<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MFS(R) UTILITIES FUND
ANNUAL REPORT o OCTOBER 31, 1998
DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 35)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 25
Independent Auditors' Report .............................................. 32
Trustees and Officers ..................................................... 37
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE MFS 75 YEARS
YEARS AHEAD WILL BRING A NUMBER OF [graphic omitted]
CHALLENGES, OUR 75 YEARS OF EXPERIENCE EXPERIENCE THE FUTURE(SM)
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- ------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
In 1999, MFS celebrates its 75th anniversary. The nation's first mutual
fund -- our Massachusetts Investors Trust (MIT) -- was introduced to the
public on March 21, 1924. Since then, MFS Investment Management(R), the
company that grew out of that original fund, has helped guide shareholders
through many economic and investment cycles, primarily by focusing on the
long-term opportunities created by an expanding global economy. As of October
31, 1998, MFS manages nearly $87 billion, and the firm's 2,000 people serve
3.8 million investors and their financial advisers worldwide. Meanwhile, MIT's
assets have grown to over $10 billion, and 56 mutual funds are offered in the
MFS Family of Funds(R).
One of the elements to the success of MIT did not exist before our founders
invented it in 1924. That is liquidity. This innovation means that if you want
to sell your investment in any MFS mutual fund, you have the security of
knowing that you may do so immediately and the money may be exchanged into
another MFS fund or that you may add other MFS funds to your portfolio as your
investment needs change. If you need your money for other purposes, it can
quickly be wired or mailed to you. This daily redemption feature, through
which new shares were created when people invested in MIT and were redeemed
when people sold, brought another important change to the industry. Now, the
price of a mutual fund's shares wasn't determined by supply and demand, but by
the value of the securities owned by each portfolio.
Another factor in our growth was the development of one of the industry's
first in-house research departments in 1932. Unlike many other companies that
rely on Wall Street research reports, which can be used by many investors at
the same time, MIT's managers built its long-term track record by visiting
companies, talking to managers and competitors, and "kicking the tires" so
they could judge the quality and potential of each company's products and
services for themselves. Today, MFS has more than 100 full-time portfolio
managers, stock analysts, and credit analysts who track the equity and bond
markets. That number includes nearly 40 equity analysts who specialize in
industries such as aviation, media, technology, automobiles, and utilities.
While MIT was the first mutual fund, it was not our only invention. We also
established the nation's first global bond fund, first high-yield municipal
bond fund, and first high-yield municipal closed-end bond fund.
We are proud of the record of MIT and of the funds in the MFS Family of Funds,
but we are also proud of our long-standing relationship with financial
advisers. Not only do we believe investors can benefit from the advice of
these experts but, as was shown during the market volatility of 1998, people
who work with financial advisers are less likely to abandon their carefully
designed, long-term investment strategies.
Our ability to service your investment and information needs is also extremely
important to us. Today, the MFS Service Center handles millions of
transactions and phone calls every year. Supporting the work of financial
advisers, promptly sending out statements and confirmations, and answering
hundreds of investors' questions every day are crucial elements in maintaining
long-term relationships with our fund shareholders. That link to our investors
has also been enhanced by our site on the World Wide Web: WWW.MFS.COM. Since
1996, this site has given investors and the general public access to up-to-
date information about MFS products and services, as well as market outlooks
and retirement information. The site has rapidly become one of our primary
vehicles for communicating with our investors and educating the public about
mutual funds in general and MFS in particular.
If there is a common thread running through these milestones, it is our
always-increasing commitment to providing you with the best possible
investment management and shareholder service, just as we have done for the
past 75 years.
As we celebrate this anniversary, it is also a time for MFS to look ahead and
build on our 75 years of innovation and experience to help meet your
investment needs in the next century. 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(R)
November 16, 1998
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Maura A. Shaughnessy]
Maura A. Shaughnessy
For the 12 months ended October 31, 1998, Class A shares of the Fund provided
a total return of 22.13%, Class B shares 21.27%, Class C shares 21.25%, and
Class I shares 22.52%. These returns, which include the reinvestment of
distributions but exclude the effects of any sales charges, compare to a
26.65% return for the Standard & Poor's Utility Index (the Utility Index), an
unmanaged, market-value-weighted, total return index of all utility stocks in
the Standard & Poor's 500 Composite Index (the S&P 500). For the same period,
the average utilities fund returned 21.89%, according to Lipper Analytical
Services, Inc., and the S&P 500, an unmanaged index of common stock total
return performance, returned 22.06%.
Q. COULD YOU DISCUSS SOME OF THE FACTORS THAT CONTRIBUTED TO THE FUND'S
PERFORMANCE OVER THE PAST 12 MONTHS?
A. The Fund trailed the Utility Index slightly for a few reasons, not the
least of which was that the recent rally in utility stocks has been driven
by large-cap, traditional electric utility stocks, which are perceived to
be high-quality investments, while the Fund's focus is predominantly on
mid-cap stocks diversified across the utility spectrum. In addition, some
of our international holdings, particularly in Latin America, and to a
lesser extent in Europe, underperformed over the past 12 months. Also, the
Fund was overweighted in natural gas stocks compared to the Utility Index,
and those stocks, which have yet to attain the broad investor confidence of
large-cap electric utility stocks, underperformed for a couple of reasons.
First, the unseasonably warm winter and spring 1998 depressed demand and,
second, these stocks are sensitive to natural gas liquids commodity prices.
Depressed commodity prices coupled with static processing costs negatively
impacted the earnings of several companies in this market.
The Fund was underweighted in telecommunications stocks, which also
contributed to its average performance in comparison to the
Utility Index.
Q. HOW WERE UTILITY STOCKS IMPACTED BY THE STOCK MARKET VOLATILITY OF THE
PAST SUMMER?
A. Because of the broad market volatility, there was a huge defensive move
into the utilities sector. Investors, many of whom probably had never owned
utilities stocks before, flooded the market for large-cap electric
utilities. In a twist on utility stocks' traditional reputation as staid,
surefooted investments, the sector became almost a momentum play during the
late summer. Among large-cap electric utilities, valuations were stretched
to unsupportable levels, which we believe reflected a lack of critical
analysis of the stocks' fundamentals and more of a reaction based on fear.
Q. IN WHAT SECTORS AND STOCKS DID YOU FIND THE BEST INVESTMENTS DURING THE
PAST YEAR?
A. MCI WorldCom has been a good performer and is up approximately 80% for the
year. While the stock may be nearing its full potential, we think it still
has some room to grow, and we remain confident in the company. Mannesmann,
a German telecommunications company, has also performed well over the past
year and is a large holding. Peco Energy, an electric utility based in
Philadelphia, is also up strongly this year.
Q. LET'S LOOK AROUND THE GLOBE. WHAT CAN YOU TELL ME ABOUT SOME OF YOUR MORE
ATTRACTIVE GLOBAL INVESTMENTS?
