Dear Shareholders,
The current investment and economic environment bears little resemblance to last
year's. One year ago, global economies were floundering, and the crisis in Asia
threatened an already weak U.S. economy. Corporate earnings were flat, and
economists used the word "deflation" for the first time in recent memory.
Entering 1999, expectations for corporate earnings growth were lowered
dramatically. In an attempt to foster U.S. growth, the Federal Reserve Board
(the Fed) lowered interest rates.
As a result, this year the U.S. economy is booming and unemployment is low. Many
corporations are focused on improving their profitability, and investors have
been rewarded with positive surprises across a variety of industries. Our
analysts predict that corporate earnings growth for 1999 will average 12% - 15%.
Global economies also are showing signs of strength, and the Asian crisis has
passed. In fact, Japan's economic woes seem to have reached bottom. Although the
process is in its infancy, some Japanese corporations not only are talking about
restructuring and cost cutting, they also are beginning to take action, looking
within to become more competitive and improve returns on equity. While still
lagging the United States, Europe is beginning to restructure and consolidate.
These signs of international growth have contributed to concerns that the U.S.
economy now may be too strong. In June, and again in August, the Fed raised
rates by one-quarter of a percentage point to help ward off the specter of
inflation.
After an unprecedented four years of 20% annual returns in the U.S. equity
market, we fear that many investors have become accustomed to high returns and
have lost sight of the risks they take on to achieve them. In the current market
many investors are taking on additional risk - whether through day trading or
investing in speculative Internet stocks.
Risks are as much a part of the market today as they were one year ago. We
believe the market remains overvalued, with stocks priced 30% above our
analysts' earnings projections. And market narrowness has not abated; the top 25
stocks in the Standard & Poor's 500 Composite Index, a popular, unmanaged index
of common stock total return performance, are still the most overvalued. Such
extreme overvaluation makes the stock market sensitive to interest-rate news and
any negative earnings surprises. The Year 2000 (Y2K) computer problem is another
factor causing investor concern. While we believe corporate America is well
prepared to address any Y2K situations that may arise at year-end, no one can
predict investor behavior. In our opinion, it is investor behavior that has the
greatest potential to create market volatility.
We believe the best way to address Y2K and other market risks is through our
continuing commitment to MFS Original Research[RegTM] and our fundamental
investment tenet of long-term investing. Whether markets are up or down, MFS
analysts focus on analyzing industries and visiting companies to determine the
long-term winners and the prices that will make them attractive opportunities.
Because all companies will not benefit equally from the improving international
environment, bottom-up research remains critical to identifying those that we
believe are successfully restructuring, consolidating, and gaining market share.
Changes in market and economic conditions can't be predicted but should always
be expected. The changes we have seen over the past year only reinforce our
commitment to long-term planning and investing. We believe volatility helps to
create opportunity for long-term investors to buy solid companies at attractive
prices. For this reason, we are continuing to expand our domestic and
international capabilities to ensure that MFS has primary, in-house research on
companies worldwide. We believe that we have built the right investment team,
backed by MFS Original Research, to take advantage of those opportunities for
our shareholders.
1
<PAGE>
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management[RegTM]
November 15, 1999
Management Review and Outlook
Dear Shareholders,
For the 12 months ended October 31, 1999, the Trust provided a total return of
11.08%, based on its beginning and ending stock market prices and assuming the
reinvestment of all distributions paid during the period. The Trust's total
return over the period based on its net asset value (NAV) was 15.68%. During
this period, the Trust continued to maintain a distribution rate of 11% based on
its original New York Stock Exchange offering price of $15 per share. These
distributions were paid through a combination of income earned from dividends,
bond coupon payments, and both short- and long-term capital gains. During the
past 12 months, the Trust's market price on the New York Stock Exchange traded
at a premium to its NAV. On October 31, 1999, shares of the Trust were trading
at a market price of $16.75 and a NAV price of $14.34. During the same period,
the Lehman Brothers High Yield Bond Index, an unmanaged index of
noninvestment-grade corporate debt, returned 4.34%.
As of October 31, 1999, approximately 60% of the portfolio was invested in
high-yield and distressed bonds, and 40% was invested in common stocks. The bond
and stock investments are an eclectic mix of companies that generally trade at
compelling valuations because they are emerging from either bankruptcy or
financial restructuring. While these companies also may be currently out of
favor in the market, we believe there is a catalyst that may bring them back in
favor and result in higher valuations.
Our bond holdings included turnaround situations such as Samsonite, the largest
maker of luggage in the world, and Sterling Chemicals, a large integrated
chemical company, both of whose businesses are improving. On the equity side,
Anacomp is another turnaround situation. One of the largest document storage
companies in the world, the company recently emerged from bankruptcy. We think
it represents an inexpensive, undervalued security.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
current only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index. The portfolio is actively
managed, and current holdings may be different.
----------------------------------------------
In accordance with Section 23(c) of the Investment Company Act of 1940, the
Trust hereby gives notice that it may from time to time repurchase shares of the
Trust in the open market at the option of the Board of Trustees and on such
terms as the Trustees shall determine.
- ---------------------------------------------------------------
Performance Summary
(For the year ended October 31, 1999)
<TABLE>
<S> <C>
Net Asset Value Per Share
October 31, 1998 $13.76
October 31, 1999 $14.34
New York Stock Exchange Price
October 31, 1998 $16.7500
December 9, 1998 (high)* $18.5000
April 14, 1999 (low)* $14.8750
October 31, 1999 $16.7500
</TABLE>
*For the period November 1, 1998, through October 31, 1999.
