<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) UTILITIES FUND
ANNUAL REPORT o OCTOBER 31, 1999
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MUTUAL FUND GIFT KITS (see page 35)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 19
Notes to Financial Statements ............................................. 26
Independent Auditors' Report .............................................. 32
MFS' Year 2000 Readiness Disclosure ....................................... 34
Trustees and Officers ..................................................... 37
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
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(R) 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.
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 15, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Maura A. Shaughnessy]
Maura A. Shaughnessy
For the 12 months ended October 31, 1999, Class A shares of the Fund provided
a total return of 23.05%, Class B shares 22.11%, Class C shares 22.18%, and
Class I shares 23.44%. These returns, which include the reinvestment of any
distributions but exclude the effects of any sales charges, compare to a 2.08%
return over the same period for the Standard & Poor's Utilities 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 utility fund returned 18.32%, according to Lipper Analytical
Services, Inc., an independent firm that reports mutual fund performance.
Q. WHAT HAS THE INVESTMENT ENVIRONMENT BEEN LIKE FOR UTILITIES STOCKS OVER THE
PAST YEAR?
A. The telecommunications sector has continued to be very strong, driven
largely by the explosion in Internet and data communications traffic. In
addition, companies involved with cellular communications have done very
well, as most subscriber numbers are much higher than initially expected.
Natural gas stocks, on the other hand, have had their share of ups and
downs. The sector benefited indirectly from the rise in oil prices that we
saw last spring. But the mild weather this fall has hurt prospects, and
stock prices have fallen off somewhat. The worst performers have been
electric utilities, which have gotten hammered from all directions. With
deregulation, the electric companies -- which typically generate lots of
cash -- now have a lot more choices about how to invest their money. And
that has made investors nervous because they're not so sure management will
do what's best for shareholders. In addition, rising interest rates have
made electric stocks less attractive by eroding the value of their
dividends. The fact that these stocks have not been growing at very high
levels -- like telecommunications stocks -- has also hurt. A common theme
across all three industries has been continued consolidation, especially in
the mid-cap arena, which is where the Fund tends to focus. And that has been
a big plus.
Q. HOW HAS CONSOLIDATION HELPED THE FUND?
A. In the telecommunications sector, we owned shares of MediaOne Group, a cable
company whose stock benefited from being acquired by AT&T. We also owned
shares of Frontier, the old Rochester Telephone. It was bought out at a
premium by Global Crossing, a company that is building fiber-optic networks
across the Atlantic. In the natural gas sector, El Paso Energy, whose stock
we owned, bought Sonat, another one of our investments. Both stocks rallied
as the merger created one of the largest natural gas companies in the
country. More recently, Mid-America Energy, an electric utility, benefited
from being bought out by Warren Buffet's company, Berkshire Hathaway. GTE's
and Bell Atlantic's stocks did well following the announcement of their
merger. And MCI WorldCom's pending acquisition of Sprint sent both stocks
soaring. Finally, our investments in Mannesmann, a German wireless and wire
line company, and Orange PLC, a wireless company in the United Kingdom, did
well following Mannesmann's decision to buy Orange.
Q. WHAT OTHER FACTORS HELPED THE FUND PERFORM WELL?
A. The other big factor was our international stake. During the past six
months, we boosted our stake in foreign stocks to 20.7% of net assets. We
did this in part because that's where we were finding what we consider to be
good values, namely, attractive prices relative to earnings prospects. Plus,
we believe there are lots of restructuring opportunities as foreign
companies strive to remain competitive in today's global economy. Besides
Mannesmann and Orange, our stake in NTT Mobile Communications Network, the
big telecommunications player in Japan did especially well. We also held
BCE, the holding company for Bell Canada. BCE has a sizable investment in
Northern Telecom, which has had a terrific run recently because of increased
demand for its telecom equipment, and this has benefited BCE.
Q. IT SOUNDS LIKE TELECOMMUNICATIONS STOCKS WERE AMONG YOUR BIGGEST WINNERS.
A. Definitely. During the year, our stake in U.S. telecomm grew to 41.20% of
net assets, about double what we had at the start of the period. Our biggest
investment was GTE. The stock climbed nicely following the announcement of a
buyout by Bell Atlantic. We also had a big investment in Bell Atlantic,
whose stock rebounded as investors rewarded the company for a smart
investment strategy. However, not all of our telecommunications names did
well. SBC Communications, which is the old Southwestern Bell, had a rough
time over the past six months because of uncertainties surrounding its
merger with Ameritech. After closing the deal, SBC had to cut earnings. Now
that the merger is done, we expect the stock to catch up, especially given
SBC's strong standing in the industry.
Q. WHICH OTHER STOCKS HELD THE FUND BACK?
A. CMS Energy, our second-largest investment, was a big disappointment. The
electric and natural gas utility's stock suffered from fears that regulators
would cut rates. There were also concerns that the company would have to
issue stock to pay for a purchase. Fortunately, management sold off some
assets instead. We expect that once the regulatory issues settle, the stock
will get back on track. Williams was another top holding that tumbled during
the period. The company, which is in both the natural gas and
telecommunications businesses, decided to spin out part of its telephone
operation. As the new stock quickly shot up, many investors who owned
Williams for its telecommunications assets decided to take profits. The
start-up also has drained Williams' earnings. We held on, however, believing
that the company is still worth more than the stock price reflects. Finally,
Peco Energy, an electric utility in Philadelphia, saw its stock flounder as
the company worked out a merger with Unicom, an electric utility in Chicago.
We found the stock attractive, given Peco's great nuclear power assets,
above-average wholesale trading business, and aggressive management team,
and we decided to increase our stake.
Q. WHERE HAVE YOU FOUND OTHER GOOD BUYING OPPORTUNITIES LATELY?
A. On the international side, we recently bought shares in a French company
called Vivendi. Half of Vivendi's business is in the waste management and
water utility area. The other half is in the media and cellular business.
