<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
MFS(R) UTILITIES FUND
SEMIANNUAL REPORT o APRIL 30, 2000
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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 ............................................. 5
Performance Summary ....................................................... 10
Portfolio of Investments .................................................. 13
Financial Statements ...................................................... 21
Notes to Financial Statements ............................................. 28
Trustees and Officers ..................................................... 35
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,
Historically, there have been two ways that shareholders in stocks and stock
mutual funds could potentially make money: capital gains from share price
appreciation and dividend payments. Over the past decade, however, it appears
to us that dividends have become less and less relevant as a means of
profiting from stock investments. Investors who in the past may have counted
on dividend payments from stocks or stock funds as a source of income are
sometimes finding their payments are no longer meeting their needs. In the
balance of this letter, we'd like to address why that has happened, why this
may in some ways be good for investors, and what investors may want to do to
adjust to the new reality of shrinking dividends.
A FUNDAMENTAL CHANGE
When a company pays a dividend, it is essentially sharing its profits with
stockholders. Until the 1950s, paying a dividend was standard practice for a
majority of American companies; dividend payments were virtually required to
compensate investors for taking on the risks associated with investing
in stocks.
What has happened in the ensuing decades, however, is a fundamental change in
the way investors view the stock market. The tremendous popularity of
Individual Retirement Accounts and 401(k) retirement plans has introduced a
flood of new investors to stocks and stock mutual funds, and a generally
rising market through most of the past decade has made the experience a very
positive one for many of those shareholders.
As a result, investors appear to be focusing much more on share price and on
company earnings -- which we believe are the strongest long-term
driver of share prices -- than on dividend payments. Summing up the trend, The
New York Times commented on January 4, 2000, that "a growing portion of
corporate America appears to be concluding that dividends are no longer needed
to attract investors and are therefore an unnecessary cost of doing business.
Fewer companies are raising dividends, and more and more major companies do
not bother to pay them at all."
BENEFITS FOR INVESTORS
In assessing whether this trend is good for investors, it may help to look at
what shareholders have traditionally regarded as the benefits of dividends.
One benefit was that a dividend payment served as an indication that a company
was in good health, because it was generating profits that it could share with
its investors. However, there are other ways for a corporation to use its
profits that over the long term may benefit shareholders more
than a dividend.
As part of the MFS Original Research(R) process that we use in evaluating
potential investments, one thing we look for is companies that are investing
their profits back in their businesses. Profits can be used to fund additional
research, product development, marketing, and other areas that may improve the
earnings of a company and potentially result in higher stock prices. Share
buybacks are another way we like to see a company reinvest its profits. By
buying back its own shares and thus reducing the number of shares outstanding,
a company may increase the value of existing shares. Over the long term, we
believe such actions may benefit shareholders more than a dividend payment. An
additional reason we feel dividends are an inefficient way for a company to
use its profits is that dividend payouts are subject to double taxation: once
as corporate profits and a second time as ordinary income to shareholders.
POTENTIAL DOWNSIDE PROTECTION
"Downside protection" is a second potential benefit that investors have
historically attributed to dividends. The reasoning went that, during a bad
market period, a stockholder could at least count on dividend payments to
somewhat counteract the effect of declining share prices. We believe, however,
that the best long-term protection against market volatility is simply
investing in good businesses -- which is why our research is focused on
identifying companies with the potential to grow earnings over the long haul,
taking down markets in their stride.
And although dividend payments may appear to provide some short-term
protection against volatility, over the past decade stock prices in general
have risen much faster than dividends, making most dividend payments too small
to provide significant protection. In 1999, for example, the average dividend
yield of stocks in the Standard & Poor's 500 Composite Index was only 1.21%(1)
-- whereas yields had averaged in the 3% - 4% range or greater during the
decades of the 1960s, '70s, and '80s.(2)
ALTERNATE INCOME STREAMS
A third benefit of stock dividend payments has traditionally been that they
may provide a steady stream of income, allowing an investor to receive money
from stock or stock mutual fund investments without selling shares. This
benefit has often been used to provide retirement income. Over the past
decade, however, many investors have found their dividend checks shrinking
while the value of their holdings may have appreciated considerably.
Intuitively, receiving a stream of dividend income without reducing the
principal in one's account may seem preferable to selling shares to generate
income. But investors should also bear in mind the tax consequences of
dividend income. Dividends are federally taxed as ordinary income, whereas
profits from selling stock or mutual fund shares held more than one year are
taxed at the capital gains rate of 20% -- which for many investors is lower
than their ordinary income tax bracket. Many shareholders may find themselves
paying lower taxes on profits from share appreciation than on dividend income.
Given the current reality of low and declining stock dividends, we would
suggest that investors seeking an income stream from their equity portfolio
talk with their investment professionals about alternate payout methods. Two
possible strategies are systematic withdrawals and bond investing.
With a systematic withdrawal, an investor's account is set up to sell shares
in order to pay out a fixed amount on a regular schedule. The advantage of
this approach is that the payout amount is always the same, regardless of
market fluctuations or variations in dividends paid by the holdings in the
account. In a period when the market is rising, share price appreciation may
in fact compensate for some selling of holdings. Of course, the disadvantage
of a systematic withdrawal is that, depending on the payout amount, the
principal balance in the account will most likely shrink as shares are sold.
At some point an investor can potentially run out of money.
For investors who feel more comfortable not drawing down their account
principal, bond funds may present an attractive alternative for providing an
income stream. High-yield bond funds, in particular, may offer the potential
for higher dividend yields than many stock funds are offering today. A
disadvantage is that, historically, bond funds have not tended to offer as
much potential for long-term share price appreciation as have stock funds.
Investors should also understand that, although investments in lower-rated
securities such as high-yield bonds may provide greater returns, they are also
associated with greater-than-average risk.(3) We suggest that investors work
with their investment professionals to determine whether a bond fund or
systematic withdrawal plan may meet their needs within their expected
time frames.
As with most major changes in the financial markets, the overall decline in
stock dividend payments presents a combination of challenges and potential
benefits for investors. We feel that most investors will be best served by
working with their investment professionals to continually monitor such
changes in the financial markets, as well as changes in their own situations,
and adjusting their portfolios accordingly. As always, we appreciate your
confidence in MFS 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)
May 18, 2000
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(1) Source: Standard & Poor's. The Standard & Poor's 500 Composite Index (the
S&P 500) is a popular, unmanaged index of common stock total return
performance. It is not possible to invest directly in an index.
