals or entities acting on such shareholders' behalf (collectively, "market timers"), setting forth the terms, procedures and restrictions with respect to such exchanges. In the absence of such an agreement, it is the policy of the Fund and MFD to reject or restrict purchases by market timers if (i) more than two exchange purchases are effected in a timed account in the same calendar quarter or (ii) a purchase would result in shares being held in timed accounts by market timers representing more than
(x) one percent of the Fund's net assets or (y) specified dollar amounts in the case of certain MFS Funds which may include the Fund and which may change from time to time. The Fund and MFD each reserve the right to request market timers to redeem their shares at net asset value, less any applicable CDSC, if either of these restrictions is violated.

DEALER CONCESSIONS. Dealers may receive different compensation with respect to sales of Class A, Class B and Class C shares. In addition, from time to time, MFD may pay dealers 100% of the applicable sales charge on sales of Class A shares of certain specified MFS Funds sold by such dealer during a specified sales period. In addition, MFD or its affiliates may, from time to time, pay dealers an additional commission equal to 0.50% of the net asset value of all of the Class B shares of certain specified MFS Funds sold by such dealer during a specified sales period. In addition, from time to time, MFD, at its expense, may provide additional commissions, compensation or promotional incentives ("concessions") to dealers which sell shares of the Fund. Such concessions provided by MFD may include financial assistance to dealers in connection with preapproved conferences or seminars, sales or training programs for invited registered representatives, payment for travel expenses, including lodging, incurred by registered representatives for such seminars or training programs, seminars for the public, advertising and sales campaigns regarding one or more MFS Funds, and/or other dealer-sponsored events. From time to time, MFD may make expense reimbursements for special training of a dealer's registered representatives in group meetings or to help pay the expenses of sales contests. Other concessions may be offered to the extent not prohibited by state laws or any self-regulatory agency, such as the NASD.

SPECIAL INVESTMENT PROGRAMS. For shareholders who elect to participate in certain investment programs (e.g., the Automatic Investment Plan) or other shareholder services, MFD or its affiliates may either (i) give a gift of nominal value, such as a hand-held calculator, or (ii) make a nominal charitable contribution on their behalf.

RESTRICTIONS ON ACTIVITIES OF NATIONAL BANKS. The Glass-Steagall Act prohibits national banks from engaging in the business of underwriting, selling or distributing securities. Although the scope of the prohibition has not been clearly defined, MFD believes that such Act should not preclude banks from entering into agency agreements with MFD. If, however, a bank were prohibited from so acting, the Trustees would consider what actions, if any, would be necessary to continue to provide efficient and effective shareholder services in respect of Shareholders who invested in the Fund through a national bank. It is not expected that shareholders would suffer any adverse financial consequence as a result of these occurrences. In addition, state securities laws on this issue may differ from the interpretation of federal law expressed herein and banks and financial institutions may be required to register as broker-dealers pursuant to state law.


A shareholder whose shares are held in the name of, or controlled by, a dealer might not receive many of the privileges and services from the Fund (such as Right of Accumulation, Letter of Intent and certain recordkeeping services) that the Fund ordinarily provides.

EXCHANGES
Subject to the requirements set forth below, some or all of the shares in an account with the Fund for which payment has been received by the Fund (i.e., an established account) may be exchanged for shares of the same class of any of the other MFS Funds at net asset value (if available for sale). In addition, Class C shares may be exchanged for shares of the MFS Money Market Fund at net asset value. Shares of one class may not be exchanged for shares of any other class.

EXCHANGES AMONG MFS FUNDS (EXCLUDING MFS MONEY MARKET FUNDS): No initial sales charges or CDSC will be imposed in connection with an exchange from shares of an MFS Fund to shares of any other MFS Fund, except with respect to exchanges from an MFS money market fund to another MFS Fund which is not an MFS money market fund (discussed below). With respect to an exchange involving shares subject to a CDSC, the CDSC will be unaffected by the exchange and the holding period for purposes of calculating the CDSC will carry over to the acquired shares.

EXCHANGES FROM AN MFS MONEY MARKET FUND: Special rules apply with respect to the imposition of an initial sales charge or a CDSC for exchanges from an MFS money market fund to another MFS Fund which is not an MFS money market fund. These rules are described under the caption "Exchanges" in the Prospectuses of those MFS money market funds.

EXCHANGES INVOLVING THE MFS FIXED FUND: Class A shares of any MFS Fund held by certain qualified retirement plans may be exchanged for units of participation of the MFS Fixed Fund (a bank collective investment fund) (the "Units"), and Units may be exchanged for Class A shares of any MFS Fund. With respect to exchanges between Class A shares subject to a CDSC and Units, the CDSC will carry over to the acquired shares or Units and will be deducted from the redemption proceeds when such shares or Units are subsequently redeemed, assuming the CDSC is then payable (the period during which the Class A shares and the Units were held will be aggregated for purposes of calculating the applicable CDSC). In the event that a shareholder initially purchases Units and then exchanges into Class A shares subject to an initial sales charge of an MFS Fund, the initial sales charge shall be due upon such exchange, but will not be imposed with respect to any subsequent exchanges between such Class A shares and Units with respect to shares on which the initial sales charge has already been paid. In the event that a shareholder initially purchases Units and then exchanges into Class A shares subject to a CDSC of an MFS Fund, the CDSC period will commence upon such exchange, and the applicability of the CDSC with respect to subsequent exchanges shall be governed by the rules set forth above in this paragraph.

GENERAL: Exchanges will be made only after instructions in writing or by telephone (an "Exchange Request") are received for an established account by the Shareholder Servicing Agent in proper form (i.e., if in writing -- signed by the record owner(s) exactly as the shares are registered; if by telephone -- proper account identification is given by the dealer or shareholder of record) and each exchange must involve either shares having an aggregate value of at least $1,000 ($50 in the case of retirement plan participants whose sponsoring organizations subscribe to the MFS FUNDamental 401(k) Plan or another similar 401(k) recordkeeping system made available by the Shareholder Servicing Agent) or all the shares in the account. If an Exchange Request is received by the Shareholder Servicing Agent on any business day prior to the close of regular trading on the New York Stock Exchange (generally, 4:00 p.m., Eastern time) (the "Exchange"), the exchange will occur on that day if all the requirements set forth above have been complied with at that time and subject to the Fund's right to reject purchase orders. No more than five exchanges may be made in any one Exchange Request by telephone. Additional information concerning this exchange privilege and prospectuses for any of the other MFS Funds may be obtained from dealers or the Shareholder Servicing Agent. A shareholder should read the prospectus of the other MFS Fund and consider the differences in objectives, policies and restrictions before making any exchange. For federal and (generally) state income tax purposes, an exchange is treated as a sale of the shares exchanged and, therefore, an exchange could result in a gain or loss to the shareholder making the exchange. Exchanges by telephone are automatically available to most non-retirement plan accounts and certain retirement plan accounts. For further information regarding exchanges by telephone, see "Redemptions by Telephone." The exchange privilege (or any aspect of it) may be changed or discontinued and is subject to certain limitations, including certain restrictions on purchases by market timers. Special procedures, privileges and restrictions with respect to exchanges may apply to market timers who enter into an agreement with MFD, as set forth in such agreement. See "Purchases -- General -- Right to Reject Purchase Orders/ Market Timing."

REDEMPTIONS AND REPURCHASES
A shareholder may withdraw all or any portion of the value of his account on any date on which the Fund is open for business by redeeming shares at their net asset value (a redemption) or by selling such shares to the Fund through a dealer (a repurchase). Certain redemptions and repurchases are, however, subject to a CDSC. See "Contingent Deferred Sales Charge" below. Because the net asset value of shares of the account fluctuates, redemptions or repurchases, which are taxable transactions, are likely to result in gains or losses to the shareholder. When a shareholder withdraws an amount from his account, the shareholder is deemed to have tendered for redemption a sufficient number of full and fractional shares in his account to cover the amount withdrawn. The proceeds of a redemption or repurchase will normally be available within seven days, except for shares purchased or received in exchange for shares purchased by check (including certified checks or cashier's checks). Payment of redemption proceeds may be delayed for up to 15 days from the purchase date in an effort to assure that such check has cleared.

REDEMPTION BY MAIL: Each shareholder may redeem all or any portion of the shares in his account by mailing or delivering to the Shareholder Servicing Agent (see back cover for address) a stock power with a written request for redemption or letter of instruction, together with his share certificates (if any were issued), all in "good order" for transfer. "Good order" generally means that the stock power, written request for redemption, letter of instruction or certificate must be endorsed by the record owner(s) exactly as the shares are registered and the signature(s) must be guaranteed in the manner set forth below under the caption "Signature Guarantee." In addition, in some cases "good order" will require the furnishing of additional documents. The Shareholder Servicing Agent may make certain de minimis exceptions to the above requirements for redemption. Within seven days after receipt of a redemption request in "good order" by the Shareholder Servicing Agent, the Fund will make payment in cash of the net asset value of the shares next determined after such redemption request was received, reduced by the amount of any applicable CDSC described above and the amount of any income tax required to be withheld, except during any period in which the right of redemption is suspended or date of payment is postponed because the Exchange is closed or trading on such Exchange is restricted or to the extent otherwise permitted by the 1940 Act if an emergency exists. See "Tax Status" below.

REDEMPTION BY TELEPHONE: Each shareholder may redeem an amount from his account by telephoning the Shareholder Servicing Agent toll-free at (800) 225- 2606. Shareholders wishing to avail themselves of this telephone redemption privilege must so elect on their Account Application, designate thereon a bank and account number to receive the proceeds of such redemption, and sign the Account Application Form with the signature(s) guaranteed in the manner set forth below under the caption "Signature Guarantee." The proceeds of such a redemption, reduced by the amount of any applicable CDSC and the amount of any income tax required to be withheld, are mailed by check to the designated account, without charge, if the redemption proceeds do not exceed $1,000, and are wired in federal funds to the designated account if the redemption proceeds exceed $1,000. If a telephone redemption request is received by the Shareholder Servicing Agent by the close of regular trading on the Exchange on any business day, shares will be redeemed at the closing net asset value of the Fund on that day. Subject to the conditions described in this section, proceeds of a redemption are normally mailed or wired on the next business day following the date of receipt of the order for redemption. The Shareholder Servicing Agent will not be responsible for any losses resulting from unauthorized telephone transactions if it follows reasonable procedures designed to verify the identity of the caller. The Shareholder Servicing Agent will request personal or other information from the caller, and will normally also record calls. Shareholders should verify the accuracy of confirmation statements immediately after their receipt.

REPURCHASE THROUGH A DEALER: If a shareholder desires to sell his shares through his dealer (a repurchase), the shareholder can place a repurchase order with his dealer, who may charge the shareholder a fee. IF THE DEALER RECEIVES THE SHAREHOLDER'S ORDER PRIOR TO THE CLOSE OF REGULAR TRADING ON THE EXCHANGE AND COMMUNICATES IT TO MFD BEFORE THE CLOSE OF BUSINESS ON THE SAME DAY, THE SHAREHOLDER WILL RECEIVE THE NET ASSET VALUE CALCULATED ON THAT DAY, REDUCED BY THE AMOUNT OF ANY APPLICABLE CDSC AND THE AMOUNT OF ANY INCOME TAX REQUIRED TO BE WITHHELD.

CONTINGENT DEFERRED SALES CHARGE: Investments in Class A or Class B shares ("Direct Purchases") will be subject to a CDSC for a period of 12 months (in the case of purchases of $1 million or more of Class A shares or purchases by certain retirement plans of Class A shares) or six years (in the case of purchases of Class B shares). Purchases of Class A shares made during a calendar month, regardless of when during the month the investment occurred, will age one month on the last day of the month and each subsequent month. Class B shares purchased on or after January 1, 1993 will be aggregated on a calendar month basis -- all transactions made during a calendar month, regardless of when during the month they have occurred, will age one year at the close of business on the last day of such month in the following calendar year and each subsequent year. For Class B shares of the Fund purchased prior to January 1, 1993, transactions will be aggregated on a calendar year basis -- all transactions made during a calendar year, regardless of when during the year they have occurred, will age one year at the close of business on December 31 of that year and each subsequent year.

At the time of a redemption, the amount by which the value of a shareholder's account for a particular class of shares represented by Direct Purchases exceeds the sum of the six calendar year aggregations (12 months in the case of purchases of $1 million or more of Class A shares or purchases by certain retirement plans of Class A shares) of Direct Purchases may be redeemed without charge ("Free Amount"). Moreover, no CDSC is ever assessed on additional shares acquired through the automatic reinvestment of dividends or capital gain distributions ("Reinvested Shares"). Therefore, at the time of redemption of a particular class, (i) any Free Amount is not subject to the CDSC and (ii) the amount of the redemption equal to the then-current value of Reinvested Shares is not subject to the CDSC, but (iii) any amount of the redemption in excess of the aggregate of the then-current value of Reinvested Shares and the Free Amount is subject to a CDSC. The CDSC will first be applied against the amount of Direct Purchases which will result in any such charge being imposed at the lowest possible rate. The CDSC to be imposed upon redemptions of shares will be calculated as set forth in "Purchases" above.

The applicability of a CDSC will be unaffected by exchanges or transfers of registration, except as described in Appendix A hereto.

GENERAL: The following information applies to redemptions and repurchases of all classes of the Fund's shares.

SIGNATURE GUARANTEE. In order to protect shareholders against fraud, the Fund requires, in certain instances as indicated above, that the shareholder's signature be guaranteed. In these cases the shareholder's signature must be guaranteed by an eligible bank, broker, dealer, credit union, national securities exchange, registered securities association, clearing agency or savings association. Signature guarantees shall be accepted in accordance with policies established by the Shareholder Servicing Agent.

REINSTATEMENT PRIVILEGE. Shareholders of the Fund who have redeemed their shares have a one-time right to reinvest the redemption proceeds in the same class of shares of any of the MFS Funds (if shares of such Fund are available for sale) at net asset value (with a credit for any CDSC paid) within 90 days of the redemption pursuant to the Reinstatement Privilege. If the shares credited for any CDSC paid are then redeemed within six years of the initial purchase in the case of Class B shares or within 12 months of the initial purchase for certain Class A share purchases, a CDSC will be imposed upon redemption. Such purchases under the Reinstatement Privilege are subject to all limitations in the SAI regarding this privilege.

IN-KIND DISTRIBUTIONS. Subject to compliance with applicable regulations, the Fund has reserved the right to pay the redemption or repurchase price of shares of the Fund, either totally or partially, by a distribution in-kind of securities (instead of cash) from the Fund's portfolio. The securities distributed in such a distribution would be valued at the same amount as that assigned to them in calculating the net asset value for the shares being sold. If a shareholder received a distribution in-kind, the shareholder could incur brokerage or transaction charges when converting the securities to cash.

INVOLUNTARY REDEMPTIONS/SMALL ACCOUNTS. Due to the relatively high cost of maintaining small accounts, the Fund reserves the right to redeem shares in any account for their then-current value if at any time the total investment in such account drops below $500 because of redemptions, except in the case of accounts being established for monthly automatic investments and certain payroll savings programs, Automatic Exchange Plan accounts and tax-deferred retirement plans, for which there is a lower minimum investment requirement. See "Purchases -- General -- Minimum Investment." Shareholders will be notified that the value of their account is less than the minimum investment requirement and allowed 60 days to make an additional investment before the redemption is processed.

DISTRIBUTION PLANS
The Trustees have adopted separate Distribution Plans for Class A, Class B and Class C shares pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Distribution Plans"), after having concluded that there is a reasonable likelihood that the Distribution Plans would benefit the Fund and its shareholders.

In certain circumstances, the fees described below have not yet been imposed or are being waived. These circumstances are described below under the heading "Current Level of Distribution and Service Fees."

FEATURES COMMON TO EACH DISTRIBUTION PLAN: The Distribution Plans have certain common features, as described below.

SERVICE FEES. Each Distribution Plan provides that the Fund may pay MFD a service fee of up to 0.25% of the average daily net assets attributable to the class of shares to which the Distribution Plan relates (i.e., Class A, Class B or Class C shares, as appropriate) (the "Designated Class") annually in order that MFD may pay expenses on behalf of the Fund relating to the servicing of shares of the Designated Class. The service fee is used by MFD to compensate dealers which enter into a sales agreement with MFD in consideration for all personal services and/or account maintenance services rendered by the dealer with respect to shares of the Designated Class owned by investors for whom such dealer is the dealer or holder of record. MFD may from time to time reduce the amount of the service fees paid for shares sold prior to a certain date. Service fees may be reduced for a dealer that is the holder or dealer of record for an investor who owns shares of the Fund having an aggregate net asset value at or above a certain dollar level. Dealers may from time to time be required to meet certain criteria in order to receive service fees. MFD or its affiliates are entitled to retain all service fees payable under each Distribution Plan for which there is no dealer of record or for which qualification standards have not been met as partial consideration for personal services and/or account maintenance services performed by MFD or its affiliates to shareholder accounts.

DISTRIBUTION FEES. Each Distribution Plan provides that the Fund may pay MFD a distribution fee based on the average daily net assets attributable to the Designated Class as partial consideration for distribution services performed and expenses incurred in the performance of MFD's obligations under its distribution agreement with the Fund. See "Management of the Fund -- Distributor" in the SAI. The amount of the distribution fee paid by the Fund with respect to each class differs under the Distribution Plans, as does the use by MFD of such distribution fees. Such amounts and uses are described below in the discussion of the separate Distribution Plans. While the amount of compensation received by MFD in the form of distribution fees during any year may be more or less than the expense incurred by MFD under its distribution agreement with the Fund, the Fund is not liable to MFD for any losses MFD may incur in performing services under its distribution agreement with the Fund.

OTHER COMMON FEATURES. Fees payable under each Distribution Plan are charged to, and therefore reduce, income allocated to shares of the Designated Class. The Distribution Plans have substantially identical provisions with respect to their operating policies and their initial approval, renewal, amendment and termination.

FEATURES UNIQUE TO EACH DISTRIBUTION PLAN: The Distribution Plans have certain features that are unique to each class of shares, as described below.

CLASS A DISTRIBUTION PLAN. Class A shares are generally offered with an initial sales charge, a substantial portion of which is paid to or retained by the dealer making the sale (and the remainder of which is paid to MFD). See "Purchases -- Class A Shares" above. In addition to the initial sales charge, the dealer also generally receives the ongoing 0.25% per annum service fee, as discussed above.

The distribution fee paid to MFD under the Class A Distribution Plan is equal, on an annual basis, to 0.10% of the Fund's average daily net assets attributable to Class A shares. As noted above, MFD may use the distribution fee to cover distribution-related expenses incurred by it under its distribution agreement with the Fund, including commissions to dealers and payments to wholesalers employed by MFD (e.g., MFD pays commission to dealers with respect to purchases of $1 million or more of Class A shares which are sold at net asset value but which are subject to a 1% CDSC for one year after purchase). See "Purchases -- Class A Shares" above. In addition, to the extent that the aggregate service and distribution fees paid under the Class A Distribution Plan do not exceed 0.35% per annum of the average daily net assets of the Fund attributable to Class A shares, the Fund is permitted to pay such distribution-related expenses or other distribution-related expenses.

CLASS B DISTRIBUTION PLAN. Class B shares are offered at net asset value without an initial sales charge but subject to a CDSC. See "Purchases -- Class B Shares" above. MFD will advance to dealers the first year service fee described above at a rate equal to 0.25% of the purchase price of such shares and, as compensation therefore, MFD may retain the service fee paid by the Fund with respect to such shares for the first year after purchase. Dealers will become eligible to receive the ongoing 0.25% per annum service fee with respect to such shares commencing in the thirteenth month following purchase.

Under the Class B Distribution Plan, the Fund pays MFD a distribution fee equal, on an annual basis, to 0.75% of the Fund's average daily net assets attributable to Class B shares. As noted above, this distribution fee may be used by MFD to cover its distribution-related expenses under its distribution agreement with the Fund (including the 3.75% commission it pays to dealers upon purchase of Class B shares, as described under "Purchases -- Class B Shares" above).

CLASS C DISTRIBUTION PLAN. Class C shares are offered at net asset value without a sales charge or a CDSC. See "Purchases -- Class C shares" above. Unlike the case with respect to the sale of Class A and Class B shares, where the dealer retains a portion of the initial sales charge (Class A shares) or receives an up-front payment from MFD (Class B shares), a dealer who sells Class C shares does not receive any initial payment, but instead receives distribution and service fees equal, on an annual basis, to 1% of the Fund's average daily net assets attributable to Class C shares owned by investors for whom the dealer is the holder or dealer of record.

This ongoing 1% fee is comprised of the 0.25% per annum service fee paid to MFD under the Class C Distribution Plan (which MFD in turn pays to dealers), as discussed above, and a distribution fee paid to MFD (which MFD also in turn pays to dealers) under the Class C Distribution Plan equal, on an annual basis, to 0.75% of the Fund's average daily net assets attributable to Class C shares.

CURRENT LEVEL OF DISTRIBUTION AND SERVICE FEES: The Fund's Class A, Class B and Class C distribution and service fees for its current fiscal year are 0.35%, 1.00% and 1.00% per annum, respectively. The 0.35% per annum Class A distribution/service fee is reduced to 0.25% per annum for shares purchased prior to October 1, 1989.

DISTRIBUTIONS
The Fund intends to declare as dividends daily and pay to its shareholders as dividends monthly substantially all of its net investment income (dividends will only accrue on shares for which payment has been received). Dividends generally are distributed on the first business day of the month. The Fund may make one or more distributions during the calendar year to its shareholders from any long-term capital gains and may also make one or more distributions during the calendar year to its shareholders from short-term capital gains. Shareholders may elect to receive dividends and capital gain distributions in either cash or additional shares of the same class with respect to which a distribution is made (see "Tax Status" and "Shareholder Services -- Distribution Options" below). Distributions paid by the Fund with respect to Class A shares will generally be greater than those paid with respect to Class B and Class C shares because expenses attributable to Class B and Class C shares will generally be higher.

TAX STATUS
The Fund is treated as an entity separate from the other series of the Trust for federal income tax purposes. In order to minimize the taxes the Fund would otherwise be required to pay, the Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Code, and to make distributions to its shareholders in accordance with the timing requirements imposed by the Code. It is expected that the Fund will not be required to pay any federal income or excise taxes, although foreign-source income received by the Fund may be subject to foreign withholding taxes.

Shareholders of the Fund normally will have to pay federal income taxes (and any state or local taxes) on the dividends and capital gain distributions they receive from the Fund, whether paid in cash or additional shares. A portion of the dividends received from the Fund (but none of the Fund's capital gain distributions) may qualify for the dividends-received deduction for corporations. Shortly after the end of each calendar year, each shareholder will be sent a statement setting forth the federal income tax status of all dividends and distributions for that year, including the portion taxable as ordinary income, the portion taxable as long term capital gain, the portion representing interest on U.S. Government obligations, the portion, if any, representing a return of capital (which is free of current taxes but results in a basis reduction), and the amount, if any, of federal income tax withheld.

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

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

NET ASSET VALUE
The net asset value per share of each class of shares of the Fund is determined each day during which the Exchange is open for trading. This determination is made once each day as of the close of regular trading on the Exchange by deducting the amount of liabilities attributable to the class from the value of the Fund's assets attributable to the class and dividing the difference by the number of shares of the class outstanding. Assets in the Fund's portfolio are valued on the basis of their market values as described in the SAI. The net asset value of each class of shares is effective for orders received by the dealer prior to its calculation and received by MFD prior to the close of that business day.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund, one of two series of the Trust, has three classes of shares, entitled Class A, Class B and Class C 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 would be entitled to vote separately to approve investment advisory agreements or changes in investment restrictions, but shares of all series would vote together in the election of Trustees and selection of accountants. Additionally, each class of shares of a series will vote separately on any material increases in the fees under its Distribution Plan or on any other matter that affects solely its class of shares, but will otherwise vote together with all other classes of shares of the series on all other matters. The Trust does not intend to hold annual shareholder meetings. The Declaration of Trust provides that a Trustee may be removed from office in certain instances (see "Description of Shares, Voting Rights and Liabilities" in the SAI).

Each share of a class of the Fund represents an equal proportionate interest in the Fund with each other class share, subject to the liabilities of that class. Shares have no pre-emptive or conversion rights (except as set forth above in "Purchases -- Conversion of Class B Shares"). Shares are fully paid and non-assessable. Should the Fund be liquidated, shareholders of each class are entitled to share pro rata in the net assets attributable to that class available for distribution to shareholders. Shares will remain on deposit with the Shareholder Servicing Agent and certificates will not be issued except in connection with pledges and assignments and in certain other limited circumstances.

The Trust is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance (e.g., fidelity bonding and errors and omissions insurance) existed and the Trust itself is unable to meet its obligations.

PERFORMANCE INFORMATION
From time to time, the Fund will provide yield, current distribution rate and total rate of return quotations for each class of shares and may also quote fund rankings in the relevant fund category from various sources, such as the Lipper Analytical Services, Inc. and Wiesenberger Investment Companies Service. Yield quotations are based on the annualized net investment income per share allocated to each class of the Fund over a 30-day period stated as a percent of the maximum public offering price of that class on the last day of that period. Yield calculations for Class B shares assume no CDSC is paid. The current distribution rate for each class is generally based upon the total amount of dividens per share paid by the Fund to shareholders of that class during the past 12 months and is computed by dividing the amount of such dividends by the maximum public offering price of that class at the end of such period. Current distribution rate calculations for Class B shares assume no CDSC is paid. The current distribution rate differs from the yield calculation because it may include distributions to shareholders from sources other than dividends and interest, such as premium income from option writing, short-term capital gains, and return of invested capital, and is calculated over a different period of time. Total rate of return quotations will reflect the average annual percentage change over stated periods in the value of an investment in each class of shares of the Fund made at the maximum public offering price of the shares of that class with all distributions reinvested and which, if quoted for periods of six years or less, will give effect to the imposition of the CDSC assessed upon redemptions of the Fund's Class B shares. Such total rate of return quotations may be accompanied by quotations which do not reflect the reduction in value of the initial investment due to the sales charge or the deduction of the CDSC, and which will thus be higher. All performance quotations are based on historical performance and are not intended to indicate future performance. Yield reflects only net portfolio income as of a stated period of time and current distribution rate reflects only the rate of distributions paid by the Fund over a stated period of time, while total rate of return reflects all components of investment return over a stated period of time. The Fund's quotations may from time to time be used in advertisements, shareholder reports or other communications to shareholders. For a discussion of the manner in which the Fund will calculate its yield, current distribution rate and total rate of return, see the SAI. For further information about the Fund's performance for the fiscal year ended September 30, 1995, please see the Fund's Annual Report. A copy of the Annual Report may be obtained without charge by contacting the Shareholder Servicing Agent (see back cover for address and phone number). In addition to information provided in shareholder reports, the Fund may, in its discretion, from time to time, make a list of all or a portion of its holdings available to investors upon request.

7. SHAREHOLDER SERVICES Shareholders with questions concerning the shareholder services described below or concerning other aspects of the Fund, should contact their investment dealer or the Shareholder Servicing Agent (see back cover for address and phone number).

ACCOUNT AND CONFIRMATION STATEMENTS -- Each shareholder will receive confirmation statements showing the transaction activity in his account. At the end of each calendar year, each shareholder will receive information regarding the tax status of reportable dividends and distributions for that year (see "Tax Status" above).

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

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

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

-- Dividends and capital gain distributions in cash.

Reinvestments (net of any tax withholding) will be made in additional full and fractional shares of the same class of shares at the net asset value in effect at the close of business on the last business day of the quarter. Checks for dividends and capital gain distributions in amounts less than $10 will automatically be reinvested in additional shares of the Fund. If a shareholder has elected to receive dividends and/or capital gain distributions in cash and the postal or other delivery service is unable to deliver checks to the shareholder's address of record, such shareholders's distribution option will automatically be converted to having all dividends and other distributions reinvested in additional shares. Any request to change a distribution option must be received by the Shareholder Servicing Agent by the record date for a dividend or distribution in order to be effective for that dividend or distribution. No interest will accrue on amounts represented by uncashed distribution or redemption checks.

INVESTMENT AND WITHDRAWAL PROGRAMS -- For the convenience of shareholders, the Fund makes available the following programs designed to enable shareholders to add to their investment in an account with the Fund or withdraw from it with a minimum of paper work. The programs involve no extra charge to shareholders (other than a sales charge in the case of certain Class A share purchases) and may be changed or discontinued at any time by a shareholder or the Fund.

LETTER OF INTENT -- If a shareholder (other than a group purchaser as described in the SAI) anticipates purchasing $100,000 or more of Class A shares of the Fund alone or in combination with shares of any class of other MFS Funds or MFS Fixed Fund (a bank collective trust) within a 13-month period (or 36-month period for purchases of $1 million or more), the shareholder may obtain such shares at the same reduced sales charge as though the total quantity were invested in one lump sum, subject to escrow agreements and the appointment of an attorney for redemptions from the escrow amount if the intended purchases are not completed, by completing the Letter of Intent section of the Account Application.

RIGHT OF ACCUMULATION -- A shareholder qualifies for cumulative quantity discounts on purchases of Class A shares when his new investment, together with the current offering price value of all holdings of any class of shares of that shareholder in the MFS Funds or MFS Fixed Fund (a bank collective trust), reaches a discount level.

DISTRIBUTION INVESTMENT PROGRAM -- Shares of a particular class of the Fund may be sold at net asset value (and without any applicable CDSC) through the automatic reinvestment of dividend and capital gain distributions from the same class of another MFS Fund. Furthermore, distributions made by the Fund may be automatically invested at net asset value in shares of the same class of another MFS Fund, if shares of such Fund are available for sale (without a sales charge and not subject to any applicable CDSC).

SYSTEMATIC WITHDRAWAL PLAN -- A shareholder may direct the Shareholder Servicing Agent to send him (or anyone he designates) regular periodic payments based upon the value of his account. Each payment under a Systematic Withdrawal Plan (a "SWP") must be at least $100, except in certain limited circumstances. The aggregate withdrawals of Class B shares in any year pursuant to a SWP will not be subject to a CDSC and are generally limited to 10% of the value of the account at the time of the establishment of the SWP. The CDSC will not be waived in the case of SWP redemptions of Class A shares which are subject to a CDSC.

DOLLAR COST AVERAGING PROGRAMS --

AUTOMATIC INVESTMENT PLAN: Cash investments of $50 or more may be made through a shareholder's checking account twice monthly, monthly or quarterly. Required forms are available from the Shareholder Servicing Agent or investment dealers.

AUTOMATIC EXCHANGE PLAN: Shareholders having account balances of at least $5,000 in any MFS Fund may exchange their shares for the same class of shares of the other MFS Funds (and, in the case of Class C shares, for shares of MFS Money Market Fund) under the Automatic Exchange Plan, a dollar cost averaging program. The Automatic Exchange Plan provides for automatic monthly or quarterly exchanges of funds from the shareholder's account in an MFS Fund for investment in the same class of shares of other MFS Funds selected by the shareholder if such fund is available for sale. Under the Automatic Exchange Plan, exchanges of at least $50 each may be made to up to four different funds. A shareholder should consider the objectives and policies of a fund and review its prospectus before electing to exchange money into such fund through the Automatic Exchange Plan. No transaction fee is imposed in connection with exchange transactions under the Automatic Exchange Plan. However, exchanges of shares of MFS Money Market Fund, MFS Government Money Market Fund or Class A shares of MFS Cash Reserve Fund will be subject to any applicable sales charge. For federal and (generally) state income tax purposes, an exchange is treated as a sale of the shares exchanged and, therefore, could result in a capital gain or loss to the shareholder making the exchange. See the SAI for further information concerning the Automatic Exchange Plan. Investors should consult their tax advisers for information regarding the potential capital gain and loss consequences of transactions under the Automatic Exchange Plan.

Because a dollar cost averaging program involves periodic purchases of shares regardless of fluctuating share offering prices, a shareholder should consider his financial ability to continue his purchases through periods of low price levels. Maintaining a dollar cost averaging program concurrently with a withdrawal program could be disadvantageous because of the sales charge included in share purchases in the case of Class A shares and because of the assessment of the CDSC for certain share redemptions in the case of Class A shares.

TAX-DEFERRED RETIREMENT PLANS -- Except as noted under "Purchases -- Class C Shares," shares of the Fund may be purchased by all types of tax-deferred retirement plans, including IRAs, SEP-IRA plans, 401(k) plans, 403(b) plans and other corporate pension and profit-sharing plans. Investors should consult with their tax adviser before establishing any of the tax-deferred retirement plans described above.

The Fund's SAI, dated February 1, 1996, contains more detailed information about the Trust and the Fund, including, but not limited to, information related to
(i) investment objectives, policies and restrictions, (ii) Trustees, officers and investment adviser, (iii) portfolio transactions and brokerage commissions,
(iv) Distribution Plans, (v) the method used to calculate performance quotations of the Fund, and (vi) various services and privileges provided by the Fund for the benefit of its shareholders, including additional information with respect to the exchange privilege.


APPENDIX A

WAIVERS OF SALES CHARGES

This Appendix sets forth the various circumstances in which all applicable sales charges are waived (Section I), the initial sales charge and the contingent deferred sales charge ("CDSC") for Class A shares is waived (Section II), and the CDSC for Class B shares is waived (Section III).

I. WAIVERS OF ALL APPLICABLE SALES CHARGES

In the following circumstances, the initial sales charge imposed on purchases of Class A shares and the CDSC imposed on certain redemptions of Class A shares and on redemptions of Class B shares, as applicable, is waived:

1. DIVIDEND REINVESTMENT

* Shares acquired through dividend or capital gain reinvestment; and

* Shares acquired by automatic reinvestment of distributions of dividends and capital gains of any MFS Fund pursuant to the Distribution Investment Program.

2. CERTAIN ACQUISITIONS/LIQUIDATIONS

* Shares acquired on account of the acquisition or liquidation of assets of other investment companies or personal holding companies.

3. AFFILIATES OF AN MFS FUND/CERTAIN DEALERS. Shares acquired by:

* Officers, eligible directors, employees (including retired employees) and agents of MFS, Sun Life or any of their subsidiary companies;

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

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

* Employees or registered representatives of dealers and other financial institution ("dealers") which have a sales agreement with MFD;

* Certain family members of any such individual and their spouses identified above and certain trusts, pension, profit-sharing or other retirement plans for the sole benefit of such persons, provided the shares are not resold except to an MFS Fund; and

* Institutional Clients of MFS or AMI.

4. INVOLUNTARY REDEMPTIONS (CDSC WAIVER ONLY)

* Shares redeemed at an MFS Fund's direction due to the small size of a shareholder's account. See "Redemptions and Repurchases -- General -- Involuntary Redemptions/Small Accounts" in the Prospectus.

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

INDIVIDUAL RETIREMENT ACCOUNTS ("IRA'S")

* Death or disability of the IRA owner.

SECTION 401(A) PLANS ("401(A) PLANS") AND SECTION 403(B) EMPLOYER SPONSORED PLANS ("ESP PLANS")

* Death, disability or retirement of Plan participant;

* Loan from Plan (repayment of loans, however, will constitute new sales for purposes of assessing sales charges);

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

* Termination of employment of Plan participant (excluding, however, a partial or other termination of the Plan);

* Tax-free return of excess Plan contributions;

* To the extent that redemption proceeds are used to pay expenses (or certain participant expenses) of the Plan (e.g., participant account fees), provided that the Plan sponsor subscribes to the MFS FUNDamental 401(k) Plan or another similar recordkeeping system made available by the Shareholder Servicing Agent; and

* Distributions from a Plan that has invested its assets in one or more of the MFS Funds for more than 10 years from the later to occur of:
(i) January 1, 1993 or (ii) the date such Plan first invests its assets in one or more of the MFS Funds. The sales charges will be waived in the case of a redemption of all of the Plan's shares in all MFS Funds (i.e., all the assets of the Plan invested in the MFS Funds are withdrawn), unless immediately prior to the redemption, the aggregate amount invested by the Plan in shares of the MFS Funds (excluding the reinvestment of distributions) during the prior four years equals 50% or more of the total value of the Plan's assets in the MFS Funds, in which case the sales charges will not be waived.

SECTION 403(B) SALARY REDUCTION ONLY PLANS ("SRO PLANS")

* Death or disability of Plan participant.

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

* To an IRA rollover account where any sales charges with respect to the shares being reregistered would have been waived had they been redeemed; and

* From a single account maintained for a 401(a) Plan to multiple accounts maintained by the Shareholder Servicing Agent on behalf of individual participants of such Plan, provided that the Plan sponsor subscribes to the MFS FUNDamental 401(k) Plan or another similar recordkeeping system made available by the Shareholder Servicing Agent.

II. WAIVERS OF CLASS A SALES CHARGES

In addition to the waivers set forth in Section I above, in the following circumstances the initial sales charge imposed on purchases of Class A shares and the contingent deferred sales charge imposed on certain redemptions of Class A shares is waived:

1. INVESTMENT OF REDEMPTION PROCEEDS FROM UNAFFILIATED MUTUAL FUNDS

* Shares acquired through the investment of redemption proceeds from another open-end management investment company not distributed or managed by MFD or its affiliates if: (i) the investment is made through a dealer and appropriate documentation is submitted to MFD;
(ii) the redeemed shares were subject to an initial sales charge or deferred sales charge (whether or not actually imposed); (iii) the redemption occurred no more than 90 days prior to the purchase of Class A shares; and (iv) the MFS Fund, MFD or its affiliates have not agreed with such company or its affiliates, formally or informally, to waive sales charges on Class A shares or provide any other incentive with respect to such redemption and sale.

2. WRAP ACCOUNT INVESTMENTS

* Shares acquired by investments through certain dealers which have entered into an agreement with MFD which includes a requirement that such shares be sold for the sole benefit of clients participating in a "wrap" account or a similar program under which such clients pay a fee to such dealer.

3. INVESTMENT BY INSURANCE COMPANY SEPARATE ACCOUNTS

* Shares acquired by insurance company separate accounts.

4. RETIREMENT PLANS

ADMINISTRATIVE SERVICES ARRANGEMENTS

* Shares acquired by retirement plans whose third party administrators, or dealers have entered into an administrative services agreement with MFD or one of its affiliates to perform certain administrative services, subject to certain operational and minimum size requirements specified from time to time by MFD or one or more of its affiliates.

REINVESTMENT OF DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS

* Shares acquired through the automatic reinvestment in Class A shares of Class A or Class B distributions which constitute required withdrawals from qualified retirement plans.

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

IRA'S

* Distributions made on or after the IRA owner has attained the age of 59 1/2 years old; and

* Tax-free returns of excess IRA contributions.

401(A) PLANS

* Distributions made on or after the Plan participant has attained the age of 59 1/2 years old; and

* Certain involuntary redemptions and redemptions in connection with certain automatic withdrawals from a Plan.

ESP PLANS AND SRO PLANS

* Distributions made on or after the Plan participant has attained the age of 59 1/2 years old.

III. WAIVERS OF CLASS B SALES CHARGES

In addition to the waivers set forth in Section I above, in the following circumstances the CDSC imposed on redemptions of Class B shares is waived:

1. SYSTEMATIC WITHDRAWAL PLAN

* Systematic Withdrawal Plan redemptions with respect to up to 10% per year of the account value at the time of establishment.

2. DEATH OF OWNER

* Shares redeemed on account of the death of the account owner if the shares are held solely in the deceased individual's name or in a living trust for the benefit of the deceased individual.

3. DISABILITY OF OWNER

* Shares redeemed on account of the disability of the account owner if shares are held either solely or jointly in the disabled individual's name or in a living trust for the benefit of the disabled individual (in which case a disability certification form is required to be submitted to the Shareholder Servicing Agent.).

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

IRA'S, 401(A) PLANS, ESP PLANS AND SRO PLANS

* Distributions made on or after the IRA owner or the Plan participant, as applicable, has attained the age of 70 1/2 years old, but only with respect to the minimum distribution under applicable Internal Revenue Code ("Code") rules.

SAR-SEP PLANS

* Distributions made on or after the SAR-SEP Plan participant has attained the age of 70 1/2 years old, but only with respect to the minimum distribution under applicable Code rules;

* Death or disability of a SAR-SEP Plan participant.


APPENDIX B

DESCRIPTION OF BOND RATINGS

The ratings of Moody's, S&P and Fitch represent their opinions as to the quality of various debt instruments. IT SHOULD BE EMPHASIZED, HOWEVER, THAT RATINGS ARE NOT ABSOLUTE STANDARDS OF QUALITY. CONSEQUENTLY, DEBT INSTRUMENTS WITH THE SAME MATURITY, COUPON AND RATING MAY HAVE DIFFERENT YIELDS WHILE DEBT INSTRUMENTS OF THE SAME MATURITY AND COUPON WITH DIFFERENT RATINGS MAY HAVE THE SAME YIELD.

MOODY'S INVESTORS SERVICE, INC.

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than Aaa securities.

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

Baa: Bonds which are rated Baa are considered as medium-grade obligations, (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

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

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities or companies that are not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed, in which case the rating is not published in Moody's publications.

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

NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating classification from Aa to B. The modifier 1 indicates that the company ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the company ranks in the lower end of its generic rating category.

STANDARD & POORS RATINGS GROUP

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 strong capacity to pay interest and repay principal and differs from the higher rated issues only in small degree.

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

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

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

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

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

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

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

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

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

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

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

FITCH INVESTORS SERVICE, INC.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DUFF & PHELPS CREDIT RATING CO.

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

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

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

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

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

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

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

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 obligations.

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 supported by good fundamental protection factors. Risk factors are very small.

D-2: Good certainty of timely payment. Liquidity factors and company fundamentals 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.


APPENDIX C
MFS TOTAL RETURN FUND
PORTFOLIO COMPOSITION CHART
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1995

The table below shows the percentages of the Fund's assets at September 30, 1995 invested in bonds assigned to the various rating categories by S&P, Moody's (provided only for bonds not rated by S&P), Fitch (provided only for bonds not rated by S&P or Moody's) and Duff & Phelps Credit Rating Co. (provided only for bonds not rated by S&P, Moody's or Fitch) and in unrated bonds determined by MFS to be of comparable quality. For split rated bonds, the higher of S&P or Moody's is used.

                           COMPILED
RATING                      RATINGS                      TOTAL
------                      --------                     -----

AAA/Aaa                      10.23%                      10.23%
AA/Aa                         1.54                        1.54
A/A                           2.74                        2.74
BBB/Baa                      13.44                       13.44
BB/Ba                         5.92                        5.92
B/B                           2.02                        2.02
CCC/Caa                        --                          --
CC/Ca                          --                          --
C/C                            --                          --
Default                        --                          --
                             -----                       -----
    TOTAL                    35.89%                      35.89%

The chart does not necessarily indicate what the composition of the Fund's portfolio will be in subsequent years. Rather, the Fund's investment objective, policies and restrictions indicate the extent to which the Fund may purchase securities in the various categories.


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 and Trust Company
89 South Street
Boston, MA 02110

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

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

Mailing Address:
P.O. Box 2281
Boston, MA 02107-9906

Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA02110

[LOGO] M F S (R)

THE FIRST NAME IN MUTUAL FUNDS

MFS(R) TOTAL RETURN FUND
500 Boylston Street
Boston, MA 02116

[LOGO] M F S (R)
THE FIRST NAME IN MUTUAL FUNDS

MFS(R) TOTAL RETURN FUND
Prospectus
February 1, 1996

MTR-1 2/96/600M 15/215/315


[LOGO]

THE FIRST NAME IN MUTUAL FUNDS

MFS(R) TOTAL                                STATEMENT OF
RETURN FUND                                 ADDITIONAL INFORMATION
(A Member of the MFS Family of Funds(R))    February 1, 1996
- --------------------------------------------------------------------------------

                                                                            Page
                                                                            ----
 1. Definitions ........................................................       2
 2. Investment Objectives, Policies and Restrictions ...................       2
 3. Management of the Fund .............................................      12
      Trustees .........................................................      13
      Officers .........................................................      13
      Investment Adviser ...............................................      13
      Custodian ........................................................      14
      Shareholder Servicing Agent ......................................      14
      Distributor ......................................................      14
 4. Portfolio Transactions and Brokerage Commissions ...................      15
 5. Shareholder Services ...............................................      16
      Investment and Withdrawal Programs ...............................      16
      Exchange Privilege ...............................................      18
      Tax-Deferred Retirement Plans ....................................      19
 6. Tax Status .........................................................      19
 7. Determination of Net Asset Value and Performance ...................      20
 8. Distribution Plans .................................................      22
 9. Description of Shares, Voting Rights and Liabilities ...............      23
10. Independent Auditors and Financial Statements ......................      24
    Appendix A .........................................................     A-1

MFS TOTAL RETURN FUND
A Series of MFS Series Trust V
500 Boylston Street, Boston, Massachusetts 02116
(617) 954-5000

This Statement of Additional Information (the "SAI") sets forth information which may be of interest to investors but which is not necessarily included in the Fund's Prospectus, dated February 1, 1996. This SAI should be read in conjunction with the Prospectus, a copy of which may be obtained without charge by contacting the Shareholder Servicing Agent (see last page for address and phone number).

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


1. DEFINITIONS

"Fund"                       -- MFS Total Return Fund, a series of
                                MFS Series Trust V (the "Trust"), a
                                Massachusetts business trust. The
                                Trust was known as Massachusetts
                                Financial Total Return Trust until
                                August 3, 1992.


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

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


"Prospectus"                 -- The Prospectus of the Fund, dated
                                February 1, 1996, as amended or
                                supplemented from time to time.

2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS INVESTMENT OBJECTIVES. The Fund's primary investment objective is to obtain above-average income (compared to a portfolio invested entirely in equity securities) consistent with the prudent employment of capital. While current income is the primary objective, the Fund believes that there should also be a reasonable opportunity for growth of capital and income, since many securities offering a better than average yield may also possess growth potential. Thus, in selecting securities for its portfolio, the Fund considers each of these objectives. Any investment involves risk and there can be no assurance that the Fund will achieve its investment objectives.

INVESTMENT POLICIES. The Prospectus contains a discussion of the Fund's policies with respect to investments in various types of securities and the risks involved in such investments. Some of these policies are discussed further below.

LOAN PARTICIPATIONS AND OTHER DIRECT INDEBTEDNESS: The Fund may purchase loan participations and other direct claims against a borrower. In purchasing a loan participation, the Fund 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, although some may be unsecured. Such loans may be in default at the time of purchase. Loans that are fully secured offer the Fund more protection than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the corporate borrower's obligation, or that the collateral can be liquidated.

These loans are made generally to finance internal growth, mergers, acquisitions, stock repurchases, leveraged buy-outs and other corporate activities. Such loans are typically made by a syndicate of lending institutions, represented by an agent lending institution which has negotiated and structured the loan and is responsible for collecting interest, principal and other amounts due on its own behalf and on behalf of the others in the syndicate, and for enforcing its and their other rights against the borrower. Alternatively, such loans may be structured as a novation, pursuant to which the Fund would assume all of the rights of the lending institution in a loan, or as an assignment, pursuant to which the Fund would purchase an assignment of a portion of a lender's interest in a loan either directly from the lender or through an intermediary. The Fund may also purchase trade or other claims against companies, which generally represent money owed by the company to a supplier of goods or services. These claims may also be purchased at a time when the company is in default.

Certain of the loan participations acquired by the Fund may involve revolving credit facilities or other standby financing commitments which obligate the Fund to pay additional cash on a certain date or on demand. These commitments may have the effect of requiring the Fund to increase its investment in a company at a time when the Fund might not otherwise decide to do so (including at a time when the company's financial condition makes it unlikely that such amounts will be repaid). To the extent that the Fund is committed to advance additional funds, it will at all times hold and maintain in a segregated account cash or other high grade debt obligations in an amount sufficient to meet such commitments.

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

MORTGAGE PASS-THROUGH SECURITIES: The Fund may invest in mortgage pass-through securities. Mortgage pass-through securities are securities representing interests in "pools" of mortgage loans. Monthly payments of interest and principal by the individual borrowers on mortgages are passed through to the holders of the securities (net of fees paid to the issuer or guarantor of the securities) as the mortgages in the underlying mortgage pools are paid off. The average lives of mortgage pass-throughs are variable when issued because their average lives depend on prepayment rates. The average life of these securities is likely to be substantially shorter than their stated final maturity as a result of unscheduled principal prepayments. Prepayments on underlying mortgages result in a loss of anticipated interest, and all or part of a premium if any has been paid, and the actual yield (or total return) to the Fund may be different than the quoted yield on the securities. Mortgage prepayments generally increase with falling interest rates and decrease with rising interest rates. Like other fixed income securities, when interest rates rise the value of a mortgage pass-through security generally will decline; however, when interest rates are declining, the value of mortgage pass-through securities with prepayment features may not increase as much as that of other fixed-income securities.

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

Interests in pools of mortgage-related securities differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the individual borrowers on their mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by prepayments of principal resulting from the sale, refinancing or foreclosure of the underlying property, net of fees or costs which may be incurred. Some mortgage pass-through securities (such as securities issued by the GNMA) are described as "modified pass-through." These securities entitle the holder to receive all interests and principal payments owed on the mortgages in the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage pass-through securities is the GNMA. GNMA is a wholly-owned U.S. Government corporation within the Department of Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by mortgage pools of Federal Housing Administration-insured or Veterans Administration-guaranteed. These guarantees, however, do not apply to the market value or yield of mortgage pass-through securities. GNMA securities are often purchased at a premium over the maturity value of the underlying mortgages. This premium is not guaranteed and will be lost if prepayment occurs.

Government-related guarantors (i.e., whose guarantees are not backed by the full faith and credit of the U.S. Government) include the FNMA and the FHLMC. FNMA is a government-sponsored corporation owned entirely by private stockholders. It is subject to general regulation by the Secretary of Housing and Urban Development. FNMA purchases conventional residential mortgages (i.e., mortgages not insured or guaranteed by any governmental agency) from a list of approved seller/servicers which include state and federally-chartered savings and loan associations, mutual savings banks, commercial banks, credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment by FNMA of principal and interest.

FHLMC is also a government-sponsored corporation owned by private stockholders. FHLMC issues Participation Certificates ("PCs") which represent interests in conventional mortgages (i.e., not federally insured or guaranteed) from FHLMC's national portfolio. FHLMC guarantees timely payment of interest and ultimate collection of principal regardless of the status of the underlying mortgage loans.

Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of mortgage loans. Such issuers may also be the originators and/or servicers of the underlying mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments in the former pools. However, timely payment of interest and principal of mortgage loans in these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage poolers. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund may also buy mortgage-related securities without insurance or guarantees.

SECURITIES LENDING: The Fund may seek to increase its income by lending fixed income portfolio securities. Such loans will usually be made only to member banks of the Federal Reserve System and to member firms (or subsidiaries thereof) of the New York Stock Exchange and would be required to be secured continuously by collateral in cash, U.S. Government securities 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. The Fund would have the right to call a loan and obtain the securities loaned at any time on customary industry settlement notice (which will usually not exceed five days). During the existence of a loan, the Fund would continue to receive the equivalent of the interest paid by the issuer on the securities loaned and would also receive compensation based on investment of cash collateral. The Fund would not, however, have the right to vote any securities having voting rights during the existence of the loan, but would call the loan in anticipation of an important vote to be taken among holders of the securities or of the giving or withholding of their consent on a material matter affecting the investment. As with other extensions of credit, there are risks of delay in recovery or even loss of rights in the collateral should the borrower of the securities fail financially. However, the loans would be made only to firms deemed by the Adviser to be of good standing, and when, in the judgment of the Adviser, the consideration which could be earned currently from securities loans of this type justifies the attendant risk. If the Adviser determines to lend securities, it is not intended that the value of the securities loaned would exceed 30% of the value of the Fund's total assets. The Fund did not lend any of its portfolio securities during its fiscal year ended September 30, 1995.

REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements with sellers who are member firms (or subsidiaries thereof) of the New York Stock Exchange or members of the Federal Reserve System, recognized primary U.S. Government securities dealers or institutions which the Adviser has determined to be of comparable creditworthiness. The securities that the Fund purchases and holds through its agent are U.S. Government securities, the values of which are equal to or greater than the repurchase price agreed to be paid by the seller. The repurchase price may be higher than the purchase price, the difference being income to the Fund, or the purchase and repurchase prices may be the same, with interest at a standard rate due to the Fund together with the repurchase price on repurchase. In either case, the income to the Fund is unrelated to the interest rate on the U.S. Government securities.

The repurchase agreement provides that in the event the seller fails to pay the price agreed upon on the agreed upon delivery date or upon demand, as the case may be, the Fund will have the right to liquidate the securities. If, at the time the Fund is contractually entitled to exercise its right to liquidate the securities, the seller is subject to a proceeding under the bankruptcy laws or its assets are otherwise subject to a stay order, the Fund's exercise of its right to liquidate the securities may be delayed and result in certain losses and costs to the Fund. The Fund has adopted and follows procedures which are intended to minimize the risks of repurchase agreements. For example, the Fund only enters into repurchase agreements after the Adviser has determined that the seller is creditworthy, and the Adviser monitors that seller's creditworthiness on an ongoing basis. Moreover, under such agreements, the value of the securities (which are marked to market every business day) is required to be greater than the repurchase price, and the Fund has the right to make margin calls at any time if the value of the securities falls below the agreed upon margin.

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

INDEXED SECURITIES: The Fund may purchase securities whose prices are indexed to the prices of other securities, securities indices, currencies, precious metals or other commodities, or other financial indicators. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. Gold-indexed securities, for example, typically provide for a maturity value that depends on the price of gold, resulting in a security whose price tends to rise and fall together with gold prices. Currency-indexed securities typically are short-term to intermediate-term debt securities whose maturity values or interest rates are determined by reference to the values of one or more specified foreign currencies, and may offer higher yields than U.S. dollar-denominated securities of equivalent issuers. Currency-indexed securities may be positively or negatively indexed; that is, their maturity value may increase when the specified currency value increases, resulting in a security that performs similarly to a foreign-denominated instrument, or their maturity value may decline when foreign currencies increase, resulting in a security whose price characteristics are similar to a put on the underlying currency. Currency-indexed securities may also have prices that depend on the values of a number of different foreign currencies relative to each other.

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

MORTGAGE "DOLLAR ROLL" TRANSACTIONS: As described in the Prospectus, the Fund may enter into mortgage "dollar roll" transactions pursuant to which it sells mortgage-backed securities for delivery in the future and simultaneously contracts to repurchase substantially similar securities on a specified future date. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated for the lost interest by the difference between the current sales price and the lower price for the future purchase (often referred to as the "drop") as well as by the interest earned on the cash proceeds of the initial sale. The Fund may also be compensated by receipt of a commitment fee.

FOREIGN SECURITIES: The Fund may invest up to 20% (and generally expects to invest between 5% and 20%) of its total assets in foreign securities (not including American Depositary Receipts). As discussed in the Prospectus, investing in foreign securities generally represents a greater degree of risk than investing in domestic securities due to possible exchange rate fluctuations, less publicly available information, more volatile markets, less securities regulation, less favorable tax provisions, war or expropriation. As a result of its investments in foreign securities, the Fund may receive interest or dividend payments, or the proceeds of the sale or redemption of such securities, in the foreign currencies in which such securities are denominated. Under certain circumstances, such as where the Adviser believes that the applicable exchange rate is unfavorable at the time the currencies are received or the Adviser anticipates, for any other reason, that the exchange rate will improve, the Fund may hold such currencies for an indefinite period of time. While the holding of currencies will permit the Fund to take advantage of favorable movements in the applicable exchange rate, such strategy also exposes the Fund to risk of loss if exchange rates move in a direction adverse to the Fund's position. Such losses could reduce any profits or increase any losses sustained by the Fund from the sale or redemption of securities and could reduce the dollar value of interest or dividend payments received.

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

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

Corporate asset-backed securities present certain risks. For instance, in the case of credit card receivables, these securities may not have the benefit of any security interest in the related collateral. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Most issuers of automobile receivables permit the servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the related automobile receivables. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the automobile receivables may not have a proper security interest in all of the obligations backing such receivables. Therefore, there is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities.

Corporate asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors to make payments on underlying assets, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses resulting from ultimate default ensures payment through insurance policies or letters of credit obtained by the issuer or sponsor from third parties. The Fund will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an instrument in such a security.

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

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

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

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

RISKS OF INVESTING IN LOWER RATED BONDS: The Fund may invest in fixed income securities rated Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Group ("S&P") or Fitch Investors Service, Inc. ("Fitch") and comparable unrated securities. These securities, while normally exhibiting adequate protection parameters, have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than in the case of higher grade fixed income securities.

The Fund may also invest in fixed income securities rated Ba or lower by Moody's or BB or lower by S&P or Fitch and comparable unrated securities (commonly known as "junk bonds") to the extent described in the Prospectus. No minimum rating standard is required by the Fund. These securities are considered speculative and, while generally providing greater income than investments in higher rated securities, will involve greater risk of principal and income (including the possibility of default or bankruptcy of the issuers of such securities) and may involve greater volatility of price (especially during periods of economic uncertainty or change) than securities in the higher rating categories and because yields vary over time, no specific level of income can ever be assured. These lower rated high yielding fixed income securities generally tend to reflect economic changes (and the outlook for economic growth), short-term corporate and industry developments and the market's perception of their credit quality (especially during times of adverse publicity) to a greater extent than higher rated securities which react primarily to fluctuations in the general level of interest rates (although these lower rated fixed income securities are also affected by changes in interest rates). In the past, economic downturns or an increase in interest rates have, under certain circumstances, caused a higher incidence of default by the issuers of these securities and may do so in the future, especially in the case of highly leveraged issuers. The prices for these securities may be affected by legislative and regulatory developments. The market for these lower rated fixed income securities may be less liquid than the market for investment grade fixed income securities. Furthermore, the liquidity of these lower rated securities may be affected by the market's perception of their credit quality. Therefore, the Adviser's judgment may at times play a greater role in valuing these securities than in the case of investment grade fixed income securities, and it also may be more difficult during times of certain adverse market conditions to sell these lower rated securities to meet redemption requests or to respond to changes in the market.

While the Adviser may refer to ratings issued by established credit rating agencies, it is not the Fund's policy to rely exclusively on ratings issued by these rating agencies, but rather to supplement such ratings with the Adviser's own independent and ongoing review of credit quality. To the extent the Fund invests in these lower rated securities, the achievement of its investment objectives may be more dependent on the Adviser's own credit analysis than in the case of a fund investing in higher quality fixed income securities. These lower rated securities may also include zero coupon bonds, deferred interest bonds and bonds on which interest is payable in kind ("PIK Bonds") which are described in the Prospectus.

OPTIONS ON SECURITIES: The Fund may write (sell) covered call and put options on securities and purchase call and put options on securities. The Fund may write options on securities for the purpose of increasing its return on such securities and for hedging purposes.

A call option written by the Fund is covered if the Fund owns the security underlying the call or has an absolute and immediate right to acquire such security without additional cash consideration (or for additional cash consideration held in a segregated account by its custodian) upon conversion or exchange of other securities held in its portfolio. A call option is also covered if a Fund holds a call on the same security and in the same principal amount as the call written where the exercise price of the call held (a) is equal to or less than the exercise price of the call written or (b) is greater than the exercise price of the call written if the difference is maintained by the Fund in cash or high grade government securities in a segregated account with its custodian. A put option written by the Fund is covered if the Fund maintains cash or high grade government securities with a value equal to the exercise price in a segregated account with its custodian, or else holds a put on the same security and in the same principal amount as the put written where the exercise price of the put held (i) is equal to or greater than the exercise price of the put written or (ii) is less than the exercise price of the put written if the difference is maintained by the Fund in cash or high grade government securities in a segregated account with its custodian. Put and call options written by the Fund may also be covered in such other manner as may be in accordance with the requirements of the exchange on which, or the counterparty with which, the option is traded, and applicable laws and regulations.

Effecting a closing transaction in the case of a written call option will permit the Fund to write another call option on the underlying security with either a different exercise price or expiration date or both, or in the case of a written put option will permit the Fund to write another put option to the extent that the exercise price thereof is secured by deposited cash or short-term securities. Such transactions permit the Fund to generate additional premium income, which will partially offset declines in the value of portfolio securities or increases in the cost of securities to be acquired. Also, effecting a closing transaction will permit the proceeds from the concurrent sale of any securities subject to the option to be used for other investments of the Fund, provided that another option on such security is not written. If the Fund desires to sell a particular security from its portfolio on which it has written a call option, it will effect a closing transaction in connection with the option prior to or concurrent with the sale of the security.

The Fund will realize a profit from a closing transaction if the premium paid in connection with the closing of an option written by the Fund is less than the premium received from writing the option, or if the premium received in connection with the closing of an option purchased by the Fund is more than the premium paid for the original purchase. Conversely, the Fund will suffer a loss if the premium paid or received in connection with a closing transaction is more or less, respectively, than the premium received or paid in establishing the option position. Because increases in the market price of a call option will generally reflect increases in the market price of the underlying security, any loss resulting from the closing out of a call option previously written by the Fund is likely to be offset in whole or in part by appreciation of the underlying security owned by the Fund.

The Fund may write options in connection with buy-and-write transactions; that is, the Fund may purchase a security and then write a call option against that security. The exercise price of the call option the Fund determines to write will depend upon the expected price movement of the underlying security. The exercise price of a call option may be below ("in-the-money"), equal to ("at- the-money") or above ("out-of-the-money") the current value of the underlying security at the time the option is written. If the call options are exercised in such transactions, the Fund's maximum gain will be the premium received by it for writing the option, adjusted upwards or downwards by the difference between the Fund's purchase price of the security and the exercise price, less related transaction costs. If the options are not exercised and the price of the underlying security declines, the amount of such decline will be offset in part, or entirely, by the premium received.

The writing of covered put options is similar in terms of risk/return characteristics to buy-and-write transactions. Put options could be used by the Fund in the same market environments that call options would be used in equivalent buy-and-write transactions.

The Fund may write combinations of put and call options on the same security, a practice known as a "straddle." By writing a straddle, the Fund undertakes a simultaneous obligation to sell and purchase the same security in the event that one of the options is exercised. If the price of the security subsequently rises sufficiently above the exercise price to cover the amount of the premium and transaction costs, the call will likely be exercised and the Fund will be required to sell the underlying security at a below market price. This loss may be offset, however, in whole or in part, by the premiums received on the writing of the two options. Conversely, if the price of the security declines by a sufficient amount, the put will likely be exercised. The writing of straddles will likely be effective, therefore, only where the price of a security remains stable and neither the call nor the put is exercised. In an instance where one of the options is exercised, the loss on the purchase or sale of the underlying security may exceed the amount of the premiums received.

By writing a call option, the Fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option. By writing a put option, the Fund assumes the risk that it may be required to purchase the underlying security for an exercise price above its then current market value, resulting in a capital loss unless the security subsequently appreciates in value. The writing of options on securities will be undertaken by the Fund for purposes in addition to hedging, and could involve certain risks which are not present in the case of hedging transactions. Moreover, even where options are written for hedging purposes, such transactions will constitute only a partial hedge against declines in the value of portfolio securities or against increases in the value of securities to be acquired, up to the amount of the premium.

The Fund also may purchase put and call options on securities. Put options would be purchased to hedge against a decline in the value of securities held in the Fund's portfolio. If such a decline occurs, the put options will permit the Fund to sell the underlying securities at the exercise price, or to close out the options at a profit. By using put options in this way, the Fund will reduce any profit it might otherwise have realized in the underlying security by the amount of the premium paid for the put option and related transaction costs. The Fund may purchase call options to hedge against an increase in the price of securities that the Fund anticipates purchasing in the future. If such an increase occurs, the call option will permit the Fund to purchase the securities at the exercise price or to close out the option at a profit. The premium paid for a call or put option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise of the option, and, unless the price of the underlying security rose or declined sufficiently, the option may expire worthless to the Fund.

OPTIONS ON STOCK INDICES: The Fund may write (sell) covered call and put options on stock indices and purchase call and put 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.

The Fund may cover call options on stock indices by owning securities whose price changes, in the opinion of the Adviser, are expected to be similar to those of the index, or by having an absolute and immediate right to acquire such securities without additional cash consideration (or for additional cash consideration held in a segregated account by its custodian) upon conversion or exchange of other securities in its portfolio. Nevertheless, where the Fund covers a call option on a stock index through ownership of securities, such securities may not match the composition of the index and, in that event, the Fund will not be fully covered and could be subject to risk of loss in the event of adverse changes in the value of the index. A Fund may also cover call options on stock indices by holding a call on the same index and in the same principal amount as the call written where the exercise price of the call held (a) is equal to or less than the exercise price of the call written or (b) is greater than the exercise price of the call written if the difference is maintained by the Fund in cash or high grade government securities in a segregated account with its custodian. The Fund may cover put options on stock indices by maintaining cash or high grade government securities with a value equal to the exercise price in a segregated account with its custodian, or else by holding a put on the same security and in the same principal amount as the put written where the exercise price of the put held (a) is equal to or greater than the exercise price of the put written or (b) is less than the exercise price of the put written if the difference is maintained by the Fund in cash or high grade government securities in a segregated account with its custodian. Put and call options on stock indices written by the Fund may also be covered in such other manner as may be in accordance with the rules of the exchange on which, or the counterparty with which, the option is traded, and applicable laws and regulations.

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

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

The Fund also may purchase put options on stock indices to hedge its investments against a decline in value. By purchasing a put option on a stock index, the Fund will seek to offset a decline in the value of securities it owns through appreciation of the put option. If the value of the Fund's investments does not decline as anticipated, or if the value of the option does not increase, the Fund's loss will be limited to the premium paid for the option, plus related transaction costs. The success of this strategy will largely depend on the accuracy of the correlation between the changes in value of the index and the changes in value of the Fund's security holdings.

YIELD CURVE OPTIONS: The Fund may also enter into options on the "spread," or yield differential, between two fixed income securities, in transactions referred to as "yield curve" options. In contrast to other types of options, a yield curve option is based on the difference between the yields of designated securities, rather than the prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is profitable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease.

Yield curve options may be used for the same purposes as other options on securities. Specifically, the Fund may purchase or write such options for hedging purposes. For example, the Fund may purchase a call option on the yield spread between two securities, if it owns one of the securities and anticipates purchasing the other security and wants to hedge against an adverse change in the yield spread between the two securities. The Fund may also purchase or write yield curve options for other than hedging purposes (i.e., in an effort to increase its current income) if, in the judgment of the Adviser, the Fund will be able to profit from movements in the spread between the yields of the underlying securities. The trading of yield curve options is subject to all of the risks associated with the trading of other types of options. In addition, however, such options present risk of loss even if the yield of one of the underlying securities remains constant, if the spread moves in a direction or to an extent which was not anticipated. Yield curve options written by the Fund will be "covered". A call (or put) option is covered if the Fund holds another call (or put) option on the spread between the same two securities and maintains in a segregated account with its custodian cash or cash equivalents sufficient to cover the Fund's net liability under the two options. Therefore, the Fund's liability for such a covered option is generally limited to the difference between the amount of the Fund's liability under the option written by the Fund less the value of the option held by the Fund. Yield curve options may also be covered in such other manner as may be in accordance with the requirements of the counterparty with which the option is traded and applicable laws and regulations. Yield curve options are traded over-the-counter and because they have been only recently introduced, established trading markets for these securities have not yet developed.

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

OPTIONS ON FOREIGN CURRENCIES: The Fund may purchase and write put and call options on foreign currencies ("Options on Foreign Currencies") for the purpose of protecting against declines in the dollar value of foreign portfolio securities and against increases in the dollar cost of foreign securities to be acquired. For example, a decline in the dollar value of a foreign currency in which portfolio securities are denominated will reduce the dollar value of such securities, even if their value in the foreign currency remains constant. In order to protect against such diminutions in the value of portfolio securities, the Fund may purchase put Options on the Foreign Currency. If the value of the currency did decline, the Fund would have the right to sell such currency for a fixed amount in dollars and would thereby offset, in whole or in part, the adverse effect on its portfolio which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which securities to be acquired are denominated is projected, thereby increasing the cost of such securities, the Fund may purchase call options thereon. The purchase of such options could offset, at least partially, the effects of the adverse movements in exchange rates. As in the case of other types of options, however, the benefit to the Fund deriving from purchases of Options on Foreign Currencies would be reduced by the amount of the premium and related transaction costs. In addition, where currency exchange rates do not move in the direction or to the extent anticipated, the Fund could sustain losses on transactions in Options on Foreign Currencies which would require it to forego a portion or all of the benefits of advantageous changes in such rates.

The Fund may write Options on Foreign Currencies for the same types of hedging purposes. For example, where the Fund anticipates a decline in the dollar value of foreign-denominated securities due to adverse fluctuations in exchange rates it may, instead of purchasing a put option, write a call option on the relevant currency. If the expected decline occurred, the option would most likely not be exercised, and the diminution in value of portfolio securities would be offset by the amount of the premium received less related transaction costs. As in the case of other types of options, therefore, the writing of Options on Foreign Currencies will constitute only a partial hedge.

FUTURES CONTRACTS: The Fund may enter into contracts for the purchase or sale for future delivery of fixed income securities or foreign currencies or contracts based on indices of securities of currencies (including any index of U.S. or foreign securities) as such instruments become available for trading ("Futures Contracts"). A Futures Contract is a bilateral agreement providing for the purchase and sale of a specified type and amount of a financial instrument, or foreign currency, or for the making and acceptance of a cash settlement, at a stated time in the future for a fixed price. By its terms, a Futures Contract provides for a specified settlement date on which, in the case of the majority of foreign currency futures contracts, the currency or the contract are delivered by the seller and paid for by the purchaser, or on which, in the case of stock index futures contracts and certain foreign currency futures contracts, the difference between the price at which the contract was entered into and the contract's closing value is settled between the purchaser and seller in cash. Futures contracts differ from options in that they are bilateral agreements, with both the purchaser and the seller equally obligated to complete the transaction. Futures Contracts call for settlement only on the expiration date and cannot be "exercised" at any other time during their term.

The purchase or sale of a Futures Contract differs from the purchase or sale of a security or the purchase of an option in that no purchase price is paid or received. Instead, an amount of cash or cash equivalents, which varies but may be as low as 5% or less of the value of the contract, must be deposited with the broker as "initial margin." Subsequent payments to and from the broker, referred to as "variation margin," are made on a daily basis as the value of the index or instrument underlying the Futures Contract fluctuates, making positions in the Futures Contract more or less valuable -- a process known as "marking to the market."

Purchases or sales of stock index futures contracts may be used to attempt to protect a Fund's current or intended stock investments from broad fluctuations in stock prices. For example, a Fund may sell stock index futures contracts in anticipation of or during a market decline to attempt to offset the decrease in market value of the Fund's securities portfolio that might otherwise result. If such decline occurs, the loss in value of portfolio securities may be offset, in whole or part, by gains on the futures position. When a Fund is not fully invested in the securities market and anticipates a significant market advance, it may purchase stock index futures contracts in order to gain rapid market exposure that may, in part or entirely, offset increases in the cost of securities that the Fund intends to purchase. As such purchases are made, the corresponding positions in stock index futures contracts will be closed out. In a substantial majority of these transactions, the Fund will purchase such securities upon termination of the futures position, but under unusual market conditions, a long futures position may be terminated without a related purchase of securities.

As noted in the Prospectus, the Fund may purchase and sell foreign currency futures contracts for hedging purposes, to attempt to protect its current or intended investments from fluctuations in currency exchange rates. Such fluctuations could reduce the dollar value of portfolio securities denominated in foreign currencies, or increase the cost of foreign-denominated securities to be acquired, even if the value of such securities in the currencies in which they are denominated remains constant. A Fund may sell futures contracts on a foreign currency, for example, where it holds securities denominated in such currency and it anticipates a decline in the value of such currency relative to the dollar. In the event such decline occurs, the resulting adverse effect on the value of foreign-denominated securities may be offset, in whole or in part, by gains on the futures contracts.

Conversely, a Fund could protect against a rise in the dollar cost of foreign- denominated securities to be acquired by purchasing futures contracts on the relevant currency, which could offset, in whole or in part, the increased cost of such securities resulting from a rise in the dollar value of the underlying currencies. Where a Fund purchases futures contracts under such circumstances, however, and the prices of securities to be acquired instead decline, the Fund will sustain losses on its futures position which could reduce or eliminate the benefits of the reduced cost of portfolio securities to be acquired.

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

The Fund may cover the writing of call Options on Futures Contracts (a) through purchases of the underlying Futures Contract, (b) through ownership of the instrument, or instruments included in the index, underlying the Futures Contract, or (c) through the holding of a call on the same Futures Contract and in the same principal amount as the call written where the exercise price of the call held (i) is equal to or less than the exercise price of the call written or
(ii) is greater than the exercise price of the call written if the difference is maintained by the Fund in cash and high grade government securities in a segregated account with its custodian. The Fund may cover the writing of put Options on Futures Contracts (a) through sales of the underlying Futures Contract, (b) through segregation of cash or cash equivalents in an amount equal to the value of the security or index underlying the Futures Contract, or (c) through the holding of a put on the same Futures Contract and in the same principal amount as the put written where the exercise price of the put held (i) is equal to or greater than the exercise price of the put written or (ii) is less than the exercise price of the put written if the difference is maintained by the Fund in cash or high grade government securities in a segregated account with its custodian. Put and call Options on Futures Contracts written by the Fund may also be covered in such other manner as may be in accordance with the rules of the exchange on which, or the counterparty with which, the option is traded, and applicable laws and regulations. Upon the exercise of a call Option on a Futures Contract written by the Fund, the Fund will be required to sell the underlying Futures Contract which, if the Fund has covered its obligation through the purchase of such Contract, will serve to liquidate its futures position. Similarly, where a put Option on a Futures Contract written by the Fund is exercised, the Fund will be required to purchase the underlying Futures Contract which, if the Fund has covered its obligation through the sale of such Contract, will close out its futures position.

The Fund may purchase Options on Futures Contracts for hedging purposes as an alternative to purchasing or selling the underlying Futures Contracts. For example, where a decrease in the value of portfolio securities is anticipated as a result of a projected market-wide decline or changes in interest or exchange rates, the Fund could, in lieu of selling Futures Contracts, purchase put options thereon. In the event that such decrease occurs, it may be offset, in whole or part, by a profit on the option. Conversely, where it is projected that the value of securities to be acquired by the Fund will increase prior to acquisition, due to a market advance or changes in interest or exchange rates, the Fund could purchase call Options on Futures Contracts, rather than purchasing the underlying Futures Contracts.

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

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

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

RISK FACTORS: IMPERFECT CORRELATION OF HEDGING INSTRUMENTS WITH THE FUND'S PORTFOLIO -- The Fund's ability effectively to hedge all or a portion of its portfolio through transactions in options, Futures Contracts, and Forward Contracts will depend on the degree to which price movements in the underlying index or instrument correlate with price movements in the relevant portion of the Fund's portfolio. Because the securities in the Fund's portfolio will most likely not be the same as those securities underlying a stock index, the correlation between movements in the portfolio and in the securities underlying the index will not be perfect. The trading of Futures Contracts and options entails the additional risk of imperfect correlation between movements in the futures or option price and the price of the underlying index or obligation. The anticipated spread between the prices may be distorted due to the differences in the nature of the markets, such as differences in margin requirements, the liquidity of such markets and the participation of speculators in such markets. In this regard, trading by speculators in options and Futures Contracts has in the past occasionally resulted in market distortions, which may be difficult or impossible to predict, particularly near the expiration of such contracts. It should be noted that Futures Contracts or options based upon a narrower index of securities, such as those of a particular industry group, may present greater risk than options or Futures Contracts based on a broad market index, because a narrower index is more susceptible to rapid and extreme fluctuations as a result of changes in the value of a small number of securities. The trading of Options on Futures Contracts also entails the risk that changes in the value of the underlying Futures Contracts will not be fully reflected in the value of the option. Further, with respect to options on securities, options on stock indices and Options on Futures Contracts, the Fund is subject to the risk of market movements between the time that the option is exercised and the time of performance thereunder. In writing a covered call option on a security, index or Futures Contract, the Fund also incurs the risk that changes in the value of the instruments used to cover the position will not correlate closely with changes in the value of the option or underlying index or instrument.

The Fund will invest in a hedging instrument only if, in the judgment of its Adviser, there would be expected to be a sufficient degree of correlation between movements in the value of the instrument and movements in the value of the relevant portion of the Fund's portfolio for such hedge to be effective. There can be no assurance that the Adviser's judgment will be accurate.

It should also be noted that the Fund may enter into transactions in options, futures contracts, options on futures contracts and forward contracts not only for hedging purposes, but also for non-hedging purposes, including the purpose of increasing its return on portfolio securities. As a result, in the event of adverse market movements, the Fund might be subject to losses, which would not be offset by increases in the value of portfolio securities or declines in the cost of securities to be acquired. In addition, the method of covering an option employed by the Fund may not fully protect it against risk of loss and, in any event, the Fund could suffer losses on the option position which might not be offset by corresponding portfolio gains.

With respect to the writing of straddles on securities, the Fund incurs the risk that the price of the underlying security will not remain stable, that one of the options written will be exercised and that the resulting loss will not be offset by the amount of the premiums received.

POTENTIAL LACK OF A LIQUID SECONDARY MARKET -- Prior to exercise or expiration, a futures or option position can only be terminated by entering into a closing purchase or sale transaction. This requires a secondary market for such instruments on the exchange on which the initial transaction was entered into. While the Fund will enter into options or futures positions only if there appears to be a liquid secondary market therefor, there can be no assurance that such a market will exist for any particular contracts at any specific time. In that event, it may not be possible to close out a position held by the Fund, and the Fund could be required to purchase or sell the instrument underlying an option, make or receive a cash settlement or meet ongoing variation margin requirements. Under such circumstances, if the Fund had insufficient cash available to meet margin requirements, it might be necessary to liquidate portfolio securities at a time when it would be disadvantageous to do so. The inability to close out options and futures positions, therefore, could have an adverse impact on the Fund's ability effectively to hedge its portfolios, and could result in trading losses. The liquidity of a secondary market in a Futures Contract or options thereon may also be adversely affected by "daily price fluctuation limits," established by exchanges, which limit the amount of fluctuation in the price of a contract during a single trading day. The trading of Futures Contracts and options is also subject to the risk of trading halts, suspensions, exchange or clearing house equipment failures, government intervention, insolvency of a brokerage firm or clearing house or other disruptions of normal trading activity, which could at times make it difficult or impossible to liquidate existing positions or to recover excess variation margin payments.

MARGIN -- Because of low initial margin deposits made upon the opening of a futures position and the writing of an option, such transactions involve substantial leverage. As a result, relatively small movements in the price of the contract can result in substantial unrealized gains or losses. Because the Fund would engage in the purchase or sale of Futures Contracts and the writing of Options on Futures Contracts solely for hedging purposes, however, and would purchase and write options on securities and stock indices in part for hedging purposes, any losses incurred in connection therewith should, if the hedging strategy is successful, be offset, in whole or in part, by increases in the value of securities held by the Fund or decreases in the prices of securities the Fund intends to acquire. Where the Fund writes options on securities or options on stock indices for other than hedging purposes, the margin requirements associated with such transactions could expose the Fund to greater risk.

TRADING AND POSITION LIMITS -- The exchanges on which Futures Contracts and options are traded may impose limitations governing the maximum number of positions on the same side of the market and involving the same underlying instrument which may be held by a single investor, whether acting alone or in concert with others (regardless of whether such contracts are held on the same or different exchanges or held or written in one or more accounts or through one or more brokers). In addition, the CFTC and the various contract markets have established limits referred to as "speculative position limits" on the maximum net long or net short position which any person may hold or control in a particular futures or option contract. An exchange may order the liquidation of positions found to be in violation of these limits and it may impose other sanctions or restrictions. The Adviser does not believe that these trading and position limits will have any adverse impact on the strategies for hedging the portfolio of the Fund.

RISK OF OPTIONS ON FUTURES CONTRACTS -- The amount of risk the Fund assumes when it purchases an Option on a Futures Contract is the premium paid for the option, plus related transaction costs. In order to profit from an option purchased, however, it may be necessary to exercise the option and to liquidate the underlying Futures Contract, subject to the risks of the availability of a liquid offset market described herein. The writer of an Option on a Futures Contract is subject to the risks of commodity futures trading, including the requirement of initial and variation margin payments, as well as the additional risk that movements in the price of the option may not correlate with movements in the price of the underlying index or Futures Contract.

ADDITIONAL RISKS OF TRANSACTIONS NOT CONDUCTED ON EXCHANGES -- Transactions in Forward Contracts are subject to all of the correlation, liquidity and other risks outlined above. In addition, however, such transactions are subject to the risk of governmental actions affecting trading in or the prices of currencies underlying such contracts, which could restrict or eliminate trading and could have a substantial adverse effect on the value of positions held by the Fund. In addition, the value of such positions could be adversely affected by a number of other complex political and economic factors applicable to the countries issuing the underlying currencies. Further, unlike trading in most other types of instruments, there is no systematic reporting of last sale information with respect to the foreign currencies underlying contracts thereon. As a result, the available information on which trading systems will be based may not be as complete as the comparable data on which the Fund makes investment and trading decisions in connection with other transactions. Moreover, because the foreign currency market is a global, 24- hour market, events could occur on that market which would not be reflected in the forward markets until the following day, thereby preventing the Fund from responding to such events in a timely manner. Settlements of exercises of Forward Contracts generally must occur within the country issuing the underlying currency, which in turn requires traders to accept or make delivery of such currencies in conformity with any United States or foreign restrictions and regulations regarding the maintenance of foreign banking relationships, fees, taxes or other charges.

Forward Contracts, and over-the-counter options on securities, are not traded on exchanges regulated by the CFTC or the SEC, but through financial institutions acting as market-makers. In an over-the-counter trading environment, many of the protections afforded to exchange participants will not be available. In addition, over-the-counter transactions can only be entered into with a financial institution willing to take the opposite side, as principal, of the Fund's position unless the institution acts as broker and is able to find another counterparty willing to enter into the transaction with the Fund. Where no such counterparty is available, it will not be possible to enter into a desired transaction. There also may be no liquid secondary market in the trading of over-the-counter contracts, and the Fund could be required to retain options purchased or written, or Forward Contracts entered into, until exercise, expiration or maturity. This in turn could limit the Fund's ability to profit from open positions or to reduce losses experienced, and could result in greater losses. Further, over-the-counter transactions are not subject to the performance guarantee of an exchange clearing house, and the Fund will therefore be subject to the risk of default by, or the bankruptcy of, the financial institution serving as its counterparty.

While Forward Contracts are not presently subject to regulation by the CFTC, the CFTC may in the future assert or be granted authority to regulate such instruments. In such event, the Fund's ability to utilize Forward Contracts in the manner set forth above could be restricted.

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

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

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

The Fund may not:
(1) Borrow amounts in excess of 5% of its gross assets (taken at the lower of cost or market value), and then only as a temporary measure for extraordinary or emergency purposes;

(2) Pledge, mortgage or hypothecate an amount of assets which (taken at market value) exceeds 33 1/3% of its gross assets taken at the lower of cost or market value. For the purpose of this restriction, collateral arrangements with respect to options on securities, stock indices and foreign currencies ("Options"), Futures Contracts, Options on Futures Contracts, Forward Contracts, and payments of initial and variation margin in connection therewith are not considered a pledge of assets;

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

(4) Concentrate its investments in any particular industry, but if it is deemed appropriate for the attainment of its investment objectives, up to 25% of its assets, at market value at the time of each investment, may be invested in any one industry;

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

(6) Make loans to other persons except through the lending of its portfolio securities and by entering into repurchase agreements (see the discussion above under the caption "Investment Policies"). Not more than 10% of the Fund's total assets will be invested in repurchase agreements maturing in more than seven days. The Fund may purchase a portion of an issue of debt securities of types commonly distributed privately to financial institutions. For these purposes the purchase of short-term commercial paper or a portion of an issue of debt securities which are part of an issue to the public shall not be considered the making of a loan;

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

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

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

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

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

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

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

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

(15) Purchase or sell any put or call options or any combination thereof, provided, that this shall not prevent the purchase, ownership, holding or sale of warrants where the grantor of the warrants is the issuer of the underlying securities or the writing, purchasing and selling of puts, calls or combinations thereof with respect to securities, foreign currencies, indices of securities and Futures Contracts.

As a matter of non-fundamental policy, the Fund may not invest in securities (other than repurchase agreements maturing in seven days or less) which are subject to legal or contractual restrictions on resale or for which there is no readily available market (unless the Board of Trustees has determined that such securities are liquid based upon trading markets for the specific security) if more than 15% of the Fund's assets (taken at market value) would be invested in such securities. The Fund also may not invest more than 5% of the value of the Fund's net assets, valued at the lower of cost or market, in warrants. Included within such amount, but not to exceed 2% of the value of the Fund's net assets, may be warrants which are not listed on the New York or American Stock Exchange. Warrants acquired by the Fund in units or attached to Securities may be deemed to be without value.

These investment restrictions are adhered to at the time of purchase or utilization of assets; a subsequent change in circumstances will not be considered to result in a violation of policy.

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

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

RICHARD B. BAILEY*
Private investor; Massachusetts Financial Services Company, Former Chairman (prior to September 30, 1991); Cambridge Bancorp, Director; Cambridge Trust Company, Director

PETER G. HARWOOD
Private Investor
Address: 211 Lindsay Pond Road, Concord, Massachusetts

J. ATWOOD IVES
Eastern Enterprises (diversified holding company), Chairman and Chief Executive Officer (since December 1991); General Cinema Corporation, Vice Chairman and Chief Financial Officer (prior to December 1991); The Neiman Marcus Group, Inc., Vice Chairman and Chief Financial Officer (prior to February 1992) Address: 9 Riverside Road, Weston, Massachusetts

LAWRENCE T. PERERA
Hemenway & Barnes (attorneys), Partner
Address: 60 State Street, Boston, Massachusetts

WILLIAM J. POORVU
Harvard University Graduate School of Business Administration, Adjunct Professor; CBL & Associates Properties, Inc. (a real estate investment trust), Director; The Baupost Fund (a registered investment company), Vice Chairman


(since November 1993), Chairman and Trustee (prior to November 1993)

Address: Harvard Business School, Soldier's Field Road, Cambridge, Massachusetts

CHARLES W. SCHMIDT
Private investor; Raytheon Company (diversified electronics manufacturer), Senior Vice President (prior to December 1990); OHM Corporation, Director; The Boston Company, Director; Boston Safe Deposit and Trust Company, Director; Mohawk Paper Company, Director
Address: 30 Colpitts Road, Weston, Massachusetts

ARNOLD D. SCOTT,* Senior Executive Vice President and Secretary Massachusetts Financial Services Company

JEFFREY L. SHAMES,* President
Massachusetts Financial Services Company

ELAINE R. SMITH
Independent Consultant; Brigham and Women's Hospital, Executive Vice President and Chief Operating Officer (prior to September 1992) Address: Weston, Massachusetts

DAVID B. STONE
North American Management Corp. (investment advisers), Chairman and Director; Eastern Enterprises, Director
Address: Ten Post Office Square, Suite 300, Boston Massachusetts

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

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

JAMES R. BORDEWICK, JR.,* Assistant Secretary Massachusetts Financial Services Company, Vice President and Associate General Counsel

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

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

Each Trustee and officer holds comparable positions with certain MFS affiliates or with certain other funds of which MFS or a subsidiary of MFS is the investment adviser or distributor. Mr. Brodkin, the Chairman of MFD, Messrs. Shames and Scott, Directors of MFD, and Mr. Cavan, the Secretary of MFD, hold similar positions with certain other MFS affiliates. Mr. Bailey is a Director of Sun Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)"), the corporate parent of MFS.

The Fund pays the compensation of non-interested Trustees and Mr. Bailey who currently receive a fee of $5,500 per year plus $250 per meeting and $225 per committee meeting attended, together with such Trustee's out-of-pocket expenses. The Trust has adopted a retirement plan for non-interested Trustees and Mr. Bailey. Under the plan, a Trustee will retire upon reaching age 73 and if the Trustee has completed at least five years of service, he would be entitled to annual payments during his lifetime of up to 50% of such Trustee's average annual compensation (based on the three years prior to his retirement) depending on his length of service. A Trustee may also retire prior to age 73 and receive reduced payments if he has completed at least five years of service. Under the plan, a Trustee (or his beneficiaries) will also receive benefits for a period of time in the event the Trustee is disabled or dies. These benefits will also be based on the Trustee's average annual compensation and length of service. There is no retirement plan provided by the Trust for Messrs. Brodkin, Scott and Shames. The Fund will accrue its allocable share of compensation expenses each year to cover current year's service and amortize past service cost.

Set forth in Appendix A hereto is certain information concerning the cash compensation paid to the Trustees and benefits accrued, and estimated benefits payable, under the retirement plan.

As of December 31, 1995, all Trustees and officers as a group owned less than 1% of the Fund's shares outstanding.

The Declaration of Trust provides that the Trust will indemnify the Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust, unless, as to liabilities to the Trust or its shareholders, it is finally adjudicated that they engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices, or with respect to any matter unless it is adjudicated that they did not act in good faith in the reasonable belief that their actions were in the best interest of the Trust. In the case of a settlement, such indemnification will not be provided unless it has been determined pursuant to the Declaration of Trust, that such officers or Trustees have not engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices.

INVESTMENT ADVISER
MFS and its predecessor organizations have a history of money management dating from 1924. MFS is a wholly owned subsidiary of Sun Life of Canada (U.S.), which in turn is a wholly owned subsidiary of Sun Life Assurance Company of Canada ("Sun Life").

The Adviser manages the Fund pursuant to an Investment Advisory Agreement, dated January 18, 1985 (the "Advisory Agreement"). The Adviser provides the Fund with overall investment advisory and administrative services, as well as general office facilities. Subject to such policies as the Trustees may determine, the Adviser makes investment decisions for the Fund. For these services and facilities, the Adviser receives a management fee, computed and paid monthly, on the basis of a formula based upon a percentage of the Fund's average daily net assets plus a percentage of its gross income (i.e., income other than gains from the sale of securities). The applicable percentages are reduced as assets and income reach the following levels:

   ANNUAL RATE OF MANAGEMENT FEE       ANNUAL RATE OF MANAGEMENT FEE
 BASED ON AVERAGE DAILY NET ASSETS         BASED ON GROSS INCOME
- ------------------------------------  --------------------------------
 .25% of the first $200 million        3.57% of the first $14 million
 .212% of average daily net assets in  3.04% of gross income in excess
  excess of $200 million              of $14 million

For the Fund's fiscal year ended September 30, 1993, MFS received management fees under the Advisory Agreement of $5,664,368 (of which $3,191,802 was based on average daily net assets and $2,472,566 on gross income), equivalent on an annualized basis, to 0.39% of the Fund's average daily net assets. For the Fund's fiscal year ended September 30, 1994, MFS received management fees under the Advisory Agreement of $9,315,310 (of which $5,365,312 was based on average daily net assets and $3,949,998 on gross income), equivalent, on an annualized basis, to 0.37% of the Fund's average daily net assets. For the Fund's fiscal year ended September 30, 1995, MFS received management fees under the Advisory Agreement of $11,256,389 (of which $6,210,710 was based on average daily net assets and $5,045,679 on gross income), equivalent on an annualized basis, to 0.39% of the Fund's average daily net assets. In order to comply with the expense limitations of certain state securities commissions, the Adviser will reduce its management fee or otherwise reimburse the Fund for any expenses, exclusive of interest, taxes and brokerage commissions, incurred by the Fund in any fiscal year to the extent such expenses exceed the most restrictive of such state expense limitations. The Adviser will make appropriate adjustments to such reimbursements in response to any amendment or rescission of the various state requirements. Any such adjustment would not become effective until the beginning of the Fund's next fiscal year following the date of such amendments or the date on which such requirements become no longer applicable.