- ---------------------------------------------------------------
2
<PAGE>
Federal Tax Information
(For the year ended October 31, 1999)
In January 2000, shareholders will be mailed a Form 1099-DIV reporting the
federal tax status of all distributions paid during the calendar year 1999.
The Trust has designated $1,740,169 as a capital gain dividend for the year
ended October 31, 1999.
For the year ended October 31, 1999, the amount of distributions from income
eligible for the 70% dividends received deduction for corporations is 1.49%.
Number of Employees
The Trust is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a closed-end, nondiversified,
management investment company and has no employees.
Number of Shareholders
As of October 31, 1999, our records indicate that there are 960 registered
shareholders and approximately 5,910 shareholders owning Trust shares in
"street" name, such as through brokers, banks, and other financial
intermediaries.
If you are a "street" name shareholder and wish to directly receive our reports,
which contain important information about the Trust, please write or call:
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
1-800-637-2304
New York Stock Exchange Symbol
The New York Stock Exchange symbol is MFV.
Results of Shareholder Meeting
At the annual meeting of shareholders of MFS[RegTM] Special Value Trust, which
was held on October 21, 1999, the following actions were taken:
Item 1. The election of Richard B. Bailey, Jeffrey L. Shames, and J. Dale
Sheratt as Trustees of the Trust.
<TABLE>
<CAPTION>
Number of Shares
Nominee For Withhold Authority
- ------- --- ------------------
<S> <C> <C>
Richard B. Bailey 5,806,481.802 73,076.180
Jeffrey L. Shames 5,807,055.337 72,502.645
J. Dale Sherratt 5,827,033.616 52,524.366
</TABLE>
Trustees continuing in office who were not subject to re-election at this
meeting are Marshall N. Cohan, Sir J. David Gibbons, Walter E. Robb, III,
Arnold D. Scott, Lawrence H. Cohn, Abby O'Neill, and Ward Smith.
Item 2. The ratification of Ernst & Young LLP as the independent public
accountants to be employed by the Trust for the fiscal year ending
October 31, 2000.
<TABLE>
<CAPTION>
Number of Shares
----------------
<S> <C>
For 5,760,306.807
Against 22,330.695
Abstain 96,920.480
</TABLE>
Investment Objective and Policies
The investment objective of the Trust is to maintain an annual distribution rate
of 11%, based on the original offering price, while seeking opportunities for
capital appreciation.
As opportunities arise in the marketplace, the Trust may invest in securities
that the Trust believes represent uncommon value by having the potential for
significant capital appreciation over a period of 12 months or longer. The
issuers of these securities may include companies out of favor in the
marketplace, or in out-of-favor industries, and over-leveraged companies with
promising longer-term prospects. Some of these companies may also be
experiencing financial or operating difficulties.
Dividend Reinvestment and
Cash Purchase Plan
MFS offers a Dividend Reinvestment and Cash Purchase Plan which allows you to
reinvest either all of the distributions paid by the Trust or only the long-term
capital gains. Purchases are made at the market price unless that price exceeds
the net asset value (the shares are trading at a premium).
3
<PAGE>
If the shares are trading at a premium, purchases will be made at a discounted
price of either the net asset value or 95% of the market price, whichever is
greater. Twice each year you also can buy shares. Investments from $100 to $500
can be made in January and July on the 15th of the month or shortly thereafter.
If your shares are in the name of a brokerage firm, bank or other nominee, you
can ask the firm or nominee to participate in the Plan on your behalf. If the
nominee does not offer the Plan, you may wish to request that your shares be
re-registered in your own name so that you can participate.
There is no service charge to reinvest distributions nor are there brokerage
charges for shares issued directly by the Trust. However, when shares are bought
on the New York Stock Exchange or otherwise on the open market, each participant
pays a pro rata share of the commissions. A service fee of $0.75 is charged for
each cash purchase, as well as a pro rata share of the brokerage commissions.
The automatic reinvestment of distributions does not relieve you of any income
tax that may be payable (or required to be withheld) on the distributions.
To enroll in or withdraw from the Plan, call 1-800-637-2304 any business day
from 8 a.m. to 8 p.m. Eastern time. Please have available the name of the Trust
and your account and Social Security numbers. For certain types of
registrations, such as corporate accounts, instructions must be submitted in
writing. Please call for additional details. When you withdraw, you can receive
the value of the reinvested shares in one of two ways: a check for the value of
the full and fractional shares, or a certificate for the full shares and a check
for the fractional shares.
If you have any questions or would like a brochure providing a complete
description of the Plan, please call 1-800-637-2304 any business day from 8 a.m.
to 8 p.m. Eastern time.