(2) Source: FactSet Research. The dividend yield of a stock is calculated by
dividing the dividend per share by the current market price per share.
(3) These risks may increase share price volatility. Please see a prospectus for
details.
A prospectus containing more complete information on any MFS product,
including charges and expenses, can be obtained from your investment
professional. Please read it carefully before you invest or send money.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Maura A. Shaughnessy]
Maura A. Shaughnessy
For the six months ended April 30, 2000, Class A shares of the Fund provided a
total return of 18.35%, Class B shares 17.98%, Class C shares 17.86%, and
Class I shares 18.46%. These returns, which include the reinvestment of any
distributions but exclude the effects of any sales charges, compare to an
8.65% return over the same period for the Fund's benchmark, the Standard &
Poor's (S&P) Utilities Index. The S&P Utilities Index is an unmanaged, market-
value-weighted total return index of all utility stocks in the S&P 500
Composite Index. For the same period, the average utility fund returned 7.97%,
according to Lipper Inc., an independent firm that reports mutual fund
performance.
Q. HOW WOULD YOU DESCRIBE THE STOCK MARKET ENVIRONMENT OVER THE PAST SIX MONTHS?
A. The market has been extremely volatile. In the last quarter of 1999, stocks
had an incredible run, with the biggest gains coming from technology and
other high-growth sectors. But almost as soon as the new year started,
investors grew unsettled. We felt that part of the problem was renewed
concerns about rising interest rates. Also, technology stocks had reached
such high levels that we believe many investors were getting nervous that
they wouldn't be able to meet their earnings forecasts. Finally, in March
and April, growth stock prices declined.
Q. WHAT HAPPENED TO UTILITY STOCKS DURING THIS TIME?
A. They moved in the opposite direction of the market leaders. During the
fourth quarter of last year, utility stocks did poorly because their
earnings looked weak compared to the strength in high-growth technology
names. But as the market grew increasingly bumpy, utilities started looking
more attractive. Toward the end of the period, investors were moving into
electric utility stocks for defensive reasons, and their stock prices moved
up nicely.
Q. WHAT CHANGES DID YOU MAKE TO TAKE ADVANTAGE OF THIS SHIFT?
A. None. My strategy is always to own the names I have confidence in --
usually companies with good earnings growth prospects whose stock prices
look reasonable. A few years ago when we had the meltdown in Asian
financial markets, investors flew into electrics, again for defensive
reasons. But they flew out just as quickly. That was a good lesson. Sure,
it would have been nice to have a higher stake than the roughly 20% we had
in these utilities when they started moving up. But I just don't have a lot
of confidence right now that the management teams at many of these
companies have the experience to run their businesses effectively in a
deregulated environment. I focused exclusively on companies like Pinnacle
West Capital that I think do seem to have the right skills. This is an
Arizona-based company focused on its nonregulated generation business
that's not only well managed but is operating in a territory with strong
growth potential. I believe that combination may give the company double-
digit earnings growth down the road.
Q. WHICH ELECTRICS HELPED THE FUND DURING THE PERIOD?
A. AES and Calpine, two independent power producers, posted exceptionally
strong gains. AES has more of an international focus, whereas Calpine has
most of its power plants here in the United States. But the story is much
the same. Both are capitalizing on two trends in generation --
privatization and deregulation. To be successful, we believe these
companies have to run their plants efficiently and understand the markets
in which they operate.
Q. HOW HAVE NATURAL GAS STOCKS DONE?
A. They've been strong performers and, fortunately, a sizable focus for the
Fund. By the end of the period, we had built our stake to 22% of portfolio
assets, for a couple of reasons. First, we recognized the overall strength in
natural gas demand. Our research shows that only about 15% of existing
electricity generation is natural-gas-based today, but 95% of the new plants
being built are natural gas ones. We believe the underlying demand for
natural gas is going to go up. Second, many of the natural gas pipeline
companies trade in natural gas and electricity. Basically, we feel they try
to take advantage of price volatility by buying excess capacity at low prices
and then reselling it at higher prices to companies that are running short.
Finally, many natural gas pipeline companies, including Dynegy, Williams,
Enron, Coastal, and El Paso, have been getting into the deregulated power
generation business. We think they have the necessary risk management tools
from their trading experience, as well as an understanding of power
generation, to be very successful.
Q. DID ANY NATURAL GAS STOCKS STAND OUT AS TOP PERFORMERS?
A. Yes. Enron had a terrific run. In addition to its natural gas pipeline
business, it's the biggest trader of natural gas and electricity in the
world. It's also the premier player in energy outsourcing. We see this as
an area with strong growth potential, as companies like Chase Manhattan and
Owens Corning are seeking to increase their efficiency by contracting out
their energy management needs. In addition, Enron has been benefiting from
efforts to put in its own telecommunications fiber-optic network. Another
strong performer was Dynegy, which bought out Illinova, a Midwest electric
utility that we already owned, and then spun off Illinova's generation on a
deregulated basis. Investors applauded the merger and spin off by pushing
Dynegy's stock price up.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Sure. Williams, another natural gas pipeline stock and our largest
investment, was flat for the period. It spun off 15% of its
telecommunications subsidiary about a year ago. Unfortunately, the parent
company's stock has moved more in line with communications stocks than with
energy stocks. And telecommunications has really done badly this spring. The
wireless companies and the new competitive local exchange carriers got killed
during the downturn of growth investing. The story isn't much better with the
service providers -- stocks like GTE and SBC Communications sunk as investors
worried about whether they could keep up in the rapidly changing
telecommunications market. We held on because we believe these companies will
prove they can compete.
Q. HAS CONSOLIDATION CONTINUED TO BENEFIT THE FUND?
A. It has. We owned El Paso and Coastal, natural gas pipeline stocks that
announced a merger in February. Both stocks took pretty hard hits over
concerns that the deal just didn't make sense. We knew the companies well
and thought the merger was a good move, especially given the fact that the
combined entity would create the biggest natural gas pipeline company in
the United States. We used the downturn as an opportunity to add to our
position and have since seen both stocks rebound nicely. We also benefited
from selling our stake in Mannesmann, a German wireless and wire-line
company, following its announced buyout by Vodafone AirTouch, a British-
based mobile telecommunications provider.
Q. DO YOU THINK UTILITY STOCKS WILL CONTINUE TO DO WELL?
A. As long as the stock market remains volatile, we think utility stocks may
provide a safer haven for investors and, therefore, we believe they should
do well. We feel that natural gas stocks seem to have the strongest
prospects and electrics the weakest. But it is important to remember that
since we buy individual stocks, not whole sectors, that's largely
irrelevant to our investment strategy. We'll remain focused on utility
companies -- regardless of sector -- that we believe can sustain or improve
earnings growth.