The Fund pays all of the Fund's expenses (other than those assumed by MFS or MFD), including: governmental fees; interest charges; taxes; membership dues in the Investment Company Institute allocable to the Fund; fees and expenses of independent auditors, of legal counsel, and of any transfer agent, registrar or dividend disbursing agent of the Fund; expenses of repurchasing and redeeming shares; expenses of preparing, printing and mailing share certificates, shareholder reports, notices, proxy statements and reports to governmental officers and commissions; brokerage and other expenses connected with the execution, recording and settlement of portfolio security transactions; insurance premiums; fees and expenses of Investors Bank & Trust Company, the Fund's custodian, for all services to the Fund, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of shares of the Fund; and expenses of shareholder meetings. Expenses relating to the issuance, registration and qualification of shares of the Fund and the preparation, printing and mailing of prospectuses for such purposes are borne by the Fund except that its Distribution Agreement with MFD, the Fund's Distributor, requires MFD to pay for prospectuses that are to be used for sales purposes. Expenses of the Trust which are not attributable to a specific series are allocated among the series in a manner believed by management of the Trust to be fair and equitable. For a list of the Fund's expenses, including the compensation paid to the Trustees who are not officers of MFS during the fiscal year ended September 30, 1995, see "Financial Statements -- Statement of Operations" in the Annual Report to shareholders. Payment by the Fund of brokerage commissions for brokerage and research services of value to the Adviser in serving its clients is discussed under the caption "Portfolio Transactions and Brokerage Commissions."

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

The Advisory Agreement will remain in effect until August 1, 1996, and will continue in effect thereafter only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of the Fund's outstanding voting securities (as defined under "Investment Restrictions") and, in either case, by a majority of the Trustees who are not parties to the Advisory Agreement or interested persons of any such party. The Advisory Agreement terminates automatically if it is assigned and may be terminated without penalty by vote of a majority of the Fund's shares (as defined in "Investment Restrictions") or by either party on not more than 60 days" nor less than 30 days' written notice. MFS may render services to others and neither the Adviser nor its personnel shall be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution and management of the Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its or their duties or by reason of reckless disregard of its or their obligations and duties under the Advisory Agreement.

CUSTODIAN
Investors Bank & Trust Company (the "Custodian") is the custodian of the Fund's assets. The Custodian's responsibilities include safekeeping and controlling the Fund's cash and securities, handling the receipt and delivery of securities, determining income and collecting interest and dividends on the Fund's investments, maintaining books of original entry for portfolio and fund accounting and other required books and accounts, and calculating the daily net asset value of shares of each class of the Fund. The Custodian does not determine the investment policies of the Fund or decide which securities the Fund will buy or sell. The Fund may, however, invest in securities of the Custodian and may deal with the Custodian as principal in securities transactions.

SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc. (the "Shareholder Servicing Agent"), a wholly owned subsidiary of MFS, is the Fund's shareholder servicing agent, pursuant to a Shareholder Servicing Agreement, effective August 1, 1985 (the "Agency Agreement") with the Trust. The Shareholder Servicing Agent's responsibilities under the Agency Agreement include administering and performing transfer agent functions and keeping records in connection with the issuance, transfer and redemption of each class of shares of the Fund. For these services, the Shareholder Servicing Agent will receive a fee calculated as a percentage of the average daily net assets of each class of shares at an effective annual rate of up to 0.15%, up to 0.22% and up to 0.15% attributable to Class A, Class B and Class C shares, respectively. In addition, the Shareholder Servicing Agent will be reimbursed by the Fund for certain expenses incurred by the Shareholder Servicing Agent on behalf of the Fund. State Street Bank and Trust Company, the dividend and distribution disbursing agent, has contracted with the Shareholder Servicing Agent to administer and perform certain dividend and distribution disbursing functions for the Fund.

DISTRIBUTOR
MFD, a wholly owned subsidiary of MFS, serves as distributor for the continuous offering of shares of the Fund pursuant to a Distribution Agreement, dated as of January 1, 1995 (the "Distribution Agreement"). Prior to January 1, 1995, MFS Financial Services, Inc. ("FSI"), another wholly owned subsidiary of MFS, was the Fund's distributor. Where this SAI refers to MFD in relation to the receipt or payment of money with respect to a period or periods prior to January 1, 1995, such reference shall be deemed to include FSI, as the predecessor in interest to MFD.

CLASS A SHARES: MFD acts as agent in selling Class A shares of the Fund to dealers. The public offering price of Class A shares of the Fund is their net asset value next computed after the sale plus a sales charge which varies based upon the quantity purchased. The public offering price of a Class A share of the Fund is calculated by dividing net asset value of a Class A share by the difference (expressed as a decimal) between 100% and the sales charge percentage of offering price applicable to the purchase (see "Purchases" in the Prospectus). The sales charge scale set forth in the Prospectus applies to purchases of Class A shares of the Fund alone or in combination with shares of all classes of certain other funds in the MFS Family of Funds (the "MFS Funds") and other funds (as noted under Right of Accumulation) by any person, including members of a family unit (e.g., husband, wife and minor children) and bona fide trustees, and also applies to purchases made under the Right of Accumulation or a Letter of Intent (see "Investment and Withdrawal Programs" in this SAI). A group might qualify to obtain quantity sales charge discounts (see "Investment and Withdrawal Programs").

Class A shares of the Fund may be sold at their net asset value to certain persons or in certain circumstances as described in the Prospectus. Such sales are made without a sales charge to promote good will with employees and others with whom MFS, MFD and/or the Fund have business relationships, and because the sales effort, if any, involved in making such sales is negligible.

MFD allows discounts to dealers (which are alike for all dealers) from the applicable public offering price of the Class A shares. Dealer allowances expressed as a percentage of offering price for all offering prices are set forth in the Prospectus (see "Purchases" in the Prospectus). The difference between the total amount invested and the sum of (a) the net proceeds to the Fund and (b) the dealer commission is the commission paid to the distributor. Because of rounding in the computation of offering price, the portion of the sales charge paid to the distributor may vary and the total sales charge may be more or less than the sales charge calculated using the sales charge expressed as a percentage of the offering price or as a percentage of the net amount invested as listed in the Prospectus. In the case of the maximum sales charge, the dealer retains 4% and MFD retains approximately 3/4 of 1% of the public offering price. In addition, MFD, on behalf of the Fund, will pay a commission to dealers who initiate and are responsible for purchases of $1 million or more as described in the Prospectus.

CLASS B AND CLASS C SHARES: MFD acts as agent in selling Class B and Class C shares of the Fund to dealers. The public offering price of Class B and Class C shares is their net asset value next computed after the sale (see "Purchases" in the Prospectus).

GENERAL: Neither MFD nor dealers are permitted to delay the placement of orders to benefit themselves by a price change. On occasion, MFD may obtain brokers loans from various banks, including the Custodian for the MFS Funds, to facilitate the settlement of sales of shares of the Fund to dealers. MFD may benefit from its temporary holding of funds paid to it by investment dealers for the purchase of Fund shares.

During the Fund's fiscal year ended September 30, 1995, MFD and dealers and certain other financial institutions received net commissions of $862,946 and $4,972,643, respectively (as their concession on gross commissions of $5,835,589) for selling Class A shares of the Fund. The Fund received $339,269,433 representing the aggregate net asset value of such shares. During the Fund's fiscal year ended September 30, 1994, MFD and dealers and certain other financial institutions received net commissions of $1,855,403 and $9,829,248, respectively (as their concession on gross commissions of $11,684,651), for selling Class A shares of the Fund. The Fund received $429,939,786 representing the aggregate net asset value of such shares. During the Fund's fiscal year ended September 30, 1993, MFD and dealers and certain other financial institutions received net commissions of $2,106,993 and $10,770,824, respectively (as their concession on gross commissions of $12,877,817), for selling Class A shares of the Fund. The Fund received $433,299,454 representing the aggregate net asset value of such shares.

During the Fund's fiscal year ended September 30, 1995, the Contingent Deferred Sales Charge ("CDSC") imposed on redemption of Class B shares was $1,756,259. During the Fund's fiscal year ended September 30, 1994, the CDSC imposed on redemption of Class B shares was $1,093,613. During the period from August 23, 1993 through September 30, 1993, the CDSC imposed on redemption of Class B shares was $63,460.

The Distribution Agreement will remain in effect until August 1, 1996, and will continue in effect thereafter only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of the Trust's shares (as defined in "Investment Restrictions") and, in either case, by a majority of the Trustees who are not parties to the Distribution Agreement or interested persons of any such party. The Distribution Agreement terminates automatically if it is assigned and may be terminated without penalty by either party on not more than 60 days' nor less than 30 days' notice.

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

The primary consideration in placing portfolio security transactions with broker-dealers for execution is to obtain and maintain the availability of execution at the most favorable prices and in the most effective manner possible. The Adviser attempts to achieve this result by selecting broker-dealers to execute portfolio transactions on behalf of the Fund and other clients of the Adviser on the basis of their professional capability, the value and quality of their brokerage services, and the general level of their brokerage commissions. In the case of securities traded in the over-the-counter market (where no stated commissions are paid but the prices include a dealer's markup or markdown), the Adviser normally seeks to deal directly with the primary market-makers, unless, in its opinion, best execution is available elsewhere. In the case of securities purchased from underwriters, the cost of such securities generally includes a fixed underwriting commission or concession. From time to time, soliciting dealer fees are available to the Adviser on the tender of the Fund's portfolio securities in so-called tender or exchange offers. Such soliciting dealer fees are in effect recaptured for the Fund by the Adviser. At present no other recapture arrangements are in effect.

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

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

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

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

Broker-dealers may be willing to furnish statistical, research and other factual information or services ("Research") to the Adviser for no consideration other than brokerage or underwriting commissions. Securities may be bought or sold from time to time through such broker-dealers on behalf of the Fund. The Trust's Trustees (together with the Trustees of the other MFS Funds) have directed the Adviser to allocate a total of $23,100 of commission business from the MFS Funds to the Pershing Division of Donaldson, Lufkin & Jenrette as consideration for the annual renewal of the Lipper Directors' Analytical Data Service (which provides information useful to the Trustees in reviewing the relationship between the Fund and the Adviser).

The Adviser's investment management personnel attempt to evaluate the quality of Research provided by brokers. The Adviser sometimes uses evaluations resulting from this effort as a consideration in the selection of brokers to execute portfolio transactions. However, the Adviser is unable to quantify the amount of commissions set forth below which were paid as a result of such Research because a substantial number of transactions were effected through brokers which provide Research but which were selected principally because of their execution capabilities.

The management fee that the Fund pays to the Adviser will not be reduced as a consequence of the Adviser's receipt of brokerage and research services. To the extent the Fund's portfolio transactions are used to obtain such services, the brokerage commissions paid by the Fund will exceed those that might otherwise be paid by an amount which cannot be presently determined. Such services would be useful and of value to the Adviser in serving both the Fund and other clients and, conversely, such services obtained by the placement of brokerage business of other clients would be useful to the Adviser in carrying out its obligations to the Fund. While such services are not expected to reduce the expenses of the Adviser, the Adviser would, through use of the services, avoid the additional expenses which would be incurred if it should attempt to develop comparable information through its own staff.

For the Fund's fiscal years ended September 30, 1993, 1994 and 1995, total brokerage commissions of $333,792, $670,133 and $1,333,734 respectively, were paid. Not all of the Fund's transactions are equity security transactions which involve the payment of brokerage commissions. During the Fund's fiscal year ended September 30, 1995, the Fund owned securities issued by Bear, Stearns & Co. which securities had a value of $3,665,556 at the end of such fiscal year, by Dean Witter Reynolds, Inc., which securities had a value of $12,701,025 at the end of such fiscal year, by Goldman Sachs & Co., which securities had a value of $2,542,650 at the end of such fiscal year and by Lehman Brothers, Inc. which securities had a value of $10,869,333 at the end of such fiscal year. Each of these entities are regular broker dealers of the Fund.

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

5. SHAREHOLDER SERVICES INVESTMENT AND WITHDRAWAL PROGRAMS -- The Fund makes available the following programs designed to enable shareholders to add to their investment or withdraw from it with a minimum of paper work. These are described below and, in certain cases, in the Prospectus. The programs involve no extra charge to shareholders (other than a sales charge in the case of certain Class A share purchases) and may be changed or discontinued at any time by a shareholder or the Fund.

LETTER OF INTENT: If a shareholder (other than a group purchaser described below) anticipates purchasing $100,000 or more of Class A shares of the Fund alone or in combination with shares of Class B or Class C of the Fund or any of the Classes of other MFS Funds, or MFS Fixed Fund (a bank collective trust) within a 13-month period (or 36-month period in the case of purchases of $1 million or more), the shareholder may obtain Class A shares of the Fund at the same reduced sales charge as though the total quantity were invested in one lump sum by completing the Letter of Intent section of the Fund's Account Application or filing a seperate Letter of Intent application (available from the Shareholder Servicing Agent) within 90 days of the commencement of purchases. Subject to acceptance by MFD and the conditions mentioned below, each purchase will be made at a public offering price applicable to a single transaction of the dollar amount specified in the Letter of Intent application. The shareholder or his dealer must inform MFD that the Letter of Intent is in effect each time shares are purchased. The shareholder makes no commitment to purchase additional shares, but if his purchases within 13 months (or 36-months in the case of purchases of $1 million or more) plus the value of shares credited toward completion of the Letter of Intent do not total the sum specified, he will pay the increased amount of the sales charge as described below. Instructions for issuance of shares in the name of a person other than the person signing the Letter of Intent application must be accompanied by a written statement from the dealer stating that the shares were paid for by the person signing such Letter. Neither income dividends nor capital gain distributions taken in additional shares will apply toward the completion of the Letter of Intent. Dividends and distributions of other MFS Funds automatically reinvested in shares of the Fund pursuant to the Distribution Investment Program will also not apply toward completion of the Letter of Intent.

Out of the shareholder's initial purchase (or subsequent purchases if necessary), 5% of the dollar amount specified in the Letter of Intent application shall be held in escrow by the Shareholder Servicing Agent in the form of shares registered in the shareholder's name. All income dividends and capital gain distributions on escrowed shares will be paid to the shareholder or to his order. When the minimum investment so specified is completed (either prior to or by the end of the 13-month period or 36-month period, as applicable), the shareholder will be notified and the escrowed shares will be released.

If the intended investment is not completed, the Shareholder Servicing Agent will redeem an appropriate number of the escrowed shares in order to realize such difference. Shares remaining after any such redemption will be released by the Shareholder Servicing Agent. By completing and signing the Account Application or separate Letter of Intent application, the shareholder irrevocably appoints the Shareholder Servicing Agent his attorney to surrender for redemption any or all escrowed shares with full power of substitution in the premises.

RIGHT OF ACCUMULATION: A shareholder qualifies for cumulative quantity discounts on the purchase of Class A shares when that shareholder's new investment, together with the current offering price value of all the holdings of all classes of shares of that shareholder in the MFS Funds or MFS Fixed Fund (a bank collective trust) reaches a discount level (see "Purchases" in the Prospectus for the sales charges on quantity purchases). For example, if a shareholder owns shares valued at $75,000 and purchases an additional $25,000 of Class A shares of the Fund, the sales charge for the $25,000 purchase would be at the rate of 4% (the rate applicable to single transactions of $100,000). A shareholder must provide the Shareholder Servicing Agent (or his investment dealer must provide MFD) with information to verify that the quantity sales charge discount is applicable at the time the investment is made. The current offering price value of an investor's holdings of Class C shares will apply toward cumulative quantity discounts on purchases of Class A shares. See the prospectus for further information on the Right of Accumulation.

DISTRIBUTION INVESTMENT PROGRAM: Distributions of dividends and capital gains made by the Fund with respect to a particular class of shares may be automatically invested in shares of the same class of one of the other MFS Funds, if shares of the fund are available for sale. Such investments will be subject to additional purchase minimums. Distributions will be invested at net asset value (exclusive of any sales charge) and will not be subject to any CDSC. Distributions will be invested at the close of business on the payable date for the distribution. A shareholder considering the Distribution Investment Program should obtain and read the prospectus of the other fund and consider the differences in objectives and policies before making any investment.

SYSTEMATIC WITHDRAWAL PLAN: A shareholder may direct the Shareholder Servicing Agent to send him (or anyone he designates) regular periodic payments based upon the value of his account. Each payment under a Systematic Withdrawal Plan (a "SWP") must be at least $100, except in certain limited circumstances. The aggregate withdrawals of Class B shares in any year pursuant to a SWP generally are limited to 10% of the value of the account at the time of the establishment of the SWP. SWP payments are drawn from the proceeds of share redemptions (which would be a return of principal and, if reflecting a gain, would be taxable). Redemptions of Class B shares will be made in the following order: (i) any "Free Amount"; (ii) to the extent necessary, any "Reinvested Shares"; and (iii) to the extent necessary, the "Direct Purchase" subject to the lowest CDSC (as such terms are defined in "Contingent Deferred Sales Charge" in the Prospectus). The CDSC will be waived in the case of redemptions of Class B shares pursuant to a SWP, but will not be waived in the case of SWP redemptions of Class A shares which are subject to a CDSC. To the extent that redemptions for such periodic withdrawals exceed dividend income reinvested in the account, such redemptions will reduce and may eventually exhaust the number of shares in the shareholder's account. All dividend and capital gain distributions for an account with a SWP will be reinvested in full and fractional shares of the Fund at the net asset value in effect at the close of business on the record date for such distributions. To initiate this service, shares having an aggregate value of at least $5,000 either must be held on deposit by, or certificates for such shares must be deposited with, the Shareholder Servicing Agent. With respect to Class A shares, maintaining a withdrawal plan concurrently with an investment program would be disadvantageous because of the sales charges included in share purchases and the imposition of a CDSC on certain redemptions. The shareholder may deposit into the account additional shares of the Fund, change the payee or change the dollar amount of each payment. The Shareholder Servicing Agent may charge the account for services rendered and expenses incurred beyond those normally assumed by the Fund with respect to the liquidation of shares. No charge is currently assessed against the account, but one could be instituted by the Shareholder Servicing Agent on 60 days' notice in writing to the shareholder in the event that the Fund ceases to assume the cost of these services. The Fund may terminate any SWP for an account if the value of the account falls below $5,000 as a result of share redemptions (other than as a result of a SWP) or an exchange of shares of the Fund for shares of another MFS Fund. Any SWP may also be terminated at any time by either the shareholder or the Fund.

INVEST BY MAIL: Additional investments of $50 or more may be made at any time by mailing a check payable to the Fund directly to the Shareholder Servicing Agent. The shareholder's account number and the name of his investment dealer must be included with each investment.

GROUP PURCHASES: A bona fide group and all of its members may be treated as a single purchaser and, under the Right of Accumulation (but not a Letter of Intent), obtain quantity sales charge discounts on the purchase of Class A shares if the group (1) gives its endorsement or authorization to the investment program so it may be used by the investment dealer to facilitate solicitation of the membership, thus effecting economies of sales effort; (2) has been in existence for at least six months and has a legitimate purpose other than to purchase mutual fund shares at a discount; (3) is not a group of individuals whose sole organizational nexus is as credit cardholders of a company, policyholders of an insurance company, customers of a bank or broker-dealer, clients of an investment adviser or other similar groups; and (4) agrees to provide certification of membership of those members investing money in the MFS Funds upon the request of MFD.

AUTOMATIC EXCHANGE PLAN: Shareholders having account balances of at least $5,000 in any MFS Fund may exchange their shares for the same class of shares of other MFS Funds (if available for sale) (and, in the case of Class C shares, for shares of MFS Money Market Fund) under the Automatic Exchange Plan. The Automatic Exchange Plan provides for automatic exchanges of funds from the shareholder's account in a MFS Fund for investment in other MFS Funds selected by the shareholder. Under the Automatic Exchange Plan, exchanges of at least $50 each may be made to up to four different funds effective on the seventh day of each month or of every third month, depending whether monthly or quarterly exchanges are elected by the shareholder. If the seventh day of the month is not a business day, the transaction will be processed on the next business day. Generally, the initial exchange will occur after receipt and processing by the Shareholder Servicing Agent of an application in good order. Exchanges will continue to be made from a shareholder's account in any MFS Fund, as long as the balance of the account is sufficient to complete the exchanges. Additional payments made to a shareholder's account in such MFS Fund will extend the period that exchanges will continue to be made under the Automatic Exchange Plan. However, if additional payments are added to an account subject to the Automatic Exchange Plan shortly before an exchange is scheduled, such funds may not be available for exchanges until the following month; therefore, care should be used to avoid inadvertently terminating the Automatic Exchange Plan through exhaustion of the account balance.

No transaction fee for exchanges will be charged in connection with the Automatic Exchange Plan. However, exchanges of shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund will be subject to any applicable sales charge. Changes in amounts to be exchanged to each fund, the funds to which exchanges are to be made and the timing of exchanges (monthly or quarterly), or termination of a shareholder's participation in the Automatic Exchange Plan will be made after instructions in writing or by telephone (an "Exchange Change Request") are received by the Shareholder Servicing Agent in proper form (i.e., if in writing -- signed by the record owner(s) exactly as shares of the MFS Fund are registered; if by telephone -- proper account identification is given by the dealer or shareholder of record). Each Exchange Change Request (other than termination of participation in the program) must involve at least $50. Generally, if an Exchange Change Request is received before the close of business on the last business day of a month, the Exchange Change Request will be effective for the following month's exchange.

A shareholder's right to make additional investments in any of the MFS Funds, to make exchanges of shares from one MFS Fund to another and to withdraw from an MFS Fund, as well as a shareholder's other rights and privileges, are not affected by a shareholder's participation in the Automatic Exchange Plan.

The Automatic Exchange Plan is part of the Exchange Privilege. For additional information regarding the Automatic Exchange Plan including the treatment of any CDSC, see "Exchange Privilege" below.

REINSTATEMENT PRIVILEGE: Shareholders of the Fund and shareholders of the other MFS Funds (except MFS Money Market Fund, MFS Government Money Market Fund and holders of Class A shares of MFS Cash Reserve Fund in the case where the shares of such funds are acquired through direct purchase or reinvested dividends) who have redeemed their shares have a one-time right to reinvest the redemption proceeds in the same class of shares of any of the MFS Funds (if shares of the fund are available for sale) at net asset value (without a sales charge) and, if applicable, with credit for any CDSC paid. In the case of proceeds reinvested in shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund, the shareholder has the right to exchange the acquired shares for shares of another MFS Fund at net asset value pursuant to the exchange privilege described below. Such a reinvestment must be made within 90 days of the redemption and is limited to the amount of the redemption proceeds. If the shares credited for any CDSC paid are then redeemed within six years of their initial purchase in the case of Class B shares or within 12 months of the initial purchase of certain Class A shares, a CDSC will be imposed upon redemption. Although redemptions and repurchases of shares are taxable events, a reinvestment within a certain period of time in the same fund may be considered a "wash sale" and may result in the inability to recognize currently any loss realized on the original redemption for federal income tax purposes. Please see your tax adviser for further information.

EXCHANGE PRIVILEGE -- Subject to the requirements set forth below, some or all of the shares for which payment has been received by the Fund (i.e., an established account) may be exchanged for shares of the same class of any of the other MFS Funds (if available for sale) at net asset value. In addition, Class C shares may be exchanged for shares of MFS Money Market Fund at net asset value. Exchanges will be made only after instructions in writing or by telephone (an "Exchange Request") are received for an established account by the Shareholder Servicing Agent.

Each Exchange Request must be in proper form (i.e., if in writing -- signed by the record owner(s) exactly as the shares are registered; if by telephone -- proper account identification is given by the dealer or shareholder of record) and each exchange must involve either shares having an aggregate value of at least $1,000 or all the shares in the account (except that the minimum is $50 for accounts of retirement plan participants whose sponsoring organizations subscribe to the MFS FUNDamental 401(k) Plan or another similar 401(k) recordkeeping system made available by the Shareholder Servicing Agent). Each exchange involves the redemption of the shares of the Fund to be exchanged and the purchase at net asset value (i.e., without a sales charge) of shares of the same class of the other MFS Fund. Any gain or loss on the redemption of the shares exchanged is reportable on the shareholder's federal income tax return, unless both the shares received and the shares surrendered in the exchange are held in a tax-deferred retirement plan or other tax-exempt account. No more than five exchanges may be made in any one Exchange Request by telephone. If the Exchange Request is received by the Shareholder Servicing Agent prior to the close of regular trading on the New York Stock Exchange (the "Exchange"), the exchange usually will occur on that day if all of the requirements set forth above have been complied with at that time. However, payment of the redemption proceeds by the Fund, and thus purchase of shares of the other MFS Fund, may be delayed for up to seven days if the Fund determines that such a delay would be in the best interest of all its shareholders. Investment dealers which have satisfied criteria established by MFD may also communicate a shareholder's Exchange Request to MFD by facsimile subject to the requirements set forth above.

No CDSC is imposed on exchanges among the MFS Funds, although liability for the CDSC is carried forward to the exchanged shares. For purposes of calculating the CDSC upon redemption of shares acquired in an exchange, the purchase of shares acquired in one or more exchanges is deemed to have occurred at the time of the original purchase of the exchanged shares.

Additional information with respect to any of the MFS Funds, including a copy of its current prospectus, may be obtained from investment dealers or the Shareholder Servicing Agent. A shareholder considering an exchange should obtain and read the prospectus of the other MFS Fund and consider the differences in objectives and policies before making any exchange. Shareholders in the other MFS Funds (except holders of shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund acquired through direct purchase and dividends reinvested prior to June 1, 1992) have the right to exchange their shares for shares of the Fund, subject to the conditions, if any, set forth in their respective prospectuses. In addition, unitholders of the MFS Fixed Fund (a bank collective investment fund) have the right to exchange their units (except units acquired through direct purchases) for shares of the MFS Funds, subject to the conditions, if any, imposed upon such unitholders by the MFS Fixed Fund.

Any state income tax advantages for investment in shares of each state- specific series of MFS Municipal Series Trust may only benefit residents of such states. Investors should consult their own tax advisers to be sure this is an appropriate investment, based on their residency and each state's income tax laws.

The exchange privilege (or any aspect of it) may be changed or discontinued and is subject to certain limitations (see "Purchases" in the Prospectus).

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

Individual Retirement Accounts (IRAs) (for individuals and their non- employed spouses who desire to make limited contributions to a tax-deferred retirement program and, if eligible, to receive a federal income tax deduction for amounts contributed);

Simplified Employee Pension (SEP-IRA) Plans;

Retirement Plans Qualified under Section 401(k) of the Internal Revenue Code of 1986 (the "Code"), as amended;

403(b) Plans (deferred compensation arrangements for employees of public school systems and certain non-profit organizations); and

Certain other qualified pension and profit-sharing plans.

The plan documents provided by MFD designate a trustee or custodian (unless another trustee or custodian is designated by the individual or group establishing the plan) and contain specific information about the plans. Each plan provides that dividends and distributions will be reinvested automatically. For further details with respect to any plan, including fees charged by the trustee, custodian or MFD, tax consequences and redemption information, see the specific documents for that plan. Plan documents other than those provided by MFD may be used to establish any of the plans described above. Third party administrative services, available for some corporate plans, may limit or delay the processing of transactions.

Investors should consult with their tax adviser before establishing any of the tax-deferred retirement plans described above.

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

Shareholders of the Fund normally will have to pay federal income taxes, and any state or local taxes, on the dividends and capital gain distributions they receive from the Fund. Dividends from ordinary income and any distributions from net short-term capital gains (whether paid in cash or reinvested in additional shares), are taxable to shareholders as ordinary income for federal income tax purposes. A portion of the Fund's ordinary income dividends (but none of its distributions of capital gains) is normally eligible for the dividends received deduction for corporations if the recipient otherwise qualifies for that deduction with respect to its holding of Fund shares. Availability of the deduction for particular corporate shareholders is subject to certain limitations, and deducted amounts may be subject to the alternative minimum tax and result in certain basis adjustments. Distributions of net capital gains (i.e., the excess of net long-term capital gains over net short-term capital losses), whether paid in cash or reinvested in additional shares, are taxable to the Fund's shareholders as long-term capital gains for federal income tax purposes regardless of how long they have owned shares in the Fund. Fund dividends declared in October, November or December that are payable to shareholders of record in such a month, and that are paid the following January will be taxable to the shareholders as if received on December 31 of the year in which they are declared.

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

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

The Fund's current dividend and accounting policies will affect the amount, timing and character of distributions to shareholders, and may, under certain circumstances, make an economic return of capital taxable to shareholders. The Fund's investment in zero coupon securities, securities calling for deferred interest, PIK bonds, or certain securities purchased at a market discount will cause it to realize income prior to the receipt of cash payments with respect to those securities. In order to distribute this income and avoid a tax on the Fund, the Fund may be required to liquidate portfolio securities that it might otherwise have continued to hold, potentially resulting in additional taxable gain or loss to the Fund.

The Fund's transactions in options, Futures Contracts, and Forward Contracts will be subject to special tax rules that may affect the amount, timing, and character of Fund income and distributions to shareholders. For example, certain positions held by the Fund on the last business day of each taxable year will be marked to market (i.e., treated as if closed out) on that day, and any gain or loss associated with the positions will be treated as 60% long-term and 40% short-term capital gain or loss. Certain positions held by the Fund that substantially diminish its risk of loss with respect to other positions in its portfolio may constitute "straddles," and may be subject to special tax rules that would cause deferral of Fund losses, adjustments in the holding periods of Fund securities, and conversion of short-term into long-term capital losses. Certain tax elections exist for straddles that may alter the effects of these rules. The Fund will limit its activities in options, Futures Contracts, Forward Contracts and swaps and related transactions to the extent necessary to meet the requirements of Subchapter M of the Code.

Special tax considerations apply with respect to foreign investments of the Fund. Foreign exchange gains and losses realized by the Fund will generally be treated as ordinary income and losses. Use of foreign currencies for non- hedging purposes and investment by the Fund in certain "passive foreign investment companies" may be limited in order to avoid a tax on the Fund. Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source; the Fund does not expect to be able to pass through to shareholders foreign tax credits with respect to such foreign taxes. The United States has entered into tax treaties with many foreign countries that may entitle the Fund to a reduced rate of tax or an exemption from tax on such income; the Fund intends to qualify for treaty reduced rates where available. It is impossible to determine the effective rate of foreign tax in advance since the amount of the Fund's assets to be invested within various countries is not known.

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

As long as it qualifies as a regulated investment company under the Code, the Fund will not be required to pay Massachusetts income or excise taxes. Distributions of the Fund which are derived from interest on obligations of the U.S. Government and certain of its agencies and instrumentalities (but generally not from capital gains realized upon the disposition of such obligations) may be exempt from state and local taxes in certain states. The Fund intends to advise shareholders of the extent if any, to which distributions consist of such interest. Shareholders are urged to consult their tax advisors regarding the possible exclusion of such portion of their dividends for state and local income tax purposes as well as regarding the tax consequences of an investment in the Fund.

7. DETERMINATION OF NET ASSET VALUE AND PERFORMANCE

NET ASSET VALUE
The net asset value per share of each class of the Fund is determined each day during which the Exchange is open for trading. (As of the date of this SAI, the Exchange is open for trading every weekday except for the following holidays or the day on which they are observed: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.) This determination is made once each day as of the close of regular trading on the Exchange by deducting the amount of the liabilities attributable to the class from the value of the assets attributable to the class and dividing the difference by the number of shares of the class outstanding.

Bonds and other fixed income securities (other than short-term obligations) in the Fund's portfolio are valued on the basis of valuations furnished by a pricing service which utilizes both dealer-supplied valuations and electronic data processing techniques which take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Forward Contracts will be valued using a pricing model taking into consideration market data from an external pricing source. Use of the pricing service has been approved by the Trust's Board of Trustees. All other securities, futures contracts and options in the Fund's portfolio (other than short-term obligations) for which the principal market is one or more securities or commodities exchanges (whether domestic or foreign) will be valued at the last reported sale price or at the settlement price prior to the determination (or if there has been no current sale, at the closing bid price) on the primary exchange on which such securities, futures contracts or options are traded; but if a securities exchange is not the principal market for securities, such securities will, if market quotations are readily available, be valued at current bid prices, unless such securities are reported on the NASDAQ system, in which case they are valued at the last sale price or, if no sales occurred during the day, at the last quoted bid price. Short-term obligations with a remaining maturity in excess of 60 days will be valued based upon dealer supplied valuations. Other short-term obligations are valued at amortized cost, which constitutes fair value as determined by the Board of Trustees. Portfolio securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees.

Generally, trading in foreign securities is substantially completed each day at various times prior to the close of regular trading on the Exchange. Occasionally, events affecting the values of such securities may occur between the times at which they are determined and the close of regular trading on the Exchange which will not be reflected in the computation of the Fund's net asset value unless the Trustees deem that such event would materially affect the net asset value in which case an adjustment would be made.

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

The Trustees review the appropriateness of the time of day as of which the net asset value is computed.

PERFORMANCE INFORMATION
TOTAL RATE OF RETURN: The Fund will calculate its total rate of return for each class of shares for certain periods by determining the average annual compounded rates of return over those periods that would cause an investment of $1,000 (made with all distributions reinvested and reflecting the CDSC or the maximum public offering price) to reach the value of that investment at the end of the periods. The Fund may also calculate (i) a total rate of return, which is not reduced by the CDSC (4% maximum for Class B shares) and therefore may result in a higher rate of return, (ii) a total rate of return assuming an initial account value of $1,000, which will result in a higher rate of return since the value of the initial account will not be reduced by the maximum sales charge (currently 4.75% on Class A shares) and/or (iii) total rates of return which represent aggregate performance over a period or year-by-year performance, and which may or may not reflect the effect of the maximum or other sales charge or CDSC. Prior to October 1, 1989, the maximum sales charge on Class A shares was 7.25%. On October 1, 1989, the maximum sales charge on Class A shares was lowered to 4.75%, a sales charge on reinvested dividends was eliminated and a Distribution Plan (described below) pursuant to Rule 12b-1 under the 1940 Act was implemented with respect to Class A shares. The Fund's average annual total rate of return for Class A shares reflecting the current maximum sales charge (4.75%) on an initial investment for the one-year, five-year and ten-year periods ended September 30, 1995 was, respectively, 12.72%, 12.61% and 12.87%. The Fund's average annual total rate of return for Class A shares not giving effect to the sales charge on the initial investment for the one-year, five-year and ten-year periods ended September 30, 1995 was, respectively, 18.36%, 13.71% and 13.42%. The Fund's average annual total rate of return for Class B shares, reflecting the CDSC, for the one-year period ended September 30, 1995 and for the period from commencement of operations of Class B Shares on August 23, 1993 to September 30, 1995 was 13.46% and 6.45%, respectively. The Fund's average annual total rate of return for Class B shares, not giving effect to the CDSC, for the one-year period ended September 30, 1995 and for the period from commencement of operations of Class B Shares on August 23, 1993 to September 30, 1995 was 17.46% and 7.77%, respectively. The Fund's average annual total rate of return for Class C shares for the one year period ended September 30, 1995 and for the period from commencement of operations of Class C Shares on August 1, 1994 to September 30, 1995 was 17.66% and 14.58%, respectively.

PERFORMANCE RESULTS: The performance results for Class A shares below, based on an assumed initial investment of $10,000 in Class A shares cover the period from January 1, 1986 through December 31, 1995 for Class A shares. It has been assumed that dividends and capital gain distributions were reinvested in additional shares. These performance results, as well as any total rate of return quotations provided by the Fund, should not be considered as representative of the performance of the Fund in the future since the net asset value and public offering price of shares of the Fund will vary based not only on the type, quality and maturities of the securities held in the Fund's portfolio, but also on changes in the current value of such securities and on changes in the expenses of the Fund. These factors and possible differences in the methods used to calculate yields and total rates of return should be considered when comparing the yield and total rate of return of the Fund to yields and total rates of return published for other investment companies or other investment vehicles. Total rate of return reflects the performance of both principal and income. Current net asset value and account balance information may be obtained by calling 1-800-MFS-TALK (637-8255).

                      MFS TOTAL RETURN FUND -- CLASS A
       --------------------------------------------------------------
                                 VALUE OF
                  VALUE OF      REINVESTED      VALUE OF
 YEAR ENDED   INITIAL $10,000  CAPITAL GAINS   REINVESTED        TOTAL
DECEMBER 31      INVESTMENT    DISTRIBUTION     DIVIDENDS        VALUE
-----------   ---------------  ------------     ---------        -----
    1986          $ 9,922         $  920        $   570         $11,412
    1987            9,376          1,317          1,122          11,815
    1988            9,961          1,652          1,978          13,591
    1989           11,265          2,294          3,166          16,725
    1990           10,340          2,124          3,872          16,336
    1991           11,742          2,742          5,384          19,868
    1992           11,957          3,337          6,575          21,869
    1993           12,989          3,849          8,343          25,181
    1994           12,112          3,609          8,795          24,516
    1995           14,031          5,280         11,803          31,114

EXPLANATORY NOTES: The results shown in the table assume that the initial investment on January 1, 1986 has been reduced by the current maximum applicable sales charge of 4.75%. No adjustment has been made for any income taxes payable by shareholders.

YIELD: Any yield quotation for a class of shares of the Fund is based on the annualized net investment income per share of that class over a 30-day period. The yield for each class of shares of the Fund is calculated by dividing the net investment income per share allocated to that class earned during the period by the maximum offering price per share of that class of the Fund on the last day of that period. The resulting figure is then annualized. Net investment income per share of a class is determined by dividing (i) the dividends and interest allocated to that class during the period, minus accrued expenses of that class for the period, by (ii) the average number of shares of the class, entitled to receive dividends during the period multiplied by the maximum offering price per share on the last day of the period. The yield calculation for Class A shares assumes a maximum sales charge of 4.75%. The yield calculations for Class B shares assumes no CDSC is paid. The yield calculation for Class A shares for the 30-day period ended September 30, 1995 was 3.92% taking into account certain fee waivers; without these waivers, the yield would have been 3.83%. The yield for Class B and Class C shares for the 30-day period ended September 30, 1995, was 3.26% and 3.29%, respectively.

CURRENT DISTRIBUTION RATE: Yield, which is calculated according to a formula prescribed by the SEC, is not indicative of the amounts which were or will be paid to the Fund's shareholders. Amounts paid to shareholders of each class are reflected in the "current distribution rate" for that class. The current distribution rate for a class is computed by dividing the total amount of dividends per share paid by the Fund to shareholders of that class during the past 12 months by the maximum public offering price of that class at the end of such period. Under certain circumstances, such as when there has been a change in the amount of dividend payout, or a fundamental change in investment policies, it might be appropriate to annualize the dividends paid over the period such policies were in effect, rather than using the dividends during the past 12 months. The current distribution rate differs from the yield computation because it may include distributions to shareholders from sources other than dividends and interest, such as premium income from option writing, short-term capital gains and return of invested capital, and is calculated over a different period of time. The Fund's current distribution rate calculation for Class A shares assumes a maximum sales charge of 4.75%. The Fund's current distribution rate calculation for Class B shares assumes no CDSC is paid. The current distribution rate for Class A, Class B and Class C shares of the Fund for the one year period ended September 30, 1995 was 4.08%, 3.52% and 3.55% respectively.

GENERAL: From time to time the Fund may, as appropriate, quote Fund rankings or reprint all or a portion of evaluations of fund performance and operations appearing in various independent publications, including but not limited to the following: Money, Fortune, U.S. News and World Report, Kiplinger's Personal Finance, The Wall Street Journal, Barron's, Investors Business Daily, Newsweek, Financial World, Financial Planning, Investment Advisor, USA Today, Pensions and Investments, SmartMoney, Forbes, Global Finance, Registered Representative, Institutional Investor, the Investment Company Institute, Johnson's Charts, Morningstar, Lipper Analytical Services, Inc., CDA Wiesenberger, Shearson Lehman and Salomon Bros. Indices, Ibbotson, Business Week, Lowry Associates, Media General, Investment Company Data, The New York Times, Your Money, Strangers Investment Advisor, Financial Planning on Wall Street, Standard and Poor's, Individual Investor, The 100 Best Mutual Funds You Can Buy, by Gordon K. Williamson, Consumer Price Index, and Sanford C. Bernstein & Co. Fund performance may also be compared to the performance of other mutual funds tracked by financial or business publications or periodicals.

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

The Fund may also quote evaluations mentioned in independent radio or television broadcasts.

From time to time the Fund may use charts and graphs to illustrate the past performance of various indices such as those mentioned above and illustrations using hypothetical rates of return to illustrate the effects of compounding and tax-deferral.

The Fund may advertise examples of the effects of periodic investment plans, including the principle of dollar cost averaging. In such a program, an investor invests a fixed dollar amount in a fund at periodic intervals, thereby purchasing fewer shares when prices are high and more shares when prices are low. While such a strategy does not assure a profit or guard against a loss in a declining market, the investor's average cost per share can be lower than if fixed numbers of shares are purchased at the same intervals.

MFS FIRSTS: MFS has a long history of innovations.

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

--        1993 -- MFS becomes money manager of MFS(R) Union Standard
          Trust, the first Trust to invest in companies deemed to be
          union-friendly by an Advisory Board of senior labor officials,
          senior managers of companies with significant labor contracts,
          academics and other national labor leaders or experts.

8. DISTRIBUTION PLANS The Trustees have adopted separate Distribution Plans for Class A, Class B and Class C shares (the "Distribution Plans") pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Rule") after having concluded that there is a reasonable likelihood that each Distribution Plan would benefit the Fund and the respective class of shareholders. The Distribution Plans are designed to promote sales, thereby increasing the net assets of the Fund. Such an increase may reduce the Fund's expense ratio to the extent the Fund's fixed costs are spread over a larger net asset base. Also, an increase in net assets may lessen the adverse effects that could result were the Fund required to liquidate portfolio securities to meet redemptions. There is, however, no assurance that the net assets of the Fund will increase or that the other benefits referred to above will be realized.

The Distribution Plans are described in the Prospectus under the caption "Distribution Plans," which is incorporated herein by reference. The following information supplements this Prospectus discussion.

SERVICE FEES: With respect to the Class A Distribution Plan, no service fees will be paid: (i) to any dealer who is the holder or dealer of record for investors who own Class A shares having an aggregate net asset value less than $750,000, or such other amount as may be determined from time to time by MFD (MFD, however, may waive this minimum amount requirement from time to time); or
(ii) to any insurance company which has entered into an agreement with the Fund and MFD that permits such insurance company to purchase Class A shares from the Fund at their net asset value in connection with annuity agreements issued in connection with the insurance company's separate accounts. Dealers may from time to time be required to meet certain other criteria in order to receive service fees.

With respect to the Class B Distribution Plan, except in the case of the first year service fee, no service fees will be paid to any securities dealer who is the holder or dealer of record for investors who own Class B shares having an aggregate net asset value of less than $750,000 or such other amount as may be determined by MFD from time to time. MFD, however, may waive this minimum amount requirement from time to time. Dealers may from time to time be required to meet certain other criteria in order to receive service fees.

MFD or its affiliates shall be entitled to receive any service fee payable under any Distribution Plan for which there is no dealer of record or for which qualification standards have not been met as partial consideration for personal services and/or account maintenance services performed by MFD or its affiliates for shareholder accounts.

DISTRIBUTION FEES: The purpose of distribution payments to MFD under the Distribution Plans is to compensate MFD for its distribution services to the Fund. MFD pays commissions to dealers as well as expenses of printing prospectuses and reports used for sales purposes, expenses with respect to the preparation and printing of sales literature and other distribution related expenses, including, without limitation, the cost necessary to provide distribution-related services, or personnel, travel, office expenses and equipment.

DISTRIBUTION AND SERVICE FEES PAID DURING THE FUND'S LAST FISCAL YEAR: During the fiscal year ended September 30, 1995, the Fund paid the following Distribution Plan expenses:

                                    AMOUNT OF      AMOUNT OF      AMOUNT OF
                                  DISTRIBUTION   DISTRIBUTION   DISTRIBUTION
                                   AND SERVICE    AND SERVICE    AND SERVICE
                                    FEES PAID    FEES RETAINED  FEES RECEIVED
DISTRIBUTION PLANS                   BY FUND        BY MFD       BY DEALERS
- ------------------                   -------     -------------   ----------
Class A Distribution Plan          $4,948,765     $  703,057     $4,245,708
Class B Distribution Plan          $9,013,390     $6,858,242     $2,155,148
Class C Distribution Plan          $   79,034     $      535     $   78,499

GENERAL: Each of the Distribution Plans will remain in effect until August 1, 1996, and will continue in effect thereafter only if such continuance is specifically approved at least annually by vote of both the Trustees and a majority of the Trustees who are not "interested persons" or financially interested parties of such Plan ("Distribution Plan Qualified Trustees"). Each of the Distribution Plans also requires that the Fund and MFD each shall provide the Trustees, and the Trustees shall review, at least quarterly, a written report of the amounts expended (and purposes therefor) under such Plan. Each of the Distribution Plans may be terminated at any time by vote of a majority of the Distribution Plan Qualified Trustees or by vote of the holders of a majority of the respective class of the Fund's shares (as defined in "Investment Restrictions"). All agreements relating to any of the Distributions Plans entered into between the Fund or MFD and other organizations must be approved by the Board of Trustees, including a majority of the Distribution Plan Qualified Trustees. Agreements under any of the Distribution Plans must be in writing, will be terminated automatically if assigned, and may be terminated at any time without payment of any penalty, by vote of a majority of the Distribution Plan Qualified Trustees or by vote of the holders of a majority of the respective class of the Fund's shares. None of the Distribution Plans may be amended to increase materially the amount of permitted distribution expenses without the approval of a majority of the respective class of the Fund's shares (as defined in "Investment Restrictions") or may be materially amended in any case without a vote of the Trustees and a majority of the Distribution Plan Qualified Trustees. The selection and nomination of Distribution Plan Qualified Trustees shall be committed to the discretion of the non-interested Trustees then in office. No Trustee who is not an "interested person" has any financial interest in any of the Distribution Plans or in any related agreement.

9. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional Shares of Beneficial Interest (without par value) of one or more separate series and to divide or combine the shares of any series into a greater or lesser number of shares without thereby changing the proportionate beneficial interests in that series. The Trustees have currently authorized shares of the Fund and one other series. The Declaration of Trust further authorizes the Trustees to classify or reclassify any series of shares into one or more classes. Pursuant thereto, the Trustees have authorized the issuance of three classes of shares of each of the Trust's two series, Class A shares, Class B shares and Class C shares. Each share of a class of the Fund represents an equal proportionate interest in the assets of the Fund allocable to that class. Upon liquidation of the Fund, shareholders of each class of the Fund are entitled to share pro rata in the Fund's net assets allocable to such class available for distribution to shareholders. The Trust reserves the right to create and issue additional series or classes of shares, in which case the shares of each class of a series would participate equally in the earnings, dividends and assets allocable to that class of the particular series.

Shareholders are entitled to one vote for each share held and may vote in the election of Trustees and on other matters submitted to meetings of shareholders. Although Trustees are not elected annually by the shareholders, shareholders have, under certain circumstances, the right to remove one or more Trustees in accordance with the provisions of section 16(c) of the 1940 Act. No material amendment may be made to the Declaration of Trust without the affirmative vote of a majority of the Trust shares (as defined in "Investment Restrictions") or by an instrument in writing without a meeting, signed by a majority of Trustees and consented to by the holders of not less than a majority of the shares outstanding and entitled to vote. Shares have no pre-emptive or conversion rights (except as described in the Prospectus under "Purchases -- Conversion of Class B Shares"). Shares are fully paid and non-assessable. The Trust may enter into a merger or consolidation, or sell all or substantially all of its assets (or all or substantially all of the assets belonging to any series of the Trust), if approved by the vote of the holders of two-thirds of the Trust's outstanding shares voting as a single class, or of the affected series of the Trust, as the case may be, except that if the Trustees of the Trust recommend such merger, consolidation or sale, the approval by vote of the holders of a majority of the Trust's or the affected series' outstanding shares (as defined in "Investment Restrictions") will be sufficient. The Trust or any series of the Trust may also be terminated (i) upon liquidation and distribution of its assets, if approved by the vote of the holders of two-thirds of its outstanding shares, or (ii) by the Trustees by written notice to the shareholders of the Trust or the affected series. If not so terminated the Trust will continue indefinitely.

The Trust is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the Declaration of Trust contains an express disclaimer of shareholder liability for acts, obligations or affairs of the Trust and provides for indemnification and reimbursement of expenses out of the Trust property for any shareholder held personally liable for the obligations of the Trust. The Declaration of Trust also provides that the Trust shall maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust itself was unable to meet its obligations.

The Declaration of Trust further provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust and that the Trustees will not be liable for any action or failure to act, but nothing in the Declaration of Trust protects a Trustee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.

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

The Portfolio of Investments at September 30, 1995, the Statement of Assets and Liabilities at September 30, 1995, the Statement of Operations for the year ended September 30, 1995, the Statement of Changes in Net Assets for each of the two years in the period ended September 30, 1995, the Notes to Financial Statements and the Independent Auditors' Report, each of which is included in the Annual Report to shareholders of the Fund, are incorporated by reference into this SAI and have been so incorporated in reliance upon the report of Deloitte & Touche LLP, independent auditors, as experts in accounting and auditing. A copy of the Annual Report accompanies this SAI.


                                                            APPENDIX A


                                                    TRUSTEE COMPENSATION TABLE

                                                                       RETIREMENT BENEFIT      ESTIMATED       TOTAL TRUSTEE FEES
                                                       TRUSTEE FEES    ACCRUED AS PART OF    CREDITED YEARS      FROM FUND AND
    TRUSTEE                                            FROM FUND\1/     FUND EXPENSE\1/      OF SERVICE\2/      FUND COMPLEX\3/
- ----------------------------------------------------------------------------------------------------------------------------------
Richard B. Bailey                                         $8,483             $1,116                 8               $263,815
A. Keith Brodkin                                          --0--              --0--                N/A                --0--
Peter G. Harwood                                           9,658                736                 5                111,366
J. Atwood Ives                                             9,233              1,100                17                101,356
Lawrence T. Perera                                         8,808              2,922                26                102,546
William Poorvu                                             9,658              2,955                25                111,366
Charles W. Schmidt                                         9,233              2,802                20                105,411
Arnold D. Scott                                           --0--              --0--                N/A                --0--
Jeffrey L. Shames                                         --0--              --0--                N/A                --0--
Elaine R. Smith                                            9,233              1,093                27                105,411
David B. Stone                                             9,858              2,575                14                115,521

\1/ For fiscal year ended September 30, 1995.
\2/ Based on normal retirement age of 73
\3/ For calendar year 1995. All Trustees receiving compensation served as Trustees of 20 funds within the MFS fund complex (having
    aggregate net assets at December 31, 1995, of approximately $17.5 billion) except Mr. Bailey, who served as Trustee of 60
    funds within the MFS fund complex (having aggregate net assets at December 31, 1995, of approximately $30.1 billion).


                                   ESTIMATED ANNUAL BENEFITS PAYABLE BY FUND UPON RETIREMENT\4/


                                                                                       YEARS OF SERVICE
                                                           ------------------------------------------------------------------------
                   AVERAGE TRUSTEE FEES                            3                 5                 7             10 OR MORE
- -----------------------------------------------------------------------------------------------------------------------------------
                          $ 7,635                                $1,145            $1,909            $2,672            $3,818
                            8,275                                 1,241             2,069             2,896             4,138
                            8,915                                 1,337             2,229             3,120             4,458
                            9,555                                 1,433             2,389             3,344             4,778
                           10,195                                 1,529             2,549             3,568             5,098
                           10,835                                 1,625             2,709             3,792             5,418

\4/ Other funds in the MFS fund complex provide similar retirement benefits to the Trustees.


INVESTMENT ADVISER
Massachusetts Financial Services Company 500 Boylston Street, Boston, MA 02116
(617) 954-5000

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

CUSTODIAN
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) 225-2606

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

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

MFS(R) TOTAL
RETURN FUND

500 BOYLSTON STREET
BOSTON, MA 02116

[LOGO]
THE FIRST NAME IN MUTUAL FUNDS

[Recycle Logo] Printed on recycled paper.

MTR-13-2/96/500 15/215/315

[Front Cover]

[MFS logo]

[Photo of train tracks]

Annual Report for
Year Ended
September 30, 1995

MFS(R) Total Return Fund


[Back Cover]

MFS(R) Total
Return Fund
500 Boylston Street
Boston, MA 02116

[MFS logo--25th anniversary medallion]

Bulk Rate
U.S. Postage
P A I D
Permit #55638
Boston, MA

MTR-2 11/95 285M 15/215/315


MFS(R) TOTAL RETURN FUND

Trustees
A. Keith Brodkin* - Chairman and President

Richard B. Bailey* - Private Investor;

Former Chairman and Director
(until 1991), Massachusetts Financial
Services Company

Peter G. Harwood - Private Investor

J. Atwood Ives - Chairman and Chief
Executive Officer, Eastern
Enterprises

Lawrence T. Perera - Partner,
Hemenway & Barnes

William J. Poorvu - Adjunct Professor,
Harvard University Graduate School of
Business Administration

Charles W. Schmidt - Private Investor

Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company

Jeffrey L. Shames* - President and Director, Massachusetts Financial Services Company

Elaine R. Smith - Independent Consultant

David B. Stone - Chairman, North
American Management Corp.
(investment adviser)

Investment Adviser
Massachusetts Financial Services Company 500 Boylston Street
Boston, MA 02116-3741

Distributor
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741

Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906

Head of the Portfolio Team
David M. Calabro*

Treasurer
W. Thomas London*

Assistant Treasurer
James O. Yost*

Secretary
Stephen E. Cavan*

Assistant Secretary
James R. Bordewick, Jr.*

Custodian
Investors Bank & Trust Company

Auditors
Deloitte & Touche llp


[BOXED TEXT]
[(NUMBER 1 DALBAR) LOGO]

For the second year in a row,
MFS earned a #1 ranking in
DALBAR, Inc.'s Broker/
Dealer Survey, Main Office
Operations Service Quality
category. The firm achieved a
3.49 overall score--on a scale of 1 to 4--in the 1995 survey. A total of 71 firms respond- ed, offering input on the quality of service they receive from 36 mutual fund companies nationwide. The survey contained questions about service quality in 17 categories, including "knowledge of phone service contacts,"
"accuracy of transaction processing," and "overall ease of doing business with the firm."

(Source: 1995 DALBAR Survey)

*Affiliated with the Investment Adviser


Letter to Shareholders

Dear Shareholders:
As has been the case for several quarters, we are managing the Fund in a conservative manner due to high stock market valuations. As of September 30, 1995, 8% of the Fund's assets was invested in cash and cash equivalents, 47% in common stocks, 9% in convertibles, and 36% in bonds. This compares to October 1, 1994, when 21% was invested in cash and cash equivalents. Early in 1995, we reduced the cash position and increased the weighting in bonds. Throughout the year, we continued to increase the bond weighting, concentrating on longer-term corporate issues. This allowed us to increase the monthly dividend throughout the year. For the year ended September 30, 1995, Class A shares provided a total return of +18.36%, Class B shares
+17.46% and Class C shares +17.66%. All these returns assume the reinvestment of distributions but exclude the effects of any sales charges. A discussion of our strategy for the Fund may be found in the Portfolio Performance and Strategy section of this letter.

Economic Outlook
Moderate, but sustainable growth appears to be the hallmark of the economic expansion's fifth year. After slowing earlier in the summer, consumer spending and homebuying were making modest gains by September 30, although consumer spending was still showing areas of weakness. Businesses, meanwhile, continued to work off excess inventories and reduce factory output. At the same time, overseas economies, particularly those of Germany and Japan, have not recovered as expected, limiting U.S. export growth. However, we believe the Federal Reserve Board's consistent and, so far, successful efforts to fight inflation seem to be giving consumers and businesses enough confidence to help maintain 2-1/2% to 3% real (adjusted for inflation) growth in gross domestic product, at least through 1995.

Interest Rates
Although the Federal Reserve implemented a one-quarter percentage point decrease in short-term interest rates in July, the effects of its seven rate increases, which began in early 1994 and ended in February of this year, are still being felt throughout the economy. While there have been some increases in commodity prices, companies have not been able to pass along most of those higher costs. This was partly due to the need to keep fighting for market share, and also because wages and benefits of U.S. workers are still growing at a pace that is near or perhaps below the inflation rate, limiting consumer buying power. At the end of July, the nation's employment cost index had risen at a rate of just 2.8% over the previous year, helping to contain cost pressures. At the same time, the bond markets have apparently become convinced that

1

Letter to Shareholders - continued

economic growth will be contained for the near future, allowing long-term interest rates to decline slightly. Although previous monetary easing by the Federal Reserve has been followed by additional rate reductions, prospects for further decreases in the current environment are uncertain. Still, with long-term government bonds yielding approximately 6.5%, in an environment of 2-1/2% to 3% inflation, real rates of return in the fixed-income markets remain relatively attractive.

Stock Market
After a nearly 30% increase through most of 1995 in the Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index of common stock performance, the stock market became somewhat volatile in the last few weeks before September 30 due to concerns about slow earnings growth for corporate America. Most of this volatility took place in technology and cyclical stocks. While we see a deceleration of corporate earnings growth as the inevitable consequence of traditional business cycles, we remain encouraged by the high absolute level of profitability among U.S. companies. Also, companies' increasing emphasis on cost-containment, coupled with their growing use of technology, have helped keep them competitive and reasonably profitable. Finally, we have been watching with interest the recent series of corporate mergers in such industries as banking, entertainment, health care and consumer products. Unlike previous merger waves, which were often intended to build conglomerates of loosely related or unrelated businesses, this year's mergers of similar companies seem to be more rationally based on the goals of helping the merged companies reduce costs and, in general, be more competitive. Looking ahead, we believe these factors, along with a stabilizing interest rate environment and a continuation of favorable earnings reports, will help maintain the stock market's long-term positive momentum.

Portfolio Performance and Strategy
Following a soft 1994, the stock market has rocketed ahead in 1995. U.S. companies increased profits by 20% or more and stock prices followed. In addition, low inflation and falling interest rates added to the attractiveness of financial services assets. The Fund continues to seek good values in the energy, financial services and telecommunications sectors. We have reduced our technology weighting and continue to be cautious in the more economically sensitive sectors.
Our equity weighting continues to be somewhat below normal. While we believe corporate profits will likely remain at high absolute levels, the rate of earnings growth is clearly decelerating. Meanwhile, valuations are still above historical levels and the dividend yield on the S&P 500 is just 2.5%.

2

Letter to Shareholders - continued

While the overall market will inevitably pause and correct at some point, we remain quite positive on the long-term outlook for equities. We will use any correction to increase our equity positions.
Over the past six months, our major changes in the portfolio were to increase the bond weighting from 31% to 36% and increase the equity position from 44% to 47%. Bonds continue to look attractive due to the weakening economy and our generally positive outlook for inflation. Our high weighting in bonds allowed us to increase the dividend significantly during 1995. While the Fund's average monthly dividend was $0.045 per share for the year ended September 30, 1994, for the year ended September 30, 1995, the average monthly dividend stood at $0.051 per share.
We appreciate your support and welcome any questions or comments you may have.

Respectfully,

/s/ A. Keith Brodkin
- ------------------------------------

A. Keith Brodkin
Chairman and President
October 12, 1995

/s/ David Calabro
- ------------------------------------

David Calabro
(on behalf of the
MFS Total Return Team)

Portfolio Managers' Profiles

David Calabro, Vice President; Geoffrey L. Kurinsky, Senior Vice President; Judith N. Lamb, Vice President; Lisa B. Nurme, Vice President; and Maura A. Shaughnessy, Vice President, are the Fund's portfolio managers. Mr. Calabro is the head of this portfolio management team and a manager of the common stock portion of the Fund's portfolio. Mr. Calabro has been employed by MFS since 1992. Mr. Kurinsky, the manager of the Fund's fixed-income securities, has been employed by MFS since 1987. Ms. Lamb, the manager of the Fund's convertible securities, has been employed by MFS since 1992. Ms. Nurme, a manager of the common stock portion of the Fund's portfolio, has been employed by MFS since 1987. Ms. Shaughnessy, also a manager of the common stock portion of the Fund's portfolio, has been employed by MFS since 1991.

3

Tax Form Summary
In January 1996, shareholders will be mailed a Tax Form Summary reporting the federal tax status of all distributions paid during the calendar year 1995.

For the year ended September 30, 1995, the amount of distributions from income eligible for the 70% dividends-received deduction for corporations came to 39%.

Federal Income Tax Information on Distributions

For the year ended September 30, 1995, distributions from long-term capital gains were $2,145,562.

Performance

The information below and on the following page illustrates the historical performance of MFS Total Return Fund Class A shares in comparison to various market indicators. Class A results reflect the deduction of the 4.75% maximum sales charge. Benchmark comparisons are unmanaged and do not reflect any fees or expenses. You cannot invest in an index. All results reflect the reinvestment of all dividends and capital gains.

Class B shares were offered effective August 23, 1993. Information on Class B share performance appears on the next page.

Class C shares were offered effective August 1, 1994. Information on Class C share performance appears on the next page.


Growth of a Hypothetical $10,000 Investment
(For the 5-Year Period Ended September 30, 1995)

[Line graph representing the growth of a $10,000 investment for the five-year period ended September 30, 1995. The graph is scaled from $5,000 to $30,000 in $5,000 segments. The years are marked in 12-month segments from 1990 to 1995. There are four lines drawn to scale. One is a solid line representing MFS Total Return Fund (Class A), a second line of short dashes represents the S&P 500, a third line of very-short dashes represents the Lehman Brothers Gov't/Corporate Bond Index, and a fourth line of medium-short dashes represents the Consumer

Price Index.]

MFS Total Return Fund (Class A)               $18,112
S&P 500                                       $22,115
Lehman Brothers Gov't/Corporate Bond Index    $16,026
Consumer Price Index                          $11,545
 -----------------------------------------------------------------------------

4


Growth of a Hypothetical $10,000 Investment
(For the 10-Year Period Ended September 30, 1995)

[Line graph representing the growth of a $10,000 investment for the ten-year period ended September 30, 1995. The graph is scaled from $0 to $5,000 in $10,000 segments. The years are marked in 12-month segments from 1985 to 1995. There are four lines drawn to scale. One is a solid line representing MFS Total Return Fund (Class A), a second line of short dashes represents the S&P 500, a third line of very-short dashes represents the Lehman Brothers Gov't/Corporate Bond Index, and a fourth line of medium-short dashes represents the Consumer

Price Index.]

MFS Total Return Fund (Class A)                 $33,552
S&P 500                                         $44,171
Lehman Brothers Gov't/Corporate Bond Index      $25,819
Consumer Price Index                            $14,143
 -----------------------------------------------------------------------------

Average Annual Total Returns

                                                     1 Year      3 Years     5 Years    10 Years
 -------------------------------------------------------------------------------------------------
MFS Total Return Fund (Class A) including 4.75%
  sales charge                                        +12.72%      +9.68%     +12.61%     +12.87%
 -------------------------------------------------------------------------------------------------
MFS Total Return Fund (Class A) at net asset
  value                                               +18.36%     +11.47%     +13.71%     +13.42%
 -------------------------------------------------------------------------------------------------
MFS Total Return Fund (Class B) with CDSC*            +13.46%       --          --         +6.45%+
 -------------------------------------------------------------------------------------------------
MFS Total Return Fund (Class B) without CDSC          +17.46%       --          --         +7.77%+
 -------------------------------------------------------------------------------------------------
MFS Total Return Fund (Class C)                       +17.66%       --          --        +14.58%#
 -------------------------------------------------------------------------------------------------
Average balanced fund                                 +19.04%     +10.75%     +13.63%     +12.30%
 -------------------------------------------------------------------------------------------------
Lehman Brothers Government Corporate Bond Index       +14.35%      +6.90%      +9.89%      +9.95%
 -------------------------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index                 +29.71%     +14.96%     +17.20%     +16.01%
 -------------------------------------------------------------------------------------------------
Consumer Price IndexS.                                 +2.54%      +2.73%      +2.91%      +3.53%
 =================================================================================================

*These returns reflect the current maximum Class B contingent deferred sales charge (CDSC) of 4%.

+For the period from the commencement of offering of Class B shares, August 23, 1993 to September 30, 1995.

#For the period from the commencement of offering of Class C shares, August 1, 1994 to September 30, 1995.

Class C shares have no initial sales charge or CDSC but, along with Class B shares, have higher annual fees and expenses than Class A shares.

S.The Consumer Price Index is a popular measure of change in prices.

++The Lehman Index is an unmanaged, market-value weighted index of U.S. Treasury and government agency securities (excluding mortgage-backed securities) and investment-grade debt obligations of domestic corporations.

5

Average Annual Total Returns - continued

In the table on the previous page, we have included the average annual total returns of all balanced funds (including the Fund) tracked by Lipper Analytical Services, Inc. (an independent firm which rates mutual fund performance) for the applicable time periods (190, 84, 59 and 30 funds for the 1-, 3-, 5- and 10-year periods ended September 30, 1995, respectively). Because these returns do not reflect any applicable sales charges, we have also included the Fund's results at net asset value (no sales charge) for comparison.

All results are historical and, therefore, are not an indication of future results. The principal value and income return of an investment in a mutual fund will vary with changes in market conditions, and shares, when redeemed, may be worth more or less than their original cost. All Class A results reflect the applicable expense subsidy which is explained in the Notes to Financial Statements. Had the subsidy not been in effect, the results would have been less favorable.

Objectives and Policies

The Fund's primary objective is to provide above-average current income (compared to a portfolio entirely invested in equity securities) consistent with prudent employment of capital. As a secondary objective, the Fund seeks opportunities for growth of capital and income because many securities that offer a better-than-average yield may possess growth potential.

The Fund's investment policies are to vary its investments in types of securities in accordance with its interpretation of economic and money market conditions, fiscal and monetary policies and underlying security values. Generally, at least 40% of the Fund's assets is invested in equity securities. The Fund's debt securities may include non-investment-grade bonds. The Fund may also invest in foreign securities.

6

Portfolio of Investments - September 30, 1995

Non-Convertible Bonds - 35.2%

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
  Banks and Credit Companies - 1.9%
  ABN Amro Global, 7.25s, 2005                                    $ 11,500            $11,821,655
  Banco Central, 8.25s, 2004                                         2,260              2,379,238
  Banco Central, 7.5s, 2005                                          5,000              5,011,000
  Banponce Financial Corp., 7.72s, 2000                              1,500              1,549,395
  Capital One Bank, 8.125s, 2000                                     2,605              2,736,135
  Chase Manhattan Corp., 8.8s, 2000                                  5,440              5,613,808
  Coastal Bancorp, Inc., 10s, 2002                                   1,380              1,352,400
  Den Danske Bank, 7.25s, 2005##                                     5,000              5,022,350
  First USA Corp., 7.65s, 2003                                      12,790             12,856,764
  Riggs National Corp., 8.5s, 2006                                  11,350             11,860,750
  Sovereign Bancorp, Inc., 6.75s, 2000                               2,590              2,518,775
                                                                                     --------------
                                                                                      $62,722,270
- ---------------------------------------------------------------------------------------------------
Corporate Asset Backed - 1.5%
  Chase Manhattan Credit Card Master Trust, Floating
    Rate, 2001                                                    $ 30,000            $30,000,000
  Merrill Lynch Home Equity Loan, 91-1, "B", 9.3s, 2016+             3,800              3,923,500
  Merrill Lynch Mortgage Investors, Inc., 9.7s, 2010                   482                495,193
  Merrill Lynch Mortgage Investors, Inc., 8.9s, 2011                 2,319              2,468,171
  Merrill Lynch Mortgage Investors, Inc., 9s, 2011                     997              1,028,802
  Merrill Lynch Mortgage Investors, Inc., 9.25s, 2011                  363                374,428
  Merrill Lynch Mortgage Investors, Inc., 8.227s, 2021+              4,000              3,024,640
  Standard Credit Card Master Trust, Floating Rate, 2000             6,140              6,145,710
                                                                                     --------------
                                                                                      $47,460,444
- ---------------------------------------------------------------------------------------------------
Financial Institutions - 1.8%
  Alex Brown, Inc., 7.625s, 2005                                  $  6,640            $ 6,782,030
  General Motors Acceptance Corp., 7.4s, 2025                        9,500              9,454,210
  Goldman Sachs Group, 7.25s, 2005                                   2,530              2,542,650
  K Mart Funding Corp., 8.8s, 2010                                   5,550              5,950,765
  Lehman Brothers Holdings, Inc., 7.375s, 2007                       5,500              5,625,895
  Lehman Brothers, Inc., 7.125s, 2002                                5,250              5,243,438
  Leucadia National Corp., 8.25s, 2005                               1,000              1,003,400
  Navistar Financial Corp., 9.5s, 1996                               4,935              5,009,025
  Phoenix Re Corp., 9.75s, 2003                                      1,000              1,040,000
  RHG Finance Corp., 8.875s, 2005                                    5,000              4,995,050
  Salton Sea Funding Corp., 7.37s, 2005##                            5,250              5,267,850
  Salton Sea Funding Corp., 7.84s, 2010##                            5,250              5,248,215
                                                                                     --------------
                                                                                      $58,162,528
- ---------------------------------------------------------------------------------------------------
Foreign - U.S. Dollar Denominated - 2.2%
  Banco Santander S.A., 7.875s, 2005                              $  6,000            $ 6,325,020
  Financiera Energetica Nacional S.A., 6.625s, 1996##                5,360              5,319,800
  Hanson Overseas, 6.75s, 2005                                       7,715              7,698,035
  Hidroelectrica Alicura, 8.375s, 1999##                             6,244              5,619,600
  Korea Electric Power Corp., 7.75s, 2013                           20,675             21,037,640
  Ocensa, 9.35s, 2005##                                              3,500              3,517,500
  Petronas Malaysia, 6.875s, 2003##                                  1,000              1,002,080

7

Portfolio of Investments - continued

Non-Convertible Bonds - continued

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
Foreign - U.S. Dollar Denominated - continued
  Province of Ontario, 7s, 2005                                   $  7,880            $ 8,027,758
  Province of Quebec, 8.8s, 2003                                     3,500              3,890,705
  Province of Saskatchewan, 9.375s, 2020                               500                615,135
  Republic of Argentina, Floating Rate, 2023                         1,000                573,750
  Republic of Argentina, 5s, 2023                                    2,000                960,000
  Republic of Colombia, 8.75s, 1999                                  3,640              3,776,500
  Republic of Greece, 9.75s, 1999                                    3,070              3,330,612
                                                                                     --------------
                                                                                      $71,694,135
- ---------------------------------------------------------------------------------------------------
Industrials - 11.5%
  Building - 0.2%
   American Standard, Inc., 0s to 1998, 10.5s to 2005             $  1,750            $ 1,421,875
   Black & Decker Corp., 8.44s, 1999                                 1,690              1,785,823
   Nortek, Inc., 9.875s, 2004                                          500                453,750
   Owens Corning Fiberglass Corp., 8.875s, 2002                      1,390              1,510,291
   Owens Corning Fiberglass Corp., 9.9s, 2015##                      2,500              2,757,092
   USG Corp., 9.25s, 2001                                              250                264,375
                                                                                     --------------
                                                                                      $ 8,193,206
- ---------------------------------------------------------------------------------------------------
  Chemicals - 0.1%
   Koppers Industries, Inc., 8.5s, 2004                           $  2,000            $ 1,865,000
   NL Industries, Inc., 11.75s, 2003                                   750                791,250
                                                                                     --------------
                                                                                      $ 2,656,250
- ---------------------------------------------------------------------------------------------------
  Consumer Goods and Services - 0.1%
   ADT Operations, Inc., 9.25s, 2003                              $  1,000            $ 1,042,500
   Sealy Corp., 9.5s, 2003                                           1,000                990,000
   Westpoint Stevens, Inc., 9.375s, 2005                             2,000              1,945,000
                                                                                     --------------
                                                                                      $ 3,977,500
- ---------------------------------------------------------------------------------------------------
  Containers - 0.3%
   Container Corp. of America, 10.75s, 2002                       $    750            $   789,375
   Container Corp. of America, 9.75s, 2003                             250                251,250
   Owens-Illinois, Inc., 9.75s, 2004                                 4,500              4,612,500
   Stone Container Corp., 9.875s, 2001                               1,900              1,876,250
   Stone Container Corp., 10.75s, 2002                               2,100              2,178,750
                                                                                     --------------
                                                                                      $ 9,708,125
- ---------------------------------------------------------------------------------------------------
  Entertainment - 0.9%
   Time Warner, Inc., 7.75s, 2005                                 $  4,382            $ 4,406,276
   Time Warner, Inc., 9.125s, 2013                                  15,000             16,280,550
   Time Warner, Inc., 9.15s, 2023                                    8,000              8,680,880
                                                                                     --------------
                                                                                      $29,367,706
- ---------------------------------------------------------------------------------------------------
  Food and Beverage Products - 1.4%
   Borden, Inc., 9.875s, 1997                                     $  4,500            $ 4,744,485
   Borden, Inc., 9.2s, 2021                                          7,900              8,599,703
   Borden, Inc., 7.875s, 2023                                        3,500              3,330,670
   Canandaigua Wine, Inc., 8.75s, 2003                               2,700              2,673,000
   Coca-Cola Bottling Group Southwest, Inc., 9s, 2003                1,000                990,000

8

Portfolio of Investments - continued

Non-Convertible Bonds - continued

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
Industrials - continued
  Food and Beverage Products - continued
   Nabisco, Inc., 7.55s, 2015                                     $  9,160            $ 9,114,566
   RJR Nabisco, Inc., 8s, 2000                                       2,500              2,533,700
   RJR Nabisco, Inc., 8.75s, 2005                                    4,255              4,292,359
   RJR Nabisco, Inc., 8.75s, 2007                                   10,000              9,958,000
                                                                                     --------------
                                                                                      $46,236,483
- ---------------------------------------------------------------------------------------------------
  Forest and Paper Products - 0.9%
   Avenor, Inc., 9.375s, 2004                                     $  5,350            $ 5,855,147
   Brascan, 7.375s, 2002                                             6,000              5,992,500
   Canadian Pacific Forest, 10.25s, 2003                             3,700              4,170,529
   Georgia-Pacific Corp., 9.875s, 2021                               8,215              9,265,206
   Georgia-Pacific Corp., 8.125s, 2023                               1,550              1,562,974
   Georgia Pacific Corp., 8.625s, 2025                               3,190              3,377,636
                                                                                     --------------
                                                                                      $30,223,992
- ---------------------------------------------------------------------------------------------------
  Medical and Health Technology and Services - 0.1%
   OrNda Healthcorp, 12.25s, 2002                                 $  2,250            $ 2,486,250
- ---------------------------------------------------------------------------------------------------
  Metals and Minerals - 0.3%
   ASARCO, Inc., 8.5s, 2025                                       $  7,000            $ 7,547,260
   Kaiser Aluminum & Chemical Corp., 9.875s, 2002                    1,000              1,000,000
                                                                                     --------------
                                                                                      $ 8,547,260
- ---------------------------------------------------------------------------------------------------
  Oils - 1.9%
   Enron Corp., 7.125s, 2007                                      $  7,000            $ 7,144,340
   Gulf Canada Resources Ltd., 9.25s, 2004                           1,000                990,000
   Louisiana Land & Exploration, 7.65s, 2023                        13,520             13,261,903
   Noram Energy Corp., 7.5s, 2000                                   10,750             10,819,122
   Oryx Energy Co., 6.23s, 1995                                      5,000              4,998,050
   Oryx Energy Co., 9.3s, 1996                                      14,650             14,819,208
   USX-Marathon Group, 8.875s, 1997                                  5,000              5,210,250
   Union Texas Petroleum Holdings, 8.5s, 2007                        5,340              5,871,597
                                                                                     --------------
                                                                                      $63,114,470
- ---------------------------------------------------------------------------------------------------
  Pollution Control - 0.1%
   Laidlaw, Inc., 8.75s, 2025                                     $  3,040            $ 3,383,915
- ---------------------------------------------------------------------------------------------------
  Precious Metals and Minerals - 0.2%
   Santa Fe Pacific Gold, 8.375s, 2005                            $  5,250            $ 5,240,182
- ---------------------------------------------------------------------------------------------------
  Printing and Publishing - 0.9%
   News America Holdings, Inc., 7.45s, 2000                       $  3,400            $ 3,483,436
   News America Holdings, Inc., 7.5s, 2000                           1,700              1,745,985
   News America Holdings, Inc., 10.125s, 2012                       10,000             11,639,700
   News America Holdings, Inc., 9.5s, 2024                           3,000              3,529,920
   Valassis Inserts, 9.375s, 1999                                    7,499              7,621,684
                                                                                     --------------
                                                                                      $28,020,725
- ---------------------------------------------------------------------------------------------------
  Restaurants and Lodging
   Four Seasons Hotels, Inc., 9.125s, 2000##                      $  1,000            $   973,750
- ---------------------------------------------------------------------------------------------------

9

Portfolio of Investments - continued

Non-Convertible Bonds - continued

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
Industrials - continued
  Special Products and Services - 0.2%
   Eagle Industries, Inc., 0s, 2003                               $    500           $    390,000
   IMC Fertilizer Group, 9.25s, 2000                                 4,000              4,120,000
   Mark IV Industries, Inc., 8.75s, 2003                               400                408,000
   OSI Specialties, Inc., 9.25s, 2003                                  500                545,000
                                                                                     --------------
                                                                                     $  5,463,000
- ---------------------------------------------------------------------------------------------------
  Steel - 0.1%
   AK Steel Holdings Corp., 10.75s, 2004                          $  2,000           $  2,137,500
   Weirton Steel Corp., 10.75s, 2005##                               1,750              1,618,750
                                                                                     --------------
                                                                                     $  3,756,250
- ---------------------------------------------------------------------------------------------------
  Stores - 1.1%
   Dayton-Hudson Corp., 9s, 2021                                  $ 10,000           $ 11,508,900
   Eckerd (Jack) Corp., 9.25s, 2004                                    500                526,250
   Finlay Enterprises, Inc., 12s, 2005                               1,500              1,035,000
   Finlay Fine Jewelry, 10.625s, 2003                                1,000                990,000
   K Mart Corp., 8.125s, 2006                                        5,490              5,696,040
   K Mart Corp., 8.99s, 2010                                         4,000              4,169,156
   K Mart Corp., 9.35s, 2020                                        13,000             13,016,250
                                                                                     --------------
                                                                                     $ 36,941,596
- ---------------------------------------------------------------------------------------------------
  Supermarkets - 0.4%
   Kroger Co., 8.5s, 2003                                         $    750           $    776,250
   Kroger Co., 9.25s, 2005                                           4,250              4,568,750
   Purity Supreme, Inc., 11.75s, 1999                                  750                819,375
   Safeway Stores, Inc., 9.65s, 2004                                 4,000              4,440,000
   Stop & Shop Cos., Inc., 9.75s, 2002                               1,700              1,853,000
                                                                                     --------------
                                                                                     $ 12,457,375
- ---------------------------------------------------------------------------------------------------
  Telecommunications - 1.7%
   MFS Communications, Inc., 0s, 2004                             $  2,850           $  2,158,875
   Paging Network, Inc., 8.875s, 2006                                3,000              2,917,500
   Rogers Cablesystems Ltd., 9.625s, 2002                              350                360,500
   TCI Communications, Inc., 8.75s, 2015                             6,749              7,042,379
   Tele Communications, Inc., 7.38s, 2001                            5,250              5,317,252
   Tele Communications, Inc., 9.8s, 2012                             4,760              5,418,546
   Tele Communications, Inc., 9.25s, 2023                           15,741             16,529,782
   USA Mobile Communication, 9.5s, 2004                                500                465,000
   Viacom, Inc., 7.75s, 2005                                        15,000             15,289,800
                                                                                     --------------
                                                                                     $ 55,499,634
- ---------------------------------------------------------------------------------------------------
  Other - 0.6%
   FHP International Corp., 7s, 2003                              $  3,000           $  2,961,630
   McDonnell Douglas Co., 9.25s, 2002                                8,380              9,423,394
   Raytheon Co., 7.375s, 2025                                        3,550              3,518,866
   Rouse Co., 8.5s, 2003                                             4,000              4,240,480
                                                                                     --------------
                                                                                     $ 20,144,370
- ---------------------------------------------------------------------------------------------------
Total Industrials                                                                    $376,392,039
- ---------------------------------------------------------------------------------------------------

10

Portfolio of Investments - continued

Non-Convertible Bonds - continued

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
Insurance - 0.3%
  CCP Insurance, Inc., 10.5s, 2004                                $  4,180            $ 4,475,024
  Travelers Group, Inc., 7.875s, 2025                                5,200              5,418,504
                                                                                     --------------
                                                                                      $ 9,893,528
- ---------------------------------------------------------------------------------------------------
Transportation - 1.0%
  Delta Air Lines, Inc., 9.75s, 2021                              $  3,680            $ 4,140,846
  Delta Air Lines, Inc., 10.375s, 2022                               5,000              5,977,800
  Jet Equipment Trust, 10.91s, 2006##                                7,489              8,443,204
  Jet Equipment Trust, 9.71s, 2014##                                 2,000              2,104,780
  Jet Equipment Trust, 10.69s, 2015##                                1,250              1,398,275
  Northwest Airlines Trust, 9.25s, 2014                              3,901              4,432,948
  Qantas Airways Ltd., 7.5s, 2003##                                  5,000              5,067,700
                                                                                     --------------
                                                                                      $31,565,553
- ---------------------------------------------------------------------------------------------------
U.S. Government Agencies - 2.6%
  Federal National Mortgage Association - 2.1%
   FNMA, 8.5s, 2003                                               $     75            $    77,350
   FNMA, 8.5s, 2005                                                 17,000             18,248,480
   FNMA, 8.5s, 2005                                                    163                168,717
   FNMA, 8.5s, 2006                                                  1,289              1,335,867
   FNMA, 8.5s, 2007                                                     74                 76,353
   FNMA, 9s, 2001                                                       55                 57,537
   FNMA, 9s, 2002                                                        5                  5,366
   FNMA, 9s, 2004                                                      131                136,916
   FNMA, 9s, 2005                                                      543                567,912
   FNMA, 9s, 2006                                                    1,046              1,092,100
   FNMA, 9.5s, 2024                                                  4,043              4,274,074
   FNMA, 9.5s, 2025                                                 41,151             43,503,680
                                                                                     --------------
                                                                                      $69,544,352
- ---------------------------------------------------------------------------------------------------
  Other - 0.5%
   Resolution Funding Corp., Strips, 0s, 2020                     $ 90,900            $16,478,352
- ---------------------------------------------------------------------------------------------------
Total U.S. Government Agencies                                                        $86,022,704
- ---------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 6.3%
  Government National Mortgage Association
   GNMA, 9s, 2017                                                 $    525            $   552,970
- ---------------------------------------------------------------------------------------------------
  Small Business Administration
   SBA, 8.8s, 2000                                                $    558            $   615,979
- ---------------------------------------------------------------------------------------------------
  U.S. Treasury Obligations - 6.3%
   Stripped Principal Payments, 0s, 2020                          $126,800            $24,038,744
   U.S. Treasury Notes, 7.25s, 1996                                 89,500             90,855,070
   U.S. Treasury Notes, 7.375s, 1997                                46,500             47,858,730
   U.S. Treasury Notes, 6.75s, 1999                                 13,500             13,833,315
   U.S. Treasury Notes, 7.5s, 1999                                     900                947,673
   U.S. Treasury Notes, 6.25s, 2000                                  4,285              4,323,822
   U.S. Treasury Notes, 7.125s, 2000                                12,375             12,893,141
   U.S. Treasury Notes, 7.75s, 2000                                  1,500              1,597,035

11

Portfolio of Investments - continued

Non-Convertible Bonds - continued

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - continued
  U.S. Treasury Obligations - continued
   U.S. Treasury Notes, 7.25s, 2004                               $  6,500           $  6,949,930
   U.S. Treasury Notes, 7.875s, 2004                                 1,048              1,165,407
   U.S. Treasury Bonds, 7.5s, 2024                                   1,575              1,752,928
                                                                                     --------------
                                                                                     $206,215,795
- ---------------------------------------------------------------------------------------------------
Total U.S. Government Guaranteed                                                     $207,384,744
- ---------------------------------------------------------------------------------------------------
Utilities - Electric - 4.9%
  BVPS II Funding Corp., 8.33s, 2007                              $  7,500           $  7,368,075
  Central Maine Power Co., 7.98s, 1996                               5,000              5,080,700
  Central Maine Power Co., 7.45s, 1999                               2,500              2,506,250
  Cleveland Electric Illumination, 9.5s, 2005                        3,950              3,955,530
  Commonwealth Edison Co., 9.5s, 2016                                5,245              5,505,991
  Commonwealth Edison Co., 8.5s, 2022                                3,000              3,147,090
  Commonwealth Edison Co., 8.375s, 2023                             14,630             15,239,632
  First PV Funding Corp., 10.3s, 2014                                3,310              3,363,788
  First PV Funding Corp., 10.15s, 2016                              13,493             13,493,000
  Gulf States Utilities Co., 8.25s, 2004                             4,750              5,071,432
  Long Island Lighting Co., 8.75s, 1997                              8,000              8,203,040
  Long Island Lighting Co., 7.625s, 1998                             5,400              5,493,366
  Long Island Lighting Co., 8.9s, 2019                              16,000             15,857,120
  Long Island Lighting Co., 9.625s, 2024                             2,500              2,559,375
  Louisiana Power & Light Co., 10.67s, 2017                          2,065              2,220,618
  Louisiana Power & Light Co., 10.67s, 2017                          1,000              1,075,360
  Midland Cogeneration Venture Corp., 10.33s, 2002                   3,458              3,561,319
  Midland Funding Corp. II, "A", 11.75s, 2005                        6,140              6,447,000
  Niagara Mohawk Power Co., 9.25s, 2001                              4,390              4,825,664
  Niagara Mohawk Power Co., 6.875s, 2003                             2,500              2,451,700
  Niagara Mohawk Power Co., 8s, 2004                                 2,800              2,929,696
  Niagara Mohawk Power Co., 9.75s, 2005                              6,500              7,582,705
  Niagara Mohawk Power Co., 7.75s, 2006                             12,260             12,589,058
  Niagara Mohawk Power Co., 8.75s, 2022                              7,880              8,129,008
  Ohio Edison Co., 7.375s, 2002                                      1,855              1,897,999
  PNPP II Funding Corp., 8.51s, 2006                                 4,361              4,373,385
  Texas & New Mexico Power Co., 12.5s, 1999                          3,623              4,075,875
                                                                                     --------------
                                                                                     $159,003,776
- ---------------------------------------------------------------------------------------------------
Utilities - Gas - 1.1%
  ANR Pipeline Co., 7s, 2005                                      $  8,220           $  8,464,463
  California Energy Co., 0s, 2004                                    4,400              3,872,000
  Coastal Corp., 10.375s, 2000                                       4,645              5,276,581
  Northwest Pipeline Co., 9s, 2022                                   1,580              1,702,260
  Panhandle Eastern Corp., 8.625s, 2025                              3,765              4,053,700
  Parker & Parsley Petroleum, 8.25s, 2007                            3,070              3,181,288
  Southern Union Co., 7.6s, 2024                                     9,500              9,420,010
  Texas Eastern Corp., 9s, 1997                                      1,000              1,032,500
                                                                                     --------------
                                                                                     $ 37,002,802
- ---------------------------------------------------------------------------------------------------

12

Portfolio of Investments - continued

Non-Convertible Bonds - continued

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
Utilities - Telephone - 0.1%
  Century Telephone Enterprises, 8.25s, 2024                      $  4,400          $    4,636,104
- ---------------------------------------------------------------------------------------------------
Total Non-Convertible Bonds (Identified Cost,
 $1,085,097,487)                                                                    $1,151,940,627
- ---------------------------------------------------------------------------------------------------

Convertible Bonds - 3.8%
- ---------------------------------------------------------------------------------------------------
Banks and Credit Companies - 0.2%
  Bank of New York Co., Inc., 7.5s, 2001                          $  3,000          $    7,061,250
- ---------------------------------------------------------------------------------------------------
Chemicals - 0.3%
  Sandoz, 2s, 2002##                                              $  2,240          $    1,818,208
  Valhi, Inc., 0s, 1997                                             19,889               7,408,652
                                                                                    --------------
                                                                                    $    9,226,860
- ---------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 0.1%
  Altera Corp., 5.75s, 2002##                                     $  1,400          $    1,967,000
- ---------------------------------------------------------------------------------------------------
Conglomerates - 0.1%
  Cooper Industries, 7.05s, 2015                                  $  3,000          $    3,018,750
- ---------------------------------------------------------------------------------------------------
Consumer Goods and Services - 0.1%
  Coleman Worldwide Corp., 0s, 1998                               $  6,250          $    1,914,062
  Fieldcrest Cannon Industries, 6s, 2012                             3,000               2,527,500
                                                                                    --------------
                                                                                    $    4,441,562
- ---------------------------------------------------------------------------------------------------
Electrical Equipment - 0.1%
  National Semiconductor, 6.5s, 2002##                            $  2,000          $    2,000,000
- ---------------------------------------------------------------------------------------------------
Electronics - 0.3%
  ADT Operations, Inc., 0s, 2010                                  $  9,475          $    4,133,469
  VLSI Technology, Inc., 8.25s, 2005                                 4,600               4,646,000
                                                                                    --------------
                                                                                    $    8,779,469
- ---------------------------------------------------------------------------------------------------
Entertainment - 0.1%
  Time Warner, Inc., 8.75s, 2015                                  $  2,742          $    2,851,212
- ---------------------------------------------------------------------------------------------------
Financial Institutions
  Mitsubishi Bank, 3s, 2002                                       $  1,200          $    1,200,000
- ---------------------------------------------------------------------------------------------------
Food and Beverage Products - 0.1%
  Grand Metropolitan, 6.5s, 2000##                                $  3,000          $    3,393,750
- ---------------------------------------------------------------------------------------------------
Insurance - 0.4%
  Equitable Cos., Inc., 6.125s, 2024                              $ 10,500          $   11,970,000
- ---------------------------------------------------------------------------------------------------
Machinery - 0.4%
  Aktiebolaget, 0s, 2002##                             ECU          18,100          $    13,653,509
- ---------------------------------------------------------------------------------------------------
Medical and Health Products - 1.1%
  Alza Corp., 0s, 1999                                            $ 10,000          $    3,850,000
  Ciba-Geigy Corp., 6.25s, 2016##                                    1,600               1,584,000
  Roche Holdings, Inc., 0s, 2008##                                  32,500              23,887,500
  Roche Holdings, Inc., 0s, 2010##                                  19,770               7,932,712
                                                                                    ---------------
                                                                                    $   37,254,212
- ---------------------------------------------------------------------------------------------------
Pollution Control - 0.1%
  U.S. Filter Corp., 6s, 2005##                                   $  2,000          $    2,202,500
- ---------------------------------------------------------------------------------------------------