A. As I mentioned previously, Mannesmann in Europe has been strong. Cellular
Communications International, an American company with prominent assets in
the Italian telecommunications market, has jumped about 60% in the past 12
months, and we believe the company will be a leader in the rapidly
expanding Italian telecommunications market. Endesa SA, a Spanish electric
utility, has performed well for the Fund as a result of extensive
restructuring in the Spanish electric industry and lower interest rates in
Europe.
Q. CONSOLIDATION, PARTICULARLY AMONG THE GAS AND ELECTRIC UTILITIES, HAS BEEN
AN UNDERLYING THEME IN THE UTILITIES MARKET. IS THERE ANYTHING NEW TO
REPORT THERE?
A. I've been disappointed in the small number of consolidation deals announced
in 1998. We've seen a few nice deals, such as an interesting gas/electric
combination between CMS Energy, an electric utility, and Duke Energy, which
sold its gas pipelines to CMS. But we haven't seen the big pairings that we
saw a couple of years ago, for two reasons. First, deregulation and
restructuring at the state level are still ongoing, and companies are
waiting for the effects of those trends to fully shake out before linking
with other utilities. Second, the Public Utility Holding Company Act is
still a stumbling block to consolidation. Interestingly, we have also seen
some international deals that have not come to fruition due to regulatory,
economic, and cultural issues.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES IN THE PORTFOLIO IN THE PAST
12 MONTHS?
A. Not really. We've spent the past year, in both the healthy and the volatile
times, leveraging our investment strategy, looking for utility stocks that
are not just good utilities but also strong companies that can be the new
leaders in a dynamic market landscape.
Q. HOW HAVE REAL ESTATE INVESTMENT TRUSTS, OR REITS, PERFORMED OVER THE PAST
12 MONTHS?
A. This past year has been a hard one for the REITs market. Companies have had
a difficult time raising capital and some markets, such as the hotel
sector, have seen deteriorating fundamentals. Nor has the market sought out
these securities for defensive purposes despite the strong yields they're
offering. So REITs have largely underperformed.
Q. WHAT DO YOU THINK 1999 WILL HOLD FOR THE GLOBAL UTILITY MARKET?
A. We still see a number of opportunities in Latin America and believe that
many of the issues there are relatively well insulated from the region's
macroeconomic problems, particularly in Brazil. In Asia, we're not seeing
much to buy, as stock valuations there are just not attractive now. In
Europe, utility stocks in northern Europe are getting expensive, but we're
seeing lots of opportunities in southern Europe, especially in Italian and
Greek telecommunications stocks and in Spanish electric utilities. In the
United States, we're finding the best values in natural gas. These
companies' ability to snap back to robust earnings growth in 1999 will be
key to their share price performance in the future.
/s/ Maura A. Shaughnessy
Maura A. Shaughnessy
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are 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.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
MAURA A. SHAUGHNESSY IS A SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND IS PORTFOLIO MANAGER OF MFS(R) UTILITIES FUND, MFS(R)
UTILITIES SERIES, PART OF MFS(R) VARIABLE INSURANCE TRUST(SM), AND THE
UTILITIES SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS. SHE
IS ALSO A MEMBER OF THE PORTFOLIO MANAGEMENT TEAM OF MFS(R) TOTAL
RETURN FUND.
MS. SHAUGHNESSY JOINED MFS IN 1991 AS AN EQUITY ANALYST AND WAS PROMOTED
TO VICE PRESIDENT IN 1992 AND SENIOR VICE PRESIDENT IN 1998.
A GRADUATE OF COLBY COLLEGE AND THE AMOS TUCK SCHOOL OF BUSINESS AT
DARTMOUTH COLLEGE, SHE IS A CHARTERED FINANCIAL ANALYST.
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. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS CAPTIAL GROWTH AND CURRENT INCOME (INCOME
ABOVE THAT AVAILABLE FROM A PORTFOLIO INVESTED
ENTIRELY IN EQUITIES).
COMMENCEMENT OF
INVESTMENT OPERATIONS: FEBRUARY 14, 1992
CLASS INCEPTION: CLASS A FEBRUARY 14, 1992
CLASS B SEPTEMBER 7, 1993
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
SIZE: $782.5 MILLION NET ASSETS AS OF OCTOBER 31, 1998
PERFORMANCE SUMMARY
The following information illustrates the historical performance of the Fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and
reflect the percentage change in net asset value, including reinvestment of
dividends. 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. (See Notes to Performance Summary for more information.)
It is not possible to invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from March 1, 1992, through October 31, 1998)
MFS Standard Lehman Brothers
Utilities S&P 500 & Poor's Corporate Bond Consumer
Fund Composite Utility Utility Total Price
- Class A Index Index Return Index Index - U.S.
- -------------------------------------------------------------------------------
3/92 $ 9,532 $10,000 $10,000 $10,000 $10,000
10/94 12,284 12,508 12,491 11,376 10,825
10/96 17,913 19,625 17,730 14,497 11,463
10/98 27,985 31,629 24,678 17,417 11,861
AVERAGE ANNUAL TOTAL RETURNS THROUGH OCTOBER 31, 1998
CLASS A
10 Years/
1 Year 3 Years 5 Years Life*
- --------------------------------------------------------------------------------
Average Annual Total Return +22.13% +22.98% +16.97% +17.40%
- --------------------------------------------------------------------------------
SEC Results +16.33% +21.00% +15.83% +16.55%
- --------------------------------------------------------------------------------
CLASS B
10 Years/
1 Year 3 Years 5 Years Life*
- --------------------------------------------------------------------------------
Average Annual Total Return +21.27% +22.05% +15.98% +16.61%
- --------------------------------------------------------------------------------
SEC Results +17.27% +21.38% +15.76% +16.61%
- --------------------------------------------------------------------------------
CLASS C
10 Years/
1 Year 3 Years 5 Years Life*
- --------------------------------------------------------------------------------
Average Annual Total Return +21.25% +22.11% +16.03% +16.70%
- --------------------------------------------------------------------------------
SEC Results +20.25% +22.11% +16.03% +16.70%
- --------------------------------------------------------------------------------
CLASS I
10 Years/
1 Year 3 Years 5 Years Life*
- --------------------------------------------------------------------------------
Average Annual Total Return +22.52% +23.20% +17.09% +17.49%
- --------------------------------------------------------------------------------
COMPARATIVE INDICES
10 Years/
1 Year 3 Years 5 Years Life
- --------------------------------------------------------------------------------
Average utilities fund** +21.89% +16.64% +11.26% +13.66%
- --------------------------------------------------------------------------------
Standard & Poor's Utility Index** +26.65% +15.18% +11.63% +14.51%
- --------------------------------------------------------------------------------
Standard & Poor's 500 Composite
Index++ +22.06% +25.99% +21.30% +18.62%
- --------------------------------------------------------------------------------
Lehman Brothers Corporate Bond
Utility Total Return Index+ + 9.34% + 8.43% + 7.37% + 8.67%
- --------------------------------------------------------------------------------
Consumer Price Index+# + 1.37% + 2.14% + 2.37% + 2.54%
- --------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
February 14, 1992, through October 31, 1998.