/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.
It is not possible to invest directly in an index.
<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
THE 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 GLOBAL, 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 investment professional, 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 FEBRUARY 14, 1992
OF INVESTMENT OPERATIONS:
CLASS INCEPTION: CLASS A FEBRUARY 14, 1992
CLASS B SEPTEMBER 7, 1993
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
SIZE: $2.0 BILLION NET ASSETS AS OF APRIL 30, 2000
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PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends. (See Notes to
Performance Summary.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH APRIL 30, 2000
<TABLE>
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 5 Years Life*
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales
Charge +18.35% +28.41% +106.70% +217.59% +327.49%
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +28.41% + 27.38% + 26.00% + 19.36%
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Average Annual Total Return Including Sales
Charge -- +22.31% + 25.33% + 24.78% + 18.66%
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CLASS B
<CAPTION>
6 Months 1 Year 3 Years 5 Years Life*
-----------------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding Sales
Charge +17.98% +27.45% +102.37% +206.06% +304.07%
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +27.45% + 26.49% + 25.07% + 18.55%
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Average Annual Total Return Including Sales
Charge -- +23.45% + 25.86% + 24.91% + 18.55%
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*For the period from the commencement of the Fund's investment operations, February 14, 1992, through April 30, 2000.
CLASS C
<CAPTION>
6 Months 1 Year 3 Years 5 Years Life*
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Cumulative Total Return Excluding Sales
Charge +17.86% +27.42% +102.22% +205.67% +305.99%
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +27.42% + 26.46% + 25.04% + 18.61%
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales
Charge -- +26.42% + 26.46% + 25.04% + 18.61%
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CLASS I
<CAPTION>
6 Months 1 Year 3 Years 5 Years Life*
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Cumulative Total Return Excluding Sales
Charge +18.46% +28.67% +108.47% +220.58% +331.51%
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +28.67% + 27.75% + 26.24% + 19.50%
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*For the period from the commencement of the Fund's investment operations, February 14, 1992, through April 30, 2000.
</TABLE>
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 Class C 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. MORE RECENT
RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. 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.
PORTFOLIO CONCENTRATION AS OF APRIL 30, 2000
FIVE LARGEST STOCK SECTORS
UTILITIES & COMMUNICATIONS 89.4%
SPECIAL PRODUCTS & SERVICES 3.7%
LEISURE 3.6%
TECHNOLOGY 1.5%
INDUSTRIAL GOODS & SERVICES 1.3%
TOP 10 STOCK HOLDINGS
WILLIAMS COS., INC. 3.6% ENRON CORP. 2.7%
Natural gas pipeline company Natural gas pipeline company
SBC COMMUNICATIONS, INC. 3.4% AES CORP. 2.6%
Integrated telecommunications company Electric power plant operator
GTE CORP. 3.4% DYNEGY, INC. 2.6%
Telecommunications company Natural gas pipeline company
BCE, INC. 3.2% KEYSPAN CORP. 2.3%
Canadian telecommunications company Electric utility company
COASTAL CORP. 3.1% KPN N.V. 2.3%
Oil and natural gas company Dutch telecommunications company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- April 30, 2000
Stocks - 77.9%
<CAPTION>
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ISSUER SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 52.6%
Business Services - 0.4%
Adelphia Business Solutions* 208,200 $ 7,287,000
------------------------------------------------------------------------------------------------------
Computer Software - Systems - 0.4%
Digex, Inc.* 104,600 $ 8,158,800
------------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 0.5%
SCANA Corp. 381,988 $ 9,883,939
------------------------------------------------------------------------------------------------------
Electronics - 0.1%
Fuelcell Energy, Inc.* 25,810 $ 1,051,758
------------------------------------------------------------------------------------------------------
Energy - 2.8%
Dynegy, Inc. 683,300 $ 44,713,444
Energy East Corp. 64,500 1,346,437
Sierra Pacific Resources Co. 577,552 8,735,474
--------------
$ 54,795,355
------------------------------------------------------------------------------------------------------
Internet - 0.1%
VIA NET.WORKS, Inc. 145,560 $ 2,902,103
------------------------------------------------------------------------------------------------------
Metals and Minerals - 0.1%
USEC, Inc. 349,600 $ 1,638,750
------------------------------------------------------------------------------------------------------
Oils - 2.7%
Coastal Corp. 1,050,100 $ 52,701,894
------------------------------------------------------------------------------------------------------
Telecommunications - 15.9%
Allegiance Telecom, Inc.* 81,000 $ 5,730,750
Alltel Corp. 513,500 34,211,937
AT&T Corp. 272,900 8,681,631
BroadWing, Inc.* 419,064 11,864,749
CenturyTel, Inc. 595,600 14,592,200
Completel Holdings LLC, "B"*## 29,250 2,193,750
Focal Communications Corp.* 35,400 1,179,263
GTE Corp. 862,400 58,427,600
Intermedia Communications, Inc.* 463,800 18,899,850
Metromedia Fiber Network, Inc., "A"* 544,920 16,824,405
NTL, Inc.* 119,200 9,118,800
Qwest Communications International, Inc.* 321,200 13,932,050
SBC Communications, Inc. 1,342,071 58,799,486
Sprint Corp.* 370,700 22,798,050
Time Warner Telecom, Inc.* 114,000 6,241,500
UnitedGlobalCom, Inc.* 140,600 7,469,375
Williams Communications Group, Inc.* 361,900 13,390,300
Winstar Communications, Inc.* 172,800 6,890,400
--------------
$ 311,246,096
------------------------------------------------------------------------------------------------------
Utilities - Electric - 17.4%
AES Corp.* 505,700 $ 45,481,394
Atmos Energy Corp. 330,199 5,241,909
Calpine Corp.* 124,400 11,382,600
CMS Energy Corp. 1,507,595 28,644,305
Constellation Energy Group, Inc. 126,300 4,175,794
DPL, Inc. 94,900 2,206,425
DQE, Inc. 237,800 9,095,850
Duke Energy Corp. 457,400 26,300,500
El Paso Electric Co.* 755,900 8,362,144
Keyspan Corp. 1,357,700 39,882,437
Montana Power Co. 100,100 4,410,656
NiSource, Inc. 1,015,300 18,783,050
Northeast Utilities 756,800 16,271,200
NSTAR Co. 309,500 13,637,344
Peco Energy Co. 700,700 29,210,431
Pinnacle West Capital Corp. 990,900 34,805,362
Public Service Enterprise Group 244,600 8,775,025
Reliant Energy, Inc. 593,500 15,801,938