13

Portfolio of Investments - continued

Convertible Bonds - continued

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
Issuer                                                             (000 Omitted)             Value
- ---------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--0.2%
  Liberty Property Trust, 8s, 2001                                $  6,000           $  6,322,500
- ---------------------------------------------------------------------------------------------------
Special Products and Services - 0.1%
  Cemex S.A., 4.25s, 1997##                                       $  5,500           $  4,585,625
- ---------------------------------------------------------------------------------------------------
Stores
  Federated Department Stores, 5s, 2003                           $  1,000           $  1,000,000
  Staples, Inc., 4.5s, 2000##                                          500                521,250
                                                                                     --------------
                                                                                     $  1,521,250
- ---------------------------------------------------------------------------------------------------
Telecommunications - 0.1%
  LDDS Communications, Inc., 5s, 2003                             $  1,000           $  1,028,750
  Turner Broadcasting Systems, Inc., 0s, 2007##                      3,000              1,342,500
                                                                                     --------------
                                                                                     $  2,371,250
- ---------------------------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $118,067,804)                              $123,820,699
- ---------------------------------------------------------------------------------------------------

Preferred Stocks - 0.9%
- ---------------------------------------------------------------------------------------------------
                                                                   Shares
- ---------------------------------------------------------------------------------------------------
Aetna Capital LLC, 9.5%                                            200,000           $  5,400,000
Bank United of Texas, "B", 9.6%                                    200,000              5,025,000
Boise Cascade Corp., "F", 9.4%                                     140,000              3,710,000
Conagra Capital, "A", 9%                                           200,000              5,375,000
Nevada Power Co., 9.9%                                              20,000              2,165,000
USX Capital LLC, 8.75%                                             376,800              9,325,800
- ---------------------------------------------------------------------------------------------------
Total Preferred Stocks (Identified Cost, $29,744,330)                                $ 31,000,800
- ---------------------------------------------------------------------------------------------------

Common Stocks - 47.2%
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - 46.8%
  Aerospace - 1.1%
   Allied Signal, Inc.                                             100,000           $  4,412,500
   Lockheed Martin Corp.                                            96,000              6,444,000
   United Technologies Corp.                                       277,424             24,517,346
                                                                                     --------------
                                                                                     $ 35,373,846
- ---------------------------------------------------------------------------------------------------
  Airlines
   Midwest Express Holdings*                                        13,500           $    303,750
- ---------------------------------------------------------------------------------------------------
  Apparel and Textiles - 0.1%
   Springs Industries, Inc.                                         45,000           $  1,766,250
- ---------------------------------------------------------------------------------------------------
  Automotive - 2.1%
   Daimler Benz, ADR                                               203,500           $ 10,098,688
   Dana Corp.                                                      200,000              5,775,000
   Ford Motor Co.                                                  525,677             16,361,697
   General Motors Corp.                                            608,269             28,512,609
   Goodyear Tire & Rubber Co.                                      178,000              7,008,750
                                                                                     --------------
                                                                                     $ 67,756,744
- ---------------------------------------------------------------------------------------------------
  Banks and Credit Companies - 4.6%
   Bank of Boston Corp.                                            383,500           $ 18,264,188

14

Portfolio of Investments - continued

Common Stocks - continued

- ---------------------------------------------------------------------------------------------------
Issuer                                                              Shares                Value
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - continued
  Banks and Credit Companies - continued
   Bank of New York, Inc.                                          165,000           $  7,672,500
   Chase Manhattan Corp.                                           396,200             24,217,725
   Citicorp                                                        165,400             11,702,050
   Comerica, Inc.                                                   50,000              1,818,750
   Corestates Financial Corp.                                      150,000              5,493,750
   First Bank System, Inc.                                         250,000             12,031,250
   First Union Corp.                                               120,000              6,120,000
   National City Corp.                                             580,000             17,907,500
   NationsBank Corp.                                               350,000             23,537,500
   Northern Trust Co.                                              420,000             19,320,000
   Norwest Corp.                                                    81,700              2,675,675
                                                                                     --------------
                                                                                     $150,760,888
- ---------------------------------------------------------------------------------------------------
  Business Machines - 0.9%
   Hewlett-Packard Co.                                              45,000           $  3,751,875
   Texas Instruments, Inc.                                          95,000              7,588,125
   Xerox Corp.                                                     135,000             18,140,625
                                                                                     --------------
                                                                                     $ 29,480,625
- ---------------------------------------------------------------------------------------------------
  Cellular Telephones - 0.1%
   AirTouch Communications, Inc.*                                  107,812           $  3,301,743
- ---------------------------------------------------------------------------------------------------
  Chemicals - 1.6%
   Dow Chemical Co.                                                200,000           $ 14,900,000
   du Pont (E.I.) de Nemours & Co.                                 180,000             12,375,000
   Grace (W.R.) & Co.                                              373,900             24,957,825
                                                                                     --------------
                                                                                     $ 52,232,825
- ---------------------------------------------------------------------------------------------------
  Conglomerates - 0.9%
   Eastern Enterprises                                             350,000           $ 11,243,750
   Textron, Inc.                                                   250,000             17,062,500
                                                                                     --------------
                                                                                     $ 28,306,250
- ---------------------------------------------------------------------------------------------------
  Consumer Goods and Services - 1.6%
   Colgate-Palmolive Co.                                           151,900           $ 10,120,338
   Gillette Co.                                                     85,600              4,076,700
   Philip Morris Cos., Inc.                                        410,400             34,268,400
   Rubbermaid, Inc.                                                101,200              2,795,650
                                                                                     --------------
                                                                                     $ 51,261,088
- ---------------------------------------------------------------------------------------------------
  Defense Electronics - 0.2%
   Loral Corp.                                                     135,900           $  7,746,300
- ---------------------------------------------------------------------------------------------------
  Electrical Equipment - 1.4%
   Alcatel Alsthom Compagnie, ADR                                  330,000           $  5,610,000
   Emerson Electric Co.                                            100,000              7,150,000
   General Electric Co.                                            215,372             13,729,965
   Honeywell, Inc.                                                 431,000             18,479,125
                                                                                     --------------
                                                                                     $ 44,969,090
- ---------------------------------------------------------------------------------------------------

15

Portfolio of Investments - continued

Common Stocks - continued

- ---------------------------------------------------------------------------------------------------
Issuer                                                             Shares                 Value
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - continued
  Electronics - 0.3%
   AMP, Inc.                                                        60,000           $  2,310,000
   Perkin-Elmer Corp.                                              230,000              8,193,750
                                                                                     --------------
                                                                                     $ 10,503,750
- ---------------------------------------------------------------------------------------------------
  Financial Institutions - 1.1%
   Bear Stearns Cos., Inc.                                         170,490           $  3,665,556
   Dean Witter Discover & Co., Inc.                                225,796             12,701,025
   Federal Home Loan Mortgage Corp.                                215,000             14,861,875
   Integra Financial Corp.                                          90,000              5,231,250
                                                                                     --------------
                                                                                     $ 36,459,706
- ---------------------------------------------------------------------------------------------------
  Food and Beverage Products - 2.3%
   Anheuser-Busch Cos., Inc.                                       130,000           $  8,108,750
   Campbell Soup Co.                                                27,500              1,396,942
   CPC International, Inc.                                         235,000             15,510,000
   Coca-Cola Co.                                                   120,000              8,280,000
   General Mills, Inc.                                             318,000             17,728,500
   Kellog Co.                                                       80,000              5,790,000
   McCormick & Co. Inc.                                             41,700                995,588
   PepsiCo, Inc.                                                   355,000             18,105,000
                                                                                     --------------
                                                                                     $ 75,914,780
- ---------------------------------------------------------------------------------------------------
  Forest and Paper Products - 0.8%
   Bowater, Inc.                                                   227,914           $ 10,626,490
   Georgia-Pacific Corp.                                            34,500              3,018,750
   Kimberly Clark Corp.                                             20,000              1,342,500
   Scott Paper Co.                                                  30,000              1,453,050
   Weyerhaeuser Co.                                                220,000             10,037,500
                                                                                     --------------
                                                                                     $ 26,478,290
- ---------------------------------------------------------------------------------------------------
  Insurance - 4.5%
   Aetna Life & Casualty Co.                                       460,600           $ 33,796,525
   Allstate Corp.                                                  279,779              9,897,182
   American General Corp.                                          400,000             14,950,000
   CIGNA Corp.                                                     324,800             33,819,800
   Lincoln National Corp.                                           91,000              4,288,375
   MBIA, Inc.                                                      160,000             11,280,000
   Reliastar Financial Corp.                                       275,000             11,171,875
   Torchmark Corp.                                                 125,000              5,265,625
   Travelers, Inc.                                                 286,269             15,208,041
   UNUM Corp.                                                      156,000              8,229,000
                                                                                     --------------
                                                                                     $147,906,423
- ---------------------------------------------------------------------------------------------------
  Machinery - 0.5%
   Caterpillar, Inc.                                                70,008           $  3,981,705
   Deere & Co., Inc.                                                86,000              6,998,250
   Ingersoll Rand Co.                                              119,000              4,462,500
                                                                                     --------------
                                                                                     $ 15,442,455
- ---------------------------------------------------------------------------------------------------

16

Portfolio of Investments - continued

Common Stocks - continued

- ---------------------------------------------------------------------------------------------------
Issuer                                                             Shares                Value
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - continued
  Medical and Health Products - 2.0%
   American Home Products Corp.                                    260,000           $ 22,067,500
   Baxter International, Inc.                                      257,300             10,581,463
   Lilly (Eli) & Co.                                               205,000             18,424,375
   SmithKline Beecham PLC, ADR                                     250,000             12,656,250
   Warner Lambert Co.                                               30,000              2,857,500
                                                                                     --------------
                                                                                     $ 66,587,088
- ---------------------------------------------------------------------------------------------------
  Metals and Minerals - 0.6%
   Cyprus Amax Minerals                                            300,000           $  8,437,500
   Phelps Dodge Corp.                                              192,560             12,059,070
                                                                                     --------------
                                                                                     $ 20,496,570
- ---------------------------------------------------------------------------------------------------
  Oil Services - 0.5%
   Dresser Industries, Inc.                                        100,000           $  2,387,500
   Schlumberger Ltd.                                               222,512             14,518,908
                                                                                     --------------
                                                                                     $ 16,906,408
- ---------------------------------------------------------------------------------------------------
  Oils - 5.9%
   Amoco Corp.                                                     324,500           $ 20,808,563
   Atlantic Richfield Co.                                          102,300             10,984,463
   British Petroleum PLC, ADR                                      207,922             18,687,032
   Chevron Corp.                                                   245,400             11,932,575
   Exxon Corp.                                                     270,836             19,567,901
   Mobil Corp.                                                     200,000             19,925,000
   Occidental Petroleum Corp.                                      700,000             15,400,000
   Royal Dutch Petroleum Co., ADR                                  260,000             31,915,000
   Sun, Inc.                                                       204,582              5,267,986
   TOTAL S.A., ADR                                                 343,000             10,332,875
   USX-Marathon Group                                              799,400             15,788,150
   Ultramar Corp.                                                  280,000              6,650,000
   YPF Sociedad Anonima, ADR                                       280,000              5,040,000
                                                                                     --------------
                                                                                     $192,299,545
- ---------------------------------------------------------------------------------------------------
  Photographic Products - 0.6%
   Eastman Kodak Co.                                               320,500           $ 18,989,625
- ---------------------------------------------------------------------------------------------------
  Pollution Control - 0.2%
   WMX Technologies, Inc.                                          200,000           $  5,700,000
- ---------------------------------------------------------------------------------------------------
  Precious Metals and Minerals - 0.1%
   Freeport-McMoRan Copper & Gold, Inc.                            156,483           $  4,009,877
- ---------------------------------------------------------------------------------------------------
  Railroads - 0.6%
   CSX Corp.                                                       164,000           $ 13,796,500
   Illinois Central Corp.                                          120,000              4,695,000
                                                                                     --------------
                                                                                     $ 18,491,500
- ---------------------------------------------------------------------------------------------------

17

Portfolio of Investments - continued

Common Stocks - continued

- ---------------------------------------------------------------------------------------------------
Issuer                                                              Shares                Value
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - continued
  Real Estate Investment Trusts - 1.4%
   Beacon Properties Corp.                                         303,400            $ 6,485,175
   Equity Residential Properties                                    54,000              1,626,750
   Health Care Property Investors, Inc.                            107,400              3,638,175
   Hospitality Properties Trust                                    380,000              9,975,000
   Kimco Realty Corp.                                               48,800              1,945,900
   Meditrust Corp.                                                 254,800              8,822,450
   National Health Investors, Inc.                                 244,400              7,393,100
   Oasis Residential                                               100,000              2,250,000
   Omega Healthcare Investors                                       80,000              2,140,000
   Storage Equities, Inc.                                           49,200                916,350
   Sun Communities, Inc.                                            85,800              2,230,800
                                                                                     --------------
                                                                                      $47,423,700
- ---------------------------------------------------------------------------------------------------
  Special Products and Services - 0.4%
   Minnesota Mining & Manufacturing Co.                             80,000            $ 4,520,000
   Pennsylvania Enterprises, Inc.                                  105,000              3,622,500
   Stanley Works                                                   130,000              5,638,750
                                                                                     --------------
                                                                                      $13,781,250
- ---------------------------------------------------------------------------------------------------
  Stores - 1.7%
   Dayton-Hudson Corp.                                             122,100            $ 9,264,338
   May Department Stores Co.                                       619,760             27,114,500
   Penney (J.C.), Inc.                                             120,000              5,955,000
   Sears, Roebuck & Co.                                            358,400             13,216,000
                                                                                     --------------
                                                                                      $55,549,838
- ---------------------------------------------------------------------------------------------------
  Utilities - Electric - 1.9%
   CMS Energy Corp.                                                300,000            $ 7,875,000
   FPL Group, Inc.                                                 420,000             17,167,500
   General Public Utilities Co.                                    125,000              3,890,625
   Pacific Gas & Electric Co.                                      300,600              8,980,425
   PECO Energy Co.                                                 350,000             10,018,750
   Pinnacle West Capital Corp.                                      50,000              1,312,500
   Portland General Electric Corp.                                  57,700              1,481,349
   Rochester Gas & Electric Corp.                                   71,800              1,696,275
   Texas Utilities Co.                                              60,000              2,092,500
   Unicom Corp.                                                    223,900              6,772,975
                                                                                     --------------
                                                                                      $61,287,899
- ---------------------------------------------------------------------------------------------------
  Utilities - Gas - 3.3%
   British Gas PLC, ADR                                             75,000            $ 3,131,250
   Coastal Corp.                                                   195,000              6,556,875
   Enron Corp.                                                     270,000              9,045,000
   Pacific Enterprises                                             676,400             16,994,550
   Panhandle Eastern Corp.                                         218,000              5,940,500
   Questar Corp.                                                    35,000              1,124,375
   Sonat, Inc.                                                     420,000             13,440,000
   Tenneco, Inc.                                                   350,000             16,187,500

18

Portfolio of Investments - continued

Common Stocks - continued

- ---------------------------------------------------------------------------------------------------
Issuer                                                              Shares                Value
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - continued
  Utilities - Gas - continued
   UGI Corp.                                                        410,000         $    8,456,250
   Williams Cos., Inc.                                              720,012             28,080,468
                                                                                     --------------
                                                                                    $  108,956,768
- ---------------------------------------------------------------------------------------------------
  Utilities - Telephone - 3.5%
   AT & T Corp.                                                     409,000         $   26,891,750
   Ameritech Corp.                                                  211,416             11,020,059
   Frontier Corp.                                                   199,600              5,314,350
   GTE Corp.                                                        422,000             16,563,500
   MCI Communications Corp.                                         453,000             11,806,312
   NYNEX Corp.                                                      268,800             12,835,200
   Pacific Telesis Group                                            150,000              4,612,500
   SBC Communications, Inc.                                         126,600              6,963,000
   Sprint Corp.                                                     377,900             13,226,500
   Tele Danmark, ADR                                                155,000              4,010,625
                                                                                     --------------
                                                                                    $  113,243,796
- ---------------------------------------------------------------------------------------------------
Total U.S. Stocks (Identified Cost, $1,090,951,534)                                 $1,529,688,667
- ---------------------------------------------------------------------------------------------------
Foreign Stocks - 0.4%
  Spain - 0.2%
   Iberdrola (Utilities - Electric)                                 750,000         $    5,686,275
- ---------------------------------------------------------------------------------------------------
  United Kingdom - 0.2%
   National Power PLC (Utilities - Electric)                      1,132,000         $    4,049,051
   PowerGen PLC (Utilities - Electric)                              729,000              2,872,916
                                                                                     --------------
                                                                                    $    6,921,967
- ---------------------------------------------------------------------------------------------------
Total Foreign Stocks (Identified Cost, $10,904,269)                                 $   12,608,242
- ---------------------------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $1,101,855,803)                               $1,542,296,909
- ---------------------------------------------------------------------------------------------------

Convertible Preferred Stocks - 5.0%
- ---------------------------------------------------------------------------------------------------
Agricultural Products - 0.2%
  Case Corp., $4.50                                                  70,000         $    7,131,250
- ---------------------------------------------------------------------------------------------------
Apparel and Textiles - 0.1%
  Owens Corning Capital LLC, 6.5%##                                  55,000         $    3,245,000
- ---------------------------------------------------------------------------------------------------
Automotive - 0.3%
  General Motors Corp., $3.25                                       140,000         $    9,082,500
- ---------------------------------------------------------------------------------------------------
Banks and Credit Companies - 0.8%
  Citicorp, 10.75%                                                  100,000         $   19,550,000
  Washington Mutual, Inc., "D", $6.00                                52,000              5,473,000
                                                                                      ------------
                                                                                    $   25,023,000
- ---------------------------------------------------------------------------------------------------
Business Services
  ALCO Standard Corp., $5.04                                         15,000         $    1,263,750
- ---------------------------------------------------------------------------------------------------
Construction Services - 0.1%
  Southdown, Inc., "D", $2.875                                       48,700         $    1,893,212
- ---------------------------------------------------------------------------------------------------

19

Portfolio of Investments - continued

Convertible Preferred Stocks - continued

- ---------------------------------------------------------------------------------------------------
Issuer                                                             Shares                 Value
- ---------------------------------------------------------------------------------------------------
Entertainment - 0.1%
  Bally Entertainment, 8%                                           195,000           $ 2,193,750
- ---------------------------------------------------------------------------------------------------
Financial Institutions - 0.5%
  Advanta Corp., 6.75%*                                              30,000           $ 1,263,750
  First Chicago Corp., "B", 5.75%                                   176,100            11,314,425
  Merrill Lynch & Co., 6.50%                                         66,600             3,646,350
                                                                                      ------------
                                                                                      $16,224,525
- ---------------------------------------------------------------------------------------------------
Food and Beverage Products - 0.2%
  RJR Nabisco Holdings, "C", 9.25%                                1,100,700           $ 7,429,725
- ---------------------------------------------------------------------------------------------------
Insurance - 0.2%
  Allstate Corp., 6.76%                                              10,000           $   426,250
  St. Paul Capital LLC, 6%                                          101,700             5,949,450
                                                                                      ------------
                                                                                      $ 6,375,700
- ---------------------------------------------------------------------------------------------------
Medical and Health Technology and Services
  SCI Finance LLC, "A", $3.125                                       15,000           $ 1,049,025
- ---------------------------------------------------------------------------------------------------
Oil Services - 0.1%
  Reading & Bates Corp., $1.625                                      95,200           $ 3,427,200
- ---------------------------------------------------------------------------------------------------
Oils - 0.6%
  Atlantic Richfield Co., 9%                                        429,551           $10,953,550
  Occidental Petroleum Corp., $3.875                                140,000             8,050,000
                                                                                      ------------
                                                                                      $19,003,550
- ---------------------------------------------------------------------------------------------------
Pollution Control - 0.3%
  Browning-Ferris Industries, 7.25%*                                275,000           $ 9,143,750
- ---------------------------------------------------------------------------------------------------
Precious Metals and Minerals - 0.3%
  Freeport-McMoRan Copper & Gold, Inc., 7%                          120,000           $ 3,300,000
  Freeport-McMoRan Copper & Gold, Inc., 5%                          200,000             5,150,000
                                                                                      ------------
                                                                                      $ 8,450,000
- ---------------------------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.2%
  Catellus Development Corp., $3.75                                  13,200           $   631,950
  Oasis Residential, "A", 9%                                         70,000             1,811,250
  Security Capital Pacific, "A", $1.75                              164,000             3,956,500
  Wellsford Residential Property Trust, "A", 7%                      90,000             1,766,250
                                                                                      ------------
                                                                                      $ 8,165,950
- ---------------------------------------------------------------------------------------------------
Special Products and Services - 0.2%
  Ceridian Corp., 5.5%                                               68,000           $ 6,596,000
- ---------------------------------------------------------------------------------------------------
Steel - 0.2%
  AK Steel Holdings Corp., 7%                                       216,500           $ 6,549,125
- ---------------------------------------------------------------------------------------------------
Utilities - Electric - 0.1%
  Williams Cos., Inc., 7%##                                          58,000           $ 3,994,750
- ---------------------------------------------------------------------------------------------------
Utilities - Gas - 0.1%
  Western Gas Resources, Inc., $2.625                                61,000           $ 2,226,500
- ---------------------------------------------------------------------------------------------------

20

Portfolio of Investments - continued

Convertible Preferred Stocks - continued

- ---------------------------------------------------------------------------------------------------
Issuer                                                              Shares                   Value
- ---------------------------------------------------------------------------------------------------
Utilities - Telephone - 0.4%
  Cointel, 7%##                                                    299,800          $   14,727,675
- ---------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost, $154,774,892)                  $  163,195,937
  -------------------------------------------------------------------------------------------------

Short-Term Obligations - 7.9%

- ---------------------------------------------------------------------------------------------------
                                                                Principal Amount
                                                                   (000 Omitted)
- ---------------------------------------------------------------------------------------------------
  AT&T Corp., due 11/28/95                                        $  7,400          $    7,331,599
  du Pont (E.I.) de Nemours & Co., due 10/25/95                     15,000              14,941,041
  Federal Farm Credit Bank, due 11/03/95 - 11/06/95                  6,500               6,465,368
  Federal Home Loan Bank, due 10/10/95 - 11/30/95                   25,800              25,670,904
  Federal Home Loan Mortgage Corp., due 10/20/95 - 11/20/95         84,093              83,676,574
  Federal National Mortgage Assn., due 10/02/95 - 11/17/95          65,175              64,979,913
  Ford Motor Credit Co., due 10/27/95                               10,500              10,454,719
  GTE South, due 10/04/95                                            7,800               7,795,016
  Heinz (H.J.) Co., due 10/03/95 - 10/13/95                         16,354              16,340,773
  PepsiCo, Inc., due 10/03/95                                       12,300              12,294,168
  Wal Mart Stores, due 11/21/95                                      7,400               7,339,073
- ---------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost                                     $  257,289,148
- ---------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $2,746,829,464)                                 $3,269,544,120

Other Assets, Less Liabilities                                                           1,164,726
- ---------------------------------------------------------------------------------------------------
Net Assets - 100.0%                                                                 $3,270,708,846
- ---------------------------------------------------------------------------------------------------

* Non-income producing security. ## SEC Rule 144A security.
+ Restricted security. ECU = Principal amount of security denominated in European Currency Units.

See notes to financial statements

21

Financial Statements

Statement of Assets and Liabilities

- -----------------------------------------------------------------------------------------
September 30, 1995
- -----------------------------------------------------------------------------------------
Assets:
  Investments, at value (identified cost, $2,746,829,464)                  $3,269,544,120
  Cash                                                                             16,688
  Receivable for investments sold                                              48,388,417
  Receivable for Fund shares sold                                               3,664,095
  Interest and dividends receivable                                            29,056,870
  Receivable from investment adviser                                               93,132
  Other assets                                                                     58,151
                                                                              -----------
    Total assets                                                           $3,350,821,473
                                                                              ===========
Liabilities:
  Distributions payable                                                    $    1,667,599
  Payable for investments purchased                                            69,267,792
  Payable for Fund shares reacquired                                            7,245,963
  Payable to affiliates -
   Management fee                                                                  52,437
   Shareholder servicing agent fee                                                 24,598
   Distribution fee                                                             1,227,748
  Accrued expenses and other liabilities                                          626,490
                                                                              -----------
    Total liabilities                                                      $   80,112,627
                                                                              -----------
Net assets                                                                 $3,270,708,846
                                                                              ===========
Net assets consist of:
  Paid-in capital                                                          $2,648,454,101
  Unrealized appreciation on investments and translation of assets and
    liabilities in foreign currencies                                         522,715,383
  Accumulated undistributed net realized gain on investments and foreign
    currency transactions                                                      98,017,011
  Accumulated undistributed net investment income                               1,522,351
                                                                              -----------
    Total                                                                  $3,270,708,846
                                                                              ===========
Shares of beneficial interest outstanding                                   226,115,458
                                                                              ===========
Class A shares:
  Net asset value and redemption price per share
   (net assets of $2,242,435,897 / 155,030,940 shares of beneficial
   interest outstanding)                                                        $14.46
                                                                              ===========
  Offering price per share (100/95.25)                                          $15.18
                                                                              ===========
Class B shares:
  Net asset value and offering price per share
   (net assets of $1,005,413,281 / 69,507,266 shares of beneficial
   interest outstanding)                                                        $14.46
                                                                              ===========
Class C shares:
  Net asset value, offering price and redemption price
   (net assets of $22,859,668 / 1,577,252 shares of beneficial interest
   outstanding)                                                                 $14.49
                                                                              ===========

On sales of $100,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A and Class B shares.

See notes to financial statements

22

Financial Statements - continued

Statement of Operations

- -----------------------------------------------------------------------------------------
Year Ended September 30, 1995
- -----------------------------------------------------------------------------------------
Net investment income:
  Income -
   Interest                                                      $105,318,026
   Dividends                                                       59,076,808
   Foreign taxes withheld                                            (478,396)
                                                                   -----------
    Total investment income                                      $163,916,438
                                                                   -----------
  Expenses -
   Management fee                                                $ 11,256,389
   Trustees' compensation                                             101,257
   Shareholder servicing agent fee (Class A)                        2,237,146
   Shareholder servicing agent fee (Class B)                        1,822,990
   Shareholder servicing agent fee (Class C)                           11,855
   Distribution and service fee (Class A)                           6,927,348
   Distribution and service fee (Class B)                           9,013,390
   Distribution and service fee (Class C)                              79,034
   Custodian fee                                                      629,779
   Postage                                                            554,164
   Printing                                                           267,348
   Auditing fees                                                       79,600
   Legal fees                                                          22,496
   Miscellaneous                                                    1,717,103
                                                                   -----------
    Total expenses                                               $ 34,719,899
   Reduction of expenses by distributor                            (1,978,583)
   Fees paid indirectly                                              (227,012)
                                                                   -----------
    Net expenses                                                 $ 32,514,304
                                                                   -----------
      Net investment income                                      $131,402,134
                                                                   -----------
Realized and unrealized gain (loss) on investments:
  Realized gain (identified cost basis) -
   Investment transactions                                       $120,747,175
   Foreign currency transactions                                       39,733
                                                                   -----------
      Net realized gain on investments                           $120,786,908
                                                                   -----------
  Change in unrealized appreciation (depreciation) -
   Investments                                                   $242,713,291
   Translation of assets and liabilities in foreign
     currencies                                                       (88,386)
                                                                   -----------
     Net unrealized gain on investments                          $242,624,905
                                                                   -----------
      Net realized and unrealized gain on investments and
        foreign currency                                         $363,411,813
                                                                   -----------
       Increase in net assets from operations                    $494,813,947
                                                                   ===========

See notes to financial statements

23

Financial Statements - continued

Statement of Changes in Net Assets

- -----------------------------------------------------------------------------------------
Year Ended September 30,                                  1995           1994
- -----------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
  Net investment income                            $  131,402,134   $  100,428,299
  Net realized gain (loss) on investments and
   foreign currency transactions                      120,786,908      (27,333,507)
  Net unrealized gain (loss) on investments and
   foreign currency translation                       242,624,905     (106,132,819)
                                                         ---------     -----------
   Increase (decrease) in net assets from
    operations                                     $  494,813,947   $  (33,038,027)
                                                         ---------     -----------
Distributions declared to shareholders -
  From net investment income (Class A)             $  (91,296,492)  $  (73,642,097)
  From net investment income (Class B)                (33,884,609)     (22,924,892)
  From net investment income (Class C)                   (302,945)          (2,881)
  From net realized gain on investments and
   foreign currency transactions (Class A)             (1,471,111)     (13,216,281)
  From net realized gain on investments and
   foreign currency transactions (Class B)               (672,401)      (4,649,374)
  From net realized gain on investments and
   foreign currency transactions (Class C)                 (2,050)        --
  In excess of net realized gain on investments
   and foreign currency transactions (Class A)           --            (13,629,891)
  In excess of net realized gain on investments
   and foreign currency transactions (Class B)           --             (4,794,879)
                                                         ---------     -----------
   Total distributions declared to shareholders    $ (127,629,608)  $ (132,860,295)
                                                         ---------     -----------
Fund share (principal) transactions -
  Net proceeds from sale of shares                 $  620,581,586   $  875,180,059
  Net asset value of shares issued to shareholders
   in reinvestment of distributions                   108,185,007      109,317,882
  Cost of shares reacquired                          (526,677,345)    (351,427,892)
                                                         ---------     -----------
   Increase in net assets from Fund share
    transactions                                   $  202,089,248   $  633,070,049
                                                         ---------     -----------
    Total increase in net assets                   $  569,273,587   $  467,171,727
Net assets:
  At beginning of period                            2,701,435,259    2,234,263,532
                                                         ---------     -----------
  At end of period (including accumulated
   undistributed (distributions in excess of) net
   investment income of $(1,522,351) and
   $(7,440,916), respectively)                     $3,270,708,846   $2,701,435,259
                                                         =========     ===========

See notes to financial statements

24

Financial Statements - continued

Financial Highlights

- ----------------------------------------------------------------------------------------------
Year Ended September 30,                     1995        1994       1993      1992       1991
- ----------------------------------------------------------------------------------------------
                                           Class A
- ----------------------------------------------------------------------------------------------
Per share data (for a share outstanding
  throughout each period):
Net asset value - beginning of period       $12.80      $13.70     $12.42    $11.82     $10.25
                                              ------     ------      ----      ----     ------
Income from investment operations+++ -
 Net investment income***                   $ 0.64      $ 0.54     $ 0.45    $ 0.65     $ 0.67
 Net realized and unrealized gain
   (loss) on investments and foreign
   currency  transactions                     1.64       (0.69)      1.74      0.75       1.57
                                              ------     ------      ----      ----     ------
     Total from investment operations       $ 2.28      $(0.15)    $ 2.19    $ 1.40     $ 2.24
                                              ------     ------      ----      ----     ------
Less distributions declared to
 shareholders -
   From net investment income****           $(0.61)     $(0.54)    $(0.59)   $(0.66)    $(0.61)
   In excess of net investment income++       --          --         --        --         --
   From net realized gain on
     investments and foreign currency
     transactions                            (0.01)      (0.10)     (0.32)    (0.14)     (0.06)
   In excess of net realized gain on
     investments and foreign currency
     transactions                             --         (0.11)      --        --         --
                                              ------     ------      ----      ----     ------
     Total distributions declared to
       shareholders                         $(0.62)     $(0.75)    $(0.91)   $(0.80)    $(0.67)
                                              ------     ------      ----      ----     ------
Net asset value - end of period             $14.46      $12.80     $13.70    $12.42     $11.82
                                              ======     ======      ====      ====     ======
Total return#                                18.36%    (1.07)%     18.32%     12.26%     22.25%
Ratios (to average net assets)/Supplemental data:***
 Expenses##                                   0.87%      0.85%      0.84%      0.84%      0.87%
 Net investment income                        4.82%      4.26%      4.51%      5.40%      5.89%
Portfolio turnover                             102%        91%        95%        84%        74%
Net assets at end of period
 (000,000 omitted)                          $2,242     $1,857     $1,702     $1,198       $909

***The distributor waived a portion of its distribution fee for the periods
   indicated. If this fee had been incurred by the Fund, the net investment income
   per share and ratios would have been:

    Net investment income                     $0.63     $ 0.52         --         --         --
    Ratios (to average net assets):
     Expenses##                                0.97%      0.95%        --         --         --
     Net investment income                     4.72%      4.16%        --         --         --

# Total returns for Class A shares do not include the sales charge (except for reinvested dividends prior to October 1, 1989). If the charge had been included, the results would have been lower.

+++ Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.

++ For the year ended September 30, 1993, the per share distribution in excess of net investment income on Class A shares was $0.0035.

**** For the years ended September 30, 1992 and 1991, $0.0508 and $0.0596, respectively, of per share distributions from net investment income have been redesignated as distributions from capital gains.

## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.

See notes to financial statements

25

Financial Statements - continued

Financial Highlights -- continued

- --------------------------------------------------------------------------------------------
Year Ended September 30,                    1990      1989      1988      1987       1986
- --------------------------------------------------------------------------------------------
                                            Class A
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period      $11.58    $10.13    $11.47    $ 9.77     $ 8.73
                                              ----      ----      ----      ----     ------
Income from investment operations -
   Net investment income                   $ 0.64    $ 0.65    $ 0.62    $ 0.56     $ 0.60
   Net realized and unrealized gain
    (loss)  on investments and foreign
    currency  transactions                  (1.25)     1.71     (1.07)     2.07       1.91
                                              ----      ----      ----      ----     ------
     Total from investment
      operations                           $(0.61)   $ 2.36    $(0.45)   $ 2.63     $ 2.51
                                              ----      ----      ----      ----     ------
Less distributions declared to
 shareholders -
   From net investment income              $(0.66)   $(0.63)   $(0.60)   $(0.56)    $(0.59)
   From net realized gain on
    investments and foreign currency
    transactions                            (0.06)    (0.28)    (0.08)    (0.36)     (0.88)
   From paid-in capital                      --        --       (0.21)    (0.01)      --
                                              ----      ----      ----      ----     ------
     Total distributions declared to
      shareholders                         $(0.72)   $(0.91)   $(0.89)   $(0.93)    $(1.47)
                                              ----      ----      ----      ----     ------
Net asset value - end of period            $10.25    $11.58    $10.13    $11.47     $ 9.77
                                              ====      ====      ====      ====     ======
Total return#                               (5.59)%   23.46%    (3.93)%   26.81%     28.45%
Ratios (to average net assets)/Supplemental data:
   Expenses                                  0.85%     0.72%     0.71%     0.63%      0.67%
   Net investment income                     5.71%     5.97%     6.06%     5.05%      5.67%
Portfolio turnover                             50%       53%       52%       58%        94%
Net assets at end of period
 (000,000 omitted)                           $707      $628      $508      $551       $309

# Total returns for Class A shares do not include the sales charge (except for reinvested dividends prior to October 1, 1989). If the charge had been included, the results would have been lower.

See notes to financial statements

26

Financial Statements - continued

Financial Highlights -- continued

- --------------------------------------------------------------------------------------------
Year Ended September 30,            1995        1994       1993*        1995      1994**
- --------------------------------------------------------------------------------------------
                                  Class B                             Class C
- --------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning
 of period                         $12.80      $13.70      $13.53      $12.80     $12.92
                                     ------     ------      ------      ------     ------
Income from investment
 operations++ -
 Net investment income             $ 0.53      $ 0.39      $ 0.06      $ 0.54     $ 0.08
 Net realized and unrealized
   gain (loss) on investments
   and foreign currency
   transactions                      1.64       (0.65)       0.16        1.66      (0.13)
                                     ------     ------      ------      ------     ------
     Total from investment
      operations                   $ 2.17      $(0.26)     $ 0.22      $ 2.20     $(0.05)
                                     ------     ------      ------      ------     ------
Less distributions declared to
 shareholders -
   From net investment income      $(0.50)     $(0.43)     $(0.05)     $(0.50)    $(0.07)
   From net realized gain on
    investments and foreign
    currency transactions           (0.01)      (0.10)       --         (0.01)      --
   In excess of net realized
    gain on investments and
    foreign currency
    transactions                     --         (0.11)       --          --         --
                                     ------     ------      ------      ------     ------
     Total distributions
      declared to shareholders     $(0.51)     $(0.64)     $(0.05)     $(0.51)    $(0.07)
                                     ------     ------      ------      ------     ------
Net asset value - end of
 period                            $14.46      $12.80      $13.70      $14.49     $12.80
                                     ======     ======      ======      ======     ======
Total return                        17.46%     (1.93)%      15.24%+     17.66%    (0.41)%
Ratios (to average net
 assets)/ Supplemental data:
   Expenses##                        1.71%       1.70%       1.75%+      1.67%      1.76%+
   Net investment income             3.97%       3.45%       3.98%+      4.14%      4.08%+
Portfolio turnover                    102%         91%         95%        102%        91%
Net assets at end of period
 (000,000 omitted)                 $1,005        $843        $532         $23         $1

* For the period from commencement of offering of Class B shares. August 23, 1993 to September 30, 1993. ** For the period from commencement of offering of Class C shares. August 1, 1994 to September 30, 1994.
+ Annualized.
++ Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding. ## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.

See notes to financial statements

27

Notes to Financial Statements

(1) Business and Organization MFS Total Return Fund (the Fund) is a diversified series of MFS Series Trust V (the Trust). The Trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.

(2) Significant Accounting Policies Investment Valuations - Equity securities listed on securities exchanges or reported through the NASDAQ system are valued at last sale prices. Unlisted equity securities or listed equity securities for which last sale prices are not available are valued at last quoted bid prices. Debt securities (other than short-term obligations which mature in 60 days or less), including listed issues and forward contracts, are valued on the basis of valuations furnished by dealers or by a pricing service with consideration to factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon exchange or over-the-counter prices. Short-term obligations, which mature in 60 days or less, are valued at amortized cost, which approximates market value. Securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Trustees.

Foreign Currency Translation - Investment valuations, other assets, and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.

Forward Foreign Currency Exchange Contracts - The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The Fund will enter into forward contracts for hedging purposes as well as for non-hedging purposes. For hedging purposes, the Fund may enter into contracts to deliver or receive foreign currency it will receive from or require for its normal investment activities. It may also use contracts in a manner intended to protect foreign currency-denominated securities from declines in value due to unfavorable exchange rate movements. For non-hedging purposes, the Fund may enter into contracts with the intent of changing the relative

28

Notes to Financial Statements - continued

exposure of the Fund's portfolio of securities to different currencies to take advantage of anticipated changes. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the contract settlement date.

Investment Transactions and Income - Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and original issue discount are amortized or accreted for financial statement and tax reporting purposes as required by federal income tax regulations. Dividend income is recorded on the ex-dividend date for dividends received in cash. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date.

Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on the Fund's average daily net assets. This fee is reduced according to an expense offset arrangement with State Street Bank, the dividend disbursing agent, which provides for partial reimbursement of custody fees based on a formula developed to measure the value of cash deposited by the Fund with the custodian and with the dividend disbursing agent. This amount is shown as a reduction of expenses on the Statement of Operations.

Tax Matters and Distributions - The Fund's policy is to comply with the provisions of the Internal Revenue Code (the Code) applicable to regulated investment companies and to distribute to shareholders all of its net income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is provided. The Fund files a tax return annually using tax accounting methods required under provisions of the Code which may differ from generally accepted accounting principles, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on these financial statements may differ from that reported on the Fund's tax return, and consequently, the character of distributions to shareholders reported in the financial highlights may differ from that reported to shareholders on Form 1099-DIV. Foreign taxes have been provided for on interest and dividend income earned on foreign investments in accordance with the applicable country's tax rates and to the extent unrecoverable are recorded as a reduction of investment income. Distributions to shareholders are recorded on the ex-dividend or ex-interest date.

The Fund distinguishes between distributions on a tax basis and a financial reporting basis and requires that only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary over-distributions for financial statement purposes, are classified as distributions in

29

Notes to Financial Statements - continued

excess of net investment income or accumulated net realized gains. During the year ended September 30, 1995, $3,045,179 was reclassified from accumulated undistributed net realized gain on investments to accumulated undistributed net investment income due to differences between book and tax accounting for government-backed securities and currency transactions. This change had no effect on the net assets or net asset value per share.

Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A, Class B, and Class C shares. The three classes of shares differ in their respective shareholder servicing agent, distribution and service fees. All shareholders bear the common expenses of the Fund pro rata based on the average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

(3) Transactions with Affiliates Investment Adviser - The Fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to provide overall investment advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an effective annual rate of 0.22% of average daily net assets and 3.09% of net investment income.

The Fund pays no compensation directly to its Trustees who are officers of the investment adviser, or to officers of the Fund, all of whom receive remuneration for their services to the Fund from MFS. Certain of the officers and Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan for all of its independent Trustees and Mr. Bailey. Included in Trustees' compensation is a net periodic pension expense of $27,090 for the year ended September 30, 1995.

Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received $862,946 for the year ended September 30, 1995, as its portion of the sales charge on sales of Class A shares of the Fund.

The Trustees have adopted separate distribution plans for Class A, Class B and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:

The Class A distribution plan provides that the Fund will pay MFD up to 0.35% per annum of its average daily net assets attributable to Class A shares in order that MFD may pay expenses on behalf of the Fund related to the distribution and servicing of its shares. These expenses include a service fee to each securities dealer that enters into a sales agreement with MFD of up to 0.25% per annum of the Fund's average daily net assets attributable to Class A shares which are attributable to that securities dealer, a distribution fee to MFD of up to 0.10% per annum of the Fund's average daily net assets attributable to Class A shares, commissions to

30

Notes to Financial Statements - continued

dealers and payments to MFD wholesalers for sales at or above a certain dollar level, and other such distribution-related expenses that are approved by the Fund. MFD retains the service fee for accounts not attributable to a securities dealer which amounted to $703,057 for the year ended September 30, 1995. MFD is waiving the 0.10% distribution fee for an indefinite period. Fees incurred under the distribution plan during the year ended September 30, 1995 were 0.25% of average daily net assets attributable to Class A shares on an annualized basis.

The Class B and Class C distribution plans provide that the Fund will pay MFD a distribution fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the Fund's average daily net assets attributable to Class B and Class C shares. MFD will pay to securities dealers that enter into a sales agreement with MFD all or a portion of the service fee attributable to Class B and Class C shares, and will pay to such securities dealers all of the distribution fee attributable to Class C shares. The service fee is intended to be additional consideration for services rendered by the dealer with respect to Class B and Class C shares. MFD retains the service fee for accounts not attributable to a securities dealer, which amounted to $97,899 and $535 for Class B and Class C shares, respectively, for the year ended September 30, 1995. Fees incurred under the distribution plans during the year ended September 30, 1995 were 1.00% of average daily net assets attributable to Class B and Class C shares on an annualized basis.

A contingent deferred sales charge is imposed on shareholder redemptions of Class A shares, on purchases of $1 million or more, in the event of a shareholder redemption within twelve months following the share purchase. A contingent deferred sales charge is imposed on shareholder redemptions of Class B shares in the event of a shareholder redemption within six years of purchase. MFD receives all contingent deferred sales charges.

Contingent deferred sales charges imposed during the year ended September 30, 1995 were $27,736 and $1,756,259 for Class A and Class B shares, respectively.

Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a fee for its services as shareholder servicing agent. The fee is calculated as a percentage of the average daily net assets of each class of shares at an effective annual rate of up to 0.15%, up to 0.22%, and up to 0.15% attributable to Class A, Class B, and Class C shares, respectively.

31

Notes to Financial Statements - continued

(4) Portfolio Securities Purchases and sales of investments, other than purchased option transactions and short-term obligations, were as follows:

                                                  Purchases           Sales
- --------------------------------------------------------------------------------
U.S. government securities                      $1,131,816,758    $1,213,055,715
                                                 =============     =============
Investments (non-U.S. government securities)    $1,875,901,630    $1,291,206,317
                                                 =============     =============

The cost and unrealized appreciation or depreciation in value of the investments owned by the Fund, as computed on a federal income tax basis, are as follows:

Aggregate cost                                                    $2,746,941,281
                                                                   =============
Gross unrealized appreciation                                     $  540,958,801
Gross unrealized depreciation                                         18,355,962
                                                                   -------------
  Net unrealized appreciation                                     $  522,602,839
                                                                   =============
(5) Shares of Beneficial Interest

The Fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in Fund shares were as follows:

Class A Shares           Year Ended September 30, 1995        Year Ended September 30, 1994
                       ---------------------------------   -----------------------------------
                          Shares             Amount            Shares              Amount
- -----------------------------------------------------------------------------------------------
Shares sold              27,571,191       $ 366,257,248       32,302,120        $ 426,179,879
Shares issued to
 shareholders in
 reinvestment of
 distributions            5,805,766          77,216,013        6,185,236           80,887,784
Shares reacquired       (23,436,000)       (309,567,243)     (17,636,558)        (231,605,258)
                        -------------     -------------      -------------      --------------
   Net increase           9,940,957       $ 133,906,018       20,850,798        $ 275,462,405
                        =============     =============      =============      ==============

Class B Shares           Year Ended September 30, 1995        Year Ended September 30, 1994
                       ---------------------------------   -----------------------------------
                            Shares              Amount           Shares               Amount
- -----------------------------------------------------------------------------------------------
Shares sold              17,488,663       $ 232,234,181       33,915,337        $ 447,401,529
Shares issued to
 shareholders in
 reinvestment of
 distributions            2,308,539          30,683,046        2,174,267           28,427,804
Shares reacquired       (16,113,302)       (214,915,122)      (9,135,051)        (119,551,014)
                        -------------     -------------      -------------      --------------
   Net increase           3,683,900       $  48,002,105       26,954,553        $ 356,278,319
                        =============     =============      =============      ==============

Class C Shares           Year Ended September 30, 1995        Year Ended September 30, 1994
                       ---------------------------------   -----------------------------------
                            Shares              Amount           Shares               Amount
- -----------------------------------------------------------------------------------------------
Shares sold               1,619,700       $  22,090,157          123,851        $   1,598,651
Shares issued to
 shareholders in
 reinvestment of
 distributions               20,825             285,948              178                2,294
Shares reacquired          (163,091)         (2,194,980)         (24,211)            (311,620)
                        -------------     -------------      -------------      --------------
   Net increase           1,477,434       $  20,181,125           99,818        $   1,289,325
                        =============     =============      =============      ==============

* For the period from commencement of offering of Class C shares, August 1, 1994 to September 30, 1994.

32

Notes to Financial Statements - continued

(6) Line of Credit The Fund entered into an agreement which enables it to participate with other funds managed by MFS in an unsecured line of credit with a bank which permits borrowings up to $350 million, collectively. Borrowings may be made to temporarily finance the repurchase of Fund shares. Interest is charged to each fund, based on its borrowings, at a rate equal to the bank's base rate. In addition, a commitment fee, based on the average daily unused portion of the line of credit, is allocated among the participating funds at the end of each quarter. The commitment fee allocated to the Fund for the year ended September 30, 1995 was $42,229.

(7) Financial Instruments The Fund regularly trades financial instruments with off-balance sheet risk in the normal course of its investing activities in order to manage exposure to market risks such as interest rates and foreign currency exchange rates. These financial instruments include written options, forward foreign currency exchange contracts and futures contracts. The notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. At September 30, 1995, the Fund did not hold any of these financial instruments.

(8) Restricted Securities The Fund may invest not more than 15% of its net assets in securities which are subject to legal or contractual restrictions on resale. At September 30, 1995, the Fund owned the following restricted securities (constituting 4.75% of net assets) which may not be publicly sold without registration under the Securities Act of 1933 (the 1933 Act). The Fund does not have the right to demand that such securities be registered. The value of these securities is determined by valuations supplied by a pricing service or brokers or, if not available, in good faith by or at the direction of the Trustees. Certain of these securities may be offered and sold to "qualified institutional buyers" under Rule 144A of the 1933 Act.

                                                                        Share/
Description                                Date of Acquisition      Par Amount      Cost          Value
- -----------------------------------------------------------------------------------------------------------
Aktiebolaget, 0s, 2002+                       5/12/92-5/13/92      18,100,000    $12,152,460   $13,653,509
Altera Corp., 5.75s, 2002+                            6/16/95       1,400,000      1,400,000     1,967,000
Cemex S.A., 4.25s, 1997+                              9/28/94       5,500,000      5,500,000     4,585,625
Ciba-Geigy Corp., 6.25s, 2016+               11/12/91-1/22/92       1,600,000      2,068,000     1,584,000
Cointel, 7%+                                  2/24/94-2/24/95         299,800     20,809,350    14,727,675
Den Danske Bank, 7.25s, 2005+                         6/14/95       5,000,000      4,995,550     5,022,350

+SEC Rule 144A restriction.

33

Notes to Financial Statements - continued

Restricted Securities -- continued

                                                                        Share/
Description                                Date of Acquisition      Par Amount     Cost           Value
- -----------------------------------------------------------------------------------------------------------
Financiera Energetica Nacional S.A.,
  6.625s, 1996+                               3/22/95-3/23/95       5,360,000   $ 5,209,062    $  5,319,800
Four Seasons Hotels, Inc., 9.125s,
  2000+                                               6/23/93       1,000,000       959,100         973,750
Grand Metropolitan, 6.5s, 2000+                       4/19/95       3,000,000     3,000,000       3,393,750
Hidroelectrica Alicura, 8.375s, 1999+                 4/08/95       6,244,000     5,849,829       5,619,600
Jet Equipment Trust, 10.91s, 2006+            4/07/95-4/18/95       7,488,695     7,941,794       8,443,204
Jet Equipment Trust, 9.71s, 2014+                     7/19/95       2,000,000     2,000,000       2,104,780
Jet Equipment Trust, 10.69s, 2015+                    4/07/95       1,250,000     1,250,000       1,398,275
Merrill Lynch Home Equity Loan, 91-1,
  "B", 9.3s, 2016                                    12/16/92       3,800,000     3,814,250       3,923,500
Merrill Lynch Mortgage Investors, Inc.,
  8.227s, 2021                                        6/22/94       4,000,000     2,772,500       3,024,640
National Semiconductor, 6.5s, 2002+                   9/22/95       2,000,000     2,000,000       2,000,000
Occidental Petroleum Corp., 7.75%+                    2/11/93         140,000     7,065,000       8,050,000
Ocensa, 9.35s, 2005+                                  6/21/95       3,500,000     3,500,000       3,517,500
Owens Corning Capital LLC, 6.5%+                      9/06/95          55,000     3,180,622       3,245,000
Owens Corning Fiberglass Corp., 9.9s,
  2015+                                               4/05/95       2,500,000     2,500,000       2,757,092
Petronas Malaysia, 6.875s, 2003+                      6/22/93       1,000,000     1,000,000       1,002,080
Qantas Airways Ltd., 7.5s, 2003+                      6/24/93       5,000,000     4,998,820       5,067,700
Roche Holdings, Inc., 0s, 2008+                       9/16/93      32,500,000    17,660,890      23,887,500
Roche Holdings, Inc., 0s, 2010+                       4/12/95      19,770,000     7,263,843       7,932,712
Salton Sea Funding Corp., 7.37s, 2005+                7/18/95       5,250,000     5,250,000       5,267,850
Salton Sea Funding Corp., 7.84s, 2010+                7/18/95       5,250,000     5,250,000       5,248,215
Sandoz, 2s, 2002+                                     9/28/95       2,240,000     1,818,208       1,818,208
Staples, Inc., 4.5s, 2000+                            9/12/95         500,000       500,000         521,250
Turner Broadcasting Systems, Inc., 0s,
  2007+                                      12/18/92-3/08/93       3,000,000     1,282,724       1,342,500
U.S. Filter Corp., 6s, 2005+                          9/13/95       2,000,000     2,000,000       2,202,500
Weirton Steel Corp., 10.75s, 2005+                    6/05/95       1,750,000     1,723,750       1,618,750
Williams Cos., Inc., 7%+                              4/03/95          58,000     2,900,000       3,994,750
                                                                                                -----------
                                                                                               $155,215,065
                                                                                                ===========

+SEC Rule 144A restriction.

34

Independent Auditors' Report

To the Trustees of MFS Series Trust V and Shareholders of MFS Total Return Fund:

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of MFS Total Return Fund (one of the series constituting MFS Series Trust V) as of September 30, 1995, the related statement of operations for the year then ended, the statement of changes in net assets for the years ended September 30, 1995 and 1994, and the financial highlights for each of the years in the ten-year period ended September 30, 1995. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at September 30, 1995 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of MFS Total Return Fund at September 30, 1995, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated periods in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
November 3, 1995 This report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

35

MFS Investment Opportunities

Mutual Funds

The MFS Family of Funds(R), shown on the facing page, falls into the eight general categories below. All offer full-time professional management, a diversified portfolio, and a wide array of shareholder services.

Stock funds seek growth of capital rather than income through investments in stocks.

Stock and bond funds seek current income and growth of capital through investments in both stocks and bonds.

Bond funds seek current income through investments in debt securities.

World funds seek stock, balanced, and bond fund objectives through investments in U.S. and foreign stocks and bonds.

Limited-maturity bond funds seek current income and preservation of capital through investments in debt securities with remaining maturities of five years or less.

National tax-free bond funds seek current income exempt from federal income tax through investments in debt securities issued by states and municipalities.(1)

State tax-free bond funds seek current income exempt from federal and state income taxes through investments in debt securities issued by a single state and its municipalities.(1)

Money market funds seek preservation of capital and current income through investments in short-term debt securities.(2)

To determine which MFS fund may be appropriate for you, please contact your financial adviser, who can help you relate these investment opportunities to your financial goals. If you prefer, you may call MFS Investor Information for literature(3) on MFS products and services: 1-800-637-2929, from 9 a.m. to 5 p.m. Eastern time any business day (leave a message anytime).

(1) A small portion of the income may be subject to federal, state and/or alternative minimum tax.

(2) Investments in money market funds are not issued or guaranteed by the U.S. government and there is no assurance that the fund will be able to maintain a stable net asset value.

(3) Including a prospectus containing more complete information including charges and expenses. Read the prospectus carefully before investing.

36

The MFS Family of Funds(R)
America's Oldest Mutual Fund Group

The members of the MFS Family of Funds are grouped below according to the types of securities in their portfolios. For free prospectuses containing more complete information, including the exchange privilege and all charges and expenses, please contact your financial adviser or call MFS at 1-800-637-2929 any business day from 9 a.m. to 5 p.m. Eastern time (or, leave a message any time). This material should be read carefully before investing or sending money.

Stock
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund MFS(R) Capital Growth Fund
MFS(R) Emerging Growth Fund
MFS(R) Gold & Natural Resources Fund
MFS(R) Growth Opportunities Fund
MFS(R) Managed Sectors Fund
MFS(R) OTC Fund
MFS(R) Research Fund
MFS(R) Value Fund

Stock and Bond
MFS(R) Total Return Fund
MFS(R) Utilities Fund

Bond
MFS(R) Bond Fund
MFS(R) Government Mortgage Fund
MFS(R) Government Securities Fund
MFS(R) High Income Fund
MFS(R) Intermediate Income Fund
MFS(R) Strategic Income Fund
(formerly MFS(R) Income & Opportunity Fund)

Limited Maturity Bond
MFS(R) Government Limited Maturity Fund
MFS(R) Limited Maturity Fund
MFS(R) Municipal Limited Maturity Fund

World
MFS(R) World Asset Allocation Fund
MFS(R) World Equity Fund
MFS(R) World Governments Fund
MFS(R) World Growth Fund
MFS(R) World Total Return Fund

National Tax-Free Bond
MFS(R) Municipal Bond Fund
MFS(R) Municipal High Income Fund
(closed to new investors)
MFS(R) Municipal Income Fund

State Tax-Free Bond
Alabama, Arkansas, California, Florida,
Georgia, Louisiana, Maryland, Massachusetts, Mississippi, New York, North Carolina,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia

Money Market
MFS(R) Cash Reserve Fund
MFS(R) Government Money Market Fund
MFS(R) Money Market Fund

PROSPECTUS

                                           February 1, 1996
MFS(R) RESEARCH                            Class A Shares of Beneficial Interest
FUND                                       Class B Shares of Beneficial Interest
(A member of the MFS Family of Funds(R))   Class C Shares of Beneficial Interest
- --------------------------------------------------------------------------------

                                                                           Page
                                                                           ----
 1. Expense Summary .................................................        2
 2. The Fund ........................................................        3
 3. Condensed Financial Information .................................        4
 4. Investment Objective and Policies ...............................        5
 5. Management of the Fund ..........................................        8
 6. Information Concerning Shares of the Fund .......................       10
        Purchases ...................................................       10
        Exchanges ...................................................       13
        Redemptions and Repurchases .................................       14
        Distribution Plans ..........................................       16
        Distributions ...............................................       18
        Tax Status ..................................................       18
        Net Asset Value .............................................       18
        Description of Shares, Voting Rights and Liabilities ........       19
        Performance Information .....................................       19
 7. Shareholder Services ............................................       19
    Appendix A ......................................................      A-1

 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.

MFS RESEARCH FUND
500 Boylston Street, Boston, Massachusetts 02116  (617) 954-5000

The investment objective of MFS Research Fund (the "Fund") is to provide long-term growth of capital and future income (see "Investment Objective and Policies"). The Fund is a diversified series of MFS Series Trust V (the "Trust"), an open-end investment company. The minimum initial investment is generally $1,000 per account (see "Purchases").

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

INVESTMENT PRODUCTS ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY, AND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY FINANCIAL

INSTITUTION. SHARES OF MUTUAL FUNDS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED, AND WILL FLUCTUATE IN VALUE. YOU MAY RECEIVE MORE OR LESS THAN YOU PAID WHEN YOU REDEEM YOUR SHARES.

This Prospectus sets forth concisely the information concerning the Trust and the Fund that a prospective investor ought to know before investing. The Trust, on behalf of the Fund, has filed with the Securities and Exchange Commission (the "SEC") a Statement of Additional Information (the "SAI"), dated February 1, 1996, as amended or supplemented from time to time, which contains more detailed information about the Trust and the Fund. The SAI is incorporated into this Prospectus by reference. See page 21 for a further description of the information set forth in the SAI. A copy of the SAI may be obtained without charge by contacting the Shareholder Servicing Agent (see back cover for address and phone number).

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


1.  EXPENSE SUMMARY

                                              CLASS A       CLASS B     CLASS C
                                              -------       -------     -------
SHAREHOLDER TRANSACTION EXPENSES:
    Maximum Initial Sales Charge
      Imposed on Purchases of Fund Shares
      (as a percentage of offering price)      5.75%        0.00%       0.00%
    Maximum Contingent Deferred Sales Charge
      (as a percentage of original purchase
      price or redemption proceeds, as
      applicable) .......................... See Below(1)   4.00%       0.00%
ANNUAL OPERATING EXPENSES OF THE FUND (AS A
  PERCENTAGE OF AVERAGE NET ASSETS):
    Management Fees ........................   0.41%        0.41%       0.41%
    Rule 12b-1 Fees ........................   0.35%(2)     1.00%(3)    1.00%(3)
    Other Expenses .........................   0.29%        0.37%       0.30%
                                               ----         ----         ----
    Total Operating Expenses ...............   1.05%        1.78%       1.71%
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(1) Purchases of $1 million or more are not subject to an initial sales charge; however, a Contingent Deferred Sales Charge ("CDSC") of 1% will be imposed on such purchases in the event of certain redemption transactions within 12 months following such purchases. See "Information Concerning Shares of the Fund -- Purchases" below.
(2) The Fund has adopted a Distribution Plan for its Class A shares in accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), which provides that it will pay distribution/ service fees aggregating up to (but not necessarily all of) 0.35% per annum of the average daily net assets attributable to the Class A shares. See "Information Concerning Shares of the Fund -- Distribution Plans" below. The 0.35% per annum distribution/service fee is reduced to 0.25% per annum for shares purchased prior to March 1, 1991. Distribution expenses paid under this Plan, together with the initial sales charge, may cause long-term shareholders to pay more than the maximum sales charge that would have been permissible if imposed entirely as an initial sales charge.
(3) The Fund has adopted separate Distribution Plans for its Class B and its Class C shares in accordance with Rule 12b-1 under the 1940 Act, which provide that it will pay distribution/service fees aggregating up to (but not necessarily all of) 1.00% per annum of the average daily net assets attributable to the Class B shares under the Class B Distribution Plan and the Class C shares under the Class C Distribution Plan. See "Information Concerning Shares of the Fund -- Distribution Plans". Distribution expenses paid under these Plans, together with any CDSC payable upon redemption of Class B shares, may cause long-term shareholders to pay more than the maximum sales charge that would have been permissible if imposed entirely as an initial sales charge.

EXAMPLE OF EXPENSES

An investor would pay the following dollar amounts of expenses on a $1,000 investment in the Fund, assuming (a) a 5% annual return and (b) redemption at the end of each of the time periods indicated (unless otherwise noted):

  PERIOD                      CLASS A            CLASS B               CLASS C
  ------                      -------   ----------------------------   -------
                                                        (1)
   1 year ..................   $ 68        $ 58         $ 18            $ 17
   3 years .................     89          86           56              54
   5 years .................    112         116           96              93
  10 years ..................   178         190(2)       190(2)          202

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(1) Assumes no redemption

(2) Class B shares convert to Class A shares approximately eight years after purchase; therefore, years nine and ten reflect Class A expenses.

The purpose of the expense table above is to assist investors in understanding the various costs and expenses that a shareholder of the Fund will bear directly or indirectly. More complete descriptions of the following Fund expenses are set forth in the following sections of the Prospectus: (i) varying sales charges on share purchases -- "Purchases"; (ii) varying CDSCs -- "Purchases"; (iii) management fees -- "Investment Adviser"; and (iv) Rule 12b- 1 (i.e., distribution plan) fees -- "Distribution Plans."

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

2. THE FUND The Fund is a diversified series of the Trust, an open-end management investment company, which was organized as a business trust under the laws of The Commonwealth of Massachusetts in 1984. The Trust presently consists of two series, each of which represents a portfolio with separate investment objectives and policies. Shares of the Fund are continuously sold to the public and the Fund then uses the proceeds to buy securities (stocks, bonds and other instruments) for its portfolio. Three classes of shares of the Fund currently are offered to the general public. Class A shares are offered at net asset value plus an initial sales charge (or a CDSC in the case of certain purchases of $1 million or more) and are subject to a Distribution Plan providing for an annual distribution fee and a service fee. Class B shares are offered at net asset value without an initial sales charge but are subject to a CDSC and a Distribution Plan providing for an annual distribution fee and service fee which are greater than the Class A annual distribution fee and service fee. Class B shares will convert to Class A shares approximately eight years after purchase. Class C shares are offered at net asset value without an initial sales charge or a CDSC but are subject to a Distribution Plan providing for an annual distribution fee and service fee which are equal to the Class B annual distribution fee and service fee. Class C shares do not convert to any other class of shares of the Fund.

The Trust's Board of Trustees provides broad supervision over the affairs of the Fund. MFS is the Fund's investment adviser. The Adviser is responsible for the management of the Fund's assets and the officers of the Trust are responsible for its operations. The Adviser manages the portfolio from day to day in accordance with the Fund's investment objective and policies. The selection of investments and the way they are managed depend on conditions and trends in the economy and the financial marketplaces. The Fund also offers to buy back (redeem) its shares from its shareholders at any time at net asset value, less any applicable CDSC.


3. CONDENSED FINANCIAL INFORMATION The following information has been audited for at least the latest five fiscal years of the Fund and should be read in conjunction with the financial statements included in the Fund's Annual Report to shareholders which are incorporated by reference into the SAI in reliance upon the report of the Fund's independent auditors given upon their authority, as experts in accounting and auditing. The Fund's current independent auditors are Deloitte & Touche LLP.

FINANCIAL HIGHLIGHTS

                                                                  YEAR ENDED SEPTEMBER 30,
                            ------------------------------------------------------------------------------------------------------
                             1995       1994       1993       1992       1991      1990        1989      1988      1987      1986
                            ------     ------     ------     ------     ------    ------      ------    ------    ------    ------
                            CLASS A
                            ------------------------------------------------------------------------------------------------------
PER SHARE DATA (FOR A SHARE
 OUTSTANDING THROUGHOUT
 EACH PERIOD):
Net asset value --
  beginning of period ....  $12.59     $14.47     $12.18     $11.84     $ 9.62    $11.49      $10.20    $12.54    $10.42    $10.36
                            ------     ------     ------     ------     ------    ------      ------    ------    ------    ------
Income from investment
 operations<F3> --
  Net investment
    income<F5> ...........  $ 0.08     $ 0.02     $ 0.11     $ 0.07     $ 0.27    $ 0.36      $ 0.39    $ 0.23    $ 0.19    $ 0.25
  Net realized and
    unrealized gain
    (loss) on
    investments ..........    2.99       1.01       3.15       1.27       2.21     (1.52)       2.30     (2.19)     4.43      2.50
                            ------     ------     ------     ------     ------    ------      ------    ------    ------    ------
      Total from
       investment
       operations ........  $ 3.07     $ 1.03     $ 3.26     $ 1.34     $ 2.48    $(1.16)     $ 2.69    $(1.96)   $ 4.62    $ 2.75
                            ------     ------     ------     ------     ------    ------      ------    ------    ------    ------
Less distributions declared
 to shareholders --
  From net investment
    income ...............  $(0.02)    $(0.03)    $(0.07)    $ --       $(0.26)   $(0.36)     $(0.39)   $(0.24)   $(0.19)   $(0.24)
  In excess of net
    realized gain on         --         (0.01)     --         --         --      --         --         --        --        --
  From net realized
    gain on investments ..   (0.03)     (2.87)     (0.90)     (1.00)     --        (0.35)<F1>  (1.01)    (0.14)    (2.31)    (2.45)
                            ------     ------     ------     ------     ------    ------      ------    ------    ------    ------
      Total distributions
        declared to
        shareholders .....  $(0.05)    $(2.91)    $(0.97)    $(1.00)    $(0.26)   $(0.71)     $(1.40)   $(0.38)   $(2.50)   $(2.69)
                            ------     ------     ------     ------     ------    ------      ------    ------    ------    ------
  Net asset value --
    end of period ........  $15.61     $12.59     $14.47     $12.18     $11.84    $ 9.62      $11.49    $10.20    $12.54    $10.42
                            ======     ======     ======     ======     ======    ======      ======    ======    ======    ======
Total return<F2> .........  24.49%      7.72%     28.27%     11.79%     25.87%  (12.73)%      26.91%  (15.60)%    44.80%    26.65%
RATIOS (TO AVERAGE NET
  ASSETS)/SUPPLEMENTAL
  DATA<F5>:
  Expenses<F4> ...........   0.95%      0.91%      0.90%      0.84%      0.95%     0.83%       0.88%     0.86%     0.73%     0.77%
  Net investmentincome       0.58%      0.14%      0.36%      0.59%      2.48%     3.21%       3.48%     2.36%     1.51%     1.88%
PORTFOLIO TURNOVER .......     94%        79%        93%        74%       177%       79%         99%      116%      101%      102%
NET ASSETS AT END OF
  PERIOD (000 OMITTED)    $507,784   $318,170   $294,019   $240,366   $231,316  $202,377    $251,857  $239,616  $321,050  $234,804
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<F1> For the year ended September 30, 1990, the per share distribution from paid-in capital was $0.0009.
<F2> Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to
     October 1, 1989). If the charge had been included, the results would have been lower.
<F3> Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.
<F4> For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
     indirectly.
<F5> The distributor did not impose its distribution fee for the periods indicated. If this fee had been incurred by the Fund,
     the net investment income per share and ratios would have been:

     Net investment
      income<F3> .........  $ 0.07     $ 0.01       --         --         --        --          --        --        --        --
                            ------     ------     ------     ------     ------    ------      ------    ------    ------    ------
     RATIOS (TO AVERAGE
       NET ASSETS):
       Expenses<F4> ......   1.05%      1.01%       --         --         --        --          --        --        --        --
       Net investment
         income ..........   0.48%      0.04%       --         --         --        --          --        --        --        --


FINANCIAL HIGHLIGHTS -- CONTINUED

                                                       YEAR ENDED SEPTEMBER 30,
                                           ----------------------------------------------------------
                                            1995         1994        1993<F2>      1995        1994<F3>
                                           ------       ------       ------       ------       ------
                                           CLASS B                                CLASS C
                                           ----------------------------------------------------------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD):
Net asset value -- beginning of period     $12.50       $14.47       $13.95       $12.51       $13.18
                                           ------       ------       ------       ------       ------
Income from investment operations<F5>
  Net investment income (loss)(S).....     $(0.03)      $(0.08)      $(0.04)      $(0.02)      $(0.04)
  Net realized and unrealized gain
    (loss) on investments and
    foreign currency transactions ....       2.96         1.00         0.56         2.96         0.62
                                           ------       ------       ------       ------       ------
      Total from investment operations     $ 2.93       $ 0.92       $ 0.52       $ 2.94       $ 0.58
                                           ------       ------       ------       ------       ------
Less distributions declared to shareholders --
  From net investment income .........     $  --<F1>    $(0.02)      $  --        $  --        $  --
  From net realized gain on investments     (0.03)       (2.87)         --         (0.03)       (1.25)
                                           ------       ------       ------       ------       ------
      Total distributions declared to
        shareholders .................     $(0.03)      $(2.89)         --        $(0.03)      $(1.25)
                                           ------       ------       ------       ------       ------
  Net asset value -- end of period ...     $15.40       $12.50       $14.47       $15.42       $12.51
                                           ======       ======       ======       ======       ======
Total return .........................     23.55%       6.91%        3.73%        23.58%        4.43%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
  Expenses<F6> .......................      1.78%       1.82%        2.33%<F4>     1.71%        1.74%<F4>
  Net investment income (loss) .......    (0.21)%     (0.65)%      (0.89)%<F4>   (0.15)%       (0.54%)<F4>
PORTFOLIO TURNOVER ...................        94%         79%          93%           94%          79%
NET ASSETS AT END OF PERIOD
  (000 OMITTED) ......................   $178,117     $25,672       $  447       $25,737       $4,821

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<F1> For the year ended September 30, 1995, the per share distribution from net investment income was $0.00003.
<F2> For the period from the commencement of offering of Class B shares, September 7, 1993, to September 30, 1993.
<F3> For the period from the commencement of offering of Class C shares, January 3, 1994, to September 30, 1994.
<F4> Annualized.
<F5> Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.
<F6> For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
     indirectly.


4. INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE -- The Fund's investment objective is to provide long-term growth of capital and future income. Any investment involves risk and there can be no assurance that the Fund will achieve its investment objective.

The portfolio securities of the Fund are selected by the investment research analysts in the Equity Research Group of the Adviser. The Fund's assets are allocated to industry groups (e.g., pharmaceuticals, retail and computer software). The allocation by industry group is determined by the analysts acting together as a group. Individual analysts are then responsible for selecting what they view as the securities best suited to meet the Fund's investment objective within their assigned industry group.

INVESTMENT POLICIES -- The Fund's policy is to invest a substantial proportion of its assets in the common stocks or securities convertible into common stocks of companies believed to possess better than average prospects for long-term growth. A smaller proportion of the assets may be invested in bonds, short-term obligations, preferred stocks or common stocks whose principal characteristic is income production rather than growth. Such securities may also offer opportunities for growth of capital as well as income. In the case of both growth stocks and income issues, emphasis is placed on the selection of progressive, well-managed companies. The Fund's debt investments, if any, may consist of "investment grade" securities (rated Baa or better by Moody's Investors Service, Inc. ("Moody's") or BBB or better by Standard and Poor's Ratings Group ("S&P") or Fitch Investors Service, Inc. ("Fitch")), and, with respect to no more than 10% of its net assets, securities in the lower rated categories (rated Ba or lower by Moody's or BB or lower by S&P or Fitch) or securities which the Adviser believes to be of similar quality to these lower rated securities (commonly known as "junk bonds"). For a description of bond ratings, see Appendix A to the SAI. It is not the Fund's policy to rely exclusively on ratings issued by established credit rating agencies but rather to supplement such ratings with the Adviser's own independent and ongoing review of credit quality. The Fund's achievement of its investment objective may be more dependent on the Adviser's own credit analysis than in the case of a fund investing in primarily higher quality bonds. From time to time, the Fund's management will exercise its judgment with respect to the proportions invested in growth stocks, income-producing securities or cash (including foreign currency) and cash equivalents depending on its view of their relative attractiveness.

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

LENDING OF SECURITIES: The Fund may make loans of its fixed income portfolio securities. Such loans will usually be made only to member banks of the Federal Reserve System and member firms (and subsidiaries thereof) of the New York Stock Exchange under contracts only if collateralized by U.S. Government securities, an irrevocable letter of credit or cash. The Fund will continue to collect the equivalent of interest on the securities loaned and will also receive compensation based on investment of cash collateral or a fee (if the collateral is U.S. Government securities). The Fund pays finder's and other fees in connection with securities loans.

RISKS OF INVESTING IN FOREIGN SECURITIES: The Fund may invest up to 20% (and generally expects to invest between 0% and 20%) of its total assets in foreign securities which are not traded on a U.S. exchange (not including American Depositary Receipts). Investing in securities of foreign issuers generally involves risks not ordinarily associated with investing in securities of domestic issuers. These include changes in currency rates, exchange control regulations, governmental administration or economic or monetary policy (in the United States or abroad) or circumstances in dealings between nations. Costs may be incurred in connection with conversions between various currencies. Special considerations may also include more limited information about foreign issuers, higher brokerage costs, different accounting standards and thinner trading markets. Foreign securities markets may also be less liquid, more volatile and less subject to government supervision than in the United States. Investments in foreign countries could be affected by other factors including expropriation, confiscatory taxation and potential difficulties in enforcing contractual obligations and could be subject to extended settlement periods. The Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date, based on anticipated changes in the relevant exchange rate. The Fund 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: The Fund may invest in American Depositary Receipts ("ADRs") which are certificates issued by a U.S. depository (usually a bank) and represent a specified quantity of shares of an underlying non-U.S. stock on deposit with a custodian bank as collateral. Because ADRs trade on United States securities exchanges, the Adviser does not treat them as foreign securities. However, they are subject to many of the risks of foreign securities (described above) such as changes in exchange rates and more limited information about foreign issuers.

EMERGING MARKET SECURITIES: Consistent with the Fund's investment objective and policies, the Fund 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 to have an emerging market economy, taking into account a number of factors, including whether the country has a low- to middle-income economy according to the International Bank for Reconstruction and Development, the country's foreign currency debt rating, its political and economic stability and the development of its financial and capital markets. The Adviser determines whether an issuer's principal activities are located in an emerging market country by considering such factors as its country of organization, the principal trading market for its securities and the source of its revenues and assets. The issuer's principal activities generally are deemed to be located in a particular country if: (a) the security is issued or guaranteed by the government of that country or any of its agencies, authorities or instrumentalities; (b) the issuer is organized under the laws of, and maintains a principal office in, that country; (c) the issuer has its principal securities trading market in that country; (d) the issuer derives 50% or more of its total revenues from goods sold or services performed in that country; or (e) the issuer has 50% of its assets in that country.

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

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

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

RISKS OF INVESTING IN LOWER RATED BONDS: As described above, the Fund may invest in fixed income (i.e., debt) securities rated Baa by Moody's or BBB by S&P and comparable unrated securities. These securities, while normally exhibiting adequate protection parameters, have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than in the case of higher grade fixed income securities.

The Fund may also invest in fixed income securities that are rated Ba or lower by Moody's or BB or lower by S&P or Fitch or comparable unrated securities ("junk bonds"). These securities are considered speculative and, while generally providing greater income than investments in higher rated securities, will involve greater risk of principal and income (including the possibility of default or bankruptcy of the issuers of such securities) and may involve greater volatility of price (especially during periods of economic uncertainty or change) than securities in the higher rating categories. However, since yields vary over time, no specific level of income can ever be assured. These lower rated high yielding fixed income securities generally tend to reflect economic changes as well as short-term corporate and industry developments to a greater extent than higher rated securities which react primarily to fluctuations in the general level of interest rates. These lower rated fixed income securities are also affected by changes in interest rates, the market's perception of their credit quality, and the outlook for economic growth. In the past, economic downturns or an increase in interest rates have, under certain circumstances, caused a higher incidence of default by the issuer of these securities and may do so in the future, especially in the case of highly leveraged issuers. During certain periods, the higher yields on the Fund's lower rated high yielding fixed income securities are paid primarily because of the increased risk of loss of principal and income, arising from such factors as the heightened possibility of default or bankruptcy of the issuers of such securities. Due to the fixed income payments of these securities, the Fund may continue to earn the same level of interest income while its net asset value declines due to portfolio losses, which could result in an increase in the Fund's yield despite the actual loss of principal. The market for these lower rated fixed income securities may be less liquid than the market for investment grade fixed income securities. Therefore, judgment may at times play a greater role in valuing these securities than in the case of investment grade fixed income securities.

RESTRICTED SECURITIES: The Fund may also purchase securities that are not registered under the Securities Act of 1933 ("1933 Act") ("restricted securities"), including those that can be offered and sold to "qualified institutional buyers" under Rule 144A under the 1933 Act ("Rule 144A securities"). The Trust's Board of Trustees determines, based upon a continuing review of the trading markets for a specific Rule 144A security, whether such security is liquid and thus not subject to the Fund's limitation on investing not more than 10% of its net assets in illiquid investments. The Board of Trustees has adopted guidelines and delegated to MFS the daily function of determining and monitoring the liquidity of Rule 144A securities. The Board, however, will retain sufficient oversight and be ultimately responsible for the determinations. The Board will carefully monitor the Fund's investments in Rule 144A securities, focusing on such important factors, among others, as valuation, liquidity and availability of information. This investment practice could have the effect of decreasing the level of liquidity in the Fund to the extent that qualified institutional buyers become for a time uninterested in purchasing Rule 144A securities held in the Fund's portfolio. Subject to the Fund's 10% limitation on investments in illiquid investments, and subject to the diversification requirements of the Internal Revenue Code of 1986, as amended (the "Code"), the Fund may also invest in restricted securities that may not be sold under Rule 144A, which presents certain risks. As a result, the Fund might not be able to sell these securities when the Adviser wishes to do so, or might have to sell them at less than fair value. In addition, market quotations are less readily available. Therefore, judgment may at times play a greater role in valuing these securities than in the case of unrestricted securities.

PORTFOLIO TRADING: The primary consideration in placing portfolio security transactions with broker-dealers for execution is to obtain, and maintain the availability of, execution at the most favorable prices and in the most effective manner possible. Consistent with the foregoing primary consideration, the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD") and such other policies as the Trustees may determine, the Adviser may consider sales of shares of the Fund and of other investment company clients of MFD as a factor in the selection of broker-dealers to execute the Fund's portfolio transactions. From time to time, the Adviser may direct certain portfolio transactions to broker-dealer firms which, in turn, have agreed to pay a portion of the Fund's operating expenses (e.g., fees charged by the custodian of the Fund's assets). For a further discussion of portfolio trading, see the SAI.

Since shares of the Fund represent an investment in securities with fluctuating market prices, shareholders should understand that the value of their shares will vary as the aggregate value of the Fund's portfolio securities increases or decreases. Moreover, any dividends the Fund pays will increase or decrease in relation to the income received from its investments.

The Fund does not intend to trade in securities for short-term profits. However, the Fund will trade whenever it believes that changes are appropriate.


The investment objective and policies described above are not fundamental and may be changed without shareholder approval. A change in the Fund's investment objective may result in the Fund having an investment objective different from the objective which the Shareholder considered appropriate at the time of investment in the Fund.

The SAI includes a discussion of other investment policies and a listing of specific investment restrictions which govern the Fund's investment policies. The specific investment restrictions listed in the SAI may be changed without approval of the shareholders of the Fund, unless indicated otherwise (see "Investment Restrictions" in the SAI). The Fund's investment limitations, policies and ratings standards are adhered to at the time of purchase or utilization of assets; a subsequent change in circumstances will not be considered to result in a violation of policy.

5. MANAGEMENT OF THE FUND INVESTMENT ADVISER -- The Adviser manages the Fund pursuant to an Investment Advisory Agreement, dated September 1, 1993 (the "Advisory Agreement"). The Adviser provides the Fund with overall investment advisory and administrative services, as well as general office facilities. The Fund is currently managed by a committee comprised of various equity research analysts employed by the Adviser. For these services and facilities, the Adviser receives a management fee, computed and paid monthly, fixed by a formula based upon a percentage of the Fund's average daily net assets plus a percentage of the Fund's gross income (i.e., income other than gains from the sale of securities) in each case on an annualized basis for the Fund's then current fiscal year. The applicable percentages are reduced as assets and income reach the following levels:

   ANNUAL RATE OF MANAGEMENT FEE            ANNUAL RATE OF MANAGEMENT FEE
  BASED ON AVERAGE DAILY NET ASSETS            BASED ON GROSS INCOME
- ---------------------------------------  ---------------------------------
0.40% of the first $100 million          5.0% of the first $2 million
0.32% of the next $400 million           4.0% of the next $8 million
0.288% of average daily net assets       3.6% of gross income in excess
  in excess of $500 million                of $10 million

For the fiscal year ended September 30, 1995, MFS received management fees of $1,910,078 (of which $1,588,228 was based on average daily net assets and $321,850 on gross income), equivalent, on an annualized basis, to 0.41% of the Fund's average daily net assets.

MFS also serves as investment adviser to each of the other funds in the MFS Family of Funds (the "MFS Funds"), to MFS(R) Municipal Income Trust, MFS Multimarket Income Trust, MFS Government Markets Income Trust, MFS Intermediate Income Trust, MFS Charter Income Trust, MFS Special Value Trust, MFS Institutional Trust, MFS Union Standard Trust, MFS Variable Insurance Trust, MFS/Sun Life Series Trust, Sun Growth Variable Annuity Fund, Inc. and seven variable accounts, each of which is a registered investment company established by Sun Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)") in connection with the sale of various fixed/variable annuity contracts. MFS and its wholly owned subsidiary, MFS Asset Management, Inc., also provide investment advice to substantial private clients.

MFS is America's oldest mutual fund organization. MFS and its predecessor organizations have a history of money management dating from 1924 and the founding of the first mutual fund in the United States, Massachusetts Investors Trust. Net assets under the management of the MFS organization were approximately $42.2 billion on behalf of over 1.8 million investor accounts as of December 31, 1995. MFS is a wholly owned subsidiary of Sun Life of Canada (U.S.) which in turn is a wholly owned subsidiary of Sun Life Assurance Company of Canada ("Sun Life"). The Directors of MFS are A. Keith Brodkin, Jeffrey L. Shames, John R. Gardner, John D. McNeil and Arnold D. Scott. Mr. Brodkin is the Chairman, Mr. Shames is the President and Mr. Scott is the Secretary and a Senior Executive Vice President of MFS. Messrs. McNeil and Gardner are the Chairman and the 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 also the Chairman, President and a Trustee of the Trust. W. Thomas London, Stephen E. Cavan, James O. Yost and James R. Bordewick, Jr., all of whom are officers of MFS, are also officers of the Trust.

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

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

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

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

6. INFORMATION CONCERNING SHARES OF THE FUND PURCHASES Shares of the Fund may be purchased at the public offering price through any dealer and other financial institutions ("dealers") having a selling agreement with MFD. Dealers may also charge their customers fees relating to investments in the Fund.

The Fund offers three classes of shares (Class A, B and C shares) which bear sales charges and distribution fees in different forms and amounts, as described below:

CLASS A SHARES: Class A shares are generally offered at net asset value plus an initial sales charge, but in certain cases are offered at net asset value without an initial sales charge but subject to a CDSC.

PURCHASES SUBJECT TO INITIAL SALES CHARGE. Class A shares are offered at net asset value plus an initial sales charge as follows:

                                    SALES CHARGE* AS
                                     PERCENTAGE OF:
                                ---------------------------     DEALER ALLOWANCE
                                                 NET AMOUNT     AS A PERCENTAGE
AMOUNT OF PURCHASE              OFFERING PRICE    INVESTED     OF OFFERING PRICE
- ------------------              --------------   ----------    -----------------
Less than $50,000 ................  5.75%           6.10%             5.00%
$50,000 but less than $100,000 ...  4.75            4.99              4.00
$100,000 but less than $250,000 ..  4.00            4.17              3.20
$250,000 but less than $500,000 ..  2.95            3.04              2.25
$500,000 but less than $1,000,000   2.20            2.25              1.70
$1,000,000 or more ............... None**           None**          See Below**
- ----------

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

MFD allows discounts to dealers (which are alike for all dealers) from the applicable public offering price, as shown in the above table. In the case of the maximum sales charge, the dealer retains 5% and MFD retains approximately 3/4 of 1% of the public offering price. The sales charge may vary depending on the number of shares of the Fund as well as certain other MFS Funds owned or being purchased, the existence of an agreement to purchase additional shares during a 13-month period (or 36-month period for purchases of $1 million or more) or other special purchase programs. A description of the Right of Accumulation, Letter of Intent and Group Purchase privileges by which the sales charge may be reduced is set forth in the SAI.

PURCHASES SUBJECT TO A CDSC (but not subject to an initial sales charge). In the following two circumstances, Class A shares are also offered at net asset value without an initial sales charge but subject to a CDSC, equal to 1% of the lesser of the value of the shares redeemed (exclusive of reinvested dividend and capital gain distributions) or the total cost of such shares, in the event of a share redemption within 12 months following the purchase:

(i) on investments of $1 million or more in Class A shares; and

(ii) on investments in Class A shares by certain retirement plans subject to the Employee Retirement Income Security Act of 1974, as amended, if the sponsoring organization demonstrates to the satisfaction of MFD that either
(a) the employer has at least 25 employees or (b) the aggregate purchases by the retirement plan of Class A shares of the MFS Funds will be in an amount of at least $250,000 within a reasonable period of time, as determined by MFD in its sole discretion.

In the case of such purchases, MFD will pay a commission to dealers as follows:
1% on sales up to $5 million, plus 0.25% on the amount in excess of $5 million. Purchases of $1 million or more for each shareholder account will be aggregated over a 12-month period (commencing from the date of the first such purchase) for purposes of determining the level of commissions to be paid during the period with respect to such account. In addition, with respect to sales to retirement plans under the second circumstance described above, MFD may pay a commission, on sales in excess of $5 million to certain retirement plans, of 1% to certain dealers which, at MFD's invitation, enter into an agreement with MFD in which the dealer agrees to return any commission paid to it on the sale (or on a pro rata portion thereof) if the shareholder redeems his or her shares within a period of time after purchase as specified by MFD.

See "Redemptions and Repurchases -- Contingent Deferred Sales Charge" for further discussion of the CDSC.

WAIVERS OF INITIAL SALES CHARGE AND CDSC. In certain circumstances, the initial sales charge imposed upon purchases of Class A shares and the CDSC imposed upon redemptions of Class A shares is waived. These circumstances are described in Appendix A to this Prospectus.

CLASS B SHARES: Class B shares are offered at net asset value without an initial sales charge but subject to a CDSC upon redemption as follows:

     YEAR OF                                              CONTINGENT
   REDEMPTION                                           DEFERRED SALES
 AFTER PURCHASE                                             CHARGE
 --------------                                         --------------
First ............................................            4%
Second ...........................................            4%
Third ............................................            3%
Fourth ...........................................            3%
Fifth ............................................            2%
Sixth ............................................            1%
Seventh and following ............................            0%

The CDSC imposed is assessed against the lesser of the value of the shares redeemed (exclusive of reinvested dividends and capital gain distributions) or the total cost of such shares. No CDSC is assessed against shares acquired through the automatic reinvestment of dividends or capital gain distributions.

MFD will pay commissions to dealers of 3.75% of the purchase price of Class B shares purchased through dealers. MFD will also advance to dealers the first year service fee payable under the Fund's Class B Distribution Plan (see "Distribution Plans" below) at a rate equal to 0.25% of the purchase price of such shares. Therefore, the total amount paid to a dealer upon the sale of Class B shares is 4% of the purchase price of the shares (commission rate of 3.75% plus a service fee equal to 0.25% of the purchase price).

See "Redemptions and Repurchases -- Contingent Deferred Sales Charge" for further discussion of the CDSC.

WAIVERS OF CDSC. In certain circumstances, the CDSC imposed upon redemption of Class B shares is waived. These circumstances are described in Appendix A to this Prospectus.

CONVERSION OF CLASS B SHARES. Class B shares of the Fund that remain outstanding for approximately eight years will convert to Class A shares of the Fund. Shares purchased through the reinvestment of distributions paid in respect of Class B shares will be treated as Class B shares for purposes of the payment of the distribution and service fees under the Distribution Plan applicable to Class B shares. See "Distribution Plans" below. However, for purposes of conversion to Class A shares, all shares in a shareholder's account that were purchased through the reinvestment of dividends and distributions paid in respect of Class B shares (and which have not converted to Class A shares as provided in the following sentence) will be held in a separate sub-account. Each time any Class B shares in the shareholder's account (other than those in the sub-account) convert to Class A shares, a portion of the Class B shares then in the sub-account will also convert to Class A shares. The portion will be determined by the ratio that the shareholder's Class B shares not acquired through reinvestment of dividends and distributions that are converting to Class A shares bear to the shareholder's total Class B shares not acquired through reinvestment. The conversion of Class B shares to Class A shares is subject to the continuing availability of a ruling from the Internal Revenue Service or an opinion of counsel that such conversion will not constitute a taxable event for federal tax purposes. There can be no assurance that such ruling or opinion will be available, and the conversion of Class B shares to Class A shares will not occur if such ruling or opinion is not available. In such event, Class B shares would continue to be subject to higher expenses than Class A shares for an indefinite period.

CLASS C SHARES: Class C shares are offered at net asset value without an initial sales charge or a CDSC. Class C shares do not convert to any other class of shares of the Fund. The maximum investment in Class C shares that may be made is $5,000,000 per transaction.

Class C shares are not currently available for purchase by any retirement plan qualified under Sections 401(a) or 403(b) of the Internal Revenue Code of 1986, as amended (the "Code"), if the retirement plan and/or the sponsoring organization subscribe to the MFS FUNDamental 401(k) Plan or another similar recordkeeping program made available by the Shareholder Servicing Agent.

GENERAL: The following information applies to purchases of all classes of the Fund's shares.

MINIMUM INVESTMENT. Except as described below, the minimum initial investment is $1,000 per account and the minimum additional investment is $50 per account. Accounts being established for monthly automatic investments and under payroll savings programs and tax-deferred retirement programs (other than IRAs) involving the submission of investments by means of group remittal statements are subject to a $50 minimum on initial and additional investments per account. The minimum initial investment for IRAs is $250 per account and the minimum additional investment is $50 per account. Accounts being established for participation in the Automatic Exchange Plan are subject to a $50 minimum on initial and additional investments per account. There are also other limited exceptions to these minimums for certain tax-deferred retirement programs. Any minimums may be changed at any time at the discretion of MFD. The Fund reserves the right to cease offering its shares at any time.

