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[logo] MFS(SM) Annual Report
INVESTMENT MANAGEMENT for Year Ended
December 31, 1997
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MASSACHUSETTS INVESTORS TRUST
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[graphic omitted]
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THE ROTH IRA IS NOW AVAILABLE (see page 36)
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TABLE OF CONTENTS
Letter to Shareholders .................................................... 1
A Discussion with the Portfolio Managers .................................. 4
Portfolio Managers' Profiles .............................................. 8
Fund Facts ................................................................ 9
Performance Summary ....................................................... 9
Portfolio Concentration ................................................... 12
Tax Form Summary .......................................................... 12
Portfolio of Investments .................................................. 13
Financial Statements ...................................................... 20
Notes to Financial Statements ............................................. 28
Independent Auditors' Report .............................................. 35
Roth IRA .................................................................. 36
Trustees and Officers ..................................................... 37
HIGHLIGHTS
o FOR THE 12 MONTHS ENDED DECEMBER 31, 1997, CLASS A SHARES OF THE TRUST
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 31.69%, CLASS B SHARES 30.75%,
CLASS C SHARES 30.76%, AND CLASS I SHARES 33.30%. (SEE PERFORMANCE SUMMARY
FOR MORE INFORMATION.)
o THE TRUST FOLLOWS A DISCIPLINED APPROACH TOWARD WHAT THE MANAGERS CONSIDER TO
BE BLUE-CHIP INVESTING, FAVORING LARGE- CAPITALIZATION, HIGH-QUALITY
COMPANIES WITH ABOVE-AVERAGE GROWTH RATES.
o WHILE THE TRUST HAD AN OVERWEIGHTING IN STOCKS OF FINANCIAL SERVICES
COMPANIES, SEVERAL OF WHICH PERFORMED VERY WELL AND HELPED PERFORMANCE, ITS
HOLDINGS IN SOME INDUSTRIAL GOODS AND SERVICES STOCKS HINDERED PERFORMANCE.
o THE TRUST'S PHARMACEUTICAL HOLDINGS ALSO HELPED PERFORMANCE, AS THE FLOW OF
PRODUCTS COMING OUT OF THIS INDUSTRY HAS ACCELERATED, IN PART BECAUSE OF A
RENEWED FOCUS ON PRODUCT DEVELOPMENT.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE>
[Photo of A. Keith Brodkin] MFS Mourns Chairman's Passing
A. Keith Brodkin It is with deep regret that we inform you of the
death on February 2, 1998, of A. Keith Brodkin,
Chairman and Chief Executive Officer of MFS
Investment Management(SM). Mr. Brodkin joined MFS
in 1970 and made enormous contributions to the
organization, including helping to build the firm's
investment staff, which will continue to manage all
of the MFS investment portfolios. His leadership,
friendship, and wise counsel will be sorely missed.
more on Mr. Brodkin on page 3
LETTER TO SHAREHOLDERS
Dear Shareholders:
Thanks to a sustained period of relative stability and moderate growth, the U.S.
economy has produced thousands of new jobs, inflation has remained under
control, and the investment climate has -- for the most part -- been favorable.
The increased use of technology and other productivity enhancements, as well as
corporate restructuring and global competition, is improving companies' balance
sheets and helping control inflation. The rapid pace of growth seen in the first
quarter slowed to an annual rate of 3.3% in the second quarter and 3.5% in the
third. We believe this economic momentum will carry well into the first quarter
of 1998 as a result of lower interest rates and continuing growth in the money
supply. While U.S. economic growth continues to be impressive, events in the
Pacific Rim will somewhat offset that and, therefore, markets are likely to
continue to focus on Federal Reserve Board activity.
The extreme volatility seen in the U.S. equity market in the fall was, we
believe, the consequence of overvaluations that had been evident for some
months. As a result, the stock market has been vulnerable to some type of
correction and has been impacted in the near term by chaotic market conditions
in the Pacific Rim. In the face of all this, however, the equity market
continues to exhibit surprising strength, much of it the result of continued
gains in corporate earnings, a trend that could be an important indicator of the
market's future direction. Certainly the situation throughout Asia bears close
scrutiny because it appears to be clearly deflationary and raises the prospect
of trade wars developing throughout the area. We are not convinced that U.S.
markets have escaped totally from October's volatility. Thus, not only is the
near-term outlook for profits being adjusted for the Asian crisis, we also
believe equity valuations have risen to a point where a cautious investment
approach seems warranted, with a need for particular attention to be paid to the
effect of Pacific Rim volatility on the earnings of U.S. companies.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
President, MFS Investment Management
January 12, 1998
JEFFREY L. SHAMES, A GRADUATE OF WESLEYAN UNIVERSITY AND THE
MASSACHUSETTS INSTITUTE OF TECHNOLOGY SLOAN SCHOOL OF MANAGEMENT, JOINED
MFS IN 1983. AFTER FOUR YEARS AS AN INDUSTRY ANALYST AND PORTFOLIO
MANAGER, HE WAS NAMED CHIEF EQUITY OFFICER IN 1987 AND PRESIDENT AND A
MEMBER OF THE BOARD IN 1993.
<PAGE>
IN MEMORIAM
A. KEITH BRODKIN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MFS INVESTMENT MANAGEMENT
On February 2, 1998, Keith Brodkin, a friend and leader to everyone at MFS, died
unexpectedly at age 62. His thoughtful letters to shareholders on the markets
and economy have been an integral part of MFS shareholder reports like this one
for many years.
Keith joined MFS in 1970 as the firm's first fixed-income manager, managing the
bond portion of MFS(R) Total Return Fund. He went on to manage our first pure
bond fund, MFS(R) Bond Fund, when it was introduced in 1974, and he was
considered a pioneer in the art of active bond management.
Keith was named President and Chief Investment Officer of MFS in 1987 and four
years later became Chairman and Chief Executive Officer. During his stewardship,
MFS has achieved significant growth in total assets under management, rising
from some $25 billion in 1991 to the over $70 billion today entrusted to us by
three million individual and institutional investors worldwide. Under Keith's
leadership, MFS has carefully but steadily built its domestic and international
investment capabilities through the introduction of a range of new products and
a still-growing staff that now numbers over 100 equity and fixed-income
professionals.
Throughout his career, Keith was very active in a wide range of charitable
endeavors. He is survived by his wife and three children.
His leadership, friendship, and wise counsel will be sorely missed.
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A DISCUSSION WITH THE PORTFOLIO MANAGERS
For the 12 months ended December 31, 1997, Class A shares of the Trust provided
a total return of 31.69%, Class B shares 30.75%, Class C shares 30.76%, and
Class I shares 33.30%. These returns, which include the reinvestment of
distributions but exclude the effects of any sales charges, compare to a 33.36%
return for the Standard & Poor's 500 Composite Index (the S&P 500) for the same
period. The S&P 500 is a popular, unmanaged index of common stock total return
performance.
Q. WHAT DO YOU SEE AS SOME OF THE MAJOR REASONS FOR THE TRUST'S PERFORMANCE
OVER THE PAST YEAR?
A. On the positive side, we had a major overweighting in financial services,
which was one of the best-performing sectors of the market. In the S&P 500
this sector returned 50%, while our financial services stocks returned 57%.