Unicom Corp. 423,500 16,834,125
--------------
$ 339,302,489
------------------------------------------------------------------------------------------------------
Utilities - Gas - 10.9%
Columbia Energy Group 412,900 $ 25,909,475
El Paso Energy Corp. 915,900 38,925,750
Energen Corp. 405,700 7,429,381
Enron Corp. 668,400 46,579,125
Kinder Morgan, Inc. 604,800 18,333,000
National Fuel Gas Co. 119,100 5,649,806
NICOR, Inc. 268,800 9,105,600
Williams Cos., Inc. 1,657,300 61,838,007
--------------
$ 213,770,144
------------------------------------------------------------------------------------------------------
Utilities - Telephone - 1.3%
U.S. West, Inc. 349,000 $ 24,844,437
------------------------------------------------------------------------------------------------------
Total U.S. Stocks $1,027,582,765
------------------------------------------------------------------------------------------------------
Foreign Stocks - 25.3%
Argentina - 0.1%
IMPSAT Fiber Networks, Inc. (Telecommunications)* 138,950 $ 2,197,147
------------------------------------------------------------------------------------------------------
Australia - 0.7%
Cable & Wireless Optus Ltd. (Telecommunications) 3,903,600 $ 12,595,961
------------------------------------------------------------------------------------------------------
Bermuda - 0.7%
FLAG Telecom Holdings Ltd. (Telecommunications)* 124,500 $ 2,427,750
Global Crossing Ltd. (Telecommunications)* 371,100 11,689,650
--------------
$ 14,117,400
------------------------------------------------------------------------------------------------------
Brazil - 1.1%
Celular CRT Participacoes, Preferred
(Telecommunications) 6,134 2,310,907
Companhia Electricas est Rio de Janeiro
(Utilities - Electric)* 7,436,500 2,348,368
Companhia Riogrand Telecomunicacoes, Preferred "A"
(Utilities - Telephone) 6,134 2,225,948
Espirito Santo Centrais Eletricas S.A. (Utilities -
Electric) 10,200 418,172
Tele Centro Oeste Celular Participacoes S.A., ADR
(Telecommunications) 168,800 1,941,200
Tele Centro Sul Participacoes S.A., ADR
(Telecommunications)* 47,500 3,028,125
Telecomunicacoes de Sao Paulo S.A
(Telecommunications)* 365,400 9,226,350
--------------
$ 21,499,070
------------------------------------------------------------------------------------------------------
Canada - 4.3%
AT&T Canada, Inc. (Telecommunications)* 316,800 $ 13,503,600
BCE, Inc. (Telecommunications) 474,700 54,471,825
Telesystem International Wireless, Inc.
(Telecommunications)* 503,600 16,618,800
--------------
$ 84,594,225
------------------------------------------------------------------------------------------------------
Finland - 0.6%
Sonera Oyj (Telecommunications) 197,600 $ 10,865,718
------------------------------------------------------------------------------------------------------
France - 1.1%
Vivendi S.A. (Business Services) 221,900 $ 21,943,319
------------------------------------------------------------------------------------------------------
Greece - 0.4%
Panafon S.A. (Telecommunications)* 626,760 $ 7,540,505
------------------------------------------------------------------------------------------------------
Hong Kong - 0.4%
China Telecom Ltd. (Telecommunications) 1,054,000 $ 7,544,327
------------------------------------------------------------------------------------------------------
Hungary - 0.7%
Magyar Tavkozlesi Rt., ADR (Telecommunications)* 399,200 $ 13,897,150
------------------------------------------------------------------------------------------------------
Israel - 0.4%
Partner Communications Co. Ltd., ADR (Cellular
Telephones)* 747,675 $ 7,990,777
------------------------------------------------------------------------------------------------------
Italy - 2.0%
Telecom Italia Mobile S.p.A. (Telecommunications) 1,917,400 $ 18,298,612
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications)* 1,138,800 4,481,790
Telecom Italia S.p.A. (Telecommunications) 1,128,800 15,779,362
--------------
$ 38,559,764
------------------------------------------------------------------------------------------------------
Japan - 1.2%
Nippon Telegraph & Telephone Co. (Utilities -
Telephone) 866 $ 10,745,810
NTT Mobile Communications Network, Inc.
(Telecommunications) 390 13,037,319
--------------
$ 23,783,129
------------------------------------------------------------------------------------------------------
Mexico - 0.8%
Nuevo Grupo Iusacell S.A. de C.V., ADR
(Telecommunications)* 755,790 $ 12,045,403
Telefonos de Mexico S.A., ADR (Utilities -
Telephone) 69,400 4,081,588
--------------
$ 16,126,991
------------------------------------------------------------------------------------------------------
Netherlands - 3.9%
Completel Europe N.V. (Telecommunications)* 444,870 $ 7,803,807
KPN N.V. (Telecommunications)* 389,450 39,237,699
Libertel N.V. (Cellular Telecommunications)* 533,991 9,367,148
United Pan-Europe Communications N.V
(Telecommunications and Cable)* 293,400 10,674,851
Versatel Telecommunications N.V
(Telecommunications)* 217,600 8,721,950
--------------
$ 75,805,455
------------------------------------------------------------------------------------------------------
Spain - 3.2%
Endesa S.A., ADR (Utilities - Electric) 674,500 $ 14,713,274
Telefonica de Espana S.A., ADR (Telecommunications) 445,173 29,492,711
Union Electrica Fenosa S.A. (Utilities - Electric) 921,400 17,745,788
--------------
$ 61,951,773
------------------------------------------------------------------------------------------------------
Sweden - 0.5%
Tele1 Europe Holdings AB (Telecommunications)* 550,360 $ 8,659,833
Tele1 Europe Holdings AB, ADR (Telecommunications)* 27,900 432,450
--------------
$ 9,092,283
------------------------------------------------------------------------------------------------------
United Kingdom - 3.2%
British Telecommunications PLC
(Telecommunications)* 26 $ 465
Cable & Wireless Communications PLC
(Telecommunications) 1,092,500 16,376,633
Cable & Wireless Communications PLC, ADR
(Telecommunications)* 168,500 2,795,980
Energis PLC (Telecommunications)* 268,800 13,272,090
Independent Energy Holdings PLC, ADR (Utilities -
Electric) 248,800 9,703,200
Vodafone AirTouch PLC (Telecommunications)* 4,470,205 20,457,458
--------------
$ 62,605,826
------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 492,710,820
------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,382,813,777) $1,520,293,585
------------------------------------------------------------------------------------------------------
Bonds - 5.9%
------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
------------------------------------------------------------------------------------------------------
U.S. Bonds - 5.8%
Banks and Credit Companies - 0.2%
Beaver Valley Funding Corp. II, 9s, 2017 $ 1,185 $ 1,191,589
Midamerican Funding LLC, 6.927s, 2029 1,230 1,059,406