------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
------------------------------------------------------------------
4
<PAGE>
Portfolio of Investments -- October 31, 1999
U.S. Bonds - 46.5%
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
<S> <C> <C>
U.S. Bonds - 37.2%
Broadcasting - 0.6%
Spectrasite Holdings, Inc., 0s to
2004, 11.25s to 2009## ................ $1,000 $ 518,750
-----------
Chemicals - 2.0%
Applied Extrusion Technologies, Inc.,
11.5s, 2002 ........................... $ 950 $ 973,750
Sterling Chemicals Holdings, Inc., 0s
to 2001, 13.5 to 2008 ................. 1,100 221,375
Sterling Chemicals, Inc., 11.25s, 2007 1,000 620,000
-----------
$ 1,815,125
-----------
Construction Services - 1.0%
Formica Corp., 10.875s, 2009## .......... $1,000 $ 900,000
-----------
Consumer Goods and
Services - 4.5%
General Binding Corp., 9.375s, 2008 $1,000 $ 807,500
Revlon Consumer Products Corp.,
8.125s, 2006 .......................... 1,925 1,501,500
Samsonite Corp., 10.75s, 2008 ........... 1,000 830,000
Synthetic Industries, Inc., 9.25s,
2007 .................................. 1,000 1,000,000
-----------
$ 4,139,000
-----------
Containers - 2.9%
Gaylord Container Corp., 9.875s,
2008 .................................. $1,900 $ 1,653,000
Riverwood International Corp.,
10.875s, 2008 ......................... 1,000 977,500
-----------
$ 2,630,500
-----------
Energy - 2.7%
Cheasapeake Energy Corp., 9.625s,
2005 .................................. $1,000 $ 950,000
Continental Resources, Inc., 10.25s,
2008 .................................. 750 626,250
Forest Oil Corp., 10.5s, 2006 ........... 920 938,400
-----------
$ 2,514,650
-----------
Forest and Paper
Products - 1.0%
U.S. Timberlands, 9.625s, 2007 .......... $1,000 $ 910,000
-----------
Gaming and Hotels - 1.2%
Santa Fe Hotel, Inc., 11s, 2000 ......... $1,200 $ 1,140,000
-----------
Industrial - 3.6%
Haynes International, Inc., 11.625s,
2004 .................................. $1,000 $ 870,000
Metallurg Holdings, Inc., 0s to 2003,
12.75s to 2008## ...................... 2,600 832,000
Simonds Industries, Inc. 10.25s,
2008 .................................. 1,000 780,000
Thermadyne Manufacturing/Capital
Corp., 9.875s, 2008 ................... 985 802,775
-----------
$ 3,284,775
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
<S> <C> <C>
Media - 7.3%
Bresnan Communications Group, 0s
to 2004, 9.25 to 2009## ............... $1,500 $ 1,005,000
Cd Radio, Inc., 14.5s, 2009## ........... 900 776,250
Classic Communications, Inc., 0s to
2003, 13.25 to 2009## ................. 1,000 665,000
Golden Books Publishing, Inc.,
7.65s to 2002** ....................... 1,880 808,400
NTL Communications Corp., 0s to
2003, 12.375s to 2006## ............... 1,400 938,000
Telemundo Holdings, Inc., 0s to
2003, 11.5s to 2008 ................... 2,000 1,140,000
United International Holdings, Inc.,
10.75s, 2008 .......................... 2,435 1,400,125
-----------
$ 6,732,775
-----------
Metals and Minerals - 3.4%
Doe Run Resources Corp., 11.25s,
2005 .................................. $ 750 $ 697,500
Kaiser Aluminum & Chemical Corp.,
12.75s, 2003 .......................... 450 450,000
Keystone Consolidated Industries,
Inc., 9.625s, 2007 .................... 1,000 942,500
Metal Management, Inc., 10s, 2008 1,500 1,005,000
-----------
$ 3,095,000
-----------
Retail - 0.8%
J Crew Group, Inc., 0s to 2002,
13.125s to 2008 ....................... $1,500 $ 705,000
-----------
Steel - 2.9%
Northwestern Steel & Wire Co.,
9.5s, 2001 ............................ $1,425 $ 856,781
Renco Steel Holdings, Inc., 10.875s,
2005 .................................. 925 823,250
WCI Steel, Inc., 10s, 2004 .............. 1,000 977,500
-----------
$ 2,657,531
-----------
Supermarkets - 0.7%
Jitney-Jungle Stores of America,
Inc., 12s, 2006+ ...................... $1,500 $ 525,000
Penn Traffic Co., 11s, 2009 ............. 138 121,607
-----------
$ 646,607
-----------
Telecommunications - 2.1%
AMSC Acquisition Co., Inc., 12.25s,
2008 .................................. $ 845 $ 523,900
DTI Holdings, Inc., 0s to 2003,
12.5s to 2008 ......................... 2,000 700,000
McCaw International Ltd., 0s to
2002, 13s to 2007 ..................... 725 458,925
Pagemart Wireless, Inc., 0s to 2003,
11.25s to 2008 ........................ 730 226,300
-----------
$ 1,909,125
-----------
</TABLE>
5
<PAGE>
Portfolio of Investments -- continued
Stocks - 41.7%
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
<S> <C> <C>
U.S. Bonds - continued
Utilities - Electric - 0.5%