Some of our major holdings performed very well. Norwest Bank, a long-time
holding for us, was up 82% for the year. US Bancorp, another long-time
holding, was up 67.5%. Progressive Corp. was up 80%, Allstate was up 60%,
while State Street Bank was up 82%. So, a combination of an overweighting
in financial services as well as good stock selection helped. Our
technology weighting, meanwhile, was at just 5.5%, versus a 12% weighting
in the S&P 500. However, our technology stocks actually outperformed both
the market and the technology index. Our technology stocks were up 42% for
the year, while the S&P technology sector was up only 27%. On the other
hand, we did see underperformance in some of our industrial goods and
services stocks, a sector in which we were slightly overweighted. A number
of these companies, such as Cooper Industries, United Technologies, and
Lockheed Martin, just didn't pull their weight. United Technologies, for
example, was up just 11% for the year. We still like these companies and
continue to hold large positions in them, but they were sub-par performers.
We also reduced our position in General Electric, believing that it was
expensive, but it turned out to be the strongest performer in the S&P's
industrial goods and services sector. The Trust only modestly
underperformed the S&P 500, and stocks like these are the primary reason.
Q. HOW WOULD YOU DESCRIBE 1997'S BUSINESS AND INVESTMENT ENVIRONMENT?
A. There are two things that determine the investment environment. One is
corporate profits; the other is the inflation and interest-rate outlook. In
1997, we continued to have a very low-inflation environment, which was very
positive for stock market valuations. The lower the inflation rate, the
more valuable future earnings are, and when you're buying a stock, you're
buying future earnings. On top of that, we saw the third consecutive year
of good, solid earnings growth. That surprised us this year. Earnings
growth was in the mid-teens in terms of percentage, while we expected
something in the 9% to 10% range.
Q. COULD YOU TALK ABOUT THE TRUST'S INVESTMENT PHILOSOPHY AND STRATEGY?
A. Our basic investment philosophy is very straightforward and has been
consistent for a long time. We have a disciplined approach toward what we
consider to be blue-chip investing. We stick with large-capitalization,
high-quality companies. We're interested primarily in companies that have
above-average growth rates, and we're careful about the price we pay for
those individual stocks. We keep the dividend yield of the portfolio at 90%
of the S&P 500 while keeping its volatility under that of the S&P 500, and
we stay fully invested. We also follow a stock-picking approach, which
means we don't look at the world on a sector or industry basis. Our stocks
are evaluated on their own merits, and sector weightings are driven by the
number of ideas we get in particular sectors.
Q. YOU TALKED ABOUT HOW WELL FINANCIAL SERVICES HAS DONE. WHY DO YOU LIKE THIS
SECTOR?
A. Here, we've been able to find companies that we think have good, strong
growth rates and yet have sold at substantial discounts to the S&P 500. For
example, Norwest Bank has a consistent 14% earnings growth rate. We started
buying that stock when its price-to-earnings ratio was about nine times
earnings; now it's about 18 times earnings. We also feel confident about
the long-term growth rates of companies like US Bancorp, State Street Bank,
and Northern Trust Co. being above that of the S&P 500. Yet the market has
valued them at significant discounts to other growth companies. One of the
things that's been driving this growth has been a significant amount of
consolidation by which, rather than taking balance-sheet or interest-rate
risks, these companies have been able to increase earnings by cutting their
back-office costs and by consolidating. That approach has been very
successful, and we think there are many years of consolidation left. We
hope to be able to take advantage of it as successfully in the future as we
have in the past.
Q. THE HEALTH CARE WEIGHTING HAS ALSO INCREASED. WHY DO YOU LIKE THIS SECTOR,
AND WHAT KINDS OF COMPANIES DO YOU FIND ATTRACTIVE HERE?
A. Health care is a good, steady growth part of the economy, particularly on
the pharmaceutical side, as opposed to the health-maintenance or managed-
care side. The flow of products coming out of the pharmaceutical business,
in particular, has accelerated, in part because of a renewed focus by drug
companies on product development. Also, there seems to be a greater
understanding by the Food and Drug Administration that the approval process
for these drugs has to be a little faster in order for them to benefit the
public. The growth rates of these companies have been quite strong, and
they've addressed some of the cost issues that they had avoided in the
1980s. Our largest holding in the Trust is Bristol-Myers Squibb. We also
have holdings in Pfizer, Johnson & Johnson, and Novartis, a Swiss drug
company.
Q. CONSUMER STAPLES IS ANOTHER IMPORTANT WEIGHTING FOR THE TRUST. WHAT KINDS
OF COMPANIES DO YOU FIND ATTRACTIVE HERE?
A. The weighting here is about even with that of the S&P 500, so it's not an
area in which we've taken a substantial position. But it includes the
quintessential quality-growth companies with global franchises, such as
Colgate-Palmolive, Gillette, Philip Morris, and Procter & Gamble.
Q. HAVE YOU SIGNIFICANTLY INCREASED OR DECREASED POSITIONS IN ANY OTHER
SECTORS THIS YEAR?
A. Relative to 1996, we brought our industrial goods and services positions
down as we eliminated some of the aerospace and defense stocks that had
been very successful positions for us. This industry consolidated
substantially in 1996, but going into 1997 the opportunities there had
diminished significantly, and we reduced those positions.
Q. DID THE TURMOIL IN EMERGING MARKETS HAVE ANY EFFECT ON THE TRUST'S HOLDINGS
OR ON HOW YOU MANAGE IT?
A. There's been no real direct effect. We've had no holdings in companies in
those parts of the world. There is, obviously, some effect on domestic
companies. For example, we had a small holding in Oracle, a stock that
declined in December when it announced that Japan was going to be a
difficult environment for it.
Q. DO YOU SEE THE TURMOIL HAVING ANY EFFECT GOING INTO 1998?
A. If it is a problem, it will be because global demand slows down and because
some of these larger companies have issues there. But one thing we've done
is to analyze what companies have exposure and where. For instance, we've
sold some Colgate-Palmolive stock based on its
Brazilian exposure.
Q. COULD YOU TALK ABOUT SOME SECTORS OR STOCKS THAT PERFORMED BETTER THAN
EXPECTED?
A. We think the whole market has been pretty surprising. We certainly would
not expect the next few years to be as rewarding as the last few years in
the stock market.
Q. AND WHAT ABOUT STOCKS OR SECTORS THAT DID NOT PERFORM AS WELL AS YOU WOULD
HAVE LIKED?
A. Probably the most disappointing stock in the portfolio was Waste
Management, which was down 14% for the year. This was a company that we
thought had an awful lot of potential, with new management coming in. But
the new management just up and left and let the world know that the
potential wasn't there. That was disappointing.
Q. WHAT KIND OF MARKET OR ECONOMIC ENVIRONMENT DO YOU ANTICIPATE GOING
FORWARD, AND HOW MIGHT THIS AFFECT SOME OF YOUR INVESTMENT DECISIONS FOR
THE TRUST?
A. For 1998, we see a still lower inflation environment. The turmoil in
emerging markets will probably have a positive effect on both interest
rates and inflation here in the United States. It already has, in fact.
This year, the risk will not be valuations, which appeared to be the case
six months ago, but earnings, and we're trying to be very careful that the
companies in the portfolio are capable of making their earnings estimates.
Finally, the real wild-card question is: What will be the ultimate effect
of the Asian tiger meltdown on U.S. economic activity in 1998? We see
Europe recovering; it seems to be stronger than it had been for the past 12
months. Several companies we own are reporting that while their Asian
markets are weaker, the European markets are more than making up for that.
So the fact that we typically own companies that have a larger European
than Asian exposure has
been a positive.
Respectfully,
/s/ Mitchell D. Dynan /s/ Keven R. Parke
Mitchell D. Dynan Kevin R. Parke
Portfolio Manager Portfolio Manager
/s/ John D. Laupheimer, Jr.
John D. Laupheimer, Jr.