** Source: Lipper Analytical Services, Inc. "Life" refers to the period from
March 1, 1992, through October 31, 1998.
+ Source: CDA/Wiesenberger. "Life" refers to the period from March 1, 1992,
through October 31, 1998.
++ Source: Lehman Brothers. "Life" refers to the period from March 1, 1992,
through October 31, 1998. The Lehman Brothers Corporate Bond Utility Total
Return Index is an unmanaged index that includes all publicly issued,
fixed-rate, nonconvertible investment-grade domestic utility debt. We no
longer consider the Lehman Brothers Corporate Bond Utility Total Return Index
a relevant benchmark against which to measure the Fund's capital appreciation
performance. The Fund invests less than 25% of its assets in utility bonds
and generally only uses bonds as a means of providing income.
# The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 4.75% 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") 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. 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.
The Fund may focus its investments in certain sectors, thereby increasing its
vulnerability to any single economic, political, or regulatory development.
<PAGE>
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 1998
FIVE LARGEST STOCK SECTORS
Utilities & Communications 84.3%
Financial Services 6.9%
Leisure 1.9%
Industrial Goods & Services 1.8%
Energy 1.6%
TOP 10 STOCK HOLDINGS
MCI WORLDCOM, INC. 3.0% PINNACLE WEST CAPITAL CORP. 2.5%
Integrated telecommunications company Arizona electric utility, real
estate, and investment company
KN ENERGY, INC. 2.9%
Natural gas services company GPU, INC. 2.5%
Electric utility holding company
CALENERGY CO., INC. 2.8%
Natural gas energy and production company COLUMBIA ENERGY GROUP, INC. 2.5%
Natural gas production and
pipeline company
CENTURY TELEPHONE ENTERPRISES, INC. 2.7%
Diversified telecommunications services ENDESA S.A. 2.2%
provider Spanish electric utility
CMS ENERGY 2.6% EDISON INTERNATIONAL 2.1%
Michigan electric and gas utility Broad-based electric industry
conglomerate
Portfolio information is as of October 31, 1998. The portfolio is actively
managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS -- October 31, 1998
Stocks - 80.3%
<CAPTION>
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ISSUER SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 60.7%
Conglomerates - 1.6%
Eastern Enterprises 301,600 $ 12,384,450
- ------------------------------------------------------------------------------------------------------
Entertainment - 0.5%
MediaOne Group, Inc.* 94,400 $ 3,994,300
- ------------------------------------------------------------------------------------------------------
Oils - 0.4%
Conoco Inc., "A"* 92,100 $ 2,290,986
Enron Oil & Gas Co. 47,300 789,319
------------
$ 3,080,305
- ------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts - 5.9%
Beacon Capital Partners, Inc.*## 161,300 $ 3,226,000
Camden Property Trust 207,700 5,581,937
CarrAmerica Realty Corp. 159,500 3,588,750
CBL & Associates Properties, Inc. 88,500 2,306,531
Equity Office Properties Trust 138,600 3,326,400
Equity Residential Properties Trust 63,900 2,683,800
First Industrial Realty Trust, Inc. 113,900 2,918,687
Highwoods Properties, Inc. 186,400 5,207,550
Kilroy Realty Corp. 87,600 1,943,625
Koger Equity, Inc. 143,800 2,426,625
Mack-Cali Realty Corp. 113,200 3,353,550
Patriot American Hospitality, Inc. 106,700 946,963
SL Green Realty Corp. 181,700 3,440,944
TriNet Corporate Realty Trust, Inc. 185,200 5,324,500
------------
$ 46,275,862
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Special Products and Services - 1.8%
MCN Energy Group, Inc. 450,200 $ 8,694,488
USEC, Inc.* 369,800 5,408,325
------------
$ 14,102,813
- ------------------------------------------------------------------------------------------------------
Telecommunications - 12.2%
Allegiance Telecom, Inc.* 177,800 $ 2,033,588
Alltel Corp. 219,900 10,294,069
Ameritech Corp. 141,900 7,653,731
Bell Atlantic Corp. 86,220 4,580,437
Cellular Communications International, Inc.* 8,000 497,250
Century Telephone Enterprises, Inc. 313,100 17,787,994
Global TeleSystems Group, Inc.* 25,200 1,009,575
GTE Corp. 112,700 6,614,081
Hyperion Telecommunications, Inc., "A"* 138,500 1,350,375
Intermedia Communications, Inc.* 380,100 7,031,850
IXC Communications, Inc.* 226,500 8,776,875
MCI WorldCom, Inc.* 357,575 19,756,019
SBC Communications, Inc. 173,664 8,042,814
------------
$ 95,428,658
- ------------------------------------------------------------------------------------------------------
Utilities - Electric - 25.3%
Atmos Energy Corp. 291,299 $ 8,647,939
CalEnergy Co., Inc.* 673,000 18,423,375
Carolina Power & Light Co. 55,700 2,555,238
Cinergy Corp. 142,300 4,909,350
CMS Energy Corp. 394,300 17,373,844
CMS Energy Corp., "G" 157,400 3,856,300
DQE, Inc. 65,300 2,575,269
Edison International 542,000 14,295,250
El Paso Electric Co.* 618,100 5,408,375
FirstEnergy Corp. 295,600 8,868,000
GPU, Inc. 390,300 16,831,687
Illinova Corp. 266,300 6,740,719
New Century Energies, Inc. 67,100 3,241,769
Niagara Mohawk Power Corp. 605,000 8,848,125
Northern States Power Co. 98,600 2,662,200
Peco Energy Co. 346,100 13,389,744
Pinnacle West Capital Corp. 385,600 16,894,100
Public Service Co. of New Mexico 136,200 3,004,912
Public Service Enterprise Group 150,000 5,700,000
Sempra Energy 99,500 2,587,000
Sierra Pacific Resources 231,600 8,438,925
Texas Utilities Co. 275,800 12,066,250
TNP Enterprises, Inc. 125,200 4,225,500
Unicom Corp. 161,100 6,071,456
------------
$197,615,327
- ------------------------------------------------------------------------------------------------------
Utilities - Gas - 13.0%
Coastal Corp. 212,600 $ 7,494,150
Columbia Energy Group, Inc. 289,500 16,754,812
Connecticut Energy Group 52,100 1,458,800
Consolidated Natural Gas Co. 60,200 3,179,312
El Paso Energy Corp. 183,600 6,506,325
Energen Corp. 217,200 3,909,600
Enron Corp. 116,400 6,140,100
KN Energy, Inc. 389,600 19,358,250
National Fuel Gas Co. 158,500 7,489,125
NICOR, Inc. 203,600 8,627,550
NUI Corp. 217,300 5,092,969
ONEOK, Inc. 203,700 6,976,725
Questar Corp. 169,300 3,333,094
Washington Gas Light Co. 204,500 5,406,469
------------
$101,727,281
- ------------------------------------------------------------------------------------------------------
Total U.S. Stocks $474,608,996
- ------------------------------------------------------------------------------------------------------
Foreign Stocks - 19.6%
Bermuda - 0.5%
Global Crossing Ltd. (Telecommunications)* 127,800 $ 3,674,250
- ------------------------------------------------------------------------------------------------------
Brazil - 2.9%
CEMIG (Utilities - Electric) 145,301,759 $ 2,825,887
Companhia Electricas est Rio de Janeiro
(Utilities - Electric)* 7,436,500,000 2,431,247