International Utility Structures,
10.75s, 2008 .......................... $ 475 $ 433,438
-----------
Total U.S. Bonds ....................................... $34,032,276
-----------
Foreign Bonds - 9.3%
Brazil - 0.5%
Banco Nacional De Desenvolvimento
Economico E Social, 13.64s,
2008 (Banks and Credit
Companies) ............................ $ 500 $ 434,400
-----------
Greece - 0.7%
Fage Dairy Industries S.A., 9s, 2007
(Food and Beverage Product) ........... $ 750 $ 675,000
-----------
Luxembourg - 0.8%
Millicom International Cellular
Communications Corp., 0s to
2001, 13.5s to 2006
(Telecommunications) .................. $ 1,000 $ 725,000
-----------
Mexico - 0.8%
Satelites Mexicanos S.A. de CV,
10.125s, 2004
(Telecommunications) .................. $ 1,000 $ 747,500
-----------
Netherlands - 2.1%
Completel Europe NV, 0s to 2004,
14.00 to 2009
(Telecommunications)## ................ $ 2,000 $ 1,000,000
Telel Europe BV, 13s, 2009
(Telecommunications) .................. 1,000 950,000
-----------
$ 1,950,000
-----------
Russia - 1.4%
Vnesheconombank, 6.063s, 2020
(Banks and Credit Companies)+ ......... $14,240 $ 1,300,112
-----------
United Kingdom - 3.0%
Esat Telecom Group PLC, 11.875s,
2008 (Telecommunications) ............. $ 650 $ 663,000
Jazztel PLC, 14s, 2009
(Telecommunications)## ................ 1,000 1,010,000
Ono Finance PLC, 13s, 2009
(Telecommunications)## ................ 1,000 992,500
Ono Finance PLC, 0s, 2009
(Telecommunications)*## ............... 1 60,000
-----------
$ 2,725,500
-----------
Total Foreign Bonds .................................... $ 8,557,512
-----------
Total Bonds (Identified Cost, $46,565,686).............. $42,589,788
-----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks - 36.0%
Aerospace - 1.9%
BE Aerospace, Inc.* .................... 80,200 $ 807,013
Moog, Inc., "A"* ....................... 39,750 954,000
-----------
$ 1,761,013
-----------
Beverages - 0.8%
Boston Beer, Inc.* ..................... 100,000 $ 775,000
-----------
Broadcasting - 0.1%
Granite Broadcasting Corp.* ............ 5,000 $ 64,375
-----------
Building - 2.9%
Associate Materials, Inc. .............. 70,000 $ 1,128,750
Atlantic Gulf Communities Corp.,+* ..... 250 32
Nortek, Inc.* .......................... 18,400 563,500
Walter Industries, Inc.* ............... 79,600 935,300
-----------
$ 2,627,582
-----------
Chemicals - 1.8%
NL Industries, Inc. .................... 80,500 $ 930,781
Polymer Group, Inc.* ................... 37,000 723,813
-----------
$ 1,654,594
-----------
Conglomerates - 9.8%
MAXXAM, Inc.* .......................... 23,000 $ 1,043,625
Tyco International Ltd. ................ 198,512 7,928,073
-----------
$ 8,971,698
-----------
Consumer Goods and
Services - 1.6%
Westpoint Stevens, Inc., "A"* .......... 75,500 $ 1,429,781
-----------
Containers - 3.2%
Atlantis Plastics, Inc.* ............... 116,550 $ 1,689,975
Gaylord Container Corp.* ............... 226,000 1,271,250
-----------
$ 2,961,225
-----------
Electrical Equipment - 0.9%
GTECH Holdings Corp.* .................. 40,450 $ 814,056
-----------
Machinery - 0.2%
Thermadyne Holdings Corp.* ............. 7,554 $ 173,742
-----------
Office Equipment - 0.9%
United Stationers, Inc.* ............... 33,500 $ 854,250
-----------
Photographic Products - 2.1%
Anacomp, Inc.* ......................... 108,663 $ 1,894,811
-----------
Stores - 0.4%
Musicland Stores Corp.* ................ 50,000 $ 390,625
-----------
Supermarkets - 1.9%
Ingles Markets, Inc. "A" ............... 88,300 $ 1,142,381
Marsh Supermarkets ..................... 42,700 480,375
Penn Traffic Co. ....................... 22,260 141,908
-----------
$ 1,764,664
-----------
</TABLE>
6
<PAGE>
Portfolio of Investments -- continued
Stocks - continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks - continued
Telecommunications - 3.8%
Adelphia Business Solutions, Inc.* ..... 40,000 $ 1,135,000
Commonwealth Telephone
Enterprises, Inc.* ................... 35,133 1,879,615
Crown Castle International Corp.* ...... 26,000 500,500
-----------
$ 3,515,115
-----------
Textiles - 1.9%
Synthetic Industries Inc.* ............. 59,965 $ 1,694,011
-----------
Utilities - Electric - 1.8%
El Paso Electric Co.* .................. 179,700 $ 1,639,763
-----------
Total U.S. Stocks ............................... $32,986,305
-----------
Foreign Stocks - 5.7%
Bermuda - 2.0%
RSL Communications, Ltd., "A"* ......... 83,300 $ 1,822,188
-----------
Canada - 1.0%
Gulf Canada Resources Ltd.
(Oil Services)* ...................... 106,500 $ 419,344
International Utility Structures Inc.