Portfolio Manager
PORTFOLIO MANAGERS' PROFILES
MITCHELL D. DYNAN JOINED THE MFS RESEARCH DEPARTMENT IN 1986 AND WAS NAMED
ASSISTANT VICE PRESIDENT -- INVESTMENTS IN 1987 AND VICE PRESIDENT --
INVESTMENTS IN 1988. A GRADUATE OF TUFTS UNIVERSITY, HE HAS MANAGED
MASSACHUSETTS INVESTORS TRUST SINCE 1995.
JOHN D. LAUPHEIMER, JR., JOINED MFS IN 1981 AS AN INDUSTRY SPECIALIST AND WAS
NAMED INVESTMENT OFFICER IN 1983, ASSISTANT VICE PRESIDENT -- INVESTMENTS IN
1984, VICE PRESIDENT -- INVESTMENTS IN 1986, AND SENIOR VICE PRESIDENT IN 1995.
A GRADUATE OF BOSTON UNIVERSITY AND THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY
SLOAN SCHOOL OF MANAGEMENT, HE HAS MANAGED THE TRUST SINCE 1992.
KEVIN R. PARKE JOINED THE MFS RESEARCH DEPARTMENT IN 1985 AS AN INDUSTRY
SPECIALIST AND WAS NAMED ASSISTANT VICE PRESIDENT -- INVESTMENTS IN 1987, VICE
PRESIDENT -- INVESTMENTS IN 1988, SENIOR VICE PRESIDENT IN 1993, DIRECTOR OF
EQUITY RESEARCH IN 1995, AND EXECUTIVE VICE PRESIDENT IN 1997. A GRADUATE OF
LEHIGH UNIVERSITY AND THE HARVARD UNIVERSITY GRADUATE SCHOOL OF BUSINESS
ADMINISTRATION, HE HAS MANAGED THE TRUST SINCE 1992.
<PAGE>
FUND FACTS
OBJECTIVE: THE INVESTMENT OBJECTIVE OF THE TRUST IS TO PROVIDE
REASONABLE CURRENT INCOME AND LONG-TERM GROWTH OF
CAPITAL AND INCOME.
COMMENCEMENT OF INVESTMENT OPERATIONS: JULY 15, 1924
CLASS INCEPTION: CLASS A JULY 15, 1924
CLASS B SEPTEMBER 7, 1993
CLASS C JULY 2, 1996
CLASS I JANUARY 2, 1997
SIZE: $6.1 BILLION NET ASSETS AS OF DECEMBER 31, 1997
PERFORMANCE SUMMARY
The information below and on the following page illustrates the historical
performance of Massachusetts Investors Trust -- Class A shares in comparison to
various market indicators. Class A share performance results reflect the
deduction of the 5.75% maximum sales charge; benchmark comparisons are unmanaged
and do not reflect any fees or expenses. The performance of other share classes
will be greater than or less than the line shown, based on differences in
charges and fees paid by shareholders investing in different classes. It is not
possible to invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-year period ended December 31, 1997)
Massachusetts Consumer
Investors S&P 500 Price
Trust - Composite Index
Class A Index - U.S.
12/92 $ 9,426 $10,000 $10,000
12/93 10,371 11,008 10,278
12/94 10,265 11,153 10,553
12/95 14,304 15,345 10,813
12/96 18,009 18,868 11,180
12/97 23,716 25,163 11,420
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended December 31, 1997)
Massachusetts Consumer
Investors S&P 500 Price
Trust - Composite Index
Class A Index - U.S.
12/87 $ 9,423 $10,000 $10,000
12/89 14,158 15,356 10,924
12/91 18,057 19,412 11,946
12/93 21,335 22,997 12,631
12/95 29,426 32,058 13,289
12/97 48,788 52,567 14,034
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1997
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Massachusetts Investors Trust (Class A)
including 5.75% sales charge (SEC results) +24.14% +29.63% +18.85% +17.18%
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Massachusetts Investors Trust (Class A)
at net asset value +31.69% +32.20% +20.27% +17.87%
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Massachusetts Investors Trust (Class B)
with CDSC (SEC results) +26.75% +30.59% +19.24% +17.46%
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Massachusetts Investors Trust (Class B)
at net asset value +30.75% +31.17% +19.43% +17.46%
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Massachusetts Investors Trust (Class C)
with CDSC (SEC results) +29.76% +31.48% +19.87% +17.68%
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Massachusetts Investors Trust (Class C)
at net asset value +30.76% +31.48% +19.87% +17.68%
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Massachusetts Investors Trust (Class I)
at net asset value +33.30% +32.33% +20.34% +17.91%
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Average growth and income fund* +27.14% +26.49% +17.53% +15.71%
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Standard & Poor's 500 Composite Index# +33.36% +31.15% +20.27% +18.05%
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Consumer Price Index#+ + 2.15% + 2.67% + 2.69% + 3.45%
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* Source: Lipper Analytical Services, Inc.
# Source: CDA/Wiesenberger.
+ The Consumer Price Index is published by the U.S. Bureau of Labor Statistics and measures
the cost of living (inflation).
</TABLE>
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share ("A") SEC results include the maximum 5.75% sales charge. Class B
share ("B") SEC results reflect the applicable contingent deferred sales charge
(CDSC), which declines over six years from 4% to 0%. Class C shares ("C") have
no initial sales charge but, like B, have higher annual fees and expenses than
A. C SEC results reflect the 1% CDSC applicable to shares redeemed within 12
months. Class I shares ("I"), which became available on January 2, 1997, have no
sales charge or Rule 12b-1 fees and are only available to certain institutional
investors.
B and C results include the performance and the operating expenses (e.g., Rule
12b-1 fees) of A for periods prior to the inception of B and C. Because
operating expenses of B and C are higher than those of A, B and C performance
generally would have been lower than A performance. The A performance included
in the B and C SEC performance has been adjusted to reflect the CDSC generally
applicable to B and C rather than the initial sales charge generally applicable
to A.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been higher
than A performance. The A performance included in the I performance has been
adjusted to reflect the fact that I have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details.
<PAGE>
PORTFOLIO CONCENTRATION AS OF DECEMBER 31, 1997
TOP 10 HOLDINGS (BEGINNING WITH THE LARGEST POSITION IN THE PORTFOLIO)
BRISTOL-MYERS SQUIBB CO. AIR PRODUCTS & CHEMICALS, INC.
Pharmaceutical products company Diversified chemical company
NORWEST CORP. GILLETTE CO.
Commercial and retail Manufacturer of personal care and office
banking company products
US BANCORP DELAWARE HARTFORD FINANCIAL SERVICES GROUP, INC.
Bank holding company Multi-line insurance company
PHILIP MORRIS COS., INC. UNITED TECHNOLOGIES CORP.
Tobacco, food, and beverage Aerospace, defense, and building
conglomerate equipment company
BRITISH PETROLEUM PLC LOCKHEED MARTIN CORP.
British oil exploration and Aerospace/defense contractor
production company
LARGEST SECTORS
Utilities and Communications 8.0%
Industrial Goods and Services 10.1%
Consumer Staples 11.2%
Health Care 11.9%
Financial Services 26.0%
Other Sectors 32.8%
For a more complete breakdown, refer to the Portfolio of Investments.
TAX FORM SUMMARY
IN JANUARY 1998, SHAREHOLDERS WERE MAILED A TAX FORM SUMMARY REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR 1997.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS
THE TRUST HAS DESIGNATED $395,321,739 AS A LONG-TERM CAPITAL GAIN.