Companhia Energetica do Ceara, Preferred "A"
(Utilities - Electric) 116,000 202,263
Companhia Paranaense de Energia, ADR
(Utilities - Electric) 383,200 2,969,800
Companhia Paranaense de Energia, Preferred "B"
(Utilities - Electric) 391,300,000 3,050,625
Companhia Riogrand Telecomunicacoes
(Utilities - Telephone) 4,834,100 1,418,338
Espirito Santo Centrais Eletricas S.A
(Utilities - Electric) 10,200,000 684,047
Espirito Santo Centrais Eletricas S.A., Preferred "B"
(Utilities - Electric) 1,114,600 626,022
Telecomunicacoes Brasileiras S.A., ADR
(Telecommunications) 68,200 5,178,938
Telecomunicacoes Sao Paulo (Telecommunications) 9,146,425 1,533,477
Telesp Participacoes S.A. (Telecommunications) 85,382,000 2,183,042
------------
$ 23,103,686
- ------------------------------------------------------------------------------------------------------
Canada - 0.1%
Bell Canada International, Inc. (Telecommunications)* 73,100 $ 767,550
- ------------------------------------------------------------------------------------------------------
Chile - 1.0%
Chilectra S.A., ADR (Utilities - Electric) 403,080 $ 7,932,614
- ------------------------------------------------------------------------------------------------------
Denmark - 0.3%
Tele Danmark, ADR (Telecommunications) 36,800 $ 2,012,500
- ------------------------------------------------------------------------------------------------------
Finland - 0.2%
Helsingin Puhelin Oyj (Telecommunications) 22,300 $ 1,221,918
- ------------------------------------------------------------------------------------------------------
Germany - 2.2%
Mannesmann AG (Conglomerate) 122,300 $ 12,034,350
VEBA AG (Oil and Gas) 65,500 3,657,561
VEBA AG, ADR (Oil and Gas) 33,600 1,873,200
------------
$ 17,565,111
- ------------------------------------------------------------------------------------------------------
Greece - 0.5%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 171,899 $ 3,907,628
- ------------------------------------------------------------------------------------------------------
Hungary - 1.0%
Magyar Tavkozlesi Rt., ADR (Telecommunications) 284,300 $ 7,640,562
- ------------------------------------------------------------------------------------------------------
Italy - 2.1%
Telecom Italia S.p.A. (Telecommunications)* 1,709,000 $ 8,623,299
Telecom Italia S.p.A. (Telecommunications)* 1,059,400 7,668,839
------------
$ 16,292,138
- ------------------------------------------------------------------------------------------------------
Mexico - 0.4%
Telefonos de Mexico S.A., ADR (Utilities - Telephone) 66,500 $ 3,512,031
- ------------------------------------------------------------------------------------------------------
Peru - 0.2%
Telefonica del Peru S.A., ADR (Telecommunications) 130,400 $ 1,695,200
- ------------------------------------------------------------------------------------------------------
Portugal - 0.8%
Electricidade de Portugal S.A. (Utilities - Electric) 260,800 $ 6,523,819
- ------------------------------------------------------------------------------------------------------
South Korea
SK Telecom Ltd. (Telecommunications) 15 $ 10,281
- ------------------------------------------------------------------------------------------------------
Spain - 5.7%
Endesa S.A. (Utilities - Electric) 569,000 $ 14,473,938
Iberdrola S.A. (Utilities - Electric) 792,700 12,814,556
Telefonica de Espana S.A., ADR (Telecommunications) 46,463 6,362,527
Union Electrica Fenosa S.A. (Utilities - Electric) 665,800 10,810,439
------------
$ 44,461,460
- ------------------------------------------------------------------------------------------------------
Switzerland - 0.7%
Swisscom AG (Telecommunications)* 16,300 $ 5,525,628
- ------------------------------------------------------------------------------------------------------
United Kingdom - 1.0%
Cable & Wireless Communications PLC
(Telecommunications)* 279,500 $ 2,104,214
PowerGen PLC (Utilities - Electric)* 392,000 5,541,642
------------
$ 7,645,856
- ------------------------------------------------------------------------------------------------------
Total Foreign Stocks $153,492,232
- ------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $606,525,604) $628,101,228
- ------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks - 2.3%
- ------------------------------------------------------------------------------------------------------
Entertainment - 0.7%
MediaOne Group, Inc., 6.25% 109,800 $ 5,915,475
- ------------------------------------------------------------------------------------------------------
Telecommunications - 0.5%
IXC Communications, Inc., 6.75% 106,000 $ 3,670,250
- ------------------------------------------------------------------------------------------------------
Utilities - Electric - 1.1%
CalEnergy Capital Trust III, 6.5% 35,000 $ 1,467,813
CalEnergy Capital Trust III, 6.5%*## 65,500 2,746,906
Houston Industries, Inc., 7.00% 36,300 2,942,569
Texas Utilities Co., 3.315% 26,100 1,200,600
------------
$ 8,357,888
- ------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost, $19,887,119) $ 17,943,613
- ------------------------------------------------------------------------------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS -- continued
Bonds - 12.3%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
U.S. Bonds - 11.9%
Banks and Credit Companies - 0.2%
Beaver Valley Funding Corp., 9s, 2017 $ 1,185 $ 1,310,077
- ------------------------------------------------------------------------------------------------------
Corporate Asset Backed - 0.1%
Time Warner Pass-Through Asset Trust, 6.1s, 2001## $ 1,015 $ 1,032,945
- ------------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue
Long Island Power Authority, New York Electric,
5.25s, 2026 $ 325 $ 327,106
- ------------------------------------------------------------------------------------------------------
Entertainment - 0.1%
Circus Circus Enterprises, Inc., 6.45s, 2006 $ 1,000 $ 885,830
- ------------------------------------------------------------------------------------------------------
Financial Institutions - 0.2%
Salton Sea Funding Corp., 6.69s, 2000 $ 470 $ 475,117
Salton Sea Funding Corp., 7.84s, 2010 1,110 1,288,155
------------
$ 1,763,272
- ------------------------------------------------------------------------------------------------------
Forest and Paper Products - 0.1%
Boise Cascade Co., 7.43s, 2005 $ 450 $ 441,459
- ------------------------------------------------------------------------------------------------------
Insurance - 0.2%
NGC Corp. Capital Trust I, 8.316s, 2027 $ 1,670 $ 1,682,225
- ------------------------------------------------------------------------------------------------------
Oils - 0.4%
Oryx Energy Co., 8.375s, 2004 $ 1,500 $ 1,595,880
Sun Co., Inc., 9s, 2024 1,000 1,124,280
------------
$ 2,720,160