Vivendi is the second-largest competitor in the French cellular market,
where we expect to see accelerating penetration growth. We believe, however,
that the current stock price does not fully reflect the value of the
telecommunications piece of the business. We also think the company is an
excellent candidate for restructuring, which we believe would give the stock
a boost. One of our largest new additions was NStar, which is the old Boston
Edison. There's a tremendous amount of merger and acquisition activity going
on in the Northeast, which could benefit NStar. Plus, the company has an
excellent strategy that we believe it is not really getting credit for.
Finally, there's strong potential from Nstar's partial ownership of RCN, a
telecommunications start-up. Eventually, we expect the electrics to do well.
In the meantime, we'll remain flexible and invest wherever we think we find
the best values.
/s/ Maura A. Shaughnessy
Maura A. Shaughnessy
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.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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MAURA A. SHAUGHNESSY IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND PORTFOLIO MANAGER OF MFS(R) CAPITAL OPPORTUNITIES FUND,
MFS(R) UTILITIES FUND, MFS(R) UTILITIES SERIES AND MFS(R) CAPITAL
OPPORTUNITIES SERIES (BOTH PART OF MFS(R) VARIABLE INSURANCE TRUST(SM)),
AND THE UTILITIES SERIES AND CAPITAL OPPORTUNITIES SERIES OFFERED THROUGH
MFS(R)/SUN LIFE ANNUITY PRODUCTS.
MS. SHAUGHNESSY JOINED MFS IN 1991 AS A RESEARCH ANALYST AND BECAME VICE
PRESIDENT AND PORTFOLIO MANAGER IN 1992 AND SENIOR VICE PRESIDENT IN 1998.
A GRADUATE OF COLBY COLLEGE AND THE AMOS TUCK SCHOOL OF BUSINESS
ADMINISTRATION OF DARTMOUTH COLLEGE, SHE IS A CHARTERED FINANCIAL ANALYST.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED
BY AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL
RESEARCH(R), A COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
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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 consultant, 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 CAPITAL 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: $1.4 BILLION NET ASSETS AS OF OCTOBER 31, 1999
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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.) It is not possible to
invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the commencement of the Fund's investment operations,
February 14, 1992, through October 31, 1999. Index information is from
February 1, 1992.)
MFS Utilities Standard & Poor's Standard & Poor's
Fund - Class A 500 Composite Index Utilities Index
-------------- ------------------- -----------------
2/92 $ 9,525 $10,000 $10,000
10/92 10,270 10,480 11,040
10/93 12,770 12,040 13,840
10/95 15,030 15,820 15,740
10/97 22,900 25,930 19,080
10/99 34,407 39,748 24,666
<PAGE>
PERFORMANCE SUMMARY -- continued
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH OCTOBER 31, 1999
<TABLE>
<CAPTION>
CLASS A
1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +23.05% +93.28% +180.32% +261.22%
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Average Annual Total Return Excluding Sales
Charge +23.05% +24.57% + 22.89% + 18.12%
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Average Annual Total Return Including Sales
Charge +17.21% +22.56% + 21.70% + 17.38%
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CLASS B
1 Year 3 Years 5 Years Life*
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Cumulative Total Return Excluding Sales Charge +22.11% +88.94% +169.58% +242.49%
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Average Annual Total Return Excluding Sales
Charge +22.11% +23.63% + 21.94% + 17.31%
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Average Annual Total Return Including Sales
Charge +18.11% +22.97% + 21.76% + 17.31%
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CLASS C
1 Year 3 Years 5 Years Life*
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Cumulative Total Return Excluding Sales Charge +22.18% +89.19% +169.57% +244.46%
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Average Annual Total Return Excluding Sales
Charge +22.18% +23.68% + 21.94% + 17.39%
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Average Annual Total Return Including Sales
Charge +21.18% +23.68% + 21.94% + 17.39%
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CLASS I
1 Year 3 Years 5 Years Life*
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Cumulative Total Return Excluding Sales Charge +23.44% +94.91% +182.68% +264.27%
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Average Annual Total Return Excluding Sales
Charge +23.44% +24.91% + 23.10% + 18.25%
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COMPARATIVE INDICES
1 Year 3 Years 5 Years Life*
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Average utility fund** +18.32% +18.70% + 16.55% + 13.63%
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Standard & Poor's 500 Composite Index+# +25.67% +26.52% + 26.02% + 19.49%
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Standard & Poor's Utilities Index# + 2.08% +12.42% + 15.22% + 12.36%
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* For the period from the commencement of the Fund's investment operations, February 14, 1992, through
October 31, 1999. Index information is from February 1, 1992.
** Source: Lipper Analytical Services, Inc.
+ Effective immediately, we no longer consider the Standard & Poor's 500 Composite Index a benchmark
for the Fund. We believe the Standard & Poor's Utilities Index more closely reflects the Fund's
investment style and objectives.
# Source: Standard & Poor's Micropal, Inc.
</TABLE>
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class C Share Performance Including Sales Charge takes into account the
deduction of the 1% CDSC applicable to shares redeemed within 12 months. Class
I shares have no sales charge and are only available to certain institutional
investors.
Class B, C, and I share performance include the performance of the Fund's
Class A shares for periods prior to their inception (blended performance).
Class B and C blended performance has been adjusted to take into account the
CDSC applicable to Class B and C shares rather than the initial sales charge
(load) applicable to Class A shares. Class I share blended performance has
been adjusted to account for the fact that Class I shares have no sales
charge. These blended performance figures have not been adjusted to take into
account differences in class-specific operating expenses. Because operating
expenses of Class B and C shares are higher than those of Class A, the blended
Class B and C share performance is higher than it would have been had Class B
and C shares been offered for the entire period. Conversely, because operating
expenses of Class I shares are lower than those of Class A, the blended Class
I share performance is lower than it would have been had Class I shares been
offered for the entire period.
All 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 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.
See the prospectus for details.