DIVIDENDS-RECEIVED DEDUCTION
FOR THE YEAR ENDED DECEMBER 31, 1997, THE AMOUNT OF DISTRIBUTIONS FROM INCOME
ELIGIBLE FOR THE 70% DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATIONS WAS 100.0%.
<PAGE>
PORTFOLIO OF INVESTMENTS - December 31, 1997
<TABLE>
<CAPTION>
Stocks - 96.7%
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ISSUER SHARES VALUE
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<S> <C> <C>
U.S. Stocks - 89.7%
Aerospace - 4.2%
Allied Signal, Inc. 1,322,900 $ 51,510,419
General Dynamics Corp. 205,000 17,719,688
Lockheed Martin Corp. 853,621 84,081,668
Raytheon Co. 240,000 12,120,000
United Technologies Corp. 1,256,000 91,452,500
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$ 256,884,275
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Agricultural Products - 0.5%
Case Corp. 552,500 $ 33,391,719
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Apparel and Textiles - 0.8%
Reebok International Ltd.* 194,360 $ 5,599,998
VF Corp. 974,000 44,743,125
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$ 50,343,123
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Automotive - 0.6%
Ford Motor Co. 240,000 $ 11,685,000
Goodrich (B.F.) Co. 550,400 22,807,200
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$ 34,492,200
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Banks and Credit Companies - 9.7%
Bank of New York, Inc. 150,800 $ 8,718,125
Chase Manhattan Corp. 128,100 14,026,950
Comerica, Inc. 662,200 59,763,550
Firstar Corp. 938,000 39,806,375
Fleet Financial Group, Inc. 33,300 2,495,419
National City Corp. 733,700 48,240,775
Northern Trust Corp. 449,000 31,317,750
Norwest Corp. 3,329,900 128,617,387
State Street Corp. 1,119,700 65,152,544
SunTrust Banks, Inc. 500,000 35,687,500
US Bancorp Delaware 1,109,200 124,161,075
Washington Mutual, Inc. 513,600 32,774,100
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$ 590,761,550
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Building - 0.7%
American Standard Cos., Inc.* 100,000 $ 3,831,250
Sherwin Williams Co. 1,322,100 36,688,275
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$ 40,519,525
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Business Machines - 1.3%
International Business Machines Corp. 627,200 $ 65,581,600
Sun Microsystems, Inc.* 314,800 12,552,650
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$ 78,134,250
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Business Services - 2.1%
Cendant Corp.* 902,844 $ 31,035,262
Computer Sciences Corp.* 603,500 50,392,250
DST Systems, Inc.* 412,900 17,625,669
First Data Corp. 1,101,200 32,210,100
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$ 131,263,281
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Cellular Telephones - 0.2%
AirTouch Communications, Inc.* 240,500 $ 9,995,781
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Chemicals - 3.2%
Air Products & Chemicals, Inc. 1,164,600 $ 95,788,350
duPont (E.I.) de Nemours & Co., Inc. 1,059,100 63,612,194
Praxair, Inc. 767,400 34,533,000
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$ 193,933,544
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Computer Software - Personal Computers - 1.4%
Compaq Computer Corp. 280,000 $ 15,802,500
Microsoft Corp.* 518,600 67,029,050
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$ 82,831,550
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Computer Software - Systems - 1.8%
BMC Software, Inc.* 237,300 $ 15,572,813
Computer Associates International, Inc. 1,420,650 75,116,869
Oracle Corp.* 729,400 16,274,737
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$ 106,964,419
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Consumer Goods and Services - 7.6%
Clorox Co. 133,490 $ 10,554,053
Colgate-Palmolive Co. 1,067,900 78,490,650
Gillette Co. 950,200 95,435,713
Philip Morris Cos., Inc. 2,438,200 110,480,937
Procter & Gamble Co. 547,000 43,657,438
Service Corp. International 1,345,200 49,688,325
Tyco International Ltd. 1,580,800 71,234,800
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$ 459,541,916
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Containers - 0.1%
Corning, Inc. 200,000 $ 7,425,000
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Defense Electronics - 0.1%
Loral Space & Communications Corp.* 239,100 $ 5,125,706
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Electrical Equipment - 3.4%
Cooper Industries, Inc. 1,265,800 $ 62,024,200
General Electric Co. 970,900 71,239,787
Honeywell, Inc. 1,091,300 74,754,050
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$ 208,018,037
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Electronics - 0.2%
Intel Corp. 171,600 $ 12,054,900
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Entertainment - 0.9%
Houston Industries, Inc., 7% 262,000 $ 14,950,375
Time Warner, Inc. 360,000 22,320,000
Viacom, Inc., "B"* 350,000 14,503,125
---------------
$ 51,773,500
- ---------------------------------------------------------------------------------------------------
Financial Institutions - 3.9%
American Express Co. 252,000 $ 22,491,000
Beneficial Corp. 719,000 59,766,875
CIT Group, Inc., "A"* 798,200 25,741,950
Federal Home Loan Mortgage Corp. 912,700 38,276,356
Household International, Inc. 491,900 62,747,994
Merrill Lynch & Co., Inc. 400,000 29,175,000
---------------
$ 238,199,175
- ---------------------------------------------------------------------------------------------------
Food and Beverage Products - 3.8%
Archer-Daniels-Midland Co. 693,000 $ 15,029,437
Coca-Cola Co. 210,900 14,051,213
CPC International, Inc. 332,800 35,859,200
General Mills, Inc. 212,900 15,248,962
Hershey Foods Corp. 173,400 10,739,963
Interstate Bakeries Corp. 344,800 12,886,900
McCormick & Co., Inc. 350,600 9,816,800
Nabisco Holdings Corp. 229,800 11,130,938
PepsiCo., Inc. 695,100 25,327,706
Ralston-Ralston Purina Co. 485,200 45,093,275
Tyson Foods, Inc. - Delaware 550,000 11,275,000
Wrigley, (WM) Junior, Co. 312,800 24,887,150
---------------
$ 231,346,544
- ---------------------------------------------------------------------------------------------------
Forest and Paper Products - 1.5%
Kimberly-Clark Corp. 1,433,200 $ 70,674,675
Weyerhaeuser Co. 386,600 18,967,562
---------------
$ 89,642,237
- ---------------------------------------------------------------------------------------------------
Insurance - 10.1%
AFLAC, Inc. 460,000 $ 23,517,500
Allstate Corp. 896,900 81,505,787
Chubb Corp. 907,000 68,591,875
CIGNA Corp. 477,300 82,602,731
Conseco, Inc. 215,500 9,791,781
Hartford Financial Services Group, Inc. 1,013,800 94,853,662
Lincoln National Corp. 301,600 23,562,500
MBIA, Inc. 288,600 19,282,088
Progressive Corp. 652,300 78,194,463
Torchmark Corp. 1,620,600 68,166,488
Transamerica Corp. 200,000 21,300,000
Travelers Group, Inc. 787,149 42,407,652
---------------
$ 613,776,527
- ---------------------------------------------------------------------------------------------------
Machinery - 0.8%
Deere & Co., Inc. 238,900 $ 13,930,856
Ingersoll Rand Co. 600,000 24,300,000
York International Corp. 300,000 11,868,750
---------------
$ 50,099,606
- ---------------------------------------------------------------------------------------------------
Medical and Health Products - 7.2%
American Home Products Corp. 79,700 $ 6,097,050
Bristol-Myers Squibb Co. 1,978,200 187,187,175
Eli Lilly & Co. 509,032 35,441,353
Johnson & Johnson 806,900 53,154,538
McKesson Corp. 222,700 24,093,356
Merck & Co., Inc. 184,620 19,615,875
Pfizer, Inc. 906,100 67,561,081
Pharmacia & Upjohn, Inc. 180,000 6,592,500
Warner-Lambert Co. 316,900 39,295,600
---------------
$ 439,038,528
- ---------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 3.0%
Cardinal Health, Inc. 154,100 $ 11,576,763
Columbia/HCA Healthcare Corp. 550,000 16,293,750
HEALTHSOUTH Corp.* 604,400 16,772,100
Medtronic, Inc. 230,900 12,078,956
St. Jude Medical, Inc.* 400,000 12,200,000
Tenet Healthcare Corp.* 1,555,400 51,522,625