(Utilities-Electric)* ................ 254,700 476,026
-----------
$ 895,370
-----------
Netherlands
Completel Holdings LLC,*
(Telecommunications)## ............... 20,000 $ 200
-----------
United Kingdom - 2.7%
News Corp. Ltd., ADR
(Entertainment) ...................... 90,217 $ 2,486,606
-----------
Total Foreign Stocks ............................ $ 5,204,364
-----------
Total Stocks (Identified Cost, $25,338,659)...... $38,190,669
-----------
Preferred Stock - 7.0%
Consumer Goods and Services
Renaissance Cosmetics, Inc., 14% ....... 1,266 $ 0
-----------
Media - 1.2%
Paxson Communications Corp., 13.25% 107 $ 1,080,700
-----------
Supermarkets - 2.4%
Supermarkets General Holdings
Corp.* ............................... 70,015 $ 2,205,472
-----------
Telecommunications - 3.4%
Crown Castle International Corp. ....... 1,031 $ 1,025,845
Global Crossing Holdings Ltd. .......... 10,000 1,060,000
Nextel Communications, Inc. ............ 976 995,520
-----------
$ 3,081,365
-----------
Total Preferred Stock (Identified
Cost, $6,645,637) .............................. $ 6,367,537
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Convertible Bond - 0.5%
Retail - 0.5%
Corporate Express, Inc., 4.5s, 2000
(Identified Cost $465,000) ......... $500 $ 495,000
-----------
</TABLE>
Warrants - 0.4%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Warrants - 0.2%
American Mobile Satellite Corp.,
(Telecommunications)*## ......... 845 $ 12,675
Cd Radio, Inc., (Media)## ......... 2,700 141,750
DTI Holdings, Inc.,
(Telecommunications)* ........... 10,000 100
Renaissance Cosmetics, Inc.,
(Consumer Goods and Services)* 1,024 0
-----------
Total U.S. Warrants .......................... $ 154,525
-----------
Foreign Warrants - 0.2%
Netherlands
Telel Europe BV,
(Telecommunications)*## ......... 1,000 $ 90,000
-----------
United Kingdom - 0.2%
Jazztel PLC
(Telecommunications)*## ......... 5,000 $ 150,000
-----------
Total Foreign Warrants ....................... $ 240,000
-----------
Total Warrants (Identified Cost,$380,686).... $ 394,525
-----------
Other Short-Term Obligations - 8.0%
Navigator Securities Lending Prime
Portfolio (Identified Cost,
$7,303,795) ..................... 7,303,795 $ 7,303,795
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Repurchase Agreement - 3.4%
Investments in Repurchase
Agreement with Goldman Sachs, in
a joint trading account ($296,352,443),
dated 10/29/99, due 11/01/99, total
to be received $296,479,925
collateralized by various U.S.
Treasury Obligations (with $281,588,000
par and value at $295,278,963), at cost ....... $3,111 $ 3,111,000
-----------
Total Investments (Identified
Cost, $89,810,463)............................. $98,452,314
-----------
Other Assets, Less
Liabilities - (7.5)% $(6,849,734)
-----------
Net Assets - 100.0% ............................... $91,602,580
-----------
</TABLE>
*Non-income producing security.
**Non-income producing security - in default.
##SEC Rule 144A restriction.
+Restricted security
See notes to financial statements.
7
<PAGE>
Statement of Assets and Liabilities -- October 31, 1999
<TABLE>
<S> <C>
Assets:
Investments, at value (identified cost, $89,810,463) .................................... $98,452,314
Cash .................................................................................... 778
Receivable for investments sold ......................................................... 224,742
Interest and dividends receivable ....................................................... 1,092,925
Other assets ............................................................................ 1,110
-----------
Total assets ....................................................................... $99,771,869
-----------
Liabilities:
Payable to dividend disbursing agent .................................................... $ 92,325
Payable for investments purchased ....................................................... 553,925
Collateral for securities loaned, at value .............................................. 7,303,795
Payable to affiliates -
Management fee ........................................................................ 8,663
Transfer and dividend disbursing agent fee ............................................ 1,706
Administrative fee .................................................................... 114
Accrued expenses and other liabilities .................................................. 208,761
-----------
Total liabilities .................................................................. $ 8,169,289
-----------
Net assets ............................................................................... $91,602,580
===========
Net assets consist of:
Paid-in capital ......................................................................... $79,882,739
Unrealized appreciation on investments and translation of assets and liabilities in
foreign currencies ..................................................................... 8,641,850
Accumulated undistributed net realized gain on investments and foreign currency
transactions ........................................................................... 3,770,428
Accumulated distributions in excess of net investment income ............................ (692,437)
-----------
Total .............................................................................. $91,602,580
===========
Shares of beneficial interest outstanding ................................................ 6,389,237
=========
Net asset value per share (net assets [divided by] shares of beneficial interest
outstanding) ............................................................................ $14.34
======
</TABLE>
See notes to financial statements.
8
<PAGE>
Statement of Operations -- October 31, 1999
<TABLE>
<S> <C>
Net investment income:
Income -
Interest ............................................................. $ 4,530,626
Dividends ............................................................ 273,899
Foreign taxes withheld ............................................... (7,760)
-----------
Total investment income .......................................... $ 4,796,765
-----------
Expenses -
Management fee ...................................................... $ 821,494
Trustees' compensation .............................................. 118,716
Administrative fee .................................................. 12,261
Investor communication fee .......................................... 62,561
Transfer and dividend disbursing agent fee .......................... 20,670
Custodian fee ....................................................... 44,458
Printing ............................................................ 12,990
Postage ............................................................. 4,516
Auditing fees ....................................................... 37,120
Legal fees .......................................................... 3,071
Miscellaneous ....................................................... 45,253
-----------
Total expenses ................................................... $ 1,183,110
Fees paid indirectly ................................................. (35,135)
-----------
Net expenses ..................................................... $ 1,147,975
-----------
Net investment income .......................................... $ 3,648,790
-----------
Realized and unrealized gain on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions ............................................... $10,051,300
Foreign currency transactions ......................................... (9,737)
-----------
Net realized gain on investments and foreign currency
transactions ................................................... $10,041,563
-----------
Change in unrealized appreciation (depreciation) -
Investments ......................................................... $ 370,084
Translation of assets and liabilities in foreign currencies ......... (1,077)
-----------
Net unrealized gain on investments and foreign currency
translation ... ................................................ $ 369,007
-----------
Net realized and unrealized gain on investments .................. $10,410,570
-----------
Increase in net assets from operations ......................... $14,059,360
===========
</TABLE>
See notes to financial statements.