<PAGE>
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 1999
FIVE LARGEST STOCK SECTORS
UTILITIES & COMMUNICATIONS 85.3%
LEISURE 4.3%
TECHNOLOGY 3.9%
CONGLOMERATES & SPECIAL PRODUCTS/SERVICES 3.5%
FINANCIAL SERVICES 2.3%
TOP 10 STOCK HOLDINGS
GTE CORP. 3.7% PECO ENERGY CO. 2.4%
Telecommunications company Electric utility company
CMS ENERGY CORP. 3.4% BCE, INC. 2.3%
Electric and gas utility Canadian telecommunications company
SBC COMMUNICATIONS, INC. 3.0% EL PASO ENERGY CO. 2.2%
Integrated telecommunications company Gas utility company
WILLIAMS, INC. 2.7% MCI WORLDCOM, INC. 2.1%
Natural gas pipeline company Telecommunications company
COLUMBIA ENERGY GROUP 2.4% NSTAR CO. 2.1%
Natural gas production and pipeline company Electric utility company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS -- October 31, 1999
Stocks - 83.2%
<CAPTION>
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ISSUER SHARES VALUE
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<S> <C> <C>
U.S. Stocks - 62.5%
Cellular Telephones
Triton PCS Holdings, Inc.* 4,900 $ 172,725
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Conglomerates - 1.1%
Eastern Enterprises Co. 300,200 $ 15,347,725
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Energy - 0.8%
Sierra Pacific Resources 490,752 $ 11,041,920
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Entertainment - 1.5%
Comcast Corp., "A" 271,000 $ 11,415,875
Time Warner, Inc. 118,700 8,271,906
--------------
$ 19,687,781
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Metals and Minerals - 0.2%
USEC, Inc. 349,600 $ 3,168,250
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Oils - 1.8%
Coastal Corp. 585,000 $ 24,643,125
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Real Estate Investment Trusts - 2.1%
Camden Property Trust 181,300 $ 4,906,431
CarrAmerica Realty Corp. 181,300 4,033,925
Equity Residential Properties Trust 126,600 5,293,463
Kilroy Realty Corp. 124,300 2,385,006
Mack-Cali Realty Corp. 191,100 4,920,825
Public Storage, Inc. 127,900 3,085,588
SL Green Realty Corp. 198,700 3,613,856
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$ 28,239,094
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Special Products and Services - 1.3%
Azurix Corp. 155,600 $ 2,188,125
MCN Energy Group, Inc. 594,100 14,518,319
--------------
$ 16,706,444
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Telecommunications - 19.8%
Alltel Corp. 117,500 $ 9,781,875
Bell Atlantic Corp. 186,220 12,092,661
CenturyTel, Inc. 495,800 20,048,912
Cincinnati Bell, Inc. 1,088,300 22,650,244
GTE Corp. 626,800 47,010,000
Insight Communications, Inc.* 107,800 2,546,775
Intermedia Communications, Inc.* 620,400 16,130,400
IXC Communications, Inc.* 269,100 11,621,756
MCI WorldCom, Inc.* 300,375 25,775,930
Metromedia Fiber Network, Inc., "A"* 354,150 11,709,084
Motorola, Inc. 57,500 5,602,656
NEXTEL Communications, Inc.* 130,000 11,204,375
Nortel Networks Corp. 85,300 5,283,269
Partner Communications Co. Ltd.* 663,475 10,449,731
SBC Communications, Inc. 733,671 37,371,367
Sprint Corp. 179,100 13,309,369
Winstar Communications, Inc.* 133,800 5,193,113
--------------
$ 267,781,517
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Utilities - Electric - 22.5%
AES Corp.* 144,400 $ 8,149,575
Atmos Energy Corp. 611,999 13,884,727
Calpine Corp.* 205,600 11,847,700
CMS Energy Corp. 1,173,595 43,276,316
DPL, Inc. 208,200 4,216,050
DQE, Inc. 540,200 21,574,237
Duke Energy Corp. 359,200 20,294,800
El Paso Electric Co.* 618,100 5,640,163
Illinova Corp. 605,800 19,272,012
Niagara Mohawk Holdings, Inc. 765,900 12,158,663
NiSource, Inc. 640,700 13,134,350
NSTAR Co. 706,400 26,887,350
Peco Energy Co. 778,500 29,728,969
Pinnacle West Capital Corp. 524,700 19,348,312
Reliant Energy, Inc. 408,700 11,137,075
Scana Corp. 562,400 13,989,700
Texas Utilities Co. 504,100 19,533,875
Unicom Corp. 264,800 10,145,150
--------------
$ 304,219,024
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Utilities - Gas - 10.8%
Columbia Energy Group 456,500 $ 29,672,500
El Paso Energy Corp. 681,500 27,941,500
Energen Corp. 332,800 6,156,800
Enron Corp. 364,400 14,553,225
Kinder Morgan, Inc. 381,100 7,669,637
National Fuel Gas Co. 253,600 12,394,700
NICOR, Inc. 203,600 7,889,500
ONEOK, Inc. 91,200 2,661,900
Washington Gas Light Co. 102,600 2,789,438
Williams Cos., Inc. 902,500 33,843,750
--------------
$ 145,572,950
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Utilities - Telephone - 0.6%
BellSouth Corp. 71,400 $ 3,213,000
U.S. West, Inc. 81,000 4,946,062
--------------
$ 8,159,062
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Total U.S. Stocks $ 844,739,617
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Foreign Stocks - 20.7%
Australia - 0.6%
Cable & Wireless Optus (Telecommunications) 3,669,200 $ 8,393,471
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Brazil - 0.4%
Celular CRT Participacoes, Preferred
(Telecommunications) 6,134 $ 622,528
Companhia Electricas est Rio de Janeiro
(Utilities - Electric)* 7,436,500 1,524,654
Companhia Energetica do Ceara, Preferred "A"
(Utilities - Electric) 772,100 1,622,558
Companhia Riogrand Telecomunicacoes, Preferred "A"
(Utilities - Telephone) 6,134 1,210,439
Espirito Santo Centrais Eletricas S.A. (Utilities -
Electric) 10,200 261,404
--------------
$ 5,241,583
- -------------------------------------------------------------------------------------------------------
Canada - 2.9%
AT & T Canada, Inc. (Telecommunications)* 318,000 $ 10,255,500
BCE, Inc. (Telecommunications) 479,100 28,865,775
--------------
$ 39,121,275
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China - 0.1%
China Telecom Hong Kong Ltd. (Telecommunications)* 18,400 $ 1,242,000
- -------------------------------------------------------------------------------------------------------
Finland - 1.6%
Helsingin Puhelin Oyj (Telecommunications) 83,100 $ 3,945,193
HPY Holding - HTF Holding Oyj Abp (Telecommunications)* 101,250 2,129,288
Sonera Oyj (Telecommunications) 492,500 14,785,015
--------------
$ 20,859,496
- -------------------------------------------------------------------------------------------------------
France - 0.9%
Bouygues S.A. (Construction)* 18,143 $ 6,314,610
Vivendi (Business Services) 67,200 5,091,113
--------------
$ 11,405,723