United Healthcare Corp. 1,270,000 63,103,125
---------------
$ 183,547,319
- ---------------------------------------------------------------------------------------------------
Metals and Minerals - 0.2%
Phelps Dodge Corp. 240,000 $ 14,940,000
- ---------------------------------------------------------------------------------------------------
Oils - 3.6%
Chevron Corp. 437,600 $ 33,695,200
Exxon Corp. 1,059,100 64,803,681
Mobil Corp. 839,600 60,608,625
Texaco, Inc. 622,400 33,843,000
USX-Marathon Group 691,500 23,338,125
---------------
$ 216,288,631
- ---------------------------------------------------------------------------------------------------
Pollution Control - 1.1%
Browning Ferris Industries, Inc. 1,013,800 $ 37,510,600
Waste Management, Inc. 1,150,000 31,625,000
---------------
$ 69,135,600
- ---------------------------------------------------------------------------------------------------
Printing and Publishing - 1.8%
Gannett Co., Inc. 793,300 $ 49,035,856
Tribune Co. 925,300 57,599,925
---------------
$ 106,635,781
- ---------------------------------------------------------------------------------------------------
Railroads - 1.5%
Burlington Northern Santa Fe Railway Co. 774,000 $ 71,933,625
CSX Corp. 300,000 16,200,000
---------------
$ 88,133,625
- ---------------------------------------------------------------------------------------------------
Stores - 3.8%
CVS Corp. 433,300 $ 27,758,281
Home Depot, Inc. 733,000 43,155,375
Liz Claiborne, Inc. 407,600 17,042,775
Office Depot, Inc.* 609,500 14,589,906
Penney (J.C.), Inc. 1,163,600 70,179,625
Rite Aid Corp. 642,200 37,689,113
Wal-Mart Stores, Inc. 597,200 23,552,075
---------------
$ 233,967,150
- ---------------------------------------------------------------------------------------------------
Supermarkets - 1.5%
Kroger Co.* 673,800 $ 24,888,488
Safeway, Inc.* 1,015,300 64,217,725
---------------
$ 89,106,213
- ---------------------------------------------------------------------------------------------------
Telecommunications - 0.9%
AT&T Corp. 636,100 $ 38,961,125
Cisco Systems, Inc.* 286,800 15,989,100
---------------
$ 54,950,225
- ---------------------------------------------------------------------------------------------------
Utilities - Electric - 2.5%
Cinergy Corp. 740,300 $ 28,362,744
CMS Energy Corp. 196,100 8,640,656
DPL, Inc. 209,500 6,023,125
Duke Energy Corp. 290,544 16,088,874
Edison International 300,000 8,156,250
FPL Group, Inc. 441,500 26,131,281
New Century Energies, Inc. 207,000 9,923,062
Pacificorp 1,527,300 41,714,381
Pinnacle West Capital Corp. 192,500 8,157,188
---------------
$ 153,197,561
- ---------------------------------------------------------------------------------------------------
Utilities - Gas - 0.4%
Columbia Gas System, Inc. 128,300 $ 10,079,569
KN Energy, Inc. 145,400 7,851,600
Pacific Enterprises 200,000 7,525,000
---------------
$ 25,456,169
- ---------------------------------------------------------------------------------------------------
Utilities - Telephone - 3.3%
BellSouth Corp. 486,000 $ 27,367,875
GTE Corp. 450,000 23,512,500
MCI Communications Corp. 1,365,700 58,469,031
SBC Communications, Inc. 416,700 30,523,275
Sprint Corp. 1,052,100 61,679,363
---------------
$ 201,552,044
- ---------------------------------------------------------------------------------------------------
Total U.S. Stocks 5,452,467,211
- ---------------------------------------------------------------------------------------------------
Foreign Stocks - 7.0%
Canada - 0.7%
Canadian National Railway Co. (Railroads) 895,400 $ 42,307,650
- ---------------------------------------------------------------------------------------------------
France - 0.6%
Alcatel Alsthom, ADR (Telecommunications) 798,800 $ 20,219,625
Sanofi (Medical and Health Products) 154,000 17,150,931
---------------
$ 37,370,556
- ---------------------------------------------------------------------------------------------------
Germany - 0.3%
Henkel Kgaa (Chemicals) 318,000 $ 20,085,142
- ---------------------------------------------------------------------------------------------------
Netherlands - 1.0%
Akzo Nobel N.V. (Chemicals) 261,800 $ 45,179,820
Royal Dutch Petroleum Co., ADR (Oils) 326,000 17,665,125
---------------
$ 62,844,945
- ---------------------------------------------------------------------------------------------------
Sweden - 0.8%
Skandia Forsakrings AB (Insurance) 816,000 $ 38,536,192
Sparbanken Sverige AB, "A" (Banks and Credit Cos.) 420,100 9,562,175
---------------
$ 48,098,367
- ---------------------------------------------------------------------------------------------------
Switzerland - 1.0%
Novartis AG (Pharmaceuticals) 34,986 $ 56,866,347
- ---------------------------------------------------------------------------------------------------
United Kingdom - 2.6%
British Petroleum PLC, ADR (Oils) 1,283,787 $ 102,301,777
Lloyds TSB Group PLC (Banks and Credit Cos.)* 2,166,325 28,225,874
PowerGen PLC (Utilities - Electric)* 2,008,505 26,167,595
---------------
$ 156,695,246
- ---------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 424,268,253
- ---------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $4,267,845,817) $ 5,876,735,464
- ---------------------------------------------------------------------------------------------------
Convertible Bond - 0.1%
- ---------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ---------------------------------------------------------------------------------------------------
Sandoz Capital BVI Ltd., 2s, 2002 (Chemicals)##
(Identified Cost $3,302,652) $ 3,700 $ 5,679,500
- ---------------------------------------------------------------------------------------------------
Convertible Preferred Stocks - 0.2%
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - 0.2%
Consumer Goods and Services - 0.2%
Newell Financial Trust Co. (Consumer Goods and
Services)##* (Identified Cost, $12,835,000) $256,700 $ 13,380,487
- ---------------------------------------------------------------------------------------------------
Short-Term Obligations - 2.2%
- ---------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ---------------------------------------------------------------------------------------------------
AT&T Corp., due 1/08/98 $ 10,000 $ 9,988,333
Carolina Power & Light Co., due 1/29/98 10,000 9,954,889
Federal Farm Credit Bank, due 1/14/98 1,630 1,626,780
Federal National Mortgage Assn., due 1/12/98 - 1/
27/98 30,040 29,966,931
Federal Home Loan Bank, due 1/21/98 - 1/28/98 20,860 20,780,877
Federal Home Loan Mortgage Corp.,
due 1/07/98 - 1/30/98 19,430 19,380,231
Goldman Sachs Group LP, due 1/05/98 - 1/15/98 16,260 16,231,380
Merrill Lynch & Co., Inc., due 1/02/98 10,000 9,998,436
Tennessee Valley Authority, due 1/16/98 15,000 14,965,313
- ---------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 132,893,170
- ---------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $4,416,876,639) $ 6,028,688,621
Other Assets, Less Liabilities - 0.8% 50,122,541
- ---------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 6,078,811,162
- ---------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
DECEMBER 31, 1997
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $4,416,876,639) $ 6,028,688,621
Cash 227,428
Foreign currency, at value (identified cost, $297,359) 297,359
Net receivable for foreign currency exchange contracts
closed or subject to master netting agreement 393,586
Receivable for Trust shares sold 58,695,235
Receivable for investments sold 4,158,282
Dividends and interest receivable 8,599,486
Other assets 27,455
---------------
Total assets $ 6,101,087,452
---------------
Liabilities:
Distributions payable $ 128,248
Payable for investments purchased 11,564,508
Payable for Trust shares reacquired 9,553,380
Payable to affiliates -
Management fee 21,849
Shareholder servicing agent fee 18,973
Distribution and service fee 85,210
Administrative fee 1,028
Accrued expenses and other liabilities 903,094
---------------