RIGHT TO REJECT PURCHASE ORDERS/MARKET TIMING. Purchases and exchanges should be made for investment purposes only. The Fund and MFD each reserve the right to reject any specific purchase order or to restrict purchases by a particular purchaser (or group of related purchasers). The Fund or MFD may reject or restrict any purchases by a particular purchaser or group, for example, when such purchase is contrary to the best interests of the Fund's other shareholders or otherwise would disrupt the management of the Fund.

MFD may enter into an agreement with shareholders who intend to make exchanges among certain classes of shares of certain MFS Funds (as determined by MFD) which follow a timing pattern, and with individuals or entities acting on such shareholders' behalf (collectively, "market timers"), setting forth the terms, procedures and restrictions with respect to such exchanges. In the absence of such an agreement, it is the policy of the Fund and MFD to reject or restrict purchases by market timers if (i) more than two exchange purchases are effected in a timed account in the same calendar quarter or (ii) a purchase would result in shares being held in timed accounts by market timers representing more than
(x) one percent of the Fund's net assets or (y) specified dollar amounts in the case of certain MFS Funds which may include the Fund and which may change from time to time. The Fund and MFD each reserve the right to request market timers to redeem their shares at net asset value, less any applicable CDSC, if either of these restrictions is violated.

DEALER CONCESSIONS. Dealers may receive different compensation with respect to sales of Class A, Class B and Class C shares. In addition, from time to time, MFD may pay dealers 100% of the applicable sales charge on sales of Class A shares of certain specified MFS Funds sold by such dealer during a specified sales period. In addition, MFD or its affiliates may, from time to time, pay dealers an additional commission equal to 0.50% of the net asset value of all of the Class B shares of certain specified MFS Funds sold by such dealer during a specified sales period. In addition, from time to time, MFD, at its expense, may provide additional commissions, compensation or promotional incentives ("concessions") to dealers which sell shares of the Fund. Such concessions provided by MFD may include financial assistance to dealers in connection with preapproved conferences or seminars, sales or training programs for invited registered representatives, payment for travel expenses, including lodging, incurred by registered representatives for such seminars or training programs, seminars for the public, advertising and sales campaigns regarding one or more MFS Funds, and/or other dealer-sponsored events. From time to time, MFD may make expense reimbursements for special training of a dealer's registered representatives in group meetings or to help pay the expenses of sales contests. Other concessions may be offered to the extent not prohibited by state laws or any self-regulatory agency, such as the NASD.

SPECIAL INVESTMENT PROGRAMS. For shareholders who elect to participate in certain investment programs (e.g., the Automatic Investment Plan) or other shareholder services, MFD or its affiliates may either (i) give a gift of nominal value, such as a hand-held calculator, or (ii) make a nominal charitable contribution on their behalf.

RESTRICTIONS ON ACTIVITIES OF NATIONAL BANKS. The Glass-Steagall Act prohibits national banks from engaging in the business of underwriting, selling or distributing securities. Although the scope of the prohibition has not been clearly defined, MFD believes that such Act should not preclude banks from entering into agency agreements with MFD. If, however, a bank were prohibited from so acting, the Trustees would consider what actions, if any, would be necessary to continue to provide efficient and effective shareholder services in respect of Shareholders who invested in the Fund through a national bank. It is not expected that shareholders would suffer any adverse financial consequence as a result of these occurrences. In addition, state securities laws on this issue may differ from the interpretation of federal law expressed herein and banks and financial institutions may be required to register as broker-dealers pursuant to state law.


A shareholder whose shares are held in the name of, or controlled by, a dealer might not receive many of the privileges and services from the Fund (such as Right of Accumulation, Letter of Intent and certain recordkeeping services) that the Fund ordinarily provides.

EXCHANGES
Subject to the requirements set forth below, some or all of the shares in an account with the Fund for which payment has been received by the Fund (i.e., an established account) may be exchanged for shares of the same class of any of the other MFS Funds at net asset value (if available for sale). In addition, Class C shares may be exchanged for shares of the MFS Money Market Fund at net asset value. Shares of one class may not be exchanged for shares of any other class.

EXCHANGES AMONG MFS FUNDS (EXCLUDING MFS MONEY MARKET FUNDS): No initial sales charges or CDSC will be imposed in connection with an exchange from shares of an MFS Fund to shares of any other MFS Fund, except with respect to exchanges from an MFS money market fund to another MFS Fund which is not an MFS money market fund (discussed below). With respect to an exchange involving shares subject to a CDSC, the CDSC will be unaffected by the exchange and the holding period for purposes of calculating the CDSC will carry over to the acquired shares.

EXCHANGES FROM AN MFS MONEY MARKET FUND: Special rules apply with respect to the imposition of an initial sales charge or a CDSC for exchanges from an MFS money market fund to another MFS Fund which is not an MFS money market fund. These rules are described under the caption "Exchanges" in the Prospectuses of those MFS money market funds.

EXCHANGES INVOLVING THE MFS FIXED FUND: Class A shares of any MFS Fund held by certain qualified retirement plans may be exchanged for units of participation of the MFS Fixed Fund (a bank collective investment fund) (the "Units"), and Units may be exchanged for Class A shares of any MFS Fund. With respect to exchanges between Class A shares subject to a CDSC and Units, the CDSC will carry over to the acquired shares or Units and will be deducted from the redemption proceeds when such shares or Units are subsequently redeemed, assuming the CDSC is then payable (the period during which the Class A shares and the Units were held will be aggregated for purposes of calculating the applicable CDSC). In the event that a shareholder initially purchases Units and then exchanges into Class A shares subject to an initial sales charge of an MFS Fund, the initial sales charge shall be due upon such exchange, but will not be imposed with respect to any subsequent exchanges between such Class A shares and Units with respect to shares on which the initial sales charge has already been paid. In the event that a shareholder initially purchases Units and then exchanges into Class A shares subject to a CDSC of an MFS Fund, the CDSC period will commence upon such exchange, and the applicability of the CDSC with respect to subsequent exchanges shall be governed by the rules set forth above in this paragraph.

GENERAL: Exchanges will be made only after instructions in writing or by telephone (an "Exchange Request") are received for an established account by the Shareholder Servicing Agent in proper form (i.e., if in writing -- signed by the record owner(s) exactly as the shares are registered; if by telephone -- proper account identification is given by the dealer or shareholder of record) and each exchange must involve either shares having an aggregate value of at least $1,000 ($50 in the case of retirement plan participants whose sponsoring organizations subscribe to the MFS FUNDamental 401(k) Plan or another similar 401(k) recordkeeping system made available by the Shareholder Servicing Agent) or all the shares in the account. If an Exchange Request is received by the Shareholder Servicing Agent on any business day prior to the close of regular trading on the New York Stock Exchange (generally, 4:00 p.m., Eastern time) (the "Exchange"), the exchange will occur on that day if all the requirements set forth above have been complied with at that time and subject to the Fund's right to reject purchase orders. No more than five exchanges may be made in any one Exchange Request by telephone. Additional information concerning this exchange privilege and prospectuses for any of the other MFS Funds may be obtained from dealers or the Shareholder Servicing Agent. A shareholder should read the prospectus of the other MFS Fund and consider the differences in objectives, policies and restrictions before making any exchange. For federal and (generally) state income tax purposes, an exchange is treated as a sale of the shares exchanged and, therefore, an exchange could result in a gain or loss to the shareholder making the exchange. Exchanges by telephone are automatically available to most non-retirement plan accounts and certain retirement plan accounts. For further information regarding exchanges by telephone, see "Redemptions by Telephone." The exchange privilege (or any aspect of it) may be changed or discontinued and is subject to certain limitations, including certain restrictions on purchases by market timers. Special procedures, privileges and restrictions with respect to exchanges may apply to market timers who enter into an agreement with MFD, as set forth in such agreement. See "Purchases -- General -- Right to Reject Purchase Orders/ Market Timing."

REDEMPTIONS AND REPURCHASES
A shareholder may withdraw all or any portion of the value of his account on any date on which the Fund is open for business by redeeming shares at their net asset value (a redemption) or by selling such shares to the Fund through a dealer (a repurchase). Certain redemptions and repurchases are, however, subject to a CDSC. See "Contingent Deferred Sales Charge" below. Because the net asset value of shares of the account fluctuates, redemptions or repurchases, which are taxable transactions, are likely to result in gains or losses to the shareholder. When a shareholder withdraws an amount from his account, the shareholder is deemed to have tendered for redemption a sufficient number of full and fractional shares in his account to cover the amount withdrawn. The proceeds of a redemption or repurchase will normally be available within seven days, except for shares purchased or received in exchange for shares purchased by check (including certified checks or cashier's checks). Payment of redemption proceeds may be delayed for up to 15 days from the purchase date in an effort to assure that such check has cleared.

REDEMPTION BY MAIL: Each shareholder may redeem all or any portion of the shares in his account by mailing or delivering to the Shareholder Servicing Agent (see back cover for address) a stock power with a written request for redemption or letter of instruction, together with his share certificates (if any were issued), all in "good order" for transfer. "Good order" generally means that the stock power, written request for redemption, letter of instruction or certificate must be endorsed by the record owner(s) exactly as the shares are registered and the signature(s) must be guaranteed in the manner set forth below under the caption "Signature Guarantee." In addition, in some cases "good order" will require the furnishing of additional documents. The Shareholder Servicing Agent may make certain de minimis exceptions to the above requirements for redemption. Within seven days after receipt of a redemption request in "good order" by the Shareholder Servicing Agent, the Fund will make payment in cash of the net asset value of the shares next determined after such redemption request was received, reduced by the amount of any applicable CDSC described above and the amount of any income tax required to be withheld, except during any period in which the right of redemption is suspended or date of payment is postponed because the Exchange is closed or trading on such Exchange is restricted or to the extent otherwise permitted by the 1940 Act if an emergency exists. See "Tax Status" below.

REDEMPTION BY TELEPHONE: Each shareholder may redeem an amount from his account by telephoning the Shareholder Servicing Agent toll-free at (800) 225- 2606. Shareholders wishing to avail themselves of this telephone redemption privilege must so elect on their Account Application, designate thereon a bank and account number to receive the proceeds of such redemption, and sign the Account Application Form with the signature(s) guaranteed in the manner set forth below under the caption "Signature Guarantee." The proceeds of such a redemption, reduced by the amount of any applicable CDSC and the amount of any income tax required to be withheld, are mailed by check to the designated account, without charge, if the redemption proceeds do not exceed $1,000, and are wired in federal funds to the designated account if the redemption proceeds exceed $1,000. If a telephone redemption request is received by the Shareholder Servicing Agent by the close of regular trading on the Exchange on any business day, shares will be redeemed at the closing net asset value of the Fund on that day. Subject to the conditions described in this section, proceeds of a redemption are normally mailed or wired on the next business day following the date of receipt of the order for redemption. The Shareholder Servicing Agent will not be responsible for any losses resulting from unauthorized telephone transactions if it follows reasonable procedures designed to verify the identity of the caller. The Shareholder Servicing Agent will request personal or other information from the caller, and will normally also record calls. Shareholders should verify the accuracy of confirmation statements immediately after their receipt.

REPURCHASE THROUGH A DEALER: If a shareholder desires to sell his shares through his dealer (a repurchase), the shareholder can place a repurchase order with his dealer, who may charge the shareholder a fee. IF THE DEALER RECEIVES THE SHAREHOLDER'S ORDER PRIOR TO THE CLOSE OF REGULAR TRADING ON THE EXCHANGE AND COMMUNICATES IT TO MFD BEFORE THE CLOSE OF BUSINESS ON THE SAME DAY, THE SHAREHOLDER WILL RECEIVE THE NET ASSET VALUE CALCULATED ON THAT DAY, REDUCED BY THE AMOUNT OF ANY APPLICABLE CDSC AND THE AMOUNT OF ANY INCOME TAX REQUIRED TO BE WITHHELD.

CONTINGENT DEFERRED SALES CHARGE: Investments in Class A or Class B shares ("Direct Purchases") will be subject to a CDSC for a period of 12 months (in the case of purchases of $1 million or more of Class A shares or purchases by certain retirement plans of Class A shares) or six years (in the case of purchases of Class B shares). Purchases of Class A shares made during a calendar month, regardless of when during the month the investment occurred, will age one month on the last day of the month and each subsequent month. Class B shares purchased on or after January 1, 1993 will be aggregated on a calendar month basis -- all transactions made during a calendar month, regardless of when during the month they have occurred, will age one year at the close of business on the last day of such month in the following calendar year and each subsequent year. For Class B shares of the Fund purchased prior to January 1, 1993, transactions will be aggregated on a calendar year basis -- all transactions made during a calendar year, regardless of when during the year they have occurred, will age one year at the close of business on December 31 of that year and each subsequent year.

At the time of a redemption, the amount by which the value of a shareholder's account for a particular class of shares represented by Direct Purchases exceeds the sum of the six calendar year aggregations (12 months in the case of purchases of $1 million or more of Class A shares or purchases by certain retirement plans of Class A shares) of Direct Purchases may be redeemed without charge ("Free Amount"). Moreover, no CDSC is ever assessed on additional shares acquired through the automatic reinvestment of dividends or capital gain distributions ("Reinvested Shares"). Therefore, at the time of redemption of a particular class, (i) any Free Amount is not subject to the CDSC and (ii) the amount of the redemption equal to the then-current value of Reinvested Shares is not subject to the CDSC, but (iii) any amount of the redemption in excess of the aggregate of the then-current value of Reinvested Shares and the Free Amount is subject to a CDSC. The CDSC will first be applied against the amount of Direct Purchases which will result in any such charge being imposed at the lowest possible rate. The CDSC to be imposed upon redemptions of shares will be calculated as set forth in "Purchases" above.

The applicability of a CDSC will be unaffected by exchanges or transfers of registration, except as described in Appendix A hereto.

GENERAL: The following information applies to redemptions and repurchases of all classes of the Fund's shares.

SIGNATURE GUARANTEE. In order to protect shareholders against fraud, the Fund requires, in certain instances as indicated above, that the shareholder's signature be guaranteed. In these cases the shareholder's signature must be guaranteed by an eligible bank, broker, dealer, credit union, national securities exchange, registered securities association, clearing agency or savings association. Signature guarantees shall be accepted in accordance with policies established by the Shareholder Servicing Agent.

REINSTATEMENT PRIVILEGE. Shareholders of the Fund who have redeemed their shares have a one-time right to reinvest the redemption proceeds in the same class of shares of any of the MFS Funds (if shares of such Fund are available for sale) at net asset value (with a credit for any CDSC paid) within 90 days of the redemption pursuant to the Reinstatement Privilege. If the shares credited for any CDSC paid are then redeemed within six years of the initial purchase in the case of Class B shares or within 12 months of the initial purchase for certain Class A share purchases, a CDSC will be imposed upon redemption. Such purchases under the Reinstatement Privilege are subject to all limitations in the SAI regarding this privilege.

IN-KIND DISTRIBUTIONS. Subject to compliance with applicable regulations, the Fund has reserved the right to pay the redemption or repurchase price of shares of the Fund, either totally or partially, by a distribution in-kind of securities (instead of cash) from the Fund's portfolio. The securities distributed in such a distribution would be valued at the same amount as that assigned to them in calculating the net asset value for the shares being sold. If a shareholder received a distribution in-kind, the shareholder could incur brokerage or transaction charges when converting the securities to cash.

INVOLUNTARY REDEMPTIONS/SMALL ACCOUNTS. Due to the relatively high cost of maintaining small accounts, the Fund reserves the right to redeem shares in any account for their then-current value if at any time the total investment in such account drops below $500 because of redemptions, except in the case of accounts being established for monthly automatic investments and certain payroll savings programs, Automatic Exchange Plan accounts and tax-deferred retirement plans, for which there is a lower minimum investment requirement. See "Purchases -- General -- Minimum Investment." Shareholders will be notified that the value of their account is less than the minimum investment requirement and allowed 60 days to make an additional investment before the redemption is processed.

DISTRIBUTION PLANS
The Trustees have adopted separate Distribution Plans for Class A, Class B and Class C shares pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Distribution Plans"), after having concluded that there is a reasonable likelihood that the Distribution Plans would benefit the Fund and its shareholders.

In certain circumstances, the fees described below have not yet been imposed or are being waived. These circumstances are described below under the heading "Current Level of Distribution and Service Fees."

FEATURES COMMON TO EACH DISTRIBUTION PLAN: The Distribution Plans have certain common features, as described below.

SERVICE FEES. Each Distribution Plan provides that the Fund may pay MFD a service fee of up to 0.25% of the average daily net assets attributable to the class of shares to which the Distribution Plan relates (i.e., Class A, Class B or Class C shares, as appropriate) (the "Designated Class") annually in order that MFD may pay expenses on behalf of the Fund relating to the servicing of shares of the Designated Class. The service fee is used by MFD to compensate dealers which enter into a sales agreement with MFD in consideration for all personal services and/or account maintenance services rendered by the dealer with respect to shares of the Designated Class owned by investors for whom such dealer is the dealer or holder of record. MFD may from time to time reduce the amount of the service fees paid for shares sold prior to a certain date. Service fees may be reduced for a dealer that is the holder or dealer of record for an investor who owns shares of the Fund having an aggregate net asset value at or above a certain dollar level. Dealers may from time to time be required to meet certain criteria in order to receive service fees. MFD or its affiliates are entitled to retain all service fees payable under each Distribution Plan for which there is no dealer of record or for which qualification standards have not been met as partial consideration for personal services and/or account maintenance services performed by MFD or its affiliates to shareholder accounts.

DISTRIBUTION FEES. Each Distribution Plan provides that the Fund may pay MFD a distribution fee based on the average daily net assets attributable to the Designated Class as partial consideration for distribution services performed and expenses incurred in the performance of MFD's obligations under its distribution agreement with the Fund. See "Management of the Fund -- Distributor" in the SAI. The amount of the distribution fee paid by the Fund with respect to each class differs under the Distribution Plans, as does the use by MFD of such distribution fees. Such amounts and uses are described below in the discussion of the separate Distribution Plans. While the amount of compensation received by MFD in the form of distribution fees during any year may be more or less than the expense incurred by MFD under its distribution agreement with the Fund, the Fund is not liable to MFD for any losses MFD may incur in performing services under its distribution agreement with the Fund.

OTHER COMMON FEATURES. Fees payable under each Distribution Plan are charged to, and therefore reduce, income allocated to shares of the Designated Class. The Distribution Plans have substantially identical provisions with respect to their operating policies and their initial approval, renewal, amendment and termination.

FEATURES UNIQUE TO EACH DISTRIBUTION PLAN: The Distribution Plans have certain features that are unique to each class of shares, as described below.

CLASS A DISTRIBUTION PLAN. Class A shares are generally offered pursuant to an initial sales charge, a substantial portion of which is paid to or retained by the dealer making the sale (the remainder of which is paid to MFD). See "Purchases -- Class A Shares" above. In addition to the initial sales charge, the dealer also generally receives the ongoing 0.25% per annum service fee, as discussed above.

The distribution fee paid to MFD under the Class A Distribution Plan is equal, on an annual basis, to 0.10% of the Fund's average daily net assets attributable to Class A shares. As noted above, MFD may use the distribution fee to cover distribution-related expenses incurred by it under its distribution agreement with the Fund, including commissions to dealers and payments to wholesalers employed by MFD (e.g., MFD pays commission to dealers with respect to purchases of $1 million or more of Class A shares which are sold at net asset value but which are subject to a 1% CDSC for one year after purchase). See "Purchases -- Class A Shares" above. In addition, to the extent that the aggregate service and distribution fees paid under the Class A Distribution Plan do not exceed 0.35% per annum of the average daily net assets of the Fund attributable to Class A shares, the Fund is permitted to pay such distribution-related expenses or other distribution-related expenses.

CLASS B DISTRIBUTION PLAN. Class B shares are offered at net asset value without an initial sales charge but subject to a CDSC. See "Purchases -- Class B Shares" above. MFD will advance to dealers the first year service fee described above at a rate equal to 0.25% of the purchase price of such shares and, as compensation therefore, MFD may retain the service fee paid by the Fund with respect to such shares for the first year after purchase. Dealers will become eligible to receive the ongoing 0.25% per annum service fee with respect to such shares commencing in the thirteenth month following purchase.

Under the Class B Distribution Plan, the Fund pays MFD a distribution fee equal, on an annual basis, to 0.75% of the Fund's average daily net assets attributable to Class B shares. As noted above, this distribution fee may be used by MFD to cover its distribution-related expenses under its distribution agreement with the Fund (including the 3.75% commission it pays to dealers upon purchase of Class B shares, as described under "Purchases -- Class B Shares" above).

CLASS C DISTRIBUTION PLAN. Class C shares are offered at net asset value without a sales charge or a CDSC. See "Purchases -- Class C shares" above. Unlike the case with respect to the sale of Class A and Class B shares, where the dealer retains a portion of the initial sales charge (Class A shares) or receives an up-front payment from MFD (Class B shares), a dealer who sells Class C shares does not receive any initial payment, but instead receives distribution and service fees equal, on an annual basis, to 1% of the Fund's average daily net assets attributable to Class C shares owned by investors for whom the dealer is the holder or dealer of record.

This ongoing 1% fee is comprised of the 0.25% per annum service fee paid to MFD under the Class C Distribution Plan (which MFD in turn pays to dealers), as discussed above, and a distribution fee paid to MFD (which MFD also in turn pays to dealers) under the Class C Distribution Plan equal, on an annual basis, to 0.75% of the Fund's average daily net assets attributable to Class C shares.

CURRENT LEVEL OF DISTRIBUTION AND SERVICE FEES: The Fund's Class A, Class B and Class C distribution and service fees for its current fiscal year are 0.35%, 1.00% and 1.00% per annum, respectively. The 0.35% per annum Class A distribution/service fee is reduced to 0.25% per annum for shares purchased prior to March 1, 1991.

DISTRIBUTIONS
The Fund intends to pay substantially all of its net investment income to its shareholders as dividends on an annual basis. The Fund may make one or more distributions during the calendar year to its shareholders from any long-term capital gains, and may also make one or more distributions during the calendar year to its shareholders from short-term capital gains. Shareholders may elect to receive dividends and capital gain distributions in either cash or additional shares of the same class with respect to which a distribution is made. See "Tax Status" and "Shareholder Services -- Distribution Options" below. Distributions paid by the Fund with respect to Class A shares will generally be greater than those paid with respect to Class B and Class C shares because expenses attributable to Class B and Class C shares will generally be higher.

TAX STATUS
The Fund is treated as an entity separate from the other series of the Trust for federal income tax purposes. In order to minimize the taxes the Fund would otherwise be required to pay, the Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Code, and to make distributions to its shareholders in accordance with the timing requirements imposed by the Code. It is expected that the Fund will not be required to pay entity level federal income or excise taxes, although foreign-source income received by the Fund may be subject to foreign withholding taxes.

Shareholders of the Fund normally will have to pay federal income taxes (and any state or local taxes) on the dividends and capital gain distributions they receive from the Fund, whether paid in cash or additional shares. A portion of the dividends received from the Fund (but none of the Fund's capital gain distributions) may qualify for the dividends received deduction for corporations. Shortly after the end of each calendar year, each shareholder will be sent a statement setting forth the federal income tax status of all dividends and distributions for that year, including the portion taxable as ordinary income, the portion taxable as long term capital gains, the portion, if any, representing a return of capital (which is free of current taxes but results in a basis reduction), and the amount, if any, of federal income tax withheld.

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

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

NET ASSET VALUE
The net asset value per share of each class of shares of the Fund is determined each day during which the Exchange is open for trading. This determination is made once each day as of the close of regular trading on the Exchange by deducting the amount of the liabilities attributable to the class from the value of the assets attributable to the class and dividing the difference by the number of shares of the class outstanding. Assets in the Fund's portfolio are valued on the basis of their market values as described in the SAI. The net asset value of each class of shares is effective for orders received by the dealer prior to its calculation and received by MFD prior to the close of that business day.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund, one of two series of the Trust, has three classes of shares entitled Class A, Class B and Class C 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 shares of that particular series. Shareholders are entitled to one vote for each share held and shares of each series would be entitled to vote separately to approve investment advisory agreements or changes in investment restrictions, but shares of all series would vote together in the election of Trustees or ratification of selection of accountants. Additionally, each class of shares of a series will vote separately on any material increases in the fees under its Distribution Plan or on any other matter that affects solely its class of shares, but will otherwise vote together with all other classes of shares of the series on all other matters. The Trust does not intend to hold annual shareholder meetings. The Declaration of Trust provides that a Trustee may be removed from office in certain instances (see "Description of Shares, Voting Rights and Liabilities" in the SAI).

Each share of a class of the Fund represents an equal proportionate interest in the Fund with each other class share, subject to the liabilities of the particular class. Shares have no pre-emptive or conversion rights (except as described above in "Purchases -- Conversion of Class B Shares"). Shares are fully paid and non-assessable. Should the Fund be liquidated, shareholders of each class are entitled to share pro rata in the net assets attributable to that class available for distribution to shareholders. Shares will remain on deposit with the Shareholder Servicing Agent and certificates will not be issued except in connection with pledges and assignments and in certain other limited circumstances.

The Trust is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance (e.g., fidelity bonding and errors and omissions insurance) exists and the Trust itself is unable to meet its obligations.

PERFORMANCE INFORMATION
From time to time, the Fund will provide total rate of return quotations for each class of shares and may also quote fund rankings in the relevant fund category from various sources, such as the Lipper Analytical Services, Inc. and Wiesenberger Investment Companies Service. Total rate of return quotations reflect the average annual percentage change over stated periods in the value of an investment in a class of shares of the Fund made at the maximum public offering price of the shares of that class with all distributions reinvested and which, if quoted for periods of six years or less, will give effect to the imposition of the CDSC assessed upon redemptions of the Fund's Class B shares. Such total rate of return quotations may be accompanied by quotations which do not reflect the reduction in value of the initial investment due to the sales charge, or the deduction of a CDSC, and which will thus be higher. The Fund's total rate of return quotations are based on historical performance and are not intended to indicate future performance. Total rate of return reflects all components of investment return over a stated period of time. The Fund's quotations may from time to time be used in advertisements, shareholder reports or other communications to shareholders. For a discussion of the manner in which the Fund will calculate its total rate of return, see the SAI. For further information about the Fund's performance for the fiscal year ended September 30, 1995, please see the Fund's Annual Report. A copy of the Annual Report may be obtained without charge by contacting the Shareholder Servicing Agent (see back cover for address and phone number). In addition to information provided in shareholder reports, the Fund may, in its discretion, from time to time, make a list of all or a portion of its holdings available to investors upon request.

7. SHAREHOLDER SERVICES Shareholders with questions concerning the shareholder services described below or concerning other aspects of the Fund, should contact their investment dealer or the Shareholder Servicing Agent (see back cover for address and phone number).

ACCOUNT AND CONFIRMATION STATEMENTS -- Each shareholder will receive confirmation statements showing the transaction activity in his account. At the end of each calendar year, each shareholder will receive income tax information regarding reportable dividends and capital gain distributions for that year (see "Tax Status").

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

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

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

-- Dividends and capital gain distributions in cash.

Reinvestments (net of any tax withholding) will be made in additional full and fractional shares of the same class of shares at the net asset value in effect at the close of business on the record date. Checks for dividends and capital gain distributions in amounts less than $10 will automatically be reinvested in additional shares of the Fund. If a shareholder has elected to receive dividends and/or capital gain distributions in cash and the postal or other delivery service is unable to deliver checks to the shareholder's address of record, such shareholder's distribution option will automatically be converted to having all dividends and other distributions reinvested in additional shares. Any request to change a distribution option must be received by the Shareholder Servicing Agent by the record date for a dividend or distribution in order to be effective for that dividend or distribution. No interest will accrue on amounts represented by uncashed distribution or redemption checks.

INVESTMENT AND WITHDRAWAL PROGRAMS
For the convenience of shareholders, the Fund makes available the following programs designed to enable shareholders to add to their investment in an account with the Fund or withdraw from it with a minimum of paper work. The programs involve no extra charge to shareholders (other than a sales charge in the case of certain Class A share purchases) and may be changed or discontinued at any time by a shareholder or the Fund.

LETTER OF INTENT -- If a shareholder (other than a group purchaser as described in the SAI) anticipates purchasing $50,000 or more of Class A shares of the Fund alone or in combination with shares of Class B or Class C of the Fund or any of the classes of other MFS Funds or MFS Fixed Fund (a bank collective trust) within a 13-month period (or 36-month period for purchases of $1 million or more), the shareholder may obtain such shares of the Fund at the same reduced sales charge as though the total quantity were invested in one lump sum, subject to escrow agreements and the appointment of an attorney for redemptions from the escrow amount if the intended purchases are not completed, by completing the Letter of Intent section of the Account Application.

RIGHT OF ACCUMULATION -- A shareholder qualifies for cumulative quantity discounts on purchases of Class A shares when his new investment, together with the current offering price value of all holdings of all classes of shares of that shareholder in the MFS Funds or MFS Fixed Fund (a bank collective trust), reaches a discount level.

DISTRIBUTION INVESTMENT PROGRAM -- Shares of a particular class of the Fund may be sold at net asset value (and without any applicable CDSC) through the automatic reinvestment of dividend and capital gain distributions from the same class of another MFS Fund. Furthermore, distributions made by the Fund may be automatically invested at net asset value in shares of the same class of another MFS Fund, if shares of such Fund are available for sale (without a sales charge and not subject to any applicable CDSC).

SYSTEMATIC WITHDRAWAL PLAN -- A shareholder may direct the Shareholder Servicing Agent to send him (or anyone he designates) regular periodic payments based upon the value of his account. Each payment under a Systematic Withdrawal Plan (a "SWP") must be at least $100, except in certain limited circumstances. The aggregate withdrawals of Class B shares in any year pursuant to a SWP will not be subject to a CDSC and are generally limited to 10% of the value of the account at the time of the establishment of the SWP. The CDSC will not be waived in the case of SWP redemptions of Class A shares which are subject to a CDSC.

DOLLAR COST AVERAGING PROGRAMS --

AUTOMATIC INVESTMENT PLAN: Cash investments of $50 or more may be made through a shareholder's checking account twice monthly, monthly or quarterly. Required forms are available from the Shareholder Servicing Agent or investment dealers.

AUTOMATIC EXCHANGE PLAN: Shareholders having account balances of at least $5,000 in any MFS Fund may exchange their shares for shares of the same class of shares of other MFS Funds (and, in the case of Class C shares, for shares of MFS Money Market Fund) under the Automatic Exchange Plan, a dollar cost averaging program. The Automatic Exchange Plan provides for automatic exchanges of funds from the shareholder's account in an MFS Fund for investment in the same class of shares of other MFS Funds selected by the shareholder if such fund is available for sale. Under the Automatic Exchange Plan, exchanges of at least $50 each may be made to up to four different funds. A shareholder should consider the objectives and policies of a fund and review its prospectus before electing to exchange money into such fund through the Automatic Exchange Plan. No transaction fee is imposed in connection with exchange transactions under the Automatic Exchange Plan. However, exchanges of shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund will be subject to any applicable sales charge. For federal and (generally) state income tax purposes, a transfer is treated as a sale of the shares exchanged and, therefore, could result in a capital gain or loss to the shareholder making the exchange. See the SAI for further information concerning the Automatic Exchange Plan. Investors should consult their tax advisers for information regarding the potential capital gain and loss consequences of transactions under the Automatic Exchange Plan.

Because a dollar cost averaging program involves periodic purchases of shares regardless of fluctuating share offering prices, a shareholder should consider his financial ability to continue his purchases through periods of low price levels. Maintaining a dollar cost averaging program concurrently with a withdrawal program could be disadvantageous because of the sales charges included in share purchases in the case of Class A shares, and because of the assessment of the CDSC for certain share redemptions in the case of Class A shares which are subject to a CDSC.

TAX-DEFERRED RETIREMENT PLANS -- Except as noted under "Purchases -- Class C Shares," shares of the Fund may be purchased by all types of tax-deferred retirement plans, including IRAs, SEP-IRA plans, 401(k) plans, 403(b) plans and other corporate pension and profit-sharing plans. Investors should consult with their tax advisers before establishing any of the tax-deferred retirement plans described above.


The Fund's SAI dated February 1, 1996, contains more detailed information about the Fund, including, but not limited to, information related to (i) investment objective, policies and restrictions, (ii) Trustees, officers and investment adviser, (iii) portfolio transactions and brokerage commissions, (iv) the Distribution Plans and (v) various services and privileges provided for the benefit of its shareholders, including additional information with respect to the exchange privilege.


APPENDIX A

WAIVERS OF SALES CHARGES

This Appendix sets forth the various circumstances in which all applicable sales charges are waived (Section I), the initial sales charge and the contingent deferred sales charge ("CDSC") for Class A shares is waived (Section II), and the CDSC for Class B shares is waived (Section III).

I. WAIVERS OF ALL APPLICABLE SALES CHARGES

In the following circumstances, the initial sales charge imposed on purchases of Class A shares and the CDSC imposed on certain redemptions of Class A shares and on redemptions of Class B shares, as applicable, is waived:

1. DIVIDEND REINVESTMENT

* Shares acquired through dividend or capital gain reinvestment; and

* Shares acquired by automatic reinvestment of distributions of dividends and capital gains of any MFS Fund pursuant to the Distribution Investment Program.

2. CERTAIN ACQUISITIONS/LIQUIDATIONS

* Shares acquired on account of the acquisition or liquidation of assets of other investment companies or personal holding companies.

3. AFFILIATES OF AN MFS FUND/CERTAIN DEALERS. Shares acquired by:

* Officers, eligible directors, employees (including retired employees) and agents of MFS, Sun Life or any of their subsidiary companies;

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

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

* Employees or registered representatives of dealers and other financial institution ("dealers") which have a sales agreement with MFD;

* Certain family members of any such individual and their spouses identified above and certain trusts, pension, profit-sharing or other retirement plans for the sole benefit of such persons, provided the shares are not resold except to an MFS Fund; and

* Institutional Clients of MFS or AMI.

4. INVOLUNTARY REDEMPTIONS (CDSC WAIVER ONLY)

* Shares redeemed at an MFS Fund's direction due to the small size of a shareholder's account. See "Redemptions and Repurchases -- General -- Involuntary Redemptions/Small Accounts" in the Prospectus.

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

INDIVIDUAL RETIREMENT ACCOUNTS ("IRA'S")

* Death or disability of the IRA owner.

SECTION 401(A) PLANS ("401(A) PLANS") AND SECTION 403(B) EMPLOYER SPONSORED PLANS ("ESP PLANS")

* Death, disability or retirement of Plan participant;

* Loan from Plan (repayment of loans, however, will constitute new sales for purposes of assessing sales charges);

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

* Termination of employment of Plan participant (excluding, however, a partial or other termination of the Plan);

* Tax-free return of excess Plan contributions;

* To the extent that redemption proceeds are used to pay expenses (or certain participant expenses) of the Plan (e.g., participant account fees), provided that the Plan sponsor subscribes to the MFS FUNDamental 401(k) Plan or another similar recordkeeping system made available by the Shareholder Servicing Agent; and

* Distributions from a Plan that has invested its assets in one or more of the MFS Funds for more than 10 years from the later to occur of:
(i) January 1, 1993 or (ii) the date such Plan first invests its assets in one or more of the MFS Funds. The sales charges will be waived in the case of a redemption of all of the Plan's shares in all MFS Funds (i.e., all the assets of the Plan invested in the MFS Funds are withdrawn), unless immediately prior to the redemption, the aggregate amount invested by the Plan in shares of the MFS Funds (excluding the reinvestment of distributions) during the prior four years equals 50% or more of the total value of the Plan's assets in the MFS Funds, in which case the sales charges will not be waived.

SECTION 403(B) SALARY REDUCTION ONLY PLANS ("SRO PLANS")

* Death or disability of Plan participant.

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

* To an IRA rollover account where any sales charges with respect to the shares being reregistered would have been waived had they been redeemed; and

* From a single account maintained for a 401(a) Plan to multiple accounts maintained by the Shareholder Servicing Agent on behalf of individual participants of such Plan, provided that the Plan sponsor subscribes to the MFS FUNDamental 401(k) Plan or another similar recordkeeping system made available by the Shareholder Servicing Agent.

II. WAIVERS OF CLASS A SALES CHARGES

In addition to the waivers set forth in Section I above, in the following circumstances the initial sales charge imposed on purchases of Class A shares and the contingent deferred sales charge imposed on certain redemptions of Class A shares is waived:

1. INVESTMENT OF REDEMPTION PROCEEDS FROM UNAFFILIATED MUTUAL FUNDS

* Shares acquired through the investment of redemption proceeds from another open-end management investment company not distributed or managed by MFD or its affiliates if: (i) the investment is made through a dealer and appropriate documentation is submitted to MFD;
(ii) the redeemed shares were subject to an initial sales charge or deferred sales charge (whether or not actually imposed); (iii) the redemption occurred no more than 90 days prior to the purchase of Class A shares; and (iv) the MFS Fund, MFD or its affiliates have not agreed with such company or its affiliates, formally or informally, to waive sales charges on Class A shares or provide any other incentive with respect to such redemption and sale.

2. WRAP ACCOUNT INVESTMENTS

* Shares acquired by investments through certain dealers which have entered into an agreement with MFD which includes a requirement that such shares be sold for the sole benefit of clients participating in a "wrap" account or a similar program under which such clients pay a fee to such dealer.

3. INVESTMENT BY INSURANCE COMPANY SEPARATE ACCOUNTS

* Shares acquired by insurance company separate accounts.

4. RETIREMENT PLANS

ADMINISTRATIVE SERVICES ARRANGEMENTS

* Shares acquired by retirement plans whose third party administrators, or dealers have entered into an administrative services agreement with MFD or one of its affiliates to perform certain administrative services, subject to certain operational and minimum size requirements specified from time to time by MFD or one or more of its affiliates.

REINVESTMENT OF DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS

* Shares acquired through the automatic reinvestment in Class A shares of Class A or Class B distributions which constitute required withdrawals from qualified retirement plans.

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

IRA'S

* Distributions made on or after the IRA owner has attained the age of 59 1/2 years old; and

* Tax-free returns of excess IRA contributions.

401(A) PLANS

* Distributions made on or after the Plan participant has attained the age of 59 1/2 years old; and

* Certain involuntary redemptions and redemptions in connection with certain automatic withdrawals from a Plan.

ESP PLANS AND SRO PLANS

* Distributions made on or after the Plan participant has attained the age of 59 1/2 years old.

III. WAIVERS OF CLASS B SALES CHARGES

In addition to the waivers set forth in Section I above, in the following circumstances the CDSC imposed on redemptions of Class B shares is waived:

1. SYSTEMATIC WITHDRAWAL PLAN

* Systematic Withdrawal Plan redemptions with respect to up to 10% per year of the account value at the time of establishment.

2. DEATH OF OWNER

* Shares redeemed on account of the death of the account owner if the shares are held solely in the deceased individual's name or in a living trust for the benefit of the deceased individual.

3. DISABILITY OF OWNER

* Shares redeemed on account of the disability of the account owner if shares are held either solely or jointly in the disabled individual's name or in a living trust for the benefit of the disabled individual (in which case a disability certification form is required to be submitted to the Shareholder Servicing Agent.).

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

IRA'S, 401(A) PLANS, ESP PLANS AND SRO PLANS

* Distributions made on or after the IRA owner or the Plan participant, as applicable, has attained the age of 70 1/2 years old, but only with respect to the minimum distribution under applicable Internal Revenue Code ("Code") rules.

SAR-SEP PLANS

* Distributions made on or after the SAR-SEP Plan participant has attained the age of 70 1/2 years old, but only with respect to the minimum distribution under applicable Code rules;

* Death or disability of a SAR-SEP Plan participant.


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

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

Custodian
Investors Bank and Trust Company
89 South Street
Boston, MA 02110

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

Shareholder Servicing Agent
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116
Toll-free: (800) 225-2606

Mailing Address:
P.O. Box 2281
Boston, MA 02107-9906

Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA02110

[LOGO] M F S (R)
THE FIRST NAME IN MUTUAL FUNDS

MFS(R) RESEARCH FUND
500 Boylston Street
Boston, MA 02116

[LOGO] M F S (R)
THE FIRST NAME IN MUTUAL FUNDS

MFS(R) RESEARCH FUND
Prospectus
February 1, 1996

MFR-1 2/96/321M 14/214/314


[LOGO]
THE FIRST NAME IN MUTUAL FUNDS

MFS(R) RESEARCH                                          STATEMENT OF
FUND                                                     ADDITIONAL INFORMATION


(A member of the MFS Family of Funds(R))                    February 1, 1996

- --------------------------------------------------------------------------------
                                                                            Page
                                                                            ----
 1.  Definitions .........................................................     2
 2.  The Fund ............................................................     2
 3.  Investment Objective, Policies and Restrictions .....................     2
 4.  Management of the Fund ..............................................     4
        Trustees .........................................................     4
        Officers .........................................................     5
        Investment Adviser ...............................................     5
        Custodian ........................................................     6
        Shareholder Servicing Agent ......................................     6
        Distributor ......................................................     6
 5.  Portfolio Transactions and Brokerage Commissions ....................     7
 6.  Shareholder Services ................................................     8
        Investment and Withdrawal Programs ...............................     8
        Exchange Privilege ...............................................    10
        Tax-Deferred Retirement Plans ....................................    11
 7.  Tax Status ..........................................................    11
 8.  Determination of Net Asset Value and Performance ....................    12
 9.  Distribution Plans ..................................................    14
10.  Description of Shares, Voting Rights and Liabilities ................    15

11.  Independent Auditors and Financial Statements .......................    15
     Appendix A ..........................................................   A-1
     Appendix B ..........................................................   B-1

MFS RESEARCH FUND

A Series of MFS Series Trust V
500 Boylston Street, Boston, Massachusetts 02116
(617) 954-5000

This Statement of Additional Information (the "SAI") sets forth information which may be of interest to investors but which is not necessarily included in the Fund's Prospectus, dated February 1, 1996. This SAI should be read in conjunction with the Prospectus, a copy of which may be obtained without charge by contacting the Shareholder Servicing Agent (see last page for address and phone number).

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


1. DEFINITIONS

"Fund"                        -- MFS Research Fund, a series of MFS
                                 Series Trust V, a Massachusetts
                                 business trust (the "Trust"). The
                                 Trust was known as Massachusetts
                                 Financial Total Return Trust until
                                 August 3, 1992 and as MFS Total
                                 Return Fund until August 23, 1993.
                                 The Fund reorganized as a series of
                                 the Trust on September 7, 1993.

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

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


"Prospectus"                  -- The Prospectus of the Fund, dated
                                 February 1, 1996, as amended and
                                 supplemented from time to time.

2. THE FUND The Fund was known as "Massachusetts Financial Development Fund" until its name was changed as of February 1, 1992. The predecessor of the Fund -- Massachusetts Financial Development Fund, Inc. (the "Corporation") -- was incorporated under the laws of The Commonwealth of Massachusetts in 1970. The Fund was reorganized as a separate Massachusetts business trust on January 29, 1985, pursuant to an Agreement and Plan of Reorganization, dated January 15, 1985. The Fund reorganized as a series of the Trust on September 7, 1993. All references in this SAI to the Fund's past activities are intended to include those of the Corporation, unless the context indicates otherwise.

3. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS INVESTMENT OBJECTIVE. The Fund's investment objective is to provide long-term growth of capital and future income. Any investment involves risk and there can be no assurance that the Fund will achieve its investment objective.

INVESTMENT POLICIES. The Prospectus contains a discussion of the Fund's policies with respect to investments in various types of securities, including repurchase agreements, and the risks involved in such investments. Some of these policies are further described below.

SECURITIES LENDING: The Fund may seek to increase its income by lending portfolio securities. Such loans will usually be made only to member banks of the Federal Reserve System and to member firms (and subsidiaries thereof) of the New York Stock Exchange and would be required to be secured continuously by collateral in cash, U.S. Government securities 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. The Fund would have the right to call a loan and obtain the securities loaned at any time on customary industry settlement notice (which usually will not exceed five days). During the existence of a loan, the Fund would continue to receive the equivalent of the interest or dividends paid by the issuer on the securities loaned and would also receive compensation based on investment of cash collateral. The Fund would not, however, have the right to vote any securities having voting rights during the existence of the loan, but would call the loan in anticipation of an important vote to be taken among holders of the securities or of the giving or withholding of their consent on a material matter affecting the investment. As with other extensions of credit there are risks of delay in recovery or even loss of rights in the collateral should the borrower of the securities fail financially. However, the loans would be made only to entities deemed by the Adviser to be of good standing, and when, in the judgment of the Adviser, the consideration which can be earned currently from securities loans of this type justifies the attendant risk. If the Adviser determines to make securities loans, it is not intended that the value of the securities loaned would exceed 30% of the value of the Fund's total assets. The Fund did not lend any of its portfolio securities during its fiscal year ended September 30, 1995.

REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements with sellers who are member firms (or subsidiaries thereof) of the New York Stock Exchange or members of the Federal Reserve System, recognized primary U.S. Government securities dealers or institutions which the Adviser has determined to be of comparable creditworthiness. The securities that the Fund purchases and holds through its agent are U.S. Government securities, the values of which are equal to or greater than the repurchase price agreed to be paid by the seller. The repurchase price may be higher than the purchase price, the difference being income to the Fund, or the purchase and repurchase prices may be the same, with interest at a standard rate due to the Fund together with the repurchase price on repurchase. In either case, the income to the Fund is unrelated to the interest rate on the U.S. Government securities.

The repurchase agreement provides that in the event the seller fails to pay the price agreed upon on the agreed upon delivery date or upon demand, as the case may be, the Fund will have the right to liquidate the securities. If at the time the Fund is contractually entitled to exercise its right to liquidate the securities, the seller is subject to a proceeding under the bankruptcy laws or its assets are otherwise subject to a stay order, the Fund's exercise of its right to liquidate the securities may be delayed and result in certain losses and costs to the Fund. The Fund has adopted and follows procedures which are intended to minimize the risks of repurchase agreements. For example, the Fund only enters into repurchase agreements after the Adviser has determined that the seller is creditworthy, and the Adviser monitors that seller's creditworthiness on an ongoing basis. Moreover, under such agreements, the value of the securities (which are marked to market every business day) is required to be greater than the repurchase price, and the Fund has the right to make margin calls at any time if the value of the securities falls below the agreed upon margin.

FOREIGN SECURITIES: The Fund may invest up to 20% (and generally expects to invest between 0% and 20%) of its total assets in foreign securities (not including American Depositary Receipts). As discussed in the Prospectus, investing in foreign securities generally represents a greater degree of risk than investing in domestic securities, due to possible exchange rate fluctuations, less publicly available information, more volatile markets, less securities regulation, less favorable tax provisions, war or expropriation. As a result of its investments in foreign securities, the Fund may receive interest or dividend payments, or the proceeds of the sale or redemption of such securities, in the foreign currencies in which such securities are denominated. Under certain circumstances, such as where the Adviser believes that the applicable exchange rate is unfavorable at the time the currencies are received or the Adviser anticipates, for any other reason, that the exchange rate will improve, the Fund may hold such currencies for an indefinite period of time. While the holding of currencies will permit the Fund to take advantage of favorable movements in the applicable exchange rate, such strategy also exposes the Fund to risk of loss if exchange rates move in a direction adverse to the Fund's position. Such losses could reduce any profits or increase any losses sustained by the Fund from the sale or redemption of securities and could reduce the dollar value of interest or dividend payments received.

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

RISKS OF INVESTING IN LOWER RATED BONDS: The Fund may invest in fixed income securities rated Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Group ("S&P") or Fitch Investors Service, Inc. ("Fitch") and comparable unrated securities. These securities, while normally exhibiting adequate protection parameters, have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than in the case of higher grade fixed income securities.

The Fund may also invest up to 10% of its net assets in securities rated Ba or lower by Moody's or BB or lower by S&P or Fitch and comparable unrated securities (commonly known as "junk bonds"). No minimum rating standard is required by the Fund. These securities are considered speculative and, while generally providing greater income than investments in higher rated securities, will involve greater risk of principal and income (including the possibility of default or bankruptcy of the issuers of such securities) and may involve greater volatility of price (especially during periods of economic uncertainty or change) than securities in the higher rating categories and because yields vary over time, no specific level of income can ever be assured. These lower rated high yielding fixed income securities generally tend to reflect economic changes (and the outlook for economic growth), short-term corporate and industry developments and the market's perception of their credit quality (especially during times of adverse publicity) to a greater extent than higher rated securities which react primarily to fluctuations in the general level of interest rates (although these lower rated fixed income securities are also affected by changes in interest rates). In the past, economic downturns or an increase in interest rates have, under certain circumstances, caused a higher incidence of default by the issuers of these securities and may do so in the future, especially in the case of highly leveraged issuers. The prices for these securities may be affected by legislative and regulatory developments. The market for these lower rated fixed income securities may be less liquid than the market for investment grade fixed income securities. Furthermore, the liquidity of these lower rated securities may be affected by the market's perception of their credit quality. Therefore, the Adviser's judgment may at times play a greater role in valuing these securities than in the case of investment grade fixed income securities, and it also may be more difficult during times of certain adverse market conditions to sell these lower rated securities to meet redemption requests or to respond to changes in the market.

While the Adviser may refer to ratings issued by established credit rating agencies, it is not the Fund's policy to rely exclusively on ratings issued by these rating agencies, but rather to supplement such ratings with the Adviser's own independent and ongoing review of credit quality. To the extent the Fund invests in these lower rated securities, the achievement of its investment objective may be more dependent on the Adviser's own credit analysis than in the case of a fund investing in higher quality fixed income securities.

WARRANTS: The Fund will not invest more than 5% of its net assets, valued at the lower of cost or market, in warrants. Included within such amount, but not to exceed 2% of the value of its net assets, may be warrants which are not listed on the New York or American Stock Exchange. Warrants acquired by the Fund in units or attached to securities may be deemed to be without value.

THE POLICIES STATED ABOVE ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT

SHAREHOLDER APPROVAL, AS MAY THE FUND'S INVESTMENT OBJECTIVE.

INVESTMENT RESTRICTIONS. The Fund has adopted the following restrictions which cannot be changed without the approval of the holders of a majority of the Fund's shares (which, as used in this SAI, means the lesser of (i) more than 50% of the outstanding shares of the Trust (or a class or series, as applicable) or
(ii) 67% or more of the outstanding shares of the Trust (or a class or series, as applicable) present at a meeting if holders of more than 50% of the outstanding shares of the Trust (or a class or series, as applicable) are represented at such meeting in person or by proxy):

The Fund may not:

(1) Borrow amounts in excess of 5% of its gross assets (taken at the lower of cost or market value), and then only as a temporary measure for extraordinary or emergency purposes;

(2) Pledge, mortgage or hypothecate an amount of assets which (taken at market value) exceeds 15% of its gross assets (taken at the lower of cost or market value);

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

(4) Concentrate its investments in any particular industry, but if it is deemed appropriate for the attainment of its investment objectives, up to 25% of its assets, at market value at the time of each investment, may be invested in any one industry;

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

(6) Make loans to other persons except through the lending of its portfolio securities and by entering into repurchase agreements. See the discussion above under the caption "Investment Policies." Not more than 10% of the Fund's total assets will be invested in repurchase agreements maturing in more than seven days. Subject to the limitation set forth in paragraph 16 below, the Fund may purchase a portion of an issue of debt securities of types commonly distributed privately to financial institutions. For these purposes the purchase of short-term commercial paper or a portion of an issue of debt securities which are part of an issue to the public shall not be considered the making of a loan;

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

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

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

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

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

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

(13) Purchase any securities on margin except that the Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of securities;

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

(15) Purchase or sell any put or call options or any combination thereof, provided, that this shall not prevent the purchase, ownership, holding or sale of warrants where the grantor of the warrants is the issuer of the underlying securities; or

(16) Invest in securities which are subject to legal or contractual restrictions on resale, or for which there is no readily available market (e.g., trading in the security is suspended, or, in the case of unlisted securities, market makers do not exist or will not entertain bids or offers), unless the Board of Trustees has determined that such securities are liquid based upon trading markets for the specific security, if more than 10% of the Fund's assets (taken at market value) would be invested in such securities.

APPLICABILITY OF RESTRICTIONS: These investment restrictions are adhered to at the time of purchase or utilization of assets; a subsequent change in circumstances will not be considered to result in a violation of policy.

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

TRUSTEES

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

RICHARD B. BAILEY*
Private investor; Massachusetts Financial Services Company, former Chairman (prior to September 30, 1991); Cambridge Bancorp, Director; Cambridge Trust Company, Director

PETER G. HARWOOD
Private Investor
Address: 211 Lindsay Pond Road, Concord, Massachusetts

J. ATWOOD IVES
Eastern Enterprises (diversified holding company), Chairman and Chief Executive Officer (since December 1991); General Cinema Corporation, Vice Chairman and Chief Financial Officer (prior to December 1991); The Neiman Marcus Group, Inc., Vice Chairman and Chief Financial Officer (prior to February 1992) Address: 9 Riverside Road, Weston, Massachusetts

LAWRENCE T. PERERA
Hemenway & Barnes (attorneys), Partner
Address: 60 State Street, Boston, Massachusetts

WILLIAM J. POORVU
Harvard University Graduate School of Business Administration, Adjunct Professor; CBL & Associates Properties, Inc. (a real estate investment trust), Director; The Baupost Fund (a registered investment company), Vice Chairman


(since November 1993), Chairman and Trustee (prior to November 1993)

Address: Harvard Business School, Soldiers Field Road, Cambridge, Massachusetts

CHARLES W. SCHMIDT
Private investor; Raytheon Company (diversified electronics manufacturer), Senior Vice President and Group Executive (prior to December 1990); OHM Corporation, Director; The Boston Company, Director; Boston Safe Deposit and Fund Company, Director; Mohawk Paper Company, Director Address: 30 Colpitts Road, Weston, Massachusetts

ARNOLD D. SCOTT*
Massachusetts Financial Services Company, Senior Executive Vice President and Secretary

JEFFREY L. SHAMES*
Massachusetts Financial Services Company, President

ELAINE R. SMITH
Independent Consultant; Brigham and Women's Hospital, Executive Vice President and Chief Operating Officer (prior to September 1992) Address: Weston, Massachusetts

DAVID B. STONE
North American Management Corp. (investment advisers), Chairman and Director; Eastern Enterprises, Director
Address: 10 Post Office Square, Suite 300, Boston, Massachusetts

OFFICERS

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

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

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

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

Each Trustee and officer holds comparable positions with certain MFS affiliates or with certain other funds of which MFS or a subsidiary of MFS is the investment adviser or distributor. Mr. Brodkin, the Chairman of MFD, Messrs. Shames and Scott, Directors of MFD, and Mr. Cavan, the Secretary of MFD hold similar positions with certain other MFS affiliates. Mr. Bailey is a Director of Sun Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)"), the corporate parent of MFS.

The Fund pays the compensation of non-interested Trustees and Mr. Bailey who currently receive a fee of $2,500 per year plus $135 per meeting and $100 per committee meeting attended, together with such Trustee's out-of-pocket expenses. The Trust has adopted a retirement plan for non-interested Trustees and Mr. Bailey. Under this plan, a Trustee will retire upon reaching age 73 and if the Trustee has completed at least five years of service, he or she would be entitled to annual payments during his lifetime of up to 50% of such Trustee's average annual compensation (based on the three years prior to his retirement) depending on his length of service. A Trustee may also retire prior to age 73 and receive reduced payments if he or she has completed at least five years of service. Under the plan, a Trustee (or his or her beneficiaries) will also receive benefits for a period of time in the event the Trustee is disabled or dies. These benefits will also be based on the Trustee's average annual compensation and length of service. There is no retirement plan provided by the Trust for Messrs. Brodkin, Scott and Shames. The Fund will accrue its allocable share of compensation expenses each year to cover current year's service and amortize past service cost.

Set forth in Appendix B hereto is certain information concerning the cash compensation paid to the Trustees and benefits accrued, and estimated benefits payable, under the retirement plan.

As of December 31, 1995, all Trustees and officers as a group owned less than 1% of the Fund's shares outstanding, not including 738,667 shares (which represent approximately 1.38% of the outstanding shares of the Fund) owned of record by certain employee benefit plans of MFS of which Messrs. Brodkin, Scott and Shames are Trustees.

As of December 31, 1995, Nationwide Life Insurance Co., P.O. Box 182029, Columbus, Ohio 43218-2029 was the record owner of 6.42% of the outstanding Class A shares of the Fund. Merrill Lynch Pierce Fenner & Smith Inc., P.O. Box 45286, Jacksonville, FL 32232-5286 was the record owner of 6.12% of the outstanding Class A shares of the Fund, 8.13% of the outstanding Class B shares of the Fund and 16.34% of the outstanding Class C shares of the Fund.

The Declaration of Trust provides that the Trust will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust, unless it is finally adjudicated that they engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices, or with respect to any matter unless it is adjudicated that they did not act in good faith in the reasonable belief that their actions were in the best interests of the Trust. In the case of a settlement, such indemnification will not be provided unless it has been determined pursuant to the Declaration of Trust, that such officers or Trustees have not engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices.

INVESTMENT ADVISER
MFS and its predecessor organizations have a history of money management dating from 1924. MFS is a wholly owned subsidiary of Sun Life of Canada (U.S.) which in turn is a wholly owned subsidiary of Sun Life Assurance Company of Canada ("Sun Life").

The Adviser manages the Fund pursuant to an Investment Advisory Agreement, dated September 1, 1993 (the "Advisory Agreement"). The Adviser provides the Fund with overall investment advisory and administrative services, as well as general office facilities. Subject to such policies as the Trustees may determine, the Adviser makes investment decisions for the Fund. For these services and facilities, the Adviser receives a management fee computed and paid monthly on the basis of a formula based upon a percentage of the Fund's average daily net assets plus a percentage of its gross income (i.e. income other than gains from the sale of securities). The applicable percentages are reduced as assets and income reach the following levels:

   ANNUAL RATE OF MANAGEMENT FEE       ANNUAL RATE OF MANAGEMENT FEE
 BASED ON AVERAGE DAILY NET ASSETS         BASED ON GROSS INCOME
- ------------------------------------  --------------------------------
0.40% of the first $100 million       5.0% of the first $2 million
0.32% of the next $400 million        4.0% of the next $8 million
0.288% of average daily net assets    3.6% of gross income in excess
  in excess of $500 million              of $10 million

For the fiscal year ended September 30, 1993, MFS received management fees of $1,067,433 (of which $916,138 was based on average daily net assets and $151,665 on gross income), equivalent on an annualized basis to 0.11% of the Fund's average daily net assets. For the fiscal year ended September 30, 1994, MFS received management fees of $1,217,986 (of which $151,240 was based on average daily net assets and $1,066,746 on gross income), equivalent on an annualized basis to .39% of the Fund's average daily net assets. For the fiscal year ended September 30, 1995, MFS received management fees under the Fund's Investment Advisory Agreement of $1,910,078 (of which $1,588,228 was based on average daily net assets and $321,850 on gross income), equivalent on an annualized basis to 0.41% of the Fund's average daily net assets.

In order to comply with the expense limitations of certain state securities commissions, the Adviser will reduce its management fee or otherwise reimburse the Fund for any expenses, exclusive of interest, taxes and brokerage commissions, incurred by the Fund in any fiscal year to the extent such expenses exceed the most restrictive of such state expense limitations. The Adviser will make appropriate adjustments to such reimbursements in response to any amendment or recission of the various state requirements. Any such adjustment would not become effective until the beginning of the Fund's next fiscal year following the date of such amendments or the date on which such requirements become no longer applicable.

The Fund pays its expenses (other than those assumed by MFS or MFD), including:
governmental fees; interest charges; taxes; membership dues in the Investment Company Institute allocable to the Fund; fees and expenses of independent auditors, of legal counsel, and of any transfer agent, registrar or dividend disbursing agent of the Fund; expenses of repurchasing and redeeming shares; expenses of preparing, printing and mailing share certificates, shareholder reports, notices, proxy statements and reports to governmental officers and commissions; brokerage and other expenses connected with the execution, recording and settlement of portfolio security transactions; insurance premiums; fees and expenses of Investors Bank & Trust Company, the Fund's custodian, for all services to the Fund, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of shares of the Fund; and expenses of shareholder meetings. Expenses relating to the issuance, registration and qualification of shares of the Fund and the preparation, printing and mailing of prospectuses for such purposes are borne by the Fund except that its Distribution Agreement with MFD, the Fund's principal underwriter, requires MFD to pay for prospectuses that are to be used for sales purposes. Expenses of the Trust which are not attributable to a specific series are allocated among the series in a manner believed by management of the Trust to be fair and equitable. For a list of the Fund's expenses, including the compensation paid to the Trustees who are not officers of MFS, during the fiscal year ended September 30, 1995, see "Financial Statements -- Statement of Operations" in the Annual Report to shareholders. Payment by the Fund of brokerage commissions for brokerage and research services of value to the Adviser in serving its clients is discussed under the caption "Portfolio Transactions and Brokerage Commissions."

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

The Advisory Agreement will remain in effect until August 1, 1996, and will continue in effect thereafter only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of the Fund's shares (as defined in "Investment Restrictions") and, in either case, by a majority of the Trustees who are not parties to the Advisory Agreement or interested persons of any such party. The Advisory Agreement terminates automatically if it is assigned and may be terminated without penalty by vote of a majority of the Fund's shares (as defined in "Investment Restrictions") or by either party on not more than 60 days' nor less than 30 days' written notice. The Advisory Agreement provides that neither the Adviser nor its personnel shall be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution and management of the Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its or their duties or by reason of reckless disregard of its or their obligations and duties under the Advisory Agreement.

CUSTODIAN
Investors Bank & Trust Company (the "Custodian") is the custodian of the Fund's assets. The Custodian's responsibilities include safekeeping and controlling the Fund's cash and securities, handling the receipt and delivery of securities, determining income and collecting interest and dividends on the Fund's investments, maintaining books of original entry for portfolio and fund accounting and other required books and accounts, and calculating the daily net asset value of each class of shares of the Fund. The Custodian does not determine the investment policies of the Fund or decide which securities the Fund will buy or sell. The Fund may, however, invest in securities of the Custodian and may deal with the Custodian as principal in securities transactions.

SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc. (the "Shareholder Servicing Agent"), a wholly owned subsidiary of MFS, is the Fund's shareholder servicing agent, pursuant to a Shareholder Servicing Agreement, effective August 1, 1985 (the "Agency Agreement"). The Shareholder Servicing Agent's responsibilities under the Agency Agreement include administering and performing transfer agent functions and keeping records in connection with the issuance, transfer and redemption of each class of shares of the Fund. For these services, the Shareholder Servicing Agent will receive a fee calculated as a percentage of the average daily net assets of each class of shares at an effective annual rate of up to 0.15%, up to 0.22% and up to 0.15% attributable to Class A, Class B and Class C shares, respectively. In addition, the Shareholder Servicing Agent will be reimbursed by the Fund for certain expenses incurred by the Shareholder Servicing Agent on behalf of the Fund. State Street Bank and Trust Company, the dividend and distribution disbursing agent of the Fund, has contracted with the Shareholder Servicing Agent to administer and perform certain dividend and distribution disbursing functions for the Fund.

DISTRIBUTOR
MFD, a wholly owned subsidiary of MFS, serves as distributor for the continuous offering of shares of the Fund pursuant to a Distribution Agreement, dated January 1, 1995 as amended and restated (the "Distribution Agreement"). Prior to January 1, 1995, MFS Financial Services, Inc. ("FSI"), another wholly owned subsidiary of MFS, was the Fund's distributor. Where this SAI refers to MFD in relation to the receipt or payment of money with respect to a period or periods prior to January 1, 1995, such reference shall be deemed to include FSI, as the predecessor in interest to MFD.

CLASS A SHARES: MFD acts as agent in selling Class A shares of the Fund to dealers. The public offering price of Class A shares of the Fund is their net asset value next computed after the sale plus a sales charge which varies based upon the quantity purchased. The public offering price of a Class A share of the Fund is calculated by dividing the net asset value of a Class A share by the difference (expressed as a decimal) between 100% and the sales charge percentage of offering price applicable to the purchase (see "Purchases" in the Prospectus). The sales charge scale set forth in the Prospectus applies to purchases of Class A shares of the Fund alone or in combination with shares of all classes of certain other funds in the MFS Family of Funds (the "MFS Funds") and other funds (as noted under Right of Accumulation) by any person, including members of a family unit (e.g., husband, wife and minor children) and bona fide trustees, and also applies to purchases made under the Right of Accumulation or a Letter of Intent (see "Investment and Withdrawal Programs" below). A group might qualify to obtain quantity sales charge discounts (see "Investment and Withdrawal Programs" in this SAI).

Class A shares of the Fund may be sold at their net asset value to certain persons or in certain circumstances, as described in the Prospectus. Such sales are made without a sales charge to promote good will with employees and others with whom MFS, MFD and/or the Fund have business relationships, and because the sales effort, if any, involved in making such sales is negligible.

MFD allows discounts to dealers (which are alike for all dealers) from the applicable public offering price of the Class A shares. Dealer allowances expressed as a percentage of offering price for all offering prices are set forth in the Prospectus (see "Purchases" in the Prospectus). The difference between the total amount invested and the sum of (a) the net proceeds to the Fund and (b) the dealer commission is the commission paid to the distributor. Because of rounding in the computation of offering price, the portion of the sales charge paid to the distributor may vary and the total sales charge may be more or less than the sales charge calculated using the sales charge expressed as a percentage of offering price or as a percentage of the net amount invested as listed in the Prospectus. In the case of the maximum sales charge, the dealer retains 5% and MFD retains approximately 3/4 of 1% of the public offering price. In addition, MFD on behalf of the Fund pays a commission on purchases of $1 million or more as described in the Prospectus.

CLASS B SHARES AND CLASS C SHARES: MFD acts as agent in selling Class B and Class C shares of the Fund to dealers. The public offering price of Class B and Class C shares is their net asset value next computed after the sale (see "Purchases" in the Prospectus).

GENERAL: Neither MFD nor dealers are permitted to delay placing orders to benefit themselves by a price change. On occasion, MFD may obtain brokers loans from various banks, including the custodian banks for the MFS Funds, to facilitate the settlement of sales of shares of the Fund to dealers. MFD may benefit from its temporary holding of funds paid to it by investment dealers for the purchase of Fund shares.

During the Fund's fiscal year ended September 30, 1995, MFD received net commissions of $218,078 and dealers received net commissions of $3,222,518 (as their concession on gross commissions of $3,440,596) for selling Class A shares of the Fund; the Fund received $114,399,469 representing the aggregate net asset value of such shares. During the Fund's fiscal year ended September 30, 1994, MFD received net commissions of $50,210 and dealers received net commissions of $469,118 (as their concession on gross commissions of $540,772) for selling Class A shares of the Fund; the Fund received $31,765,695 representing the aggregate net asset value of such shares. During the Fund's fiscal year ended September 30, 1993, MFD received net commissions of $19,871 and dealers received net commissions of $123,575 (as their concession on gross commissions of $143,446) for selling Class A shares of the Fund; the Fund received $9,615,105 representing the aggregate net asset value of such shares.

During the Fund's fiscal year ended September 30, 1995, the Contingent Deferred Sales Charge ("CDSC") imposed on redemption of Class B shares was $109,742. During the Fund's fiscal year ended September 30, 1994, the CDSC imposed on redemption of Class B shares was $7,566. During the period from September 7, 1993 through September 30, 1993, the CDSC imposed on redemption of Class B shares was $0.

The Distribution Agreement will remain in effect until August 1, 1996, and will continue in effect thereafter only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of the Fund's outstanding voting securities and, in either case, by a majority of the Trustees who are not parties to the Distribution Agreement or interested persons of any such party. The Distribution Agreement terminates automatically if it is assigned and may be terminated without penalty by either party on not more than 60 days' nor less than 30 days' notice.

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

The primary consideration in placing portfolio security transactions with broker-dealers for execution is to obtain and maintain the availability of execution at the most favorable prices and in the most effective manner possible. The Adviser attempts to achieve this result by selecting broker-dealers to execute portfolio transactions on behalf of the Fund and other clients of the Adviser on the basis of their professional capability, the value and quality of their brokerage services, and the general level of their brokerage commissions. In the case of securities traded in the over-the-counter market (where no stated commissions are paid but the prices include a dealer's markup or markdown), the Adviser normally seeks to deal directly with the primary market makers, unless in its opinion, best execution is available elsewhere. In the case of securities purchased from underwriters, the cost of such securities generally includes a fixed underwriting commission or concession. From time to time, soliciting dealer fees are available to the Adviser on the tender of the Fund's portfolio securities in so-called tender or exchange offers. Such soliciting dealer fees are in effect recaptured for the Fund by the Adviser. At present no other recapture arrangements are in effect.

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

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

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

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

Broker-dealers may be willing to furnish statistical, research and other factual information or services ("Research") to the Adviser for no consideration other than brokerage or underwriting commissions. Securities may be bought or sold from time to time through such broker-dealers on behalf of the Fund. The Trust's Trustees (together with the Trustees of the other MFS Funds) have directed the Adviser to allocate a total of $23,100 of commission business from the MFS Funds to the Pershing Division of Donaldson, Lufkin & Jenrette as consideration for the annual renewal of the Lipper Directors' Analytical Data Service (which provides information useful to the Trustees in reviewing the relationship between the Fund and the Adviser).

The Adviser's investment management personnel attempt to evaluate the quality of Research provided by brokers. The Adviser sometimes uses evaluations resulting from this effort as a consideration in the selection of brokers to execute portfolio transactions. However, the Adviser is unable to quantify the amount of commissions set forth below which were paid as a result of such Research because a substantial number of transactions were effected through brokers which provide Research but which were selected principally because of their execution capabilities.

The management fee that the Fund pays to the Adviser will not be reduced as a consequence of the Adviser's receipt of brokerage and research services. To the extent the Fund's portfolio transactions are used to obtain such services, the brokerage commissions paid by the Fund will exceed those that might otherwise be paid, by an amount which cannot be presently determined. Such services would be useful and of value to the Adviser in serving both the Fund and other clients and, conversely, such services obtained by the placement of brokerage business of other clients would be useful to the Adviser in carrying out its obligations to the Fund. While such services are not expected to reduce the expenses of the Adviser, the Adviser would, through use of the services, avoid the additional expenses which would be incurred if it should attempt to develop comparable information through its own staff.

For the Fund's fiscal years ended September 1995, 1994 and 1993, total brokerage commissions of $1,333,734, $814,169 and $682,723, respectively were paid. During the Fund's fiscal year ended September 30, 1995, the Fund did not acquire or sell securities issued by affiliates of regular broker-dealers of the Fund.

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

6. SHAREHOLDER SERVICES INVESTMENT AND WITHDRAWAL PROGRAMS -- The Fund makes available programs designed to enable shareholders to add to their investment or withdraw from it with a minimum of paper work. The programs involve no extra charge to shareholders (other than a sales charge in the case of certain Class A share purchases) and may be changed or discontinued at any time by a shareholder or the Fund.

LETTER OF INTENT: If a shareholder (other than a group purchaser described below) anticipates purchasing $50,000 or more of Class A shares of the Fund alone or in combination with shares of Class B or Class C of the Fund or any of the classes of other MFS Funds or MFS Fixed Fund (a bank collective investment fund) within a 13-month period (or 36 month period, in the case of purchases of $1 million or more), the shareholder may obtain Class A shares of the Fund at the same reduced sales charge as though the total quantity were invested in one lump sum by completing the Letter of Intent section of the Fund's Account Application or filing a separate Letter of Intent application (available from the Shareholder Servicing Agent) within 90 days of the commencement of purchases. Subject to acceptance by MFD and the conditions mentioned below, each purchase will be made at a public offering price applicable to a single transaction of the dollar amount specified in the Letter of Intent application. The shareholder or his dealer must inform MFD that the Letter of Intent is in effect each time shares are purchased. The shareholder makes no commitment to purchase additional shares, but if his purchases within 13 months (or 36 months in the case of purchases of $1 million or more) plus the value of shares credited toward completion of the Letter of Intent do not total the sum specified, he will pay the increased amount of the sales charge as described below. Instructions for issuance of shares in the name of a person other than the person signing the Letter of Intent application must be accompanied by a written statement from the dealer stating that the shares were paid for by the person signing such Letter. Neither income dividends nor capital gain distributions taken in additional shares will apply toward the completion of the Letter of Intent. Dividends and distributions of other MFS Funds automatically reinvested in shares of the Fund pursuant to the Distribution Investment Program will also not apply toward completion of the Letter of Intent.

Out of the shareholder's initial purchase (or subsequent purchases if necessary), 5% of the dollar amount specified in the Letter of Intent application shall be held in escrow by the Shareholder Servicing Agent in the form of shares registered in the shareholder's name. All income dividends and capital gain distributions on escrowed shares will be paid to the shareholder or to his order. When the minimum investment so specified is completed (either prior to or by the end of the 13-month period or 36-month period, as applicable), the shareholder will be notified and the escrowed shares will be released.

If the intended investment is not completed, the Shareholder Servicing Agent will redeem an appropriate number of the escrowed shares in order to realize such difference. Shares remaining after any such redemption will be released by the Shareholder Servicing Agent. By completing and signing the Account Application or separate Letter of Intent application, the shareholder irrevocably appoints the Shareholder Servicing Agent his attorney to surrender for redemption any or all escrowed shares with full power of substitution in the premises.

RIGHT OF ACCUMULATION: A shareholder qualifies for cumulative quantity discounts on the purchase of Class A shares when that shareholder's new investment, together with the current offering price value of all holdings of all classes of shares of that shareholder in the MFS Funds or MFS Fixed Fund (a bank collective investment fund) reaches a discount level. See "Purchases" in the Prospectus for the sales charges on quantity discounts. For example, if a shareholder owns shares valued at public offering price at $37,500 and purchases an additional $12,500 of Class A shares of the Fund, the sales charge for the $12,500 purchase would be at the rate of 4.75% (the rate applicable to single transactions of $50,000). A shareholder must provide the Shareholder Servicing Agent (or his investment dealer must provide MFD) with information to verify that the quantity sales charge discount is applicable at the time the investment is made.

DISTRIBUTION INVESTMENT PROGRAM: Distributions of dividends and capital gains made by the Fund with respect to a particular class of shares may be automatically invested in shares of the same class of one of the other MFS Funds if shares of such fund are available for sale. Such investments will be subject to additional purchase minimums. Distributions will be invested at net asset value (exclusive of any sales charge) and will not be subject to any CDSC. Distributions will be invested at the close of business on the payable date for the distribution. A shareholder considering the Distribution Investment Program should obtain and read the prospectus of the other MFS fund and consider the differences in objectives and policies before making any investment.

SYSTEMATIC WITHDRAWAL PLAN: A shareholder may direct the Shareholder Servicing Agent to send him (or anyone he designates) regular periodic payments, based upon the value of his account. Each payment under a Systematic Withdrawal Plan ("SWP") must be at least $100, except in certain limited circumstances. The aggregate withdrawals of Class B shares in any year pursuant to a Plan generally are limited to 10% of the value of the account at the time of the establishment of the SWP. SWP payments are drawn from the proceeds of share redemptions (which would be a return of principal and, if reflecting a gain, would be taxable). Redemptions of Class B shares will be made in the following order: (i) any "Free Amount"; (ii) to the extent necessary any "Reinvested Shares"; (iii) to the extent necessary, the "Direct Purchase" subject to the lowest CDSC (as such terms are defined in "Contingent Deferred Sales Charge" in the Prospectus). The CDSC will be waived in the case of redemptions of Class B shares pursuant to a SWP, but will not be waived in the case of SWP redemptions of Class A shares which are subject to a CDSC. To the extent that redemptions for such periodic withdrawals exceed dividend income reinvested in the account, such redemptions will reduce and may eventually exhaust the number of shares in the shareholder's account. All dividend and capital gain distributions for an account with a SWP will be reinvested in full and fractional shares of the Fund at the net asset value in effect at the close of business on the record date for such distributions. To initiate this service, shares having an aggregate value of at least $5,000 either must be held on deposit by, or certificates for such shares must be deposited with, the Shareholder Servicing Agent. With respect to Class A shares, maintaining a withdrawal plan concurrently with an investment program would be disadvantageous because of the sales charges included in share purchases and the imposition of a CDSC on certain redemptions. The shareholder may deposit into the account additional shares of the Fund, change the payee or change the dollar amount of each payment. The Shareholder Servicing Agent may charge the account for services rendered and expenses incurred beyond those normally assumed by the Fund with respect to the liquidation of shares. No charge is currently assessed against the account, but one could be instituted by the Shareholder Servicing Agent on 60 days' notice in writing to the shareholder in the event that the Fund ceases to assume the cost of these services. The Fund may terminate any SWP for an account if the value of the account falls below $5,000 as a result of share redemptions (other than as a result of a SWP) or an exchange of shares of the Fund for shares of another MFS Fund. Any SWP may be terminated at any time by either the shareholder or the Fund.

INVEST BY MAIL: Additional investments of $50 or more may be made at any time by mailing a check payable to the Fund directly to the Shareholder Servicing Agent. The shareholder's account number and the name of his investment dealer must be included with each investment.

GROUP PURCHASES: A bona fide group and all its members may be treated as a single purchaser and, under the Right of Accumulation (but not a Letter of Intent), obtain quantity sales charge discounts on the purchase of Class A shares if the group (1) gives its endorsement or authorization to the investment program so it may be used by the investment dealer to facilitate solicitation of the membership, thus effecting economies of sales effort; (2) has been in existence for at least six months and has a legitimate purpose other than to purchase mutual fund shares at a discount; (3) is not a group of individuals whose sole organizational nexus is as credit cardholders of a company, policyholders of an insurance company, customers of a bank or broker-dealer, clients of an investment adviser or other similar groups; and (4) agrees to provide certification of membership of those members investing money in the MFS Funds upon the request of MFD.

AUTOMATIC EXCHANGE PLAN: Shareholders having account balances of at least $5,000 in any MFS Fund may exchange their shares for the same class of shares of other MFS Funds (if available for sale) (and, in the case of Class C shares, for shares of MFS Money Market Fund) under the Automatic Exchange Plan, a dollar cost averaging program. The Automatic Exchange Plan provides for automatic monthly or quarterly exchanges of funds from the shareholder's account in an MFS Fund for investment in the same class of shares of other MFS Funds selected by the shareholder. Under the Automatic Exchange Plan, exchanges of at least $50 each may be made to up to four different funds effective on the seventh day of each month or of every third month, depending whether monthly or quarterly exchanges are elected by the shareholder. If the seventh day of the month is not a business day, the transaction will be processed on the next business day. Generally, the initial exchange will occur after receipt and processing by the Shareholder Servicing Agent of an application in good order. Exchanges will continue to be made from a shareholder's account in any MFS Fund as long as the balance of the account is sufficient to complete the exchanges. Additional payments made to a shareholder's account will extend the period that exchanges will continue to be made under the Automatic Exchange Plan. However, if additional payments are added to an account subject to the Automatic Exchange Plan shortly before an exchange is scheduled, such funds may not be available for exchanges until the following month; therefore, care should be used to avoid inadvertently terminating the Automatic Exchange Plan through exhaustion of the account balance.

No transaction fee for exchanges will be charged in connection with the Automatic Exchange Plan. However, exchanges of shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund will be subject to any applicable sales charge. Changes in amounts to be exchanged to each fund, the funds to which exchanges are to be made and the timing of exchanges (monthly or quarterly), or termination of a shareholder's participation in the Automatic Exchange Plan will be made after instructions in writing or by telephone (an "Exchange Change Request") are received by the Shareholder Servicing Agent in proper form (i.e., if in writing -- signed by the record owner(s) exactly as shares are registered; if by telephone -- proper account identification is given by the dealer or shareholder of record). Each Exchange Change Request (other than termination of participation in the program) must involve at least $50. Generally, if an Exchange Change Request is received by telephone or in writing before the close of business on the last business day of a month, the Exchange Change Request will be effective for the following month's exchange.

A shareholder's right to make additional investments in any of the MFS Funds, to make exchanges of shares from one MFS Fund to another and to withdraw from an MFS Fund, as well as a shareholder's other rights and privileges are not affected by a shareholder's participation in the Automatic Exchange Plan.

The Automatic Exchange Plan is part of the Exchange Privilege. For additional information regarding the Automatic Exchange Plan, including the treatment of any CDSC, see "Exchange Privilege" below.

REINSTATEMENT PRIVILEGE: Shareholders of the Fund and shareholders of the other MFS Funds (except MFS Money Market Fund, MFS Government Money Market Fund and holders of Class A shares of MFS Cash Reserve Fund in the case where such shares are acquired through direct purchase or reinvested dividends) who have redeemed their shares have a one-time right to reinvest the redemption proceeds in the same class of shares of any of the MFS Funds (if shares of the fund are available for sale) at net asset value (without a sales charge) and, if applicable, with credit for any CDSC paid. In the case of proceeds reinvested in shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund, the shareholder has the right to exchange such shares for shares of another MFS Fund at net asset value pursuant to the exchange privilege described below. Such a reinvestment must be made within 90 days of the redemption and is limited to the amount of the redemption proceeds. If the shares credited for any CDSC paid are then redeemed within six years of the initial purchase for Class B shares (or within 12 months of the initial purchase of certain Class A shares), a CDSC will be imposed upon redemption. Although redemptions and repurchases of shares are taxable events, a reinvestment within a certain period of time in the same fund may be considered a "wash sale" and may result in the inability to recognize currently all or a portion of a loss realized on the original redemption for federal income tax purposes. Please see your tax advisor for further information.

EXCHANGE PRIVILEGE -- Subject to the requirements set forth below, some or all of the shares for which payment has been received by the Fund (i.e., an established account) may be exchanged for shares of the same class of any of the other MFS Funds (if available for sale) at net asset value. In addition, Class C shares may be exchanged for shares of MFS Money Market Fund at net asset value. Exchanges will be made only after instructions in writing or by telephone (an "Exchange Request") for an established account are received by the Shareholder Servicing Agent.

Each Exchange Request must be in proper form (i.e., if in writing -- signed by the record owner(s) exactly as the shares are registered; if by telephone -- proper account identification is given by the dealer or shareholder of record), and each exchange must involve either shares having an aggregate value of at least $1,000 or all the shares in the account (except that the minimum is $50 for accounts of retirement plan participants whose sponsoring organizations subscribe to the MFS FUNDamental 401(k) Plan or another similar 401(k) recordkeeping system made available by the Shareholder Servicing Agent). Each exchange involves the redemption of the shares of the Fund to be exchanged and the purchase at net asset value (i.e., without a sales charge) of shares of the same class of the other MFS Fund. Any gain or loss on the redemption of the shares exchanged is reportable on the shareholder's federal income tax return, unless both the shares received and the shares surrendered are held in a tax-deferred retirement plan or other tax-exempt account. No more than five exchanges may be made in any one Exchange Request by telephone. If an Exchange Request is received by the Shareholder Servicing Agent prior to the close of regular trading on the New York Stock Exchange (the "Exchange"), the exchange usually will occur on that day if all the restrictions set forth above have been complied with at that time. However, payment of the redemption proceeds by the Fund, and thus the purchase of shares of another MFS Fund, may be delayed for up to seven days if the Fund determines that such a delay would be in the best interest of all its shareholders. Investment dealers which have satisfied criteria established by MFD may also communicate a shareholder's Exchange Request to MFD by facsimile subject to the restrictions and requirements set forth above.

No CDSC is imposed on exchanges among the MFS Funds, although liability for the CDSC is carried forward to the exchanged shares. For purposes of calculating the CDSC upon redemption of shares acquired in an exchange, the purchase of shares acquired in one or more exchanges is deemed to have occurred at the time of the original purchase of the exchanged shares.

Additional information with respect to any of the MFS Funds, including a copy of its current prospectus, may be obtained from investment dealers or the Shareholder Servicing Agent. A shareholder considering an exchange should obtain and read the prospectus of the other MFS Fund and consider the differences in objectives and policies before making any exchange. Shareholders of the other MFS Funds (except shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund acquired through direct purchase and dividends reinvested prior to June 1, 1992) have the right to exchange their shares for shares of the Fund, subject to the conditions, if any, set forth in their respective prospectuses. In addition, unitholders of the MFS Fixed Fund (a bank collective investment fund) have the right to exchange their units (except units acquired through direct purchases) for shares of the Fund, subject to the conditions, if any, imposed upon such unitholders by the MFS Fixed Fund.

Any state income tax advantages for investment in shares of each state- specific series of MFS Municipal Series Trust may only benefit residents of such states. Investors should consult with their own tax advisers to be sure this is an appropriate investment, based on their residency and each state's income tax laws.

The exchange privilege (or any aspect of it) may be changed or discontinued and is subject to certain limitations (see "Purchases" in the Prospectus).

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

Individual Retirement Accounts ("IRAs") (for individuals and their non- employed spouses who desire to make limited contributions to a tax-deferred retirement program and, if eligible, to receive a federal income tax deduction for amounts contributed);

Simplified Employee Pension (SEP-IRA) Plans;

Retirement Plans Qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code");

403(b) Plans (deferred compensation arrangements for employees of public school systems and certain non-profit organizations); and

Certain qualified corporate pension and profit-sharing plans.

The plan documents provided by MFD designate a trustee or custodian (unless another trustee or custodian is designated by the individual or group establishing the plan) and contain specific information about the plans. Each plan provides that dividends and distributions will be reinvested automatically. For further details with respect to any plan, including fees charged by the trustee, custodian or MFD, tax consequences and redemption information, see the specific documents for that plan. Plan documents other than those provided by MFD may be used to establish any of the plans described above. Third party administrative services, available for some corporate plans, may limit or delay the processing of transactions.

An investor should consult with his tax adviser before establishing any of the tax-deferred retirement plans described above.

Class C shares are not currently available for purchase by any retirement plan qualified under Internal Revenue Code section 401(a) or 403(b) if the retirement plan and/or the sponsoring organization subscribe to the MFS FUNDamental 401(k) Plan or another similar 401(a) or 403(b) recordkeeping program made available by MFS Service Center, Inc.

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

Shareholders of the Fund normally will have to pay federal income taxes, and any state or local taxes, on the dividends and capital gain distributions they receive from the Fund. Dividends from ordinary income, and distributions from net short-term capital gains (whether paid in cash or reinvested in additional shares), are taxable to shareholders as ordinary income for federal income tax purposes. A portion of the Fund's ordinary income dividends (but none of its distributions of capital gains) is normally eligible for the dividends-received deduction for corporations if the recipient otherwise qualifies for that deduction with respect to its holding of Fund shares. Availability of the deduction for particular corporate shareholders is subject to certain limitations, and deducted amounts may be subject to the alternative minimum tax and may result in certain basis adjustments. Distributions of net capital gains (i.e., the excess of net long-term capital gains over net short-term capital losses), whether paid in cash or reinvested in additional shares, are taxable to the Fund's shareholders as long-term capital gains for federal income tax purposes regardless of how long they have owned shares in the Fund. Fund dividends declared in October, November or December that are payable to shareholders of record in such a month, and that are paid the following January will be taxable to shareholders as if received on December 31 of the year in which they are declared.

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

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

The Fund's current dividend and accounting policies will affect the amount, timing and character of distributions to shareholders and may, under certain circumstances, make an economic return of capital taxable to shareholders. The Fund's investment in debt securities providing for deferred interest and certain securities purchased at market discount will cause it to realize income prior to the receipt of cash payments with respect to those securities. In order to distribute this income and avoid a tax on the Fund, the Fund may be required to liquidate portfolio securities that it might otherwise have continued to hold, potentially resulting in additional taxable gain or loss to the Fund.

Special tax considerations apply with respect to foreign investments of the Fund. Foreign exchange gains and losses realized by the Fund will generally be treated as ordinary income and losses. The holding of foreign currencies and investment by the Fund in certain "passive foreign investment companies" may be limited in order to avoid a tax on the Fund.

Investment income received by the Fund from foreign securities may be subject to foreign income taxes withheld at the source; the Fund does not expect to be able to pass through to shareholders foreign tax credits with respect to such foreign taxes. The United States has entered into tax treaties with many foreign countries that may entitle the Fund to a reduced rate of tax or an exemption from tax on such income; the Fund intends to qualify for treaty reduced rates where available. It is impossible to determine the effective rate of foreign tax in advance since the amount of the Fund's assets to be invested within various countries is not known.

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

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

8. DETERMINATION OF NET ASSET VALUE AND PERFORMANCE

NET ASSET VALUE
The net asset value per share of each class of the Fund is determined each day during which the Exchange is open for regular trading. (As of the date of this SAI, the Exchange is open for regular trading every weekday except for the following holidays or days on which they are observed: New Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving Day and Christmas Day.) This determination is made once each day as of the close of regular trading on the Exchange by deducting the amount of the liabilities attributable to the class from the value of the assets attributable to the class and dividing the difference by the number of shares of the class outstanding. Equity securities in the Fund's portfolio are valued at the last sale price on the exchange on which they are primarily traded or on the NASDAQ system for unlisted national market issues, or at the last quoted bid price for securities in which there were no sales during the day or for unlisted securities not reported on the NASDAQ system.

Bonds and other fixed income securities in the Fund's portfolio are valued on the basis of valuations furnished by a pricing service which utilizes both dealer-supplied valuations and electronic data processing techniques which take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Use of the pricing service has been approved by the Trust's Board of Trustees. Short- term obligations with a remaining maturity in excess of 60 days will be valued upon dealer supplied valuations. Other short-term obligations are valued at amortized cost, which constitutes fair value as determined by the Board of Trustees. Portfolio securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees.

PERFORMANCE INFORMATION

TOTAL RATE OF RETURN: The Fund will calculate its total rate of return for each class of shares for certain periods by determining the average annual compounded rates of return over those periods that would cause an investment of $1,000 (made with all distributions reinvested and reflecting the CDSC or the maximum public offering price) to reach the value of that investment at the end of the periods. The Fund may also calculate (i) a total rate of return, which is not reduced by the CDSC (4% maximum for Class B shares purchased on and after September 1, 1993) and therefore may result in a higher rate of return, (ii) a total rate of return assuming an initial account value of $1,000, which will result in a higher rate of return since the value of the initial account will not be reduced by the maximum sales charge (currently 5.75% on Class A shares), and/or (iii) total rates of return which represent aggregate performance over a period or year-by-year performance, and which may or may not reflect the effect of the maximum or other sales charge or CDSC. Prior to March 1, 1991, the maximum sales charge on Class A shares was 7.25%. On March 1, 1991, the maximum sales charge on Class A shares was lowered to 5.75%, the sales charge was eliminated on reinvested dividends and a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act was implemented with respect to Class A shares as described below. The Fund's average annual total rate of return for Class A shares reflecting the initial investment at the current maximum public offering price (5.75%) for the one-year, five-year and ten-year periods ended September 30, 1995, was 17.32%, 17.96% and 14.92%, respectively. The Fund's average annual total rate of return for Class A shares not giving effect to the sales charge on the initial investment for the one-year, five-year and ten-year periods ended September 30, 1995, was 24.49%, 19.37% and 15.60%, respectively. The Fund's average annual total rate of return for Class B shares, reflecting the CDSC, for the one-year period ended September 30, 1995 and for the period from commencement of operations of Class B shares on September 7, 1993 to September 30, 1995 was 19.55% and 14.83%, respectively. The Fund's average annual total rate of return for Class B shares, not giving effect to the CDSC, for the one-year period ended September 30, 1995 and for the period from commencement of operations of Class B shares on September 7, 1993 to September 30, 1995 was 23.55% and 16.49%, respectively. The Fund's average annual total rate of return for Class C shares for the one-year period ended September 30, 1995 was 23.58% and for the period from commencement of operations of Class C shares on January 3, 1994 to September 30, 1995 was 15.79%.