- -------------------------------------------------------------------------------------------------------
Germany - 1.5%
Mannesmann AG (Conglomerate) 126,300 $ 19,854,273
- -------------------------------------------------------------------------------------------------------
Greece - 0.9%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 569,140 $ 12,065,354
- -------------------------------------------------------------------------------------------------------
Hong Kong - 0.3%
China Telecom Ltd. (Telecommunications)* 1,352,000 $ 4,620,958
- -------------------------------------------------------------------------------------------------------
Hungary - 0.9%
Magyar Tavkozlesi Rt., ADR (Telecommunications)* 423,900 $ 12,213,619
- -------------------------------------------------------------------------------------------------------
Italy - 1.4%
Telecom Italia Mobile S.p.A. (Telecommunications) 2,404,600 $ 15,018,921
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications)* 1,138,800 3,951,580
--------------
$ 18,970,501
- -------------------------------------------------------------------------------------------------------
Japan - 1.7%
Nippon Telephone & Telegraph Corp.
(Utilities - Telephone) 700 $ 10,746,498
NTT Mobile Communications Network, Inc.
(Telecommunications) 450 11,960,276
--------------
$ 22,706,774
- -------------------------------------------------------------------------------------------------------
Netherlands - 0.9%
Koninklijke KPN N.V. (Telecommunications) 43,750 $ 2,244,493
Libertel N.V. (Cellular Telephones)* 194,900 3,688,874
United Pan - Europe Communications N.V
(Telecommunications)* 83,800 6,441,260
--------------
$ 12,374,627
- -------------------------------------------------------------------------------------------------------
Poland - 0.2%
Netia Holdings S.A., ADR (Telecommunications)* 196,525 $ 3,070,703
- -------------------------------------------------------------------------------------------------------
Portugal - 0.2%
Telecel - Comunicacoes Pessoais S.A
(Telecommunications) 22,300 $ 2,893,540
- -------------------------------------------------------------------------------------------------------
Spain - 2.7%
Telefonica de Espana S.A., ADR (Telecommunications) 406,641 $ 20,306,635
Telefonica Publicidad e Informacion S.A. (Utilities -
Telephone) 112,700 2,456,590
Union Electrica Fenosa S.A. (Utilities - Electric) 973,200 14,234,383
--------------
$ 36,997,608
- -------------------------------------------------------------------------------------------------------
United Kingdom - 3.5%
British Telecommunications PLC (Telecommunications) 1,086,469 $ 19,703,554
COLT Telecom Group PLC (Telecommunications)* 75,514 2,253,931
COLT Telecom Group PLC, ADR (Telecommunications)* 56,200 6,659,700
Independent Energy Holdings PLC, ADR (Utilities -
Electric) 195,500 5,290,719
Orange PLC (Telecommunications) 533,500 13,250,870
--------------
$ 47,158,774
- -------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 279,190,279
- -------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,033,811,922) $1,123,929,896
- -------------------------------------------------------------------------------------------------------
Preferred Stocks - 3.1%
- -------------------------------------------------------------------------------------------------------
Oils - 0.7%
Coastal Corp., 5.58% 62,800 $ 1,420,850
Coastal Corp., 6.625% 325,100 8,615,150
--------------
$ 10,036,000
- -------------------------------------------------------------------------------------------------------
Telecommunications - 1.6%
Cox Communications, Inc., 0.25% 197,200 $ 10,962,151
McLeodUSA, Inc., 6.75% 26,083 10,433,200
--------------
$ 21,395,351
- -------------------------------------------------------------------------------------------------------
Utilities - Electric - 0.8%
CMS Energy Corp., 8.75% 268,900 $ 10,352,650
- -------------------------------------------------------------------------------------------------------
Total Preferred Stocks (Identified Cost, $35,627,873) $ 41,784,001
- -------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks - 2.4%
- -------------------------------------------------------------------------------------------------------
Telecommunications - 0.9%
Global Telesystems Group, Inc., 7.25%## 94,800 $ 4,154,610
UnitedGlobalCom, Inc., 7.00%## 135,600 8,051,250
--------------
$ 12,205,860
- -------------------------------------------------------------------------------------------------------
Utilities - Electric - 1.5%
AES Trust III, 6.75% 288,300 $ 14,541,131
Calpine Capital Trust, 5.75% 102,800 6,065,200
--------------
$ 20,606,331
- -------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost, $31,160,400) $ 32,812,191
- -------------------------------------------------------------------------------------------------------
Bonds - 5.1%
- -------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- -------------------------------------------------------------------------------------------------------
U.S. Bonds - 5.0%
Banks and Credit Companies - 0.2%
Beaver Valley Funding Corp. II, 9s, 2017 $ 1,185 $ 1,209,695
Midland Funding Corp., 10.33s, 2002 1,110 1,152,122
--------------
$ 2,361,817
- -------------------------------------------------------------------------------------------------------
Energy - 0.1%
Ocean Energy, Inc., 8.875s, 2007 $ 850 $ 841,500
- -------------------------------------------------------------------------------------------------------
Financial Institutions - 0.2%
Duke Capital Corp., 7.25s, 2004 $ 400 $ 402,564
Salton Sea Funding Corp., 6.69s, 2000 216 216,238
Salton Sea Funding Corp., 7.84s, 2010 1,110 1,082,050
Salton Sea Funding Corp., 8.3s, 2011 1,460 1,463,267
--------------
$ 3,164,119
- -------------------------------------------------------------------------------------------------------
Gas - 0.1%
CMS Panhandle Holding Co., 6.5s, 2009 $ 1,300 $ 1,188,668
- -------------------------------------------------------------------------------------------------------
Telecommunications - 0.9%
Intermedia Communications, Inc., 12.25s, 2009 $ 17,850 $ 9,639,000
Sprint Capital Corp., 6.9s, 2019 1,279 1,192,553
Telecomunicaciones De Puerto, 6.65s, 2006## 296 281,718
WorldCom, Inc., 8.875s, 2006 720 757,987
--------------
$ 11,871,258
- -------------------------------------------------------------------------------------------------------