9
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income .................................................................. $ 3,648,790 $ 244,889
Net realized gain on investments and foreign currency transactions ..................... 10,041,563 8,968,455
Net unrealized gain (loss) on investments and foreign currency translation ............. 369,007 (3,000,880)
------------- -------------
Increase in net assets from operations ............................................. $ 14,059,360 $ 6,212,464
------------- -------------
Distributions declared to shareholders -
From net investment income ............................................................. $ (3,648,790) $ (244,889)
From net realized gain on investments and foreign currency transactions ................ (6,324,253) (14,296,429)
In excess of net investment income ..................................................... (516,404) --
------------- -------------
Total distributions declared to shareholders ....................................... $ (10,489,447) $ (14,541,318)
------------- -------------
Trust share (principal) transactions -
Net asset value of shares issued to shareholders in reinvestment of distributions ...... $ 1,095,841 $ 1,600,556
------------- -------------
Total increase (decrease) in net assets ............................................ $ 4,665,754 $ (6,728,298)
Net assets:
At beginning of period .................................................................. 86,936,826 93,665,124
------------- -------------
At end of period (including accumulated distributions in excess of net investment income
of $692,437 and $217,430, respectively) ................................................ $ 91,602,580 $ 86,936,826
============= =============
</TABLE>
See notes to financial statements.
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Year Ended
----------------------
1999 1998
<S> <C> <C>
Per share data (for a share outstanding -------- --------
throughout each period):
Net asset value - beginning of period ...................... $ 13.76 $ 15.03
-------- --------
Income from investment operations# -
Net investment income ..................................... $ 0.57 $ 0.04
Net realized and unrealized gain on investments and
foreign currency ........................................ 1.66 1.01
-------- --------
Total from investment operations ..................... $ 2.23 $ 1.05
-------- --------
Less distributions declared to shareholders -
From net investment income ................................ $ (0.57) $ (0.04)
From net realized gain on investments and foreign currency
transactions ........................................... (1.00) (2.28)
In excess of net investment income ....................... (0.08) --
From paid in capital ...................................... -- --
--------- ---------
Total distributions declared to shareholders ........ $ (1.65) $ (2.32)
--------- ---------
Net asset value - end of period ............................ $ 14.34 $ 13.76
======== ========
Per share market value - end of period ..................... $ 16.750 $ 16.750
======== ========
Total return ............................................... 11.08% 0.26%
Ratios (to average net assets)/Supplemental data:
Expenses## ................................................ 1.23% 1.10%
Net investment income ..................................... 3.79% 0.26%
Portfolio turnover ......................................... 137% 85%
Net assets at end of period (000 Omitted) .................. $ 91,603 $ 86,937
<CAPTION>
Year Ended
-----------------------------------------
<S> <C> <C> <C>
1997 1996 1995
Per share data (for a share outstanding ---- ---- ----
throughout each period):
Net asset value - beginning of period ...................... $ 15.23 $ 13.93 $ 13.40
-------- -------- --------
Income from investment operations# -
Net investment income .................................... $ 0.11 $ 0.13 $ 0.20
Net realized and unrealized gain on investments and
foreign currency ....................................... 2.66 2.82 2.18
-------- -------- --------
Total from investment operations .................... $ 2.77 $ 2.95 $ 2.38
-------- -------- --------
Less distributions declared to shareholders -
From net investment income ............................... $ (0.10) $ (0.13) $ (0.20)
From net realized gain on investments and foreign currency
transactions ............................................ (2.87) (1.52) (1.14)
In excess of net investment income ....................... -- -- (0.01)
From paid in capital ..................................... -- -- (0.50)
-------- -------- --------
Total distributions declared to shareholders ........ $ (2.97) $ (1.65) $ (1.85)
-------- -------- --------
Net asset value - end of period ............................ $ 15.03 $ 15.23 $ 13.93
======== ======== ========
Per share market value - end of period ..................... $ 19.000 $ 18.250 $ 16.500
======== ======== ========
Total return ............................................... 23.29% 22.20% 26.06%
Ratios (to average net assets)/Supplemental data:
Expenses## ............................................... 1.12% 1.14% 1.26%
Net investment income .................................... 0.72% 0.85% 1.52%
Portfolio turnover ......................................... 119% 96% 92%
Net assets at end of period (000 Omitted) .................. $ 93,665 $ 93,161 $ 84,243
</TABLE>
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
See notes to financial statements.