- ------------------------------------------------------------------------------------------------------
Telecommunications - 0.5%
Cellular Communications International, Inc., 5.75s, 2005 $ 3,326 $ 2,685,519
Rogers Cablesystems, Inc., 10.125s, 2012 200 216,000
WorldCom, Inc., 8.875s, 2006 720 789,034
------------
$ 3,690,553
- ------------------------------------------------------------------------------------------------------
U.S. Government Agencies - 0.3%
Federal National Mortgage Association - 0.3%
FNMA, 6.5s, 2013 $ 2,264 $ 2,297,090
- ------------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 5.7%
Government National Mortgage Association - 0.7%
GNMA, 7s, 2027 $ 445 $ 455,655
GNMA, 7.5s, 2025 - 2027 3,632 3,740,082
GNMA, 8s, 2025 - 2026 1,081 1,119,106
------------
$ 5,314,843
- ------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 5.0%
U.S. Treasury Bonds, 6.125s, 2027 $ 1,656 $ 1,863,514
U.S. Treasury Bonds, 6.375s, 2027 5,000 5,761,700
U.S. Treasury Bonds, 9.875s, 2015 810 1,227,401
U.S. Treasury Bonds, 10.75s, 2005 400 541,064
U.S. Treasury Notes, 6.5s, 2001 - 2006 21,620 24,172,458
U.S. Treasury Notes, 6.625s, 2007 5,000 5,677,350
------------
$ 39,243,487
- ------------------------------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 44,558,330
- ------------------------------------------------------------------------------------------------------
Utilities - Electric - 3.8%
AEP Generating, 9.82s, 2022 $ 1,192 $ 1,554,622
CalEnergy Co., Inc., 7.63s, 2007 2,500 2,553,450
Commonwealth Edison Co., 6.95s, 2018 275 275,344
Commonwealth Edison Co., 7.625s, 2007 225 243,868
Connecticut Light & Power Co., 8.59s, 2003 1,000 1,040,500
Long Island Lighting Co., 8.2s, 2023 1,500 1,668,315
Midland Cogeneration Venture Corp., 10.33s, 2002 330 358,068
Midland Funding Corp. I, 10.33s, 2002 1,257 1,327,625
Montana Power Co., 7.875s, 2026 500 579,865
National Rural Utilities Cooperative Finance, 5.75s, 2008 3,621 3,619,660
Niagara Mohawk Power Corp., 7.625s, 2005 1,000 1,026,330
Niagara Mohawk Power Corp., 8.5s, 2023 1,200 1,309,776
PacifiCorp, 6.75s, 2004 4,000 3,986,600
PP&L, Inc., 6.125s, 2001 3,000 3,059,160
Seabrook Station, 7.83s, 2019 916 1,037,373
Texas & New Mexico Power Co., 12.5s, 1999 1,000 1,012,740
Texas Utilities Co., 5.94s, 2001 3,500 3,503,185
Texas Utilities Co., 6.375s, 2008 1,200 1,191,768
Utilicorp United, Inc., 8.45s, 1999 600 616,698
------------
$ 29,964,947
- ------------------------------------------------------------------------------------------------------
Utilities - Gas - 0.3%
Tennessee Gas Pipeline Co., 7.625s, 2037 $ 1,000 $ 1,025,860
Texas Gas Transmission Corp., 7.25s, 2027 1,100 1,130,921
------------
$ 2,156,781
- ------------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 92,830,775
- ------------------------------------------------------------------------------------------------------
Foreign Bonds - 0.4%
Argentina - 0.1%
Hidroelectrica Alicura, 8.375s, 1999
(Utilities - Electric)## $ 1,150 $ 1,109,750
- ------------------------------------------------------------------------------------------------------
Canada - 0.1%
Gulf Canada Resources, 9.25s, 2004 (Oils) $ 850 $ 866,345
- ------------------------------------------------------------------------------------------------------
Chile - 0.2%
Empresa Electric Guacolda S.A., 7.6s, 2001
(Utilities - Electric)## $ 1,500 $ 1,515,885
- ------------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 3,491,980
- ------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $95,699,451) $ 96,322,755
- ------------------------------------------------------------------------------------------------------
Convertible Bonds - 2.8%
- ------------------------------------------------------------------------------------------------------
Financial Institutions - 0.6%
ADT Operations, Inc., 0s, 2010 $ 2,870 $ 4,979,450
- ------------------------------------------------------------------------------------------------------
Telecommunications - 2.2%
Cellular Commerce International, Inc., 6s, 2005## $ 5,780 $ 9,826,000
Cellular Communications International, Inc., 6s, 2005 310 527,000
Global Telesystems Group, Inc., 5.75s, 2010 7,990 7,051,175
------------
$ 17,404,175
- ------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $16,546,446) $ 22,383,625
- ------------------------------------------------------------------------------------------------------
Short-Term Obligations - 2.0%
- ------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 11/12/98 - 11/30/98 $ 8,100 $ 8,067,485
General Electric Capital Corp., due 11/02/98 7,600 7,598,792
- ------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 15,666,277
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $754,324,897) $780,417,498
Other Assets, Less Liabilities - 0.3% 2,120,737
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $782,538,235
- ------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- -------------------------------------------------------------------------------
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
Assets:
Investment, at value (identified cost, $754,324,897) $780,417,498
Cash 396,823
Foreign currency, at value (identified cost, $435,886) 433,963
Receivable for Fund shares sold 10,215,622
Receivable for investments sold 24,399,342
Interest and dividends receivable 2,977,300
Other assets 1,711
------------
Total assets $818,842,259
------------
Liabilities:
Distributions payable $ 426,510
Payable for Fund shares reaquired 1,104,919
Payable for investments purchased 34,313,100
Net payable for foreign currency exchange contracts
subject to master netting agreements 60,674
Payable to affiliates -
Management fee 21,113
Shareholder servicing agent fee 4,751
Distribution and service fee 224,610
Administrative fee 566
Accrued expenses and other liabilities 147,781
------------
Total liabilities $ 36,304,024
------------
Net assets $782,538,235
============
Net assets consist of:
Paid-in capital $713,563,527
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 26,018,908
Accumulated undistributed net realized gain on
investments and foreign
currency transactions 43,361,127
Accumulated distributions in excess of net investment
income (405,327)
------------
Total $782,538,235
============
Shares of beneficial interest outstanding 72,803,353
==========
Class A shares:
Net asset value per share
(net assets of $324,097,935 / 30,106,797 shares of
beneficial interest outstanding) $10.76
======
Offering price per share (100 / 95.25 of net value per
share) $11.30
======
Class B shares:
Net asset value and offering price per share
(net assets of $361,439,496 / 33,669,637 shares of
beneficial interest outstanding) $10.73
======
Class C shares:
Net asset value and offering price per share
(net assets of $95,856,030 / 8,920,695 shares of