Total liabilities $ 22,276,290
---------------
Net assets $ 6,078,811,162
---------------
Net assets consist of:
Paid-in capital $ 4,402,549,427
Unrealized appreciation on investments and translation
of assets and liabilities
in foreign currencies 1,612,204,888
Accumulated undistributed net realized gain on
investments and foreign currency transactions 63,481,940
Accumulated undistributed net investment income 574,907
---------------
Total $ 6,078,811,162
===============
Shares of beneficial interest outstanding 347,946,625
===========
Class A shares:
Net asset value per share
(net assets of $4,322,889,220 / 246,774,167 shares of
beneficial interest outstanding) $17.52
======
Offering price per share (100 / 94.25) $18.59
======
Class B shares:
Net asset value and offering price per share
(net assets of $1,521,983,606 / 87,666,283 shares of
beneficial interest outstanding) $17.36
======
Class C shares:
Net asset value and offering price per share
(net assets of $211,382,903 / 12,219,014 shares of
beneficial interest outstanding) $17.30
======
Class I shares:
Net asset value, offering price, and redemption price per
share (net assets of $22,555,433 / 1,287,161 shares of
beneficial interest outstanding) $17.52
======
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, Class
B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- -------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 73,617,166
Interest 9,820,217
Foreign taxes withheld (500,567)
--------------
Total investment income $ 82,936,816
--------------
Expenses -
Management fee $ 8,764,265
Shareholder servicing agent fee 5,895,601
Trustees' compensation 110,894
Distribution and service fee (Class A) 11,384,974
Distribution and service fee (Class B) 9,366,400
Distribution and service fee (Class C) 987,846
Administrative fee 292,240
Custodian fee 1,011,919
Postage 535,410
Printing 173,816
Auditing fees 30,349
Legal fees 22,933
Miscellaneous 1,932,190
--------------
Total expenses $ 40,508,837
Fees paid indirectly (330,270)
--------------
Net expenses $ 40,178,567
--------------
Net investment income $ 42,758,249
--------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 473,286,729
Foreign currency transactions 2,425,783
--------------
Net realized gain on investments and foreign
currency transactions $ 475,712,512
--------------
Change in unrealized appreciation (depreciation) -
Investments $ 680,074,658
Translation of assets and liabilities in foreign
currencies (626,751)
--------------
Net unrealized gain on investments and foreign
currency translation $ 679,447,907
--------------
Net realized and unrealized gain on investments
and foreign currency $1,155,160,419
--------------
Increase in net assets from operations $1,197,918,668
==============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 42,758,249 $ 37,472,710
Net realized gain on investments and foreign
currency transactions 475,712,512 264,646,010
Net unrealized gain on investments and foreign
currency translation 679,447,907 311,795,896
---------------- --------------
Increase in net assets from operations $ 1,197,918,668 $ 613,914,616
---------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (36,968,683) $ (34,290,506)
From net investment income (Class B) (4,911,186) (2,257,259)
From net investment income (Class C) (625,297) (41,906)
From net investment income (Class I) (253,082) --
From net realized gain on investments and foreign
currency transactions (Class A) (291,966,401) (227,454,227)
From net realized gain on investments and foreign
currency transactions (Class B) (101,973,791) (36,115,432)
From net realized gain on investments and foreign
currency transactions (Class C) (14,088,283) (967,699)
From net realized gain on investments and foreign
currency transactions (Class I) (1,559,900) --
In excess of Net Investment Income (Class A) (1,515,419) --
In excess of Net Investment Income (Class B) (201,319) --
In excess of Net Investment Income (Class C) (25,633) --
In excess of Net Investment Income (Class I) (10,374) --
---------------- --------------
Total distributions declared to shareholders $ (454,099,368) $ (301,127,029)
---------------- --------------
Net increase in net assets from Trust share
transactions $ 2,208,342,129 $ 574,478,329
---------------- --------------
Total increase in net assets $ 2,952,161,429 $ 887,265,916
Net assets:
At beginning of period 3,126,649,733 2,239,383,817
---------------- --------------
At end of period (including accumulated undistributed
net investment income of $574,907 and distributions in
excess of net investment income of $1,850,877 and
$98,132 respectively) $ 6,078,811,162 $3,126,649,733
================ ==============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.46 $12.71 $10.07 $11.50
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.18 $ 0.21 $ 0.25 $ 0.25
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 4.33 3.07 3.67 (0.36)
------ ------ ------ ------
Total from investment operations $ 4.51 $ 3.28 $ 3.92 $(0.11)
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.17) $(0.21) $(0.46) $(0.25)
From net realized gain on investments and foreign
currency transactions (1.27) (1.32) (0.82) (1.05)
In excess of net investment income+ (0.01) -- -- 0.00
In excess of net realized gain on investments and
foreign currency transactions -- -- -- (0.02)
------ ------ ------ ------
Total distributions declared to shareholders $(1.45) $(1.53) $(1.28) $(1.32)
------ ------ ------ ------
Net asset value - end of period $17.52 $14.46 $12.71 $10.07
====== ====== ====== ======
Total return(+) 31.69% 25.90% 39.34% (1.02)%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.74% 0.74% 0.70% 0.71%
Net investment income 1.09% 1.51% 2.13% 2.20%
Portfolio turnover 44% 47% 54% 87%
Average commission rate### $0.0573 $0.0520 $ -- $ --
Net assets at end of period (000,000 omitted) $ 4,323 $ 2,678 $ 2,074 $ 1,535
# Per share data for the periods subsequent to December 31, 1992, are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Trust's expenses are calculated without reduction for fees paid
indirectly.
### Average commission rate is calculated for the Trust for fiscal years beginning on or after September 1, 1995.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
+ For the year ended December 31, 1994, the per share distributions in excess of net investment income was $.0004.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $12.31 $13.87 $12.28 $13.55 $11.22 $11.26
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.39 $ 0.32 $ 0.38 $ 0.43 $ 0.45 $ 0.40
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 0.86 0.69 2.95 (0.45) 3.56 0.76
------ ------ ------ ------ ------ ------
Total from investment operations $ 1.25 $ 1.01 $ 3.33 $(0.02) $ 4.01 $ 1.16
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.39) $(0.33) $(0.39) $(0.43) $(0.45) $(0.39)
From net realized gain on investments
and foreign currency transactions (1.67) (2.22) (1.32) (0.82) (1.22) (0.81)
In excess of net realized gain on
investments and foreign currency
transactions++ -- -- 0.00 -- -- --
From paid-in capital+++ -- (0.02) (0.03) -- (0.01) 0.00
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(2.06) $(2.57) $(1.74) $(1.25) $(1.68) $(1.20)
------ ------ ------ ------ ------ ------
Net asset value - end of period $11.50 $12.31 $13.87 $12.28 $13.55 $11.22
====== ====== ====== ====== ====== ======
Total return(+) 10.03% 7.68% 27.41% (0.33)% 35.80% 10.12%
Ratios (to average net assets)/
Supplemental data:
Expenses 0.68% 0.62% 0.62% 0.47% 0.50% 0.55%
Net investment income 3.04% 2.30% 2.73% 3.28% 3.40% 3.39%
Portfolio turnover 41% 46% 44% 26% 20% 19%
Net assets at end of period
(000,000 omitted) $1,626 $1,548 $1,530 $1,265 $1,382 $1,139
# Per share data for the periods subsequent to December 31, 1992, are based on average shares outstanding.
(+) Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to January
2, 1991). If the charge had been included, the results would have been lower.