Midland Cogeneration Venture Corp., 10.33s, 2002 247 252,533
Midland Funding Corp., 10.33s, 2002 941 962,183
--------------
$ 3,465,711
------------------------------------------------------------------------------------------------------
Energy - 0.1%
Ocean Energy, Inc., 8.875s, 2007 $ 850 $ 837,250
------------------------------------------------------------------------------------------------------
Financial Institutions - 0.1%
Salton Sea Funding Corp., 6.69s, 2000 $ 119 $ 119,460
Salton Sea Funding Corp., 7.84s, 2010 1,110 1,071,228
Salton Sea Funding Corp., 8.3s, 2011 1,311 1,294,845
--------------
$ 2,485,533
------------------------------------------------------------------------------------------------------
Financial Services - 0.1%
Bellsouth Capital Funding Corp., 7.75s, 2010 $ 1,540 $ 1,539,661
Sprint Capital Corp., 6.9s, 2019 1,279 1,146,189
--------------
$ 2,685,850
------------------------------------------------------------------------------------------------------
Telecommunications - 0.8%
Intermedia Communications, Inc., 12.25s, 2009 $ 17,850 $ 10,888,500
Sprint Spectrum LP, 11s, 2006 1,463 1,575,036
Telecomunicaciones de Puerto Rico, Inc., 6.65s, 2006 296 278,976
Telecomunicaciones de Puerto Rico, Inc., 6.8s, 2009 687 631,680
TXU Eastern Funding Co., 6.75s, 2009 1,488 1,329,839
WorldCom, Inc., 8.875s, 2006 720 748,613
--------------
$ 15,452,644
------------------------------------------------------------------------------------------------------
U.S. Federal Agencies - 0.4%
Federal Home Loan Mortgage Corp., 5s, 2004 $ 490 $ 454,705
Federal Home Loan Mortgage Corp., 6.5s, 2029 1,244 1,161,776
Federal National Mortgage Assn., 5.25s, 2009 1,821 1,580,282
Federal National Mortgage Assn., 7s, 2029 1,468 1,404,779
Federal National Mortgage Assn., 7.25s, 2010 2,715 2,706,936
------------------------------------------------------------------------------------------------------
Total U.S. Federal Agencies $ 7,308,478
------------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 3.2%
Government National Mortgage Association - 0.6%
GNMA, 6.5s, 2029 $ 540 $ 505,687
GNMA, 7s, 2027 - 2028 2,228 2,143,031
GNMA, 7.5s, 2025 - 2028 4,477 4,406,621
GNMA, 8s, 2025 - 2030 3,223 3,229,851
--------------
$ 10,285,190
------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 2.6%
U.S. Treasury Bonds, 0s, 2023 $ 15,834 $ 4,034,503
U.S. Treasury Bonds, 6.125s, 2029 7,257 7,273,982
U.S. Treasury Bonds, 10.375s, 2009 30,628 34,906,425
U.S. Treasury Notes, 6.5s, 2010 4,559 4,649,450
--------------
$ 50,864,360
------------------------------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 61,149,550
------------------------------------------------------------------------------------------------------
Utilities - Electric - 0.8%
California Infrastructure, 6.17s, 2003 $ 1,839 $ 1,832,104
CMS Panhandle Holding Co., 6.5s, 2009 1,300 1,122,628
Connecticut Light & Power Co., 8.59s, 2003 1,000 986,440
Detroit Edison Co., 7.5s, 2005 3,647 3,610,030
Illinois Power Special Purpose Trust, 5.26s, 2003 2,100 2,079,000
Niagara Mohawk Power Corp., 7.75s, 2006 2,183 2,136,458
NRG Energy, Inc., 8.962s, 2016 719 716,304
NSTAR Co., 8s, 2010 2,443 2,429,319
Toledo Edison Co., 9.5s, 2001 1,385 1,405,623
--------------
$ 16,317,906
------------------------------------------------------------------------------------------------------
Utilities - Gas - 0.1%
Columbia Gas Systems, Inc., 6.39s, 2000 $ 2,245 $ 2,227,175
------------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 111,930,097
------------------------------------------------------------------------------------------------------
Foreign Bonds - 0.1%
Canada
Gulf Canada Resources Ltd., 9.25s, 2004 (Oils) $ 850 $ 847,254
------------------------------------------------------------------------------------------------------
Netherlands - 0.1%
Completel Europe N.V., 0s to 2004, 14s to 2009
(Telecommunications) $ 2,927 $ 1,463,500
------------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 2,310,754
------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $116,736,185) $ 114,240,851
------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks - 7.9%
------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
------------------------------------------------------------------------------------------------------
U.S. Stocks - 5.8%
Oils - 0.8%
Coastal Corp., 6.625% 560,000 $ 16,590,000
------------------------------------------------------------------------------------------------------
Telecommunications - 2.7%
Cox Communications, Inc., 0.25% 147,100 $ 7,505,483
Cox Communications, Inc., 7.75% 146,700 15,733,575
DECS Trust VI, 6.25% 110,100 5,862,825
MGC Communications, Inc., 7.25% 241,200 10,371,600
UnitedGlobalCom, Inc., "C", 7.00% 11,200 791,000
UnitedGlobalCom, Inc., "D", 7.00% 115,020 5,290,920
UnitedGlobalCom, Inc., 7.00%## 102,700 7,253,188
--------------
$ 52,808,591
------------------------------------------------------------------------------------------------------
Utilities - Electric - 2.3%
AES Trust III, 6.75% 277,400 $ 19,782,087
Calpine Capital Trust, 5.75%* 144,200 12,130,825
CMS Energy Corp., 8.75% 489,300 12,966,450
--------------
$ 44,879,362
------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 114,277,953
------------------------------------------------------------------------------------------------------
Foreign Stocks - 2.1%
Bermuda - 2.1%
Global Crossing Ltd., 6.75% (Telecommunications) 57,300 $ 14,353,650
Global Crossing Ltd., 7.00% (Telecommunications) 43,700 8,805,550
Global Crossing Ltd., 7.00% (Telecommunications)## 86,000 17,630,000
--------------
$ 40,789,200
------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost,
$147,188,923) $ 155,067,153
------------------------------------------------------------------------------------------------------
Convertible Bonds - 2.4%
------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
------------------------------------------------------------------------------------------------------
U.S. Bonds - 2.4%
Financial Institutions - 1.2%
ADT Operations, Inc., 0s, 2010 $ 9,115 $ 23,038,162
------------------------------------------------------------------------------------------------------
Financial Services - 0.4%
Bell Atlantic Financial Services, Inc., 4.25s, 2005 $ 6,100 $ 7,608,896
------------------------------------------------------------------------------------------------------
Telecommunications - 0.8%
Liberty Media Group, 4s, 2029## $ 5,776 $ 7,530,460
NTL, Inc., 5.75s, 2009## 9,870 8,673,263
--------------
$ 16,203,723
------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $41,954,069) $ 46,850,781
------------------------------------------------------------------------------------------------------
Short-Term Obligations - 6.9%
------------------------------------------------------------------------------------------------------