beneficial interest outstanding) $10.75
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $1,144,774 / 106,224 shares of
beneficial interest outstanding) $10.78
======
On sales of $100,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Statement of Operations
- ------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1998
- ------------------------------------------------------------------------------------------
<S> <C>
Net investment income:
Income -
Dividends $10,349,976
Interest 5,408,066
Foreign taxes withheld (310,587)
-----------
Total investment income $15,447,455
-----------
Expenses -
Management fee $ 2,540,928
Trustees' compensation 41,400
Shareholder servicing agent fee 486,597
Distribution and service fee (Class A) 402,562
Distribution and service fee (Class B) 2,091,070
Distribution and service fee (Class C) 549,445
Administrative fee 61,787
Custodian fee 180,623
Printing 49,968
Postage 43,203
Auditing fees 34,066
Legal fees 4,034
Miscellaneous 361,292
-----------
Total expenses $ 6,846,975
Fees paid indirectly (57,753)
Reduction of expenses by investment adviser (413,288)
-----------
Net expenses $ 6,375,934
-----------
Net investment income $ 9,071,521
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $44,064,038
Foreign currency transactions (186,931)
-----------
Net realized gain on investments and foreign currency transactions $43,877,107
-----------
Change in unrealized appreciation (depreciation) -
Investments $12,756,845
Translation of assets and liabilities in foreign currencies (74,166)
-----------
Net unrealized gain on investments and foreign currency translation $12,682,679
-----------
Net realized and unrealized gain on investments and foreign
currency $56,559,786
-----------
Increase in net assets from operations $65,631,307
===========
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
- -------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 9,071,521 $ 4,492,110
Net realized gain on investments and foreign currency
transactions 43,877,107 29,198,342
Net unrealized gain on investments and foreign currency
translation 12,682,679 3,178,460
------------ ------------
Increase in net assets from operations $ 65,631,307 $ 36,868,912
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,357,952) $ (2,595,146)
From net investment income (Class B) (4,035,339) (1,850,367)
From net investment income (Class C) (1,060,616) (373,755)
From net investment income (Class I) (28,949) (23,347)
In excess of net investment income (Class A) (134,059) --
In excess of net investment income (Class B) (216,882) --
In excess of net investment income (Class C) (52,495) --
In excess of net investment income (Class I) (1,891) --
From net realized gain on investments and foreign
currency transactions (Class A) (12,514,640) (5,350,418)
From net realized gain on investments and foreign
currency transactions (Class B) (13,185,584) (4,454,053)
From net realized gain on investments and foreign
currency transactions (Class C) (3,245,184) (782,366)
From net realized gain on investments and foreign
currency transactions (Class I) (113,598) --
------------ ------------
Total distributions declared to shareholders $(38,947,189) $(15,429,452)
------------ ------------
Net increase in net assets from Fund share transactions $550,284,827 $ 65,677,277
------------ ------------
Total increase in net assets $576,968,945 $ 87,116,737
Net assets:
At beginning of period 205,569,290 118,452,553
------------ ------------
At end of period (including accumulated undistributed
(distributions in excess of) net investment income of
$(405,327) and $77,488, respectively) $782,538,235 $205,569,290
============ ============
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.39 $ 9.12 $ 8.20 $ 7.00 $ 7.86
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.27 $ 0.32 $ 0.38 $ 0.31 $ 0.33
Net realized and unrealized gain (loss) on
investments and foreign currency 1.78 2.08 1.07 1.22 (0.63)
------ ------ ------ ------ ------
Total from investment operations $ 2.05 $ 2.40 $ 1.45 $ 1.53 $(0.30)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.27) $(0.34) $(0.32) $(0.33) $(0.35)
From net realized gain on investments and
foreign currency transactions (1.39) (0.79) (0.21) -- (0.21)
In excess of net investment income (0.02) -- -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.68) $(1.13) $(0.53) $(0.33) $(0.56)
------ ------ ------ ------ ------
Net asset value - end of period $10.76 $10.39 $ 9.12 $ 8.20 $ 7.00
====== ====== ====== ====== ======
Total return(+) 22.13% 28.62% 18.41% 22.48% (3.89)%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.05% 1.10% 1.08% 0.83% 0.65%
Net investment income 2.60% 3.27% 4.37% 4.30% 4.58%
Portfolio turnover 124% 153% 137% 152% 115%
Net assets at end of period (000 omitted) $324,098 $90,083 $60,345 $52,474 $42,027
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995,
the Fund's expenses are calculated without reduction for this expense offset arrangement.
(+) 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.
(S) The investment adviser voluntarily waived all or a portion of its management fee for the periods indicated. For the year
ended October 31, 1994, the investment adviser further agreed to reduce a portion of the Fund's expenses. If these fees
had not been waived, the net investment income per share and the ratios would have been:
Net investment income $ 0.26 $ 0.30 $ 0.34 $ 0.28 $ 0.28
Ratios (to average net assets):
Expenses## 1.15% 1.29% 1.42% 1.23% 1.41%
Net investment income 2.50% 3.08% 4.03% 3.90% 3.82%
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.36 $ 9.10 $ 8.18 $ 6.98 $ 7.84
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.19 $ 0.24 $ 0.31 $ 0.24 $ 0.25
Net realized and unrealized gain (loss) on
investments and foreign currency 1.79 2.08 1.07 1.22 (0.63)
------ ------ ------ ------ ------
Total from investment operations $ 1.98 $ 2.32 $ 1.38 $ 1.46 $(0.38)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.20) $(0.27) $(0.25) $(0.26) $(0.27)
From net realized gain on investments and
foreign currency transactions (1.39) (0.79) (0.21) -- (0.21)
In excess of net investment income (0.02) -- -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.61) $(1.06) $(0.46) $(0.26) $(0.48)
------ ------ ------ ------ ------
Net asset value - end of period $10.73 $10.36 $ 9.10 $ 8.18 $ 6.98
====== ====== ====== ====== ======
Total return 21.27% 27.59% 17.50% 21.43% (4.92)%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.80% 1.87% 1.89% 1.74% 1.72%
Net investment income 1.85% 2.49% 3.53% 3.33% 3.51%
Portfolio turnover 124% 153% 137% 152% 115%
Net assets at end of period (000 omitted) $361,439 $91,973 $49,877 $33,239 $19,774
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995,
the Fund's expenses are calculated without reduction for this expense offset arrangement.