11
<PAGE>
Notes to Financial Statements
(1) Business and Organization
MFS Special Value Trust (the Trust) is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended, as
a closed-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. The Trust
can invest in foreign securities. 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. The Trust can invest in high-yield
securities rated below investment grade. Investments in high-yield securities
involve greater degrees of credit and market risk than investments in
higher-rated securities and tend to be more sensitive to economic conditions.
Investment Valuations -- Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, 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. Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
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 in good faith by the Trustees.
Repurchase Agreements -- The Trust may enter into repurchase agreements with
institutions that the Trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Trust requires
that the securities collateral in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Trust to obtain those securities
in the event of a default under the repurchase agreement. The Trust monitors, on
a daily basis, the value of the collateral to ensure that its value, including
accrued interest, is greater than amounts owed to the Trust under each such
repurchase agreement. The Trust, along with other affiliated entities of
Massachusetts Financial Services Company (MFS), may utilize a joint trading
account for the purpose of entering into one or more repurchase agreements.
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.
Deferred Trustee Compensation -- Effective July 24, 1999, under a Deferred
Compensation Plan (the Plan) independent Trustees may elect to defer receipt of
all or a portion of their annual compensation. Deferred
12
<PAGE>
amounts are treated as though equivalent dollar amounts had been invested in
shares of the fund or other MFS funds selected by the Trustee. Deferred amounts
represent an unsecured obligation of the fund until distributed in accordance
with the Plan.
Security Loans -- State Street Bank and Trust Company ("State Street"), as
agent, may loan the securities of the Trust to certain brokers (the "Borrowers")
approved by the Trust. The loans are collateralized at all times by cash or U.S.
Treasury securities in an amount at least equal to the market value of the
securities loaned. State Street provides the Trust with indemnification against
Borrower default. The Trust bears the risk of loss with respect to the
investment of cash collateral.
At October 31, 1999, the value of securities loaned was $6,900,449. These loans
were collateralized by cash of $7,303,795. Cash collateral is invested in
short-term securities, which are included in the Portfolio of Investments. A
portion of the income generated upon investment of the collateral is remitted to
the Borrowers, and the remainder is allocated between the Trust and State Street
in its capacity as lending agent. On loans collateralized by U.S. Treasury
securities, a fee is received from the Borrower, and is allocated between the
Trust and the lending agent. Income from securities lending is included in
interest income on the Statement of Operations. The dividend and interest income
earned on the securities loaned is accounted for in the same manner as other
dividend and interest income.
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 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. The Trust uses the effective
interest method for reporting interest income on payment-in-kind (PIK) bonds.
Legal fees and other related expenses incurred to preserve and protect the value
of a security owned are added to the cost of the security; other legal fees are
expensed. Capital infusions made directly to the security issuer, which are
generally non-recurring, incurred to protect or enhance the value of high-yield
debt securities, are reported as additions to the cost basis of the security.
Costs that are incurred to negotiate the terms or conditions of capital
infusions or that are expected to result in a plan of reorganization are
reported as realized losses. Ongoing costs incurred to protect or enhance an
investment, or costs incurred to pursue other claims or legal actions, are
expensed.
Fees Paid Indirectly -- The Trust's custody fee is calculated as a percentage of
the Trust's month end net assets. The fee is reduced according to an arrangement
that measures the value of cash deposited with the custodian by the Trust.
During the period, the Trust's custodian fees were reduced by $35,135 under this
arrangement.
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.
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 be reported in the financial statements as distributions from paid-in
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
13
<PAGE>
excess of net investment income or net realized gains. During the year ended
October 31, 1999, $41,397 was reclassified from accumulated net realized gain on
investments and foreign currency transactions, to accumulated distributions in
excess of net investment income due to differences between book and tax
accounting for defaulted bond income. This change had no effect on the net
assets or net asset value per share.
(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 an annual rate of 0.68% of
the Fund's average daily net assets and 3.40% of investment income.
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 Fund from MFS. Certain officers and
Trustees of the Trust are officers or directors of MFS 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 $34,175 for the year ended October 31, 1999.
Administrator -- 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 annual percentages of the Trust's average daily net assets:
<TABLE>
<S> <C>
First $1 billion ................ 0.0150%
Next $1 billion ................. 0.0125%
Next $1 billion ................. 0.0100%
In excess of $3 billion ......... 0.0000%
</TABLE>
Transfer Agent -- MFSC acts as registrar and dividend disbursing agent for the
Trust. The agreement provides that the Trust will pay MFSC an account
maintenance fee of no more than $9.00 and a dividend services fee of $0.75 per
reinvestment and will reimburse MFSC for reasonable out-of-pocket expenses.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
-----------------------------------------------------------------------------------------
<S> <C> <C>
U.S. government securities ............................ $ 2,394,375 $ 2,419,650
------------ ------------
Investments (non-U.S. government securities) .......... $122,443,415 $125,142,829
------------ ------------
</TABLE>
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Trust, as computed on a federal income tax basis, are
as follows:
<TABLE>
<S> <C>
Aggregate cost .......................... $ 89,815,463
============
Gross unrealized appreciation ........... $ 17,861,230
Gross unrealized depreciation ........... (9,224,380)
------------
Net unrealized appreciation ......... $ 8,636,850
============
</TABLE>
14
<PAGE>
(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>
Year Ended Year Ended
October 31, 1999 October 31, 1998
------------------------ ----------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders in reinvestment of distributions ...... 70,078 $1,095,841 89,124 $1,600,556
------ ---------- ------ ----------
</TABLE>
(6) Line of Credit
The Trust and other affiliated funds participate in an $820 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 October 31, 1999, was $681. The Trust had no
significant borrowings during the year.