++ For the year ended December 31, 1991, the per share distribution in excess of net realized gain on investments was $.0041.
+++ For the year ended December 31, 1988, the per share distribution from paid-in capital was $.0001.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997 1996 1995 1994 1993*
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $14.36 $12.63 $10.03 $11.48 $13.02
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.07 $ 0.10 $ 0.15 $ 0.15 $ 0.04
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 4.28 3.06 3.64 (0.36) 0.32
------ ------ ------ ------ ------
Total from investment operations $ 4.35 $ 3.16 $ 3.79 $(0.21) $ 0.36
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.08) $(0.11) $(0.37) $(0.17) $(0.23)
From net realized gain on investments and
foreign currency transactions (1.27) (1.32) (0.82) (1.05) (1.67)
In excess of net investment income 0.00+++ -- -- 0.00++ --
In excess of net realized gain on investments
and foreign currency transactions -- -- -- (0.02) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.35) $(1.43) $(1.19) $(1.24) $(1.90)
------ ------ ------ ------ ------
Net asset value - end of period $17.36 $14.36 $12.63 $10.03 $11.48
====== ====== ====== ====== ======
Total return 30.75% 25.05% 38.05% (1.88)% 2.62%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.41% 1.54% 1.56% 1.61% 1.56%+
Net investment income 0.42% 0.72% 1.25% 1.37% 1.05%+
Portfolio turnover 44% 47% 54% 87% 41%
Average commission rate### $0.0573 $0.0520 $ -- $ -- $ --
Net assets at end of period (000,000 omitted) $ 1,522 $ 437 $ 165 $ 69 $ 15
+ Annualized.
* For the period from the inception of Class B, September 7, 1993, through December 31, 1993.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Trust's expenses are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for the Trust for fiscal years beginning on or after September 1, 1995.
++ For the year ended December 31, 1994, the per share distribution in excess of net investment income was $.0003.
+++ For the year ended December 31, 1997, the per share distribution in excess of net investment income was $0.003.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997 1996**
- -----------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.33 $13.93
------ ------
Income from investment operations# -
Net investment income $ 0.07 $ 0.05
Net realized and unrealized gain on investments and foreign
currency transactions 4.27 1.76
------ ------
Total from investment operations $ 4.34 $ 1.81
------ ------
Less distributions declared to shareholders -
From net investment income $(0.10) $(0.09)
From net realized gain on investments and foreign currency
transactions (1.27) (1.32)
In excess of net investment income+++ 0.00 --
------ ------
Total distributions declared to shareholders $(1.37) $(1.41)
----- -----
Net asset value - end of period $17.30 $14.33
====== ======
Total return 30.76% 12.74%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.41% 1.49%+
Net investment income 0.42% 0.77%+
Portfolio turnover 44% 47%
Average commission rate $0.0573 $0.0520
Net assets at end of period (000,000 omitted) $ 211 $ 12
+ Annualized.
++ Not annualized.
** For the period from the inception of Class C, July 2, 1996, through December 31, 1996.
# Per share data are based on average shares outstanding.
## The Trust's expenses are calculated without reduction for fees paid indirectly.
+++ For the year ended December 31, 1997, the per share distribution in excess of netinvestment income was $0.004.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ---------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997***
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.33
------
Income from investment operations# -
Net investment income $ 0.26
Net realized and unrealized gain on investments and foreign currency
transactions 4.44
------
Total from investment operations $ 4.70
------
Less distributions declared to shareholders -
From net investment income $(0.23)
From net realized gain on investments and foreign currency transactions (1.27)
In excess of net investment income (0.01)
------
Total distributions declared to shareholders $(1.51)
------
Net asset value - end of period $17.52
======
Total return 33.30%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.41%+
Net investment income 1.42%+
Portfolio turnover 44%
Average commission rate $0.0573
Net assets at end of period (000 omitted) $22,555
*** For the period from the inception of Class I, January 2, 1997, through December 31, 1997.
# Per share data are based on average shares outstanding.
## The Trust's expenses are calculated without reduction for fees paid indirectly.
+ Annualized.
++ Not annualized.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
Massachusetts Investors Trust (the Trust) was organized as a common law trust
under the laws of the Commonwealth of Massachusetts in 1924 and is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-
end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political, and economic environment.
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 result from fluctuations in foreign currency exchange rates is not
separately disclosed.
Forward Foreign Currency Exchange Contracts - The Trust 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 Trust will enter into
forward contracts for hedging purposes as well as for nonhedging purposes. For
hedging purposes, the Trust may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. The Trust 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 Trust may
enter into contracts with the intent of changing the relative exposure of the
Trust'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. On contract settlement date the gains or losses are
recorded as realized foreign currency transactions.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend payments received in additional securities are
recorded on the ex-dividend in an amount equal to the value of the security on
such date.
Fees Paid Indirectly - The Trust's custody fee is calculated as a percentage of
the Trust's average daily net assets. The fee is reduced according to a fee
arrangement that measures the value of cash deposited with the custodian by the
Trust. This amount is shown as a reduction of expenses on the Statement of
Operations.
Expense Reductions - MFS has directed certain portfolio trade to brokers who
paid a portion of the Trust's expenses. For the period, the Trust's expenses
were reduced by $9,706 under this agreement.
Tax Matters and Distributions - The Trust'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 taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Trust 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 Trust'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.
Distributions to shareholders are recorded on the ex-dividend date. The Trust
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 tax 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 December 31, 1997, $2,425,783 was reclassified to
accumulated undistributed net investment income from accumulated undistributed
net realized gain on investments and foreign currency transactions 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 Trust offers multiple
classes of shares. The classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Trust 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 Trust 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 the following annual
rates:
BASED ON AVERAGE NET ASSETS BASED ON GROSS INCOME
- --------------------------- ----------------------
First $200 million 0.30% First $6 million 6.67%
Next $300 million 0.24% Next $9 million 5.33%
In excess of $500 million 0.12% In excess of $15 million 2.67%
Administrator - Effective March 1, 1997, the Trust has an administrative
services agreement with MFS to provide the Trust with certain financial, legal,
shareholder servicing, compliance, and other administrative services. As a
partial reimbursement for the cost of providing these services, the Trust pays
MFS an administrative fee at the following percentage of the Trust's average
daily net assets, provided that the administrative fee is not assessed on Trust
assets that exceed $3 billion.