(S) The investment adviser voluntarily waived all or a portion of its management fee for the periods indicated. For the year
ended October 31, 1994, the investment adviser further agreed to reduce a portion of the Fund's expenses. If these fees
had not been waived, the net investment income per share and the ratios would have been:
Net investment income $ 0.18 $ 0.22 $ 0.28 $ 0.21 $ 0.20
Ratios (to average net assets):
Expenses## 1.90% 2.06% 2.23% 2.14% 2.48%
Net investment income 1.75% 2.30% 3.19% 2.93% 2.74%
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
- --------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
------------------------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994*
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $10.37 $ 9.10 $ 8.18 $ 6.99 $ 7.48
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.19 $ 0.24 $ 0.31 $ 0.24 $ 0.25
Net realized and unrealized gain (loss) on
investments and foreign currency 1.80 2.09 1.07 1.21 (0.54)
------ ------ ------ ------ ------
Total from investment operations $ 1.99 $ 2.33 $ 1.38 $ 1.45 $(0.29)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.20) $(0.27) $(0.25) $(0.26) $(0.20)
From net realized gain on investments and
foreign currency transactions (1.39) (0.79) (0.21) -- --
In excess of net investment income (0.02) -- -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.61) $(1.06) $(0.46) $(0.26) $(0.20)
------ ------ ------ ------ ------
Net asset value - end of period $10.75 $10.37 $ 9.10 $ 8.18 $ 6.99
====== ====== ====== ====== ======
Total return 21.25% 27.71% 17.57% 21.19% (3.87)%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.80% 1.85% 1.82% 1.81% 1.65%+
Net investment income 1.85% 2.47% 3.60% 3.32% 3.56%+
Portfolio turnover 124% 153% 137% 152% 115%
Net assets at end of period (000 omitted) $95,856 $22,788 $8,231 $4,943 $2,399
* For the period from the inception of Class C, January 3, 1994, through October 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995,
the Fund's expenses are calculated without reduction for this expense offset arrangement.
(S) The investment adviser voluntarily waived all or a portion of its management fee for the periods indicated. For the
period ended October 31, 1994, the investment adviser further agreed to reduce a portion of the Fund's expenses. If these
fees had not been waived, the net investment income per share and the ratios would have been:
Net investment income $ 0.18 $ 0.22 $ 0.28 $ 0.21 $ 0.20
Ratios (to average net assets):
Expenses## 1.90% 2.04% 2.16% 2.21% 2.41%+
Net investment income 1.75% 2.28% 3.26% 2.83% 2.80%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED PERIOD ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997*
- --------------------------------------------------------------------------------------------------------------------
CLASS I
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.39 $ 8.90
------ ------
Income from investment operations# -
Net investment income(S) $ 0.30 $ 0.29
Net realized and unrealized gain on investments and foreign
currency 1.80 1.48
------ ------
Total from investment operations $ 2.10 $ 1.77
------ ------
Less distributions declared to shareholders -
From net investment income $(0.29) $(0.28)
From net realized gain on investments and foreign currency
transactions (1.39) --
In excess of net investment income (0.03) --
------ ------
Total distributions declared to shareholders $(1.71) $(0.28)
------ ------
Net asset value - end of period $10.78 $10.39
====== ======
Total return 22.52% 20.15%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.80% 0.86%+
Net investment income 2.84% 3.39%+
Portfolio turnover 124% 153%
Net assets at end of period (000 omitted) $1,145 $725
* For the period from the inception of Class I, January 2, 1997, through October 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount
of cash maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are
calculated without reduction for this expense offset arrangement.
(S) The investment adviser voluntarily waived a portion of its management fee for the periods indicated. If
the fee had not been waived, the net investment income per share and the ratios would have been:
Net investment income $ 0.29 $ 0.27
Ratios (to average net assets):
Expenses## 0.90% 1.05%+
Net investment income 2.74% 3.20%+
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Utilities Fund (the Fund) is a non-diversified series of MFS Series Trust
VI (the Trust). The Trust is organized as a Massachusetts business trust and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
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 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. Debt securities (other than short-term obligations which
mature in 60 days or less), including listed issues and forward contracts, are
valued on the basis of valuations furnished by dealers or by a pricing service
with consideration to factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data, without exclusive reliance
upon exchange or over-the-counter prices. Short-term obligations, which mature
in 60 days or less, are valued at amortized cost, which approximates market
value. Securities for which there are no such quotations or valuations are
valued at fair value as determined in good faith by or at the direction of the
Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. The Fund will enter
into forward contracts for hedging purposes as well as for non-hedging
purposes. For hedging purposes, the Fund may enter into contracts to deliver
or receive foreign currency it will receive from or require for its normal
investment activities. The Fund may also use contracts in a manner intended to
protect foreign currency denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains
or losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains
or losses on 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 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. Some securities may be
purchased on a "when-issued" or "forward delivery" basis, which means that the
securities will be delivered to the Fund at a future date, usually beyond
customary settlement time.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund'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 Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code, which may differ from generally accepted accounting principles, the
basis on which these financial statements are prepared. Accordingly, the
amount of net investment income and net realized gain reported on these
financial statements may differ from that reported on the Fund's tax return
and, consequently, the character of distributions to shareholders reported in
the financial highlights may differ from that reported to shareholders on Form
1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a 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 net realized gains. During
the year ended October 31, 1998, accumulated undistributed net realized gain
on investments was decreased by $351,844, accumulated distributions in excess
of net investment income was decreased by $333,847 and paid-in capital was
increased by $17,997 due to differences between book and tax accounting for
non-taxable dividends, mortgage-backed securities and currency transactions.
This change had no effect on the net assets or net asset value per share.
At October 31, 1998, accumulated undistributed net realized gain on
investments and accumulated distributions in excess of net investment income
under book accounting were different from tax accounting due to temporary
differences in accounting for wash sales.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on 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. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.375%
of average daily net assets and 6.25% of investment income. The investment
adviser has voluntarily agreed to waive a portion of its fee, which is
reflected as a reduction of expenses in the Statement of Operations.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of $8,758
for the year ended October 31, 1998.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$618,527 for the year ended October 31, 1998, as its portion of the sales
charge on sales of Class A shares of the Fund.
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 Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
paid to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum of the Fund's average daily net assets attributable to
Class A shares which are attributable to that securities dealer and a
distribution fee to MFD of up to 0.10% per annum of the Fund's average daily
net assets attributable to Class A shares. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $31,818
for the year ended October 31, 1998. Payment of the 0.10% per annum Class A
distribution fee will commence on such date as the Trustees of the Trust may
determine. Fees incurred under the distribution plan during the year ended
October 31, 1998, were 0.25% of average daily net assets attributable to Class
A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a
distribution fee of up to 0.75% per annum, and a service fee of up to 0.25%
per annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class B
and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. The service fee is intended
to be 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 $13,826 and $582 for
Class B and Class C shares, respectively, for the year ended October 31, 1998.
Fees incurred under the distribution plan during the year ended October 31,
1998, were 1.00% and 1.00% of average daily net assets attributable to Class B
and Class C shares on an annualized basis, respectively.