PERFORMANCE RESULTS: The performance results for Class A shares below, based on an assumed initial investment of $10,000 in Class A shares, cover the period from January 1, 1986 through December 31, 1995. It has been assumed that dividends and capital gain distributions were reinvested in additional shares. These performance results, as well as any total rate of return quotations provided by the Fund, should not be considered as representative of the performance of the Fund in the future since the net asset value and public offering price of shares of the Fund will vary based not only on the type, quality and maturities of the securities held in the Fund's portfolio, but also on changes in the current value of such securities and on changes in the expenses of the Fund. These factors and possible differences in the methods used to calculate total rates of return should be considered when comparing the total rate of return of the Fund to total rates of return published for other investment companies or other investment vehicles. Total rate of return reflects the performance of both principal and income. Current net asset value of shares and account balance information may be obtained by calling 1-800-MFS-TALK (637-8255).

                               MFS RESEARCH FUND -- CLASS A
               ------------------------------------------------------------
                                 VALUE OF
                  VALUE OF      REINVESTED      VALUE OF
 YEAR ENDED    INITIAL $10,000 CAPITAL GAINS   REINVESTED        TOTAL
DECEMBER 31      INVESTMENT    DISTRIBUTION     DIVIDENDS        VALUE
-----------     -----------    ------------    ----------        -----
    1986           $ 8,561        $ 2,025      $    167         $10,753
    1987             7,507          3,528           295          11,330
    1988             7,924          3,944           629          12,497
    1989             8,820          5,749         1,192          15,761
    1990             7,814          5,467         1,533          14,814
    1991             9,386          8,134         2,127          19,647
    1992             9,661          9,873         2,301          21,835
    1993            10,440         12,902         3,225          26,567
    1994             9,457         13,746         3,367          26,570
    1995            12,295         19,187         5,341          36,823

EXPLANATORY NOTES: The results assume that the initial investment on January 1, 1986 has been reduced by the current maximum applicable sales charge of 5.75%. No adjustment has been made for any income taxes payable by shareholders.

GENERAL: From time to time each Fund may, as appropriate, quote Fund rankings or reprint all or a portion of evaluations of fund performance and operations appearing in various independent publications, including but not limited to the following: Money, Fortune, U.S. News and World Report, Kiplinger's Personal Finance, The Wall Street Journal, Barron's, Investors Business Daily, Newsweek, Financial World, Financial Planning, Investment Advisor, USA Today, Pensions and Investments, SmartMoney, Forbes, Global Finance, Registered Representative, Institutional Investor, the Investment Company Institute, Johnson's Charts, Morningstar, Lipper Analytical Services, Inc., CDA Wiesenberger, Shearson Lehman and Salomon Bros. Indices, Ibbotson, Business Week, Lowry Associates, Media General, Investment Company Data, The New York Times, Your Money, Strangers Investment Advisor, Financial Planning on Wall Street, Standard and Poor's, Individual Investor, The 100 Best Mutual Funds You Can Buy, by Gordon K. Williamson, Consumer Price Index, and Sanford C. Bernstein & Co. Fund performance may also be compared to the performance of other mutual funds tracked by financial or business publications or periodicals.

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

The Fund may also quote evaluations mentioned in independent radio or television broadcasts.

From time to time the Fund may use charts and graphs to illustrate the past performance of various indices such as those mentioned above and illustrations using hypothetical rates of return to illustrate the effects of compounding and tax-deferral.

The Fund may advertise examples of the effects of periodic investment plans, including the principle of dollar cost averaging. In such a program, an investor invests a fixed dollar amount in a fund at periodic intervals, thereby purchasing fewer shares when prices are high and more shares when prices are low. While such a strategy does not assure a profit or guard against a loss in a declining market, the investor's average cost per share can be lower than if fixed numbers of shares are purchased at the same intervals.

MFS FIRSTS:  MFS has a long history of innovations.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

       --        1993 -- MFS becomes money manager of MFS(R) Union Standard
                 Trust, the first Trust to invest in companies deemed to be
                 union-friendly by an Advisory Board of senior labor officials,
                 senior managers of companies with significant labor contracts,
                 academics and other national labor leaders or experts.

9. DISTRIBUTION PLANS The Trustees have adopted a Distribution Plan for each of Class A, Class B and Class C shares (the "Distribution Plans") pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Rule") after having concluded that there is a reasonable likelihood that each Distribution Plan would benefit the Fund and the respective class of shareholders. The Distribution Plans are designed to promote sales, thereby increasing the net assets of the Fund. Such an increase may reduce the expense ratio to the extent the Fund's fixed costs are spread over a larger net asset base. Also, an increase in net assets may lessen the adverse effects that could result were the Fund required to liquidate portfolio securities to meet redemptions. There is, however, no assurance that the net assets of the Fund will increase or that the other benefits referred to above will be realized.

The Distribution Plans are described in the Prospectus under the caption "Distribution Plans," which is incorporated herein by reference. The following information supplements this Prospectus discussion.

SERVICE FEES: With respect to the Class A Distribution Plan, no service fees will be paid: (i) to any dealer who is the holder or dealer of record for investors who own Class A shares having an aggregate net asset value less than $750,000, or such other amount as may be determined from time to time by MFD (MFD, however, may waive this minimum amount requirement from time to time); or
(ii) to any insurance company which has entered into an agreement with the Fund and MFD that permits such insurance company to purchase Class A shares from the Fund at their net asset value in connection with annuity agreements issued in connection with the insurance company's separate accounts. Dealers may from time to time be required to meet certain other criteria in order to receive service fees.

With respect to the Class B Distribution Plan, except in the case of the first year service fee, no service fees will be paid to any securities dealer who is the holder or dealer of record for investors who own Class B shares having an aggregate net asset value of less than $750,000 or such other amount as may be determined by MFD from time to time. MFD, however, may waive this minimum amount requirement from time to time. Dealers may from time to time be required to meet certain other criteria in order to receive service fees.

MFD or its affiliates shall be entitled to receive any service fee payable under any Distribution Plan for which there is no dealer of record or for which qualification standards have not been met as partial consideration for personal services and/or account maintenance services performed by MFD or its affiliates for shareholder accounts.

DISTRIBUTION FEES: The purpose of distribution payments to MFD under the Distribution Plans is to compensate MFD for its distribution services to the Fund. MFD pays commissions to dealers as well as expenses of printing prospectuses and reports used for sales purposes, expenses with respect to the preparation and printing of sales literature and other distribution related expenses, including, without limitation, the cost necessary to provide distribution-related services, or personnel, travel, office expenses and equipment.

DISTRIBUTION AND SERVICE FEES PAID DURING THE FUND'S LAST FISCAL YEAR: During the fiscal year ended September 30, 1995, the Fund paid the following Distribution plan expenses:

                                    AMOUNT OF      AMOUNT OF      AMOUNT OF
                                  DISTRIBUTION   DISTRIBUTION   DISTRIBUTION
                                   AND SERVICE    AND SERVICE    AND SERVICE
                                    FEES PAID    FEES RETAINED  FEES RECEIVED
DISTRIBUTION PLANS                   BY FUND       BY MFD        BY DEALERS
- ------------------                   -------     ------------   --------------
Class A Distribution Plan           $935,377       $175,008       $760,369
Class B Distribution Plan           $807,085       $612,575       $194,510
Class C Distribution Plan           $114,386       $  1,558       $112,828

GENERAL: Each of the Distribution Plans will remain in effect until August 1, 1996, and will continue in effect thereafter only if such continuance is specifically approved at least annually by vote of both the Trustees and a majority of the Trustees who are not "interested persons" or financially interested parties of such Plan ("Distribution Plan Qualified Trustees"). Each of the Distribution Plans also requires that the Fund and MFD each shall provide the Trustees, and the Trustees shall review, at least quarterly, a written report of the amounts expended (and purposes therefor) under such Plan. Each of the Distribution Plans may be terminated at any time by vote of a majority of the Distribution Plan Qualified Trustees or by vote of the holders of a majority of the respective class of the Fund's shares (as defined in "Investment Restrictions"). All agreements relating to any of the Distributions Plans entered into between the Fund or MFD and other organizations must be approved by the Board of Trustees, including a majority of the Distribution Plan Qualified Trustees. Agreements under any of the Distribution Plans must be in writing, will be terminated automatically if assigned, and may be terminated at any time without payment of any penalty, by vote of a majority of the Distribution Plan Qualified Trustees or by vote of the holders of a majority of the respective class of the Fund's shares. None of the Distribution Plans may be amended to increase materially the amount of permitted distribution expenses without the approval of a majority of the respective class of the Fund's shares (as defined in "Investment Restrictions") or may be materially amended in any case without a vote of the Trustees and a majority of the Distribution Plan Qualified Trustees. The selection and nomination of Distribution Plan Qualified Trustees shall be committed to the discretion of the non-interested Trustees then in office. No Trustee who is not an "interested person" has any financial interest in any of the Distribution Plans or in any related agreement.

10. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional Shares of Beneficial Interest (without par value) of one or more separate series and to divide or combine the shares of any series into a greater or lesser number of shares without thereby changing the proportionate beneficial interests in that series. The Trustees have currently authorized shares of the Fund and one other series. The Declaration of Trust further authorizes the Trustees to classify or reclassify any series of shares into one or more classes. Pursuant thereto, the Trustees have authorized the issuance of three classes of shares of each series of the Trust (Class A, Class B and Class C shares). Each share of a class of the Fund represents an equal proportionate interest in the assets of the Fund allocable to that class. Upon liquidation of the Fund, the shareholders of each class of the Fund are entitled to share pro rata in the net assets of the Fund allocable to such class available for distribution to its shareholders. The Trust reserves the right to create and issue additional classes or series of shares, in which case the shares of each class would participate equally in the earnings, dividends and assets allocable to that class of the particular series.

Shareholders are entitled to one vote for each share held and may vote in the election of Trustees and on other matters submitted to meetings of shareholders. Although Trustees are not elected annually by the shareholders, shareholders have, under certain circumstances, the right to remove one or more Trustees. No material amendment may be made to the Declaration of Trust without the affirmative vote of the holders of a majority of the Trust's shares or by an instrument in writing without a meeting, signed by a majority of Trustees and consented to by the holders of more than 50% of the shares of the Fund outstanding and entitled to vote. Shares have no preemptive or conversion rights (except as described in "Purchases -- Conversion of Class B Shares" in the Prospectus). Shares when issued are fully paid and non-assessable.

The Trust may enter into a merger or consolidation, or sell all or substantially all of its assets (or all or substantially all of the assets belonging to any series of the Trust), if approved by the vote of the holders of two-thirds of the Trust's outstanding shares voting as a single class, or of the affected series of the Trust, as the case may be, except that if the Trustees of the Trust recommend such merger, consolidation or sale, the approval by vote of the holders of a majority of the Trust's or the affected series' outstanding shares (as defined in "Investment Objective, Policies and Restrictions -- Investment Restrictions") will be sufficient. The Trust or any series of the Trust may also be terminated (i) upon liquidation and distribution of its assets, if approved by the vote of the holders of two-thirds of its outstanding shares, or (ii) by the Trustees by written notice to the shareholders of the Trust or the affected series. If not so terminated the Trust will continue indefinitely.

The Trust is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the Declaration of Trust contains an express disclaimer of shareholder liability for acts, obligations or affairs of the Trust and provides for indemnification and reimbursement of expenses out of the Trust property for any shareholder held personally liable for the obligations of the Fund. The Declaration of Trust also provides that the Trust shall maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust itself was unable to meet its obligations.

The Declaration of Trust further provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust and that the Trustees will not be liable for any action or failure to act, but nothing in the Declaration of Trust protects a Trustee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.

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

The Portfolio of Investments at September 30, 1995, the Statement of Assets and Liabilities at September 30, 1995, the Statement of Operations for the year ended September 30, 1995, the Statement of Changes in Net Assets for each of the two years in the period ended September 30, 1995, the Notes to Financial Statements and the Independent Auditors' Report, each of which is included in the Annual Report to shareholders of the Fund, are incorporated by reference into this SAI and have been so incorporated in reliance upon the report of Deloitte & Touche LLP, independent auditors, as experts in accounting and auditing. A copy of the Annual Report accompanies this SAI.


APPENDIX A

DESCRIPTION OF BOND RATINGS

The ratings of Moody's, S&P and Fitch represent their opinions as to the quality of various bonds. IT SHOULD BE EMPHASIZED, HOWEVER, THAT RATINGS ARE NOT ABSOLUTE STANDARDS OF QUALITY. CONSEQUENTLY, BONDS WITH THE SAME MATURITY, COUPON AND RATING MAY HAVE DIFFERENT YIELDS WHILE BONDS OF THE SAME MATURITY AND COUPON WITH DIFFERENT RATINGS MAY HAVE THE SAME YIELD.

MOODY'S

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

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

Baa: Bonds which are rated Baa are considered as medium-grade obligations, (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

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

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted;

2. The issue or issuer belongs to a group of securities or companies that are not rated as a matter of policy;

3. There is a lack of essential data pertaining to the issue or issuer;

4. The issue was privately placed, in which case the rating is not published in Moody's publications.

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

NOTE: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes possess the strongest investment attributes are designated by the symbols Aa 1, A 1, Baa 1, Ba 1 and B 1.

S&P

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

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

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

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

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

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

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

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

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

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

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

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

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

FITCH

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                                                                                                        APPENDIX B


                                                    TRUSTEE COMPENSATION TABLE

                                                                       RETIREMENT BENEFIT      ESTIMATED       TOTAL TRUSTEE FEES
                                                       TRUSTEE FEES    ACCRUED AS PART OF    CREDITED YEARS      FROM FUND AND
    TRUSTEE                                            FROM FUND\1/     FUND EXPENSE\1/      OF SERVICE\2/      FUND COMPLEX\3/
- ----------------------------------------------------------------------------------------------------------------------------------
Richard B. Bailey                                        $2,810             $  593                  8              $263,815
A. Keith Brodkin                                          --0--              --0--                N/A                --0--
Peter G. Harwood                                          3,220                314                  5               111,366
J. Atwood Ives                                            3,060                605                 17               101,356
Lawrence T. Perera                                        2,920              1,576                 23               102,546
William Poorvu                                            3,220              1,572                 25               111,366
Charles W. Schmidt                                        3,080              1,491                 20               105,411
Arnold D. Scott                                           --0--              --0--                N/A                --0--
Jeffrey L. Shames                                         --0--              --0--                N/A                --0--
Elaine R. Smith                                           3,080                577                 27               105,411
David B. Stone                                            3,290              1,370                 14               115,521

\1/ For fiscal year ended September 30, 1995.
\2/ Based on normal retirement age of 73.
\3/ For calendar year 1995. All Trustees receiving compensation served as Trustees of 20 funds within the MFS fund complex (having
    aggregate net assets at December 31, 1995, of approximately $17.5 billion) except Mr. Bailey, who served as Trustee of 70
    funds within the MFS fund complex (having aggregate net assets at December 31, 1995, of approximately $30.1 billion).


                                   ESTIMATED ANNUAL BENEFITS PAYABLE BY FUND UPON RETIREMENT\4/


                                                                                   YEARS OF SERVICE
                                                       ------------------------------------------------------------------------
                 AVERAGE TRUSTEE FEES                          3                 5                 7             10 OR MORE
- -------------------------------------------------------------------------------------------------------------------------------
                        $2,530                               $380              $633             $  886            $1,265
                         2,750                                413               688                963             1,375
                         2,970                                446               743              1,040             1,485
                         3,190                                479               798              1,117             1,595
                         3,410                                512               853              1,194             1,705
                         3,630                                545               908              1,271             1,815

\4/ Other funds in the MFS fund complex provide similar retirement benefits to the Trustees.


INVESTMENT ADVISER

Massachusetts Financial Services Company 500 Boylston Street, Boston, MA 02116
(617) 954-5000

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

CUSTODIAN
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) 225-2606

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

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

MFS(R)
RESEARCH
FUND

500 BOYLSTON STREET
BOSTON, MA 02116

Printed on recycled paper.

MFR-13-2/96/500 14/214/314


MFS RESEARCH FUND
(A SERIES OF MFS SERIES TRUST V)

500 BOYLSTON STREET o BOSTON o MASSACHUSETTS 02116-3741
617 o 954-5000

November 22, 1995

VIA EDGAR

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549

Re: MFS Series Trust V (File No. 811-2031), on Behalf of MFS Research Fund

Ladies and Gentlemen:

Pursuant to the requirements of Section 30(b) of the Investment Company Act of 1940 and Rule 30b2-1 thereunder, we hereby file a copy of the Annual Report to Shareholders dated September 30, 1995 of MFS Research Fund.

Very truly yours,

LORRAINE K. GRIP

Lorraine K. Grip
Senior Production Editor

\lkg


[LOGO] MFS [R]                                            Annual Report for
THE FIRST NAME IN MUTUAL FUNDS                                   Year Ended
                                                         September 31, 1995

MFS [R] Research Fund


[A photo of computer disks.]


[LOGO] MFS [R] RESEARCH FUND

TRUSTEES
A. Keith Brodkin* - Chairman and President

Richard B. Bailey* - Private Investor;
Former Chairman and Director (until 1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp; Director, Cambridge Trust Company

Peter G. Harwood - Private Investor

J. Atwood Ives - Chairman and Chief Executive Officer, Eastern Enterprises

Lawrence T. Perera - Partner,
Hemenway & Barnes

William J. Poorvu - Adjunct Professor,
Harvard University Graduate School of
Business Administration

Charles W. Schmidt - Private Investor

Arnold D. Scott* - Senior Executive Vice President, Director and Secretary, Massachusetts Financial Services Company

Jeffrey L. Shames* - President and Director, Massachusetts Financial Services Company

Elaine R. Smith - Independent Consultant

David B. Stone - Chairman, North American Management Corp.
(Investment Adviser)

INVESTMENT ADVISER
Massachusetts Financial Services Company 500 Boylston Street
Boston, MA 02116-3741

DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741

TREASURER
W. Thomas London*

ASSISTANT TREASURER
James O. Yost*

SECRETARY
Stephen E. Cavan*

Assistant Secretary
JAMES R. BORDEWICK, JR.*

Custodian
Investors Bank & Trust Company

Auditors
Deloitte & Touche llp

INVESTOR INFORMATION

For MFS stock and bond market outlooks, call toll free: 1-800-637-4458 anytime from a touch-tone telephone.

For information on MFS mutual funds, call your financial adviser or, for an information kit, call toll free: 1-800-637-2929 any business day from 9 a.m. to 5 p.m. Eastern time (or leave a message anytime).

Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free:
1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.

For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any business day from 9 a.m. to 5 p.m. Eastern time. (To use this service, your phone must be equipped with a Telecommunications Device for the Deaf.)

For share prices, account balances and exchanges, call toll free: 1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.

TOP-RATED SERVICE

For the second year in a row, MFS earned a #1 ranking in DALBAR Inc.'s Broker-Dealer Survey, Main Office Operations Service Quality category. The firm achieved a 3.49 overall score -- on a scale of 1 to 4 -- in the 1995 survey. A total of 71 firms responded, offering input on the quality of service they receive from 36 mutual fund companies nationwide. The survey contained questions about service quality in 17 categories, including "knowledge of phone service contacts," "accuracy of transaction processing," and "overall ease of doing business with the firm."

SOURCE: 1995 Dalbar Survey

*Affiliated with the Investment Adviser


LETTER TO SHAREHOLDERS

Dear Shareholders:

For the year ended September 30, 1995, Class A shares of the Fund experienced a total return of +24.49%, Class B shares +23.55%, and Class C shares +23.58%, while the Standard &Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index of common stock performance, reported a total return of +29.71%. All of the Fund's returns assume the reinvestment of distributions but exclude the effects of any sales charges. Strong performance by the technology and financial services sectors helped the Fund during the year, although some of those gains were offset by underperformance in the cellular telephone and health care industries. A further discussion of our strategy for the Fund may be found in the Portfolio Performance and Strategy section of this letter.

Economic Outlook

Moderate, but sustainable growth appears to be the hallmark of the economic expansion's fifth year. After slowing earlier in the summer, homebuying was making modest gains by September 30, although consumer spending was still showing some areas of weakness. Businesses, meanwhile, continued to work off excess in ventories and reduce factory output. At the same time, overseas economies, particularly those of Germany and Japan, have not recovered as expected, limiting U.S. export growth. However, we believe the Federal Reserve Board's consistent and, so far, successful efforts to fight inflation seem to be giving consume rs and businesses enough confidence to help maintain 2 1/2% to 3% real (adjusted for inflation) growth in gross domestic product, at least through 1995.

Stock Market

For a number of growth sectors, such as technology, leisure and household products, the longer-term outlook remains favorable, as do the prospects for many small-company stocks because of their growth potential relative to larger companies. Also, companies' increasing emphasis on cost-containment, coupled with their growing use of technology, has helped keep them competitive and reasonably profitable. Finally, we have been watching with interest the recent series of corporate mergers in such industries as banking, entertainment, health care and consumer products. Unlike previous merger waves, which were often intended to build conglomerates of loosely related or unrelated businesses, this year's mergers of similar companies seem to be more rationally based on the goal of helping the merged companies reduce costs and, in general, be more competitive. Looking ahead, we believe these factors, along with a stabilizing interest rate environment and a continuation of favorable earnings reports, will help maintain the stock market's long-term positive momentum.

1

LETTER TO SHAREHOLDERS - continued

Portfolio Performance and Strategy

The underperformance of the Fund was primarily due to three factors. First, the portfolio's holdings in the cellular telephone industry underperformed, due to changing market conditions related to the acquisition of Lin

Broadcasting by AT&T. This acquisition caused a reassessment of the value of cellular licenses, and the Fund's holdings in this sector have been reduced in the past year. Second, the Fund's holdings in the health care sector, primarily in health maintenance organizations, underperformed the market, due to increased price competition in some regional markets. However, we increased the Fund's holdings in this area, due to our confidence in the long-term growth potential of the diversified and well-managed companies in this industry. Stocks purchased in this category include United Healthcare and Pacificare. The third reason for underperformance lies in the past year's stock market rally, which has been concentrated in the largest-market capitalization companies (as represented by the S&P 500), while the Fund is diversified among our committee of analysts' top stock selections across all market capitalizations.

The Fund has been overweighted in the technology sector for the past 12 months and has benefited from the strong earnings of such companies as Intel, Microsoft and Cadence Design. The financial services sector has benefited from lower interest rates, strong earnings and improving valuations. In particular, the Fund benefited from its holdings in PennCorp Financial, Advanta and Capital One.

The Fund is currently overweighted in the technology, consumer staples and health care sectors. We believe that selected companies in these groups will continue to demonstrate strong earnings, despite the slowing economy. In technology, our emphasis is on selected computer software companies, such as Microsoft, Oracle and Informix, where we believe current profitability levels are sustainable due to the proprietary nature of these companies' products. The Fund is underweighted in the commodity-cyclical, automotive, transportation and energy sectors, because we believe the slow economy will lead to earnings disappointments for many of the companies in those groups.

2

LETTER TO SHAREHOLDERS - continued

We appreciate your support and welcome any questions or comments you may have.

Respectfully,

[A PHOTO OF A. KEITH BRODKIN,               [A PHOTO OF KEVIN R. PARKE,
CHAIRMAN AND PRESIDENT]                     PORTFOLIO MANAGER]


/s/ A. Keith Brodkin                        /s/ Kevin R. Parke

    A. Keith Brodkin                            Kevin R. Parke
    Chairman and President                      Director of Research

October 12, 1995

The MFS Research Analysts are responsible for the day-to-day management of the Fund under the general supervision of Mr. Parke.

TAX FORM SUMMARY

In January, 1996, shareholders will be mailed a Tax Form Summary reporting the federal tax status of all distributions paid during the calendar year 1995.

For the year ended September 30, 1995, the amount of distributions from income eligible for the 70% dividends-received deduction for corporations came to 100%.

Objective and Policies

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

The Fund's policy is to invest a substantial proportion of its assets in common stocks, or securities convertible into common stocks, of companies believed to possess better-than-average prospects for long-term growth. A smaller proportion of the assets may be invested in bonds, short-term obligations, preferred stocks or common stocks whose principal characteristic is income production rather than growth. The Fund may also invest in foreign securities.

3

PORTFOLIO CONCENTRATION

                                         Percent of                                       Percent of
Five Largest Industries                  Net Assets    Ten Largest Holdings               Net Assets
- ----------------------------------------------------------------------------------------------------
Consumer Goods And Services                     9.6    United Healthcare Corp.                   1.9
Insurance                                       6.8    McDonnell Douglas Corp.                   1.9
Medical And Health Technology And Services      6.5    Xilinx, Inc.                              1.8
Computer Software - Systems                     6.2    Intel                                     1.8
Electronics                                     4.7    Medisense, Inc.                           1.7
                                                       International Business Machines Corp.     1.7
                                                       Kimberly Clark Corp.                      1.6
                                                       Oracle Systems Corp.                      1.6
                                                       Colgate-Palmolive Co.                     1.5
                                                       Loral Corp.                               1.5

PERFORMANCE

The information below and on the following page illustrates the historical performance of MFSResearch Fund Class A shares in comparison to various market indicators. Fund results in the graph reflect the deduction of the 5.75% maximum sales charge; benchmark comparisons are unmanaged and do not reflect any fees or expenses. You cannot invest in an index. All results reflect the reinvestment of all dividends and capital gains.

Class B shares were offered effective September 7, 1993. Information on Class B share performance appears on the next page.

Please note that effective January 3, 1994, Class C shares were offered. Information on Class C share performance appears on the next page.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-Year Period Ended September 30, 1995)

[LINE GRAPH]

Line graph representing the growth of a $10,000 investment for the five-year period ended September 30, 1995. The graph is scaled from $5,000 to $30,000 in $5,000 segments. The years are marked in 12-month segments from 1990 to 1995. There are three lines drawn to scale. One is a solid line representing MFS Research Fund (Class A), a second line of short dashes represents the S&P 500, and a third line of medium-short dashes represents the Consumer Price Index.

MFS Research Fund (Class A)                        $22,840
S&P 500                                            $22,115
Consumer Price Index                               $11,545

4

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-Year Period Ended September 30, 1995)

[LINE GRAPH]

Line graph representing the growth of a $10,000 investment for the ten-year period ended September 30, 1995. The graph is caled from $0 to $50,000 in $10,000 segments. The years are marked in 12-month segments from 1985 to 1995. There are three lines drawn to scale. One is a solid line representing MFS Research Fund (Class A), a second line of short dashes represents the S&P 500, and a third line of medium-short dashes represents the Consumer Price Index.

MFS Research Fund (Class A)                        $44,171
S&P 500                                            $40,154
Consumer Price Index                               $14,143

AVERAGE ANNUAL TOTAL RETURNS

                                                                      1 YEAR            3 YEARS           5 YEARS        10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Research Fund (Class A) Including
  5.75% Sales Charge                                                  +17.32%           +17.49%           +17.96%          +14.92%

MFS Research Fund (Class A) At Net
  Asset Value                                                         +24.49%           +19.82%           +19.37%          +15.60%

MFS Research Fund (Class B) With CDSC*                                +19.55%              --                 --           +14.83%**

MFS Research Fund (Class B) Without CDSC                              +23.55%              --                 --           +16.49%**

MFS Research Fund (Class C)                                           +23.58%              --                 --           +15.79%#

Average Capital Appreciation Fund                                     +25.22%           +15.93%           +17.83%          +13.76%

Average Growth And Income Fund                                        +23.06%           +13.65%           +15.95%          +13.62%

Standard & Poor's 500 Composite Index                                 +29.71%           +14.96%           +17.20%          +16.01%

Consumer Price Index##                                                 +2.54%            +2.73%            +2.91%           +3.53%


  *These returns reflect the current maximum Class B contingent deferred sales charge (CDSC) of 4%.

 **For the period from the commencement of offering of Class B shares, September 7, 1993 to September 30, 1995.

 #For the period from the commencement of offering of Class C shares, January 3, 1994 to September 30, 1995. Class C shares have no
  initial sales charge or CDSC but, along with Class B shares, have higher annual fees and expenses than Class A shares.

##The Consumer Price Index is a popular measure of change in prices.

5

AVERAGE ANNUAL TOTAL RETURNS - continued

In the table on the previous page, we have included the average annual total returns of all growth and income funds (including the Fund) (394, 241, 186 and 116 funds) as well as all capital appreciation funds (152, 98, 85 and 49 funds) tracked by Lipper Analytical Services, Inc. (an independent firm which rates mutual fund performance) for the 1-, 3-, 5- and 10-year periods ended September 30, 1995, respectively. Because these returns do not reflect any applicable sales charges, we have also included the Fund's results at net asset value (no sales charge) for comparison.

All results are historical and, therefore, are not an indication of future results. The principal value and income return of an investment in a mutual fund will vary with changes in market conditions, and shares, when redeemed, may be worth more or less than their original cost. All Class A share results reflect the applicable expense subsidy which is explained in the Notes to Financial Statements. Had the subsidy not been in effect, the results would have been less favorable. The subsidy may be rescinded by MFS at any time.

6

PORTFOLIO OF INVESTMENTS - September 30, 1995

Common Stocks - 96.5%
================================================================================
ISSUER                                                  SHARES             VALUE
- --------------------------------------------------------------------------------
U.S. Common Stocks - 91.1%
   Aerospace - 3.3%
      Lockheed-Martin Corp.                             105,800      $ 7,101,825
      McDonnell Douglas Corp.                           161,150       13,335,163
      United Technologies Corp.                          33,000        2,916,375
                                                                     -----------
                                                                     $23,353,363
- --------------------------------------------------------------------------------
   Agricultural Products - 2.6%
      AGCO Corp.                                        173,400      $ 7,889,700
      Case Corp.                                        288,700       10,609,725
                                                                     -----------
                                                                     $18,499,425
- --------------------------------------------------------------------------------
   Airlines
      Midwest Express Holdings, Inc.*                     4,500      $   101,250
- --------------------------------------------------------------------------------
   Apparel And Textiles - 2.3%
      Deckers Outdoor Corp.*                            135,600      $ 1,101,750
      Nike, Inc., "B"                                    66,000        7,334,250
      Nine West Group, Inc.*                            172,300        7,839,650
                                                                     -----------
                                                                     $16,275,650
- --------------------------------------------------------------------------------
   Automotive - 0.2%
      Jason, Inc.*#                                     187,500      $ 1,370,625
- --------------------------------------------------------------------------------
   Banks And Credit Companies - 2.0%
      Chase Manhattan Corp.                             134,100      $ 8,196,863
      Northern Trust Co.                                134,100        6,168,600
                                                                     -----------
                                                                     $14,365,463
- --------------------------------------------------------------------------------
   Business Machines - 2.5%
      Affiliated Computer Co.*                           82,500      $ 2,413,125
      International Business Machines Corp.             124,900       11,787,438
      Motorola, Inc.                                     46,900        3,581,987
                                                                     -----------
                                                                     $17,782,550
- --------------------------------------------------------------------------------
   Business Services - 2.2%
      Ceridian Corp.*                                    208,200     $ 9,238,875
      Interim Services, Inc.*                            123,900       3,345,300
      Technology Solutions Co.*                          168,300       3,029,400
                                                                     -----------
                                                                     $15,613,575
- --------------------------------------------------------------------------------
   Cellular Phones - 1.0%
      Cellular Communications of Puerto Rico*            126,416     $ 3,855,688
      Telephone & Data Systems, Inc.                      73,300       3,078,600
                                                                     -----------
                                                                     $ 6,934,288
- --------------------------------------------------------------------------------
   CHEMICALS - 2.8%
      Air Products & Chemicals, Inc.                      66,000     $ 3,440,250
      Grace (W.R.) & Co.                                 152,600      10,186,050
      Hanna (M.A.) Co.                                    77,850       2,053,294
      Uniroyal Chemical Corp.*                           430,800       3,877,200
                                                                     -----------
                                                                     $19,556,794
- --------------------------------------------------------------------------------

7

PORTFOLIO OF INVESTMENTS - continued

Common Stocks - continued
================================================================================
ISSUER                                                  SHARES             VALUE
- --------------------------------------------------------------------------------
U.S. Common Stocks - Continued
   Computer Software - Personal Computers - 2.9%
      Electronic Arts, Inc.*                              162,700    $ 5,979,225
      Learning Co.*                                        65,100      3,938,550
      Microsoft Corp.*                                    100,600      9,104,300
      Network Peripherals*                                112,900      1,778,175
                                                                     -----------
                                                                     $20,800,250
- --------------------------------------------------------------------------------
   Computer Software - Systems - 6.2%
      Adobe Systems, Inc.                                  73,400    $ 3,798,450
      Cadence Design Systems, Inc.*                       254,100      9,973,425
      Compaq Computer Corp.*                              114,100      5,519,588
      Compuware Corp.*                                    175,400      3,858,800
      Informix Corp.*                                     237,700      7,725,250
      Oracle Systems Corp.*                               293,750     11,272,656
      Sybase, Inc.*                                        62,100      1,994,962
                                                                     -----------
                                                                     $44,143,131
- --------------------------------------------------------------------------------
   Construction Services - 0.9%
      Champion International Corp.                        120,500    $ 6,491,938
- --------------------------------------------------------------------------------
   Consumer Goods And Services - 9.6%
      Colgate-Palmolive Co.                               160,700    $10,706,638
      Duracell International, Inc.                        163,300      7,328,087
      Gillette Co.                                        177,200      8,439,150
      Leggett & Platt, Inc.                                76,200      1,876,425
      Philip Morris Cos., Inc.                            120,700     10,078,450
      Procter & Gamble Co.                                134,800     10,379,600
      RJR Nabisco Holdings Corp.                          230,540      7,463,733
      Service Corporation International                   116,300      4,550,238
      Tyco International Ltd.                             118,800      7,484,400
                                                                     -----------
                                                                     $68,306,721
- --------------------------------------------------------------------------------
   Defense Electronics - 1.5%
     Loral Corp.                                          189,200    $10,784,400
- --------------------------------------------------------------------------------
   Electronics - 4.7
      Intel Corp.                                         212,100    $12,752,512
      LSI Logic Corp.*                                     65,400      3,776,850
      National Semiconductor Corp.*                       134,500      3,715,562
      Xilinx, Inc.*                                       272,900     13,133,312
                                                                     -----------
                                                                     $33,378,236
- --------------------------------------------------------------------------------
   Entertainment - 2.7%
      Aztar Corp.*                                        624,400    $ 5,229,350
      Boyd Gaming Corp.*                                    9,200        137,402
      Harrah's Entertainment, Inc.*                       242,000      7,078,500
      Showboat, Inc.                                      281,500      6,087,438
      Starsight Telecast, Inc.*                           150,000        562,500
                                                                     -----------
                                                                     $19,095,190
- --------------------------------------------------------------------------------
   Financial Institutions - 1.5%
      Advanta Corp., "B"                                  148,000     $6,290,000
      Integra Financial Corp.                              74,600      4,336,125
                                                                     -----------
                                                                     $10,626,125
- --------------------------------------------------------------------------------

8

PORTFOLIO OF INVESTMENTS - continued

Common Stocks - continued
================================================================================
ISSUER                                                  SHARES             VALUE
- --------------------------------------------------------------------------------
U.S. Common Stocks - Continued
   Food And Beverage Products - 4.5%
      CPC International, Inc.                             106,300    $ 7,015,800
      Kellogg Co.                                          93,300      6,752,588
      PepsiCo, Inc.                                       159,000      8,109,000
      Pioneer Hi-Bred International, Inc.                 129,800      5,970,800
      Universal Foods Corp.                               116,100      4,048,987
                                                                     -----------
                                                                     $31,897,175
- --------------------------------------------------------------------------------
   Forest And Paper Products - 2.5%
      International Paper Co.                             140,400    $ 5,896,800
      Kimberly Clark Corp.                                174,400     11,706,600
                                                                     -----------
                                                                     $17,603,400
- --------------------------------------------------------------------------------
   Insurance - 6.8%
      AFLAC, Inc.                                         115,100    $ 4,776,650
      American Re Corp.                                   153,100      5,894,350
      CIGNA Corp.                                          70,200      7,309,575
      Equitable of Iowa Cos                               193,300      7,152,100
      MBIA, Inc.                                          103,000      7,261,500
      Penncorp Financial Group, Inc.                      417,100      9,958,263
      Travelers, Inc.                                     109,700      5,827,812
                                                                     -----------
                                                                     $48,180,250
- --------------------------------------------------------------------------------
   Machinery - 0.5%
      IDEX Corp.                                           18,000    $   643,500
      York International Corp.                             74,100      3,121,463
                                                                     -----------
                                                                     $ 3,764,963
- --------------------------------------------------------------------------------
   Medical And Health Products - 4.1%
      Johnson & Johnson                                    40,100    $ 2,972,412
      Medisense, Inc.*                                    500,400     12,072,150
      Pfizer, Inc.                                         79,000      4,216,625
      Uromed Corp.*                                       755,500      7,555,000
      Zoll Medical Corp.*                                 208,100      1,950,938
                                                                     -----------
                                                                     $28,767,125
- --------------------------------------------------------------------------------
   Medical And Health Technology And ServiceS - 6.5%
      Community Health Systems*                            90,100    $ 3,637,788
      Integrated Health Services, Inc.                     54,000      1,525,500
      Living Centers of America*                           96,300      3,201,975
      Mariner Health Group, Inc.*                         100,200      1,415,325
      Pacificare Health Systems, Inc., "A"*                 9,800        641,900
      Pacificare Health Systems, Inc., "B"*                99,100      6,738,800
      Renal Treatment Centers, Inc.*                      134,000      4,958,000
      St. Jude Medical, Inc.*                             156,100      9,873,325
      United Healthcare Corp.                             286,500     14,002,687
                                                                     -----------
                                                                     $45,995,300
- --------------------------------------------------------------------------------
   Oil Services - 0.5%
     BJ Services Co.*                                     144,400     $3,646,100
- --------------------------------------------------------------------------------
   Oils - 2.0%
      Mitchell Energy & Development Corp.                 268,300    $ 4,728,788
      Mobil Corp.                                          96,300      9,593,887
                                                                     -----------
                                                                     $14,322,675
- --------------------------------------------------------------------------------

9

PORTFOLIO OF INVESTMENTS - continued

Common Stocks - continued
================================================================================
ISSUER                                                  SHARES             VALUE
- --------------------------------------------------------------------------------
U.S. Common Stocks - Continued
   Pollution Control - 1.2%
      WMX Technologies, Inc.                              282,400   $  8,048,400
      Western Waste Industries*                            36,400        728,000
                                                                    ------------
                                                                    $  8,776,400
- --------------------------------------------------------------------------------
   Railroads - 1.1%
      Wisconsin Central Transportation Corp.*             117,500   $  7,843,125
- --------------------------------------------------------------------------------
   Restaurants And Lodging - 2.3%
      Applebee's International, Inc.                      103,100   $  2,809,475
      Buffets, Inc.*                                       77,800        972,500
      HFS, Inc.*                                           44,300      2,320,212
      Hammons (John Q) Hotels, Inc.*                       25,700        330,888
      Lone Star Steakhouse and Saloon, Inc.*               67,000      2,747,000
      Promus Hotel Corp.*                                 149,750      3,406,813
      Quantum Restaurant Group, Inc.*                     100,000      1,337,500
      Sonic Corp.*                                        100,350      2,282,962
                                                                    ------------
                                                                    $ 16,207,350
- --------------------------------------------------------------------------------
   Special Products And Services - 2.4%
      Intertape Polymer Group, Inc.                       211,800   $  6,195,150
      Sphere Drake Holdings Ltd.                          246,800      3,702,000
      Stanley Works                                       164,300      7,126,513
                                                                    ------------
                                                                    $ 17,023,663
- --------------------------------------------------------------------------------
   Stores - 3.2%
      Circuit City Stores, Inc.                           203,000   $  6,419,875
      Dayton-Hudson Corp.                                  95,100      7,215,713
      Lowe's Companies, Inc.                               94,200      2,826,000
      Office Depot, Inc.*                                 208,100      6,269,012
                                                                    ------------
                                                                    $ 22,730,600
- --------------------------------------------------------------------------------
   Telecommunications - 1.8%
      Cabletron Systems, Inc.*                            119,900   $  7,898,412
      Rogers Communications, Inc., "B"*                   519,600      5,130,167
                                                                    ------------
                                                                    $ 13,028,579
- --------------------------------------------------------------------------------
   Utilities - Electric
      Sithe Energies, Inc.*                                24,200   $    193,600
- --------------------------------------------------------------------------------
   Utilities - Gas - 1.8%
      Coastal Corp.                                       211,700   $  7,118,412
      Enron Corp.                                         179,400      6,009,900
                                                                    ------------
                                                                    $ 13,128,312
- --------------------------------------------------------------------------------
   Utilities - Telephone - 1.0%
      MCI Communications Corp.                            273,700   $  7,133,306
- --------------------------------------------------------------------------------
Total U.S. Common Stocks (Identified Cost, $528,360,997)            $647,720,897
- --------------------------------------------------------------------------------
Foreign Stocks - 5.4%
   Denmark - 0.4%
      Tele Danmark, ADR (Utilities - Telephone)           110,500   $  2,859,188
- --------------------------------------------------------------------------------
   Finland - 0.5%
      Nokia, AB (Telecommunications Equipment)             48,800   $  3,425,921
- --------------------------------------------------------------------------------

10

PORTFOLIO OF INVESTMENTS - continued

Common Stocks - continued
================================================================================
ISSUER                                                  SHARES             VALUE
- --------------------------------------------------------------------------------
Foreign Stocks - Continued
   France - 0.8%
      Pinault-Printemps (Retail)                           27,000   $  5,722,288
- --------------------------------------------------------------------------------
   Italy - 0.7%
      Telecom Italia (Telecommunications)               2,110,200   $  2,761,197
      Telecom Italia Mobile SpA (Telecommunications)    2,110,200      2,329,240
                                                                    ------------
                                                                    $  5,090,437
- --------------------------------------------------------------------------------
   Malaysia - 0.5%
      New Straits Times Press (Publishing)              1,280,000   $  3,614,848
- --------------------------------------------------------------------------------
   Sweden - 2.3%
      Astra AB, Free Shares, "B"
          (Medical and Health Products)                   254,960   $  8,964,904
      Hennes & Mauritz, "B" (Retail)                      116,900      7,513,351
                                                                    ------------
                                                                    $ 16,478,255
- --------------------------------------------------------------------------------
   United Kingdom - 0.2%
      Invesco Fund Managers (Finance)                     429,200   $  1,498,466
- --------------------------------------------------------------------------------
Total Foreign Stocks (Identified Cost, $33,493,026)                 $ 38,689,403
- --------------------------------------------------------------------------------

Preferred Stocks - 0.3%
- --------------------------------------------------------------------------------
   Cellular Communications, Inc., Cv.
      (IDENTIFIED COST, $1,224,813)                        44,000   $  2,398,000
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $563,078,836)                 $688,808,300
- --------------------------------------------------------------------------------

Short-Term Obligations - 3.5%
- --------------------------------------------------------------------------------
                                                PRINCIPAL AMOUNT
ISSUER                                              (000 OMITTED)       VALUE
- --------------------------------------------------------------------------------

  Federal Home Loan Bank, due 10/25/95                   $ 7,000   $  6,972,876
  Federal National Mortgage Association, due 10/03/95      3,355      3,353,434
  Federal National Mortgage Association, due 10/05/95      5,000      4,996,111
  Ford Motor Credit, due 10/02/95                          8,850      8,846,803
  GTE South, Inc., due 10/04/95                            1,045      1,044,333
- --------------------------------------------------------------------------------
Total Short-term Obligations, At Amortized Cost And Value          $ 25,213,557
Total Investments (Identified Cost, $588,292,393)                  $714,021,857

Other Assets, Less Liabilities - (0.3%)                              (2,383,923)
- --------------------------------------------------------------------------------
NET ASSETS - 100.0%                                                $711,637,934
- --------------------------------------------------------------------------------
+ Restricted security.
* Non-income producing security.
# Security priced by management.

See notes to financial statements

11

FINANCIAL STATEMENTS

Statement of Assets and Liabilities
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
ASSETS:
  Investments, at value (identified cost, $588,292,393)             $714,021,857
  Cash                                                                    15,718
  Receivable for investments sold                                      4,892,389
  Receivable for Fund shares sold                                      5,257,943
  Dividends and interest receivable                                      982,322
  Other assets                                                             5,160
                                                                    ------------
     Total assets                                                   $725,175,389


Liabilities:
  Payable for investments purchased                                  $12,730,698
  Payable for Fund shares reacquired                                     377,003
  Payable to affiliates -
     Management fee                                                       14,270
     Shareholder servicing agent fee                                       4,332
     Distribution fee                                                    220,828
  Accrued expenses and other liabilities                                 190,324
                                                                    ------------
        Total liabilities                                            $13,537,455
                                                                    ------------
Net Assets                                                          $711,637,934
                                                                    ============
Net Assets Consist Of:
  Paid-in capital                                                   $537,626,146
  Unrealized appreciation on investments and translation of
      assets and liabilities in foreign currencies                   125,730,254

  Accumulated undistributed net realized gain on investments
      and foreign currency transactions                               46,863,005

  Accumulated undistributed net investment income                      1,418,529
                                                                    ------------
     Total                                                          $711,637,934
                                                                    ============
Shares of Beneficial Interest Outstanding                             45,769,252
                                                                    ============

Class A Shares:
  Net Asset Value And Redemption Price Per Share
     (net assets of $507,783,815 / 32,534,587 shares of
     beneficial interest outstanding)                                  $15.61
                                                                       ======
  Offering Price Per Share (100/94.25)                                 $16.56
                                                                       ======
Class B Shares:
  Net Asset Value And Offering Price Per Share
     (net assets of $178,116,815 / 11,565,395 shares of
     beneficial interest outstanding)                                  $15.40
                                                                       ======
Class C Shares:
  Net Asset Value, Offering Price And Redemption Price Per Share
     (net assets of $25,737,304 / 1,669,270 shares of
     beneficial interest outstanding)                                  $15.42
                                                                       ======

On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A and Class B shares.

See notes to financial statements

12

FINANCIAL STATEMENTS - continued

Statement of Operations
================================================================================
Year Ended September 30, 1995
- --------------------------------------------------------------------------------
Net Investment Income:
   Income -
     Dividends                                                     $  5,521,009
     Interest                                                         1,763,021
     Foreign taxes withheld                                            (108,803)
                                                                   ------------
        Total investment income                                    $  7,175,227
                                                                   ------------
   Expenses -
      Management fee                                               $  1,910,078
      Trustees' compensation                                             34,491
      Shareholder servicing agent fee (Class A)                         566,439
      Shareholder servicing agent fee (Class B)                         177,743
      Shareholder servicing agent fee (Class C)                          17,241
      Distribution and service fee (Class A)                          1,312,892
      Distribution and service fee (Class B)                            807,085
      Distribution and service fee (Class C)                            114,386
      Custodian fee                                                     210,356
      Postage                                                            58,944
      Printing                                                           55,127
      Auditing fees                                                      36,800
      Legal fees                                                         11,405
      Miscellaneous                                                     265,798
                                                                   ------------
        Total expenses                                             $  5,578,785

      Reduction of expenses by distributor                             (377,515)
      Fees paid indirectly                                              (31,373)
                                                                   ------------
        Net expenses                                               $  5,169,897
                                                                   ------------
           Net investment income                                   $  2,005,330
                                                                   ------------

Realized and Unrealized Gain (Loss)on Investments:
  Realized gain (loss) (identified cost basis) -
     Investment transactions                                       $ 47,491,369
     Foreign currency transactions                                      (36,682)
                                                                   ------------
        Net realized gain on investments                           $ 47,454,687
                                                                   ------------
  Change in unrealized appreciation -
     Investments                                                   $ 68,894,140
     Translation of assets and liabilities in foreign currencies            201
                                                                   ------------
        Net unrealized gain on investments                         $ 68,894,341
                                                                   ------------
           Net realized and unrealized gain on
             investments and foreign currency                      $116,349,028
                                                                   ------------
             Increase in net assets from operations                $118,354,358
                                                                   ============

See notes to financial statements

13

FINANCIAL STATEMENTS - continued

Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Year Ended September 30,                                  1995           1994
- --------------------------------------------------------------------------------
Increase In Net Assets:
From operations -
   Net investment income                            $  2,005,330    $   341,364
   Net realized gain on investments and
      foreign currency transactions                   47,454,687     34,277,386
   Net unrealized gain (loss) on investments
      and foreign currency                            68,894,341    (11,035,216)
                                                      ----------    -----------
      Increase in net assets from operations        $118,354,358    $23,583,534
                                                    ------------    -----------
Distributions declared to shareholders -
   From net investment income (Class A)             $   (481,316)   $  (700,869)
   From net investment income (Class B)                  (14,893)        (1,857)
   From net realized gain on investments and
      foreign currency transactions (Class A)           (820,736)   (61,514,987)
   From net realized gain on investments and
      foreign currency transactions (Class B)           (118,230)    (2,437,162)
   From net realized gain on investments and
        foreign currency transactions (Class C)          (16,120)      (411,703)

   In excess of net investment income (Class A)            --           (72,504)
   In excess of net investment income (Class B)            --              (192)
                                                     -----------   ------------
        Total distributions declared
           to shareholders                           $(1,451,295)  $(65,139,274)
                                                     -----------   ------------
Fund share (principal) transactions -
   Net proceeds from sale of shares                  $353,872,982  $ 89,603,156
   Net asset value of shares issued to
      shareholders in reinvestment
      of distributions                                  1,571,633    54,945,985
                                                     -----------   ------------
Cost of shares reacquired                            (109,372,045)  (48,796,609)
                                                     -----------   ------------
   Increase in net assets from
      Fund share transactions                        $246,072,570  $ 95,752,532
                                                     -----------   ------------
         Total increase in net assets                $362,975,633  $ 54,196,792

Net Assets:
   At beginning of period                             348,662,301   294,465,509
                                                     -----------   ------------
   At end of period (including accumulated
      undistributed net investment income
      (accumulated distributions in excess of
      net investment income of $1,418,529 and
      $(72,628), respectively)                       $711,637,934  $348,662,301
                                                     ============  ============

See notes to financial statements

14

FINANCIAL STATEMENTS - continued

Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended September 30,                                              1995         1994           1993          1992          1991
- ------------------------------------------------------------------------------------------------------------------------------------
                                                   Class A
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):

Net asset value - beginning of period                             $  12.59      $  14.47      $  12.18      $  11.84      $   9.62
                                                                  --------      --------      --------      --------      --------
Income from investment operations# -
   Net investment income*                                         $   0.08      $   0.02      $   0.11      $   0.07      $   0.27
   Net realized and unrealized gain on
      investments and foreign currency
      transactions                                                    2.99          1.01          3.15          1.27          2.21
                                                                  --------      --------      --------      --------      --------
       Total from investment operations                           $   3.07      $   1.03      $   3.26      $   1.34      $   2.48
                                                                  --------      --------      --------      --------      --------
   Less distributions declared to shareholders -
      From net investment income                                  $  (0.02)     $  (0.03)     $  (0.07)     $   --         $  (0.26)
      In excess of net realized gain on investments                    --          (0.01)          --           --            --
      From net realized gain on investments                          (0.03)        (2.87)        (0.90)        (1.00)         --
                                                                  --------      --------      --------      --------      --------
      Total distributions declared to
         shareholders                                             $  (0.05)     $  (2.91)     $  (0.97)     $  (1.00)     $  (0.26)
                                                                  --------      --------      --------      --------      --------
  Net asset value - end of period                                 $  15.61         12.59      $  14.47         12.18      $  11.84
                                                                  --------      --------      --------      --------      --------
  Total return++                                                     24.49%         7.72%        28.87%        11.79         25.87%

Ratios (to average net assets)/Supplemental data:
    Expenses##                                                        0.95%         0.91%         0.90%         0.84%         0.95%
    Net investment income                                             0.58%         0.14%         0.36%         0.59%         2.48%
  Portfolio turnover                                                    94%           79%           93%           74%          177%
  Net assets at end of period (000 omitted)                       $507,784      $318,170      $294,019      $240,366      $231,316
                                                                  --------      --------      --------      --------      --------



 ++Total returns for Class A shares do not include the applicable sales charge (except for reinvested  dividends prior to October 1,
   1989). If the charge had been included, the results would have been lower.

  #Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.

 ##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.

  *The distributor did not impose a portion of its distribution fees for the periods indicated. If this fee had been incurred by the
   Fund, the net investment income per share and the ratios would have been:

                 Net investment income#                           $   0.07      $   0.01           --            --           --
                 Ratios (to average net assets):
                    Expenses##                                        1.05%         1.01%          --            --           --
                    Net investment income                             0.48%         0.04%          --            --           --

See notes to financial statements

15

FINANCIAL STATEMENTS - continued

Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended September 30,                                        1990            1989            1988            1987           1986
- ------------------------------------------------------------------------------------------------------------------------------------
                                                             Class A
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period                       $  11.49        $  10.20        $  12.54        $  10.42       $  10.36
Income from investment operations -
   Net investment income                                    $   0.36        $   0.39        $   0.23        $   0.19       $   0.25
   Net realized and unrealized gain (loss) on
       investments and foreign currency
          transactions                                         (1.52)           2.30           (2.19)           4.43           2.50
                                                            --------        --------        --------          ------       --------
       Total from investment operations                     $  (1.16)       $   2.69        $  (1.96)       $   4.62       $   2.75
                                                            --------        --------        --------          ------       --------
Less distributions declared to shareholders -
   From net investment income                               $  (0.36)       $  (0.39)       $  (0.24)       $  (0.19)      $  (0.24)
   From net realized gain on investments                       (0.35)*         (1.01)          (0.14)          (2.31)         (2.45)
                                                            --------        --------        --------          ------       --------
       Total distributions declared to
         shareholders                                       $  (0.71)       $  (1.40)       $  (0.38)         $(2.50)      $  (2.69)
                                                            --------        --------        --------          ------       --------
Net asset value - end of period                             $   9.62        $  11.49        $  10.20          $12.54       $  10.42
                                                            ========        ========        ========          ======       ========
Total return**                                                (12.73)%         26.91%         (15.60)%         44.80%         26.65%

Ratios (to average net assets)/Supplemental data:
    Expenses                                                    0.83%           0.88%           0.86%           0.73%          0.77%
    Net investment income                                       3.21%           3.48%           2.36%           1.51%          1.88%
Portfolio turnover                                                79%             99%            116%            101%           102%
Net assets at end of period (000 omitted)                   $202,377        $251,857        $239,616        $321,050       $234,804



 * For the year ended September 30, 1990, the per share distribution from paid-in capital was $0.0009.
** Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to October 1,
   1989). If the charge had been included, the results would have been lower.

See notes to financial statements

16

FINANCIAL STATEMENTS - continued

Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended September 30,                                        1995            1994          1993**            1995       1994***
- ------------------------------------------------------------------------------------------------------------------------------------
                                                             Class B                                         Class C
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period                       $  12.50        $  14.47        $  13.95        $  12.51      $  13.18
                                                            --------        --------        --------        --------      --------
Income from investment operations# -
    Net investment income (loss)+                           $  (0.03)       $  (0.08)       $  (0.04)       $  (0.02)     $  (0.04)
    Net realized and unrealized gain (loss) on
       investments and foreign currency
         transactions                                           2.96            1.00            0.56            2.96          0.62
                                                            --------        --------        --------        --------      --------
       Total from investment operations                        $2.93        $   0.92        $   0.52        $   2.94      $   0.58
                                                            --------        --------        --------        --------      --------
Less distributions declared to shareholders -
From net investment income                                  $   --           $  (0.02)       $   --           $   --         $   --
   From net realized gain on investments                       (0.03)          (2.87)           --              (0.03)        (1.25)
                                                            --------        --------        --------        --------      --------
   Total distributions declared to
       shareholders                                         $  (0.03)       $  (2.89)       $   --           $  (0.03)     $  (1.25)
                                                            --------        --------        --------        --------      --------
Net asset value - end of period                             $  15.40        $  12.50        $  14.47        $  15.42      $  12.51
                                                            ========        ========        ========        ========      ========
  Total return                                                 23.55%           6.91%           3.73%          23.58%         4.43%
                                                            ========        ========        ========        ========      ========
Ratios (to average net assets)/Supplemental data:
    Expenses##                                                  1.78%           1.82%           2.33            1.71%         1.74%
    Net investment income (loss)                               (0.21)%         (0.65)%         (0.89)%         (0.15)%       (0.54)%

Portfolio turnover                                                94%             79%             93%             94%           79%

Net assets at end of period (000 omitted)                   $178,117         $25,672            $447         $25,737         $4,821


  * For the year ended September 30, 1995, the per share distribution from net investment income was $0.00003.
 ** For the period from the commencement of offering of Class B shares, September 7, 1993, to September 30, 1993.
*** For the period from the commencement of offering of Class C shares, January 3, 1994, to September 30, 1994.
  + Annualized.

  # Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding
 ## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.

See notes to financial statements

17

NOTES TO FINANCIAL STATEMENTS

(1) Business and Organization

MFS Research Fund (the Fund) is a diversified series of MFS Series Trust V (the Trust). The Trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.

(2) Significant Accounting Policies

INVESTMENT VALUATIONS - Equity securities listed on securities exchanges or reported through the NASDAQ system are valued at last sale prices. Unlisted equity securities or listed equity securities for which last sale prices are n ot available are valued at last quoted bid prices. Debt securities (other than short-term obligations which mature in 60 days or less), including listed issues and forward contracts, are valued on the basis of valuations furnished by dealers or by a pricing service with consideration to factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon exchange or over-the-counter prices. Short-term obligations, which mature in 60 days or less, are valued at amortized cost, which approximates market value. Non-U.S. dollar denominated short-term obligations are valued at amortized cost as calculated in the base currency and translated into U.S. dollars at the closing daily exchange rate. Securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Trustees.

REPURCHASE AGREEMENTS - The Fund may enter into repurchase agreements with institutions that the Fund's investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. The Fund requires that the securities purchased in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the Fund to obtain those securities in the event of a default under the repurchase agreement. The Fund monitors, on a daily basis, the value of the securities transferred to ensure that the value, including accrued interest, of the securities under each repurchase agreement is greater than amounts owed to the Fund under each such repurchase agreement.

FOREIGN CURRENCY TRANSLATION - Investment valuations, other assets, and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses att ributable to foreign exchange rate movements on income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.

18

NOTES TO FINANCIAL STATEMENTS - continued

Investment Transactions And Income - Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and original issue discount are amortized or accreted for financial statement and tax reporting purposes as required by federal income tax regulations. Dividend income is recorded on the ex-dividend date for dividends received in cash. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.

Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on the Fund's average daily net assets. The fee is reduced according to a fee arrangement, which provides for custody fees to be reduced based on a formula developed to measure the value of cash deposited with the custodian by the Fund. This amount is shown as a reduction of expenses on the Statement of Operations.

Tax Matters And Distributions - The Fund's policy is to comply with the provisions of the Internal Revenue Code (the Code) applicable to regulated investment companies and to distribute to shareholders all of its net income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is provided. The Fund files a tax return annually using tax accounting methods required under provisions of the Code which may differ from generally accepted accounting principles, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on these financial statements may differ from that reported on the Fund's tax return, and consequently, the character of distributions to shareholders reported in the financial highlights may differ from that reported to shareholders on Form 1099-DIV.

Foreign taxes have been provided for on interest and dividend income earned on foreign investments in accordance with the applicable country's tax rates and to the extent unrecoverable are recorded as a reduction of investment income. Distributions to shareholders are recorded on the ex-dividend date. The Fund distinguishes between distributions on a tax basis and a financial reporting basis and requires that only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or accumulated net realized gains. During the year ended September 30, 1995, $17,964 was reclassified from accumulated undistributed net investment income to accumulated net realized gain on investments, due to differences between book and tax accounting for currency transactions. This change had no effect on the net assets or net asset value per share.

Multiple Classes Of Shares Of Beneficial Interest - The Fund offers Class A, Class B, and Class C shares. The three classes of shares differ in their respective shareholder servicing agent, distribution and service fees. All shareholders bear the common expenses of the Fund

19

NOTES TO FINANCIAL STATEMENTS - continued

pro rata based on the average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

(3) Transactions with Affiliates

Investment Adviser - The Fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to provide overall investment advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an effective annual rate of 0.34% of average daily net assets and 4.28% of investment income. The Fund pays no compensation directly to its Trustees who are officers of the investment adviser, or to officers of the Fund, all of whom receive remuneration for their services to the Fund from MFS. Certain of the officers and Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan for all of its independent Trustees and Mr. Bailey. Included in Trustees' compensation is a net periodic pension expense of $9,811 for the year ended September 30, 1995.

Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received $218,078 for the year ended September 30, 1995, as its portion of the sales charge on sales of Class A shares of the Fund. The Trustees have adopted separate distribution plans for Class A, Class B and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:

The Class A distribution plan provides that the Fund will pay MFD up to 0.35% per annum of its average daily net assets attributable to Class A shares in order that MFD may pay expenses on behalf of the Fund related to the distribution and servicing of its shares. These expenses include a service fee to each securities dealer that enters into a sales agreement with MFD of up to 0.25% per annum of the Fund's average daily net assets attributable to Class A shares which are attributable to that securities dealer, a distribution fee to MFD of up to 0.10% per annum of the Fund's average daily net assets attributable to Class A shares, commissions to dealers and payments to MFD wholesalers for sales at or above a certain dollar level, and other such distribution-related expenses that are approved by the Fund. MFD retains the service fee for accounts not attributable to a securities dealer which amounted to $175,008 for the year ended September 30, 1995. MFD is waiving the 0.10% distribution fee for an indefinite period. Fees incurred under the distribution plan during the year ended September 30, 1995 were 0.25% of average daily net assets attributable to Class A shares on an annualized basis.

The Class B and Class C distribution plans provide that the Fund will pay MFD a distribution fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the Fund's average daily net assets attributable to Class B and Class C shares. MFD will pay to securities dealers that enter into a sales agreement with MFD all or a portion of the service

20

NOTES TO FINANCIAL STATEMENTS - continued

fee attributable to Class B and Class C shares, and will pay to such securities dealers all of the distribution fee attributable to Class C shares. The service fee is intended to be additional consideration for services rendered by the dealer with respect to Class B and Class C shares. MFD retains the service fee for accounts not attributable to a securities dealer, which amounted to $6,633 and $1,558 for Class B and Class C shares, respectively, for the year ended September 30, 1995. Fees incurred under the distribution plans during the year ended September 30, 1995 were 1.00% of average daily net assets attributable to Class B and Class C shares on an annualized basis.

A contingent deferred sales charge is imposed on shareholder redemptions of Class A shares, on purchases of $1 million or more, in the event of a shareholder redemption within twelve months following the share purchase. A contingent deferred sales charge is imposed on shareholder redemptions of Class B shares in the event of a shareholder redemption within six years of purchase. MFD receives all contingent deferred sales charges. Contingent deferred sales charges imposed during the year ended September 30, 1995 were $654 and $109,742 for Class A and Class B shares, respectively.

Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a fee for its services as shareholder servicing agent. The fee is calculated as a percentage of the average daily net assets of each class of shares at an effective annual rate of up to 0.15%, up to 0.22%, and up to 0.15% attributable to Class A, Class B, and Class C shares, respectively.

(4) Portfolio Securities

Purchases and sales of investments, other than U.S. government securities, purchased option transactions and short-term obligations, aggregated $662,260,814 and $421,920,228, respectively. The cost and unrealized appreciation or depreciation in value of the investments owned by the Fund, as computed on a federal income tax basis, are as follows:

Aggregate cost                                                    $ 588,802,903
                                                                  =============
Gross unrealized appreciation                                     $ 139,337,502
Gross unrealized depreciation                                       (14,118,548)
                                                                  -------------
   Net unrealized appreciation                                    $ 125,218,954
                                                                  =============

21

NOTES TO FINANCIAL STATEMENTS - continued

(5) Shares of Beneficial Interest

The Fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in Fund shares were as follows:

Class A Shares                    Year Ended September 30,1995     Year Ended September 30,1994
                                  ----------------------------     ----------------------------
                                  Shares         Amount            Shares         Amount
- -----------------------------------------------------------------------------------------------

Shares sold                       12,798,218     $172,943,634     3,839,136     $ 51,599,673

Shares issued to shareholders in
  reinvestment of distributions      119,182        1,423,980     4,069,118       52,350,489

Shares reacquired                 (5,659,542)     (74,912,826)   (2,955,596)     (40,221,505)
                                  ----------     ------------     ---------     ------------
   Net increase                    7,257,858     $ 99,454,788     4,952,658     $ 63,728,657




Class B Shares                    Year Ended September 30,1995     Year Ended September 30,1994
                                  ----------------------------     ----------------------------
                                  Shares         Amount            Shares         Amount
- -----------------------------------------------------------------------------------------------
Shares sold                       11,678,569     $158,403,133       2,171,868     $ 29,076,136

Shares issued to shareholders in
  reinvestment of distributions       11,368          135,681         183,200        2,292,393

Shares reacquired                 (2,178,275)     (29,569,820)       (332,192)      (4,402,426)
                                  ----------     ------------       ---------     ------------
   Net increase                    9,511,662     $128,968,994       2,022,876     $ 26,966,103



Class C Shares                    Year Ended September 30,1995      Year Ended September 30,1994+
                                  ----------------------------      ----------------------------
                                  Shares         Amount             Shares         Amount
- -----------------------------------------------------------------------------------------------
Shares sold                        1,642,158     $22,526,215          673,209     $  8,927,347

Shares issued to shareholders in
  reinvestment of distributions        1,007          11,972           24,307          303,103

Shares reacquired                   (359,369)     (4,889,399)        (312,042)      (4,172,678)

                                  ----------     ------------        ---------     ------------
   Net increase                    1,283,796     $17,648,788          385,474     $  5,057,772

+For the period from the commencement of offering of Class C shares, January 3, 1994 to September 30, 1994.

(6) Line of Credit

The Fund entered into an agreement which enables it to participate with other funds managed by MFS in an unsecured line of credit with a bank which permits borrowings up to $350 million, collectively. Borrowings may be made to temporarily finance the repurchase of Fund shares. Interest is charged to each fund, based on its borrowings, at a rate equal to the bank's base rate. In addition, a commitment fee, based on the average daily unused portion of the line of credit, is allocated among the participating funds at the end of each quarter. The commitment fee allocated to the Fund for the year ended September 30, 1995 was $4,511.

22

NOTES TO FINANCIAL STATEMENTS - continued

(7) Restricted Security

The Fund may invest not more than 10% of its total net assets in securities which are subject to legal or contractual restrictions on resale. At September 30, 1995, the Fund owned the following restricted security (constituting 0.19% of total assets) which may not be publicly sold without registration under the Securities Act of 1933 (the 1993 Act). The Fund does not have the right to demand that such securities be registered. The value of this security is determined by valuations supplied by a pricing service or brokers or, if not available, in good faith or at the direction of the Trustees.

                           Date of         Share
Description            Acquisition        Amount         Cost             Value
- --------------------------------------------------------------------------------
Jason, Inc.                1/21/94       187,500     $1,650,000      $1,370,625

23

INDEPENDENT AUDITORS' REPORT

To the Trustees of MFS Series Trust V and Shareholders of MFS Research Fund:

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of MFS Research Fund (a series of MFS Series Trust
V) as of September 30, 1995, the related statement of operations for the year then ended, the statement of changes in net assets for the years ended September 30, 1995 and 1994, and the financial highlights for each of the years in the ten-year period ended September 30, 1995. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at September 30, 1995 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of MFS Research Fund at September 30, 1995, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated periods in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
November 3, 1995


This report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

24

IT'S EASY TO CONTACT US

MFS AUTOMATED INFORMATION

ACCOUNT INFORMATION:
Call 1-800-MFS-TALK (1-800-637-8255)
anytime.

MARKET OUTLOOK:
Call 1-800-637-4458 anytime for the MFS outlook on the bond and stock markets.

MFS PERSONAL SERVICE
ACCOUNT SERVICE:
Call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.

PRODUCT INFORMATION:
Call 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time.

IRA SERVICE:
Call 1-800-637-1255 any business day
from 8 a.m. to 6 p.m. Eastern time.

SERVICE FOR THE HEARING-IMPAIRED:
Call 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time (TDD required).

MFS MAILING ADDRESSES
FOR PERSONAL ACCOUNTS:
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906

FOR IRA ACCOUNTS:
MFS Service Center, Inc.
J.W. McCormack Station
P.O. Box 4501
Boston, MA 02101-9817

25

A WORD ABOUT MFS PRODUCTS AND SERVICES

MAKING ADDITIONAL INVESTMENTS AT YOUR CONVENIENCE

There are several easy ways to make additional single investments of at least $50:

o send a check with the lower portion of your account statement

o contact your financial adviser to purchase shares on your behalf

o wire additional investments through your bank; call us first for instructions.

MAKING ADDITIONAL INVESTMENTS AUTOMATICALLY

By investing a set amount at regular intervals, over time you will buy more shares when prices are low, and fewer shares when prices are high. Because dollar cost averaging involves periodic purchases regardless of fluctuating share prices, you should consider your financial ability to continue investing in periods of low prices. MFS offers two dollar-cost-averaging programs. See the prospectus for further details. Dollar cost averaging does not assure a profit or avoid a loss.

THE AUTOMATIC INVESTMENT PLAN offers a simple way to make regular investments of at least $50 through automatic withdrawals from your checking account.

THE AUTOMATIC EXCHANGE PLAN automatically exchanges shares from any MFS fund with $5,000 or more into the same class of shares in up to four other MFS funds. You choose the amounts of the exchanges (as little as $50) and their frequency.

 A Hypothetical Example of Automatic Monthly Investing Compounding at 8% a Year

 Amount       5 Years           10            15             20             25
- --------------------------------------------------------------------------------
 $  50         3,671         9,064        16,989         28,633         45,742
 $  75         5,506        13,596        25,483         42,950         68,613
 $ 100         7,341        18,128        33,978         57,266         91,484
 $ 200        14,683        36,257        67,956        114,532        182,968

For illustration only. Not indicative of future performance of any MFS fund.

For applications or further information call 1-800-225-2606 any business day from 8 a.m. to 8 p.m. Eastern time.

If you are a participant in a retirement plan, check with your plan sponsor regarding the availability of these options.

26

A FINANCIAL ADVISER CAN HELP YOU BE A BETTER INVESTOR

Financial advisers can be valuable resources for their clients, providing ongoing education and guidance about investments, as well as a wide range of services. Here are just some of the ways your financial adviser may be able to help you be a better investor:

# Day-to-day monitoring of your portfolio

# Tax recordkeeping

# In-depth information on fund managers, their track records and their tenure

# Risk/reward analyses of current or potential holdings

# Asset allocation advice

# Construction of a detailed personal financial profile

# Order and confirmation processing

# Information on a fund group's range of shareholder services

# Portfolio adjustments based on lifestyle changes

# Assistance with business retirement planning

# Evaluation of lump-sum distribution options

# Recommendations on a selection of fund groups

# Specialized research and investment information not readily available to individuals

# In-depth knowledge of markets and products, kept current by ongoing tracking

# Estate, tax, insurance, and business planning

# Help with possible savings on sales charges through breakpoints, rights of accumulation, and letters of intent

27

MFS INVESTMENT OPPORTUNITIES

MUTUAL FUNDS

The MFS Family of Funds, shown on the facing page, falls into the eight general categories below. All offer full-time professional management, a diversified portfolio, and a wide array of shareholder services.

STOCK FUNDS seek growth of capital rather than income through investments in stocks.

STOCK AND BOND FUNDS seek current income and growth of capital through investments in both stocks and bonds.

BOND FUNDS seek current income through investments in debt securities.

WORLD FUNDS seek stock, balanced, and bond fund objectives through investments in U.S. and foreign stocks and bonds. Limited-maturity funds seek current income and preservation of capital through investments in debt securities with remaining maturities of five years or less.

NATIONAL TAX-FREE BOND FUNDS seek current income exempt from federal income tax through investments in debt securities issued by states and municipalities.[1]

STATE TAX-FREE BOND FUNDS seek current income exempt from federal and state income taxes through investments in debt securities issued by a single state and its municipalities.[1]

MONEY MARKET FUNDS seek preservation of capital and current income through investments in short-term debt securities.[2]

To determine which MFS fund may be appropriate for you, please contact your financial adviser, who can help you relate these investment opportunities to your financial goals. If you prefer, you may call MFS Investor Information for literature[3] on MFS products and services: 1-800-637-2929, from 9 a.m. to 5 p.m. Eastern time any business day (leave a message anytime).

[1] A small portion of the income may be subject to federal, state and/or alternative minimum tax.

[2] Investments in money market funds are not issued or guaranteed by the U.S.
government and there is no assurance that the fund will be able to maintain a stable net asset value.

[3] Including a prospectus containing more complete information including charges and expenses. Read the prospectus carefully before investing.

28

THE MFS FAMILY OF FUNDS [Register mark]

America's Oldest Mutual Fund Group

The members of the MFS Family of Funds are grouped below according to the types of securities in their portfolios. For free prospectuses containing more complete information, including the exchange privilege and all charges and expenses, please contact your financial adviser or call MFS at 1-800-637-2929 any business day from 9 a.m. to 5 p.m. Eastern time (or, leave a message any time). This material should be read carefully before investing or sending money.

STOCK

Massachusetts Investors Trust

Massachusetts Investors Growth Stock Fund

MFS [R] Capital Growth Fund

MFS [R] Emerging Growth Fund

MFS [R] Gold & Natural Resources Fund

MFS [R] Growth Opportunities Fund

MFS [R] Managed Sectors Fund

MFS [R] OTC Fund

MFS [R] Research Fund

MFS [R] Value Fund

STOCK AND BOND

MFS [R] Total Return Fund

MFS [R] Utilities Fund

BOND

MFS [R] Bond Fund

MFS [R] Government Mortgage Fund

MFS [R] Government Securities Fund

MFS [R] High Income Fund

MFS [R] Intermediate Income Fund

MFS [R] Strategic Income Fund
(formerly MFS [R] Income & Opportunity Fund)

LIMITED MATURITY BOND

MFS [R] Government Limited Maturity Fund

MFS [R] Limited Maturity Fund

MFS [R] Municipal Limited Maturity Fund

WORLD

MFS [R] World Asset Allocation Fund

MFS [R] World Equity Fund

MFS [R] World Governments Fund

MFS [R] World Growth Fund

MFS [R] World Total Return Fund

NATIONAL TAX-FREE BOND

MFS [R] Municipal Bond Fund

MFS [R] Municipal High Income Fund
(closed to new investors)

MFS [R] Municipal Income Fund

STATE TAX-FREE BOND

Alabama, Arkansas, California, Florida, Georgia, Louisiana, Maryland, Massachusetts, Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia

MONEY MARKET

MFS [R] Cash Reserve Fund

MFS [R] Government Money Market Fund

MFS [R] Money Market Fund


MFS [R] RESEARCH FUND                                          BULK RATE
                                                               U.S. POSTAGE
                                                               P A I D
500 Boylston Street                                            U.S. POSTAGE
Boston, MA 02116                                               BOSTON, MA

[DALBAR LOGO]

MFR-2 11/95/62.5M 14/214/314


PART C

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

MFS TOTAL RETURN FUND

a) FINANCIAL STATEMENTS INCLUDED IN PARTS A AND B:

INCLUDED IN PART A OF THIS REGISTRATION STATEMENT:

For the ten years ended September 30, 1995:

Financial Highlights

INCLUDED IN PART B OF THIS REGISTRATION STATEMENT:
At September 30, 1995:
Portfolio of Investments*

Statements of Assets and Liabilities*

For the year ended September 30, 1995:


Statement of Operations*

For the two years ended September 30, 1995:


Statement of Changes in Net Assets*

MFS RESEARCH FUND

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

INCLUDED IN PART A OF THIS REGISTRATION STATEMENT:

For the ten years ended September 30, 1995:

Financial Highlights

INCLUDED IN PART B OF THIS REGISTRATION STATEMENT:
At September 30, 1995:
Portfolio of Investments**

Statement of Assets and Liabilities**

For the year ended September 30, 1995:


Statement of Operations**

For the two years ended September 30, 1995:


Statement of Changes in Net Assets**


*Incorporated by reference to the Annual Report to Shareholders dated September 30, 1995 filed with the SEC via EDGAR on December 7, 1995. **Incorporated by reference to the Annual Report to Shareholders dated September 30, 1995 filed with the SEC via EDGAR on December 7, 1995.

(b) EXHIBITS:

1 Amended and Restated Declaration of Trust, dated December 21, 1994; filed herewith.

2 Amended and Restated By-Laws, dated December 21, 1994; filed herewith.

3 Not Applicable

4 Form of Certificate representing ownership of the Registrant's Class A, B and C Shares of Beneficial Interest.(1)

5 (a) Investment Advisory Agreement for MFS Total Return Fund, a series of the Trust, dated January 18, 1985; filed herewith.

(b) Amendment No. 1 to Investment Advisory Agreement, dated November 19, 1985; filed herewith.

(c) Investment Advisory Agreement for MFS Research Fund, a Series of the Trust, dated September 1, 1993; filed herewith.

6 (a) Distribution Agreement between the Trust and MFS Fund Distributors, Inc., dated January 1, 1995; filed herewith.

(b) Dealer Agreement between MFS Fund Distributors, Inc. and a dealer, dated December 28, 1994 and the Mutual Fund Agreement between MFD and a bank or NASD affiliate, dated December 28, 1994. (2)

7 Retirement Plan for Non-Interested Person Trustees, dated January 1, 1991; filed herewith.

8 (a) Custodian Contract between Registrant (formerly known as Massachusetts Financial Total Return Trust) and Investors Bank and Trust Company, dated October 1, 1991; filed herewith.

(b) Amendment No. 1 to Custodian Contract, dated April 21, 1992; filed herewith.

9 (a) Shareholder Servicing Agent Agreement between the Registrant and Massachusetts Financial Service Center, Inc., dated August 1, 1985; filed herewith.

(b) Amendment to Shareholder Servicing Agent Agreement, dated December 28, 1993; filed herewith.

(c) Exchange Privilege Agreement, dated September 1, 1995. (3)

(d) Loan Agreement by and among the Banks named therein, the MFS Funds named therein and The First National Bank of Boston dated February 21, 1995. (4)

(e) Agreement and Plan of Reorganization dated January 15, 1985 between Registrant and Massachusetts Financial Development Fund, Inc; filed herewith.

(f) Dividend Disbursing Agency Agreement dated February 1, 1986; filed herewith.

10 Opinion and Consent of Counsel for the fiscal year ended September 30, 1995 filed with Registrant's Rule 24f-2 Notice on November 16, 1995.

11 Consent of Deloitte & Touche LLP - MFS Total Return Fund and MFS Research Fund; filed herewith.

12 Not Applicable.

13      Not Applicable.

14 (a)  Forms for Individual Retirement Account Disclosure Statement
        as currently in effect. (5)

   (b)  Forms for MFS 403(b) Custodial Account Agreement as
        currently in effect. (5)

   (c)  Forms for MFS Prototype Paired Defined Contribution Plans
        and Trust Agreement as currently in effect. (5)

15 (a)  Amended and Restated Distribution Plan for MFS Total Return
        Fund, dated December 21, 1994 for Class A shares; filed
        herewith.

   (b)  Distribution Plan for MFS Total Return Fund dated August 23,
        1993, for Class B shares; filed herewith.

   (c)  Distribution Plan for MFS Total Return Fund dated July 20,
        1994 for Class C shares; filed herewith.


   (d)  Distribution Plan for MFS Research Fund, dated September 1,
        1993 for Class A shares; filed herewith.

   (e)  Distribution Plan for MFS Research Fund dated September 1,
        1993, for Class B shares; filed herewith.


   (f)  Distribution Plan for MFS Research Fund dated December 28,
        1993, for Class C shares; filed herewith.


16      Schedule of Computation for Performance Quotations - Average
        Annual Total Rate of Return, Aggregate Total Rate of Return,
        Standardized Yield and Current Distribution Rate. (2)

17      Not Applicable.

18      Not Applicable.

Power of Attorney dated September 21, 1994; filed herewith.

(1) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915 and 811-4096) Post-Effective Amendment No. 28 filed with the SEC on July 28, 1985.

(2) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915 and 811-4096) Post-Effective Amendment No. 26 filed with the SEC on February 22, 1995.

(3) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and 811-4492) Post-Effective Amendment No. 13 filed with the SEC via EDGAR on November 28, 1995.

(4) Incorporated by reference to Post-Effective Amendment No. 28 on Form N-2 for MFS Municipal Income Trust (File No. 811-4841) filed with the SEC via EDGAR on February 28, 1995.

(5) Incorporated by reference to MFS Series Trust IX (File Nos. 2-50409 and 811-2464) Post-Effective Amendment No. 32 filed with the SEC via EDGAR on August 28, 1995.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Not applicable.


ITEM 26.  NUMBER OF HOLDERS OF SECURITIES

          FOR MFS TOTAL RETURN FUND

               (1)                                              (2)
          TITLE OF CLASS                               NUMBER OF RECORD HOLDERS


          Class A Shares of Beneficial Interest                140,013
                  (without par value)                  (as of December 31, 1995)

          Class B Shares of Beneficial Interest                 77,097
                  (without par value)                  (as of December 31, 1995)

          Class C Shares of Beneficial Interest                  1,794
                  (without par value)                  (as of December 31, 1995)

          FOR MFS RESEARCH FUND

          Class A Shares of Beneficial Interest                 36,050
                  (without par value)                  (as of December 31, 1995)

          Class B Shares of Beneficial Interest                 21,044
                  (without par value)                  (as of December 31, 1995)

          Class C Shares of Beneficial Interest                  2,373
                  (without par value)                  (as of December 31, 1995)

ITEM 27. INDEMNIFICATION

Reference is hereby made to (a) Article V of Registrant's Declaration of Trust amended and restated, December 21, 1994, filed herewith; (b) Section 9 of the Shareholder Servicing Agent Agreement filed herewith; and (c) the undertaking of the Registrant regarding indemnification set forth in its Registration Statement on Form S-5.

The Trustees and officers of the Registrant and the personnel of the Registrant's investment adviser and distributor are insured under an errors and omissions liability insurance policy. The Registrant and its officers are also insured under the fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

MFS serves as investment adviser to the following open-end Funds comprising the MFS Family of Funds: Massachusetts Investors Trust, Massachusetts Investors Growth Stock Fund, MFS Growth Opportunities Fund, MFS Government Securities Fund, MFS Government Limited Maturity Fund, MFS Series Trust I (which has eight series: MFS Managed Sectors Fund, MFS Cash Reserve Fund, MFS World Asset Allocation Fund, MFS Aggressive Growth Fund, MFS Research Growth and Income Fund, MFS Core Growth Fund, MFS Equity Income Fund and MFS Special Opportunities Fund), MFS Series Trust II (which has four series: MFS Emerging Growth Fund, MFS Capital Growth Fund, MFS Intermediate Income Fund and MFS Gold & Natural Resources Fund), MFS Series Trust III (which has two series: MFS High Income Fund and MFS Municipal High Income Fund), MFS Series Trust IV (which has four series: MFS Money Market Fund, MFS Government Money Market Fund, MFS Municipal Bond Fund and MFS OTC Fund), MFS Series Trust V (which has two series:
MFS Total Return Fund and MFS Research Fund), MFS Series Trust VI (which has three series: MFS World Total Return Fund, MFS Utilities Fund and MFS World Equity Fund), MFS Series Trust VII (which has two series: MFS World Governments Fund and MFS Value Fund), MFS Series Trust VIII (which has two series: MFS Strategic Income Fund and MFS World Growth Fund), MFS Series Trust IX (which has three series: MFS Bond Fund, MFS Limited Maturity Fund and MFS Municipal Limited Maturity Fund), MFS Series Trust X (which has four series: MFS Government Mortgage Fund, MFS/Foreign & Colonial Emerging Markets Equity Fund, MFS/Foreign & Colonial International Growth Fund and MFS/Foreign & Colonial International Growth and Income Fund), and MFS Municipal Series Trust (which has 19 series:
MFS Alabama Municipal Bond Fund, MFS Arkansas Municipal Bond Fund, MFS California Municipal Bond Fund, MFS Florida Municipal Bond Fund, MFS Georgia Municipal Bond Fund, MFS Louisiana Municipal Bond Fund, MFS Maryland Municipal Bond Fund, MFS Massachusetts Municipal Bond Fund, MFS Mississippi Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS Tennessee Municipal Bond Fund, MFS Texas Municipal Bond Fund, MFS Virginia Municipal Bond Fund, MFS Washington Municipal Bond Fund, MFS West Virginia Municipal Bond Fund and MFS Municipal Income Fund) (the "MFS Funds"). The principal business address of each of the aforementioned Funds is 500 Boylston Street, Boston, Massachusetts 02116.

MFS also serves as investment adviser of the following no-load, open-end Funds: MFS Institutional Trust ("MFSIT") (which has seven series), MFS Variable Insurance Trust ("MVI") (which has twelve series) and MFS Union Standard Trust ("UST") (which has two series). The principal business address of each of the aforementioned Funds is 500 Boylston Street, Boston, Massachusetts 02116.

In addition, MFS serves as investment adviser to the following closed-end Funds: MFS Municipal Income Trust, MFS Multimarket Income Trust, MFS Government Markets Income Trust, MFS Intermediate Income Trust, MFS Charter Income Trust and MFS Special Value Trust (the "MFS Closed-End Funds"). The principal business address of each of the aforementioned Funds is 500 Boylston Street, Boston, Massachusetts 02116.

Lastly, MFS serves as investment adviser to MFS/Sun Life Series Trust ("MFS/SL"), Sun Growth Variable Annuity Funds, Inc. ("SGVAF"), Money Market Variable Account, High Yield Variable Account, Capital Appreciation Variable Account, Government Securities Variable Account, World Governments Variable Account, Total Return Variable Account and Managed Sectors Variable Account. The principal business address of each is One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181.

MFS International Ltd. ("MIL"), a limited liability company organized under the laws of the Republic of Ireland and a subsidiary of MFS, whose principal business address is 41-45 St. Stephen's Green, Dublin 2, Ireland, serves as investment adviser to and distributor for MFS International Fund (which has four portfolios: MFS International Funds-U.S. Equity Fund, MFS International Funds-U.S. Emerging Growth Fund, MFS International Funds-Global Governments Fund and MFS International Funds-Charter Income Fund) (the "MIL Funds"). The MIL Funds are organized in Luxembourg and qualify as an undertaking for collective investments in transferable securities (UCITS). The principal business address of the MIL Funds is 47, Boulevard Royal, L-2449 Luxembourg.

MIL also serves as investment adviser to and distributor for MFS Meridian U.S. Government Bond Fund, MFS Meridian Charter Income Fund, MFS Meridian Global Government Fund, MFS Meridian U.S. Emerging Growth Fund, MFS Meridian Global Equity Fund, MFS Meridian Limited Maturity Fund, MFS Meridian World Growth Fund, MFS Meridian Money Market Fund, MFS Meridian World Total Return Fund and MFS Meridian U.S. Equity Fund (collectively the "MFS Meridian Funds"). Each of the MFS Meridian Funds is organized as an exempt company under the laws of the Cayman Islands. The principal business address of each of the MFS Meridian Funds is P.O. Box 309, Grand Cayman, Cayman Islands, British West Indies.

MFS International (U.K.) Ltd. ("MIL-UK"), a private limited company registered with the Registrar of Companies for England and Wales whose current address is 4 John Carpenter Street, London, England ED4Y 0NH, is involved primarily in marketing and investment research activities with respect to private clients and the MIL Funds and the MFS Meridian Funds.

MFS Fund Distributors, Inc. ("MFD"), a wholly owned subsidiary of MFS, serves as distributor for the MFS Funds, MVI, UST and MFSIT.

Clarendon Insurance Agency, Inc. ("CIAI"), a wholly owned subsidiary of MFS, serves as distributor for certain life insurance and annuity contracts issued by Sun Life Assurance Company of Canada (U.S.).

MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary of MFS, serves as shareholder servicing agent to the MFS Funds, the MFS Closed-End Funds, MFSIT, MVI and UST.

MFS Asset Management, Inc. ("AMI"), a wholly owned subsidiary of MFS, provides investment advice to substantial private clients.

MFS Retirement Services, Inc. ("RSI"), a wholly owned subsidiary of MFS, markets MFS products to retirement plans and provides administrative and record keeping services for retirement plans.

MFS

The Directors of MFS are A. Keith Brodkin, Jeffrey L. Shames, Arnold D. Scott, John R. Gardner and John D. McNeil. Mr. Brodkin is the Chairman, Mr. Shames is the President, Mr. Scott is a Senior Executive Vice President and Secretary, Bruce C. Avery, William S. Harris, William W. Scott, Jr., and Patricia A. Zlotin are Executive Vice Presidents, James E. Russell is a Senior Vice President and the Treasurer, Stephen E. Cavan is a Senior Vice President, General Counsel and an Assistant Secretary, Joseph W. Dello Russo is a Senior Vice President and Chief Financial Officer, Robert T. Burns is a Vice President and an Assistant Secretary of MFS, and Mary Kay Doherty is a Vice President and Assistant Treasurer.

MASSACHUSETTS INVESTORS TRUST
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
MFS GROWTH OPPORTUNITIES FUND
MFS GOVERNMENT SECURITIES FUND
MFS SERIES TRUST I
MFS SERIES TRUST V
MFS SERIES TRUST VI
MFS SERIES TRUST X
MFS GOVERNMENT LIMITED MATURITY FUND

A. Keith Brodkin is the Chairman and President, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Vice President of MFS, is the Assistant Treasurer, James R. Bordewick, Jr., Vice President and Associate General Counsel of MFS, is the Assistant Secretary.

MFS SERIES TRUST II

A. Keith Brodkin is the Chairman and President, Leslie J. Nanberg, Senior Vice President of MFS, is a Vice President, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer, and James R. Bordewick, Jr., is the Assistant Secretary.

MFS GOVERNMENT MARKETS INCOME TRUST
MFS INTERMEDIATE INCOME TRUST

A. Keith Brodkin is the Chairman and President, Patricia A. Zlotin, Executive Vice President of MFS and Leslie J. Nanberg, Senior Vice President of MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer, and James R. Bordewick, Jr., is the Assistant Secretary.

MFS SERIES TRUST III

A. Keith Brodkin is the Chairman and President, James T. Swanson, Robert J. Manning, Cynthia M. Brown and Joan S. Batchelder, Senior Vice Presidents of MFS, Bernard Scozzafava, Vice President of MFS, and Matthew Fontaine, Assistant Vice President of MFS, are Vice Presidents, Sheila Burns-Magnan and Daniel E. McManus, Assistant Vice Presidents of MFS, are Assistant Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer, and James R. Bordewick, Jr., is the Assistant Secretary.