Federal Agricultural Mortgage Corp., due 5/11/00 $ 24,000 $ 23,960,800
Federal Home Loan Bank, due 5/01/00 76,335 76,335,000
General Electric Capital Corp., due 5/01/00 - 5/22/00 34,990 34,919,767
------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 135,215,567
------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,823,908,521) $1,971,667,937
Other Assets, Less Liabilities - (1.0)% (19,221,807)
------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,952,446,130
------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------------
APRIL 30, 2000
-------------------------------------------------------------------------------------
Assets:
<S> <C>
Investments, at value (identified cost, $1,823,908,521) $1,971,667,937
Investments of cash collateral for securities loaned, at value
(identified cost, $254,988,648) 254,988,648
Cash 5,759
Foreign currency, at value (identified cost, $7,233) 5,450
Receivable for Fund shares sold 12,448,853
Receivable for investments sold 3,157,213
Interest and dividends receivable 7,151,001
Other assets 5,799
--------------
Total assets $2,249,430,660
--------------
Liabilities:
Distributions payable $ 367,615
Payable for Fund shares reacquired 1,936,819
Payable for investments purchased 39,204,949
Collateral for securities loaned, at value 254,988,648
Payable to affiliates -
Management fee 78,304
Shareholder servicing agent fee 15,642
Distribution and service fee 116,711
Administrative fee 2,759
Accrued expenses and other liabilities 273,083
--------------
Total liabilities $ 296,984,530
--------------
Net assets $1,952,446,130
==============
Net assets consist of:
Paid-in capital $1,625,031,318
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 147,748,232
Accumulated undistributed net realized gain on
investments and foreign
currency transactions 178,930,732
Accumulated undistributed net investment income 735,848
--------------
Total $1,952,446,130
==============
Shares of beneficial interest outstanding 148,851,753
==============
Class A shares:
Net asset value per share
(net assets of $658,057,778 / 50,077,526 shares of
beneficial interest outstanding) $13.14
======
Offering price per share (100 / 95.25 of net asset
value per share) $13.80
======
Class B shares:
Net asset value and offering price per share
(net assets of $981,418,809 / 74,907,746 shares of
beneficial interest outstanding) $13.10
======
Class C shares:
Net asset value and offering price per share
(net assets of $310,671,893 / 23,691,943 shares of
beneficial interest outstanding) $13.11
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $2,297,650 / 174,538 shares of
beneficial interest outstanding) $13.16
======
On sales of $100,000 or more, the offering price of Class A 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.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
---------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2000
---------------------------------------------------------------------------------------------
<S> <C>
Net investment income:
Income -
Dividends $ 15,519,606
Interest 7,335,219
Foreign taxes withheld (161,455)
------------
Total investment income $ 22,693,370
------------
Expenses -
Management fee $ 4,481,112
Trustees' compensation 19,830
Shareholder servicing agent fee 843,589
Distribution and service fee (Class A) 704,550
Distribution and service fee (Class B) 4,283,436
Distribution and service fee (Class C) 1,324,515
Administrative fee 94,956
Custodian fee 303,648
Printing 18,586
Postage 89,706
Auditing fees 15,429
Miscellaneous 679,765
------------
Total expenses $ 12,859,122
Fees paid indirectly (66,809)
Reduction of expenses by investment adviser (263,136)
------------
Net expenses $ 12,529,177
------------
Net investment income $ 10,164,193
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $183,923,322
Foreign currency transactions (690,324)
------------
Net realized gain on investments and foreign currency transactions $183,232,998
------------
Change in unrealized appreciation (depreciation) -
Investments $ 45,241,209
Translation of assets and liabilities in foreign currencies (81,066)
------------
Net unrealized gain on investments and foreign currency translation $ 45,160,143
------------
Net realized and unrealized gain on investments and foreign
currency $228,393,141
------------
Increase in net assets from operations $238,557,334
============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
--------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
(UNAUDITED)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 10,164,193 $ 14,848,769
Net realized gain on investments and foreign
currency transactions 183,232,998 127,939,149
Net unrealized gain on investments and foreign
currency translation 45,160,143 76,569,181
-------------- --------------
Increase in net assets from operations $ 238,557,334 $ 219,357,099
-------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,413,860) $ (8,789,769)
From net investment income (Class B) (3,519,929) (7,897,582)
From net investment income (Class C) (1,082,576) (2,253,120)
From net investment income (Class I) (17,655) (31,538)
In excess of net investment income (Class A) -- (182,692)
In excess of net investment income (Class B) -- (164,148)
In excess of net investment income (Class C) -- (46,830)
In excess of net investment income (Class I) -- (655)
From net realized gain on investments and foreign
currency transactions (Class A) (40,693,133) (19,331,261)
From net realized gain on investments and foreign
currency transactions (Class B) (63,117,808) (22,418,158)
From net realized gain on investments and foreign
currency transactions (Class C) (19,343,816) (5,964,171)
From net realized gain on investments and foreign
currency transactions (Class I) (126,624) (67,729)
-------------- --------------
Total distributions declared to shareholders $ (132,315,401) $ (67,147,653)
-------------- --------------
Net increase in net assets from Fund share
transactions $ 494,607,556 $ 416,848,960
-------------- --------------
Total increase in net assets $ 600,849,489 $ 569,058,406
Net assets:
At beginning of period 1,351,596,641 782,538,235
-------------- --------------
At end of period (including accumulated undistributed
net investment income and distributions in excess of
net investment income of $735,848 and $394,325,
respectively) $1,952,446,130 $1,351,596,641
============== ==============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED ------------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
CLASS A
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $12.23 $10.76 $10.39 $ 9.12 $ 8.20 $ 7.00
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.11 $ 0.21 $ 0.27 $ 0.32 $ 0.38 $ 0.31
Net realized and unrealized gain
on investments and foreign
currency 2.00 2.13 1.78 2.08 1.07 1.22
------ ------ ------ ------ ------ ------
Total from investment
operations $ 2.11 $ 2.34 $ 2.05 $ 2.40 $ 1.45 $ 1.53
