FORM N-CSR, CERTIFICATIONS AND DISCLOSURE CONTROLS AND PROCEDURES

1. FORM N-CSR, CERTIFICATIONS AND DISCLOSURE CONTROLS AND PROCEDURES James F. DesMarais, Esq.MFS Investment ManagementBrian S. Vargo, Esq.Dechert LLP January 26, 2004

2. SARBANES-OXLEY ACT OF 2002 • A primary goal - enhance responsibility for financial reports • Two separate certifications • SOX § 302 • SOX § 906 Form N-CSR, Certifications and Disclosure Controls and Procedures

3. SEC RULES AND FORMSINVESTMENT COMPANY ACT OF 1940 • ICA Rule 30e-1 • Semi-annual reports to stockholders • Annual audited financial statements • ICA Rules 30b2-1 and 30d-1 – Form N-CSR • ICA Rule 30a-2 – Certifications • ICA Rule 30a-3 – Controls and Procedures Form N-CSR, Certifications and Disclosure Controls and Procedures

4. FORM N-CSR • ICA and Exchange Act report • Items include • Reports to stockholders • Code of ethics • Audit committee financial expert • Principal accountant fees and services • Controls and procedures • Exhibits - including certifications • Note Exchange Act Rule 12b-20 – further material information Form N-CSR, Certifications and Disclosure Controls and Procedures

5. FORM N-CSR CERTIFICATIONS • Principal executive officer and principal financial officer • Two separate forms of certifications • Form N-CSR Item 10(a)(2) – ICA Rule 30a-2(a) • Form N-CSR Item 10(b) – ICA Rule 30a2(b) Form N-CSR, Certifications and Disclosure Controls and Procedures

6. FORM N-CSR CERTIFICATIONS • Item 10(a)(2) • Reviewed the report • Based on his or her knowledge, no material misstatement or omission • Based on his or her knowledge, financial statements and financial information fairlypresent in all material respects financial condition, results of operations, changes in net assets, and cash flows (if required) • Disclosure controls and procedures • Internal control over financial reporting Form N-CSR, Certifications and Disclosure Controls and Procedures

7. FORM N-CSR CERTIFICATIONS • Item 10(b) • Report fully complies with Exchange Act requirements • Information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the issuer Form N-CSR, Certifications and Disclosure Controls and Procedures

8. FORM N-CSR CERTIFICATIONS • Item 10(a)(2) - Controls and procedures • Disclosure controls and procedures (DCP) • Internal control over financial reporting (ICFP) Form N-CSR, Certifications and Disclosure Controls and Procedures

9. FORM N-CSR CERTIFICATIONS • Item 10(a)(2) - DCP • Responsibility for establishing and maintaining • Designed to ensure knowledge of material information • Evaluation and report • Form N-CSR, Item 9 - conclusions regarding effectiveness of DCP Form N-CSR, Certifications and Disclosure Controls and Procedures

10. FORM N-CSR CERTIFICATIONS • Item 10(a)(2) - ICFR • Responsibility for establishing and maintaining • Designed to provide reasonable assurance regarding reliability of financial reporting and the preparation of financial statements in accordance with GAAP • Disclosure of material changes and deficiencies Form N-CSR, Certifications and Disclosure Controls and Procedures

11. CHANGES TO SHAREHOLDER REPORTS • Tighten MDFP • Use of standardized template • Base discussion on attribution analysis • Eliminate discussion of comparative performance to benchmarks not included in attribution analysis • Elimination of forward-looking statements • Note significant positions sold out of fund after the reporting period • Discuss effect of cash position on relative performance • Use of separate document that is not part of shareholder report • President letter • Forward looking statements • Expanded discussion on fund performance Form N-CSR, Certifications and Disclosure Controls and Procedures

12. CONDUCT OF PEO/PFOCERTIFICATION MEETING • Frequency – monthly for many fund groups • Attendees – major contributors to N-CSR • Purpose – to fulfill requirement that PEO/PFO have reviewed the shareholder report • Topics • Approve minutes • Discussion of material changes to processes or controls • Discuss significant issues arising from other operating committees • Risk Committee • Valuation Committee • Trade Processing Committee • Discuss whistleblower reports • Discuss reports under Attorney Conduct Rule • Regulatory update • Update on industry compliance activities/efforts • Review current N-CSR filings/process • Confirm receipt of all sub-certifications Form N-CSR, Certifications and Disclosure Controls and Procedures