Certain Class A shares and Class C shares are subject to a contingent deferred
sales charge in the event of a shareholder redemption within 12 months
following purchase. A contingent deferred sales charge is imposed on
shareholder redemptions of Class B shares in the event of a shareholder
redemption within six years of purchase. MFD receives all contingent deferred
sales charges. Contingent deferred sales charges imposed during the year ended
October 31, 1998, were $1,102, $295,694, and $29,251 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 Fund's average daily net assets at an effective annual
rate of 0.1125%. Prior to January 1, 1998, the fee was calculated as a
percentage of the Fund'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, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
U.S. government securities $ 73,755,481 $ 39,537,641
------------ ------------
Investments (non-U.S. government securities) $940,317,317 $463,300,313
------------ ------------
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $759,326,013
------------
Gross unrealized appreciation $ 49,179,109
Gross unrealized depreciation (28,087,624)
------------
Net unrealized appreciation $ 21,091,485
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
<TABLE>
Class A Shares
<CAPTION>
YEAR ENDED OCTOBER 31, 1998 YEAR ENDED OCTOBER 31, 1997
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 27,132,195 $281,809,080 7,819,952 $ 77,226,921
Shares issued to shareholders in
reinvestment of distributions 1,483,437 14,492,448 732,324 6,609,825
Shares transferred to Class I -- -- (120,449) (1,071,996)
Shares reacquired (7,181,632) (74,517,887) (6,378,092) (62,953,332)
---------- ------------ ---------- ------------
Net increase 21,434,000 $221,783,641 2,053,735 $ 19,811,418
========== ============ ========= ============
</TABLE>
<TABLE>
Class B Shares
<CAPTION>
YEAR ENDED OCTOBER 31, 1998 YEAR ENDED OCTOBER 31, 1997
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 26,385,454 $275,542,126 4,757,161 $ 45,918,763
Shares issued to shareholders in
reinvestment of distributions 1,405,140 13,677,225 572,483 5,137,051
Shares reacquired (2,998,536) (31,238,443) (1,935,800) (18,320,311)
---------- ------------ ---------- ------------
Net increase 24,792,058 $257,980,908 3,393,844 $ 32,735,503
========== ============ ========= ============
</TABLE>
<TABLE>
Class C Shares
<CAPTION>
YEAR ENDED OCTOBER 31, 1998 YEAR ENDED OCTOBER 31, 1997
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 7,452,847 $ 77,990,473 1,398,533 $ 13,601,081
Shares issued to shareholders in
reinvestment of distributions 304,674 2,974,079 97,304 875,586
Shares reacquired (1,033,828) (10,820,419) (202,885) (1,938,852)
---------- ------------ ---------- ------------
Net increase 6,723,693 $ 70,144,133 1,292,952 $ 12,537,815
========== ============ ========= ============
</TABLE>
<TABLE>
Class I Shares
<CAPTION>
YEAR ENDED OCTOBER 31, 1998 PERIOD ENDED OCTOBER 31, 1997*
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 33,150 $ 356,454 12,797 $ 121,518
Shares transferred from Class A -- -- 120,449 1,071,996
Shares issued to shareholders in
reinvestment of distributions 14,702 143,189 2,421 23,241
Shares reacquired (11,414) (123,498) (65,881) (624,214)
---------- ------------ ---------- ------------
Net increase 36,438 $ 376,145 69,786 $ 592,541
========== ============ ========= ============
</TABLE>
*For the period from the inception of Class I, January 2, 1997, through
October 31, 1997.
(6) Line of Credit
The Fund and other affiliated funds participate in a $805 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
Fund shares. Interest is charged to each fund, based on its borrowings, at a
rate equal to the bank's base rate. In addition, a commitment fee, based on
the average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
the Fund for the year ended October 31, 1998, was $3,625.
(7) Financial Instruments
The Fund 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 Fund
has in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the
risks associated with these instruments is meaningful only when all related
and offsetting transactions are considered.
Forward Foreign Currency Exchange Contracts
Forward foreign currency sales under master netting agreements amounted to a
net payable of $60,674 with Merrill Lynch at October 31, 1998.
At October 31, 1998, the Fund had sufficient cash and/or securities to cover
any commitments under these contracts.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of MFS Series Trust VI and Shareholders of MFS Utilities Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Utilities Fund, including the schedule of portfolio investments as of October
31, 1998, 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, 1998 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 MFS
Utilities Fund at October 31, 1998, 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.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 9, 1998
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
- --------------------------------------------------------------------------------
IN JANUARY 1999, SHAREHOLDERS WILL BE MAILED A FORM 1099 REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR
1998.
THE FUND HAS DESIGNATED $11,322,123 AS A CAPITAL GAIN DIVIDEND.
FOR THE YEAR ENDED OCTOBER 31, 1998, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS RECEIVED DEDUCTION FOR
CORPORATIONS CAME TO 10.0%.
<PAGE>
MFS(R) UTILITIES FUND
<TABLE>
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Former Stephen E. Cavan*
Chairman and Director (until 1991), MFS Investment
Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Marshall N. Cohan - Private Investor
CUSTODIAN
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, State Street Bank and Trust Company
Brigham and Women's Hospital; Professor of
Surgery, Harvard Medical School AUDITORS
Ernst & Young LLP
The Hon. Sir J. David Gibbons, KBE - Chief
Executive Officer, Edmund Gibbons Ltd.; Chairman, INVESTOR INFORMATION
Colonial Insurance Company, Ltd. For MFS stock and bond market outlooks, call toll
free: 1-800-637-4458 anytime from a touch-tone
Abby M. O'Neill - Private Investor telephone.
Walter E. Robb, III - President and Treasurer, For information on MFS mutual funds, call your
Benchmark Advisors, Inc. (corporate financial financial adviser or, for an information kit, call
consultants); President, Benchmark Consulting toll free: 1-800-637-2929 any business day from 9
Group, Inc. (office services) 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
MFS Investment Management MFS Service Center, Inc.
P.O. Box 2281
Jeffrey L. Shames* - Chairman, Chief Boston, MA 02107-9906
Executive Officer, and Director,
MFS Investment Management For general information, call toll free:
1-800-225-2606 any business day from
J. Dale Sherratt - President, Insight Resources, 8 a.m. to 8 p.m. Eastern time.
Inc. (acquisition planning specialists)
For service to speech- or hearing-impaired, call
Ward Smith - Former Chairman (until 1994), NACCO toll free: 1-800-637-6576 any business day from
Industries (holding company) 9 a.m. to 5 p.m. Eastern time. (To use this
service, your phone must be equipped with a
INVESTMENT ADVISER Telecommunications Device for the Deaf.) For share
Massachusetts Financial Services Company prices, account balances, and exchanges, call toll
500 Boylston Street free: 1-800-MFS-TALK (1-800-637-8255) anytime from
Boston, MA 02116-3741 a touch-tone telephone.
DISTRIBUTOR WORLD WIDE WEB
MFS Fund Distributors, Inc. www.mfs.com
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Maura A. Shaughnessy*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
</TABLE>
*Affiliated with the Investment Adviser
<PAGE>
----------------
MFS(R) UTILITIES FUND Bulk Rate
U.S. Postage
[Logo] M F S(R) Paid
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ----------------
500 Boylston Street
Boston, MA 02116-3741
(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MUF-2 12/98 52M 35/235/335/835