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.11) $(0.25) $(0.27) $(0.34) $(0.32) $(0.33)
From net realized gain on
investments and foreign
currency transactions (1.09) (0.61) (1.39) (0.79) (0.21) --
In excess of net investment
income -- (0.01) (0.02) -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(1.20) $(0.87) $(1.68) $(1.13) $(0.53) $(0.33)
------ ------ ------ ------ ------ ------
Net asset value - end of period $13.14 $12.23 $10.76 $10.39 $ 9.12 $ 8.20
====== ====== ====== ====== ====== ======
Total return(+) 18.35%++ 23.05% 22.13% 28.62% 18.41% 22.48%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.98%+ 1.05% 1.05% 1.10% 1.08% 0.83%
Net investment income 1.65%+ 1.88% 2.60% 3.27% 4.37% 4.30%
Portfolio turnover 65% 137% 124% 153% 137% 152%
Net assets at end of period (000
omitted) $658,058 $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 not been waived, the
net investment income per share and the ratios would have been:
Net investment income $ 0.11 $ 0.20 $ 0.26 $ 0.30 $ 0.34 $ 0.28
Ratios (to average net assets):
Expenses## 1.01%+ 1.10% 1.15% 1.39% 1.42% 1.23%
Net investment income 1.62%+ 1.83% 2.50% 3.08% 4.03% 3.90%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and 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,
SIX MONTHS ENDED ------------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
CLASS B
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $12.19 $10.73 $10.36 $ 9.10 $ 8.18 $ 6.98
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.07 $ 0.12 $ 0.19 $ 0.24 $ 0.31 $ 0.24
Net realized and unrealized gain
on investments and foreign
currency 1.99 2.12 1.79 2.08 1.07 1.22
------ ------ ------ ------ ------ ------
Total from investment
operations $ 2.06 $ 2.24 $ 1.98 $ 2.32 $ 1.38 $ 1.46
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.06) $(0.16) $(0.20) $(0.27) $(0.25) $(0.26)
From net realized gain on
investments and foreign
currency transactions (1.09) (0.61) (1.39) (0.79) (0.21) --
In excess of net investment
income -- (0.01) (0.02) -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(1.15) $(0.78) $(1.61) $(1.06) $(0.46) $(0.26)
------ ------ ------ ------ ------ ------
Net asset value - end of period $13.10 $12.19 $10.73 $10.36 $ 9.10 $ 8.18
====== ====== ====== ====== ====== ======
Total return 17.98%++ 22.11% 21.27% 27.59% 17.50% 21.43%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.73%+ 1.80% 1.80% 1.87% 1.89% 1.74%
Net investment income 1.01%+ 1.08% 1.85% 2.49% 3.53% 3.33%
Portfolio turnover 65% 137% 124% 153% 137% 152%
Net assets at end of period (000
omitted) $981,419 $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 not been waived, the
net investment income per share and the ratios would have been:
Net investment income $ 0.07 $ 0.11 $ 0.18 $ 0.22 $ 0.28 $ 0.21
Ratios (to average net assets):
Expenses## 1.76%+ 1.85% 1.90% 2.06% 2.23% 2.14%
Net investment income 0.98%+ 1.03% 1.75% 2.30% 3.19% 2.93%
+Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED ------------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
CLASS C
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $12.21 $10.75 $10.37 $ 9.10 $ 8.18 $ 6.99
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.06 $ 0.12 $ 0.19 $ 0.24 $ 0.31 $ 0.24
Net realized and unrealized gain
on investments and foreign currency 1.99 2.12 1.80 2.09 1.07 1.21
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.05 $ 2.24 $ 1.99 $ 2.33 $ 1.38 $ 1.45
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.06) $(0.16) $(0.20) $(0.27) $(0.25) $(0.26)
From net realized gain on
investments and foreign
currency transactions (1.09) (0.61) (1.39) (0.79) (0.21) --
In excess of net investment
income -- (0.01) (0.02) -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(1.15) $(0.78) $(1.61) $(1.06) $(0.46) $(0.26)
------ ------ ------ ------ ------ ------
Net asset value - end of period $13.11 $12.21 $10.75 $10.37 $ 9.10 $ 8.18
====== ====== ====== ====== ====== ======
Total return 17.86%++ 22.18% 21.25% 27.71% 17.57% 21.19%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.73%+ 1.81% 1.80% 1.85% 1.82% 1.81%
Net investment income 0.90%+ 1.08% 1.85% 2.47% 3.60% 3.32%
Portfolio turnover 65% 137% 124% 153% 137% 152%
Net assets at end of period (000
omitted) $310,672 $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 not been waived, the
net investment income per share and the ratios would have been:
Net investment income $ 0.06 $ 0.11 $ 0.18 $ 0.22 $ 0.28 $ 0.21
Ratios (to average net assets):
Expenses## 1.76%+ 1.86% 1.90% 2.04% 2.16% 2.21%
Net investment income 0.87%+ 1.03% 1.75% 2.28% 3.26% 2.83%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and 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
SIX MONTHS ENDED ------------------------- OCTOBER 31,
APRIL 30, 2000 1999 1998 1997*
(UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------
CLASS I
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $12.25 $10.78 $10.39 $ 8.90
------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.13 $ 0.24 $ 0.30 $ 0.29
Net realized and unrealized gain on
investments and foreign currency 1.99 2.13 1.80 1.48
------ ------ ------ ------
Total from investment operations $ 2.12 $ 2.37 $ 2.10 $ 1.77
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.12) $(0.28) $(0.29) $(0.28)
From net realized gain on investments and
foreign currency transactions (1.09) (0.61) (1.39) --
In excess of net investment income -- (0.01) (0.03) --
------ ------ ------ ------
Total distributions declared to
shareholders $(1.21) $(0.90) $(1.71) $(0.28)
------ ------ ------ ------
Net asset value - end of period $13.16 $12.25 $10.78 $10.39
====== ====== ====== ======
Total return 18.46%++ 23.44% 22.52% 20.15%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.73%+ 0.80% 0.80% 0.86%+
Net investment income 1.90%+ 2.14% 2.84% 3.39%+
Portfolio turnover 65% 137% 124% 153%
Net assets at end of period (000 omitted) $2,298 $1,437 $1,145 $725
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had not been waived,
the net investment income per share and the ratios would have been:
Net investment income $ 0.13 $ 0.23 $ 0.29 $ 0.27
Ratios (to average net assets):
Expenses## 0.76%+ 0.85% 0.90% 1.05%+
Net investment income 1.87%+ 2.09% 2.74% 3.20%+
* For the period from the inception of Class I, January 3, 1997, through October 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(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, at
fair value, 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") and
Chase Manhattan Bank ("Chase"), as agents, 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/or U.S. Treasury securities in an
amount at least equal to the market value of the securities loaned. State
Street and Chase provide the Fund with indemnification against Borrower
default. The Fund bears the risk of loss with respect to the investment of
cash collateral.