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
The Trust pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Trust, all of whom receive
remuneration for their services to the Trust from MFS. Certain officers and
Trustees of the Trust are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Trust 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 $31,744
for the year ended December 31, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$2,535,298 for the year ended December 31, 1997, as its portion of the sales
charge on sales of Class A shares of the Trust.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Trust's distribution plan provides that the Trust 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 Trust 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 (reduced to 0.15% per annum for shares purchased prior to
January 2, 1991) of the Trust'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 Trust'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 Trust. MFD retains the
service fee for accounts not attributable to a securities dealer, which amounted
to $1,981,083 for the year ended December 31, 1997. Currently, 0.075% per annum
of the Class A distribution fee is being paid by the Trust. Payment of the
remaining 0.025% per annum Class A distribution fee will become payable on such
date as the Trustees of the Trust may determine. Fees incurred under the
distribution plan during the year ended December 31, 1997, were 0.32% of average
daily net assets attributable to Class A shares on an annualized basis.
The Trust's distribution plan provides that the Trust will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per annum,
of the Trust'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 $811,669 and $2,106 for Class B and Class C
shares, respectively, for the year ended December 31, 1997. Fees incurred under
the distribution plan during the year ended December 31, 1997, were 1.00% of
average daily net assets attributable to Class B and Class C shares on an
annualized basis.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within 12 months following such 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.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class C shares in the event of a shareholder redemption within 12 months of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the year ended December 31, 1997, were
$42,452, $1,061,596, and $36,084 for Class A, Class B, and Class C 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 Trust's average daily net assets at an effective annual rate
of 0.13%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, aggregated $3,715,656,388 and $1,916,221,819,
respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Trust, as computed on a federal income tax basis, are
as follows:
Aggregate cost $4,440,660,664
--------------
Gross unrealized appreciation $1,624,911,949
Gross unrealized depreciation (36,883,992)
--------------
Net unrealized appreciation $1,588,027,957
==============
(5) Shares of Beneficial Interest
The Trust'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 Trust shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 108,356,333 $ 1,816,718,757 40,132,064 $ 567,992,774
Shares issued to
shareholders in
reinvestment of
distributions 15,057,865 254,083,546 13,545,436 196,263,540
Shares transferred to
Class I (977,846) (14,217,885) -- --
Shares reacquired (60,788,485) (1,014,640,995) (31,823,640) (448,678,542)
----------- ---------------- ---------- --------------
Net increase 61,647,867 $ 1,041,943,423 21,853,860 $ 315,577,772
=========== ================ ========== ==============
<CAPTION>
Class B Shares
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 60,547,150 $ 1,011,314,619 18,025,772 $ 255,006,792
Shares issued to
shareholders in
reinvestment of
distributions 5,752,255 96,250,575 2,481,401 35,764,019
Shares reacquired (9,037,298) (150,648,443) (3,152,904) (44,728,804)
----------- ---------------- ---------- --------------
Net increase 57,262,107 $ 956,916,751 17,354,269 $ 246,042,007
=========== ================ ========== ==============
<CAPTION>
Class C Shares
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996*
------------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 12,051,608 $ 202,729,481 849,655 $ 12,579,327
Shares issued to
shareholders in
reinvestment of
distributions 606,219 10,113,634 56,001 806,499
Shares reacquired (1,309,344) (22,589,323) (35,125) (527,276)
----------- ---------------- ---------- --------------
Net increase 11,348,483 $ 190,253,792 870,531 $ 12,858,550
=========== ================ ========== ==============
<CAPTION>
Class I Shares
YEAR ENDED DECEMBER 31, 1997**
-------------------------------------
SHARES AMOUNT
- -------------------------------------------------------------------
<S> <C> <C>
Shares sold 321,571 $ 5,237,008
Shares issued to
shareholders in
reinvestment of
distributions 103,620 1,748,324
Shares transferred from
Class A 977,846 14,217,885
Shares reacquired (115,876) (1,975,054)
----------- ----------------
Net increase 1,287,161 $ 19,228,163
=========== ================
*For the period from the inception of Class C, July 2, 1996, through December 31, 1996.
**For the period from the inception of Class I, January 2, 1997, through December 31, 1997.
</TABLE>
(6) Line of Credit
The Trust and other affiliated funds participate in a $400 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Trust
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 Trust for the year ended December 31, 1997, was $31,375.
(7) Financial Instruments
The Trust 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 foreign currency exchange rates. These financial instruments include
forward foreign currency exchange contracts. The notional or contractual amounts
of these instruments represent the investment the Trust 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.
Forward foreign currency purchases and sales under master netting agreements
amounted to a net receivable of $393,586 with Swiss Bank Corporation at December
31, 1997.
At December 31, 1997, the Trust had sufficient cash and/or securities to cover
any commitments under these contracts.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of Massachusetts Investors Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Massachusetts Investors Trust as of December
31, 1997, the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended December 31, 1997 and
1996, and the financial highlights for each of the years in the ten- year period
ended December 31, 1997. These financial statements are the responsibility of
the Trust'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
December 31, 1997 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 Massachusetts
Investors Trust at December 31, 1997, 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
February 6, 1998
--------------------------------------------
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.
<PAGE>
MASSACHUSETTS INVESTORS TRUST
<TABLE>
<S> <C>
Trustees Assistant Secretary
Richard B. Bailey* - Private Investor; James R. Bordewick, Jr.*
Former Chairman and Director (until 1991),
Massachusetts Financial Services Company Custodian
State Street Bank and Trust Company
Peter G. Harwood - Private Investor
Auditors
J. Atwood Ives - Chairman and Chief Executive Deloitte & Touche LLP
Officer, Eastern Enterprises
Investor Information
Lawrence T. Perera - Partner, Hemenway For MFS stock and bond market outlooks, call
& Barnes toll free: 1-800-637-4458 anytime from a
touch-tone telephone.
William J. Poorvu - Adjunct Professor,
Harvard University Graduate School of For information on MFS mutual funds, call
Business Administration your financial adviser or, for an information
kit, call toll free: 1-800-637-2929 any
Charles W. Schmidt - Private Investor business day from 9 a.m. to 5 p.m. Eastern
time (or leave a message anytime).
Arnold D. Scott* - Senior Executive Vice
President, Director and Secretary, Investor Service
Massachusetts Financial Services Company MFS Service Center, Inc.
P.O. Box 2281
Jeffrey L. Shames* - Chairman, President, and Boston, MA 02107-9906
Director, Massachusetts Financial Services
Company For general information, call toll free:
1-800-225-2606 any business day from
Elaine R. Smith - Independent Consultant 8 a.m. to 8 p.m. Eastern time.
David B. Stone - Chairman, North American For service to speech- or hearing-impaired,
Management Corp. (investment advisers) call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time. (To
Investment Adviser use this service, your phone must be equipped
Massachusetts Financial Services Company with a Telecommunications Device for the
500 Boylston Street Deaf.) For share prices, account balances,
Boston, MA 02116-3741 and exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
Distributor telephone.
MFS Fund Distributors, Inc.
500 Boylston Street World Wide Web
Boston, MA 02116-3741 www.mfs.com
Portfolio Managers [Dalbar logo] For the fourth year in a row,
Mitchell D. Dynan* MFS earned a #1 ranking in the DALBAR, Inc.
John D. Laupheimer, Jr.* Broker/Dealer Survey, Main Office Operations
Kevin R. Parke* Service Quality Category. The firm achieved a
3.42 overall score on a scale of 1 to 4 in
Treasurer the 1997 survey. A total of 111 firms
W. Thomas London* responded, offering input on the quality of
service they received from 29 mutual fund
Assistant Treasurers companies nationwide. The survey contained
Mark E. Bradley* questions about service quality in 11
Ellen Moynihan* categories, including "knowledge of
James O. Yost* operations contact," "keeping you informed,"
and "ease of doing business" with the firm.
Secretary
Stephen E. Cavan*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
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Boston, MA 02116-3741 MFS
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