MFS SERIES TRUST IV
MFS SERIES TRUST IX

A. Keith Brodkin is the Chairman and President, Robert A. Dennis and Geoffrey L. Kurinsky, Senior Vice Presidents of MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

MFS SERIES TRUST VII

A. Keith Brodkin is the Chairman and President, Leslie J. Nanberg and Stephen C. Bryant, Senior Vice Presidents of MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

MFS SERIES TRUST VIII

A. Keith Brodkin is the Chairman and President, Jeffrey L. Shames, Leslie J. Nanberg, Patricia A. Zlotin, James T. Swanson and John D. Laupheimer, Jr., Vice President of MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

MFS MUNICIPAL SERIES TRUST

A. Keith Brodkin is the Chairman and President, Cynthia M. Brown and Robert A. Dennis are Vice Presidents, David B. Smith, Geoffrey L. Schechter and David R. King, Vice Presidents of MFS, are Vice Presidents, Daniel E. McManus, Assistant Vice President of MFS, is an Assistant Vice President, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

MFS VARIABLE INSURANCE TRUST
MFS UNION STANDARD TRUST
MFS INSTITUTIONAL TRUST

A. Keith Brodkin is the Chairman and President, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

MFS MUNICIPAL INCOME TRUST

A. Keith Brodkin is the Chairman and President, Cynthia M. Brown and Robert J. Manning are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

MFS MULTIMARKET INCOME TRUST
MFS CHARTER INCOME TRUST

A. Keith Brodkin is the Chairman and President, Patricia A. Zlotin, Leslie J. Nanberg and James T. Swanson are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Vice President of MFS, is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

MFS SPECIAL VALUE TRUST

A. Keith Brodkin is the Chairman and President, Jeffrey L. Shames, Patricia A. Zlotin and Robert J. Manning are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, and James O. Yost, is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

SGVAF

W. Thomas London is the Treasurer.

MIL

A. Keith Brodkin is a Director and the Chairman, Arnold D. Scott and Jeffrey L. Shames are Directors, Ziad Malek, Senior Vice President of MFS, is the President, Thomas J. Cashman, Jr., a Senior Vice President of MFS, is a Senior Vice President, Stephen E. Cavan is a Director, Senior Vice President and the Clerk, James R. Bordewick, Jr. is a Director, Vice President and an Assistant Clerk, Robert T. Burns is an Assistant Clerk, Joseph W. Dello Russo is the Treasurer and James E. Russell is the Assistant Treasurer.

MIL-UK

A. Keith Brodkin is a Director and the Chairman, Arnold D. Scott, Jeffrey L. Shames, and James R. Bordewick, Jr., are Directors, Stephen E. Cavan is a Director and the Secretary, Ziad Malek is the President, Joseph W. Dello Russo is the Treasurer, and Robert T. Burns is the Assistant Secretary.

MIL FUNDS

A. Keith Brodkin is the Chairman, President and a Director, Richard B. Bailey, John A. Brindle and Richard W. S. Baker are Directors, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary, and Ziad Malek is a Senior Vice President.

MFS MERIDIAN FUNDS

A. Keith Brodkin is the Chairman, President and a Director, Richard B. Bailey, John A. Brindle, Richard W. S. Baker, Arnold D. Scott and Jeffrey L. Shames are Directors, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James R. Bordewick, Jr., is the Assistant Secretary, James O. Yost is the Assistant Treasurer, and Ziad Malek is a Senior Vice President.

MFD

A. Keith Brodkin is the Chairman and a Director, Arnold D. Scott and Jeffrey L. Shames are Directors, William W. Scott, Jr., an Executive Vice President of MFS, is the President, Stephen E. Cavan is the Secretary, Robert T. Burns is the Assistant Secretary, Joseph W. Dello Russo is the Treasurer, and James E. Russell is the Assistant Treasurer.

CIAI

A. Keith Brodkin is the Chairman and a Director, Arnold D. Scott and Jeffrey L. Shames are Directors, Cynthia Orcott is President, Bruce C. Avery is the Vice President, Joseph W. Dello Russo is the Treasurer, James E. Russell is the Assistant Treasurer, Stephen E. Cavan is the Secretary, and Robert T. Burns is the Assistant Secretary.

MFSC

A. Keith Brodkin is the Chairman and a Director, Arnold D. Scott and Jeffrey L. Shames are Directors, Joseph A. Recomendes, a Senior Vice President of MFS, is Vice Chairman and a Director, Janet A. Clifford is the Executive Vice President, Joseph W. Dello Russo is the Treasurer, James E. Russell is the Assistant Treasurer, Stephen E. Cavan is the Secretary, and Robert T. Burns is the Assistant Secretary.

AMI

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

RSI

William W. Scott, Jr., Joseph A. Recomendes and Bruce C. Avery are Directors, Arnold D. Scott is the Chairman and a Director, Douglas C. Grip, a Senior Vice President of MFS, is the President, Joseph W. Dello Russo is the Treasurer, James E. Russell is the Assistant Treasurer, Stephen E. Cavan is the Secretary, Robert T. Burns is the Assistant Secretary and Sharon A. Brovelli is a Senior Vice President.

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

A. Keith Brodkin        Director, Sun Life Assurance Company of
                         Canada (U.S.), One Sun Life Executive Park,
                         Wellesley Hills, Massachusetts
                        Director, Sun Life Insurance and Annuity
                         Company of New York, 67 Broad Street, New
                         York, New York

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

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

Joseph W. Dello Russo   Director of Mutual Fund Operations, The Boston
                         Company, Exchange Place, Boston,
                         Massachusetts (until August, 1994)

ITEM 29. DISTRIBUTORS

(a) Reference is hereby made to Item 28 above.

(b) Reference is hereby made to Item 28 above; the principal business address of each of these persons is 500 Boylston Street, Boston, Massachusetts 02116.

(c) Not applicable.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The accounts and records of the Registrant are located, in whole or in part, at the office of the Registrant and the following locations:

          NAME                                  ADDRESS

Massachusetts Financial                   500 Boylston Street
 Services Company                         Boston, MA  02116
 (investment adviser)

MFS Fund Distributors, Inc.               500 Boylston Street
 (principal underwriter)                  Boston, MA  02116

Investors Bank & Trust                    89 South Street
 Company                                  Boston, MA  02111
 (custodian)

MFS Service Center, Inc.                  500 Boylston Street
 (transfer agent)                         Boston, Mass.  02116

ITEM 31. MANAGEMENT SERVICES

Not applicable.

ITEM 32. UNDERTAKINGS

(a) Not Applicable.

(b) Not Applicable.

(c) Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the provisions set forth in Item 27 of this Part C, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being Registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(d) The registrant undertakes to furnish each person to whom a prospectus is delivered with a copy of the Registrant's latest annual report to shareholders upon request and without charge.


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Boston and The Commonwealth of Massachusetts on the 26th day of January, 1996.

MFS SERIES TRUST V

By:     JAMES R. BORDEWICK, JR.
Name:   James R. Bordewick, Jr.
Title:  Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to its Registration Statement has been signed below by the following persons in the capacities indicated on January 26, 1996.

             SIGNATURE             TITLE

A. KEITH BRODKIN*                  Chairman, President (Principal
A. Keith Brodkin                    Executive Officer) and Trustee


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


RICHARD B. BAILEY*                 Trustee
Richard B. Bailey


PETER G. HARWOOD*                  Trustee
Peter G. Harwood


J. ATWOOD IVES*                    Trustee
J. Atwood Ives


LAWRENCE T. PERERA*                Trustee
Lawrence T. Perera


WILLIAM J. POORVU*                 Trustee
William J. Poorvu


CHARLES W. SCHMIDT*                Trustee
Charles W. Schmidt


ARNOLD D. SCOTT*                   Trustee
Arnold D. Scott


JEFFREY L. SHAMES*                 Trustee
Jeffrey L. Shames


ELAINE R. SMITH*                   Trustee
Elaine R. Smith


DAVID B. STONE* Trustee David B. Stone

*By:    JAMES R. BORDEWICK, JR.
Name:   James R. Bordewick, Jr.
         as Attorney-in-fact

Executed by James R. Bordewick, Jr. on behalf of those indicated pursuant to a Power of Attorney dated September 21, 1994; filed herewith.


POWER OF ATTORNEY

MFS SERIES TRUST V

The undersigned, Trustees and officers of MFS Series Trust V (the "Registrant"), hereby severally constitute and appoint A. Keith Brodkin, W. Thomas London, Stephen E. Cavan and James R. Bordewick, Jr., and each of them singly, as true and lawful attorneys, with full power to them and each of them to sign for each of the undersigned, in the names of, and in the capacities indicated below, any Registration Statement and any and all amendments thereto and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission for the purpose of registering the Registrant as a management investment company under the Investment Company Act of 1940 and/or the shares issued by the Registrant under the Securities Act of 1933 granting unto our said attorneys, and each of them, acting alone, full power and authority to do and perform each and every act and thing requisite or necessary or desirable to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, the undersigned have hereunto set their hand on this 21st day of September, 1994.

                   SIGNATURES                              TITLE(S)



/s/ A. KEITH BRODKIN                          Chairman of the Board; Trustee;
- -------------------------------------           and Principal Executive Officer
    A. Keith Brodkin


/s/ RICHARD B. BAILEY                         Trustee
- -------------------------------------
    Richard B. Bailey


/s/ PETER G. HARWOOD                          Trustee
- -------------------------------------
    Peter G. Harwood


/s/ J. ATWOOD IVES                            Trustee
- -------------------------------------
    J. Atwood Ives


/s/ LAWRENCE T. PERERA                        Trustee
- -------------------------------------
    Lawrence T. Perera


/s/ WILLIAM J. POORVU                         Trustee
- -------------------------------------
    William J. Poorvu


/s/ CHARLES W. SCHMIDT                        Trustee
- -------------------------------------
    Charles W. Schmidt


/s/ ARNOLD D. SCOTT                           Trustee
- -------------------------------------
    Arnold D. Scott


/s/ JEFFREY L. SHAMES                         Trustee
- -------------------------------------
    Jeffrey L. Shames


/s/ ELAINE R. SMITH                           Trustee
- -------------------------------------
    Elaine R. Smith


/s/ DAVID B. STONE                            Trustee
- -------------------------------------
    David B. Stone


/s/ W. THOMAS LONDON                          Principal Financial and Accounting
- -------------------------------------           Officer
    W. Thomas London


                                INDEX TO EXHIBITS

EXHIBIT NO.                  DESCRIPTION OF EXHIBIT                              PAGE NO.

    1       Amended and Restated Declaration of Trust, dated December 21, 1994.

    2       Amended and Restated By-Laws, dated December 21, 1994.

    5 (a)   Investment Advisory Agreement for MFS Total Return Fund,
             a series of the Trust, dated January 18, 1985.

      (b)   Amendment No. 1 to Investment Advisory Agreement, dated
             November 19, 1985.

      (c)   Investment Advisory Agreement for MFS Research Fund, a
             Series of the Trust, dated September 1, 1993.

    6 (a)   Distribution Agreement between the Trust and MFS Fund
             Distributors, Inc., dated January 1, 1995.

    7       Retirement Plan for Non-Interested Person Trustees, dated
             January 1, 1991.

    8 (a)   Custodian Contract between Registrant and Investors Bank
             and Trust Company, dated October 1, 1991.

      (b)   Amendment No. 1 to Custodian Contract, dated April 21, 1992.

    9 (a)   Shareholder Servicing Agent Agreement between the Registrant and
             Massachusetts Financial Service Center, Inc., dated August 1, 1985.

      (b)   Amendment to Shareholder Servicing Agent Agreement, dated December
             28, 1993.

      (e)   Agreement and Plan of Reorganization dated January 15, 1985 between
             Registrant and Massachusetts Financial Development Fund, Inc.

      (f)   Dividend Disbursing Agency Agreement dated February 1, 1986.

   11       Consent of Deloitte & Touche LLP - MFS Total Return Fund
             and MFS Research Fund.

   15 (a)   Amended and Restated Distribution Plan for MFS Total Return Fund,
             dated December 21, 1994 for Class A shares.

      (b)   Distribution Plan for MFS Total Return Fund dated August 23, 1993,
             for Class B shares.

      (c)   Distribution Plan for MFS Total Return Fund dated July 20, 1994 for
             Class C shares.

      (d)   Distribution Plan for MFS Research Fund, dated September 1, 1993 for
             Class A shares.

      (e)   Distribution Plan for MFS Research Fund dated September 1, 1993, for
             Class B shares.

      (f)   Distribution Plan for MFS Research Fund dated December 28, 1993, for
             Class C shares.

            Power of Attorney dated September 21, 1994.


EXHIBIT NO. 99.1(a)

MFS SERIES TRUST V


AMENDED AND RESTATED

DECLARATION OF TRUST

DECEMBER 21, 1994


                                TABLE OF CONTENTS
                                                                            PAGE

ARTICLE I -- NAME AND DEFINITIONS
         Section 1.1          Name                                          1
         Section 1.2          Definitions                                   2

ARTICLE II -- TRUSTEES
         Section 2.1          Number of Trustees                            3
         Section 2.2          Term of Office of Trustees                    3
         Section 2.3          Resignation and Appointment of Trustees       4
         Section 2.4          Vacancies                                     4
         Section 2.5          Delegation of Power to Other Trustees         5

ARTICLE III -- POWERS OF TRUSTEES
         Section 3.1          General                                       5
         Section 3.2          Investments                                   5
         Section 3.3          Legal Title                                   6
         Section 3.4          Issuance and Repurchase of Securities         7
         Section 3.5          Borrowing Money; Lending Trust Assets         7
         Section 3.6          Delegation; Committees                        7
         Section 3.7          Collection and Payment                        7
         Section 3.8          Expenses                                      7
         Section 3.9          Manner of Acting; By-Laws                     7
         Section 3.10         Miscellaneous Powers                          8
         Section 3.11         Principal Transactions                        9
         Section 3.12         Trustees and Officers as Shareholders         9

ARTICLE IV -- INVESTMENT ADVISER, DISTRIBUTOR AND TRANSFER AGENT
         Section 4.1          Investment Adviser                           10
         Section 4.2          Distributor                                  10
         Section 4.3          Transfer Agent                               10
         Section 4.4          Parties to Contract                          11


                                TABLE OF CONTENTS
                                                                         PAGE
ARTICLE V -- LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS
         Section 5.1          No Personal Liability of Shareholders,
                                Trustees, etc.                             11
         Section 5.2          Non-Liability of Trustees, etc.              12
         Section 5.3          Mandatory Indemnification                    12
         Section 5.4          No Bond Required of Trustees                 14
         Section 5.5          No Duty of Investigation; Notice in Trust
                                Instruments, etc.                          14
         Section 5.6          Reliance on Experts, etc.                    15

ARTICLE VI -- SHARES OF BENEFICIAL INTEREST
         Section 6.1          Beneficial Interest                          15
         Section 6.2          Rights of Shareholders                       15
         Section 6.3          Trust Only                                   15
         Section 6.4          Issuance of Shares                           16
         Section 6.5          Register of Shares                           16
         Section 6.6          Transfer of Shares                           16
         Section 6.7          Notices                                      17
         Section 6.8          Voting Powers                                17
         Section 6.9          Series Designation                           18
         Section 6.10         Class Designation                            20

ARTICLE VII -- REDEMPTIONS
         Section 7.1          Redemptions                                  20
         Section 7.2          Suspension of Right of Redemption            21
         Section 7.3          Redemption of Shares; Disclosure of Holding  21

ARTICLE VIII -- DETERMINATION OF NET ASSET VALUE,
                            NET INCOME AND DISTRIBUTIONS                   22

ARTICLE IX -- DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
         Section 9.1          Duration                                     22
         Section 9.2          Termination of Trust                         22
         Section 9.3          Amendment Procedure                          23
         Section 9.4          Merger, Consolidation and Sale of Assets     24
         Section 9.5          Incorporation                                24


                                TABLE OF CONTENTS
                                                                         PAGE

ARTICLE X -- REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS        25

ARTICLE XI -- MISCELLANEOUS
         Section 11.1         Filing                                       26
         Section 11.2         Governing Law                                26
         Section 11.3         Counterparts                                 26
         Section 11.4         Reliance by Third Parties                    26
         Section 11.5         Provisions in Conflict with Law or
                                Regulations                                27

ANNEX A                                                                    28
ANNEX B                                                                    29

SIGNATURE PAGE                                                             30


AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MFS SERIES TRUST V
500 Boylston Street
Boston, Massachusetts 02116

AMENDED AND RESTATED DECLARATION OF TRUST, made as of this 21st day of December, 1994 by the Trustees hereunder.

WHEREAS, the Trust was established pursuant to a Declaration of Trust dated November 7, 1984 for the investment and reinvestment of funds contributed thereto; and

WHEREAS, the Trustees desire that the beneficial interest in the trust assets continue to be divided into transferable Shares of Beneficial Interest (without par value) issued in one or more series, as hereinafter provided; and

WHEREAS, the Declaration of Trust has been, from time to time, amended in accordance with the provisions of the Declaration; and

WHEREAS, the Trustees now desire further to amend and to restate the Declaration of Trust and hereby certify, as provided in Section 11.1 of the Declaration, that this Amended and Restated Declaration of Trust has been further amended and restated in accordance with the provisions of the Declaration;

NOW THEREFORE, the Trustees hereby confirm that all money and property contributed to the trust established hereunder shall be held and managed in trust for the benefit of holders, from time to time, of the shares of Beneficial Interest (without par value) issued hereunder and subject to the provisions hereof.

ARTICLE I
NAME AND DEFINITIONS

Section 1.1 - Name. The name of the trust created hereby is the MFS Series Trust V, the current address of which is 500 Boylston Street, Boston, Massachusetts 02116.

Section 1.2 - Definitions. Wherever they are used herein, the following terms have the following respective meanings:

(a) "By-Laws" means the By-Laws referred to in Section 3.9 hereof, as from time to time amended.

(b) the terms "Commission," "Interested Person" and "Majority Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) have the meanings given them in the 1940 Act, except to the extent that the Trustees have otherwise defined "Majority Shareholder Vote" in conjunction with the establishment of any series of Shares.

(c) "Declaration" means this Declaration of Trust as amended from time to time. Reference in this Declaration of Trust to "Declaration," "hereof," "herein" and "hereunder" shall be deemed to refer to this Declaration rather than the article or section in which such words appear.

(d) "Distributor" means the party, other than the Trust, to the contract described in Section 4.2 hereof.

(e) "Investment Adviser" means a party furnishing services to the Trust pursuant to any contract described in Section 4.1 hereof.

(f) the "1940 Act" means the Investment Company Act of 1940 and the Rules and Regulations thereunder, as amended from time to time.

(g) "Person" means and includes individuals, corporations, partnerships, trusts, associations, joint ventures and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof, whether domestic or foreign.

(h) "Shareholder" means a record owner of outstanding Shares.

(i) "Shares" means the units of interest into which the beneficial interest in the Trust shall be divided from time to time, including the Shares of any and all series which may be established by the Trustees, and includes fractions of Shares as well as whole Shares.

(j) "Transfer Agent" means the party, other than the Trust, to a contract described in Section 4.3 hereof.

(k) the "Trust" means MFS Series Trust V.

(l) the "Trust Property" means any and all property, real or personal, tangible or intangible, which is owned or held by or for the account of the Trust or the Trustees.

(m) the "Trustees" means the persons who have signed the Declaration, so long as they shall continue in office in accordance with the terms hereof, and all other persons who may from time to time be duly elected, qualified and serving as Trustees in accordance with the provisions hereof, and reference herein to a Trustee or the Trustees shall refer to such person or persons in their capacity as trustees hereunder.

ARTICLE II
TRUSTEES

Section 2.1 - Number of Trustees. The number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by a majority of the Trustees, provided, however, that the number of Trustees shall in no event be less than three (3) nor more than fifteen (15).

Section 2.2 - Term of Office of Trustees. Subject to the provisions of
Section 16(a) of the 1940 Act, the Trustees shall hold office during the lifetime of this Trust and until its termination as hereinafter provided; except:

(a) that any Trustee may resign his trust (without need for prior or subsequent accounting) by an instrument in writing signed by him and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein;

(b) that any Trustee may be removed (provided the aggregate number of Trustees after such removal shall not be less than the number required by
Section 2.1 hereof) with cause, at any time by written instrument, signed by at least two-thirds of the remaining Trustees, specifying the date when such removal shall become effective;

(c) that any Trustee who requests in writing to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees, specifying the date of his retirement; and

(d) a Trustee may be removed at any meeting of Shareholders by a vote of two-thirds of the outstanding Shares. Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the Trust or the remaining Trustees any Trust Property held in the name of the resigning or removed Trustee. Upon the incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence.

Section 2.3 - Resignation and Appointment of Trustees. In case of the declination, death, resignation, retirement, removal or inability of any of the Trustees, or in case a vacancy shall, by reason of an increase in number, or for any other reason, exist, the remaining Trustees shall fill such vacancy by appointing such other person as they in their discretion shall see fit. Such appointment shall be evidenced by a written instrument signed by a majority of the Trustees in office. Any such appointment shall not become effective, however, until the person named in the written instrument of appointment shall have accepted in writing such appointment and agreed in writing to be bound by the terms of the Declaration. Within twelve months of such appointment, the Trustees shall cause notice of such appointment to be mailed to each Shareholder at his address as recorded on the books of the Trustees. An appointment of a Trustee may be made by the Trustees then in office and notice thereof mailed to Shareholders as aforesaid in anticipation of a vacancy to occur by reason of retirement, resignation or increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at or after the effective date of said retirement, resignation or increase in number of Trustees. The power of appointment is subject to the provisions of Section 16(a) of the 1940 Act.

Section 2.4 - Vacancies. The death, declination, resignation, retirement, removal or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration. Whenever a vacancy in the number of Trustees shall occur, until such vacancy if filled as provided in Section 2.3, the Trustees in office, regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by the Declaration. A written instrument certifying the existence of such vacancy signed by a majority of the Trustees shall be conclusive evidence of the existence of such vacancy.

Section 2.5 - Delegation of Power to Other Trustees. Any Trustee may, by power of attorney, delegate his power for a period not exceeding six (6) months at any one time to any other Trustee or Trustees; provided that in no case shall less than two (2) Trustees personally exercise the powers granted to the Trustees under the Declaration except as herein otherwise expressly provided.

ARTICLE III
POWERS OF TRUSTEES

Section 3.1 - General. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by the Declaration. The Trustees shall have power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without The Commonwealth of Massachusetts, in any and all states of the United States of America, in the District of Columbia, and in any and all commonwealths, territories, dependencies, colonies, possessions, agencies or instrumentalities of the United States of America and of foreign governments, and to do all such other things and execute all such instruments as the Trustees deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of the Declaration, the presumption shall be in favor of a grant of power to the Trustees.

The enumeration of any specific power herein shall not be construed as limiting the aforesaid power. Such powers of the Trustees may be exercised without order of or resort to any court.

Section 3.2 - Investments. The Trustees shall have the power to:

(a) conduct, operate and carry on the business of an investment company;

(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, lend or otherwise deal in or dispose of U.S. and foreign currencies, any form of gold and other precious metals, commodity contracts,

contracts for the future acquisition or delivery of fixed income or other securities, and securities of every nature and kind, including, without limitation, all types of bonds, debentures, stocks, negotiable or non-negotiable instruments, obligations, evidences of indebtedness, certificates of deposit or indebtedness, commercial paper, repurchase agreements, bankers' acceptances, and other securities of any kind, issued, created, guaranteed or sponsored by any and all Persons, including, without limitation, states, territories and possessions of the United States and the District of Columbia and any political subdivision, agency or instrumentality of any such Person, or by the U.S. Government, any foreign government, any political subdivision or any agency of instrumentality of the U.S. Government, any foreign government or any political subdivision of the U.S. Government or any foreign government, or any international instrumentality, or by any bank or savings institution, or by any corporation or organization organized under the laws of the United States or of any state, territory or possession thereof, or by any corporation or organization organized under any foreign law, or in "when issued" contracts for any such securities, or retain Trust assets in cash and from time to time change the investments of the assets of the Trust; and to exercise any and all rights, powers and privileges of ownership or interest in respect of any and all such investments of every kind and description, including, without limitation, the right to consent and otherwise act with respect thereto, with power to designate one or more persons, firms, associations or corporations to exercise any of said rights, powers and privileges in respect of any of said instruments.

The Trustees shall not be limited to investing in obligations maturing before the possible termination of the Trust, nor shall the Trustees be limited by any law limiting the investments which may be made by fiduciaries.

Section 3.3 - Legal Title. Legal title to all the Trust Property shall be vested in the Trustees as joint tenants except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or in the name of any other Person or nominee, on such terms as the Trustees may determine. The right, title and interest of the Trustees in the Trust Property shall vest automatically in each Person who may hereafter become a Trustee. Upon the resignation, removal or death of a Trustee he shall automatically cease to have any right, title or interest in any of the Trust Property, and the right, title and interest of such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered.

Section 3.4 - Issuance and Repurchase of Securities. The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the provisions set forth in Articles VII, VIII and IX and Section 6.9 hereof, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property of the Trust whether capital or surplus or otherwise, to the full extent now or hereafter permitted by the laws of The Commonwealth of Massachusetts governing business corporations.

Section 3.5 - Borrowing Money; Lending Trust Assets. The Trustees shall have power to borrow money or otherwise obtain credit and to secure the same by mortgaging, pledging or otherwise subjecting as security the assets of the Trust, to endorse, guarantee, or undertake the performance of any obligation, contract or engagement of any other Person and to lend Trust assets.

Section 3.6 - Delegation; Committees. The Trustees shall have power to delegate from time to time to such of their number or to officers, employees or agents of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient.

Section 3.7 - Collection and Payment. The Trustees shall have power to collect all property due to the Trust; to pay all claims, including taxes, against the Trust Property; to prosecute, defend, compromise or abandon any claims relating to the Trust Property; to foreclose any security interest securing any obligations, by virtue of which any property is owed to the Trust; and to enter into releases, agreements and other instruments.

Section 3.8 - Expenses. The Trustees shall have the power to incur and pay any expenses which in the opinion of the Trustees are necessary or incidental to carry out any of the purposes of the Declaration, and to pay reasonable compensation from the funds of the Trust to themselves as Trustees. The Trustees shall fix the compensation of all officers, employees and Trustees.

Section 3.9 - Manner of Acting; By-Laws. Except as otherwise provided herein or in the By-Laws, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum being present), including any meeting held by means of a conference telephone circuit or similar communications equipment by means of which all persons participating in the meeting can hear each other, or by written consents of all the Trustees. The Trustees may adopt By-Laws not inconsistent with this Declaration to provide for the conduct of the business of the Trust and may amend or repeal such By-Laws to the extent such power is not reserved to the Shareholders.

Section 3.10 - Miscellaneous Powers. The Trustees shall have the power to:

(a) employ or contract with such Persons as the Trustees may deem desirable for the transaction of the business of the Trust;

(b) enter into joint ventures, partnerships and any other combinations or associations;

(c) remove Trustees or fill vacancies in or add to their number, elect and remove such officers and appoint and terminate such agents or employees as they consider appropriate, and appoint from their own number, and terminate, any one or more committees which may exercise some or all of the power and authority of the Trustees as the Trustees may determine;

(d) purchase, and pay for out of Trust Property, insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers, distributors, selected dealers or independent contractors of the Trust against all claims arising by reason of holding any such position or by reason of any action taken or omitted by any such Person in such capacity, whether or not constituting negligence, or whether or not the Trust would have the power to indemnify such Person against such liability;

(e) establish pension, profit-sharing, share purchase, and other retirement, incentive and benefit plans for any Trustees, officers, employees or agents of the Trust;

(f) to the extent permitted by law, indemnify any person with whom the Trust has dealings, including the Investment Adviser, Distributor, Transfer Agent and any dealer, to such extent as the Trustees shall determine;

(g) guarantee indebtedness or contractual obligations of others;

(h) determine and change the fiscal year of the Trust and the method by which its accounts shall be kept; and

(i) adopt a seal for the Trust but the absence of such seal shall not impair the validity of any instrument executed on behalf of the Trust.

Section 3.11 - Principal Transactions. Except in transactions permitted by the 1940 Act, or any order of exemption issued by the Commission, the Trustees shall not, on behalf of the Trust, buy any securities (other than Shares) from or sell any securities (other than Shares) to, or lend any assets of the Trust to, any Trustee or officer of the Trust or any firm of which any such Trustee or officer is a member acting as principal, or have any such dealings with the Investment Adviser, Distributor or Transfer Agent or with any Interested Person of such Person; but the Trust may employ any such Person, or firm or company in which such Person is an Interested Person, as broker, legal counsel, registrar, transfer agent, dividend disbursing agent or custodian upon customary terms.

Section 3.12 - Trustees and Officers as Shareholders. Except as hereinafter provided, no officer, Trustee or Member of the Advisory Board of the Trust, and no member, partner, officer, director or trustee of the Investment Adviser or of the Distributor, and no Investment Adviser or Distributor of the Trust, shall take long or short positions in the securities issued by the Trust. The foregoing provision shall not prevent:

(a) The Distributor from purchasing Shares from the Trust if such purchases are limited (except for reasonable allowances for clerical errors, delays and errors of transmission and cancellation of orders) to purchases for the purpose of filling orders for Shares received by the Distributor and provided that orders to purchase from the Trust are entered with the Trust or the Custodian promptly upon receipt by the Distributor of purchase orders for Shares, unless the Distributor is otherwise instructed by its customer;

(b) The Distributor from purchasing Shares as agent for the account of the Trust;

(c) The purchase from the Trust or from the Distributor of Shares by any officer, Trustee or member of the Advisory Board of the Trust or by any member, partner, officer, director or trustee of the Investment Adviser or of the Distributor at a price not lower than the net asset value of the Shares at the moment of such purchase, provided that any such sales are only to be made pursuant to a uniform offer described in the Trust's current prospectus; or

(d) The Investment Adviser, the Distributor, or any of their officers, partners, directors or trustees from purchasing Shares prior to the effective date of the Registration Statement relating to the Shares under the Securities Act of 1933, as amended.

ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR AND TRANSFER AGENT

Section 4.1 - Investment Adviser. Subject to a Majority Shareholder Vote, the Trustees may in their discretion from time to time enter into one or more investment advisory or management contracts whereby a party to such contract shall undertake to furnish the Trust such management, investment advisory, statistical and research facilities and services, promotional activities, and such other facilities and services, if any, as the Trustees shall from time to time consider desirable and all upon such terms and conditions as the Trustees may in their discretion determine. Notwithstanding any provision of the Declaration, the Trustees may delegate to the Investment Adviser authority (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect purchases, sales, loans or exchanges of assets of the Trust on behalf of the Trustees or may authorize any officer, employee or Trustee to effect such purchases, sales, loans or exchanges pursuant to recommendations of the Investment Adviser (and all without further action by the Trustees). Any such purchases, sales, loans or exchanges shall be deemed to have been authorized by all of the Trustees.

Section 4.2 - Distributor. The Trustees may in their discretion from time to time enter into a contract, providing for the sale of Shares whereby the Trust may either agree to sell the Shares to the other party to the contract or appoint such other party its sales agent for such Shares. In either case, the contract shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article IV or the By-Laws; and such contract may also provide for the repurchase or sale of Shares by such other party as principal or as agent of the Trust and may provide that such other party may enter into selected dealer agreements with registered securities dealers to further the purpose of the distribution or repurchase of the Shares.

Section 4.3 - Transfer Agent. The Trustees may in their discretion from time to time enter into a transfer agency and shareholder service contract or contracts whereby the other party or parties to such contract or contracts shall undertake to furnish transfer agency and/or shareholder services. The contract or contracts shall have such terms and conditions as the Trustees may in their discretion determine not inconsistent with the Declaration or the By-Laws. Such services may be provided by one or more Persons.

Section 4.4 - Parties to Contract. Any contract of the character described in Section 4.1, 4.2 or 4.3 of this Article IV or any Custodian contract, as described in the By-Laws, may be entered into with any Person, although one or more of the Trustees or officers of the Trust may be an officer, partner, director, trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any such relationship; nor shall any Person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom, provided that the contract when entered into was not inconsistent with the provisions of this Article IV or the By-Laws. The same Person may be the other party to contracts entered into pursuant to Sections 4.1, 4.2 and 4.3 above or Custodian contracts, and any individual may be financially interested or otherwise affiliated with Persons who are parties to any or all of the contracts mentioned in this Section 4.4.

ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS

Section 5.1 - No Personal Liability of Shareholders, Trustees, etc. No Shareholder shall be subject to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. No Trustee, officer, employee or agent of the Trust shall be subject to any personal liability whatsoever to any Person, other than the Trust or its Shareholders, in connection with Trust Property or the affairs of the Trust, save only that arising from bad faith, willful misfeasance, gross negligence or reckless disregard for his duty to such Person; and all such Persons shall look solely to the Trust Property for satisfaction of claims of any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is made a party to any suit or proceeding to enforce any such liability, he shall not, on account thereof, be held to any personal liability. The Trust shall indemnify and hold each Shareholder harmless from and against all claims and liabilities to which such Shareholder may become subject by reason of his being or having been a Shareholder, and shall reimburse such Shareholder for all legal and other expenses reasonably incurred by him in connection with any such claim or liability. The rights accruing to a Shareholder under this Section 5.1 shall not exclude any other right to which such Shareholder may be lawfully entitled, nor shall anything herein contained restrict the right of the Trust to indemnify or reimburse a Shareholder in any appropriate situation even though not specifically provided herein.

Section 5.2 - Non-Liability of Trustees, etc. No Trustee, officer, employee or agent of the Trust shall be liable to the Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee, or agent thereof for any action or failure to act (including without limitation the failure to compel in any way any former or acting Trustee to redress any breach of trust) except for his own bad faith, willful misfeasance, gross negligence or reckless disregard of his duties.

Section 5.3 - Mandatory Indemnification.

(a) Subject to the exceptions and limitations contained in paragraph
(b) below:

(i) every person who is or has been a Trustee or officer of the Trust shall be indemnified by the Trust to the fullest extent permitted by law against all liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Trustee or officer and against amounts paid or incurred by him in the settlement thereof;

(ii) the words "claim," "action," "suit," or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal or other, including appeals), actual or threatened; and the words "liability" and "expenses" shall include, without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.

(b) No indemnification shall be provided hereunder to a Trustee or officer:

(i) against any liability to the Trust or the Shareholders by reason of a final adjudication by the court or other body before which the proceeding was brought that he engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office;

(ii) with respect to any matter as to which he shall have been finally adjudicated not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or

(iii) in the event of a settlement involving a payment by a Trustee or officer or other disposition not involving a final adjudication as provided in paragraph (b) (i) or (b) (ii) above resulting in a payment by a Trustee or officer, unless there has been either a determination that such Trustee or officer did not engage in wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office by the court or other body approving the settlement or other disposition or by a reasonable determination, based upon a review of readily available facts (as opposed to a full trial-type inquiry) that he did not engage in such conduct:

(A) by vote of a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter); or

(B) by vote of a majority of the outstanding shares of the Trust not including any shares owned by any affiliated person of the Trust; or

(C) by written opinion of independent counsel, provided, however, that any shareholder may, by appropriate legal proceeding, challenge any such determination by the Board of Directors, or by independent counsel.

(c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not affect any other rights to which any Trustee or officer may now or hereafter be entitled, shall continue as to a Person who has ceased to be such Trustee or officer and shall inure to the benefit of the heirs, executors and administrators of such Person. Nothing contained herein shall affect any rights to indemnification to which personnel other than Trustees and officers may be entitled by contract or otherwise under law.

(d) Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Section 5.3, provided that either:

(i) such undertaking is secured by a surety bond or some other appropriate security or the Trust shall be insured against losses arising out of any such advances; or

(ii) a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter) or an independent legal counsel in a written opinion, shall determine, based upon a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the recipient ultimately will be found entitled to indemnification.

As used in this Section 5.3, a "Disinterested Trustee" is one (i) who is not an "Interested Person" of the Trust (including anyone who has been exempted from being an "Interested Person" by any rule, regulation or order of the Commission), and (ii) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or had been pending.

Section 5.4 - No Bond Required of Trustees. No Trustee shall be obligated to give any bond or other security for the performance of any of his duties hereunder.

Section 5.5 - No Duty of Investigation; Notice in Trust Instruments, etc. No purchaser, lender, Transfer Agent or other Person dealing with the Trustees or any officer, employee or agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obligation, contract, instrument, certificate, Share, other security of the Trust or undertaking, and every other act or thing whatsoever executed in connection with the Trust shall be conclusively presumed to have been executed or done by the executors thereof only in their capacity as Trustees under the Declaration or in their capacity as officers, employees or agents of the Trust. Every written obligation, contract, instrument, certificate, Share, other security of the Trust or undertaking made or issued by the Trustees shall recite that the same is executed or made by them not individually, but as Trustees under the Declaration, and that the obligations of any such instrument are not binding upon any of the Trustees or Shareholders individually, but bind only the trust estate, and may contain any further recital which they or he may deem appropriate, but the omission of such recital shall not operate to bind any of the Trustees or Shareholders individually. The Trustees shall at all times maintain insurance for the protection of the Trust Property, the Trust's Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable.

Section 5.6 - Reliance on Experts, etc. Each Trustee and officer or employee of the Trust shall, in the performance of his duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel, or upon reports made to the Trust by any of its officers or employees or by the Investment Adviser, the Distributor, Transfer Agent, selected dealers, accountants, appraisers or other experts or consultants selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also be a Trustee.

ARTICLE VI
SHARES OF BENEFICIAL INTEREST

Section 6.1 - Beneficial Interest. The interest of the beneficiaries hereunder shall be divided into transferable Shares of Beneficial Interest (without par value). The number of Shares authorized hereunder is unlimited. All Shares issued hereunder including, without limitation, Shares issued in connection with a dividend in Shares or a split of Shares, shall be fully paid and non-assessable.

Section 6.2 - Rights of Shareholders. The ownership of the Trust property of every description and the right to conduct any business hereinbefore described are vested exclusively in the Trustees, and the Shareholders shall have no interest therein other than the beneficial interest conferred by their Shares, and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to assume any losses of the Trust or suffer an assessment of any kind by virtue of their ownership of Shares. The Shares shall be personal property giving only the rights specifically set forth in the Declaration. The Shares shall not entitle the holder to preference, preemptive, appraisal, conversion or exchange rights, except as the Trustees may determine with respect to any series or class of Shares.

Section 6.3 - Trust Only. It is the intention of the Trustees to create only the relationship of Trustee and beneficiary between the Trustees and each Shareholder from time to time. It is not the intention of the Trustees to create a general partnership, limited partnership, joint stock association, corporation, bailment or any form or legal relationship other than a trust. Nothing in the Declaration shall be construed to make the Shareholders, either by themselves or with the Trustees, partners or members of a joint stock association.

Section 6.4 - Issuance of Shares. The Trustees, in their discretion may, from time to time without vote of the Shareholders, issue Shares, in addition to the then issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of consideration, including cash or property, at such time or times, and on such terms as the Trustees may deem best, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with the assumption of liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares. The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a Share or integral multiples thereof.

Section 6.5 - Register of Shares. A register shall be kept at the principal office of the Trust or at an office of the Transfer Agent which shall contain the names and addresses of the Shareholders and the number of Shares held by them respectively and a record of all transfers thereof. Such register shall be conclusive as to who are the holders of the Shares and who shall be entitled to receive dividends or distributions or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive payment of any dividend or distribution, nor to have notice given to him as herein or in the By-Laws provided, until he has given his address to the Transfer Agent or such other officer or agent of the Trustees as shall keep the said register for entry thereon. It is not contemplated that certificates will be issued for the Shares; however, the Trustees, in their discretion, may authorize the issuance of Share certificates and promulgate appropriate rules and regulations as to their use.

Section 6.6 - Transfer of Shares. Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing, upon delivery to the Trustees or the Transfer Agent of a duly executed instrument of transfer, together with any certificate or certificates (if issued) for such Shares and such evidence of the genuineness of each such execution and authorization and of other matters as may reasonably be required. Upon such delivery the transfer shall be recorded on the register of the Trust. Until such record is made, the Shareholder of record shall be deemed to be the holder of such shares for all purposes hereunder and neither the Trustees nor any Transfer Agent or registrar nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed transfer.

Any person becoming entitled to any Shares in consequence of death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation of law, shall be recorded on the register of Shares as the holder of such Shares upon production of the proper evidence thereof to the Trustees or the Transfer Agent; but until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereunder and neither the Trustees nor any Transfer Agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such death, bankruptcy or incompetence, or other operation of law.

Section 6.7 - Notices. Any and all notices to which any Shareholder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Shareholder of record at his last known address as recorded on the register of the Trust.

Section 6.8 - Voting Powers. The Shareholders shall have power to vote only (i) for the election of Trustees as provided in Section 2.2 hereof, (ii) with respect to any investment advisory or management contract as provided in
Section 4.1., (iii) with respect to termination of the Trust as provided in
Section 9.2 hereof, (iv) with respect to any amendment of the Declaration to the extent and as provided in Section 9.3 hereof, (v) with respect to any merger, consolidation or sale of assets as provided in Sections 9.4 hereof, (vi) with respect to incorporation of the Trust to the extent and as provided in Section 9.5 hereof, (vii) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust of the Shareholders, and (viii) with respect to such additional matters relating to the Trust as may be required by the Declaration, the By-Laws or any registration of the Trust with the Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote, except that Shares held in the treasury of the Trust shall not be voted and that the Trustees may, in conjunction with the establishment of any series of Shares, establish conditions under which the several series shall have separate voting rights or no voting rights. There shall be no cumulative voting in the election of Trustees. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, the Declaration or the By-Laws to be taken by Shareholders. The By-Laws may include further provisions for Shareholders votes and meetings and related matters.

Section 6.9 - Series Designation. The Trustees, in their discretion, may authorize the division of Shares into two or more series, and the different series shall be established and designated, and the variations in the relative rights and preferences as between the different series shall be fixed and determined by the Trustees; provided, that all Shares shall be identical except that there may be variations so fixed and determined between different series as to purchase price, right of redemption and the price, terms and manner of redemption, special and relative rights as to dividends and on liquidation, conversion rights, and conditions under which the several series shall have separate voting rights. All references to Shares in this Declaration shall be deemed to be shares of any or all series as the context may require.

If the Trustees shall divide the Shares of the Trust into two or more series, the following provisions shall be applicable:

(a) The number of authorized shares and the number of shares of each series that may be issued shall be unlimited. The Trustees may classify or reclassify any unissued shares or any shares previously issued and reacquired of any series into one or more series that may be established and designed from time to time. The Trustees may hold as treasury shares (of the same or some other series), reissue for such consideration and on such terms as they may determine, or cancel any shares of any series reacquired by the Trust at their discretion from time to time.

(b) The power of the Trustees to invest and reinvest the Trust Property shall be governed by Section 3.2 of this Declaration with respect to any one or more series which represents the interests in the assets of the Trust immediately prior to the establishment of two or more series and the power of the Trustees to invest and reinvest assets applicable to any other series shall be as set forth in the instrument of the Trustees establishing such series which is hereinafter described.

(c) All consideration received by the Trust for the issue or sale of shares of a particular series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to that series for all purposes, subject only to the rights of creditors, and shall be so recorded upon the books of account of the Trust. In the event that there are any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular series, the Trustees shall allocate them among any one or more of the series established and designated from time to time in such manner and on such basis as they, in their sole discretion, deem fair and equitable. Each such allocation by the Trustees shall be conclusive and binding upon the shareholders of all series for all purposes.

(d) The assets belonging to each particular series shall be charged with the liabilities of the Trust in respect of that series and all expenses, cost, charges and reserves attributable to that series, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular series shall be allocated and charged by the Trustees to and among any one or more of the series established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the holders of all series for all purposes. The Trustees shall have full discretion, to the extent not inconsistent with the 1940 Act, to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding upon the Shareholders.

(e) The power of the Trustees to pay dividends and make distributions shall be governed by Article VIII of this Trust with respect to any one or more series which represents the interests in the assets of the Trust immediately prior to the establishment of two or more series. With respect to any other series, dividends and distributions on Shares of a particular series may be paid with such frequency as the Trustees may determine, which may be daily or otherwise, pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine, to the holders of Shares of that series, from such of the income and capital gains, accrued or realized, from the assets belonging to that series, as the Trustees may determine, after providing for actual and accrued liabilities belonging to that series. All dividends and distributions on Shares of a particular series shall be distributed pro rata to the holders of that series in proportion to the number of Shares of that series held by such holders at the date and time of record established for the payment of such dividends or distributions.

The establishment and designation of any series of Shares shall be effective upon the execution by a majority of the then Trustees of an instrument setting forth such establishment and designation and the relative rights and preferences of such series, or as otherwise provided in such instrument. At any time that there are no Shares outstanding or any particular series previously established and designated, the Trustees may by an instrument executed by a majority of their number abolish that series and the establishment and designation thereof. Each instrument referred to in this paragraph shall have the status of an amendment to this Declaration.

The series of Shares established and designated pursuant to this
Section 6.9 and existing as of the date hereof are set forth in Annex A hereto.

Section 6.10 - Class Designation. The Trustees may, in their discretion, authorize the division of Shares of the Trust (or any series of the Trust) into one or more classes. All Shares of a class shall be identical with each other and with the Shares of each other class of the Trust or the same series of the Trust (as applicable), except for such variations between classes as may be approved by the Board of Trustees and permitted by the 1940 Act or pursuant to any exemptive order issued by the Securities and Exchange Commission. The classes of Shares authorized pursuant to this Section 6.10 and existing as of the date hereof are set forth in Annex B hereto.

ARTICLE VII
REDEMPTIONS

Section 7.1 - Redemptions. In case any Shareholder at any time desires to dispose of his Shares, he may deposit his certificate or certificates therefor, duly endorsed in blank or accompanied by an instrument of transfer executed in blank, or if the Shares are not represented by any certificates, a written request or other such form of request as the Trustees may from time to time authorize, at the office of the Transfer Agent or at the office of any bank or trust company, either in or outside of Massachusetts, which is a member of the Federal Reserve System and which the said Transfer Agent has designated in writing for that purpose, together with an irrevocable offer in writing in a form acceptable to the Trustees to sell the Shares represented thereby to the Trust at the net asset value thereof per share, determined as provided in the By-Laws, next after such deposit. Payment for said shares shall be made to the Shareholder within seven (7) days after the date on which the deposit is made, unless (i) the date of payment is postponed pursuant to Section 7.2 hereof, or
(ii) the receipt, or verification of receipt, of the purchase price for the Shares to be redeemed is delayed, in either of which event payment may be delayed beyond seven (7) days.

Section 7.2 - Suspension of Right of Redemption. The Trust may declare a suspension of the right of redemption or postpone the date of payment of the redemption proceeds for the whole or any part of any period (i) during which the New York Stock Exchange is closed other than customary weekend and holiday closings, (ii) during which trading on the New York Stock Exchange is restricted, (iii) during which an emergency exists as a result of which disposal by the Trust of securities owned by it is not reasonably practicable or it is not reasonably practicable for the Trust fairly to determine the value of its net assets, or (iv) during any other period when the Commission may for the protection of security holders of the Trust by order permit suspension of the right of redemption or postponement of the date of payment of the redemption proceeds, provided that applicable rules and regulations of the Commission shall govern as to whether the conditions prescribed in (ii), (iii) or (iv) exist. Such suspension shall take effect at such time as the Trust shall specify but not later than the close of business on the business day next following the declaration of suspension, and thereafter there shall be no right of redemption or payment of the redemption proceeds until the Trust shall declare the suspension at an end, except that the suspension shall terminate in any event on the first day on which said stock exchange shall have reopened or the period specified in (ii) or (iii) shall have expired (as to which, in the absence of an official ruling by the Commission, the determination of the Trust shall be conclusive). In the case of a suspension of the right of redemption, a Shareholder may either withdraw his request for redemption or receive payment based on the net asset value existing after the termination of the suspension.

Section 7.3 - Redemption of Shares; Disclosure of Holding. If the Trustees shall, at any time and in good faith, be of the opinion that direct or indirect ownership of Shares or other securities of the Trust has or may become concentrated in any Person to an extent which would disqualify the Trust as a regulated investment company under the Internal Revenue Code of 1986, as amended (the "Code"), then the Trustees shall have the power by lot or other means deemed equitable by them (i) to call for redemption by any such Person a number, or principal amount, of Shares or other securities of the Trust sufficient to maintain or bring the direct or indirect ownership of Shares or other securities of the Trust into conformity with the requirements for such qualification, and
(ii) to refuse to transfer or issue Shares or other securities of the Trust to any Person whose acquisition of the Shares or other securities of the Trust in question would result in such disqualification. The redemption shall be effected at the redemption price and in the manner provided in Section 7.1 hereof.

The holders of Shares or other securities of the Trust shall upon demand disclose to the Trustees in writing such information with respect to direct and indirect ownership of Shares or other securities of the Trust as the Trustees deem necessary to comply with the provisions of the Code, or to comply with the requirements of any other authority.

ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS

The Trustees, in their absolute discretion, may prescribe and shall set forth in the By-Laws or in a duly adopted vote of the Trustees such basis and times for determining the per Share net asset value of the Shares or net income, or the declaration and payment of dividends and distributions, as they may deem necessary or desirable.

ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.

Section 9.1 - Duration. The Trust shall continue without limitation of time but subject to the provisions of this Article IX.

Section 9.2 - Termination of Trust.

(a) The Trust may be terminated (i) by the affirmative vote of the holders of not less than two-thirds of the Shares outstanding and entitled to vote at any meeting of Shareholders, or (ii) by an instrument in writing, without a meeting, signed by a majority of the Trustees and consented to by the holders of not less than two-thirds of such Shares, or by such other vote as may be established by the Trustees with respect to any series of Shares, or (iii) by the Trustees by written notice to the Shareholders. Upon the termination of the Trust:

(i) the Trust shall carry on no business except for the purpose of winding up its affairs;

(ii) the Trustees shall proceed to wind up the affairs of the Trust and all of the powers of the Trustees under this Declaration shall continue until the affairs of the Trust shall have been wound up, including the power to fulfill or discharge the contracts of the Trust, collect its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining Trust Property to one or more persons at public or private sale for consideration which may consist in whole or in part of cash, securities or other property of any kind, discharge or pay its liabilities, and to do all other acts appropriate to liquidate its business; provided, that any sale, conveyance, assignment, exchange, transfer or other disposition of all or substantially all the Trust Property shall require Shareholder approval in accordance with Section 9.4 hereof; and

(iii) after paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements as they deem necessary for their protection, the Trustees may distribute the remaining Trust Property, in cash or in kind or partly in cash and partly in kind, among the Shareholders according to their respective rights.

(b) After termination of the Trust and distribution to the Shareholders as herein provided, a majority of the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination, and the Trustees shall thereupon be discharged from all further liabilities and duties hereunder, and the rights and interests of all Shareholders shall thereupon cease.

Section 9.3 - Amendment Procedure.

(a) This Declaration may be amended by a Majority Shareholder Vote or by any instrument in writing, without a meeting, signed by a majority of the Trustees and consented to by the holders of not less than a majority of the Shares outstanding and entitled to vote. The Trustees may also amend this Declaration without the vote or consent of Shareholders to designate series in accordance with Section 6.9 hereof, to change the name of the Trust, to supply any omission, to cure, correct or supplement any ambiguous, defective or inconsistent provision hereof, or if they deem it necessary to conform this Declaration to the requirements of applicable federal laws or regulations or the requirements of the regulated investment company provisions of the Code, as amended, but the Trustees shall not be liable for failing so to do.

(b) No amendment may be made under this Section 9.3 which would change any rights with respect to any Shares by reducing the amount payable thereon upon liquidation of the Trust or by diminishing or eliminating any voting rights pertaining thereto, except with the vote or consent of the holders of two-thirds of the Shares outstanding and entitled to vote, or by such other vote as may be established by the Trustees with respect to any series of Shares. Nothing contained in this Declaration shall permit the amendment of this Declaration to impair the exemption from personal liability of the Shareholders, Trustees, officers, employees and agents of the Trust or to permit assessments upon Shareholders.

(c) A certificate signed by a majority of the Trustees setting forth an amendment and reciting that it was duly adopted by the Shareholders or by the Trustees as aforesaid or a copy of the Declaration, as amended, and executed by a majority of the Trustees, shall be conclusive evidence of such amendment when lodged among the records of the Trust.

Notwithstanding any other provision hereof, until such time as a registration statement under the Securities Act of 1933, as amended, covering the first public offering of securities of the Trust shall have become effective, this Declaration may be terminated or amended in any respect by the affirmative vote of a majority of the Trustees or by an instrument signed by a majority of the Trustees.

Section 9.4 - Merger, Consolidation and Sale of Assets. The Trust may merge or consolidate with any other corporation, association, trust or other organization or may sell, lease or exchange all or substantially all of the Trust Property, including its good will, upon such terms and conditions and for such consideration when and as authorized at any meeting of Shareholders called for such purpose by the affirmative vote of the holders of not less than two-thirds of the Shares outstanding and entitled to vote, or by an instrument or instruments in writing without a meeting, consented to by the holders of not less than two-thirds of such Shares, or by such other vote as may be established by the Trustees with respect to any series of Shares; provided, however, that if such merger, consolidation, sale, lease or exchange is recommended by the Trustees, the vote or written consent of the holders of a majority of Shares outstanding and entitled to vote, or such other vote or written consent as may be established by the Trustees with respect to any series of Shares, shall be sufficient authorization; and any such merger, consolidation, sale, lease or exchange shall be deemed for all purposes to have been accomplished under and pursuant to the statutes of The Commonwealth of Massachusetts.

Section 9.5 - Incorporation. With the approval of the holders of a majority of the Shares outstanding and entitled to vote, or by such other vote as may be established by the Trustees with respect to any series of Shares, the Trustees may cause to be organized or assist in organizing a corporation or corporations under the laws of any jurisdiction, or any other trust, partnership, association or other organization to take over all of the Trust Property or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, convey and transfer the Trust Property to any such corporation, trust, partnership, association or organization in exchange for the Shares or securities thereof or otherwise, and to lend money to, subscribe for the Shares or securities of, and enter into any contracts with any such corporation, trust, partnership, association or organization in which the Trust holds or is about to acquire shares or any other interest. The Trustees may also cause a merger or consolidation between the Trust or any successor thereto and any such corporation, trust, partnership, association or other organization if and to the extent permitted by law, as provided under the law then in effect. Nothing contained herein shall be construed as requiring approval of Shareholders for the Trustees to organize or assist in organizing one or more corporations, trusts, partnerships, associations or other organizations and selling, conveying or transferring a portion of the Trust Property to such organization or entitles.

ARTICLE X
REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS

The Trustees shall at least semi-annually submit to the Shareholders a written financial report of the transactions of the Trust, including financial statements which shall at least annually be certified by independent public accountants.

Whenever ten or more Shareholders of record who have been such for at least six months preceding the date of application, and who hold in the aggregate either Shares having a net asset value of at least $25,000 or at least 1% of the Shares outstanding, whichever is less, shall apply to the Trustees in writing, stating that they wish to communicate with other Shareholders with a view to obtaining signatures to a request for a meeting of Shareholders for the purpose of removing one or more Trustees pursuant to Section 2.2 hereof and accompany such application with a form of communication and request which they wish to transmit, the Trustees shall within five business days after receipt of such application either (a) afford to such applicants access to a list of the names and addresses of all Shareholders as recorded on the books of the Trust; or (b) inform such applicants as to the approximate number of Shareholders of record, and the approximate cost of mailing to them the proposed communication and form of request. If the Trustees elect to follow the course specified in (b) above, the Trustees, upon the written request of such applicants, accompanied by a tender of the material to be mailed and of the reasonable expenses of mailing, shall, with reasonable promptness, mail such material to all Shareholders of record, unless within five business days after such tender the Trustees mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement signed by at least a majority of the Trustees to the effect that in their opinion either such material contains untrue statements of fact or omits to state facts necessary to make the statements contained therein not misleading, or would be in violation of applicable law, and specifying the basis of such opinion.

ARTICLE XI
MISCELLANEOUS

Section 11.1 - Filing. This Declaration, as amended, and any subsequent amendment hereto shall be filed in the office of the Secretary of The Commonwealth of Massachusetts and in such other place or places as may be required under the laws of The Commonwealth of Massachusetts and may also be filed or recorded in such other places as the Trustees deem appropriate. Each amendment so filed shall be accompanied by a certificate signed and acknowledged by a Trustee stating that such action was duly taken in a manner provided herein, and unless such amendment or such certificate sets forth some later time for the effectiveness of such amendment, such amendment shall be effective upon its filing. A restated Declaration, integrating into a single instrument all of the provisions of the Declaration which are then in effect and operative, may be executed from time to time by a majority of the Trustees and shall, upon filing with the Secretary of The Commonwealth of Massachusetts, be conclusive evidence of all amendments contained therein and may thereafter be referred to in lieu of the original Declaration and the various amendments thereto.

Section 11.2 - Governing Law. This Declaration is executed by the Trustees and delivered in The Commonwealth of Massachusetts and with reference to the laws thereof, and the rights of all parties and the validity and construction of every provision hereof shall be subject to and construed according to the laws of said Commonwealth.

Section 11.3 - Counterparts. This Declaration may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts, together, shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart.

Section 11.4 - Reliance by Third Parties. Any certificate executed by an individual who, according to the records of the Trust appears to be a Trustee hereunder, certifying to: (i) the number or identity of Trustees or Shareholders, (ii) the due authorization of the execution of any instrument or writing, (iii) the form of any vote passed at a meeting of Trustees or Shareholders, (iv) the fact that the number of Trustees or Shareholders present at any meeting or executing any written instrument satisfies the requirements of this Declaration, (v) the form of any By-Laws adopted by or the identity of any officers elected by the Trustees, or (vi) the existence of any fact or facts which in any manner relate to the affairs of the Trust, shall be conclusive evidence as to the matters so certified in favor of any Person dealing with the Trustees and their successors.

Section 11.5 - Provisions in Conflict with Law or Regulations.

(a) The provisions of the Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the regulated investment company provisions of the Code, as amended, or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of the Declaration; provided however, that such determination shall not affect any of the remaining provisions of the Declaration or render invalid or improper any action taken or omitted prior to such determination.

(b) If any provision of the Declaration shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of the Declaration in any jurisdiction.


ANNEX A

Pursuant to Section 6.9 of the Declaration, the Trustees of the Trust have established and designated two series of Shares (as defined in the Declaration), such series to have the following special and relative rights:

1. The series are designated:
- MFS Research Fund
- MFS Total Return Fund

2. The series shall be authorized to invest in cash, securities, instruments and other property as from time to time described in the Trust's then currently effective registration statement under the Securities Act of 1933 to the extent pertaining to the offering of Shares of such series. Each Share of the series shall be redeemable, shall be entitled to one vote or fraction thereof in respect of a fractional share on matters on which Shares of the series shall be entitled to vote, shall represent a pro rata beneficial interest in the assets allocated or belonging to the series, and shall be entitled to receive its pro rata share of the net assets of the series upon liquidation of the series, all as provided in Section 6.9 of the Declaration.

3. Shareholders of the series shall vote separately as a class on any matter to the extent required by, and any matter shall be deemed to have been effectively acted upon with respect to the series as provided in Rule 18f-2, as from time to time in effect, under the Investment Company Act of 1940, as amended, or any successor rule, and by the Declaration.

4. The assets and liabilities of the Trust shall be allocated among the previously established and existing series of the Trust and this series as set forth in Section 6.9 of the Declaration.

5. Subject to the provisions of Section 6.9 and Article IX of the Declaration, the Trustees (including any successor Trustees) shall have the right at any time and from time to time to reallocate assets and expenses or to change the designation of any series now or hereafter created, or to otherwise change the special and relative rights of any such series.


ANNEX B

Pursuant to Section 6.10 of the Declaration of Trust, the Trustees have divided the shares of each series of the Trust to create three classes of shares, within the meaning of Section 6.10, as follows:

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

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

3. The purchase price of Class A Shares, Class B Shares and Class C Shares, the method of determination of the net asset value of Class A Shares, Class B Shares and Class C Shares, the price, terms and manner of redemption of Class A Shares, Class B Shares and Class C Shares, any conversion feature of the Class B Shares, and the relative dividend rights of holders of Class A Shares, Class B Shares and Class C Shares shall be established by the Trustees of the Trust in accordance with the Declaration and shall be set forth in the current prospectus and statement of additional information of the Trust or any series thereof, as amended from time to time, contained in the Trust's registration statement under the Securities Act of 1933, as amended.

4. Class A Shares, Class B Shares and Class C Shares shall vote together as a single class except that shares of a class may vote separately on matters affecting only that class and shares of a class not affected by a matter will not vote on that matter.

5. A class of shares of any series of the Trust may be terminated by the Trustees by written notice to the Shareholders of the class.


IN WITNESS WHEREOF, the undersigned have executed this instrument this 21st day of December, 1994.

A. KEITH BRODKIN                                     CHARLES W. SCHMIDT
- -------------------------                            -------------------------
A. Keith Brodkin                                     Charles W. Schmidt
76 Farm Road                                         63 Claypit Hill Road
Sherborn, MA  01770                                  Wayland, MA  01778



RICHARD B. BAILEY                                    ARNOLD D. SCOTT
- -------------------------                            -------------------------
Richard B. Bailey                                    Arnold D. Scott
63 Atlantic Avenue                                   20 Rowes Wharf
Boston, MA  02110                                    Boston, MA  02110



PETER G. HARWOOD                                     JEFFREY L. SHAMES
- -------------------------                            -------------------------
Peter G. Harwood                                     Jeffrey L. Shames
211 Lindsay Pond Road                                60 Brookside Road
Concord, MA  01742                                   Needham, MA  02192



J. ATWOOD IVES                                       ELAINE R. SMITH
- -------------------------                            -------------------------
J. Atwood Ives                                       Elaine R. Smith
1 Bennington Road                                    75 Scotch Pine Road
Lexington, MA  02173                                 Weston, MA  02193



LAWRENCE T. PERERA                                   DAVID B. STONE
- -------------------------                            -------------------------
Lawrence T. Perera                                   David B. Stone
18 Marlborough Street                                50 Delano Road
Boston, MA  02116                                    Marion, MA  02736

WILLIAM J. POORVU
William J. Poorvu
975 Memorial Drive
Cambridge, MA 02138

EXHIBIT NO. 99.2

AMENDED AND RESTATED

BY-LAWS

OF

MFS SERIES TRUST V

DECEMBER 21, 1994


AMENDED AND RESTATED

BY-LAWS

OF

MFS SERIES TRUST V

ARTICLE I

DEFINITIONS

The terms "Commission", "Declaration", "Distributor", "Investment Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares", "Transfer Agent", "Trust", "Trust Property" and "Trustees" have the respective meanings given them in the amended and restated Declaration of Trust of MFS Series Trust V, dated December 21, 1994 as amended from time to time.

ARTICLE II

OFFICES

SECTION 1. PRINCIPAL OFFICE. Until changed by the Trustees, the principal office of the Trust in The Commonwealth of Massachusetts shall be in the City of Boston, County of Suffolk.

SECTION 2. OTHER OFFICES. The Trust may have offices in such other places without as well as within the Commonwealth as the Trustees may from time to time determine.

ARTICLE III

SHAREHOLDERS

SECTION 1. MEETINGS. Meetings of the Shareholders may be called at any time by a majority of the Trustees and shall be called by any Trustee upon written request of Shareholders holding in the aggregate not less than ten percent (10%) of the outstanding Shares of the Trust having voting rights, if shareholders of all series are required under the Declaration to vote in the aggregate and not by individual series at such meeting, or of any series or class if shareholders of such series or class are entitled under the Declaration to vote by individual series or class, such request specifying the purpose or purposes for which such meeting is to be called. Any such meeting shall be held within or without The Commonwealth of Massachusetts on such day and at such time as the Trustees shall designate.

SECTION 2. NOTICE OF MEETINGS. Notice of all meetings of Shareholders, stating the time, place and purposes of the meeting, shall be given by the Trustees by mail to each Shareholder entitled to vote at such meeting at his address as recorded on the register of the Trust, mailed at least (ten) 10 days and not more than (sixty) 60 days before the meeting. Only the business stated in the notice of the meeting shall be considered at such meeting. Any adjourned meeting may be held as adjourned without further notice. No notice need be given to any Shareholder who shall have failed to inform the Trust of his current address or if a written waiver of notice, executed before or after the meeting by the Shareholder or his attorney thereunto authorized, is filed with the records of the meeting.

SECTION 3. RECORD DATE FOR MEETINGS. For the purpose of determining the Shareholders who are entitled to notice of and to vote at any meeting, or to participate in any distribution, or for the purpose of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding thirty (30) days, as the Trustees may determine; or without closing the transfer books the Trustees may fix a date not more than sixty (60) days prior to the date of any meeting of Shareholders or distribution or other action as a record date for the determination of the persons to be treated as Shareholders of record for such purpose.

SECTION 4. PROXIES. At any meeting of Shareholders, any holder of Shares entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Clerk, or with such other officer or agent of the Trust as the Clerk may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a vote of a majority of the Trustees, proxies may be solicited in the name of one or more Trustees or one or more of the officers of the Trust. When any Share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Share. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. The placing of a Shareholder's name on a proxy pursuant to telephonic or electronically transmitted instructions obtained pursuant to procedures reasonably designed to verify that such instructions have been authorized by such Shareholder shall constitute execution of such proxy by or on behalf of such Shareholder. If the holder of any such Share is a minor or a person of unsound mind, and subject to guardianship or to the legal control of any other person as regards the charge or management of such Share, he may vote by his guardian or such other person appointed or having such control, and such vote may be given in person or by proxy. Any copy, facsimile telecommunication or other reliable reproduction of a proxy may be substituted for or used in lieu of the original proxy for any and all purposes for which the original proxy could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original proxy or the portion thereof to be returned by the Shareholder.

SECTION 5. QUORUM, ADJOURNMENT AND REQUIRED VOTE. A majority of outstanding Shares entitled to vote shall constitute a quorum at any meeting of Shareholders, except that where any provision of law, the Declaration or these By-laws permits or requires that holders of any series or class shall vote as a series or class, then a majority of the aggregate number of Shares of that series or class entitled to vote shall be necessary to constitute a quorum for the transaction of business by that series or class. In the absence of a quorum, a majority of outstanding Shares entitled to vote present in person or by proxy, or, where any provision of law, the Declaration or these By-laws permits or requires that holders of any series or class shall vote as a series or class, a majority of outstanding Shares of that series or class entitled to vote present in person or by proxy, may adjourn the meeting from time to time until a quorum shall be present. Only Shareholders of record shall be entitled to vote on any matter. Each full Share shall be entitled to one vote and fractional Shares shall be entitled to a vote of such fraction. Except as otherwise provided any provision of law, the Declaration or these By-laws, Shares representing a majority of the votes cast shall decide any matter (i.e., abstentions and broker non-votes shall not be counted) and a plurality shall elect a Trustee, provided that where any provision of law, the Declaration or these By-Laws permits or requires that holders of any series or class shall vote as a series or class, then a majority of the Shares of that series or class cast on the matter shall decide the matter (i.e., abstentions and broker non-votes shall not be counted) insofar as that series or class is concerned.

SECTION 6. INSPECTION OF RECORDS. The records of the Trust shall be open to inspection by Shareholders to the same extent as is permitted shareholders of a Massachusetts business corporation.

SECTION 7. ACTION WITHOUT MEETING. Any action which may be taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by law, the Declaration or these By-Laws for approval of such matter) consent to the action in writing and the written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.

ARTICLE IV

TRUSTEES

SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their discretion provide for regular or stated meetings of the Trustees. Notice of regular or stated meetings need not be given. Meetings of the Trustees other than regular or stated meetings shall be held whenever called by the Chairman or by any one of the Trustees at the time being in office. Notice of the time and place of each meeting other than regular or stated meetings shall be given by the Secretary or an Assistant Secretary, or the Clerk or an Assistant Clerk or by the officer or Trustee calling the meeting and shall be mailed to each Trustee at least two days before the meeting, or shall be telegraphed, cabled, or wirelessed or sent by facsimile or other electronic means to each Trustee at his business address, or personally delivered to him at least one day before the meeting. Such notice may, however, be waived by any Trustee. Notice of a meeting need not be given to any Trustee if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any Trustee who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. A notice or waiver of notice need not specify the purpose of any meeting. Except as provided by law the Trustees may meet by means of a telephone conference circuit or similar communications equipment by means of which all persons participating in the meeting can hear each other, which telephone conference meeting shall be deemed to have been held at a place designated by the Trustees at the meeting. Participation in a telephone conference meeting shall constitute presence in person at such meeting. Any action required or permitted to be taken at any meeting of the Trustees may be taken by the Trustees without a meeting if all the Trustees consent to the action in writing and the written consents are filed with the records of the Trustees' meetings. Such consents shall be treated as a vote for all purposes.

SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees shall be present at any regular or special meeting of the Trustees in order to constitute a quorum for the transaction of business at such meeting and (except as otherwise required by law, the Declaration or these By-Laws) the act of a majority of the Trustees present at any such meeting, at which a quorum is present, shall be the act of the Trustees. In the absence of a quorum, a majority of the Trustees present may adjourn the meeting from time to time until a quorum shall be present. Notice of an adjourned meeting need not be given.

ARTICLE V

COMMITTEES AND ADVISORY BOARD

SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a majority of all the Trustees may elect from their own number an Executive Committee to consist of not less than three (3) Trustees to hold office at the pleasure of the Trustees which shall have the power to conduct the current and ordinary business of the Trust while the Trustees are not in session, including the purchase and sale of securities and the designation of securities to be delivered upon redemption of Shares of the Trust, and such other powers of the Trustees as the Trustees may, from time to time, delegate to the Executive Committee except those powers which by law, the Declaration or these By-Laws they are prohibited from delegating. The Trustees may also elect from their own number other Committees from time to time, the number composing such Committees, the powers conferred upon the same (subject to the same limitations as with respect to the Executive Committee) and the term of membership on such Committees to be determined by the Trustees. The Trustees may designate a chairman of any such Committee. In the absence of such designation a Committee may elect its own Chairman.

SECTION 2. MEETING, QUORUM AND MANNER OF ACTING. The Trustees may:

(i) provide for stated meetings of any Committee,

(ii) specify the manner of calling and notice required for special meetings of any Committee,

(iii) specify the number of members of a Committee required to constitute a quorum and the number of members of a Committee required to exercise specified powers delegated to such Committee,

(iv) authorize the making of decisions to exercise specified powers by written assent of the requisite number of members of a Committee without a meeting, and

(v) authorize the members of a Committee to meet by means of a telephone conference circuit.

Each Committee shall keep regular minutes of its meetings and records of decisions taken without a meeting and cause them to be recorded in a book designated for that purpose and kept in the office of the Trust.

SECTION 3. ADVISORY BOARD. The Trustees may appoint an Advisory Board to consist in the first instance of not less than three (3) members. Members of such Advisory Board shall not be Trustees or officers and need not be Shareholders. A member of such Advisory Board shall hold office for such period as the Trustees may by resolution provide. Any member of such board may resign therefrom by a written instrument signed by him which shall take effect upon delivery to the Trustees. The Advisory Board shall have no legal powers and shall not perform the functions of Trustees in any manner, such Advisory Board being intended merely to act in an advisory capacity. Such Advisory Board shall meet at such times and upon such notice as the Trustees may by resolution provide.

ARTICLE VI

OFFICERS

SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a Chairman, a President, a Treasurer and a Clerk, who shall be elected by the Trustees. The Trustees may elect or appoint such other officers or agents as the business of the Trust may require, including one or more Vice Presidents, a Secretary and one or more Assistant Secretaries, one or more Assistant Treasurers, and one or more Assistant Clerks. The Trustees may delegate to any officer or Committee the power to appoint any subordinate officers or agents.

SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise provided by law, the Declaration or these By-Laws, the Chairman, the President, the Treasurer and the Clerk shall hold office until his resignation has been accepted by the Trustees or until his respective successor shall have been duly elected and qualified, and all other officers shall hold office at the pleasure of the Trustees. Any two or more offices may be held by the same person. Any officer may be, but none need be, a Trustee or Shareholder.

SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of the Trustees, may remove any officer with or without cause by a vote of a majority of the Trustees. Any officer or agent appointed by any officer or Committee may be removed with or without cause by such appointing officer or Committee.

SECTION 4. POWERS AND DUTIES OF THE CHAIRMAN. The Chairman may call meetings of the Trustees and of any Committee thereof when he deems it necessary and shall preside at all meetings of the Shareholders. Subject to the control of the Trustees and any Committees of the Trustees, the Chairman shall at all times exercise a general supervision and direction over the affairs of the Trust. The Chairman shall have the power to employ attorneys and counsel for the Trust and to employ such subordinate officers, agents, clerks and employees as he may find necessary to transact the business of the Trust. The Chairman shall also have the power to grant, issue, execute or sign such powers of attorney, proxies or other documents as may be deemed advisable or necessary in furtherance of the interests of the Trust. The Chairman shall have such other powers and duties as, from time to time, may be conferred upon or assigned to him by the Trustees.

SECTION 5. POWERS AND DUTIES OF THE PRESIDENT. In the absence or disability of the Chairman, the President shall perform all the duties and may exercise any of the powers of the Chairman, subject to the control of the Trustees. The President shall perform such other duties as may be assigned to him from time to time by the Trustees or the Chairman.

SECTION 6. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or disability of the President, the Vice President or, if there be more than one Vice President, any Vice President designated by the Trustees shall perform all the duties and may exercise any of the powers of the President, subject to the control of the Trustees. Each Vice President shall perform such other duties as may be assigned to him from time to time by the Trustees or the President.

SECTION 7. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be the principal financial and accounting officer of the Trust. The Treasurer shall deliver all funds of the Trust which may come into his hands to such custodian as the Trustees may employ pursuant to Article X hereof. The Treasurer shall render a statement of condition of the finances of the Trust to the Trustees as often as they shall require the same and shall in general perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Trustees. The Treasurer shall give a bond for the faithful discharge of his duties, if required to do so by the Trustees, in such sum and with such surety or sureties as the Trustees shall require.

SECTION 8. POWERS AND DUTIES OF THE CLERK. The Clerk shall keep the minutes of all meetings of the Shareholders in proper books provided for that purpose; he shall have custody of the seal of the Trust; he shall have charge of the Share transfer books, lists and records unless the same are in the charge of the Transfer Agent. He or the Secretary shall attend to the giving and serving of all notices by the Trust in accordance with the provisions of these By-Laws and as required by law; and subject to these By-Laws, he shall in general perform all duties incident to the office of Clerk and such other duties as from time to time may be assigned to him by the Trustees.

SECTION 9. POWERS AND DUTIES OF THE SECRETARY. The Secretary, if any, shall keep the minutes of all meetings of the Trustees. He shall perform such other duties and have such other powers in addition to those specified in these By-Laws as the Trustees shall from time to time designate. If there be no Secretary or Assistant Secretary, the Clerk shall perform the duties of Secretary.

SECTION 10. POWERS AND DUTIES OF ASSISTANT TREASURERS. In the absence or disability of the Treasurer, any Assistant Treasurer designated by the Trustees shall perform all the duties, and may exercise any of the powers, of the Treasurer. Each Assistant Treasurer shall perform such other duties as from time to time may be assigned to him by the Trustees. Each Assistant Treasurer shall give a bond for the faithful discharge of his duties, if required to do so by the Trustees, in such sum and with such surety or sureties as the Trustees shall require.

SECTION 11. POWERS AND DUTIES OF ASSISTANT CLERKS. In the absence or disability of the Clerk, any Assistant Clerk designated by the Trustees shall perform all the duties, and may exercise any of the powers, of the Clerk. The Assistant Clerks shall perform such other duties as from time to time may be assigned to them by the Trustees.

SECTION 12. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence or disability of the Secretary, any Assistant Secretary designated by the Trustees shall perform all of the duties, and may exercise any of the powers, of the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them by the Trustees.

SECTION 13. COMPENSATION OF OFFICERS AND TRUSTEES AND MEMBERS OF THE ADVISORY BOARD. Subject to any applicable law or provision of the Declaration, the compensation of the officers and Trustees and members of the Advisory Board shall be fixed from time to time by the Trustees or, in the case of officers, by any Committee or officer upon whom such power may be conferred by the Trustees. No officer shall be prevented from receiving such compensation as such officer by reason of the fact that he is also a Trustee.

ARTICLE VII

FISCAL YEAR

The fiscal year of the Trust shall begin on the first day of October in each year and shall end on the last day of September in that year, provided, however, that the Trustees may from time to time change the fiscal year.

ARTICLE VIII

SEAL

The Trustees shall adopt a seal which shall be in such form and shall have such inscription thereon as the Trustees may from time to time prescribe.

ARTICLE IX

WAIVERS OF NOTICE

Whenever any notice is required to be given by law, the Declaration or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent thereto. A notice shall be deemed to have been telegraphed, cabled or wirelessed or sent by facsimile or other electronic means for the purposes of these By-Laws when it has been delivered to a representative of any telegraph, cable or wireless company with instruction that it be telegraphed, cabled or wirelessed or when a confirmation of such facsimile having been sent, or a confirmation that such electronic means has sent the notice being transmitted, is generated. Any notice shall be deemed to be given at the time when the same shall be mailed, telegraphed, cabled or wirelessed or when sent by facsimile or other electronic means.

ARTICLE X

CUSTODIAN

SECTION 1. APPOINTMENT AND DUTIES. The Trustees shall at all times employ a bank or trust company having a capital, surplus and undivided profits of at least five million dollars ($5,000,000.00) as custodian with authority as its agent, but subject to such restrictions, limitations and other requirements, if any, as may be contained in the Declaration, these By-Laws and the 1940 Act:

(i) to hold the securities owned by the Trust and deliver the same upon written order;

(ii) to receive and issue receipts for any monies due to the Trust and deposit the same in its own banking department or elsewhere as the Trustees may direct;

(iii) to disburse such funds upon orders or vouchers;

(iv) if authorized by the Trustees, to keep the books and accounts of the Trust and furnish clerical and accounting services; and

(v) if authorized to do so by the Trustees, to compute the net income of the Trust;

all upon such basis of compensation as may be agreed upon between the Trustees and the custodian. If so directed by a Majority Shareholder Vote, the custodian shall deliver and pay over all Trust Property held by it as specified in such vote.

The Trustees may also authorize the custodian to employ one or more sub-custodians from time to time to perform such of the acts and services of the custodian and upon such terms and conditions as may be agreed upon between the custodian and such sub-custodian and approved by the Trustees, provided that in every case such sub-custodian shall be a bank or trust company organized under the laws of the United States or one of the states thereof and having capital, surplus and undivided profits of at least five million dollars ($5,000,000.00) or such foreign banks and securities depositories as meet the requirements of applicable provisions of the 1940 Act or the rules and regulations thereunder.

SECTION 2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct the custodian to deposit all or any part of the securities owned by the Trust in a system for the central handling of securities established by a national securities exchange or a national securities association registered with the Commission under the Securities Exchange Act of 1934, or such other person as may be permitted by the Commission, or otherwise in accordance with the 1940 Act, pursuant to which system all securities of any particular class or series of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to withdrawal only upon the order of the Trust or its custodian.

SECTION 3. ACCEPTANCE OF RECEIPTS IN LIEU OF CERTIFICATES. Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct the custodian to accept written receipts or other written evidences indicating purchases of securities held in book-entry form in the Federal Reserve System in accordance with regulations promulgated by the Board of Governors of the Federal Reserve System and the local Federal Reserve Banks in lieu of receipt of certificates representing such securities.

SECTION 4. PROVISIONS OF CUSTODIAN CONTRACT. The substance of the following provisions shall apply to the employment of a custodian pursuant to this Article X and to any contract entered into with the custodian so employed:

(i) The Trustees shall cause to be delivered to the custodian all securities owned by the Trust or to which it may become entitled, and shall order the same to be delivered by the custodian only upon completion of a sale, exchange, transfer, pledge, or other disposition thereof, and upon receipt by the custodian of the consideration therefor or a certificate of deposit or a receipt of an issuer or of its Transfer Agent, all as the Trustees may generally or from time to time require or approve, or to a successor custodian; and the Trustees shall cause all funds owned by the Trust or to which it may become entitled to be paid to the custodian, and shall order the same disbursed only for investment against delivery of the securities acquired, or in payment of expenses, including management compensation, and liabilities of the Trust, including distributions to Shareholders, or to a successor custodian; provided, however, that nothing herein shall prevent the custodian from paying for securities before such securities are received by the custodian or the custodian from delivering securities prior to receiving payment therefor in accordance with the payment and delivery customs of the market in which such securities are being purchased or sold .

(ii) In case of the resignation, removal or inability to serve of any such custodian, the Trust shall promptly appoint another bank or trust company meeting the requirements of this Article X as successor custodian. The agreement with the custodian shall provide that the retiring custodian shall, upon receipt of notice of such appointment, deliver the funds and property of the Trust in its possession to and only to such successor, and that pending appointment of a successor custodian, or a vote of the Shareholders to function without a custodian, the custodian shall not deliver funds and property of the Trust to the Trust, but may deliver all or any part of them to a bank or trust company doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus and undivided profits (as shown in its last published report) of at least $5,000,000, as the property of the Trust to be held under terms similar to those on which they were held by the retiring custodian.

ARTICLE XI

SALE OF SHARES OF THE TRUST

The Trustees may from time to time issue and sell or cause to be issued and sold Shares for cash or other property, which shall in every case be paid or delivered to the Custodian as agent of the Trust before the delivery of any certificate for such shares. The Shares, including additional Shares which may have been repurchased by the Trust (herein sometimes referred to as "treasury shares"), may not be sold at a price less than the net asset value thereof (as defined in Article XII hereof) determined by or on behalf of the Trustees next after the sale is made or at some later time after such sale.

No Shares need be offered to existing Shareholders before being offered to others. No Shares shall be sold by the Trust (although Shares previously contracted to be sold may be issued upon payment therefor) during any period when the determination of net asset value is suspended by declaration of the Trustees pursuant to the provisions of Article XII hereof. In connection with the acquisition by merger or otherwise of all or substantially all the assets of an investment company (whether a regulated or private investment company or a personal holding company), the Trustees may issue or cause to be issued Shares and accept in payment therefor such assets valued at not more than market value thereof in lieu of cash, notwithstanding that the federal income tax basis to the Trust of any assets so acquired may be less than the market value, provided that such assets are of the character in which the Trustees are permitted to invest the funds of the Trust.

The Trustees, in their sole discretion, may cause the Trust to redeem all of the Shares of the Trust held by any Shareholder if the value of such Shares is less than a minimum amount established from time to time by the Trustees.

ARTICLE XII

NET ASSET VALUE OF SHARES

The term "net asset value" per Share of any class or series of Shares shall mean: (i) the value of all assets of that series or class; (ii) less total liabilities of such series or class; (iii) divided by the number of Shares of such series or class outstanding, in each case at the time of such determination, all as determine by or under the direction of the Trustees. Such value shall be determined on such days and at such time as the Trustees may determine. Such determination shall be made with respect to securities for which market quotations are readily available, at the market value of such securities; and with respect to other securities and assets, at the fair value as determined in good faith by or pursuant to the direction of the Trustees, provided, however, that the Trustees, without shareholder approval, may alter the method of appraising portfolio securities insofar as permitted under the 1940 Act, and the rules, regulations and interpretations thereof promulgated or issued by the Securities and Exchange Commission or insofar as permitted by any order of the Securities and Exchange commission. The Trustees may delegate any powers and duties under this Article XII with respect to appraisal of assets and liabilities. At any time the Trustees may cause the value per share last determined to be determined again in a similar manner and may fix the time when such predetermined value shall become effective.

ARTICLE XIII

DIVIDENDS AND DISTRIBUTIONS

SECTION 1. LIMITATIONS ON DISTRIBUTIONS. The total of distributions to Shareholders of a particular series or class paid in respect of any one fiscal year, subject to the exceptions noted below, shall, when and as declared by the Trustees, be approximately equal to the sum of:

(i) the net income, exclusive of the profits or losses realized upon the sale of securities or other property, of such series or class for such fiscal year, determined in accordance with generally accepted accounting principles (which, if the Trustees so determine, may be adjusted for net amounts included as such accrued net income in the price of Shares of such series or class issued or repurchased), but if the net income of such series or class exceeds the amount distributed by less than one cent per share outstanding at the record date for the final dividend, the excess shall be treated as distributable income of such series or class for the following fiscal year; and

(ii) in the discretion of the Trustees, an additional amount which shall not substantially exceed the excess of profits over losses on sales of securities or other property allocated or belonging to such series or class for such fiscal year.

The decision of the Trustees as to what, in accordance with generally accepted accounting principles, is income and what is principal shall be final, and except as specifically provided herein the decision of the Trustees as to what expenses and charges of the Trust shall be charged against principal and what against income shall be final, all subject to any applicable provisions of the 1940 Act and rules, regulations and orders of the Commission promulgated thereunder. For the purposes of the limitation imposed by this Section 1, Shares issued pursuant to Section 2 of this Article XIII shall be valued at the amount of cash which the Shareholders would have received if they had elected to receive cash in lieu of such Shares.

Inasmuch as the computation of net income and gains for federal income tax purposes may vary from the computation thereof on the books, the above provisions shall be interpreted to give to the Trustees the power in their discretion to distribute for any fiscal year as ordinary dividends and as capital gains distributions, respectively, additional amounts sufficient to enable the Trust to avoid or reduce liability for taxes. Any payment made to Shareholders pursuant to clause (ii) of this Section 1 shall be accompanied by a written statement showing the source or sources of such payment, and the basis of computation thereof.

SECTION 2. DISTRIBUTIONS PAYABLE IN CASH OR SHARES. The Trustees shall have power, to the fullest extent permitted by the laws of The Commonwealth of Massachusetts but subject to the limitation as to cash distributions imposed by
Section 1 of this Article XIII, at any time or from time to time to declare and cause to be paid distributions payable at the election of any Shareholder of any series or class (whether exercised before or after the declaration of the distribution) either in cash or in Shares of such series, provided that the sum of:

(i) the cash distribution actually paid to any Shareholder, and

(ii) the net asset value of the Shares which that Shareholder elects to receive, in effect at such time at or after the election as the Trustees may specify, shall not exceed the full amount of cash to which that Shareholder would be entitled if he elected to receive only cash.

In the case of a distribution payable in cash or Shares at the election of a Shareholder, the Trustees may prescribe whether a Shareholder, failing to express his election before a given time shall be deemed to have elected to take Shares rather than cash, or to take cash rather then Shares, or to take Shares with cash adjustment of fractions.

The Trustees, in their sole discretion, may cause the Trust to require that all distributions payable to a shareholder in amounts less than such amount or amounts determined from time to time by the Trustees be reinvested in additional shares of the Trust rather than paid in cash, unless a shareholder who, after notification that his distributions will be reinvested in additional shares in accordance with the preceding phrase, elects to receive such distributions in cash. Where a shareholder has elected to receive distributions in cash and the postal or other delivery service is unable to deliver checks to the shareholder's address of record, the Trustees, in their sole discretion, may cause the Trust to require that such Shareholder's distribution option will be converted to having all distributions reinvested in additional shares.

SECTION 3. STOCK DIVIDENDS. Anything in these By-Laws to the contrary notwithstanding, the Trustees may at any time declare and distribute pro rata among the Shareholders of any series or class a "stock dividend" out of either authorized but unissued Shares of such series or class or treasury Shares of such series or class or both.

ARTICLE XIV

DERIVATIVE CLAIMS

No Shareholder shall have the right to bring or maintain any court action, proceeding or claim on behalf of the Trust or any series or class thereof without first making demand on the Trustees requesting the Trustees to bring or maintain such action, proceeding or claim. Such demand shall be excused only when the plaintiff makes a specific showing that irreparable injury to the Trust or any series or class thereof would otherwise result. Such demand shall be mailed to the Clerk of the Trust at the Trust's principal office and shall set forth in reasonable detail the nature of the proposed court action, proceeding or claim and the essential facts relied upon by the Shareholder to support the allegations made in the demand. The Trustees shall consider such demand within 45 days of its receipt by the Trust. In their sole discretion, the Trustees may submit the matter to a vote of Shareholders of the Trust or any series or class thereof, as appropriate. Any decision by the Trustees to bring, maintain or settle (or not to bring, maintain or settle) such court action, proceeding or claim, or to submit the matter to a vote of Shareholders, shall be made by the Trustees in their business judgment and shall be binding upon the Shareholders. Any decision by the Trustees to bring or maintain a court action, proceeding or suit on behalf of the Trust or any series or class thereof shall be subject to the right of the Shareholders under Article VI, Section 6.8 of the Declaration to vote on whether or not such court action, proceeding or suit should or should not be brought or maintained.

ARTICLE XV

AMENDMENTS

These By-Laws, or any of them, may be altered, amended or repealed, restated, or new By-Laws may be adopted:

(i) by Majority Shareholder Vote, or

(ii) by the Trustees,

provided, however, that no By-Law may be amended, adopted or repealed by the Trustees if such amendment, adoption or repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of the Shareholders.


EXHIBIT NO. 99.5(a)

INVESTMENT ADVISORY AGREEMENT

THIS AGREEMENT, made this 18th day of January, 1985 by and between Massachusetts income Development Fund, a Massachusetts business trust (the "Fund") and Massachusetts Financial Services Company, a Delaware Corporation (the "Adviser").

WITNESSETH:

WHEREAS, the Fund is engage in business as an open-end investment company registered under the lnvestment. company Act of 1940;

WHEREAS, the Adviser is willing to provide business management services to the Fund on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereto as herein set forth, the parties covenant and agree as follows:

ARTICLE 1: DUTIES OF THE ADVISER. The Adviser shall provide the Fund with such investment advice and supervision as the latter may from time to time consider necessary for the proper management of its funds. The Adviser shall act as Adviser to the Fund and as such shall furnish continuously an investment program and shall determine from time to time what securities shall be purchased, sold or exchanged and what portion of the assets of the Fund shall be held uninvested, subject always to the restrictions of its Declaration of Trust, dated November 7, 1984, and By-Laws, as amended from time to time (respectively, the "Declaration" and the "By-Laws"), and to the provisions of the Investment Company Act of 1940. The Adviser shall also make recommendations as to the manner in which voting rights, rights to consent to corporate action and any other rights pertaining to the Fund's portfolio securities shall be exercised. Should the Trustees at any time, however, make any definite determination as to investment policy and notify the Adviser thereof in writing, the Adviser shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked. The Adviser shall take, on behalf of the Fund, all actions which it deems necessary to implement the investment policies determined as provided above, and in particular to place all orders for the purchase or sale of portfolio securities for the Fund's account with brokers or dealers selected by it, and to that end the Adviser is authorized as the agent of the Fund to give instructions to the Custodian of the Fund as to deliveries of securities and payments of cash for the account of the Fund. In connection with the selection of such brokers or dealers and the placing of such orders, the Adviser is directed to seek for the Fund execution at the most favorable price by responsible brokerage firms at reasonably competitive commission rates. In fulfilling this requirement the Adviser shall not be deemed to have acted unlawfully or to have breached any duty, created by this Agreement or otherwise, solely by reason of its having caused the Fund to pay a broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Adviser determined in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Adviser's overall responsibilities with respect to the Fund and to other clients of the Adviser as to which the Adviser exercised investment discretion.