Cash collateral is invested in short-term securities. 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 the lending agents. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the Fund and the lending agents. 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.
At April 30, 2000, the value of securities loaned was $264,503,813. These
loans were collateralized by U.S. Treasury securities of $17,088,311 and cash
of $254,988,648 which was invested in the following short-term obligations:
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL AMORTIZED COST
AMOUNT AND VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Navigator Securities Lending Prime Portfolio 182,301,065 $182,301,065
Salomon Smith Barney, Inc., due 5/01/00 $ 72,687,583 72,687,583
------------
Total investment of cash collateral for securities loaned $254,988,648
============
</TABLE>
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 reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. During the period, the Fund's custodian fees were reduced by $61,010
under this arrangement. The Fund has entered into a directed brokerage
agreement, under which the broker will credit the Fund a portion of the
commissions generated, to offset certain expenses of the Fund. For the period,
the Fund's custodian fees were reduced by $5,799 under this agreement. These
amounts are 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 net 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.
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 $6,396
for the six months ended April 30, 2000.
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 incurs an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$460,249 for the six months ended April 30, 2000, 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 $30,153
for the six months ended April 30, 2000. 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 six months
ended April 30, 2000, 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 $16,608 and $3,766 for Class B and Class C shares, respectively, for
the six months ended April 30, 2000. Fees incurred under the distribution plan
during the six months ended April 30, 2000 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 six months ended April
30, 2000, were $5,246, $789,975, and $33,132 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%.
(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 $ 99,651,842 $ 54,268,655
Investments (non-U.S. government securities) $1,233,825,240 $997,627,627
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 $1,823,908,521
--------------
Gross unrealized appreciation $ 265,885,162
Gross unrealized depreciation (118,125,746)
--------------
Net unrealized appreciation $ 147,759,416
==============
(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>
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 16,149,164 $215,190,426 26,782,130 $296,199,639
Shares issued to
shareholders in
reinvestment of
distributions 3,055,514 36,333,473 1,705,504 18,153,918
Shares reacquired (5,682,277) (75,040,362) (22,039,306) (244,032,316)
---------- ------------ ----------- ------------
Net increase 13,522,401 $176,483,537 6,448,328 $ 70,321,241
========== ============ =========== ============
Class B Shares
<CAPTION>
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
Shares sold 18,942,113 $249,958,127 29,604,556 $328,295,994
Shares issued to
shareholders in
reinvestment of
distributions 4,446,589 52,422,803 2,190,312 23,087,105
Shares reacquired (5,160,200) (67,492,259) (8,785,261) (98,304,257)
---------- ------------ ----------- ------------
Net increase 18,228,502 $234,888,671 23,009,607 $253,078,842
========== ============ =========== ============
Class C Shares
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
Shares sold 8,065,671 $107,060,511 10,720,902 $119,141,707
Shares issued to
shareholders in
reinvestment of
distributions 1,208,412 14,257,917 513,712 5,429,977
Shares reacquired (2,941,549) (38,819,219) (2,795,900) (31,245,007)
---------- ------------ ----------- ------------
Net increase 6,332,534 $ 82,499,209 8,438,714 $ 93,326,677
========== ============ =========== ============
Class I Shares
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
Shares sold 205,003 $ 2,794,367 55,017 $ 620,395
Shares issued to
shareholders in
reinvestment of
distributions 11,635 139,061 8,561 91,116
Shares reacquired (159,380) (2,197,289) (52,522) (589,311)
---------- ------------ ----------- ------------
Net increase 57,258 $ 736,139 11,056 $ 122,200
========== ============ =========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $1.1 billion unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. 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 six
months ended April 30, 2000, was $6,307. The Fund had no borrowings during the
period.
<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.
INVESTOR INFORMATION
Abby M. O'Neill - Private Investor For information on MFS mutual funds, call your
investment professional or, for an information
Walter E. Robb, III - President and Treasurer, kit, call toll free: 1-800-637-2929 any
Benchmark Advisors, Inc. (corporate financial business day from 9 a.m. to 5 p.m. Eastern time
consultants); President, Benchmark Consulting (or leave a message anytime).
Group, Inc. (office services)
INVESTOR SERVICE
Arnold D. Scott* - Senior Executive MFS Service Center, Inc.
Vice President, Director, and Secretary, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman and Chief For general information, call toll free:
Executive Officer, MFS Investment Management 1-800-225-2606 any business day from 8 a.m. to
8 p.m. Eastern time.
J. Dale Sherratt - President, Insight
Resources, Inc. (acquisition planning For service to speech- or hearing-impaired,
specialists) call toll free: 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time. (To use
Ward Smith - Former Chairman (until 1994), this service, your phone must be equipped with
NACCO Industries (holding company) a Telecommunications Device for the Deaf.)
INVESTMENT ADVISER For share prices, account balances, exchanges,
Massachusetts Financial Services Company or stock and bond outlooks, call toll free:
500 Boylston Street 1-800-MFS-TALK (1-800-637-8255) anytime from a
Boston, MA 02116-3741 touch-tone telephone.
DISTRIBUTOR WORLD WIDE WEB
MFS Fund Distributors, Inc. www.mfs.com
500 Boylston Street
Boston, MA 02116-3741
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
PAID
[Logo] M F S(R) MFS
INVESTMENT MANAGEMENT ------------
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MUF-3 6/00 134M 35/235/335/835