13. DISCLOSURE CONTROLS AND PROCEDURES • ICA Rule 30a-3 • Funds must maintain and regularly evaluate DCP • DCP - controls and other procedures designed to ensure that • information required to be disclosed on Form N-CSR (includes shareholder report!) is recorded, processed, summarized and reported on a timely basis • information is timely communicated to management to enable timely decisions regarding disclosure Form N-CSR, Certifications and Disclosure Controls and Procedures

14. DISCLOSURE CONTROLS AND PROCEDURES • What’s the point of DCP? • SEC rules require them • Process provides the basis for certifications • Accuracy of information • Compliance with disclosure requirements Form N-CSR, Certifications and Disclosure Controls and Procedures

15. DEVELOPING & IMPLEMENTING DCP • Getting started • No prescribed form • Tailor to particular business and management practices • Start with current practices Form N-CSR, Certifications and Disclosure Controls and Procedures

16. DEVELOPING & IMPLEMENTING DCP • Initial assessment • Understand and document the process by which information is collected and reported • Evaluate current practice • Timely communication • Accuracy • Records • Personnel Form N-CSR, Certifications and Disclosure Controls and Procedures

17. DEVELOPING & IMPLEMENTING DCP • Identify key personnel/functions • Determine how to effectively gather information • Questionnaires • Interviews • Disclosure review and meetings • Sub-certifications • Determine the level of diligence to confirm information • Establish schedules for each step in the process Form N-CSR, Certifications and Disclosure Controls and Procedures

18. DEVELOPING & IMPLEMENTING DCP • Introduction • Explain rationale • Emphasize importance Form N-CSR, Certifications and Disclosure Controls and Procedures

19. DEVELOPING & IMPLEMENTING DCP • Establish a disclosure controls committee (DCC) • Role • Oversee the process • Ensure efficiency and effectiveness • Resolve disputes • Consider disclosure issues • Members - senior management of each major department/function that contributes to disclosure Form N-CSR, Certifications and Disclosure Controls and Procedures

20. DEVELOPING & IMPLEMENTING DCP • Describe the process • Key personnel • Methods of gathering information and responsibility • Methods of confirming information Form N-CSR, Certifications and Disclosure Controls and Procedures

21. DEVELOPING & IMPLEMENTING DCP • Active role for senior management • PEO and PFO are “on the hook” • At a minimum • PEO and PFO must review each report • DCC should meet or communicate with PEO and PFO to review the process implemented, disclosure issues, and the accuracy and completeness of disclosures Form N-CSR, Certifications and Disclosure Controls and Procedures

22. DEVELOPING & IMPLEMENTING DCP • Sub-certifications • Support PEO and PFO certifications • Internal - personnel who provide or verify information • External - service providers • Certification of information • Verification of integrity of process • Investment activities, pricing, marketing and information services, legal and compliance, administration, accounting, custody, transfer agency Form N-CSR, Certifications and Disclosure Controls and Procedures

23. DEVELOPING & IMPLEMENTING DCP • Coverage • PEO and PFO certifications cover the entire report • MDFP • Marketing information • “President’s letter” • Financial statements and information • DCP must be comprehensive and coordinate efforts of all groups that contribute to disclosure • Use checklists and flow charts • Required information • Responsible persons • Sub-certifications Form N-CSR, Certifications and Disclosure Controls and Procedures

24. DEVELOPING & IMPLEMENTING DCP • Records • Create a “paper trail” - document each step in the disclosure process • Regular meetings and minutes of DCC • Compiled reports and information • Completed checklists • Sub-certifications Form N-CSR, Certifications and Disclosure Controls and Procedures

25. DEVELOPING & IMPLEMENTING DCP • Keep the Board involved • Approval of DCP • Regular reports - evaluations, deficiencies, changes Form N-CSR, Certifications and Disclosure Controls and Procedures