U.S. Federal Agencies - 0.2%
Federal Home Loan Bank - 0.1%
Federal Home Loan Bank, 6.5s, 2029 $ 1,276 $ 1,223,480
- -------------------------------------------------------------------------------------------------------
Federal National Mortgage Association - 0.1%
FNMA, 7s, 2029 $ 1,510 $ 1,482,268
- -------------------------------------------------------------------------------------------------------
Total U.S. Federal Agencies $ 2,705,748
- -------------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 1.6%
Government National Mortgage Association - 0.6%
GNMA, 6.5s, 2029 $ 543 $ 518,773
GNMA, 7s, 2027 - 2028 2,304 2,260,505
GNMA, 7.5s, 2025 - 2028 4,748 4,759,712
GNMA, 8s, 2025 - 2027 803 817,741
--------------
$ 8,356,731
- -------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 1.0%
U.S. Treasury Notes, 6s, 2009 $ 12,980 $ 12,961,698
- -------------------------------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 21,318,429
- -------------------------------------------------------------------------------------------------------
Utilities - Electric - 1.2%
AEP Generating, 9.82s, 2022 $ 3,775 $ 4,337,848
California Infrastructure, 6.17s, 2003 1,839 1,834,973
Connecticut Light & Power Co., 8.59s, 2003 1,000 1,019,540
Edison International, Inc., 6.875s, 2004 1,000 991,360
Illinois Power Special Purpose Trust, 5.26s, 2003 2,100 2,073,750
Midamerican Funding LLC, 6.927s, 2029 1,230 1,090,862
Midland Cogeneration Venture Corp., 10.33s, 2002 291 302,384
Seabrook Station, 7.83s, 2019 862 865,778
Toledo Edison Co., 9.5s, 2001 1,385 1,430,400
TXU Eastern Funding Co., 6.75s, 2009 1,488 1,374,882
Utilicorp United, Inc., 8.45s, 1999 600 600,534
--------------
$ 15,922,311
- -------------------------------------------------------------------------------------------------------
Utilities - Gas - 0.5%
CE Generation LLC, 7.416s, 2018 $ 1,520 $ 1,430,700
Columbia Gas Systems, Inc., 6.39s, 2000 2,245 2,233,573
El Paso Energy Corp., 6.75s, 2009 3,721 3,550,206
--------------
$ 7,214,479
- -------------------------------------------------------------------------------------------------------
Utilities - Telephone
AT & T Corp., 6.5s, 2029 $ 900 $ 796,140
- -------------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 67,384,469
- -------------------------------------------------------------------------------------------------------
Foreign Bonds - 0.1%
Canada - 0.1%
Gulf Canada Resources Ltd., 9.25s, 2004 (Oils) $ 850 $ 850,765
- -------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $70,911,019) $ 68,235,234
- -------------------------------------------------------------------------------------------------------
Convertible Bonds - 4.3%
- -------------------------------------------------------------------------------------------------------
Financial Institutions - 1.1%
ADT Operations, Inc., 0s, 2010 $ 7,230 $ 15,806,588
- -------------------------------------------------------------------------------------------------------
Financial Services - 0.5%
Bell Atlantic Financial Services, Inc., 4.25s, 2005## $ 6,100 $ 6,389,750
- -------------------------------------------------------------------------------------------------------
Telecommunications - 2.7%
Comcast Corp., 2s, 2029 $ 83 $ 6,907,090
CoreComm Ltd., 6s, 2006 7,880 8,943,800
Global Telesystems Group, Inc., 5.75s, 2010 3,950 4,196,875
Level 3 Communications, Inc., 6s, 2009 13,770 16,110,900
--------------
$ 36,158,665
- -------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $51,088,686) $ 58,355,003
- -------------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.8%
- -------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Corp., due 11/01/99 $ 24,800 $ 24,800,000
Federal Home Loan Mortgage Corp., due 12/09/99 27,200 27,050,702
- -------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 51,850,702
- -------------------------------------------------------------------------------------------------------
Other Short-Term Obligations - 12.9%
- -------------------------------------------------------------------------------------------------------
SHARES
- -------------------------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio
(Identified Cost, $174,221,506) 174,221,506 $ 174,221,506
- -------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,448,672,108) $1,551,188,533
Other Assets, Less Liabilities - (14.8)% (199,591,892)
- -------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,351,596,641
- -------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,448,672,108) $1,551,188,533
Cash 46,062
Receivable for Fund shares sold 5,042,695
Receivable for investments sold 6,377,213
Interest and dividends receivable 3,107,521
Other assets 5,800
--------------
Total assets $1,565,767,824
--------------
Liabilities:
Distributions payable $ 343,474
Payable for Fund shares reacquired 1,599,836
Payable for investments purchased 37,578,215
Collateral for securities loaned, at value 174,221,506
Payable to affiliates -
Management fee 54,910
Shareholder servicing agent fee 10,970
Distribution and service fee 82,380
Administrative fee 1,576
Accrued expenses and other liabilities 278,316
--------------
Total liabilities $ 214,171,183
--------------
Net assets $1,351,596,641
==============
Net assets consist of:
Paid-in capital $1,130,423,762
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 102,588,089
Accumulated undistributed net realized gain on
investments and foreign currency transactions 118,979,115
Accumulated distributions in excess of net investment
income (394,325)
--------------
Total $1,351,596,641
==============
Shares of beneficial interest outstanding 110,711,058
===========
Class A shares:
Net asset value per share
(net assets of $447,120,923 / 36,555,125 shares of
beneficial interest outstanding) $12.23
======
Offering price per share (100 / 95.25 of net asset
value per share) $12.84
======
Class B shares:
Net asset value and offering price per share
(net assets of $691,114,762 / 56,679,244 shares of
beneficial interest outstanding) $12.19
======
Class C shares:
Net asset value and offering price per share
(net assets of $211,924,444 / 17,359,409 shares of
beneficial interest outstanding) $12.21
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $1,436,512 / 117,280 shares of
beneficial interest outstanding) $12.25