(7) Restricted Securities
The Trust may invest not more than 20% of its net assets in securities which are
subject to legal or contractual restrictions on resale. At October 31, 1999, the
Trust owned the following restricted securities, excluding securities issued
under Rule 144A, constituting 1.42% of net assets which may not be publicly sold
without registration under the Securities Act of 1933. The Trust does not have
the right to demand that such securities be registered. The value of these
securities is determined by valuations furnished by dealers or by a pricing
service, or if not available, in good faith by the Trustees.
<TABLE>
<CAPTION>
Date of Share/Par
Description Acquisition Amount Cost Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Atlantic Gulf Communities Corp. 3/20/92 - 9/25/95 250 $ -- $ 32
Jitney-Jungle Stores of America, Inc., 12s, 2006 3/5/99 - 10/6/99 1,500 1,278,688 525,000
Vnesheconombank, 6.063s, 2020 5/24/99 14,240 1,136,704 1,300,112
----------
$1,825,144
==========
</TABLE>
15
<PAGE>
Report of Ernst & Young, Independent Auditors
To the Trustees and Shareholders of MFS Special Value Trust:
We have audited the accompanying statement of assets and liabilities of MFS
Special Value Trust, including the schedule of portfolio investments, as of
October 31, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. 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 and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
MFS Special Value Trust at October 31, 1999, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
Boston, Massachusetts
December 9, 1999
16
/s/ ERNST & YOUNG LLP
<PAGE>
MFS' Year 2000 Readiness Disclosure
[Graphic: MFS > Year 2000; Y2K]
MFS Investment Management[RegTM], as an investment adviser and on behalf of the
MFS funds, is committed to the effective use of technology in managing our
portfolio investments, delivering high-quality service to MFS fund shareholders,
retirement plan participants, and MFS' institutional clients, and supporting the
financial consultants who sell our products.
MFS can now say that it is ready for the Year 2000. Our testing has demonstrated
that MFS' computer hardware and software will recognize "00" as the Year 2000
and will not confuse those digits with 1900. All of our critical business
applications and processes have been successfully tested, and we have adopted
companywide policies that will help us maintain our readiness through the
remainder of the year. Any new technology that is brought into the company
before the end of the year will be held to the same stringent standards as our
current technology. We have also developed a vendor readiness survey, contacted
over 700 of our vendors, and established an ongoing process to review responses,
as well as to review readiness statements of new vendors and products.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original
Research[RegTM] process of evaluating portfolio investments, one of the many
relevant factors that MFS' portfolio managers and research analysts may consider
is a company's Y2K readiness.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS fund shareholders, retirement plan participants, or
institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program,
please visit our Web site at www.mfs.com, call our toll-free line,
1-800-637-4406, or write to the MFS Year 2000 Program Management Office by
e-mail at [email protected] or by letter at 500 Boylston Street, Boston, MA
02116-3741.
17
<PAGE>
[Back cover]
MFS[RegTM] Special Value Trust
Trustees
Richard B. Bailey (2)
Private Investor; Former Chairman and
Director (until 1991), MFS Investment Management
Marshall N. Cohan+ (1)
Private Investor
Lawrence H. Cohn, M.D.+ (2)
Chief of Cardiac Surgery,
Brigham and Women's Hospital;
Professor of Surgery, Harvard
Medical School
The Hon. Sir J. David
Gibbons, KBE+ (2)
Chief Executive Officer,
Edmund Gibbons Ltd.;
Chairman, Colonial
Insurance Company, Ltd.
Abby M. O'Neill+ (2)
Private Investor
Walter E. Robb, III+ (1)
President and Treasurer,
Benchmark Advisors, Inc.
(corporate financial consultants);
President, Benchmark Consulting
Group, Inc. (office services)
Arnold D. Scott*
Senior Executive Vice President,
Director, and Secretary,
MFS Investment Management
Jeffrey L. Shames*
Chairman and Chief Executive Officer,
MFS Investment Management
J. Dale Sherratt+(1)
President, Insight Resources, Inc.
(acquisition planning specialists)
Ward Smith+ (1)
Former Chairman (until 1994),
NACCO Industries (holding company)
Portfolio Manager
Robert J. Manning*
Treasurer
W. Thomas London*
Assistant Treasurers
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Transfer Agent,
Registrar, and Dividend
Disbursing Agent
State Street Bank and
Trust Company
c/o MFS Service Center, Inc.
P.O. Box 9024
Boston, MA 02205-9824
1-800-637-2304
Custodian
State Street Bank and
Trust Company
Auditors
Ernst & Young LLP
Investment Adviser
Massachusetts Financial
Services Company
500 Boylston Street
Boston, MA 02116-3741
+ Independent Trustee.
* MFS Investment Management.
(1) Member of Audit Committee.
(2) Member of Portfolio Trading Committee.
[Recycle logo] This report is printed on recycled paper. MSVCE-2 12/99 13.7M
[Front cover]
[Background graphic: BOND repeating horizontally and vertically]
[Graphic: MFS[RegTM] Logo]
INVESTMENT MANAGEMENT
We invented the mutual fund[RegTM]
MFS[RegTM] Special
Value Trust
Annual Report o October 31, 1999