ARTICLE 2: ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall furnish at its own expense investment advisory and administrative services, office space, equipment and clerical personnel necessary for servicing the investments of the Fund and maintaining its organization, and investment advisory facilities and executive and supervisory personnel for managing the investments and effecting the portfolio transactions of the Fund. The Adviser shall arrange, if desired by the Fund, for Directors, officers and employees of the Adviser to serve as Trustees, officers or agents of the Fund if duly elected or appointed to such positions and subject to their individual consent and to any limitations imposed by law. It is understood that the Fund will pay all of its own expenses including, without limitation, compensation of Trustees not affiliated with the Adviser, governmental fees, interest charges, taxes, membership dues in the Investment Company Institute allocable to the Fund, fees and expenses of independent auditors, of legal counsel and of any transfer agent, registrar or dividend disbursing agent of the Fund, expenses of repurchasing and redeeming shares, expenses of preparing, printing and mailing stock certificates, prospectuses, shareholder reports, notices, proxy statements and reports to governmental officers and commissions, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, fees and expenses of the custodian for all services to the Fund, including safekeeping of funds and securities, keeping of books and accounts and calculation of the net asset value of shares of the Fund, expenses of shareholder meetings, and expenses relating to the issuance, registration and qualification of shares of the Fund.

ARTICLE 3: COMPENSATION OF THE ADVISER. For the services to be rendered and the facilities to be furnished as provided in Articles 1 and 2 above, the Fund shall pay to the Adviser an investment advisory fee computed and paid monthly at the annual rate .25% of the Fund's average daily net assets and 3.57% of the Fund's gross income for the period, provided that:

(a) The annual rate applicable to average daily net assets in excess of $200,000,000 shall be .212% of said excess;

(b) The annual rate applicable to gross income in excess of $14,000,000 shall be 3.04% of said excess; and

(c) Within thirty days following the close of any fiscal year of the Fund, the Adviser will pay to the Fund a sum equal to the amount by which the aggregate expenses of the Fund incurred during such fiscal year, but excluding interest, taxes and brokerage commissions, exceed the lesser of either 25% of gross income of the Fund for the preceding year or the sum of
(a) 1 1/2% of the average daily net assets of the preceding year up to and including $40,000,000 and (b) 1% of any excess of average daily net assets of the preceding year over $40,000,000. The obligation of the Adviser to reimburse the Fund for expenses incurred for any year may be terminated or revised at any time by the Adviser without the consent of the Fund by notice in writing from the Adviser to the Fund, provided, however, that termination or revision of the Adviser's obligation to reimburse for expenses is not to be effective with respect to the fiscal year within which such notice is given.

If the Adviser shall serve for less that the whole of any period specified in this Article 3, the compensation to the Adviser shall be prorated.

ARTICLE 4: COVENANTS OF THE ADVISER. The Adviser agrees that it will not deal with itself, or with the Trustees of the Fund or the Underwriter as principals in making purchases or sales of securities or other property for the account of the Fund, will not take a long or short position in the shares of the Fund except as provided by the Declaration, and will comply with all other provisions of the Declaration and By-Laws relative to the Adviser and its Directors and officers.

ARTICLE 5: LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution and management of the Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder. As used in this Article 5, the term "Adviser" shall include Directors, officers and employees of the Adviser as well as the corporation itself.

ARTICLE 6: ACTIVITIES OF THE ADVISER. The services of the Adviser to the Fund are not to be deemed to be exclusive, the Adviser being free to render services to others. It is understood that Trustees, officers, and shareholders of the Trust are or may be or become interested in the Adviser, as Directors, officers, employees, or otherwise and that Directors, officers and employees of the Adviser are or may become similarly interested in the Fund and that the Adviser may be or become interested in the Fund as a shareholder or otherwise.

ARTICLE 7: DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This Agreement shall become effective on the date of its execution and shall govern the relations between the parties hereto thereafter, and shall remain in force until August 1, 1995 on which date it will terminate unless its continuance after August 1, 1995 is specifically approved at least annually (i) by the vote of a majority of the Trustees of the Fund who are not interested persons of the Fund or of the Adviser at a meeting specifically called for the purpose of voting on such approval, and (ii) by the Trustees of the Fund, or by vote of a majority of the outstanding voting securities of the Fund. The aforesaid requirement that continuance of this Agreement be "specifically approved at least annually" shall be construed in a manner consistent with the Investment Company Act of 1940 and the Rules and Regulations thereunder.

This Agreement may be terminated at any time without the payment of any penalty by the Trustees or by vote of a majority of the outstanding voting securities of the Fund, or by the Adviser, on not more than sixty days' nor less that thirty days' written notice to the other party. This Agreement shall automatically terminate in the event of its assignment.

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

The terms "vote of a majority of the outstanding voting securities", "assignment", "affiliated person", and "interested persons", when used in this Agreement, shall have the respective meanings specified in the Investment Company Act of 1940 and the Rules and Regulations thereunder, subject, however, to such exemptions as my be granted by the Securities and Exchange Commission under said Act.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered in their names and on their behalf by the undersigned officers thereunto duly authorized, and their respective seals to be hereto affixed, all as of the day and year first written above.

MASSACHUSETTS INCOME
DEVELOPMENT FUND

By: ILLEGIBLE
(Illegible)

Chairman and Trustee

MASSACHUSETTS FINANCIAL
SERVICES COMPANY

By: ILLEGIBLE
(Illegible)

President

EXHIBIT NO. 99.5(b)

AGREEMENT, made this 19th day of November, 1985, by and between Massachusetts Income Development Fund, a Massachusetts business trust (the "Fund"), and Massachusetts Financial Services Company, a Delaware corporation ("MFS").

WHEREAS, MFS acts as investment adviser to the Fund pursuant to an Investment Advisory Agreement, dated the 18th day of January, 1985 (the "Advisory Agreement"); and

WHEREAS, the Fund intends, and MFS has given permission to the Fund, to change the name of the Fund, effective January 28, 1986, to "Massachusetts Financial Total Return Trust;"

NOW THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Fund and MFS agree as follows:

MFS may permit other fund advisory clients to use the words "Massachusetts Financial" in their names. The Fund agrees that if MFS shall for any reason no longer serve as the investment adviser to the Fund, the Fund will change its name so as to delete the words 'Massachusetts Financial."

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, and their respective seals to be hereto affixed, all as of the date first above written. The undersigned Trustee of the Fund has executed this Agreement not individually, but as Trustee under the Declaration of Trust of the Fund, dated November 7, 1984, and the obligations of this Agreement are not binding upon any of the Trustees or shareholders of the Fund, individually, but bind only the Trust estate.

MASSACHUSETTS INCOME
DEVELOPMENT FUND

By: RICHARD B. BAILEY
Richard B. Bailey

MASSACHUSETTS FINANCIAL
SERVICES COMPANY

By: H. ALDEN JOHNSON, JR.

H. Alden Johnson, Jr.


EXHIBIT NO. 99.5(c)

INVESTMENT ADVISORY AGREEMENT

INVESTMENT ADVISORY AGREEMENT, dated as of this 1st day of September, 1993 by and between MFS SERIES TRUST V, a Massachusetts business trust (the "Trust") on behalf of MFS RESEARCH FUND, a series of the Trust (the "Fund"), and Massachusetts Financial Services Company, a Delaware corporation (the "Adviser").

WITNESSETH:

WHEREAS, the Trust is engaged in business as an open-end investment company registered under the Investment Company Act of 1940; and

WHEREAS, the Adviser is willing to provide business management services to the Fund on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereto as herein set forth, the parties covenant and agree as follows:

ARTICLE 1: DUTIES OF THE ADVISER. The Adviser shall provide the Fund with such investment advice and supervision as the latter may from time to time consider necessary for the proper management of its funds. The Adviser shall act as Adviser to the Fund and as such shall furnish continuously an investment program and shall determine from time to time what securities shall be purchased, sold or exchanged and what portion of the assets of the Fund shall be held uninvested, subject always to the restrictions of the Trust's Declaration of Trust, dated November 7, 1984, and By-Laws, as amended from time to time (respectively, the "Declaration" and the "By-Laws"), and to the provisions of the Investment Company Act of 1940. The Adviser shall also make recommendations as to the manner in which voting rights, rights to consent to corporate action and any other rights pertaining to the Fund's portfolio securities shall be exercised. Should the Trustees at any time, however, make any definite determination as to investment policy and notify the Adviser thereof in writing, the Adviser shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked. The Adviser shall take, on behalf of the Fund, all actions which it deems necessary to implement the investment policies determined as provided above, and in particular to place all orders for the purchase or sale of portfolio securities for the Fund's account with brokers or dealers selected by it, and to that end the Adviser is authorized as the agent of the Fund to give instructions to the Custodian of the Fund as to deliveries of securities and payments of cash for the account of the Fund. In connection with the selection of such brokers or dealers and the placing of such orders, the Adviser is directed to seek for the Fund execution at the most favorable price by responsible brokerage firms at reasonably competitive commission rates. In fulfilling this requirement the Adviser shall not be deemed to have acted unlawfully or to have breached any duty, created by this Agreement or otherwise, solely by reason of its having caused the Fund to pay a broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Adviser determined in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Adviser's overall responsibilities with respect to the Fund and to other clients of the Adviser as to which the Adviser exercises investment discretion.

ARTICLE 2: ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall furnish at its own expense investment advisory and administrative services, office space, equipment and clerical personnel necessary for servicing the investments of the Fund and maintaining its organization, and investment advisory facilities and executive and supervisory personnel for managing the investments and effecting the portfolio transactions of the Fund. The Adviser shall arrange, if desired by the Trust, for Directors, officers and employees of the Adviser to serve as Trustees, officers or agents of the Trust if duly elected or appointed to such positions and subject to their individual consent and to any limitations imposed by law. It is understood that the Fund will pay all of its own expenses including, without limitation, compensation of Trustees not affiliated with the Adviser, governmental fees, interest charges, taxes, membership dues in the Investment Company Institute allocable to the Fund, fees and expenses of independent auditors, of legal counsel and of any transfer agent, registrar or dividend disbursing agent of the Fund, expenses of repurchasing and redeeming shares, expenses of preparing, printing and mailing stock certificates, prospectuses, shareholder reports, notices, proxy statements and reports to governmental officers and commissions, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, fees and expenses of the custodian for all services to the Fund, including safekeeping of funds and securities, keeping of books and accounts and calculation of the net asset value of shares of the Fund, expenses of shareholder meetings, and expenses relating to the issuance, registration and qualification of shares of the Fund.

ARTICLE 3: COMPENSATION OF THE ADVISER. For the services to be rendered and the facilities to be furnished as provided in Articles 1 and 2 above, the Fund shall pay to the Adviser an investment advisory fee computed and paid monthly at the annual rate .40% of the Fund's average daily net assets and 5.0% of the Fund's gross income for the period, provided that:

(a) The annual rate applicable to average daily net assets in excess of $100,000,000 shall be 32% of said excess;

(b) The annual rate applicable to gross income in excess of $2,000,000 shall be 4% of said excess; and

(c) Within thirty days following the close of any fiscal year of the Fund, the Adviser will pay to the Fund a sum equal to the amount by which the aggregate expenses of the Fund incurred during such fiscal year, but excluding interest, taxes and brokerage commissions, exceed the sum of (a) 1 1/2% of the average daily net assets of the preceding year up to and including $40,000,000 and (b) 1% of any excess of average daily net assets of the preceding year over $40,000,000. The obligation of the Adviser to reimburse the Fund for expenses incurred for any year may be terminated or revised at any time by the Adviser without the consent of the Fund by notice in writing from the Adviser to the Fund, provided, however, that termination or revision of the Adviser's obligation to reimburse for expenses is not to be effective with respect to the fiscal year within which such notice is given.

If the Adviser shall serve for less that the whole of any period specified in this Article 3, the compensation to the Adviser shall be prorated.

ARTICLE 4: COVENANTS OF THE ADVISER. The Adviser agrees that it will not deal with itself, or with the Trustees of the Trust or the Underwriter as principals in making purchases or sales of securities or other property for the account of the Fund, will not take a long or short position in the shares of the Fund except as provided by the Declaration, and will comply with all other provisions of the Declaration and By-Laws relative to the Adviser and its Directors and officers.

ARTICLE 5: LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution and management of the Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder. As used in this Article 5, the term "Adviser" shall include Directors, officers and employees of the Adviser as well as the corporation itself.

ARTICLE 6: ACTIVITIES OF THE ADVISER. The services of the Adviser to the Fund are not to be deemed to be exclusive, the Adviser being free to render services to others. The Adviser may permit other Fund clients to use the letters "MFS" in their names. The Fund agrees that if the Adviser shall for any reason no longer serve as the Adviser to the Fund, the Fund will change its name so as to delete the letters "MFS". It is understood that Trustees, officers, and shareholders of the Trust are or may be or become interested in the Adviser, as Directors, officers, employees, or otherwise and that Directors, officers and employees of the Adviser are or may become similarly interested in the Fund and that the Adviser may be or become interested in the Fund as a shareholder or otherwise.

ARTICLE 7: DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This Agreement shall become effective on the date of its execution and shall govern the relations between the parties hereto thereafter, and shall remain in force until August 1, 1995 on which date it will terminate unless its continuance after August 1, 1995 is specifically approved at least annually (i) by the vote of a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Adviser at a meeting specifically called for the purpose of voting on such approval, and (ii) by the Trustees of the Trust, or by vote of a majority of the outstanding voting securities of the Fund. The aforesaid requirement that continuance of this Agreement be "specifically approved at least annually" shall be construed in a manner consistent with the Investment Company Act of 1940 and the Rules and Regulations thereunder.

This Agreement may be terminated at any time without the payment of any penalty by the Trustees or by vote of a majority of the outstanding voting securities of the Fund, or by the Adviser, on not more than sixty days' nor less that thirty days' written notice to the other party. This Agreement shall automatically terminate in the event of its assignment.

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

The terms "vote of a majority of the outstanding voting securities", "assignment", "affiliated person", and "interested persons", when used in this Agreement, shall have the respective meanings specified in the Investment Company Act of 1940 and the Rules and Regulations thereunder, subject, however, to such exemptions as my be granted by the Securities and Exchange Commission under said Act.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered in their names and on their behalf by the undersigned, thereunto duly authorized, and their respective seals to be hereto affixed, all as of the day and year first written above. The undersigned Trustee of the Trust has executed this Agreement not individually, but as Trustee under the Declaration and the obligations of this Agreement are not binding upon any of the Trustees or shareholders of the Trust, individually, but bind only the trust estate applicable to the Fund.

MFS SERIES TRUST V on
behalf of MFS RESEARCH FUND

By: A. KEITH BRODKIN

A. Keith Brodkin Chairman and Trustee

MASSACHUSETTS FINANCIAL
SERVICES COMPANY

By: A. KEITH BRODKIN

A. Keith Brodkin Chairman

EXHIBIT NO. 99.6(a)

DISTRIBUTION AGREEMENT

DISTRIBUTION AGREEMENT, made this first day of January, 1995, by and between MFS SERIES TRUST V, a Massachusetts business trust (the "Trust"), on behalf of each series from time to time of the Trust (referred to individually as a "Fund" and collectively as the "Funds") and MFS FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor");

NOW, THEREFORE, in consideration of the mutual promises and undertakings herein contained, the parties hereto agree as follows:

1. The Trust grants to the Distributor the right, as agent of the Trust, to sell Shares of Beneficial Interest, without par value, of the Funds (the "Shares") upon the terms herein below set forth during the term of this Agreement. While this Agreement is in force, the Distributor agrees to use its best efforts to find purchasers for Shares.

The Distributor shall have the right, as agent of the Trust, to order from the Trust the Shares needed, but not more than the Shares needed (except for clerical errors and errors of transmission) to fill unconditional orders for Shares placed with the Distributor by dealers, banks or other financial institutions or investors as set forth in the current Prospectus and Statement of Additional Information (collectively, the "Prospectus") relating to the Shares. The price which shall be paid to the Trust for the Shares so purchased shall be the net asset value used in determining the public offering price on which such orders were based. The Distributor shall notify the Custodian of the Trust, at the end of each business day, or as soon thereafter as the orders placed with it have been compiled, of the number of Shares and the prices thereof which have been ordered through the Distributor since the end of the previous day.

The right granted to the Distributor to place orders for Shares with the Trust shall be exclusive, except that said exclusive right shall not apply to Shares issued in the event that an investment company (whether a regulated or private investment company or a personal holding company) is merged or consolidated with the Trust (or a Fund) or in the event that the Trust (or a Fund) acquires by purchase or otherwise, all (or substantially all) the assets or the outstanding shares of any such company; nor shall it apply to Shares issued by the Trust (or a Fund) as a stock dividend or a stock split. The exclusive right to place orders for Shares granted to the Distributor may be waived by the Distributor by notice to the Trust in writing, either unconditionally or subject to such conditions and limitations as may be set forth in the notice to the Trust. The Trust hereby acknowledges that the Distributor may render distribution and other services to other parties, including other investment companies. In connection with its duties hereunder, the Distributor shall also arrange for computation of performance statistics with respect to the Trust and arrange for publication of current price information in newspapers and other publications.

2. The Shares may be sold through the Distributor to dealers, banks and other financial institutions having sales agreements with the Distributor, upon the following terms and conditions:

The public offering price, i.e., the price per Share at which the Distributor or dealers, banks or other financial institutions purchasing Shares through the Distributor may sell Shares to the public, shall be the public offering price as set forth in the current Prospectus relating to the Shares, including a sales charge (where applicable) not to exceed the amount permitted by Article III, Section 26 of the National Association of Securities Dealers, Inc.'s Rule of Fair Practice, as amended from time to time. The Distributor shall retain the sales charge (where applicable) less any applicable dealer or comparable discount. If the resulting public offering price does not come out to an even cent, the public offering price shall be adjusted to the nearer cent. In addition, the Trust agrees that the Distributor may impose certain contingent deferred sales charges (where applicable) in connection with the redemption of Shares, not to exceed 6% of the net asset value of Shares, and the Distributor shall retain (or receive from the Trust, as the case may be) all such contingent deferred sales charges.

The Distributor may place orders for Shares at the net asset value for such Shares (as established pursuant to paragraph l above) on behalf of such purchasers and under such circumstances as the Prospectus describes, provided that such sales comply with Rule 22d-1 under the Investment Company Act of 1940 or any exemptive order granted by the Securities and Exchange Commission. The Distributor may also place orders for Shares at net asset value on behalf of persons reinvesting the proceeds of the redemption or resale of Shares or shares of other investment companies for which the Distributor acts as Distributor or as otherwise provided in the current Prospectus.

The net asset value of Shares shall be determined by the Trust or by an agent of the Trust, as of the close of regular trading of the New York Stock Exchange on each business day on which said Exchange is open, in accordance with the method set forth in the governing instruments (as hereinafter defined) of the Trust. The Trust may also cause the net asset value to be determined in substantially the same manner or estimated in such manner and as of such other hour or hours as may from time to time be agreed upon in writing by the Trust and Distributor. The Trust shall have the right to suspend the sale of Shares if, because of some extraordinary condition, the New York Stock Exchange shall be closed, or if conditions obtaining during the hours when the Exchange is open render such action advisable, or for any other reasons deemed adequate by the Trust.

3. The Trust agrees that it will, from time to time, take all necessary action to register the offering and sale of Shares under the Securities Act of l933, as amended (the "Act"), and applicable state securities laws.

The Distributor shall be an independent contractor and neither the Distributor nor any of its directors, officers or employees as such, is or shall be an employee of the Trust. It is understood that Trustees, officers and shareholders of the Trust are or may become interested in the Distributor, as Directors, officers and employees, or otherwise and that Directors, officers and employees of the Distributor are or may become similarly interested in the Trust and that the Distributor may be or become interested in the Trust as a shareholder or otherwise. The Distributor is responsible for its own conduct and the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others through its agents or employees. The Distributor assumes full responsibility for its agents and employees under applicable statutes and agrees to pay all employer taxes thereunder.

4. The Distributor covenants and agrees that, in selling Shares, it will use its best efforts in all respects duly to conform with the requirements of all state and federal laws and the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD") relating to the sale of Shares, and will indemnify and hold harmless the Trust and each of its Trustees and officers and each person, if any, who controls the Trust within the meaning of Section 15 of the Act, against any loss, liability, damages, claim or expense (including the reasonable cost of investigating or defending any alleged loss, liability, damages, claim or expense and reasonable counsel fees incurred in connection therewith), arising by reason of any person's acquiring any Shares, which may be based upon the Act or any other statute or common law, on account of any wrongful act of the Distributor or any of its employees (including any failure to conform with any requirement of any state or federal law or the Rules of Fair Practice of the NASD relating to the sale of Shares) or on the ground that the registration statement or Prospectus as from time to time amended and supplemented, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, unless any such act, statement or omission was made in reliance upon information furnished to the Distributor by or on behalf of the Trust, provided, however, that in no case (i) is the indemnity of the Distributor in favor of any person indemnified to be deemed to protect the Trust or any such person against any liability to which the Trust or any such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its or his duties or by reason of its or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Distributor to be liable under its indemnity agreement contained in this paragraph with respect to any claim made against the Trust or any person indemnified unless the Trust or such person, as the case may be, shall have notified the Distributor in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon the Trust or upon such person (or after the Trust or such person shall have received notice of such service on any designated agent), but failure to notify the Distributor of any such claim shall not relieve it from any liability which it may have to the Trust or any person against whom such action is brought otherwise than on account of its indemnity agreement contained in this paragraph. The Distributor shall be entitled to participate, at its own expense, in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any such liability, but, if the Distributor elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the Trust, or to its officers or Trustees, or to any controlling person or persons, defendant or defendants in the suit. In the event that the Distributor elects to assume the defense of any such suit and retain such counsel, the Trust or such officers or Trustees or controlling person or persons, defendant or defendants in the suit, shall bear the fees and expenses of any additional counsel retained by them, but, in case the Distributor does not elect to assume the defense of any such suit, it shall reimburse the Trust and such officers and Trustees or controlling person or persons, defendant or defendants in such suit, for the reasonable fees and expenses of any counsel retained by them. The Distributor agrees promptly to notify the Trust of the commencement of any litigation or proceedings against it in connection with the issue and sale of any Shares.

Neither the Distributor nor any other person is authorized to give any information or to make any representation on behalf of the Trust, other than those contained in the registration statement or Prospectus filed with the Securities and Exchange Commission under the Act (as said registration statement or Prospectus may be amended or supplemented from time to time), covering the Shares or other than those contained in periodic reports to shareholders of the Trust.

5. The Trust will pay, or cause to be paid -

(i) all costs and expenses of the Trust, including fees and disbursements of its counsel, in connection with the preparation and filing of any required registration statement or Prospectus under the Act covering Shares and all amendments and supplements thereto and any notices regarding the registration of shares, and preparing and mailing to shareholders Prospectuses, statements and confirmations and periodic reports (including the expense of setting up in type any such registration statement, Prospectus or periodic report);

(ii) the expenses (including auditing expenses) of qualification of the Shares for sale, and, if necessary or advisable in connection therewith, of qualifying the Trust as a dealer or broker, in such states as shall be selected by the Distributor and the fees payable to each such state with respect to shares sold and for continuing the qualification therein until the Distributor notifies the Trust that it does not wish such qualification continued;

(iii) the cost of preparing temporary or permanent certificates for Shares;

(iv) all fees and disbursements of the transfer agent of the Trust;

(v) the cost and expenses of delivering to the Distributor at its office in Boston, Massachusetts, all Shares sold through it as Distributor hereunder; and

(vi) all the federal and state issue and/or transfer taxes payable upon the issue by or (in the case of treasury Shares) transfer from the Trust of any and all Shares purchased through the Distributor hereunder.

The Distributor agrees that, after the Prospectus and periodic reports have been set up in type, it will bear the expense (other than the cost of mailing to shareholders of the Trust of printing and distributing any copies thereof which are to be used in connection with the offering of Shares to dealers, banks or other financial institutions or investors. The Distributor further agrees that it will bear the expenses of preparing, printing and distributing any other literature used by the Distributor or furnished by it for use by dealers, banks or other financial institutions in connection with the offering of the Shares for sale to the public and expenses of advertising in connection with such offering. The Distributor will also bear the expense of sending confirmations and statements to dealers, banks and other financial institutions having sales agreements with the Distributor. Nothing in this paragraph 5 shall be deemed to prohibit or conflict with any payment by the Trust or any Fund to the Distributor pursuant to any Distribution Plan adopted as in effect pursuant to Rule 12b-1 under the Investment Company Act of 1940.

6. The Trust hereby authorizes the Distributor to repurchase, upon the terms and conditions set forth in written instructions given by the Trust to the Distributor from time to time, as agent of the Trust and for its account, such Shares as may be offered for sale to the Trust from time to time; provided the Distributor shall have the right, as stated above in paragraph 2 of this Agreement, to retain (or to receive from the Trust, as the case may be) a deferred sales charge not to exceed 6% of the net asset value of the Shares so repurchased.

(a) The Distributor shall notify in writing the Custodian of the Trust, at the end of each business day, or as soon thereafter as the repurchases have been compiled, of the number of Shares repurchased for the account of the Trust since the last previous report, together with the prices at which such repurchases were made, and upon the request of any Officer or Trustee of the Trust shall furnish similar information with respect to all repurchases made up to the time of the request on any day.

(b) The Trust reserves the right to suspend or revoke the foregoing authorization at any time. Unless otherwise stated, any such suspension or revocation shall be effective forthwith upon receipt of notice thereof by an officer of the Distributor, by telegraph or by written notice from the Trust. In the event that the authorization of the Distributor is, by the terms of such notice, suspended for more than twenty-four hours or until further notice, the authorization given by this paragraph 6 shall not be revived except by action of a majority of the members of the Board of Trustees of the Trust.

(c) The Distributor shall have the right to terminate the operation of this paragraph 6 upon giving to the Trust thirty days' written notice thereof.

(d) The Trust agrees to authorize and direct the Custodian to pay, for the account of the Trust, the purchase price of any Shares so repurchased against delivery of the certificates, if any, in proper form for transfer to the Trust or for cancellation by the Trust.

(e) The Distributor shall receive no commission in respect of any repurchase of Shares under the foregoing authorization and appointment as agent, except in connection with contingent deferred sales charge as provided in the current Prospectus relating to the Shares.

(f) The Trust agrees to reimburse the Distributor, from time to time upon demand, for any reasonable expenses incurred in connection with the repurchase of Shares pursuant to this paragraph 6.

7. If, at any time during the existence of this Agreement, the Trust shall deem it necessary or advisable in the best interests of the Trust that any amendment of this Agreement be made in order to comply with the recommendations or requirements of the Securities and Exchange Commission or other governmental authority or to obtain any advantage under Massachusetts, any state or federal tax laws, it shall notify the Distributor of the form of amendment which it deems necessary or advisable and the reasons therefore. If the Distributor declines to assent to such amendment, the Trust may terminate this Agreement forthwith by written notice to the Distributor without payment of any penalty. If, at any time during the existence of this Agreement, upon request by the Distributor, the Trust fails (after a reasonable time) to make any changes in its governing instruments or in its methods of doing business which are necessary in order to comply with any requirements of federal or state laws or regulations, laws or regulations of the Securities and Exchange Commission or of a national securities association of which the Distributor is or may be a member, relating to the sale of Shares, the Distributor may terminate this Agreement forthwith by written notice to the Trust without payment of any penalty.

8. The Distributor agrees that it will not take any long or short positions in the Shares except as permitted by paragraphs l and 6 hereof. Whenever used in this Agreement, the term "governing instruments" shall mean the Declaration of Trust and the By-Laws of the Trust, as from time to time amended.

9. This Agreement shall become effective on January 1, 1995 and shall continue in force until August 1, 1996 on which date it will terminate unless its continuance after August 1, 1996, is specifically approved at least annually
(i) by the vote of a majority of the Board of Trustees of the Trust who are not interested persons of the Trust or of the Distributor at a meeting specifically called for the purpose of voting on such approval, and (ii) by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of that Fund. The aforesaid requirement that continuance of this Agreement be "specifically approved at least annually" shall be construed in a manner consistent with the Investment Company Act of l940 and the Rules and Regulations thereunder.

This Agreement may be terminated as to any Fund at any time by either party without payment of any penalty on not more than sixty days' or less than thirty days' written notice to the other party.

10. This Agreement shall automatically terminate in the event of its assignment.

11. The terms "vote of a majority of the outstanding voting securities", "interested person" and "assignment" shall have the respective meanings specified in the Investment Company Act of l940 and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under said Act.

12. This Agreement shall be governed by the laws of The Commonwealth of Massachusetts.

13. A copy of the Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts. The Distributor acknowledges that the obligations of or arising out of this instrument are not binding upon any of the Trust's trustees, officers, employees, agents or shareholders individually, but are binding solely upon the assets and property of the Trust. If this instrument is executed by the Trust on behalf of one or more series of the Trust, the Distributor further acknowledges that the assets and liabilities of each series of the Trust are separate and distinct and that the obligations of or arising out of this instrument are binding solely upon the assets or property of the series on whose behalf the Trust has executed this instrument. If the Trust has executed this instrument on behalf of more than one series of the Trust, the Distributor also agrees that the obligations of each series hereunder shall be several and not joint, in accordance with its proportionate interest hereunder, and the Distributor agrees not to proceed against any series for the obligations of another series.


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above.

MFS SERIES TRUST V

On behalf of MFS Total Return Fund
MFS Research Fund

By: W. THOMAS LONDON

W. Thomas London as officer and not individually

MFS FUND DISTRIBUTORS, INC.

By: WILLIAM W. SCOTT, JR.

William W. Scott, Jr.

President


EXHIBIT NO. 99.7

MFS TOTAL RETURN FUND

RETIREMENT PLAN FOR NON-INTERESTED PERSON TRUSTEES

MFS Total Return Fund (the "Fund") has adopted this Retirement Plan for Non-Interested Person Trustees (the "Plan"). The Plan has been established for the purpose of providing certain benefits to eligible Independent Trustees of the Fund, or their beneficiaries, after termination of the Independent Trustees' services as such.

1. DEFINITIONS

The following terms shall have the following meanings:

Accrued Benefit: A benefit which is equal to the Normal Retirement Benefit calculated using an Independent Trustee's Years of Service and Annual Compensation as of the determination date.

Actuarial Equivalent: A benefit equal in value, based on (a) an interest rate equal to the immediate annuity rate published by the Pension Guaranty Corporation for the January of the Plan Year of calculation and (b) the 1983 Individual Annuity Mortality Tables for Males.

Annual Compensation: The average of the total compensation (retainer and meeting fees) received by an Independent Trustee during each of the last three Plan Years preceding his termination of services as such for which he served either as an Independent Trustee or a Nonaffiliated Trustee for the entire year; provided, that if an Independent Trustee served as an Independent Trustee and/or a Nonaffiliated Trustee for fewer than three full Plan Years prior to his termination of services, there shall be taken into account his annualized compensation for the one or more most recent partial Plan Years (if any) for which he served as an Independent Trustee or a Nonaffiliated Trustee that, when aggregated with his full Plan Years, does not exceed three Plan Years.

Disability: Disability as defined in ss.22(e)(3) of the Internal Revenue Code of 1986, as amended.

Independent Trustee: A Trustee of the Fund who is not an "interested person" (as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended) of the Fund, Lifetime Advisers, Inc. ("Lifetime"), Massachusetts Financial Services Company ("MFS") or MFS Financial Services, Inc. ("FSI").

Nonaffiliated Trustee: A Trustee of the Fund who has no material business or professional relationship with the Fund, Lifetime, MFS or FSI and who is subject to being declared an "interested person" solely by reason of his relationship with the Fund, Lifetime, MFS or FSI during the two most recently completed fiscal years of the Fund.

Normal Retirement Benefit: An annual benefit at Normal Retirement Date equal to 5% of an Independent Trustee's Annual Compensation multiplied by the Independent Trustee's whole Years of Service, up to a maximum of ten Years of Service, payable in the Normal Form of Benefit, as defined in ss.3(g).

Normal Retirement Date: December 31 of the Plan Year in which an Independent Trustee attains age 73.

Plan Year: January 1 through December 31.

Retirement: Termination of service of an Independent Trustee after having completed at least Five Years of Service and having attained age 62, other than: (1) any termination by reason of death; (ii) any termination by reason of Disability, provided that any Independent Trustee who suffers a Disability and who has otherwise satisfied the requirements for Retirement shall have the right to elect whether his termination is by reason of Retirement or by reason of Disability; or (iii) any termination resulting from the Independent Trustee's willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Independent Trustee ("Misconduct").

Year of Service: A Plan Year during which an Independent Trustee completed at least six months of service as either a Nonaffiliated Trustee or an Independent Trustee.

2. ELIGIBILITY

No Trustee of the Fund shall be eligible to participate in the Plan or be entitled to any rights or benefits hereunder until the Trustee becomes an Independent Trustee. Each individual who completes any service as an Independent Trustee on or after the Effective Date of this Plan, and who so elects in such manner as the Committee determines from time to time, will be eligible to participate in the Plan.

3. RETIREMENT DATE; AMOUNT OF BENEFIT

(a) Retirement. Each Independent Trustee shall retire on that Independent Trustee's Normal Retirement Date, if he has not previously ceased to perform services as an Independent Trustee. Each retired Independent Trustee is referred to as a "Retired Trustee".

(b) Normal Retirement Benefit. Upon an Independent Trustee's Retirement on his Normal Retirement Date, the Independent Trustee shall receive, commencing on his Normal Retirement Date, his Normal Retirement Benefit.

(c) Early Retirement Benefit. Upon an Independent Trustee's Retirement prior to his Normal Retirement Date, the Independent Trustee shall receive an Early Retirement Benefit commencing on the Independent Trustee's date of Retirement. The benefit payable on an Independent Trustee's early Retirement shall be his Accrued Benefit reduced by 5% for every year that payment of an Early Retirement Benefit precedes that Trustee's Normal Retirement Date.

(d) Deferred Termination Benefit. If an Independent Trustee's service as such terminates, other than (i) termination as a result of his Misconduct or (ii) termination that constitutes termination by reason of his Retirement, Disability or death, after he has completed at least five Years of Service, he shall receive, commencing on the date he attains age 62, his Accrued Benefit reduced by 55%.

(e) Disability Benefit. If an Independent Trustee's service as such terminates by reason of his Disability and, if the Independent Trustee is eligible for Retirement, he elects that his termination be treated as being by reason of Disability, he shall receive his Accrued Benefit paid for the one hundred twenty (120) months immediately following the month in which his service so terminates. In the event the Independent Trustee dies before he has received one hundred twenty (120) payments, monthly payments in the same amount shall be paid to his beneficiary until the number of payments to the Independent Trustee plus the number of payments to the beneficiary equal one hundred twenty (120) payments.

(f) Death Benefit. Each Independent Trustee who elects to participate in this Plan shall designate a beneficiary in such form as the Committee approves from time to time to receive any benefits payable under this Plan in the event of his death. In the event there is no validly designated beneficiary in existence on the date of an Independent Trustee's death, his beneficiary shall be his surviving spouse, if any, or if none, his estate. The beneficiary of an Independent Trustee who dies during service, and with respect to whom benefit payments have not commenced, shall be entitled to that Independent Trustee's Accrued Benefit paid for the one hundred twenty (120) months immediately following death.

(g) Form of Benefit. Except as otherwise provided in thisss.3, benefits payable under this ss.3 shall be payable in the form of a monthly annuity for the life of the Independent Trustee, and, if the Independent Trustee dies before he has received one hundred twenty (120) payments, monthly payments in the same amount shall be payable to his beneficiary until the number of payments to the Independent Trustee plus the number of payments to the beneficiary equal one hundred twenty (120) payments (the "Normal Form of Benefit"). However, notwithstanding any other provision of this Section 3 to the contrary, if an Independent Trustee's beneficiary is entitled to payments under this Plan upon the Independent Trustee's death, then (i) if the Independent Trustee's beneficiary is his estate, the lump sum Actuarial Equivalent present value of those payments shall be paid to the estate in a single lump sum as soon as administratively reasonable following the Independent Trustee's death, and (ii) if the Independent Trustee's beneficiary is other than his estate, the Committee in its sole discretion may direct that the Actuarial Equivalent value of those payments be paid in such form other than the Normal Form of Benefit (including without limitation a lump sum) as it determines.

4. PAYMENT OF BENEFIT; ALLOCATION OF COSTS

The Fund is responsible for the payment of the benefits, as well as all expenses of administration of the Plan, including without limitation all accounting, legal and actuarial fees and expenses. The obligations of the Fund to pay such benefits and expenses will not be secured or funded in any manner, and the obligations will not have any preference over the lawful claims of the Fund's creditors and shareholders. The Fund shall be under no obligation to segregate any assets for the purpose of providing retirement benefits pursuant to this Plan, and to the extent that any Independent Trustee or beneficiary acquires a right to receive a benefit under the Plan, such right shall be limited to that of a recipient of an unfunded, unsecured promise to pay amounts in the future and such person's position with respect to such amounts shall be that of a general unsecured creditor of the Fund. To the extent that the Fund consists of one or more separate portfolios, costs and expenses will be allocated among the portfolios by the Board of Trustees of the Fund (the "Board") in a manner that is determined by the Board to be fair and equitable under the circumstances.

5. ADMINISTRATION

(a) The Committee. Any question involving entitlement to payments under or the interpretation or administration of the Plan will be referred to a committee (the "Committee") of Independent Trustees designated by the Board. Except as otherwise provided herein, the Committee will make all interpretations and determinations necessary or desirable for the Plan's administration, and such interpretations and determinations will be final and conclusive.

(b) Powers of the Committee. The Committee will represent and act on behalf of the Fund in respect of the Plan and, subject to the other provisions of the Plan, the Committee may adopt, amend or repeal by-laws or other regulations, relating to the administration of the Plan, the conduct of the Committee's affairs, its rights or powers or the rights or powers of its members or of the Board. The Committee will report to the Board from time to time on its activities in respect of the Plan. The Committee or persons designated by it will cause such records to be kept as may be necessary for the administration of the Plan.

6. MISCELLANEOUS PROVISIONS

(a) Rights Not Assignable. The right to receive any payment under the Plan may not be transferred, assigned, pledged or otherwise alienated.

(b) Amendment, etc. The Committee, with the concurrence of the Board, may at any time amend or terminate the Plan or waive any provision of the Plan, provided that no amendment, termination or waiver will impair the rights of an Independent Trustee to receive upon Retirement the payments which would have been made to that Independent Trustee had there been no such amendment, termination or waiver (based upon that Independent Trustee's Years of Service to the date of such amendment, termination or waiver) or the rights of a former Independent Trustee or Retired Trustee to receive any benefit due under the Plan, without the consent of such present or former Independent Trustee or Retired Trustee, as the case may be. A present or former Independent Trustee or Retired Trustee may elect to waive receipt of his benefit by so advising the Committee.

Notwithstanding any provision of this Plan to the contrary, however, in the event of the sale of all or substantially all of the assets of the Fund, the liquidation or dissolution of the Fund, or any merger or other similar reorganization of the Fund that the Fund does not survive:

(i) if although the Fund does not survive there is a surviving entity, all rights and benefits (including without limitation those of Retired Trustees) under the Plan shall cease upon consummation of such transaction, unless, and only to the extent that, the board of trustees (or other similar governing body) of the surviving entity agrees to assume the Plan and/or to provide any such rights or benefits; and

(ii) if there is no surviving entity, the Board shall have the right to take specific action to terminate the Plan and/or to cause any or all rights and benefits (including without limitation those of Retired Trustees) under the Plan to cease as of the date of such event but, in the absence of any such specific action, the lump sum Actuarial Equivalent present value of the Accrued Benefit of each present or former Independent Trustee or Retired Trustee (or beneficiary thereof) who on the date of liquidation is receiving or entitled to receive a benefit under the Plan or would be entitled to receive a benefit under the Plan based on his actual or deemed termination of service as of the date of such liquidation shall be paid to such person.

(c) No Right to Re-election. Nothing in the Plan will create any obligation on the part of the Board to nominate any Independent Trustee for re-election.

(d) Vacancies. Although the Board will retain the right to increase or decrease its size, it shall be the general policy of the Board to replace each person who ceases to serve as an Independent Trustee by selecting a new Independent Trustee from candidates duly proposed.

(e) Consulting. Each Retired Trustee may render such services for the Fund, for such compensation, as may be agreed upon from time to time by such Trustee and the Board of the Fund.

(f) Construction. Whenever any masculine terminology is used in this Plan, it shall be taken to include the feminine, unless the context otherwise indicates. The titles and headings included herein are for convenience only and shall not be construed as in any way affecting or modifying the text of this Plan, which text shall control. This Plan shall be construed and regulated in accordance with the laws of The Commonwealth of Massachusetts, except to the extent such state law is preempted by federal law.

(g) Effective Date. This Plan will become effective on January 1, 1991 (the "Effective Date").


EXHIBIT NO. 99.8(a)

CUSTODIAN AGREEMENT

Between

MASSACHUSETTS FINANCIAL TOTAL RETURN TRUST

and

INVESTORS BANK & TRUST COMPANY


TABLE OF CONTENTS

PAGE NO.

1.       Bank Appointed Custodian                                              1

2.       Definitions                                                           1

I        2.1    Authorized Person                                              1
         2.2    Security                                                       1
         2.3    Portfolio security                                             1
         2.4    Officers' Certificate                                          1
         2.5    Book-Entry System                                              2
         2.6    Depository                                                     2

3.       Proper Instructions                                                   2

4.       Separate Accounts                                                     2

5.       Certification as to Authorized Persons                                2

6.       Custody of Cash and Securities of the Fund                            2

         6.1    Cash                                                           2

                (a)  Purchase of Securities                                    3
                (b)  Redemptions                                               3
                (c)  Distributions and Expenses of Fund                        3
                (d)  Payment in Respect of Securities                          3
                (e)  Repayment of Loans                                        3
                (f)  Repayment of Cash                                         3
                (g)  Foreign Exchange Transactions                             3
                (h)  Commodities                                               4
                (i)  Other Authorized Payments                                 4
                (j)  Termination                                               4

         6.2    Securities                                                     4

                (a)  Book-Entry System                                         5
                (b)  Use of a Depository                                       6
                (c)  Use of Book-Entry System for Commercial Paper             7
                (d)  Use of Bond Immobilization Programs                       7
                (e)  Eurodollar CDs                                            8

         6.3    Options and Futures Transactions                               8

                (a)  Puts and Calls Traded on Securities Exchanges, NASDAQ     8
                     or Over-the Counter
                (b)  Puts, Calls and Futures Traded on Commodities Exchanges   8
                (c)  Segregated Account                                        9


TABLE OF CONTENTS (Continued)

PAGE NO.

         6.4    Segregated Account for "When Issued", "Forward Commitment"     9
                and Reverse Repurchase Agreement Transactions

         6.5    Interest Bearing Call or Time Deposits                        10

7.       Transfer of Securities                                               10

8.       Redemptions                                                          11

9.       Merger, Dissolution, etc. of Fund                                    11

10.      Actions of Bank Without Prior Authorization                          12

11.      Maintenance of Records; Fund Evaluation, Accounting Services         13

12.      Concerning the Bank                                                  14

         12.1   Performance of Duties                                         14
         12.2   Fees and Expenses of Bank                                     15
         12.3   Advances by Bank                                              15

13. Termination 15

14. Notices 16

15. Amendments 17

16. Parties 17

17. Governing Law 17

18. Interpretive and Additional Provisions 17

19. Delegation of Certain Custodian Duties to Massachusetts 17 Financial Services Company ("MFS")

SIGNATURE PAGE 18


CUSTODIAN AGREEMENT

AGREEMENT made as of this 1st. day of October, 1991 between Massachusetts Financial Total Return Trust established as a Massachusetts Business Trust under the laws of the Commonwealth of Massachusetts (the "Fund"), and INVESTORS BANK & TRUST COMPANY ("Bank").

The Fund, an open end management investment company, desires to place and maintain all of its portfolio securities and cash in the custody of the Bank. The Bank has at least the minimum qualifications required by Section 17(f)(1) of the Investment Company Act of 1940 to act as custodian of the portfolio securities and cash of the Fund, and has indicated its willingness to so act, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, the parties hereto agree as follows:

1. Bank appointed custodian. The Fund hereby appoints the Bank as custodian of its portfolio securities and cash delivered to the Bank as hereinafter described, and the Bank agrees to act as such upon the terms and conditions hereinafter set forth.

2. Definitions. Whenever used herein, the terms listed below will have the following meaning:

2.1 Authorized Person. Authorized Person will mean any of the persons duly authorized to give Proper Instructions or otherwise act on behalf of the Fund by appropriate resolution of the Board of Trustees of the Fund (the "Board") or with respect to actions regarding transfers of securities and other investment activities, those persons duly authorized by the investment adviser of the Fund.

2.2 Security. The term security as used herein will have the same meaning as when such term is used in the Securities Act of 1933 as amended, including, without limitation, any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to a foreign currency, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to, or option contract to purchase or sell any of the foregoing and futures, forward contracts and options thereon.

2.3 Portfolio Security. Portfolio security will mean any security owned by the Fund.

2.4 Officers' Certificate. Officers' Certificate will mean unless otherwise indicated, any request, direction, instruction, or certification in writing signed by any Authorized Person or Persons of the Fund as the Fund shall designate to the Bank in writing from time to time.

2.5 Book-Entry System. Book-Entry System shall mean the Federal Reserve-Treasury Department Book Entry System for United States government, instrumentality and agency securities operated by the Federal Reserve Banks, its successor or successors and its nominee or nominees.

2.6 Depository. Depository shall mean The Depository Trust Company ("DTC"), or Participants Trust Company ("PTC"), both of which are clearing agencies registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, and their respective successor or successors and nominee or nominees. The term "Depository" shall further mean and include any other person authorized to act as a depository under the Investment Company Act of 1940, its successor or successors and its nominee or nominees, specifically identified in a certified copy of a resolution of the Fund's Board.

3. Proper Instructions. Proper Instructions shall mean (i) instructions regarding the purchase or sale of securities for the portfolio of the Fund, and payments and deliveries in connection therewith, given by an Authorized Person or Persons as designated by the Fund in writing from time to time, such instructions to be given in such form and manner as the Bank and the Fund shall agree upon from time to time, and (ii) instructions (which may be continuing instructions) regarding other matters signed or initialed by such one or more Authorized Persons. Oral instructions will be considered Proper Instructions if the Bank reasonably believes them to have been given by an Authorized Person. The Fund shall cause all oral instructions to be promptly confirmed in writing. The Bank shall act upon and comply with any subsequent Proper Instruction which modifies a prior instruction and the Bank shall make reasonable efforts to detect any discrepancy between the original instruction and such confirmation and to report such discrepancy to the Fund. Proper Instructions may include communication effected directly between electro-mechanical or electronic devices provided that the Fund and the Bank are satisfied that such procedures afford adequate safeguards for the Fund's assets.

4. Separate Accounts. If the Fund has more than one series or portfolio, the Bank will segregate the assets of the Fund into a Separate Account for each such series or portfolio containing the assets of such series or portfolio (and all investment earnings thereon), all as directed from time to time by Proper Instructions.

5. Certification as to Authorized Persons. The Secretary or Assistant Secretary of the Fund will at all times maintain on file with the Bank his certification to the Bank, in such form as may be acceptable to the Bank, of (i) the names and signatures of the Authorized Persons and (ii) the names of the members of the Board, it being understood that upon the occurrence of any change in the information set forth in the most recent certification on file (including without limitation any person named in the most recent certification who is no longer an Authorized Person as designated therein), the Secretary or Assistant Secretary of the Fund will sign a new or amended certification setting forth the change and the new, additional or omitted names or signatures. The Bank will be entitled to rely and act upon any Officers' Certificate given to it by the Fund.

6. Custody of Cash and Securities. As custodian for the Fund, the Bank will keep safely all of the portfolio securities delivered to the Bank, and will deposit to the account of the Fund all of the cash of the Fund delivered to the Bank, as set forth below.

6.1 Cash. The Bank will open and maintain a separate account or accounts in the name of the Fund or, if directed by the Fund, in the name of the Bank, as custodian of the Fund, subject only to draft or order by the Bank acting pursuant to the terms of this Agreement. The Bank will hold in such account or accounts as custodian, subject to the provisions hereof, all cash received by it, including borrowed funds, for the account of the Fund. Upon receipt by the Bank of Proper Instructions (which may be continuing instructions) or in the case of payments for redemptions and repurchases of outstanding shares of beneficial interest of the Fund, notification from the Fund's transfer agent as provided in Section 8, requesting such payment, designating the payee or the account or accounts to which the Bank will release funds for deposit, and stating that it is for a purpose permitted under the terms of this Section 6.1, specifying the applicable subsection, or describing such purpose with sufficient particularity to permit the Bank to ascertain the applicable subsection, the Bank will make payments of cash held for the accounts of the Fund, insofar as funds are available for that Purpose only as permitted in (a)-(j) below.

(a) Purchase of Securities: Upon the purchase of securities for the Fund, against contemporaneous receipt of such securities by the Bank registered in the name of the Fund or in the name of, or properly endorsed and in form for transfer to, the Bank, or a nominee of the Bank, or receipt for the account of the Bank through use of (1) the Book-Entry System pursuant to Section 6.2(a)(3) below, (2) Depository pursuant to 6.2(b) below, or
(3) Book-Entry Paper pursuant to Section 6.2(c) below, each such payment to be made at the purchase price shown in the Proper Instructions received by the Bank before such payment is made;

(b) Redemptions: In such amount as may be necessary for the repurchase or redemption of shares of beneficial interest of the Fund offered for repurchase or redemption in accordance with Section 8 of this Agreement;

(c) Distributions and Expenses of Fund: For the payment on the account of the Fund of dividends or other distributions to shareholders as may from time to time be declared by the Board, interest, taxes, management or supervisory fees, distribution fees, fees of the Bank for its services hereunder and reimbursement of the expenses and liabilities of the Bank as provided hereunder, fees of any transfer agent, fees for legal, accounting, and auditing services, or other operating expenses of the Fund;

(d) Payment in Respect of Securities: For payments in connection with the conversion, exchange or surrender of Portfolio securities or securities subscribed to by the Fund held by or to be delivered to the Bank;

(e) Repayment of Loans: To repay loans of money made to the Fund, but, in the case of final payment, only upon redelivery to the Bank of any Portfolio securities pledged or hypothecated therefor and upon surrender of documents evidencing the loan;

(f) Repayment of Cash: To repay the cash delivered to the Fund for the purpose of collateralizing the obligation to return to the Fund Portfolio securities borrowed from the Fund but only upon redelivery to the Bank of such borrowed Portfolio securities;

(g) Foreign Exchange Transactions: For payments in connection with foreign exchange contracts or options to purchase and sell foreign currencies for spot and future delivery which may be entered into by the Bank on behalf of the Fund upon the receipt of Proper Instructions, such Proper Instructions to specify the currency broker or banking institution (which may be the Bank, or any other sub custodian or agent hereunder, acting as principal) with which the contract or option is made, and the Bank shall have no duty with respect to the selection of such currency brokers or banking institutions with which the Fund deals or for their failure to comply with the terms of any contract or option;

(h) Commodities: Upon the purchase of commodities for the Fund, against contemporaneous receipt of such commodities by the Bank registered in the name of the Fund or in the name of, or properly endorsed and in form for transfer to, the Bank, or a nominee of the Bank;

(i) Other Authorized Payments: For other authorized transactions of the Fund, or other obligations of the Fund incurred for proper Fund purposes including, without limitation, payments in connection with any tender offer by the Fund; provided that before making any such payment the Bank will also receive an Officer's Certificate naming the person or persons to whom such payment is to be made, and either describing the transaction for which payment is to be made and declaring it to be an authorized transaction of the Fund, or specifying the amount of the obligation for which payment is to be made, setting forth the purpose for which such obligation was incurred and declaring such purpose to be a proper corporate purpose; and

(j) Termination: Upon the termination of this Agreement as hereinafter set forth pursuant to Section 9 and Section 13 of this Agreement.

The Bank is hereby authorized to endorse for collection and collect on behalf of and in the name of the Fund all checks, drafts, or other negotiable or transferable instruments or other orders for the payment of money received by it for the account of the Fund.

6.2 Securities. Except as otherwise provided herein, the Bank as custodian, will receive and hold pursuant to the provisions hereof, in a separate account or accounts and physically segregated at all times from those of other persons, any and all Portfolio securities which may now or hereafter be delivered to it by or for the account of the Fund. All such Portfolio securities will be held or disposed of by the Bank for, and subject at all times to, the instructions of the Fund pursuant to the terms of this Agreement. Subject to the specific provisions herein relating to Portfolio securities that are not physically held by the Bank, the Bank will register all Portfolio securities (unless otherwise directed by Proper Instructions or an Officers' Certificate), in the name of a registered nominee of the Bank as defined in the Internal Revenue Code and any Regulations of the Treasury Department issued thereunder, and will execute and deliver all such certificates in connection therewith as may be required by such laws or Regulations or under the laws of any State. The Bank will ensure that the specific securities physically held by it hereunder will be at all times identifiable and will exercise prudent care and use its best efforts to the end that the other securities held by it hereunder will be at all times identifiable.

The Bank will use the same care with respect to the safekeeping of portfolio securities and cash of the Fund held by it as it uses in respect of its own similar property (which will at minimum be reasonable care) but it need not maintain any special insurance for the benefit of the Fund. The Bank shall provide to the Fund, at least annually and upon request, information relating to its insurance coverage. The Bank will also immediately notify the Fund in the event any of its insurance coverage is materially changed, cancelled or not renewed.

The Fund will from time to time furnish to the Bank appropriate instruments to enable it to hold or deliver in proper form for transfer, or to register in the name of its registered nominee, any securities which it may hold for the account of the Fund and which may from time to time be registered in the name of the Fund.

Neither the Bank nor any nominee of the Bank will vote any of the portfolio securities held hereunder by or for the account of the Fund, except in accordance with Proper Instructions or an Officers' Certificate.

The Bank will promptly execute and deliver, or cause to be executed and delivered, to the Fund all notices, proxies and proxy soliciting materials with respect to such securities, such proxies to be executed by the registered holder of such securities (if registered otherwise than in the name of the Fund), but without indicating the manner in which such proxies are to be voted.

(a) Book-Entry System. Provided (i) the Bank has received a certified copy of a resolution of the Board specifically approving deposits of Fund assets in the Book-Entry System, and (ii) for each year following such approval, the Board has reviewed and approved the arrangement and has not delivered an Officer's Certificate to the Bank indicating that it has withdrawn its approval:

1. The Bank may keep Securities of the Fund in the Book-Entry System provided that such securities are represented in an account ("Account") of the Bank (or its agent) in such System which shall not include any assets of the Bank (or such agent) other than assets held as a fiduciary, custodian, or otherwise for customers.

2. The records of the Bank (and any such agent) with respect to the Fund's participation in the Book-Entry System through the Bank (or any such agent) will identify by book entry securities belonging to the Fund which are included with other securities deposited in the Account and shall at all times during the regular business hours of the Bank (or such agent) be open for inspection by duly authorized officers, employees or agents of the Fund. Where securities are transferred to the Fund's account, the Bank shall also, by book entry or otherwise, identify as belonging to the Fund a quantity of securities in fungible bulk of securities (i) registered in the name of the Bank or its nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve Bank.

3. The Bank (or its agent) shall pay for securities purchased for the account of the Fund or shall pay cash collateral against the return of securities loaned by the Fund upon (i) receipt of advice from the Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect such payment and transfer for the account of the Fund. The Bank shall send the Fund a confirmation, as defined by Rule 17f-4 under the Investment Company Act of 1940, of any transfers to or from the account of the Fund.

4. The Bank will promptly provide the Fund with any report obtained by the Bank or its agent on the Book-Entry System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the Book-Entry System. The Bank will provide the Fund and cause any such agent to provide, at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, including Securities deposited in the Book-Entry System, relating to the services provided by the Bank or such agent under the Agreement.

5. Anything to the contrary in the Agreement notwithstanding, the Bank shall be liable to the Fund for any loss or damage to the Fund resulting from use of the Book-Entry System by reason of any negligence, willful misfeasance or bad faith of the bank or any of its agents or of any of its or their employees or from any negligent disregard by the Bank or any such agent of its duty to enforce effectively such rights as it may have against the Book-Entry System; at the election of the Fund, it shall be entitled to be subrogated for the Bank in any claim against the Book-Entry System or any other person which the Bank or its agent may have as a consequence of any such loss or damage if and to the extent that the Fund has not been made whole for any loss or damage.

(b) Use of a Depository. Provided (i) the Bank has received a certified copy of a resolution of the Fund's Board specifically approving deposits in DTC and PTC or other such Depository; (ii) the Bank appoints any such depository its agent; and (iii) for each year following such Board approval, the Board has reviewed and approved the arrangement and has not delivered an Officer's Certificate to the Bank indicating that it has withdrawn its approval:

1. The Bank may use a Depository to hold, receive, exchange, release, lend, deliver and otherwise deal with the securities owned by the Fund, including stock dividends, rights and other items of like nature, and to receive and remit to the Bank on behalf of the Fund all income and other payments thereon and to take all steps necessary and proper in connection with the collection thereof, provided that such securities are held in an account of the Bank (or its agent) in such Depository which shall not include any assets of the Bank (or such agent) other than assets held as a fiduciary, custodian, or otherwise for customers. The records of the Bank shall identify those securities of the Trust held by the Depository.

2. Registration of the Fund's securities may be made in the name of any nominee or nominees used by such Depository.

3. Payment for securities purchased and sold may be made through the clearing medium employed by such Depository for transactions of participants acting through it. Upon any purchase of securities for the account of the Fund, payment will be made only upon delivery of the securities to or for the account of the Fund and the Fund shall pay cash collateral against the return of securities loaned by the Fund only upon delivery of the securities to or for the account of the Fund; and upon any sale of securities for the account of the Fund, delivery of the securities will be made only against payment thereof or, in the event securities are loaned, delivery of securities will be made only against receipt of the initial cash collateral to or for the account of the Fund.

4. Anything to the contrary in the Agreement notwithstanding, the Bank shall be liable to the Fund for any loss or damage to the Fund resulting from use of a Depository by reason of any negligence, willful misfeasance or bad faith of the Bank or any of its agents or of any of its or their employees or from any negligent disregard by the Bank or any such agent of its duty to enforce effectively such rights as it may have against a Depository. At the election of the Fund, it shall be entitled to be subrogated for the Bank in any claim against a Depository or any other person which the Bank or its agent may have as a consequence of any such loss or damage if and to the extent that the Fund has not been made whole for any loss or damage. In this connection, with respect to the use of the Depository by the Bank, the Bank, without cost to the Fund, shall ensure that: (i) the Depository obtains replacement of any certificated security deposited with it in the event such security is lost, destroyed, wrongfully taken or otherwise not available to be returned to the Bank upon its request; (ii) any proxy materials received by Depository with respect to securities of the Fund deposited with such Depository are forwarded immediately to the Bank for prompt transmittal to the Fund; (iii) such Depository immediately forwards to the Bank confirmation of any purchase or sale of securities for the account of the Fund and of the appropriate book entry made by such Depository to the Fund's account; (iv) such Depository prepares and delivers to the Bank such records with respect to the performance of the Bank's obligations and duties hereunder as may be necessary for the Fund to comply with the record keeping requirements of Section 31(a) of the Act and Rule 31a thereunder and such other rules and regulations relating to record keeping requirements of the Fund as may be enacted from time to time; and (v) such Depository delivers to the Bank and the Fund all internal accounting control reports, whether or not audited by an independent public accountant, as well as such other reports as the Fund may reasonably request in order to verify the Fund's securities held by such Depository.

(c) Use of Book-Entry System for Commercial Paper. Provided (i) the Bank has received a certified copy of a resolution of the Board specifically approving participation in a system maintained by the Bank for the holding of commercial paper in book-entry form ("Book Entry Paper") and (ii) for each year following such approval the Board has reviewed and approved the arrangements, upon receipt of Proper Instructions and upon receipt of confirmation from an Issuer (as defined below) that the Fund has purchased such Issuer's Book Entry Paper, the Bank shall issue and hold in book-entry form, on behalf of the Fund, commercial paper issued by issuers with whom the Bank has entered into a book-entry agreement (the "Issuers"). In maintaining its Book Entry Paper System, the Bank agrees that:

1. The Bank will maintain all Book Entry Paper held by the Fund in an account of the Bank that includes only assets held by it for customers;

2. The records of the Bank with respect to the Fund's purchase of Book Entry Paper through the Bank will identify, by book entry, Commercial Paper belonging to the Fund which is included in the Book Entry Paper System and shall at all times during the regular business hours of the Bank be open for inspection by duly authorized officers, employees or agents of the Fund.

3. (a) The Bank shall pay for Book Entry Paper purchased for the account of the Fund upon contemporaneous (i) receipt of advice from the Issuer that such sale of Book Entry Paper has been effected, and (ii) the making of an entry on the records of the Bank to reflect such payment and transfer for the account of the Fund.

(b) The Bank shall cancel such Book Entry Paper obligation upon the maturity thereof upon contemporaneous (i) receipt of advice that payment for such Book Entry Paper has been transferred to the Fund, and
(ii) the making of an entry on the records of the Bank to reflect such payment for the account of the Fund .

4. The Bank shall transmit to the Fund a transaction journal confirming each transaction in Book Entry Paper for the account of the Fund on the next business day following the transaction;

5. The Bank will send to the Fund such reports on its system of internal accounting control as the Fund may reasonably request from time to time;

(d) Use of Bond Immobilization Programs. Provided (i) the Bank has received a certified copy of a resolution of the Board specifically approving the maintenance of portfolio securities in an immobilization program operated by a bank which meets the requirements of Section 26(a)(1) of the Investment Company Act of 1940, and (ii) for each year following such approval the Board has reviewed and approved the arrangement and has not delivered an officer's Certificate to the Bank indicating that it has withdrawn its approval, the Bank shall enter into such immobilization program with such bank acting as a sub custodian hereunder.

(e) Eurodollar CDs. Any Eurodollar CDs belonging to the Fund may be physically held by the European branch of the U.S. banking institution that is the issuer of such Eurodollar CD (a "European Branch"), provided that such securities are identified on the books of the Bank as belonging to the Fund and that the books of the Bank identify the European branch holding such securities. Notwithstanding any other provision of this Agreement to the contrary, except as stated in the first sentence of this subparagraph (e), the Bank shall be under no other duty with respect to such Eurodollar CDs belonging to the Fund, and shall have no liability to the Fund or its shareholders with respect to the actions, inactions, whether negligent or otherwise of such European Branch in connection with such Eurodollar CDs, except for any loss or damage to the Fund resulting from the Bank's own negligence, willful misfeasance or bad faith in the performance of its duties hereunder.

6.3 Options and Futures Transactions.

(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or Over-the-Counter.

1. The Bank shall take action as to put options ("puts") and call options ("calls") purchased or sold (written) by the Fund regarding escrow or other arrangements in accordance with the provisions of any agreement entered into upon receipt of Proper Instructions between the Bank, any broker and, if necessary, the Fund. In the case of a call option written by the Fund, the Bank will arrange for an escrow receipt to be issued when requested to do so by the Fund.

2. Unless another agreement requires it to do so, the Bank shall be under no duty or obligation to see that the Fund has deposited or is maintaining adequate margin, if required, with any broker in connection with any option, nor shall the Bank be under duty or obligation to present such option to the broker for exercise unless it receives Proper Instructions from the Fund. The Bank shall, however, comply with all Proper Instructions regarding margin and exercise of options. The Bank shall have no responsibility for the legality of any put or call purchased or sold on behalf of the Fund, the propriety of any such purchase or sale, or the adequacy of any collateral delivered to a broker in connection with an option or deposited to or withdrawn from a Segregated Account as described in sub-paragraph c of this Section 6.3. The Bank specifically, but not by way of limitation, shall not be under any duty or obligation to: (i) periodically check or notify the Fund that the amount of such collateral held by a broker or held in a Segregated Account as described in sub-paragraph (c) of this Section 6.3 is sufficient to protect such broker of the Fund against any loss; (ii) effect the return of any collateral delivered to a broker, provided however, the Bank shall, upon expiration of an option, return to the Fund any collateral held by the Bank relating to such option; or (iii) advise the Fund that any option it holds, has or is about to expire. Such duties or obligations shall be the sole responsibility of the Fund.

(b) Puts, Calls and Futures Traded on Commodities Exchanges.

1. The Bank shall take action as to puts, calls and futures contracts ("Futures") purchased or sold by the Fund in accordance with the provisions of any agreement among the Fund, the bank and a Futures merchant relating to compliance with the rules of the Commodity Futures Trading Commission and/or any contract market, or any similar organization or organizations, (including any foreign organization) regarding account deposits in connection with transactions by the Fund.

2. The responsibilities and liabilities of the Bank as to Futures, puts and calls traded on commodities exchanges, any Futures Commission Merchant account and the Segregated Account shall be limited as set forth in sub-paragraph (a)(2) of this Section 6.3 as if such sub-paragraph referred to Futures Commission Merchants rather than brokers, and Futures and puts and calls thereon instead of options.

(c) Segregated Account.

The Bank shall upon receipt of Proper Instructions establish and maintain a Segregated Account or Accounts for and on behalf of the Fund, into which Account or Accounts may be transferred cash and/or securities including securities maintained in an Account by the Bank pursuant to Section 6.2 hereof, (i) in accordance with the provisions of any agreement among the Fund, the Bank and a broker or any Futures merchant, relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange or the Commodity Futures Trading Commission or any registered contract market, or of any similar organization or organizations (including any foreign organization) regarding escrow or other arrangements in connection with transactions by the Fund, and (ii) for the purpose of segregating cash or securities in connection with options purchased, or written by the Fund or commodity futures or options thereon purchased or written by the Fund, and (iii) for the purposes of compliance by the Fund with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases or rules or regulations of the Securities and Exchange Commission relating to the maintenance of Segregated Accounts by registered investment companies , and (iv) for the purpose of segregating cash or securities for the ICI Mutual Insurance Company letter of credit, and (v) for other proper corporate purposes, but only, in the case of clause (v), upon receipt of an Officers' Certificate, setting forth the purpose or purposes of such Segregated Account and declaring such purposes to be proper corporate purposes.

6.4 Segregated Account for "When-Issued", "Forward Commitment" and Reverse Repurchase Agreement Transactions. Notwithstanding any other provisions hereof, the Bank will maintain a segregated account (the "Segregated Account") in the name of the Fund (i) for the deposit of liquid assets, such as cash, U.S. Government securities or other high grade obligations, having a value (marked to the market on a daily basis by the Bank) at all times equal to not less than the aggregate purchase price due on the settlement dates (or such other amount as the Fund shall indicate) of all the Fund's then outstanding forward commitment or "when-issued" agreements relating to the purchase of portfolio securities and all the Fund's then outstanding commitments under reverse repurchase agreements entered into with broker-dealer firms, and (ii) for the deposit of any portfolio securities which the Fund has agreed to sell on a forward commitment basis, all in accordance with Securities and Exchange Commission Release No. IC-10666. No assets shall be deposited in the Segregated Account except pursuant to Proper Instructions. Assets may be withdrawn from the segregated account pursuant to Proper Instructions only (a) for sale or delivery to meet the Fund's obligations under outstanding firm commitment or when-issued agreements for the purchase of portfolio securities and under reverse repurchase agreements, (b) for exchange for other liquid assets of equal or greater value deposited in the Segregated Account, (c) to the extent that the Fund's outstanding forward commitment or when-issued agreements for the purchase of portfolio securities or reverse repurchase agreements are sold to other parties or the Fund's obligations thereunder are met from assets of the Fund other than those in the Segregated Account, or (d) for delivery upon settlement of a forward commitment agreement for the sale of portfolio securities.

6.5 Interest Bearing Call or Time Deposits. The Bank shall, upon receipt of Proper Instructions relating to the purchase by the Fund of interest bearing fixed term and call deposits, transfer cash, by wire or otherwise, in such amounts and to such bank or banks as shall be indicated in such Proper Instructions. The Bank shall include in its records with respect to the assets of the Fund appropriate notation as to the amount of each such deposit, the banking institution with which such deposit is made (the "Deposit Bank"), and shall retain such forms of advice or receipt evidencing the deposit, if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall be deemed portfolio securities of the Fund and the responsibility of the Bank therefore shall be the same as and no greater than the Bank's responsibility in respect of other portfolio securities of the Fund.

7. Transfer of Securities. The Bank will transfer, exchange, deliver or release Portfolio securities held by it hereunder, insofar as such securities are available for such purpose, provided that before making any transfer, exchange, delivery or release under this Section the Bank will receive Proper Instructions requesting such transfer, exchange or delivery stating that it is for a purpose permitted under the terms of this Section 7, specifying the applicable subsection, or describing the purpose of the transaction with sufficient particularity to permit the Bank to ascertain the applicable subsection, only

7.1 Upon sales of Portfolio securities for the account of the Fund, against contemporaneous receipt by the Bank of payment therefor in full, each such payment to be in the amount of the sale price shown in the Proper Instructions received by the Bank before such payment is made;

7.2 In exchange for or upon conversion into other securities alone or other securities and cash pursuant to any plan of merger, consolidation, reorganization, share split-up, change in par value, recapitalization or readjustment or otherwise, upon exercise of subscription, purchase or sale or other similar rights represented by such Portfolio securities, or for the purpose of tendering shares in the event of a tender offer therefore, provided however that in the event of an offer of exchange, tender offer, or other exercise of rights requiring the physical tender or delivery of Portfolio securities, the Bank shall have no liability for failure to so tender in a timely matter unless such Proper Instructions are received by the Bank at least two business days prior to the date required for tender, and unless the Bank (or its agent or sub custodian hereunder) has actual possession of such security at least two business days prior to the date of tender;

7.3 Upon conversion of Portfolio securities pursuant to their terms into other securities;

7.4 For the purpose of redeeming in kind shares of common stock of the Fund upon authorization from the Fund;

7.5 In the case of option contracts owned by the Fund, for presentation to the endorsing broker;

7.6 When such Portfolio securities are called, redeemed or retired or otherwise become payable;

7.7 For the purpose of effectuating the pledge of portfolio securities held by the Bank pursuant to this Agreement in order to collateralize loans made to the Fund by any bank, including the Bank; provided, however, that such Portfolio securities will be released only upon payment to the Bank for the account of the Fund of the moneys borrowed, except that in cases where additional collateral is required to secure a borrowing already made, and such fact is made to appear in the Proper Instructions, further portfolio securities may be released for that purpose without any such payment;

7.8 For the purpose of releasing certificates representing Portfolio securities of the Fund, against contemporaneous receipt by the Bank of the fair value of such security, as set forth in Proper Instructions received by the bank before such payment is made;

7.9 For the purpose of delivering securities lent by the Fund to a bank or broker dealer, but only against receipt in accordance with street delivery custom except as otherwise provided in Subsections 6.2(a) and (b) hereof, of adequate collateral as agreed upon from time to time by the Fund and the Bank, and upon receipt of payment in connection with any repurchase agreement relating to such securities entered into by the Fund;

7.10 For other authorized transactions of the Fund or for other proper corporate purposes; provided that before making such transfer, the Bank will also receive an Officers' Certificate specifying the portfolio securities to be delivered, setting forth the transaction in or purpose for which such delivery is to be made, declaring such transaction to be an authorized transaction of the Fund or such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such securities shall be made; and

7.11 Upon termination of this Agreement as hereinafter set forth pursuant to Section 9 and Section 13 of this Agreement.

7.12 For delivery in accordance with the provisions of any agreement among the Fund, the Bank and a broker-dealer relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations (including foreign organizations), regarding escrow or other arrangements in connection with transactions by the Fund;

7.13 For delivery in accordance with the provisions of any agreement among the Fund, the Bank, and a Futures commission merchant relating to compliance with the rules of the Commodity Futures Trading Commissions or any similar organization or organizations (including foreign organizations), regarding account deposits in connection with transactions by the Fund.

As to any deliveries made by the Bank pursuant to subsections 7.1, 7.2, 7.3, 7.5, 7.6, 7.7, 7.8 and 7.9, securities or cash receivable in exchange therefor shall be delivered to the Bank.

8. Redemptions. In the case of payment of assets of the Fund held by the Bank in connection with redemptions and repurchases by the Fund of its outstanding shares of beneficial interest, the Bank will rely on written notification by the Fund's transfer agent of receipt of a request for redemption and certificates, if issued, in proper form for redemption before such payment is made. Payment shall be made in accordance with the Declaration of Trust of the Fund, from assets available for said purpose.

9. Merger. Dissolution. etc. of Fund. In the case of the following transactions, not in the ordinary course of business, namely, the merger of the Fund into or the consolidation of the Fund with another investment company, the sale by the Fund of all, or substantially all of its assets to another investment company, or the liquidation or dissolution of the Fund and distribution of its assets, the Bank will deliver the Portfolio securities held by it under this Agreement and disburse cash only upon the order of the Fund set forth in an officers' Certificate, accompanied by a certified copy of a resolution of the Fund's Board authorizing any of the foregoing transactions. Upon completion of such delivery and disbursement and the payment of the preapproved fees, disbursements and expenses of the Bank, this Agreement will terminate.

10. Actions of Bank Without Prior Authorization. Notwithstanding anything herein to the contrary, unless and until the Bank receives an Officers' Certificate to the contrary, it will without prior authorization or instruction of the Fund or the transfer agent:

10.1 Receive and hold for the account of the Fund hereunder and deposit in the account or accounts referred to in Section 6 hereof, all income, dividends, interest and other payments or distribution of cash with respect to the Portfolio securities held thereunder;

10.2 Present for payment all coupons and other income items held by it for the account of the Fund which call for payment upon presentation and hold the cash received by it upon such payment for the account of the Fund account or accounts referred to in Section 6 hereof:

10.3 Receive and hold for the account of the Fund hereunder and deposit in the account or accounts referred to in Section 6 hereof all securities received as a distribution on Portfolio securities as a result of a stock dividend, share split-up, reorganization, recapitalization, merger, consolidation, readjustment, distribution of rights and similar securities issued with respect to any Portfolio securities held by it hereunder.

10.4 Execute as agent on behalf of the Fund all necessary ownership and other certificates and affidavits required by the Internal Revenue Code or the regulations of the Treasury Department issued thereunder, or by the laws of any state, now or hereafter in effect, inserting the Fund's name on such certificates as the owner of the securities covered thereby, to the extent it may lawfully do so and as may be required to obtain payment in respect thereof. The Bank will execute and deliver such certificates in connection with Portfolio securities delivered to it or by it under this Agreement as may be required under the provisions of the Internal Revenue Code and any Regulations of the Treasury Department issued thereunder, or under the laws of any State;

10.5 Present for payment all portfolio securities which are called, redeemed, retired or otherwise become payable, and hold cash received by it upon payment for the account of the Fund in the account or accounts referred to in Section 6 hereof; and

10.6 Exchange interim receipts or temporary securities for definitive securities.

The Bank shall collect any funds which are collectible arising from Portfolio securities, including dividends, interest and other income, and shall transmit promptly to the Fund all written information affecting such securities including, without limitation, any call for redemption, offer of exchange, pendency of maturity, notices regarding options and futures contracts, right of subscription, reorganization or other proceedings.

If Portfolio securities upon which such income is payable are in default or payment is refused after due demand or presentation, the Bank will notify the Fund in writing of any default or refusal to pay within two business days from the day on which it receives knowledge of such default or refusal. In addition, the Bank will send the Fund a written report once each month showing any income on any Portfolio security held by it which is more than ten days overdue on the date of such report.

11. Maintenance of Records: Fund Evaluation: Accounting Services. The Bank will maintain records with respect to transactions for which the Bank is responsible pursuant to the terms and conditions of this Agreement, and in compliance with the applicable rules and regulations of the Investment Company Act of 1940 as amended, as well as applicable federal and state tax laws and all other laws and regulations which may be applicable, and will furnish the Fund daily with a statement of assets and liabilities and a portfolio of investments of the Fund as well as such other calculations and reports as the Bank and Fund may agree from time to time. The Bank will furnish to the Fund at the end of every month, and at the close of each quarter of the Fund's fiscal year as well as at such other times as the Fund may request, a list of the Portfolio securities and the aggregate amount of cash held by it for the Fund. The books and records of the Bank pertaining to its actions under this Agreement and reports by the Bank or its independent accountants concerning its accounting system, procedures for safeguarding the Fund's assets and internal accounting controls, which shall be of sufficient scope and in sufficient detail as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, shall so state, and will be open to inspection and audit at reasonable times by officers of or auditors employed by the Fund as well as any other person authorized by the Fund by Proper Instructions. The books and records relating to the Fund will be preserved by the Bank in the manner and in accordance with the applicable rules and regulations under the Investment Company Act of 1940 and shall be the property of the Fund.

As custodian the Bank shall have and perform the following powers and duties:

11.1 To keep the books of account and render statements or copies from time to time as reasonably requested by the Treasurer or any executive officer of the Fund.

11.2 To compute and, unless otherwise directed by the Board, determine as of the close of business on the New York Stock Exchange on each day on which said Exchange is open for trading or as of such other hours, if any, as may be authorized by said Board the net asset value and the public offering price of a share of beneficial interest of the Fund, such determination to be made in accordance with the provisions of the Declaration of Trust of the Fund and Prospectus and Statement of Additional Information relating to the Fund, as they may from time to time be amended, and any applicable resolutions of the Board at the time in force and applicable; and promptly to notify the Fund and the National Association of Securities Dealers ("NASD") or such other persons as the Fund may request of the results of such computation and determination. In computing the net asset value hereunder, the Bank may rely in good faith upon information furnished in writing to it by any Authorized Person in respect of
(i) the manner of accrual of the liabilities of the Fund and in respect of liabilities of the Fund not appearing on its books of account kept by the Bank,
(ii) reserves, if any, authorized by the Board or that no such reserves have been authorized, (iii) the source of the quotations to be used in computing the net asset value, (iv) the value to be assigned to any security for which no price quotations are available, and (v) the method of computation of the public offering price on the basis of the net asset value of the shares, and the Bank shall not be responsible for any loss occasioned by such reliance or for any good faith reliance on any quotations received from a source pursuant to (iii) above.

11.3 To assist generally in the preparation of reports to shareholders and others, audits of accounts, and other ministerial matters of like nature.

12. Concerning the Bank.

12.1 Performance of Duties. In performing its duties hereunder and any other duties listed on any Schedule hereto, if any, the Bank will be entitled to receive and act upon the advice of independent counsel of its own selection, which may be counsel for the Fund, and will be without liability for any action taken or thing done or omitted to be done in accordance with this Agreement in good faith in conformity with such advice, if such counsel and such advice are approved by the Fund, provided however such approval shall not be unreasonably withheld. In the performance of its duties hereunder, so long as it exercises reasonable care, the Bank will be protected and not be liable, and will be indemnified and saved harmless for any action taken or omitted to be taken by it in good faith reliance upon the terms of this Agreement, any Officers' Certificate, Proper Instructions, resolution of the Board, telegram, notice, request, certificate or other instrument reasonably believed by the Bank to be genuine and to have been sent by an Authorized Person and for any other loss to the Fund except in the case of the Bank's negligence, willful misfeasance or misconduct or bad faith in the performance of its duties or negligent disregard of its obligations and duties hereunder.

The Bank may employ agents in the performance of its duties hereunder and the Bank shall be responsible for the acts and omissions of such agents as if performed by the Bank hereunder. The Bank may employ sub custodians upon receipt of Proper Instructions indicating that the Board has so approved the appointment, provided that any such subcustodian meets at least the minimum qualifications required by Section 17(f)(1) of the Investment Company Act of 1940 to act as a custodian of the Fund's assets. In order to comply with Rule 17f-5, (and 17f-4, if applicable) of the Investment Company Act of 1940, the contract between the Bank and any foreign subcustodian relating to securities of the Fund shall be subject to approval of the Fund. The appointment of any subcustodian by the Bank pursuant to this Agreement shall not relieve the Bank of its responsibilities and liabilities under this Agreement, and the Bank shall be liable to the Fund, to the extent of the Fund's damages, resulting from the failure of any subcustodian to exercise reasonable care and to act in good faith without negligence, provided however, the Bank shall not be liable for any loss resulting from, or caused by nationalization, expropriation, currency restrictions, acts of war or terrorism, insurrection, revolution, nuclear fusion, fission or radiation, acts of God or other similar events or acts not due to the failure of the Bank or any subcustodians to exercise reasonable care in the performance of their duties. Notwithstanding the foregoing, in connection with the Bank's liability for the performance of The Chase Manhattan Bank, N. A. ("Chase") as a sub custodian of the Fund pursuant to an agreement by and between Chase and the Bank, which form of agreement is attached hereto (the "Chase Agreement"), and any subcustodian of the Fund appointed under the Chase Agreement with the approval of the Board, the "Fund's damages" for the purpose of the preceding sentence will be determined based on the market value of the property which is the subject of the loss at the date of discovery of such loss and without reference to any special conditions or circumstances.

The Bank will be under no duty or obligation to inquire into and will not be liable for:

(a) the validity of the issue of any Portfolio securities purchased by or for the Fund, the legality of the purchases thereof or the propriety of the price incurred therefor;

(b) the legality of any sale of any portfolio securities by or for the Fund or the propriety of the amount for which the same are sold;

(c) the legality of an issue or sale of any shares of beneficial interest of the Fund or the sufficiency of the amount to be received therefor;

(d) the legality of the repurchase of any shares of beneficial interest of the Fund or the propriety of the amount to be paid therefor;

(e) the legality of the declaration of any dividend by the Fund or the legality of the distribution of any Portfolio securities as payment in kind of such dividend; or

(f) any property or moneys of the Fund already delivered or paid by the Bank pursuant to the terms hereof.

Moreover, the Bank will not be under any duty or obligation to ascertain whether any Portfolio securities at any time delivered to or held by it for the account of the Fund are such as may properly be held by the Fund under the provisions of its Declaration of Trust or By-Laws, any federal or state statutes or any rule or regulation of any governmental agency.

12.2 Fees and Expenses of Bank. The Fund will pay or reimburse the Bank from time to time for any transfer taxes payable upon transfer of Portfolio securities made hereunder, and for all necessary proper disbursements, expenses and charges made or incurred by the Bank in the performance of this Agreement (including any duties listed on any Schedule hereto, if any) including any indemnities for any loss, liabilities or expense to the Bank as specifically provided above. For the services rendered by the Bank hereunder, the Fund will pay to the Bank such compensation or fees at such rate and at such times as shall be agreed upon in writing by the parties from time to time. The Bank will also be entitled to reimbursement by the Fund for all preapproved expenses incurred in conjunction with termination of this Agreement by the Fund.

12.3 Advances by Bank. The Bank may, in its sole discretion, advance funds on behalf of the Fund to make any payment permitted by this Agreement upon receipt of any proper authorization required by this Agreement for such payments by the Fund. Should such a payment or payments, with advanced funds, result in an overdraft (due to insufficiencies of the Fund's account with the Bank, or for any other reason) this Agreement deems any such or related indebtedness, a loan made by the Bank to the Fund payable on demand and bearing interest at the rate set forth in writing by the Bank concurrently herewith (as amended from time to time) unless the Fund shall provide the Bank with agreed upon compensating balances. The Fund agrees that the Bank shall have a continuing lien and security interest on the assets of the Fund to the extent of any overdraft, provided that in no event shall the amount of such lien exceed the lesser of (i) the amount of such overdraft or (ii) 10% of the Fund's gross assets on the date of such overdraft, and provided further that to the extent consistent with the foregoing, the Bank will comply with any Proper Instructions indicating which Portfolio securities and/or which account of the Fund shall be subject to such lien. If such overdraft is not repaid within a reasonable period of time, the Bank shall have the right to exercise any rights it may have as a lienholder or secured party.

13. Termination

13.1 This Agreement may be termlnate at any time without penalty upon sixty days written notice delivered by either party to the other by means of registered mail, and upon the expiration of such sixty days this Agreement will terminate; provided, however, that the effective date of such termination may be postponed to a date not more than ninety days from the date of delivery of such notice (i) by the Bank in order to prepare for the transfer by the Bank of all of the assets of the Fund held hereunder, and (ii) by the Fund in order to give the Fund an opportunity to make suitable arrangements for a successor custodian. The Fund may immediately terminate this Agreement: (i) in the event of the appointment of a conservator or receiver for the Bank or upon the happening of a like event; (ii) if the Bank shall make a general assignment for the benefit of creditors; admit in writing its inability to pay its debts as they become due; file a petition in bankruptcy or a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future bankruptcy, reorganization, insolvency or similar statute, law or regulation or seek the appointment of any trustee, receiver, custodian or liquidator of the Bank or of all or substantially all of its properties; (iii) if a proceeding is commenced against the Bank seeking relief or an appointment of a type described in paragraph 13.1(ii) above and such proceeding is not dismissed within 30 days after the commencement thereof; (iv) if the Bank's insurance is materially adversely changed. At any time after the termination of this Agreement, the Fund will, at its request, have access to the records of the Bank relating to the performance of its duties as custodian.

13.2 In the event of the termination of this Agreement, the Bank will immediately upon receipt or transmittal, as the case may be, of notice of termination, commence and prosecute diligently to completion the transfer of all cash and the delivery of all Portfolio securities duly endorsed and all records maintained under Section 11 to the successor custodian when appointed by the Fund. The obligation of the Bank to deliver and transfer over the assets of the Fund held by it directly to such successor custodian will commence as soon as such successor is appointed and will continue until completed as aforesaid. If the Fund does not select a successor custodian within ninety (90) days from the date of delivery of notice of termination the Bank may, subject to the provisions of subsection 13.3 of this Section 13, deliver the Portfolio securities and cash of the Fund held by the Bank to a bank or trust company of its own selection which meets the requirements of Section 17(f)(1) of the Investment Company Act of 1940 and has a reported capital, surplus and undivided profits aggregating not less than $25,000,000, to be held as the property of the Fund under terms similar to those on which they were held by the Bank, whereupon such bank or trust company so selected by the Bank will become the successor custodian of such assets of the Fund with the same effect as though selected by the Board.

13.3 Prior to the expiration of ninety (90) days after notice of termination has been given, the Fund may furnish the Bank with an order of the Fund advising that a successor custodian cannot be found willing and able to act upon reasonable and customary terms and that there has been submitted to the Board of the Fund the question of whether the Fund will be liquidated or will function without a custodian for the assets of the Fund held by the Bank. In that event the Bank will deliver the Portfolio securities and cash of the Fund held by it, subject as aforesaid, in accordance with one of such alternatives which may be approved by the requisite vote of the Board, upon receipt by the Bank of a copy such vote certified by the Fund's Secretary or Assistant Secretary.

14. Notices. Any notice or other instrument in writing authorized or required by this Agreement to be given to either party hereto will be sufficiently given if addressed to such party and mailed or delivered to it at its office at the address set forth below; namely:

(a) In the case of notices sent to the Fund to:

Treasurer
Massachusetts Financial Total Return Trust c/o Massachusetts Financial Services Company 500 Boylston Street Boston, MA 02116

(b) In the case of notices sent to the Bank to:

Investors Bank & Trust Company Financial Product Services One Lincoln Plaza P.O. Box 1537
Boston, Massachusetts 02205-1537

or at such other place as such party may from time to time designate in writing.

15. Amendments. This Agreement may not be altered or amended, except by an instrument in writing, executed by both parties, and in the case of the Fund, such alteration or amendment will be authorized and approved by its Board.

16. Parties. This Agreement will be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that this Agreement will not be assignable by the Fund without the prior written consent of the Bank or by the Bank without the prior written consent of the Fund, authorized and approved by its Board; and provided further that termination proceedings pursuant to Section 13 hereof will not be deemed to be an assignment within the meaning of this provision.

17. Governing Law. This Agreement and all performance hereunder will be governed by the laws of the Commonwealth of Massachusetts.

18. Interpretive and Additional Provisions. In connection with the operation of this Agreement, the Bank and the Fund may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in writing signed by both parties and shall be annexed hereto and shall be binding upon the parties hereto as if incorporated into this Agreement, provided however, no such interpretive or additional provisions shall be deemed to be an alteration or amendment of this Agreement.

19. Delegation of Certain Duties to Massachusetts Financial Services Company ("MFS"). The Bank, with the prior written consent of MFS, may delegate to MFS the performance of any or all of the duties it has agreed to perform for the Fund in a separate written agreement relating to (i) accounting for investments in currency and for financial instruments (including, without limitation, options contracts, futures contracts, options on futures contracts, options on foreign currency and forward foreign currency exchange contracts) and
(ii) federal and state regulatory compliance. The Bank shall compensate MFS for the performance of such duties at such fee or fees as MFS shall determine to be equal to MFS' cost for performing such duties (the "MFS Fees") Following its payment of MFS Fees to MFS, the Bank shall recover the amount of the MFS Fees from the Fund on such terms as the Bank and the Fund shall agree. MFS assumes responsibility for all duties delegated to it by the Bank pursuant to this
Section 19, and the Bank may rely on MFS for the accuracy and correctness of the accounting information provided by MFS to the Bank pursuant to this Section 19.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate and their respective corporate seals to be affixed hereto as of the date first above written by their respective officers thereunto duly authorized.

MASSACHUSETTS FINANCIAL
TOTAL RETURN TRUST

                                                     By:  /s/ W. THOMAS LONDON
                                                          ----------------------
                                                          W. Thomas London

ATTEST:

/s/ ILLEGIBLE
- -------------------------
(Illegible)

INVESTORS BANK & TRUST
COMPANY

                                                     By:  /s/ ILLEGIBLE
                                                          ----------------------
                                                         (Illegible)
ATTEST:

/s/ ILLEGIBLE
- -------------------------
(Illegible)

The officer of the Fund signing this Agreement is executing this Agreement not individually but in his capacity as an officer of the Fund. The obligations of the Fund under this Agreement are not binding upon any of the trustees, officers, employees, agents or shareholders of the Fund individually, but bind only the trust estate of the Fund.


EXHIBIT 99.8(b)

AMENDMENT TO
CUSTODIAN AGREEMENT

Amendment dated as of this 21st day of April, 1992 to the Custodian Agreement between Massachusetts Financial Total Return Trust (the "Fund") and Investors Bank & Trust Company (the "Bank") dated October 1, 1991 (the "Agreement").