======
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
Statement of Operations
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1999
- --------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 22,997,992
Interest 8,612,875
Foreign taxes withheld (343,784)
------------
Total investment income $ 31,267,083
------------
Expenses -
Management fee $ 6,016,950
Trustees' compensation 42,491
Shareholder servicing agent fee 1,134,788
Distribution and service fee (Class A) 979,326
Distribution and service fee (Class B) 5,373,110
Distribution and service fee (Class C) 1,556,253
Administrative fee 139,716
Custodian fee 368,970
Printing 85,554
Postage 136,744
Auditing fees 30,356
Legal fees 12,183
Miscellaneous 1,215,186
------------
Total expenses $ 17,091,627
Fees paid indirectly (86,083)
Reduction of expenses by investment adviser (587,230)
------------
Net expenses $ 16,418,314
------------
Net investment income $ 14,848,769
------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $127,774,308
Foreign currency transactions 164,841
------------
Net realized gain on investments and foreign currency
transactions $127,939,149
------------
Change in unrealized appreciation -
Investments $ 76,425,746
Translation of assets and liabilities in foreign
currencies 143,435
------------
Net unrealized gain on investments and foreign
currency translation $ 76,569,181
------------
Net realized and unrealized gain on investments and
foreign currency $204,508,330
------------
Increase in net assets from operations
$219,357,099
============
See notes to financial statements.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
<CAPTION>
- ------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 14,848,769 $ 9,071,521
Net realized gain on investments and foreign currency
transactions 127,939,149 43,877,107
Net unrealized gain on investments and foreign currency
translation 76,569,181 12,682,679
-------------- ------------
Increase in net assets from operations $ 219,357,099 $ 65,631,307
-------------- ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (8,787,769) $ (4,357,952)
From net investment income (Class B) (7,897,582) (4,035,339)
From net investment income (Class C) (2,253,120) (1,060,616)
From net investment income (Class I) (31,538) (28,949)
In excess of net investment income (Class A) (182,692) (134,059)
In excess of net investment income (Class B) (164,148) (216,882)
In excess of net investment income (Class C) (46,830) (52,495)
In excess of net investment income (Class I) (655) (1,891)
From net realized gain on investments and foreign
currency transactions (Class A) (19,331,261) (12,514,640)
From net realized gain on investments and foreign
currency transactions (Class B) (22,418,158) (13,185,584)
From net realized gain on investments and foreign
currency transactions (Class C) (5,964,171) (3,245,184)
From net realized gain on investments and foreign
currency transactions (Class I) (67,729) (113,598)
-------------- ------------
Total distributions declared to shareholders $ (67,147,653) $(38,947,189)
-------------- ------------
Net increase in net assets from Fund share transactions $ 416,848,960 $550,284,827
-------------- ------------
Total increase in net assets $ 569,058,406 $576,968,945
Net assets:
At beginning of period 782,538,235 205,569,290
-------------- ------------
At end of period (including accumulated distributions in
excess of net investment income of $(394,325) and
$(405,327), respectively) $1,351,596,641 $782,538,235
============== ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $10.76 $10.39 $ 9.12 $ 8.20 $ 7.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.21 $ 0.27 $ 0.32 $ 0.38 $ 0.31
Net realized and unrealized gain on
investments and foreign currency 2.13 1.78 2.08 1.07 1.22
------ ------ ------ ------ ------
Total from investment operations $ 2.34 $ 2.05 $ 2.40 $ 1.45 $ 1.53
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.25) $(0.27) $(0.34) $(0.32) $(0.33)
From net realized gain on investments and
foreign currency transactions (0.61) (1.39) (0.79) (0.21) --
In excess of net investment income (0.01) (0.02) -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.87) $(1.68) $(1.13) $(0.53) $(0.33)
------ ------ ------ ------ ------
Net asset value - end of period $12.23 $10.76 $10.39 $ 9.12 $ 8.20
====== ====== ====== ====== ======
Total return(+) 23.05% 22.13% 28.62% 18.41% 12.48%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.05% 1.05% 1.10% 1.08% 0.83%
Net investment income 1.88% 2.60% 3.27% 4.37% 4.30%
Portfolio turnover 137% 124% 153% 137% 152%
Net assets at end of period (000 omitted) $447,121 $324,098 $90,083 $60,345 $52,474
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had been incurred
by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.20 $ 0.26 $ 0.30 $ 0.34 $ 0.28
Ratios (to average net assets):
Expenses## 1.10% 1.15% 1.29% 1.42% 1.23%
Net investment income 1.83% 2.50% 3.08% 4.03% 3.90%
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) 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.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $10.73 $10.36 $ 9.10 $ 8.18 $ 6.98
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.12 $ 0.19 $ 0.24 $ 0.31 $ 0.24
Net realized and unrealized gain on
investments and foreign currency 2.12 1.79 2.08 1.07 1.22
------ ------ ------ ------ ------
Total from investment operations $ 2.24 $ 1.98 $ 2.32 $ 1.38 $ 1.46
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.16) $(0.20) $(0.27) $(0.25) $(0.26)
From net realized gain on investments and
foreign currency transactions (0.61) (1.39) (0.79) (0.21) --
In excess of net investment income (0.01) (0.02) -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.78) $(1.61) $(1.06) $(0.46) $(0.26)
------ ------ ------ ------ ------
Net asset value - end of period $12.19 $10.73 $10.36 $ 9.10 $ 8.18
====== ====== ====== ====== ======
Total return 22.11% 21.27% 27.59% 17.50% 21.43%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.80% 1.80% 1.87% 1.89% 1.74%
Net investment income 1.08% 1.85% 2.49% 3.53% 3.33%
Portfolio turnover 137% 124% 153% 137% 152%
Net assets at end of period (000 omitted) $691,115 $361,439 $91,973 $49,877 $33,239
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had been incurred
by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.11 $ 0.18 $ 0.22 $ 0.28 $ 0.21