Section 12.3 of the Agreement is amended and restated as follows:

12.3 Advances by Bank. The Bank may, in its sole discretion, advance funds on behalf of the Fund, or any series of the Fund, to make any payment permitted by this Agreement upon receipt of any proper authorization required by this Agreement for such payments by the Fund or any series of the Fund. Should such a payment or payments, with advanced funds, result in an overdraft (due to insufficiencies of the Fund's or, if applicable, any series' of the Fund account with the Bank) or for any other reason, this Agreement deems any such or related indebtedness, a loan made by the Bank to the Fund (or if the overdraft relates to a series of the Fund, such series) payable on demand and bearing interest at the rate set forth in writing by the Bank concurrently herewith (as amended from time to time) unless the Fund (or, if applicable, the Fund on behalf of the series) shall provide the Bank with agreed upon compensating balances. The Fund agrees that the Bank shall have a continuing lien and security interest on the assets of the Fund (or, if the overdraft is on behalf of a series of the Fund, the assets of such series) to the extent of any overdraft, provided that in no event shall the amount of such lien exceed the lesser of (i) the amount of such overdraft or (ii) 10% of the Fund's gross assets (or if the overdraft is on behalf of a series of the Fund, such series' gross assets) on the date of such overdraft, and provided further that to the extent consistent with the foregoing, the Bank will comply with any Proper Instructions indicating which Portfolio securities and/or which account of the Fund (or if the overdraft is on behalf of a series of the Fund, which Portfolio securities and/or which account of the series) shall be subject to such lien. If such overdraft is not repaid within a reasonable period of time, the Bank shall have the right to exercise any rights it may have as a lien holder or secured party.

Section 15 of the Agreement is amended and restated as follows:

15. Amendments. This Agreement may not be altered or amended, except by an instrument in writing, executed by both parties, and in the case of the Fund, any alteration or amendment which is material will be authorized and approved by its Board.

The Fund and the Bank also hereby agree that notwithstanding any provision to the contrary in this Agreement, each series of the Fund (including any future series of the Fund) is separately liable for its own expenses and liabilities under the Agreement and that the assets of one series of the Fund may not be set off against the obligations of another series or otherwise be used to satisfy the obligations or indebtedness of another series of the Fund.


Executed as of the date first above written.

MASSACHUSETTS FINANCIAL
TOTAL RETURN TRUST*

Attest:  /s/ ILLEGIBLE                       By:  /s/ W. THOMAS LONDON
- -------------------------------------             ------------------------------
             (Illegible)                            W. Thomas London

INVESTORS BANK & TRUST COMPANY

Attest:  /s/ ILLEGIBLE                       By: /s/ ILLEGIBLE
- -------------------------------------           --------------------------------
             (Illegible)                             (Illegible)

* A copy of the Declaration of Trust of the Fund is on file with the Secretary of State of the Commonwealth of Massachusetts. You acknowledge that the obligations of or arising out of this instrument are not binding upon any of the Fund trustees, officers or shareholders individually, but are binding only upon the assets and property of the Fund.


EXHIBIT NO. 99.9(a)

MASSACHUSETTS INCOME DEVELOPMENT FUND
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116

August 1, 1985

Massachusetts Financial Service Center, Inc. 200 Berkeley Street
Boston, Massachusetts 02116

SHAREHOLDER SERVICING AGENT AGREEMENT

Dear Sirs:

Massachusetts Income Development Fund (the "Fund") is an open-end registered investment company. The Fund has selected you to act as the Shareholder Servicing Agent and you hereby agree to act as such Agent and perform the duties and functions thereof in the manner and on the conditions hereinafter set forth. Accordingly, the Fund hereby agrees with you as follows:

1. The Facility. You represent that you have the necessary computer equipment, software and other office equipment ("Facility") adequate to perform the services contemplated hereby as well as for other investment companies (such investment companies, together with the Fund, are herein collectively referred to as the "MFS Funds") for which Massachusetts Financial Services Company ("MFS") acts as investment adviser. The Facility is presently located at 50 Milk Street, Boston, Massachusetts, and is to be dedicated solely to the performance of services for the MFS Funds, provided that the Facility may be utilized to perform services for others with the prior written permission of the MFS Funds.

2. Name. Unless otherwise directed in writing by MFS, you shall perform the services contemplated hereby under the name "Massachusetts Financial Service Center, Inc.", which name, any similar names and any logos of which shall remain the property and under the control of MFS. Upon termination of this Agreement, you shall cease to use such name or any similar name within a reasonable period of time.

3. Services to be Performed. As Shareholder Servicing Agent ("Agent"), you shall be responsible for administering and performing transfer and dividend and distribution disbursing and plan agent functions in connection with the issuance, transfer and redemption of the shares of beneficial interest ("Shares"). The details of the operating standards and procedures to be followed by you shall be determined from time to time by agreement between you and the Fund.

4. Standard of Service. As Agent for the Fund, you agree to provide service equal to or better than that provided by you or others furnishing shareholder services to other open-end investment companies ("Standard") at a fee comparable to the fee paid you for your services hereunder. The Standard shall include at least the following:

(a) Prompt reconciliation of any differences as to the number of outstanding shares between various Facility records or between Facility records and records of an MFS Fund's Custodian;

(b) Prompt processing of shareholder correspondence and of other matters requiring action by you;

(c) Prompt clearance of any daily volume backlog;

(d) Providing innovative services and technological improvements;

(e) Meeting the requirements of any governmental authority having jurisdiction over you or the Fund; and

(f) Prompt reconciliation of all bank accounts under your control belonging to the Fund or MFS.

If any MFS Fund serviced by you is reasonably of the view that the service provided by you does not meet the Standard, it shall give you written notice specifying the particulars, and you then shall have 120 days in which to restore the service so that it meets the Standard, except that such period shall be 180 days with respect to meeting that portion of the Standard described above in item (d) of this paragraph 4. If at the end of such period the Fund remains reasonably of the view that the service provided by you, in the particulars specified, does not meet the Standard, then the MFS Fund or Funds having a majority of the accounts for which you are then Agent may, by appropriate action (including the concurrence of a majority of the Trustees or Directors, as the case may be, of such MFS Fund or Funds who are not interested persons of MFS), elect to terminate this Agreement for cause as to all such Funds upon 90 days notice to you. Upon termination hereof, the Fund shall pay you such compensation as may be due to you as of the date of such termination, and shall likewise reimburse you for any costs, expenses, and disbursements reasonably incurred by you to such date in the performance of your duties hereunder.

5. Purchase of Facility. In the event that notice of termination of this Agreement has been given pursuant to the provisions of paragraph 14 hereof, for cause as defined in paragraph 4 hereof, the MFS Funds have the right, but shall not be required (a) to purchase the Facility and assume the unexpired portion of any leases of equipment or real estate relating to the Facility from you at a price equal to your unrecovered acquisition value (as supported by the schedules and records used in determining monthly billings) of the machinery, equipment, software, furniture, fixtures and leasehold improvements included in the Facility, and (b) to negotiate with persons then employed by you in the operation of the Facility and to hire all of them in connection with the purchase of the Facility from you by the MFS Funds. You agree to release each such employee from any contractual obligations such person may have to you that may interfere with such person's being hired at such time by the MFS Funds and agree not to interfere with the negotiation and hiring of any such persons at such time. In the event that the MFS Funds have given notice of termination of this Agreement pursuant to the provisions of paragraph 14 hereof for reasons other than cause as defined in paragraph 4 hereof, the MFS Funds shall purchase the Facility under the terms and conditions set forth in subsections (a) and (b) of this paragraph 5.

You shall effect the transfer of the Facility pursuant to this paragraph 5 upon the termination date specified in the notice, or at such other time as shall be agreed upon by the parties hereto.

6. Rights in Data and Confidentiality. You agree that all records, data, files, input materials, reports, forms and other data received, computed or stored in the performance of this Agreement are the exclusive property of the Fund and that all such records and other data shall be furnished without additional charge, except for actual processing costs, to the Fund in machine readable as well as printed form immediately upon termination of this Agreement or at the Fund's request. You shall safeguard and maintain the confidentiality of the Fund's data and information supplied to you by the Fund and you shall not transfer or disclose the Fund's data to any third party without the Fund's prior written consent unless compelled to do so by order of a court or regulatory authority.

7. Fees. The fee per Fund shareholder account for your shareholder services hereunder shall not be in excess of such amount as shall be agreed in writing between us. Such fee shall be payable in monthly installments of one-twelfth of the annual fee. Such fee shall be subject to review at least annually and fixed by the parties in good faith negotiation on the basis of a statement of the expenses of the Facility prepared by you, which either you or the Fund may require to be certified by a major accounting firm acceptable to the parties. The party or parties requesting such certification shall bear all expenses thereof. In addition to the foregoing fee, you will be reimbursed by the Fund for out-of-pocket expenses reasonably incurred by you on behalf of the Fund, including but not limited to expenses for stationery (including business forms and checks), postage, telephone and telegraph line and toll charges, and premiums for negotiable instrument insurance and similar items.

8. Record Keeping. You will maintain records in a form acceptable to the Fund and in compliance with the rules and regulation of the Securities and Exchange Commission, including, but not limited to, records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules thereunder, which at all times will be the property of the Fund and will be available for inspection and use by the Fund.

9. Duty of Care and Indemnification. You will at all times act in good faith in performing your duties hereunder. You will not be liable or responsible for delays or errors by reason of circumstances beyond your control, including acts of civil or military authority, national emergencies, labor difficulties, fire, mechanical breakdown beyond your control, flood or catastrophe, acts of God, insurrection, war, riots or failure beyond your control of transportation, communication or power supply. The Fund will indemnify you against and hold you harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from your bad faith or negligence, and arising out of, or in connection with, your duties on behalf of the Fund hereunder. In addition, the Fund will indemnify you against and hold you harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit as a result of your acting in accordance with any instructions reasonably believed by you to have been executed or orally communicated by any person duly authorized by the Fund or its Principal Underwriter, or as a result of acting in accordance with written or oral advice reasonably believed by you to have been given by counsel for the Fund, or as a result of acting in accordance with any instrument or share certificate reasonably believed by you to have been genuine and signed, countersigned or executed by any person or persons authorized to sign, countersign or execute the same (unless contributed to by your gross negligence or bad faith). In any case in which the Fund may be asked to indemnify you or hold you harmless, the Fund shall be advised of all pertinent facts concerning the situation in question and you will use reasonable care to identify and notify the Fund promptly concerning any situation which presents or appears likely to present a claim for indemnification against the Fund. The Fund shall have the option to defend you against any claim which may be the subject of this indemnification, and in the event that the Fund so elects such defense shall be conducted by counsel chosen by the Fund and satisfactory to you and it will so notify you, and thereupon the Fund shall take over complete defense of the claim and you shall sustain no further legal or other expenses in such situation for which you seek indemnification under this paragraph, except the expense of any additional counsel retained by you. You will in no case confess any claim or make any compromise in any case in which the Fund will be asked to indemnify you except with the Fund's prior written consent. The obligations of the parties hereto under this paragraph shall survive the termination of this Agreement.

If any officer of the Fund shall no longer be vested with authority to sign for the Fund, written notice thereof shall forthwith be given to you by the Fund and until receipt of such notice by it, you shall be fully indemnified and held harmless by the Fund in recognizing and acting upon certificates or other instruments bearing the signatures or facsimile signatures of such officer.

10. Insurance. You will notify the Fund should any of your insurance coverage, as set forth on Exhibit A hereto, be changed for any reason, such notification to include the date of change and reason or reasons therefor.

11. Notices. All notices or other communications hereunder shall be in writing and shall be deemed sufficient if mailed to either party at the addresses set forth in this Agreement, or at such other addresses as the parties hereto may designate by notice to each other.

12. Further Assurances. Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.

13. Use of a Sub- or Co-Transfer Agent. Notwithstanding any other provision of this Agreement, it is expressly understood and agreed that you are authorized in the performance of your duties hereunder to employ, from time to time, one or more Sub-Transfer Agents and/or Co-Transfer Agents.

14. Termination. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing, which, except in the case of termination, shall be signed by the party against which enforcement of such change waiver or discharge is sought. Except as otherwise provided in paragraph 4 hereof, this Agreement shall continue indefinitely until terminated by 90 days' written notice given by the Fund to you or by you to the Fund, provided that the Fund may terminate this Agreement upon 15 days' written notice of termination and election of the right to purchase the Facility pursuant to the provisions of paragraph 5 hereof. Upon termination hereof, the Fund shall pay you such compensation as may be due to you as of the date of such termination, and shall likewise reimburse you for any costs, expenses, and disbursements reasonably incurred by you to such date in the performance of your duties hereunder. You agree to cooperate with the Fund and provide all necessary assistance in effectuating an orderly transition upon termination of this Agreement.

15. Successor. In the event that in connection with termination a successor to any of your duties or responsibilities hereunder is designated by the Fund by written notice to you, you will, promptly upon such termination and at the expense of the Fund, transfer to such successor a certified list of the shareholders of the Fund (with name, address and tax identification or Social Security number) an historical record of the account of each shareholder and the status thereof, and all other relevant books, records, correspondence, and other data established or maintained by you under this Agreement in form reasonably acceptable to the Fund (if such form differs from the form in which you have maintained the same, the Fund shall pay any expenses associated with transferring the same to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from your cognizant personnel in the establishment of books, records and other data by such successor.

16. Miscellaneous. This Agreement shall be construed and enforced in accordance with and governed by the laws of the Commonwealth of Massachusetts. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument. This Agreement has been executed on behalf of the Fund by the undersigned not individually, but in the capacity indicated, and the obligations of this Agreement are not binding upon any of the Trustees or shareholders of the Fund individually, but bind only the trust estate.

If you are in agreement with the foregoing, please sign the form of acceptance on the accompanying two counterparts of this letter and return such counterparts to the Fund whereupon this letter shall become a binding contract among the Fund, you and MFS, MFS having already executed this letter.

Very truly yours,

MASSACHUSETTS INCOME
DEVELOPMENT FUND

By: /s/ RICHARD B. BAILEY
    ---------------------------------
        Richard B. Bailey
        Title:  Chairman

The foregoing is hereby accepted as of the date thereof.

MASSACHUSETTS FINANCIAL
SERVICES COMPANY

By: /S/ H. ALDEN JOHNSON
    ---------------------------------
        H. Alden Johnson
        Title:  President

The foregoing is hereby accepted as of the date thereof.

MASSACHUSETTS FINANCIAL
SERVICE CENTER, INC.

By: /S/ BRUCE C. AVERY
    ---------------------------------
        Bruce C. Avery
        Title:  President


EXHIBIT NO. 99.9(b)

MFS SERIES TRUST V
500 BOYLSTON STREET o BOSTON o MASSACHUSETTS o 02116

(617) o 954-5000

December 28, 1993

MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116

Dear Sir/Madam:

This will confirm our understanding that Exhibit B to the Shareholder Servicing Agent Agreement between us, dated August 1, 1985, as amended, is hereby amended, effective immediately, to read in its entirety as set forth on Attachment 1 hereto.

Please indicate your acceptance of the foregoing by signing below.

Sincerely,

MFS SERIES TRUST V

By: W. THOMAS LONDON

W. Thomas London Treasurer

Accepted and Agreed:

MFS SERVICE CENTER, INC.

By:  /s/ JAMES E. RUSSELL
    ----------------------------------
         James E. Russell
         Treasurer


ATTACHMENT 1
DECEMBER 28, 1993

EXHIBIT B TO THE SHAREHOLDER SERVICING AGENT AGREEMENT
BETWEEN MFS SERVICE CENTER, INC. ("MFSC") AND
MFS SERIES TRUST V (THE "FUND")

1. The fees to be paid by the Fund on behalf of its series with respect to Class A shares of each series of the Fund to MFSC, for MFSC's services as shareholder servicing agent, shall be:

0.15% of the first $500 million of the assets of the series attributable to such class; 0.12% of the second $500 million of the assets of the series attributable to such class; 0.09% over $1 billion of the assets of the series attributable to such class.

2. The fees to be paid by the Fund on behalf of its series with respect to Class B shares of each series of the Fund to MFSC, for MFSC's services as shareholder servicing agent, shall be:

0.22% of the first $500 million of the assets of the series attributable to such class; 0.18% of the second $500 million of the assets of the series attributable to such class; 0.13% over $1 billion of the assets of the series attributable to such class.

3. The fees to be paid by the Fund on behalf of its series with respect to Class C shares of each series of the Fund to MFSC, for MFSC's services as shareholder servicing agent, shall be:

0.15% of the first $500 million of the assets of the series attributable to such class; 0.12% of the second $500 million of the assets of the series attributable to such class; 0.09% over $1 billion of the assets of the series attributable to such class.


EXHIBIT NO. 99.9(e)

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION made this 1st day of January, 1985 by and between Massachusetts Financial Development Fund, Inc. (the "Fund"), a Massachusetts corporation, and Massachusetts Financial Development Fund, a Massachusetts business trust (the "Trust").

1. Plan of Reorganization and Liquidation. (a) The Fund shall assign, sell, convey, transfer and deliver to the Trust at the closing provided for in Section
2 (hereinafter called the "Closing") all of its then existing assets of every kind and nature. In consideration therefor, the Trust shall at the Closing (i) assume all of the Fund's obligations and liabilities then existing, whether absolute, accrued, contingent or otherwise, including without limitation all liabilities of the Fund to shareholders who elect to dissent from the transaction and effect their appraisal rights under Massachusetts law and all fees are expenses in connection with the transactions contemplated hereby and
(ii) deliver to the Fund a number of full and fractional shares of beneficial interest of the Trust (the "Trust Shares") equal to the number of full and fractional shares of the Fund then outstanding.

(b) Upon consummation of the transaction described in paragraph (a) of this
Section 1, the Fund shall distribute in complete liquidation pro rata to its shareholders of record as of the Closing Date (other than those shareholder who have objected to the reorganization to as to be eligible to perfect statutory appraisal rights) the Trust Shares received by the Fund. Such distribution shall be accomplished by the establishment of an open account on the share records of the Trust in the name of each shareholder of the Fund representing a number of Trust Shares equal to the number of shares of the Fund owned of record by the shareholder at the Closing Date, provided that a shareholder who has objected to the reorganization so as to be eligible to perfect statutory appraisal rights shall have no rights with respect to Trust Shares until such time as he has waived or otherwise relinquished such statutory appraisal rights. Certificates for shares of the Fund issued prior to the reorganization shall represent outstanding shares of the Trust following the reorganization. Certificates representing Trust Shares will be issued only if the shareholder so requests.

(c) As promptly as practicable after the liquidation of the Fund as foresaid, the Fund shall be dissolved pursuant to the provisions of the Massachusetts Business Corporation Law and its legal existence terminated.

2. Closing and Closing Date. The Closing shall occur at 10 A.M. on January 29, 1985 or at such later time and date as the parties may mutually agree (the "Closing Date").

3. Conditions Precedent. The obligations of the Fund and the Trust to effect the transaction contemplated hereunder shall be subject to the satisfaction of each of the following conditions:

(a) All mailings shall have been made with, and all authority and orders shall have been received from, the Securities and Exchange Commission (the "SEC") and state securities commissions as may be necessary in the opinion of Gaston & Snow & Ely Bartlett to permit the parties to carry out the transactions contemplated by this Agreement;

(b) Each party shall have received an opinion of Gaston Snow & Ely Bartlett to the effect that for federal income tax purposes: (i) no gain or loss will be recognized by the Fund upon the transfer of its assets and liabilities to the Trust; (ii) the tax basis of the assets of the Fund in the hands of the Trust will be the same as the tax basis of such assets in the hands of the Fund immediately prior to the transfer; (iii) the holding period of the assets of the Fund transferred to the Trust will include the period during which such assets were held by the Fund; (iv) no gain or loss will be recognized by the Trust upon the receipt of the assets of the Fund in exchange for shares of the Trust and the assumption by the Trust of the liabilities and obligations of the Fund; (v) no gain or loss will be recognized by the shareholders of the Fund upon the receipt of shares of the Trust in exchange for their shares in the Fund; (vi) the basis of the shares of the Trust received by the shareholders of the Fund will be the same as the basis of the shares of the Fund exchanged therefor; and
(vii) the holding period of shares of the Trust received by the shareholders of the Fund will include the holding period of the shares of the Fund exchanged therefor, provided that at the time of the exchange the shares of the Fund were held as capital assets; and as to such other matters as it may reasonably request;

(c) This Agreement and Plan of Reorganization and the reorganization contemplated hereby shall have been adopted and approved by the affirmative vote of the holders of at least two-thirds of the outstanding shares of Common Stock of the Fund entitled to vote thereon;

(d) The Trust shall have entered into an Investment Advisory Agreement and a Distribution Agreement with Massachusetts Financial Services Company, a Shareholder Servicing Agent Agreement with Bradford Trust Company of Boston and a Custodian Contract with State Street Bank and Trust Company, such contracts to be in each case substantially identical in form and substance to those respective contracts in effect at the Closing Date between the Fund and said other parties, and such contracts shall have been approved by the Trustees of the Trust and, to the extent required by law, by the Trustees of the Trust who are not "interested persons" of the Trust as defined in the Investment Company Act of 1940 and by the shareholders of the Trust (it being understood that the Fund as sole shareholder of the Trust prior to the consummation of the reorganization hereby agrees and is authorized to vote for such approval); and

(e) The Trustees of the Trust who are not "interested persons" of the Trust as defined in the Investment Company Act of 1940 shall have selected as auditors for the Trust such auditors as shall have been selected and ratified for the Fund, and such selection shall have been ratified by the shareholders of the Trust (it being understood that the Fund as sole shareholder of the Trust prior to the consummation of the reorganization hereby agrees and is authorized to vote for such ratification).

At any time prior to the Closing, any of the foregoing conditions may be waived by the Board of Directors of the Fund and the Trustees of the Trust if, in their judgment, such waiver will not have a material adverse effect on the interests of the shareholders of the Fund.

4. Amendment. This Agreement may be amended at any time by action of the Board of Directors of the Fund and the Trustees of the Trust, notwithstanding approval thereof by the shareholders of the Fund, provided that no amendment shall have a material adverse effect on the interests of the shareholders of the Fund.

5. Termination. The Board of Directors of the Fund and the Trustees of the Trust may terminate this Agreement and abandon the reorganization contemplated hereby, notwithstanding approval thereof by the shareholders of the Fund, at any time prior to the Closing, if circumstances should develop that, in their judgment, make proceeding with the Agreement inadvisable.

6. Limitation of Liability of the Trustees and Shareholders. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of the The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually and that the obligations of the instrument are not binding upon any of the Trustees or shareholders individually but binding only upon the assets and property of the Trust.

IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be executed and delivered by their duly authorized officers as of the day and year first written above.

MASSACHUSETTS FINANCIAL
DEVELOPMENT FUND, INC.

By: /s/ ILLEGIBLE
    ---------------------------------
        (Illegible)

MASSACHUSETTS FINANCIAL
DEVELOPMENT FUND

By: /s/ RICHARD B. BAILEY
    ---------------------------------
        Richard B. Bailey


EXHIBIT NO. 99.9(f)

Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
Massachusetts Total Return Trust
Massachusetts Capital Development Fund
Massachusetts Financial Development Fund
Massachusetts Financial Bond Fund
Massachusetts Cash Management Trust
MFS Managed Municipal Bond Trust
Massachusetts Financial High Income Trust
Municipal Working Capital Trust

Massachusetts Financial International Trust Massachusetts Financial Emerging Growth Trust Massachusetts Financial Special Fund MFS Managed High Yield Municipal Bond Trust MFS Government Guaranteed Securities Trust MFS Managed Multi-State Tax-Exempt Trust MFS/Sun Life Series Trust MFS Managed California Tax-Exempt Trust Trust for Thrift Institutions MFS Government Securities High Yield Trust

200 Berkeley Street o Boston o Massachusetts o 02116

February 1, 1986

State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

Dividend Disbursing Agency Agreement

Dear Sirs:

Each of the above-listed funds (individually, the "Fund") is an open-end registered investment company organized as a Massachusetts business trust. Each Fund separately has selected you to act as its Dividend Disbursing Agent and you hereby agree to act as such Agent and perform the duties and functions thereof in the manner and on the conditions hereinafter set forth. Accordingly, each Fund individually hereby agrees with you as follows:

1. Services to be Performed. As Dividend Disbursing Agent ("Agent"), you shall be responsible for performing dividend and distribution disbursing agent functions with regard to the Fund's shares of beneficial interest ("Shares"). The details of the operating standards and procedures to be followed by you shall be determined from time to time by agreement between you and the Fund.

2. Standard of Service. As Agent for the Fund, you agree to provide service equal to at least that provided by you or others furnishing dividend and distribution disbursing services to other open-end investment companies ("Standard") at a fee, as may be agreed to from time to time, comparable to the fee paid you for your services hereunder. The Standard shall include at least the following:

(a) Prompt processing of all matters requiring action by you;

(b) Prompt clearance of any daily volume backlog;

(c) Providing innovative services and technological improvements;

(d) Meeting the requirements of any governmental authority having jurisdiction over you or the Fund; and

(e) Prompt reconciliation of all bank accounts under your control belonging to the Fund.

If the Fund is reasonably of the view that the service provided by you does not meet the Standard, it shall give you written notice specifying the particulars, and you then shall have 120 days in which to restore the service so that it meets the Standard, except that such period shall be 180 days with respect to meeting that portion of the Standard described above in item (c) of this paragraph 2. If at the end of such period the Fund remains reasonably of the view that the service provided by you in the particulars specified, does not meet the Standard, then the Fund may, by appropriate action, elect to terminate this Agreement for cause upon 90 days notice to you. Upon termination hereof, the Fund shall pay you such compensation as may be due to you as of the date of such termination, and shall likewise reimburse you for any costs, expenses, and disbursements reasonably incurred by you to such date in the performance of your duties hereunder.

3. Rights in Data and Confidentiality. You agree that all records, data, files, input materials, reports, forms and other data received, computed or stored in the performance of this Agreement are the exclusive property of the Fund and that all such records and other data shall be furnished without additional charge, except for actual processing costs, to the Fund in machine readable as well as printed form immediately upon termination of this Agreement or at the Fund's request. You shall safeguard and maintain the confidentiality of the Fund's data and information supplied to you by the Fund and you shall not transfer or disclose the Fund's data to any third party without the Fund's prior written consent unless compelled to do so by order of a court or regulatory authority.

4. Fees. The fee, based upon check clearance and reconciliation work performed hereunder, shall not be in excess of such amount as shall be agreed in writing between us. Such fee shall be payable in monthly installments. Such fee shall be subject to review at least annually and fixed by the parties in good faith negotiation on the basis of a statement of your expenses, which either you or the Fund may require to be certified by a major accounting firm acceptable to the parties. The party requesting such certification shall bear all expenses thereof. In addition to the foregoing fee, you will be reimbursed by the Fund for out-of-pocket expenses reasonably incurred by you on behalf of the Fund, including but not limited to expenses for stationery, postage, telephone and telegraph line and toll charges and similar items.

5. Record Keeping. You will maintain records in a form acceptable to the Fund and in compliance with the rules and regulations of the Securities and Exchange Commission, including, but not limited to, records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules thereunder, which at all times will be the property of the Fund and will be available for inspection and use by the Fund or the Fund's transfer agent.

6. Duty of Care and Indemnification. You will at all times act in good faith in performing your duties hereunder. You will not be liable or responsible for delays or errors by reason of circumstances beyond your control, including acts of civil or military authority, national emergencies, labor difficulties, fire, mechanical breakdown beyond your control, flood or catastrophe, acts of God, insurrection, war, riots or failure beyond your control of transportation, communication or power supply. The Fund will indemnify you against and hold you harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from your bad faith or negligence, and arising out of, or in connection with, your duties on behalf of the Fund hereunder. In addition, the Fund will indemnify you against and hold you harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit as a result of your acting in accordance with any instructions reasonably believed by you to have been given executed or orally communicated by any person duly authorized by the Fund or as a result of acting in accordance with written or oral advice reasonable believed by you to have been given by counsel for the Fund, or as a result of acting in accordance with any instrument or share certificate reasonably believed by you to have been genuine and signed, countersigned or executed by any person or persons authorized to sign, countersign or execute the same (unless contributed to by your gross negligence or bad faith). In any case in which the Fund may be asked to indemnify you or hold you harmless, the Fund shall be advised of all pertinent facts concerning the situation in question and you will use reasonable care to identify and notify the Fund promptly concerning any situation which presents or appears likely to present a claim for indemnification against the Fund. The Fund shall have the option to defend you against any claim which may be the subject of this indemnification, and in the event that the Fund so elects such defense shall be conducted by counsel chosen by the Fund and satisfactory to you and it will so notify you, and thereupon the Fund shall take over complete defense of the claim and you shall sustain no further legal or other expenses in such situation for which you seek indemnification under this paragraph, except the expense of any additional counsel retained by you. You will in no case confess any claim or make any compromise in any case in which the Fund will be asked to indemnify you except with the Fund's prior written consent. The obligations of the parties hereto under this paragraph shall survive the termination of this Agreement.

7. Insurance. You will notify the Fund should any of your insurance coverage, as set forth on Exhibit A hereto, be changed for any reason, such notification to include the date of change and reason or reasons therefor.

8. Notices. All notices or other communications hereunder shall be in writing and shall be deemed sufficient if mailed to either party at the addresses set forth in this Agreement, or at such other addresses as the parties hereto may designate by notice to each other.

9. Further Assurances. Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.

10. Use of a Sub-Dividend Disbursing Agent. Notwithstanding any other provision of this Agreement, it is expressly understood and agreed that you are authorized in the performance of your duties hereunder to employ one or more Sub-Dividend Disbursing Agents.

11. Termination. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing, which, except in the case of termination, shall be signed by the party against which enforcement of such change waiver or discharge is sought. Except as otherwise provided in paragraph 2 hereof, this Agreement shall continue indefinitely until terminated by 90 days' written notice given by the Fund to you or by you to the Fund. Upon termination hereof, the Fund shall pay you such compensation as may be due to you as of the date of such termination, and shall likewise reimburse you for any costs, expenses, and disbursements reasonably incurred by you to such date in the performance of your duties hereunder. You agree to cooperate with the Fund and provide all necessary assistance in effectuating an orderly transition upon termination of this Agreement.

12. Successor. In the event that in connection with termination a successor to any of your duties or responsibilities hereunder is designated by the Fund by written notice to you, you will, promptly upon such termination and at the expense of the Fund, transfer to such successor an historical record of dividends and disbursements and all other relevant books, records, correspondence, and other data established or maintained by you under this Agreement in form reasonably acceptable to the Fund (if such form differs from the form in which you have maintained the same, the Fund shall pay any expenses associated with transferring the same to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from your cognizant personnel in the establishment of books, records and other data by such successor.

13. Miscellaneous. This Agreement shall be construed and enforced in accordance with and governed by the laws of the Commonwealth of Massachusetts. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. This Agreement has been executed on behalf of the Fund by the undersigned not individually, but in the capacity indicated, and the obligations of this Agreement are not binding upon any of the Trustees or shareholders of the Fund individually, but bind only the trust estate.

If you are in agreement with the foregoing, please sign the form of acceptance on this letter and the accompanying counterpart of this letter and return such counterpart to the Fund whereupon this letter shall become a binding contract between the Fund and you, the Fund having already executed this letter and its counterpart.

Very truly yours,

Massachusetts Investors Trust                  By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Investors Growth Stock Fund      By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Total Return Trust               By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Capital Development Fund         By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Financial Development Fund       By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Financial Bond Fund              By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Cash Management Trust            By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


MFS Managed Municipal Bond Trust               By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Financial High Income Trust      By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Chairman
                                                       Richard B. Bailey


Municipal Working Capital Trust                By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Financial International Trust    By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Financial Emerging Growth Trust  By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Massachusetts Financial Special Fund           By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


MFS Managed High Yield Municipal Bond Trust    By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


MFS Government Guaranteed Securities Trust     By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman

MFS Managed Mult-State Tax-Exempt Trust        By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


MFS/Sun Life Series Trust                      By: /s/ JOHN D. McNEIL
                                                       John D. McNeil
                                                   -----------------------------
                                                       Chairman


MFS Managed California Tax-Exempt Trust        By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Trust for Thrift Institutions                  By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


MFS Government Securities High Yield Trust     By: /s/ RICHARD B. BAILEY
                                                   -----------------------------
                                                       Richard B. Bailey
                                                       Chairman


Attest:  /s/ DANIEL M. JAFFE
         ---------------------------------
             Daniel M. Jaffe

The foregoing is hereby accepted as of the date thereof.

STATE STREET BANK AND
TRUST COMPANY

By:  /s/ILLEGIBLE
    -----------------------------
        ILLEGIBLE


EXHIBIT NO. 99.11

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Post-Effective Amendment No. 41 to Registration Statement No. 2-38613 of MFS Series Trust V of our reports each dated November 3, 1995 appearing in the annual reports to shareholders for the year ended September 30, 1995, of MFS Total Return Fund and MFS Research Fund, each a series of MFS Series Trust V and to the references to us under the headings "Condensed Financial Information" in the Prospectus and "Independent Auditors and Financial Statements" in the Statement of Additional Information, both of which are part of such Registration Statement.

                                /s/ DELOITTE & TOUCHE LLP
                                    ---------------------------
                                    Deloitte & Touche LLP

Boston, Massachusetts
January 22, 1996


EXHIBIT NO. 99.15(a)

MFS SERIES TRUST V

MFS TOTAL RETURN FUND

AMENDED AND RESTATED DISTRIBUTION PLAN

AMENDED AND RESTATED DISTRIBUTION PLAN with respect to the shares of beneficial interest to be designated "CLASS A" of the MFS TOTAL RETURN FUND (the "Fund"), a series of MFS Series Trust V (the "Trust"), a business trust organized and existing under the laws of The Commonwealth of Massachusetts, dated the 17th day of May, 1989, amended and restated the 19th day of December, 1990, amended and restated the 23rd day of August, 1993 and amended this 21st day of December, 1994.

WITNESSETH:

WHEREAS, the Trust is engaged in business as an open-end management investment company and is registered under the Investment Company Act of 1940 (the "1940 Act"); and

WHEREAS, a plan of distribution pursuant to Rule 12b-1 of the 1940 Act was previously adopted and approved by the Trustees of the Trust, including the Qualifying Trustees (as defined below), and by the shareholders of the Fund; and

WHEREAS, the Trust intends to continue to distribute the Shares of Beneficial Interest (without par value) of the Fund designated Class A Shares (the "Shares") in part in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to adopt this amended and restated Distribution Plan (the "Plan") as a plan of distribution pursuant to such Rule; and

WHEREAS, the Trust has entered into a distribution agreement (the "Distribution Agreement") in a form approved by the Board of Trustees of the Trust (the "Board of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors, Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the Distributor provides facilities and personnel and renders services to the Fund in connection with the offering and distribution of the Shares; and

WHEREAS, the Trust recognizes and agrees that the Distributor will enter into agreements ("Dealer Agreements") with various securities dealers and other financial intermediaries ("Dealers") pursuant to which the Dealers will act as dealers of the Shares in connection with the offering of Shares; and

WHEREAS, the Distribution Agreement provides that a sales charge may be paid by investors who purchase Shares and that the Distributor and Dealers will receive such sales charge as partial compensation for their services in connection with sale of Shares; and

WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and implement this Plan, has evaluated such information as it deemed necessary to an informed determination as to whether this Plan should be adopted and implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Fund for such purposes, and has determined that there is a reasonable likelihood that the adoption and implementation of this Plan will benefit the Fund and its Class A shareholders;

NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a plan of distribution relating to the Shares in accordance with Rule 12b-1 under the 1940 Act, on the following terms and conditions:

1. As specified in the Distribution Agreement, the Distributor shall provide facilities, personnel and a program with respect to the offering and sale of Shares. Among other things, the Distributor shall be responsible for all expenses of printing (excluding typesetting) and distributing prospectuses to prospective shareholders and providing such other related services as are reasonably necessary in connection therewith.

2. The Distributor shall bear all distribution-related expenses to the extent specified in the Distribution Agreement in providing the services described in Section 1, including without limitation, the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead), equipment, printing, delivery and mailing costs.

3. As partial consideration for the services performed and expenses incurred in the performance of its obligations under the Distribution Agreement, the Fund shall pay the Distributor a distribution fee periodically at a rate of 0.10% per annum of the average daily net assets of the Fund attributable to the Shares. Such payments shall commence following shareholder approval of the Plan but only upon notification by the Distributor to the Fund of the commencement of the Plan (the "Commencement Date").

4. As partial consideration for the personal services and/or account maintenance services performed by each Dealer in the performance of its obligations under its Dealer Agreement, the Fund shall on or after the Commencement Date pay each Dealer a service fee periodically at a rate not to exceed 0.25% per annum of the portion of the average daily net assets of the Fund that is represented by Shares that are owned by investors for whom such Dealer is the holder or dealer of record. The Distributor may from time to time reduce the amount of the service fee paid to a Dealer for Shares sold prior to certain date.

5. In addition to fees payable pursuant to Sections 3 and 4 hereof, the expenses permitted to be paid by the Fund pursuant to this Plan on or after the Commencement Date shall include other distribution related expenses. These other distribution related expenses may include, but are not limited to, a dealer commission and a payment to wholesalers employed by the Distributor on net asset value purchases at or above a certain dollar level.

The aggregate amount of fees and expenses paid pursuant to Sections 3 and 4 hereof and this Section 5 shall not exceed 0.35% per annum of the average daily net assets of the Fund attributable to the Shares. No fees shall be paid pursuant to Section 4 hereof or this Section 5 to any insurance company which has entered into an agreement with the Trust on behalf of the Fund and the Distributor that permits such insurance company to purchase Shares from the Fund at their net asset value in connection with annuity agreements issued in connection with the insurance company's separate accounts. That portion of the Fund's average daily net assets on which fees payable under Section 4 hereof and this Section 5 are calculated may be subject to certain minimum amount requirements as may be determined, and additional or different dealer or wholesaler qualification standards that may be established, from time to time by the Distributor. The Distributor shall be entitled to be paid any fees payable under Section 4 hereof or this Section 5 with respect to accounts for which no Dealer of record exists or qualification standards have not been met as partial consideration for personal services and/or account maintenance services provided by the Distributor to the Shares. The fees and expenses payable pursuant to
Section 4 and this Section 5 may from time to time be paid by the Fund to the Distributor and the Distributor will then pay these expenses on behalf of the Fund.

6. Nothing herein contained shall be deemed to require the Trust to take any action contrary to its Declaration of Trust or By-Laws or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Trustees of the responsibility for and control of the conduct of the affairs of the Fund.

7. This Plan shall become effective upon (a) approval by a vote of at least a "majority of the outstanding voting securities" of the Shares, and (b) approval by a vote of the Board of Trustees and vote of a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any of the agreements related to the Plan (the "Qualified Trustees"), such votes to be cast in person at a meeting called for the purpose of voting on this Plan.

8. This Plan shall continue in effect indefinitely; provided, however, that such continuance is subject to annual approval by a vote of the Board of Trustees and a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on continuance of this Plan. If such annual approval is not obtained, this Plan shall expire 12 months after the effective date of the last approval.

9. This Plan may be amended at any time by the Board of Trustees; provided that (a) any amendment to increase materially the amount to be spent for the services described herein shall be effective only upon approval by a vote of a "majority of the outstanding voting securities" of the Shares and (b) any material amendment of this Plan shall be effective only upon approval by a vote of the Board of Trustees and a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on such amendment. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by a vote of a "majority of the outstanding voting securities" of the Shares.

10. The Distributor shall provide the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under the Plan and the purposes for which such expenditures were made.

11. While this Plan is in effect, the selection and nomination of Qualified Trustees shall be committed to the discretion of the Trustees who are not "interested persons" of the Trust.

12. For the purposes of this Plan, the terms "interested person" and "majority of the outstanding voting securities" are used as defined in the 1940 Act. In addition, for purposes of determining the fees payable to Dealers and wholesalers, the value of the Share's net assets shall be computed in the manner specified in the Fund's then current prospectus for computation of the net asset value of the Shares.

13. The Trust shall preserve copies of this Plan, and each agreement related hereto and each report referred to in Section 10 hereof (collectively the "Records") for a period of six years from the end of the fiscal year in which such Record was made and each such Record shall be kept in an easily accessible place for the first two years of said record keeping.

14. This Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.

15. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby.


EXHIBIT NO. 99.15(b)

MFS SERIES TRUST V

MFS TOTAL RETURN FUND

PLAN OF DISTRIBUTION

PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be designated "CLASS B" OF MFS TOTAL RETURN FUND (the "Fund"), a series of MFS Series Trust V (the "Trust") a Massachusetts business trust, dated August 23, 1993 and amended this 21st day of December, 1994.

WITNESSETH:

WHEREAS, the Trust is engaged in business as an open-end management investment company and is registered under the Investment Company Act of 1940, as amended (collectively with the rules and regulations promulgated thereunder, the "1940 Act"); and

WHEREAS, the Trust intends to distribute the shares of beneficial interest (without par value) of the Fund designated Class B Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to such Rule; and

WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware corporation, to provide certain distribution services for the Fund (the "Distributor"); and

WHEREAS, the Trust has entered into a distribution agreement (the "Distribution Agreement") (in a form approved by the Board of Trustees of the Trust in a manner specified in such Rule 12b-1) with the Distributor, whereby the Distributor will provide facilities and personnel and render services to the Fund in connection with the offering and distribution of the Shares; and

WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the services of firms or individuals to act as dealers (the "Dealers") of the Shares in connection with the offering of Shares, and (b) the Distributor may make payments for such services to the Dealers out of the fee paid to the Distributor hereunder, any deferred sales charges imposed by the Distributor in connection with the repurchase of Shares, its profits or any other source available to it; and

WHEREAS, the Trust recognizes and agrees that the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares by the Fund, and the Distributor may retain (or receive from the Fund, as the case may be) all such deferred sales charges; and

WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund should adopt and implement this Plan, has evaluated such information as it deemed necessary to an informed determination as to whether this Plan should be adopted and implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Fund for such purposes, and has determined that there is a reasonable likelihood that the adoption and implementation of this Plan will benefit the Fund and its Class B shareholders;

NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for the Fund as a plan for distribution relating to the Shares in accordance with Rule 12b-1, on the following terms and conditions:

1. As specified in the Distribution Agreement, the Distributor shall provide facilities, personnel and a program with respect to the offering and sale of Shares. Among other things, the Distributor shall be responsible for commissions payable to Dealers, all expenses of printing (excluding typesetting) and distributing prospectuses to prospective shareholders and providing such other related services as are reasonably necessary in connection therewith.

2. The Distributor shall bear all distribution-related expenses to the extent specified in the Distribution Agreement in providing the services described in paragraph 1, including without limitation, the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead), equipment, printing, delivery and mailing costs.

3. It is understood that the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares by the Fund and the Distributor may retain (or receive from the Fund, as the case may be) all such deferred sales charges. As additional consideration for all services performed and expenses incurred in the performance of its obligations under the Distribution Agreement, the Fund shall pay the Distributor a distribution fee periodically at a rate of 0.75% per annum of the Fund's average daily net assets attributable to the Shares.

4. As partial consideration for the personal services and/or account maintenance services performed by each Dealer in the performance of its obligations under its dealer agreement with the Distributor, the Fund shall pay each Dealer a service fee periodically at a rate not to exceed 0.25% per annum of the portion of the average daily net assets of the Fund that is represented by Shares that are owned by lnvestors for whom such Dealer is the holder or dealer of record. That portion of the Fund's average daily net assets on which the fees payable under this paragraph 4 hereof are calculated may be subject to certain minimum amount requirements as may be determined, and additional or different dealer qualification standards that may be established from time to time, by the Distributor. The Distributor shall be entitled to be paid any fees payable under this paragraph 4 hereof with respect to Shares for which no Dealer of record exists or qualification standards have not been met as partial consideration for personal services and/or account maintenance services provided by the Distributor to the Shares. The service fee payable pursuant to this paragraph 4 may from time to time be paid by the Fund to the Distributor and the Distributor will then pay these fees on behalf of the Fund.

5. The Fund understands that agreements between the Distributor and the Dealers may provide for payment of commissions to Dealers in connection with the sales of Shares and may provide for a portion (which may be all or substantially all) of the fees payable by the Fund to the Distributor under the Distribution Agreement to be paid by the Distributor to the Dealers in consideration of the Dealer's services as a dealer of the Shares. Except as described in paragraph 4, nothing in this Plan shall be construed as requiring the Fund to make any payment to any Dealer or to have any obligations to any Dealer in connection with services as a dealer of the Shares. The Distributor shall agree and undertake that any agreement entered into between the Distributor and any Dealer shall provide that, except as provided in paragraph 4, such Dealer shall look solely to the Distributor for compensation for its services thereunder and that in no event shall such Dealer seek any payment from the Fund.

6. The Fund shall pay all fees and expenses of any independent auditor, legal counsel, investment adviser, administrator, transfer agent, custodian, shareholder servicing agent, registrar or dividend disbursing agent of the Fund; expenses of distributing and redeeming Shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to shareholders of the Fund, except that the Distributor shall be responsible for the distribution-related expenses as provided in paragraphs 1 and 2 hereof.

7. Nothing herein contained shall be deemed to require the Trust to take any action contrary to its Declaration of Trust or By-Laws or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Trustees of the responsibility for and control of the conduct of the affairs of the Fund.

8. This Plan shall become effective upon (a) approval by a vote of at least a "majority of the outstanding voting securities" of the Shares, and (b) approval by a vote of the Board of Trustees and a vote of a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan (the "Qualified Trustees"), such votes to be cast in person at a meeting called for the purpose of voting on this Plan.

9. This Plan shall continue in effect indefinitely; provided that such continuance is "specifically approved at least annually" by a vote of both a majority of the Trustees of the Trust and a majority of the Qualified Trustees. If such annual approval is not obtained, this Plan shall expire 12 months after the effective date of the last approval.

10. This Plan may be amended at any time by the Board of Trustees; provided that this Plan may not be amended to increase materially the amount of permitted expenses hereunder without the approval of holders of a "majority of the outstanding voting securities" of the Shares and may not be materially amended in any case without a vote of a majority of both the Trustees and the Qualified Trustees. This Plan may be terminated at any time by a vote of a majority of the Qualified Trustees or by a vote of the holders of a "majority of the outstanding voting securities" of the Shares.

11. The Fund and the Distributor shall provide the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under this Plan and the purposes for which such expenditures were made.

12. While this Plan is in effect, the selection and nomination of Qualified Trustees shall be committed to the discretion of the Trustees who are not "interested persons" of the Trust.

13. For the purposes of this Plan, the terms "interested persons", "majority of the outstanding voting securities" and "specifically approved at least annually" are used as defined in the 1940 Act. In addition, for purposes of determining the fees payable to the Distributor hereunder, the value of the Fund's net assets shall be computed in the manner specified in the Fund's then-current prospectus and statement of additional information for computation of the net asset value of the Shares of the Fund.

14. The Trust shall preserve copies of this Plan, and each agreement related hereto and each report referred to in paragraph 11 hereof (collectively, the "Records") for a period of six years from the end of the fiscal year in which such Record was made and each such record shall be kept in an easily accessible place for the first two years of said record-keeping.

15. This Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.

16. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby.


EXHIBIT NO. 99.15(c)

MFS SERIES TRUST V

MFS TOTAL RETURN FUND

PLAN OF DISTRIBUTION

PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be designated "CLASS C" of MFS TOTAL RETURN FUND (the "Fund"), a series of MFS Series Trust V (the "Trust"), a Massachusetts business trust, dated July 20, 1994 and amended this 21st day of December, 1994.

WITNESSETH:

WHEREAS, the Trust is engaged in business as an open-end management investment company and is registered under the Investment Company Act of 1940, as amended (collectively with the rules and regulations promulgated thereunder, the "1940 Act"); and

WHEREAS, the Trust intends to distribute the shares of beneficial interest (without par value) of the Fund designated Class C Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to such Rule; and

WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware corporation, to provide certain distribution services for the Fund (the "Distributor"); and

WHEREAS, the Trust has entered into a distribution agreement (the "Distribution Agreement") (in a form approved by the Board of Trustees of the Trust in a manner specified in Rule 12b-1) with the Distributor, whereby the Distributor will provide facilities and personnel and render services to the Fund in connection with the offering and distribution of the Shares; and

WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the services of firms or individuals to act as dealers (the "Dealers") of the Shares in connection with the offering of Shares, and (b) the Distributor may make payments for such services to the Dealers out of the fee paid to the Distributor hereunder, any deferred sales charges imposed by the Distributor in connection with the repurchase of Shares, its profits or any other source available to it; and

WHEREAS, the Trust recognizes and agrees that the Distributor may (but is not required to) impose certain deferred sales charges in connection with the repurchase of Shares by the Fund, and the Distributor may retain (or receive from the Fund as the case may be) all such deferred sales charges; and

WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund should adopt and implement this Plan, has evaluated such information as it deemed necessary to an informed determination as to whether this Plan should be adopted and implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Fund for such purposes, and has determined that there is a reasonable likelihood that the adoption and implementation of this Plan will benefit the Fund and its Class C shareholders;

NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for the Fund as a plan for distribution relating to the Shares in accordance with Rule 12b-1, on the following terms and conditions:

1. As specified in the Distribution Agreement, the Distributor shall provide facilities, personnel and a program with respect to the offering and sale of Shares. Among other things, the Distributor shall be responsible for any commissions payable to Dealers (including any ongoing maintenance commissions), all expenses of printing (excluding typesetting) and distributing prospectuses to prospective shareholders and providing such other related services as are reasonably necessary in connection therewith.

2. The Distributor shall bear all distribution-related expenses to the extent specified in the Distribution Agreement in providing the services described in paragraph 1, including without limitation, the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead), equipment, printing, delivery and mailing costs.

3. It is understood that the Distributor may (but is not required to) impose certain deferred sales charges in connection with the repurchase of Shares by the Fund and the Distributor may retain (or receive from the Fund, as the case may be) all such deferred sales charges. As additional consideration for all services performed and expenses incurred in the performance of its obligations under the Distribution Agreement, the Fund shall pay the Distributor a distribution fee periodically at a rate not to exceed 0.75% per annum of the Fund's average daily net assets attributable to the Shares.

4. As partial consideration for the personal services and/or account maintenance services performed by each Dealer in the performance of its obligations under its dealer agreement with the Distributor, the Fund shall pay each Dealer a service fee periodically at a rate not to exceed 0.25% per annum of the portion of the average daily net assets of the Fund that is represented by Shares that are owned by investors for whom such Dealer is the holder or dealer of record. That portion of the Fund's average daily net assets on which the fees payable under this paragraph 4 hereof are calculated may be subject to certain minimum amount requirements as may be determined, and additional or different dealer qualification standards that may be established, from time to time by the Distributor. The Distributor shall be entitled to be paid any fees payable under this paragraph 4 hereof with respect to Shares for which no Dealer of record exists or qualification standards have not been met as partial consideration for personal services and/or account maintenance services provided by the Distributor to the Shares. The service fee payable pursuant to this paragraph 4 may from time to time be paid by the Fund to the Distributor and the Distributor will then pay these fees to Dealers on behalf of the Fund or retain them in accordance with this paragraph.

5. The Fund understands that agreements between the Distributor and the Dealers may provide for payment of commissions to Dealers in connection with the sales of Shares and may provide for a portion (which may be all or substantially all) of the fees payable by the Fund to the Distributor under the Distribution Agreement to be paid by the Distributor to the Dealers in consideration of the Dealer's services as a dealer of the Shares. Except as described in paragraph 4, nothing in this Plan shall be construed as requiring the Fund to make any payment to any Dealer or to have any obligations to any Dealer in connection with services as a dealer of the Shares. The Distributor shall agree and undertake that any agreement entered into between the Distributor and any Dealer shall provide that, except as provided in paragraph 4, such Dealer shall look solely to the Distributor for compensation for its services thereunder and that in no event shall such Dealer seek any payment from the Fund.

6. The Fund shall pay all fees and expenses of any independent auditor, legal counsel, investment adviser, administrator, transfer agent, custodian, shareholder servicing agent, registrar or dividend disbursing agent of the Fund; expenses of distributing and redeeming Shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to shareholders of the Fund, except that the Distributor shall be responsible for the distribution-related expenses as provided in paragraphs 1 and 2 hereof.

7. Nothing herein contained shall be deemed to require the Trust to take any action contrary to its Declaration of Trust or By-Laws or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Trustees of the responsibility for and control of the conduct of the affairs of the Fund.

8. This Plan shall become effective upon (a) approval by a vote of at least a "majority of the outstanding voting securities" of Class C, and (b) approval by a vote of the Board of Trustees and a vote of a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan (the "Qualified Trustees"), such votes to be cast in person at a meeting called for the purpose of voting on this Plan.

9. This Plan shall continue in effect indefinitely; provided that such continuance is "specifically approved at least annually" by a vote of both a majority of the Trustees of the Trust and a majority of the Qualified Trustees. If such annual approval is not obtained, this Plan shall expire 12 months after the effective date of the last approval.

10. This Plan may be amended at any time by the Board of Trustees; provided that this Plan may not be amended to increase materially the amount of permitted expenses hereunder without the approval of holders of a "majority of the outstanding voting securities" of Class C and may not be materially amended in any case without a vote of a majority of both the Trustees and the Qualified Trustees. This Plan may be terminated at any time by a vote of a majority of the Qualified Trustees or by a vote of the holders of a "majority of the outstanding voting securities" of Class C.

11. The Fund and the Distributor shall provide the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under this Plan and the purposes for which such expenditures were made.

12. While this Plan is in effect, the selection and nomination of Qualified Trustees shall be committed to the discretion of the Trustees who are not "interested persons" of the Trust.

13. For the purposes of this Plan, the terms "interested persons," "majority of the outstanding voting securities" and "specifically approved at least annually" are used as defined in the 1940 Act. In addition, for purposes of determining the fees payable to the Distributor hereunder, the value of the Fund's net assets shall be computed in the manner specified in the Fund's then-current prospectus and statement of additional information for computation of the net asset value of the Shares of the Fund.

14. The Trust shall preserve copies of this Plan, and each agreement related hereto and each report referred to in paragraph 11 hereof (collectively, the "Records") for a period of six years from the end of the fiscal year in which such Record was made and each such record shall be kept in an easily accessible place for the first two years of said record-keeping.

15. This Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.

16. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby.


EXHIBIT NO. 99.15(d)

MFS SERIES TRUST V

MFS RESEARCH FUND

DISTRIBUTION PLAN

DISTRIBUTION PLAN with respect to the shares of beneficial interest to be designated "CLASS A" of the MFS RESEARCH FUND (the "Fund"), a series of MFS Series Trust V (the "Trust"), a business trust organized and existing under the laws of The Commonwealth of Massachusetts, dated the 1st day of September, 1993 and amended this 21st day of December, 1994.

WITNESSETH:

WHEREAS, the Trust is engaged in business as an open-end management investment company and is registered under the Investment Company Act of 1940 (the "Act"); and

WHEREAS, the Trust intends to distribute the Shares of Beneficial Interest (without par value) of the Fund designated Class A Shares (the "Shares") in part in accordance with Rule 12b-1 under the Act, ("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to such Rule; and

WHEREAS, the Trust has entered into a distribution agreement (the "Distribution Agreement") in a form approved by the Board of Trustees of the Trust (the "Board of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors, Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the Distributor provides facilities and personnel and renders services to the Fund in connection with the offering and distribution of the Shares; and

WHEREAS, the Trust recognizes and agrees that the Distributor will enter into agreements ("Dealer Agreements") with various securities dealers and other financial intermediaries ("Dealers") pursuant to which the Dealers will act as dealers of the Shares in connection with the offering of Shares; and

WHEREAS, the Distribution Agreement provides that a sales charge may be paid by investors who purchase Shares and that the Distributor and Dealers will receive such sales charge as partial compensation for their services in connection with sale of Shares; and

WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and implement this Plan, has evaluated such information as it deemed necessary to an informed determination as to whether this Plan should be adopted and implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Fund for such purposes, and has determined that there is a reasonable likelihood that the adoption and implementation of this Plan will benefit the Fund and its Class A shareholders;

NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a plan of distribution relating to the Shares in accordance with Rule 12b-1 under the Act, on the following terms and conditions:

1. As specified in the Distribution Agreement, the Distributor shall provide facilities, personnel and a program with respect to the offering and sale of Shares. Among other things, the Distributor shall be responsible for all expenses of printing (excluding typesetting) and distributing prospectuses to prospective shareholders and providing such other related services as are reasonably necessary in connection therewith.

2. The Distributor shall bear all distribution-related expenses described in Section 1, including without limitation, the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead), equipment, printing, delivery and mailing costs.

3. As partial consideration for the services performed and expenses to the extent specified in the Distribution Agreement in providing the services incurred in the performance of its obligations under the Distribution Agreement, the Fund shall pay the Distributor a distribution fee periodically at a rate of 0.10% per annum of the average daily net assets of the Fund attributable to the Shares. Such payments shall commence following shareholder approval of the Plan but only upon notification by the Distributor to the Fund of the commencement of the Plan (the "Commencement Date").

4. As partial consideration for the personal services and/or account maintenance services performed by each Dealer in the performance of its obligations under its Dealer Agreement, the Fund shall on or after the Commencement Date pay each Dealer a service fee periodically at a rate not to exceed 0.25% per annum of the portion of the average daily net assets of the Fund that is represented by Shares that are owned by investors for whom such Dealer is the holder or dealer of record. The Distributor may from time to time reduce the amount of the service fee paid to a Dealer for Shares sold prior to certain date.

5. In addition to fees payable pursuant to Sections 3 and 4 hereof, the expenses permitted to be paid by the Fund pursuant to this Plan on or after the Commencement Date shall include other distribution related expenses. These other distribution related expenses may include, but are not limited to, a dealer commission and a payment to wholesalers employed by the Distributor on net asset value purchases at or above a certain dollar level.

The aggregate amount of fees and expenses paid pursuant to Sections 3 and 4 hereof and this Section 5 shall not exceed 0.35% per annum of the average daily net assets of the Fund attributable to the Shares. No fees shall be paid pursuant to Section 4 hereof or this Section 5 to any insurance company which has entered into an agreement with the Trust on behalf of the Fund and the Distributor that permits such insurance company to purchase Shares from the Fund at their net asset value in connection with annuity agreements issued in connection with the insurance company's separate accounts. That portion of the Fund's average daily net assets on which fees payable under Section 4 hereof and this Section 5 are calculated may be subject to certain minimum amount requirements as may be determined, and additional or different dealer or wholesaler qualification standards that may be established, from time to time by the Distributor. The Distributor shall be entitled to be paid any fees payable under Section 4 hereof or this Section 5 with respect to accounts for which no Dealer of record exists or qualification standards have not been met as partial consideration for personal services and/or account maintenance services provided by the Distributor to the Shares. The fees and expenses payable pursuant to
Section 4 and this Section 5 may from time to time be paid by the Fund to the Distributor and the Distributor will then pay these expenses on behalf of the Fund.

6. Nothing herein contained shall be deemed to require the Trust to take any action contrary to its Declaration of Trust or By-Laws or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Trustees of the responsibility for and control of the conduct of the affairs of the Fund.

7. This Plan shall become effective upon (a) approval by a vote of at least a "majority of the outstanding voting securities" of the Shares, and (b) approval by a vote of the Board of Trustees and vote of a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any of the agreements related to the Plan (the "Qualified Trustees"), such votes to be cast in person at a meeting called for the purpose of voting on this Plan.

8. This Plan shall continue in effect indefinitely; provided, however, that such continuance is subject to annual approval by a vote of the Board of Trustees and a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on continuance of this Plan. If such annual approval is not obtained, this Plan shall expire 12 months after the effective date of the last approval.

9. This Plan may be amended at any time by the Board of Trustees; provided that (a) any amendment to increase materially the amount to be spent for the services described herein shall be effective only upon approval by a vote of a "majority of the outstanding voting securities" of the Shares and (b) any material amendment of this Plan shall be effective only upon approval by a vote of the Board of Trustees and a majority of the Qualified Trustees, such votes to be cast in person at a meeting called for the purpose of voting on such amendment. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by a vote of a "majority of the outstanding voting securities" of the Shares.

10. The Distributor shall provide the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under the Plan and the purposes for which such expenditures were made.

11. While this Plan is in effect, the selection and nomination of Qualified Trustees shall be committed to the discretion of the Trustees who are not "interested persons" of the Trust.

12. For the purposes of this Plan, the terms "interested person" and "majority of the outstanding voting securities" are used as defined in the Act. In addition, for purposes of determining the fees payable to Dealers and wholesalers, the value of the Share's net assets shall be computed in the manner specified in the Fund's then current prospectus for computation of the net asset value of the Shares.

13. The Trust shall preserve copies of this Plan, and each agreement related hereto and each report referred to in Section 10 hereof (collectively the "Records") for a period of six years from the end of the fiscal year in which such Record was made and each such Record shall be kept in an easily accessible place for the first two years of said record keeping.

14. This Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts and the applicable provisions of the Act.

15. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby.


EXHIBIT NO. 99.15(e)

MFS SERIES TRUST V

MFS RESEARCH FUND

PLAN OF DISTRIBUTION

PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be designated "CLASS B" OF MFS RESEARCH FUND (the "Fund"), a series of MFS Series Trust V (the "Trust") a Massachusetts business trust, dated September 1, 1993 and amended this 21st day of December, 1994.

WITNESSETH:

WHEREAS, the Trust is engaged in business as an open-end management investment company and is registered under the Investment Company Act of 1940, as amended (collectively with the rules and regulations promulgated thereunder, the "1940 Act"); and

WHEREAS, the Trust intends to distribute the shares of beneficial interest (without par value) of the Fund designated Class B Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to such Rule; and

WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware corporation, to provide certain distribution services for the Fund (the "Distributor"); and

WHEREAS, the Trust has entered into a distribution agreement (the "Distribution Agreement") (in a form approved by the Board of Trustees of the Trust in a manner specified in such Rule 12b-1) with the Distributor, whereby the Distributor will provide facilities and personnel and render services to the Fund in connection with the offering and distribution of the Shares; and

WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the services of firms or individuals to act as dealers (the "Dealers") of the Shares in connection with the offering of Shares, and (b) the Distributor may make payments for such services to the Dealers out of the fee paid to the Distributor hereunder, any deferred sales charges imposed by the Distributor in connection with the repurchase of Shares, its profits or any other source available to it; and

WHEREAS, the Trust recognizes and agrees that the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares by the Fund, and the Distributor may retain (or receive from the Fund, as the case may be) all such deferred sales charges; and

WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund should adopt and implement this Plan, has evaluated such information as it deemed necessary to an informed determination as to whether this Plan should be adopted and implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Fund for such purposes, and has determined that there is a reasonable likelihood that the adoption and implementation of this Plan will benefit the Fund and its Class B shareholders;

NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for the Fund as a plan for distribution relating to the Shares in accordance with Rule 12b-1, on the following terms and conditions:

1. As specified in the Distribution Agreement, the Distributor shall provide facilities, personnel and a program with respect to the offering and sale of Shares. Among other things, the Distributor shall be responsible for commissions payable to Dealers, all expenses of printing (excluding typesetting) and distributing prospectuses to prospective shareholders and providing such other related services as are reasonably necessary in connection therewith,

2. The Distributor shall bear all distribution-related expenses to the extent specified in the Distribution Agreement in providing the services described in paragraph 1, including without limitation, the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead), equipment, printing, delivery and mailing costs.

3. It is understood that the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares by the Fund and the Distributor may retain (or receive from the Fund, as the case may be) all such deferred sales charges. As additional consideration for all services performed and expenses incurred in the performance of its obligations under the Distribution Agreement, the Fund shall pay the Distributor a distribution fee periodically at a rate of 0.75% per annum of the Fund's average daily net assets attributable to the Shares.

4. As partial consideration for the personal services and/or account maintenance services performed by each Dealer in the performance of its obligations under its dealer agreement with the Distributor, the Fund shall pay each Dealer a service fee periodically at a rate not to exceed 0.25% per annum of the portion of the average daily net assets of the Fund that is represented by Shares that are owned by investors for whom such Dealer is the holder or dealer of record. That portion of the Fund's average daily net assets on which the fees payable under this paragraph 4 hereof are calculated may be subject to certain minimum amount requirements as may be determined, and additional or different dealer qualification standards that may be established from time to time, by the Distributor. The Distributor shall be entitled to be paid any fees payable under this paragraph 4 hereof with respect to Shares for which no Dealer of record exists or qualification standards have not been met as partial consideration for personal services and/or account maintenance services provided by the Distributor to the Shares. The service fee payable pursuant to this paragraph 4 may from time to time be paid by the Fund to the Distributor and the Distributor will then pay these fees on behalf of the Fund.

5. The Fund understands that agreements between the Distributor and the Dealers may provide for payment of commissions to Dealers in connection with the sales of Shares and may provide for a portion (which may be all or substantially all) of the fees payable by the Fund to the Distributor under the Distribution Agreement to be paid by the Distributor to the Dealers in consideration of the Dealer's services as a dealer of the Shares. Except as described in paragraph 4, nothing in this Plan shall be construed as requiring the Fund to make any payment to any Dealer or to have any obligations to any Dealer in connection with services as a dealer of the Shares. The Distributor shall agree and undertake that any agreement entered into between the Distributor and any Dealer shall provide that, except as provided in paragraph 4, such Dealer shall look solely to the Distributor for compensation for its services thereunder and that in no event shall such Dealer seek any payment from the Fund.

6. The Fund shall pay all fees and expenses of any independent auditor, legal counsel, investment adviser, administrator, transfer agent, custodian, shareholder servicing agent, registrar or dividend disbursing agent of the Fund; expenses of distributing and redeeming Shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to shareholders of the Fund, except that the Distributor shall be responsible for the distribution-related expenses as provided in paragraphs 1 and 2 hereof.

7. Nothing herein contained shall be deemed to require the Trust to take any action contrary to its Declaration of Trust or By-Laws or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Trustees of the responsibility for and control of the conduct of the affairs of the Fund.

8. This Plan shall become effective upon (a) approval by a vote of at least a "majority of the outstanding voting securities" of the Shares, and (b) approval by a vote of the Board of Trustees and a vote of a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan (the "Qualified Trustees"), such votes to be cast in person at a meeting called for the purpose of voting on this Plan.

9. This Plan shall continue in effect indefinitely; provided that such continuance is "specifically approved at least annually" by a vote of both a majority of the Trustees of the Trust and a majority of the Qualified Trustees. If such annual approval is not obtained, this Plan shall expire 12 months after the effective date of the last approval.

10. This Plan may be amended at any time by the Board of Trustees; provided that this Plan may not be amended to increase materially the amount of permitted expenses hereunder without the approval of holders of a "majority of the outstanding voting securities" of the Shares and may not be materially amended in any case without a vote of a majority of both the Trustees and the Qualified Trustees. This Plan may be terminated at any time by a vote of a majority of the Qualified Trustees or by a vote of the holders of a "majority of the outstanding voting securities" of the Shares.

11. The Fund and the Distributor shall provide the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under this Plan and the purposes for which such expenditures were made.

12. While this Plan is in effect, the selection and nomination of Qualified Trustees shall be committed to the discretion of the Trustees who are not "interested persons" of the Trust.

13. For the purposes of this Plan, the terms "interested persons", "majority of the outstanding voting securities" and "specifically approved at least annually" are used as defined in the 1940 Act. In addition, for purposes of determining the fees payable to the Distributor hereunder, the value of the Fund's net assets shall be computed in the manner specified in the Fund's then-current prospectus and statement of additional information for competition of the net asset value of the Shares of the Fund.

14. The Trust shall preserve copies of this Plan, and each agreement related hereto and each report referred to in paragraph 11 hereof (collectively, the "Records") for a period of six years from the end of the fiscal year in which such Record was made and each such record shall be kept in an easily accessible place for the first two years of said record-keeping.

15. This Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.

16. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby.


EXHIBIT NO. 99.15(f)

MFS SERIES TRUST V

MFS RESEARCH FUND

PLAN OF DISTRIBUTION

PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be designated "CLASS C" of MFS Research Fund (the "Fund"), a series of MFS Series Trust V (the "Trust") a Massachusetts business trust, dated December 28, 1993 and amended this 21st day of December, 1994.

WITNESSETH:

WHEREAS, the Trust is engaged in business as an open-end management investment company and is registered under the Investment Company Act of 1940, as amended (collectively with the rules and regulations promulgated thereunder, the "1940 Act"); and

WHEREAS, the Trust intends to distribute the shares of beneficial interest (without par value) of the Fund designated Class C Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to such Rule; and

WHEREAS, the Trust desires for MFS Fund Distributors, Inc., a Delaware corporation ("MFD"), to provide certain distribution services for the Fund (the "Distributor"); and

WHEREAS, the Trust has entered into a distribution agreement (the "Distribution Agreement") (in a form approved by the Board of Trustees of the Trust in a manner specified in Rule 12b-1) with the Distributor, whereby the Distributor will provide facilities and personnel and render services to the Fund in connection with the offering and distribution of the Shares (the "Distribution Agreement"); and

WHEREAS, the Trust recognizes and agrees that (a) the Distributor may retain the services of firms or individuals to act as dealers (the "Dealers") of the Shares in connection with the offering of Shares, and (b) the Distributor may make payments for such services to the Dealers out of the fee paid to the Distributor hereunder, any deferred sales charges imposed by the Distributor in connection with the repurchase of Shares, its profits or any other source available to it; and

WHEREAS, the Trust recognizes and agrees that the Distributor may (but is not required to) impose certain deferred sales charges in connection with the repurchase of Shares by the Fund, and the Distributor may retain (or receive from the Fund, as the case may be) all such deferred sales charges; and

WHEREAS, the Board of Trustees of the Trust, in considering whether the Fund should adopt and implement this Plan, has evaluated such information as it deemed necessary to an informed determination as to whether this Plan should be adopted and implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Fund for such purposes, and has determined that there is a reasonable likelihood that the adoption and implementation of this Plan will benefit the Fund and its Class C shareholders;

NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan for the Fund as a plan for distribution relating to the Shares in accordance with Rule 12b-1, on the following terms and conditions:

1. As specified in the Distribution Agreement, the Distributor shall provide facilities, personnel and a program with respect to the offering and sale of Shares. Among other things, the Distributor shall be responsible for any commissions payable to Dealers (including any ongoing maintenance commissions), all expenses of printing (excluding typesetting) and distributing prospectuses to prospective shareholders and providing such other related services as are reasonably necessary in connection therewith

2. The Distributor shall bear all distribution-related expenses to the extent specified in the Distribution Agreement in providing the services described in paragraph 1, including without limitation, the compensation of personnel necessary to provide such services and all costs of travel, office expenses (including rent and overhead), equipment, printing, delivery and mailing costs.

3. It is understood that the Distributor may (but is not required to) impose certain deferred sales charges in connection with the repurchase of Shares by the Fund and the Distributor may retain (or receive from the Fund, as the case may be) all such deferred sales charges. As additional consideration for all services performed and expenses incurred in the performance of its obligations under the Distribution Agreement, the Fund shall pay the Distributor a distribution fee periodically at a rate not to exceed 0.75% per annum of the Fund's average daily net assets attributable to the Shares.

4. As partial consideration for the personal services and/or account maintenance services performed by each Dealer in the performance of its obligations under its dealer agreement with the Distributor, the Fund shall pay each Dealer a service fee periodically at a rate not to exceed 0.25% per annum of the portion of the average daily net assets of the Fund that is represented by Shares that are owned by investors for whom such Dealer is the holder or dealer of record. That portion of the Fund's average daily net assets on which the fees payable under this paragraph 4 hereof are calculated may be subject to certain minimum amount requirements as may be determined, and additional or different dealer qualification standards that may be established, from time to time by the Distributor. The Distributor shall be entitled to be paid any fees payable under this paragraph 4 hereof with respect to Shares for which no Dealer of record exists or qualification standards have not been met as partial consideration for personal services and/or account maintenance services provided by the Distributor to the Shares. The service fee payable pursuant to this paragraph 4 may from time to time be paid by the Fund to the Distributor and the Distributor will then pay these fees to Dealers on behalf of the Fund or retain them in accordance with this paragraph.

5. The Fund understands that agreements between the Distributor and the Dealers may provide for payment of commissions to Dealers in connection with the sales of Shares and may provide for a portion (which may be all or substantially all) of the fees payable by the Fund to the Distributor under the Distribution Agreement to be paid by the Distributor to the Dealers in consideration of the Dealer's services as a dealer of the Shares. Except as described in paragraph 4, nothing in this Plan shall be construed as requiring the Fund to make any payment to any Dealer or to have any obligations to any Dealer in connection with services as a dealer of the Shares. The Distributor shall agree and undertake that any agreement entered into between the Distributor and any Dealer shall provide that, except as provided in paragraph 4, such Dealer shall look solely to the Distributor for compensation for its services thereunder and that in no event shall such Dealer seek any payment from the Fund.

6. The Fund shall pay all fees and expenses of any independent auditor, legal counsel, investment adviser, administrator, transfer agent, custodian, shareholder servicing agent, registrar or dividend disbursing agent of the Fund; expenses of distributing and redeeming Shares and servicing shareholder accounts; expenses of preparing, printing and mailing prospectuses, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to shareholders of the Fund, except that the Distributor shall be responsible for the distribution-related expenses as provided in paragraphs 1 and 2 hereof.

7. Nothing herein contained shall be deemed to require the Trust to take any action contrary to its Declaration of Trust or By-Laws or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Board of Trustees of the responsibility for and control of the conduct of the affairs of the Fund.

8. This Plan shall become effective upon (a) approval by a vote of at least a "majority of the outstanding voting securities" of Class C, and (b) approval by a vote of the Board of Trustees and a vote of a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan (the "Qualified Trustees"), such votes to be cast in person at a meeting called for the Purpose of voting on this Plan.

9. This Plan shall continue in effect indefinitely; provided that such continuance is "specifically approved at least annually" by a vote of both a majority of the Trustees of the Trust and a majority of the Qualified Trustees. If such annual approval is not obtained, this Plan shall expire 12 months after the effective date of the last approval.

10. This Plan may be amended at any time by the Board of Trustees; provided that this Plan may not be amended to increase materially the amount of permitted expenses hereunder without the approval of holders of a "majority of the outstanding voting securities" of Class C and may not be materially amended in any case without a vote of a majority of both the Trustees and the Qualified Trustees. This Plan may be terminated at any time by a vote of a majority of the Qualified Trustees or by a vote of the holders of a "majority of the outstanding voting securities" of Class C.

11. The Fund and the Distributor shall provide the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended under this Plan and the purposes for which such expenditures were made.

12. While this Plan is in effect, the selection and nomination of Qualified Trustees shall be committed to the discretion of the Trustees who are not "interested persons" of the Trust.

13. For the purposes of this Plan, the terms "interested persons", "majority of the outstanding voting securities" and "specifically approved at least annually" are used as defined in the 1940 Act. In addition, for purposes of determining the fees payable to the Distributor hereunder, the value of the Fund's net assets shall be computed in the manner specified in the Fund's then-current prospectus and statement of additional information for computation of the net asset value of the Shares of the Fund.

14. The Trust shall preserve copies of this Plan, and each agreement related hereto and each report referred to in paragraph 11 hereof (collectively, the "Records") for a period of six years from the end of the fiscal year in which such Record was made and each such record shall be kept in an easily accessible place for the first two years of said record-keeping.

15. This Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.

16. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby.


ARTICLE 6
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MFS TOTAL RETURN FUND CLASS A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
SERIES:
NUMBER:011
NAME: MFS TOTAL RETURN FUND CLASS A


PERIOD TYPE YEAR
FISCAL YEAR END SEP 30 1995
PERIOD END SEP 30 1995
INVESTMENTS AT COST 2,746,829,464
INVESTMENTS AT VALUE 3,269,544,120
RECEIVABLES 81,202,514
ASSETS OTHER 58,151
OTHER ITEMS ASSETS 16,688
TOTAL ASSETS 3,350,821,473
PAYABLE FOR SECURITIES 69,267,792
SENIOR LONG TERM DEBT 0
OTHER ITEMS LIABILITIES 10,844,835
TOTAL LIABILITIES 80,112,627
SENIOR EQUITY 0
PAID IN CAPITAL COMMON 2,648,454,101
SHARES COMMON STOCK 155,030,940
SHARES COMMON PRIOR 145,089,983
ACCUMULATED NII CURRENT 1,522,351
OVERDISTRIBUTION NII 0
ACCUMULATED NET GAINS 98,017,011
OVERDISTRIBUTION GAINS 0
ACCUM APPREC OR DEPREC 522,715,383
NET ASSETS 3,270,708,846
DIVIDEND INCOME 59,076,808
INTEREST INCOME 105,318,026
OTHER INCOME (478,396)
EXPENSES NET 32,514,304
NET INVESTMENT INCOME 131,402,134
REALIZED GAINS CURRENT 120,786,908
APPREC INCREASE CURRENT 242,624,905
NET CHANGE FROM OPS 494,813,947
EQUALIZATION 0
DISTRIBUTIONS OF INCOME 91,296,492
DISTRIBUTIONS OF GAINS 1,471,111
DISTRIBUTIONS OTHER 0
NUMBER OF SHARES SOLD 27,571,191
NUMBER OF SHARES REDEEMED 23,436,000
SHARES REINVESTED 5,805,766
NET CHANGE IN ASSETS 569,273,587
ACCUMULATED NII PRIOR 0
ACCUMULATED GAINS PRIOR 0
OVERDISTRIB NII PRIOR 7,440,916
OVERDIST NET GAINS PRIOR 17,579,156
GROSS ADVISORY FEES 11,256,389
INTEREST EXPENSE 0
GROSS EXPENSE 34,719,899
AVERAGE NET ASSETS 2,885,203,365
PER SHARE NAV BEGIN 12.80
PER SHARE NII 0.64
PER SHARE GAIN APPREC 1.64
PER SHARE DIVIDEND 0.61
PER SHARE DISTRIBUTIONS 0.01
RETURNS OF CAPITAL 0.00
PER SHARE NAV END 14.46
EXPENSE RATIO 0.87
AVG DEBT OUTSTANDING 0
AVG DEBT PER SHARE 0

ARTICLE 6
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MFS TOTAL RETURN FUND CLASS B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
SERIES:
NUMBER:012
NAME: MFS TOTAL RETURN FUND CLASS B


PERIOD TYPE YEAR
FISCAL YEAR END SEP 30 1995
PERIOD END SEP 30 1995
INVESTMENTS AT COST 2,746,829,464
INVESTMENTS AT VALUE 3,269,544,120
RECEIVABLES 81,202,514
ASSETS OTHER 58,151
OTHER ITEMS ASSETS 16,688
TOTAL ASSETS 3,350,821,473
PAYABLE FOR SECURITIES 69,267,792
SENIOR LONG TERM DEBT 0
OTHER ITEMS LIABILITIES 10,844,835
TOTAL LIABILITIES 80,112,627
SENIOR EQUITY 0
PAID IN CAPITAL COMMON 2,648,454,101
SHARES COMMON STOCK 69,507,266
SHARES COMMON PRIOR 65,823,366
ACCUMULATED NII CURRENT 1,522,351
OVERDISTRIBUTION NII 0
ACCUMULATED NET GAINS 98,017,011
OVERDISTRIBUTION GAINS 0
ACCUM APPREC OR DEPREC 522,715,383
NET ASSETS 3,270,708,846
DIVIDEND INCOME 59,076,808
INTEREST INCOME 105,318,026
OTHER INCOME (478,396)
EXPENSES NET 32,514,304
NET INVESTMENT INCOME 131,402,134
REALIZED GAINS CURRENT 120,786,908
APPREC INCREASE CURRENT 242,624,905
NET CHANGE FROM OPS 494,813,947
EQUALIZATION 0
DISTRIBUTIONS OF INCOME 33,884,609
DISTRIBUTIONS OF GAINS 672,401
DISTRIBUTIONS OTHER 0
NUMBER OF SHARES SOLD 17,488,664
NUMBER OF SHARES REDEEMED 16,113,302
SHARES REINVESTED 2,308,539
NET CHANGE IN ASSETS 569,273,587
ACCUMULATED NII PRIOR 0
ACCUMULATED GAINS PRIOR 0
OVERDISTRIB NII PRIOR 7,440,916
OVERDIST NET GAINS PRIOR 17,579,156
GROSS ADVISORY FEES 11,256,389
INTEREST EXPENSE 0
GROSS EXPENSE 34,719,899
AVERAGE NET ASSETS 2,885,203,365
PER SHARE NAV BEGIN 12.80
PER SHARE NII 0.53
PER SHARE GAIN APPREC 1.64
PER SHARE DIVIDEND 0.50
PER SHARE DISTRIBUTIONS 0.01
RETURNS OF CAPITAL 0.00
PER SHARE NAV END 14.46
EXPENSE RATIO 1.71
AVG DEBT OUTSTANDING 0
AVG DEBT PER SHARE 0

ARTICLE 6
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MFS TOTAL RETURN FUND CLASS C AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
SERIES:
NUMBER:013
NAME: MFS TOTAL RETURN FUND CLASS C


PERIOD TYPE YEAR
FISCAL YEAR END SEP 30 1995
PERIOD END SEP 30 1995
INVESTMENTS AT COST 2,746,829,464
INVESTMENTS AT VALUE 3,269,544,120
RECEIVABLES 81,202,514
ASSETS OTHER 58,151
OTHER ITEMS ASSETS 16,688
TOTAL ASSETS 3,350,821,473
PAYABLE FOR SECURITIES 69,267,792
SENIOR LONG TERM DEBT 0
OTHER ITEMS LIABILITIES 10,844,835
TOTAL LIABILITIES 80,112,627
SENIOR EQUITY 0
PAID IN CAPITAL COMMON 2,648,454,101
SHARES COMMON STOCK 1,577,252
SHARES COMMON PRIOR 99,818
ACCUMULATED NII CURRENT 1,522,351
OVERDISTRIBUTION NII 0
ACCUMULATED NET GAINS 98,017,011
OVERDISTRIBUTION GAINS 0
ACCUM APPREC OR DEPREC 522,715,383
NET ASSETS 3,270,708,846
DIVIDEND INCOME 59,076,808
INTEREST INCOME 105,318,026
OTHER INCOME (478,396)
EXPENSES NET 32,514,304
NET INVESTMENT INCOME 131,402,134
REALIZED GAINS CURRENT 120,786,908
APPREC INCREASE CURRENT 242,624,905
NET CHANGE FROM OPS 494,813,947
EQUALIZATION 0
DISTRIBUTIONS OF INCOME 302,945
DISTRIBUTIONS OF GAINS 2,050
DISTRIBUTIONS OTHER 0
NUMBER OF SHARES SOLD 1,619,700
NUMBER OF SHARES REDEEMED 163,091
SHARES REINVESTED 20,825
NET CHANGE IN ASSETS 569,273,587
ACCUMULATED NII PRIOR 0
ACCUMULATED GAINS PRIOR 0
OVERDISTRIB NII PRIOR 7,440,916
OVERDIST NET GAINS PRIOR 17,579,156
GROSS ADVISORY FEES 11,256,389
INTEREST EXPENSE 0
GROSS EXPENSE 34,719,899
AVERAGE NET ASSETS 2,885,203,365
PER SHARE NAV BEGIN 12.80
PER SHARE NII 0.54
PER SHARE GAIN APPREC 1.66
PER SHARE DIVIDEND 0.50
PER SHARE DISTRIBUTIONS 0.01
RETURNS OF CAPITAL 0.00
PER SHARE NAV END 14.49
EXPENSE RATIO 1.67
AVG DEBT OUTSTANDING 0
AVG DEBT PER SHARE 0

ARTICLE 6
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MFS RESEARCH FUND CLASS A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
SERIES:
NUMBER:021
NAME: MFS RESEARCH FUND CLASS A


PERIOD TYPE YEAR
FISCAL YEAR END SEP 30 1995
PERIOD END SEP 30 1995
INVESTMENTS AT COST 588,292,393
INVESTMENTS AT VALUE 714,021,857
RECEIVABLES 11,132,654
ASSETS OTHER 5,160
OTHER ITEMS ASSETS 15,718
TOTAL ASSETS 725,175,389
PAYABLE FOR SECURITIES 12,730,698
SENIOR LONG TERM DEBT 0
OTHER ITEMS LIABILITIES 806,757
TOTAL LIABILITIES 13,537,455
SENIOR EQUITY 0
PAID IN CAPITAL COMMON 537,626,146
SHARES COMMON STOCK 32,534,587
SHARES COMMON PRIOR 25,276,729
ACCUMULATED NII CURRENT 1,418,529
OVERDISTRIBUTION NII 0
ACCUMULATED NET GAINS 46,863,005
OVERDISTRIBUTION GAINS 0
ACCUM APPREC OR DEPREC 125,730,254
NET ASSETS 711,637,934
DIVIDEND INCOME 5,521,009
INTEREST INCOME 1,763,021
OTHER INCOME (108,803)
EXPENSES NET 5,169,897
NET INVESTMENT INCOME 2,005,330
REALIZED GAINS CURRENT 47,454,687
APPREC INCREASE CURRENT 68,894,341
NET CHANGE FROM OPS 118,354,358
EQUALIZATION 0
DISTRIBUTIONS OF INCOME 481,316
DISTRIBUTIONS OF GAINS 820,736
DISTRIBUTIONS OTHER 0
NUMBER OF SHARES SOLD 12,798,218
NUMBER OF SHARES REDEEMED 5,659,542
SHARES REINVESTED 119,182
NET CHANGE IN ASSETS 362,975,633
ACCUMULATED NII PRIOR 0
ACCUMULATED GAINS PRIOR 345,440
OVERDISTRIB NII PRIOR 72,628
OVERDIST NET GAINS PRIOR 0
GROSS ADVISORY FEES 1,910,078
INTEREST EXPENSE 0
GROSS EXPENSE 5,578,785
AVERAGE NET ASSETS 469,632,994
PER SHARE NAV BEGIN 12.59
PER SHARE NII 0.08
PER SHARE GAIN APPREC 2.99
PER SHARE DIVIDEND 0.02
PER SHARE DISTRIBUTIONS 0.03
RETURNS OF CAPITAL 0.00
PER SHARE NAV END 15.61
EXPENSE RATIO 0.95
AVG DEBT OUTSTANDING 0
AVG DEBT PER SHARE 0

ARTICLE 6
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MFS RESEARCH FUND CLASS B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
SERIES:
NUMBER:022
NAME: MFS RESEARCH FUND CLASS B


PERIOD TYPE YEAR
FISCAL YEAR END SEP 30 1995
PERIOD END SEP 30 1995
INVESTMENTS AT COST 588,292,393
INVESTMENTS AT VALUE 714,021,857
RECEIVABLES 11,132,654
ASSETS OTHER 5,160
OTHER ITEMS ASSETS 15,718
TOTAL ASSETS 725,175,389
PAYABLE FOR SECURITIES 12,730,698
SENIOR LONG TERM DEBT 0
OTHER ITEMS LIABILITIES 806,757
TOTAL LIABILITIES 13,537,455
SENIOR EQUITY 0
PAID IN CAPITAL COMMON 537,626,146
SHARES COMMON STOCK 11,565,395
SHARES COMMON PRIOR 2,053,733
ACCUMULATED NII CURRENT 1,418,529
OVERDISTRIBUTION NII 0
ACCUMULATED NET GAINS 46,863,005
OVERDISTRIBUTION GAINS 0
ACCUM APPREC OR DEPREC 125,730,254
NET ASSETS 711,637,934
DIVIDEND INCOME 5,521,009
INTEREST INCOME 1,763,021
OTHER INCOME (108,803)
EXPENSES NET 5,169,897
NET INVESTMENT INCOME 2,005,330
REALIZED GAINS CURRENT 47,454,687
APPREC INCREASE CURRENT 68,894,341
NET CHANGE FROM OPS 118,354,358
EQUALIZATION 0
DISTRIBUTIONS OF INCOME 14,893
DISTRIBUTIONS OF GAINS 118,230
DISTRIBUTIONS OTHER 0
NUMBER OF SHARES SOLD 11,678,569
NUMBER OF SHARES REDEEMED 2,178,275
SHARES REINVESTED 11,368
NET CHANGE IN ASSETS 362,975,633
ACCUMULATED NII PRIOR 0
ACCUMULATED GAINS PRIOR 345,440
OVERDISTRIB NII PRIOR 72,628
OVERDIST NET GAINS PRIOR 0
GROSS ADVISORY FEES 1,910,078
INTEREST EXPENSE 0
GROSS EXPENSE 5,578,785
AVERAGE NET ASSETS 469,632,994
PER SHARE NAV BEGIN 12.50
PER SHARE NII (0.03)
PER SHARE GAIN APPREC 2.96
PER SHARE DIVIDEND 0.00
PER SHARE DISTRIBUTIONS 0.03
RETURNS OF CAPITAL 0.00
PER SHARE NAV END 15.40
EXPENSE RATIO 1.78
AVG DEBT OUTSTANDING 0
AVG DEBT PER SHARE 0

ARTICLE 6
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MFS RESEARCH FUND CLASS C AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
SERIES:
NUMBER:023
NAME: MFS RESEARCH FUND CLASS C


PERIOD TYPE YEAR
FISCAL YEAR END SEP 30 1995
PERIOD END SEP 30 1995
INVESTMENTS AT COST 588,292,393
INVESTMENTS AT VALUE 714,021,857
RECEIVABLES 11,132,654
ASSETS OTHER 5,160
OTHER ITEMS ASSETS 15,718
TOTAL ASSETS 725,175,389
PAYABLE FOR SECURITIES 12,730,698
SENIOR LONG TERM DEBT 0
OTHER ITEMS LIABILITIES 806,757
TOTAL LIABILITIES 13,537,455
SENIOR EQUITY 0
PAID IN CAPITAL COMMON 537,626,146
SHARES COMMON STOCK 1,669,270
SHARES COMMON PRIOR 385,474
ACCUMULATED NII CURRENT 1,418,529
OVERDISTRIBUTION NII 0
ACCUMULATED NET GAINS 46,863,005
OVERDISTRIBUTION GAINS 0
ACCUM APPREC OR DEPREC 125,730,254
NET ASSETS 711,637,934
DIVIDEND INCOME 5,521,009
INTEREST INCOME 1,763,021
OTHER INCOME (108,803)
EXPENSES NET 5,169,897
NET INVESTMENT INCOME 2,005,330
REALIZED GAINS CURRENT 47,454,687
APPREC INCREASE CURRENT 68,894,341
NET CHANGE FROM OPS 118,354,358
EQUALIZATION 0
DISTRIBUTIONS OF INCOME 0
DISTRIBUTIONS OF GAINS 16,120
DISTRIBUTIONS OTHER 0
NUMBER OF SHARES SOLD 1,642,158
NUMBER OF SHARES REDEEMED 359,369
SHARES REINVESTED 1,007
NET CHANGE IN ASSETS 362,975,633
ACCUMULATED NII PRIOR 0
ACCUMULATED GAINS PRIOR 345,440
OVERDISTRIB NII PRIOR 72,628
OVERDIST NET GAINS PRIOR 0
GROSS ADVISORY FEES 1,910,078
INTEREST EXPENSE 0
GROSS EXPENSE 5,578,785
AVERAGE NET ASSETS 469,632,994
PER SHARE NAV BEGIN 12.51
PER SHARE NII (0.02)
PER SHARE GAIN APPREC 2.96
PER SHARE DIVIDEND 0.00
PER SHARE DISTRIBUTIONS 0.03
RETURNS OF CAPITAL 0.00
PER SHARE NAV END 15.42
EXPENSE RATIO 1.71
AVG DEBT OUTSTANDING 0
AVG DEBT PER SHARE 0