Ratios (to average net assets):
Expenses## 1.85% 1.90% 2.06% 2.23% 2.14%
Net investment income 1.03% 1.75% 2.30% 3.19% 2.93%
# 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.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $10.75 $10.37 $ 9.10 $ 8.18 $ 6.99
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.12 $ 0.19 $ 0.24 $ 0.31 $ 0.24
Net realized and unrealized gain on
investments and foreign currency 2.12 1.80 2.09 1.07 1.21
------ ------ ------ ------ ------
Total from investment operations $ 2.24 $ 1.99 $ 2.33 $ 1.38 $ 1.45
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.16) $(0.20) $(0.27) $(0.25) $(0.26)
From net realized gain on investments and
foreign currency transactions (0.61) (1.39) (0.79) (0.21) --
In excess of net investment income (0.01) (0.02) -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.78) $(1.61) $(1.06) $(0.46) $(0.26)
------ ------ ------ ------ ------
Net asset value - end of period $12.21 $10.75 $10.37 $ 9.10 $ 8.18
====== ====== ====== ====== ======
Total return 22.18% 21.25% 27.71% 17.57% 21.19%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.81% 1.80% 1.85% 1.82% 1.81%
Net investment income 1.08% 1.85% 2.47% 3.60% 3.32%
Portfolio turnover 137% 124% 153% 137% 152%
Net assets at end of period (000 omitted) $211,924 $95,856 $22,788 $8,231 $4,943
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had been incurred
by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.11 $ 0.18 $ 0.22 $ 0.28 $ 0.21
Ratios (to average net assets):
Expenses## 1.86% 1.90% 2.04% 2.16% 2.21%
Net investment income 1.03% 1.75% 2.28% 3.26% 2.83%
# 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.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, PERIOD ENDED
--------------------------- OCTOBER 31,
1999 1998 1997*
- -----------------------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $10.78 $10.39 $ 8.90
------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.24 $ 0.30 $ 0.29
Net realized and unrealized gain on investments and foreign
currency 2.13 1.80 1.48
------ ------ ------
Total from investment operations $ 2.37 $ 2.10 $ 1.77
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.28) $(0.29) $(0.28)
From net realized gain on investments and foreign currency
transactions (0.61) (1.39) --
In excess of net investment income (0.01) (0.03) --
------ ------ ------
Total distributions declared to shareholders $(0.90) $(1.71) $(0.28)
------ ------ ------
Net asset value - end of period $12.25 $10.78 $10.39
====== ====== ======
Total return 23.44% 22.52% 20.15%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.80% 0.80% 0.86%+
Net investment income 2.14% 2.84% 3.39%+
Portfolio turnover 137% 124% 153%
Net assets at end of period (000 omitted) $1,437 $1,145 $ 725
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had been
incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.23 $ 0.29 $ 0.27
Ratios (to average net assets):
Expenses## 0.85% 0.90% 1.05%+
Net investment income 2.09% 2.74% 3.20%+
* 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.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
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. The Fund
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.
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, 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 in good faith by
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.
Security Loans - State Street Bank and Trust Company ("State Street"), as
agent, may loan the securities of the Fund to certain brokers (the
"Borrowers") approved by the Fund. The loans are collateralized at all times
by cash and U.S. Treasury securities in an amount at least equal to the market
value of the securities loaned. State Street provides the Fund with
indemnification against Borrower default. The Fund bears the risk of loss with
respect to the investment of cash collateral.
At October 31, 1999, the value of securities loaned was $174,304,104. These
loans were collateralized by cash of $174,221,506 and U.S. Treasury securities
of $6,928,134. 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 Fund 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 Fund and State Street. 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.
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 may 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.
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 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 excess of net investment income or net realized gains.
During the year ended October 31, 1999, accumulated undistributed net realized
gain on investments and foreign currency transactions was decreased by
$4,539,842, accumulated distributions in excess of net investment income was
decreased by $4,528,567 and paid-in capital was increased by $11,275 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, 1999,
accumulated undistributed net realized gain on investments and foreign
currency transactions 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 daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. 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 the Fund's 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 shown 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
$11,673 for the year ended October 31, 1999.
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
$694,592 for the year ended October 31, 1999, 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 $131,973
for the year ended October 31, 1999. 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, 1999, 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 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 $20,018 and $3,522 for
Class B and Class C shares, respectively, for the year ended October 31, 1999.
Fees incurred under the distribution plan during the year ended October 31,
1999, were 1.00% and 1.00% of average daily net assets attributable to Class B
and Class C shares, respectively.
Certain Class A 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,
1999, were $12,484, $870,968, and $428,030 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 annual rate of 0.10%.
Prior to April 1, 1999, the fee was calculated as a percentage of the Fund's
average daily net assets at an annual rate of 0.1125%.
(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 $ 82,892,891 $ 101,517,127
-------------- --------------
Investments (non-U.S. government
securities) $1,712,345,379 $1,338,785,744
-------------- --------------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $1,452,179,338
--------------
Gross unrealized appreciation $ 142,708,544
Gross unrealized depreciation (43,699,349)
--------------
Net unrealized appreciation $ 99,009,195
==============
(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, 1999 YEAR ENDED OCTOBER 31, 1998
---------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 26,782,130 $ 296,199,639 27,132,195 $281,809,080
Shares issued to shareholders
in reinvestment of
distributions 1,705,504 18,153,918 1,483,437 14,492,448
Shares reacquired (22,039,306) (244,032,316) (7,181,632) (74,517,887)
----------- ------------- ---------- ------------
Net increase 6,448,328 $ 70,321,241 21,434,000 $221,783,641
=========== ============= ========== ============
</TABLE>
<TABLE>
Class B Shares
<CAPTION>
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998
---------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 29,604,556 $ 328,295,994 26,385,454 $275,542,126
Shares issued to shareholders
in reinvestment of
distributions 2,190,312 23,087,105 1,405,140 13,677,225
Shares reacquired (8,785,261) (98,304,257) (2,998,536) (31,238,443)
----------- ------------- ---------- ------------
Net increase 23,009,607 $ 253,078,842 24,792,058 $257,980,908
=========== ============= ========== ============
</TABLE>
<TABLE>
Class C Shares
<CAPTION>
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998
---------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 10,720,902 $ 119,141,707 7,452,847 $ 77,990,473
Shares issued to shareholders
in reinvestment of
distributions 513,712 5,429,977 304,674 2,974,079
Shares reacquired (2,795,900) (31,245,007) (1,033,828) (10,820,419)
----------- ------------- ---------- ------------
Net increase 8,438,714 $ 93,326,677 6,723,693 $ 70,144,133
=========== ============= ========== ============
</TABLE>
<TABLE>
Class I Shares
<CAPTION>
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998
---------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 55,017 $ 620,395 33,150 $ 356,454
Shares issued to shareholders
in reinvestment of
distributions 8,561 91,116 14,702 143,189
Shares reacquired (52,522) (589,311) (11,414) (123,498)
----------- ------------- ---------- ------------
Net increase 11,056 $ 122,200 36,438 $ 376,145
=========== ============= ========== ============
</TABLE>
(6) Line of Credit
The Fund 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 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. At October 31, 1999, there were
no loans outstanding. Interest expense incurred on the borrowings amounted to
$38,749 for the year ended October 31, 1999. The average dollar amount of
borrowings was $700,756 and the weighted average interest rate on these
borrowings was 5.71%. The commitment fee allocated to the Fund for the year
ended October 31, 1999, was $7,776.
<PAGE>
REPORT OF ERNST & YOUNG, 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, 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 Utilities Fund 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.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 9, 1999
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
- --------------------------------------------------------------------------------
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 FUND HAS DESIGNATED $21,541,578 AS A CAPITAL GAIN DIVIDEND.
FOR THE YEAR ENDED OCTOBER 31, 1999, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS RECEIVED DEDUCTION FOR
CORPORATIONS IS 14.8%.
- --------------------------------------------------------------------------------
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), 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, [Graphic Omitted]
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(R)
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.
<PAGE>
<TABLE>
MFS(R) UTILITIES FUND
<S> <C>
TRUSTEES ASSISTANT TREASURERS
Richard B. Bailey - Private Investor; Mark E. Bradley*
Former Chairman and Director (until 1991), Ellen Moynihan*
MFS Investment Management(R) James O. Yost*
Marshall N. Cohan - Private Investor SECRETARY
Stephen E. Cavan*
Lawrence H. Cohn, M.D. - Chief of Cardiac
Surgery, Brigham and Women's Hospital; ASSISTANT SECRETARY
Professor of Surgery, Harvard Medical School James R. Bordewick, Jr.*
The Hon. Sir J. David Gibbons, KBE - Chief CUSTODIAN
Executive Officer, Edmund Gibbons Ltd.; State Street Bank and Trust Company
Chairman, Colonial Insurance Company, Ltd.
AUDITORS
Abby M. O'Neill - Private Investor Ernst & Young LLP
Walter E. Robb, III - President and Treasurer, INVESTOR INFORMATION
Benchmark Advisors, Inc. (corporate financial For information on MFS mutual funds, call your
consultants); President, Benchmark Consulting financial consultant or, for an information
Group, Inc. (office services) kit, call toll free: 1-800-637-2929 any
business day from 9 a.m. to 5 p.m. Eastern time
Arnold D. Scott* - Senior Executive (or leave a message anytime).
Vice President, Director, and Secretary,
MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman and Chief P.O. Box 2281
Executive Officer, MFS Investment Management Boston, MA 02107-9906
J. Dale Sherratt - President, Insight For general information, call toll free:
Resources, Inc. (acquisition planning 1-800-225-2606 any business day from
specialists) 8 a.m. to 8 p.m. Eastern time.
Ward Smith - Former Chairman (until 1994), For service to speech- or hearing-impaired,
NACCO Industries (holding company) call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time. (To
INVESTMENT ADVISER use this service, your phone must be equipped
Massachusetts Financial Services Company with a Telecommunications Device for the Deaf.)
500 Boylston Street
Boston, MA 02116-3741 For share prices, account balances, exchanges,
or MFS stock and bond market outlooks, call
DISTRIBUTOR toll free: 1-800-MFS-TALK (1-800-637-8255)
MFS Fund Distributors, Inc. anytime from a touch-tone telephone.
500 Boylston Street
Boston, MA 02116-3741 WORLD WIDE WEB
www.mfs.com
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
Maura A. Shaughnessy*
TREASURER
W. Thomas London*
+Independent Trustee
*MFS Investment Management
</TABLE>
<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)1999 MFS Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MUF-2 12/99 95M 35/235/335/835
