<PAGE>
[Logo] MFS
THE FIRST NAME IN MUTUAL FUNDS
SEMIANNUAL REPORT
APRIL 30, 1995
MFS(R) UTILITIES FUND
[GRAPHIC OMITTED: art work:
Silhouette of two men talking
in front of a large window.]
<PAGE>
<TABLE>
<S> <C>
MFS(R) UTILITIES FUND
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; INVESTOR INFORMATION
Former Chairman and Director (until 1991), For MFS stock and bond market outlooks,
Massachusetts Financial Services Company call toll free: 1-800-637-4458 anytime from
a touch-tone telephone.
Marshall N. Cohan - Private Investor
For information on MFS mutual funds,
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, call your financial adviser or, for an
Brigham and Women's Hospital; Professor of information kit, call toll free:
Surgery, Harvard Medical School 1-800-637-2929 any business day from
9 a.m. to 5 p.m. Eastern time (or leave
The Hon. Sir J. David Gibbons, KBE - Chief a message anytime).
Executive Officer, Edmund Gibbons Ltd.;
Chairman, Bank of N.T. Butterfield & Son Ltd. INVESTOR SERVICE
MFS Service Center, Inc.
Abby M. O'Neill - Private Investor; P.O. Box 2281
Director, Rockefeller Financial Services, Inc. Boston, MA 02107-9906
(Investment Advisers)
For general information, call toll free:
Walter E. Robb, III - President and Treasurer, 1-800-225-2606 any business day from
Benchmark Advisors, Inc. (Corporate Financial 8 a.m. to 8 p.m. Eastern time.
Consultants)
For service to speech- or hearing-impaired,
Arnold D. Scott* - Senior Executive Vice President call toll free: 1-800-637-6576 any business
and Secretary, Massachusetts Financial Services Company day from 9 a.m. to 5 p.m. Eastern time.
(To use this service, your phone must be
Jeffrey L. Shames* - President, Massachusetts equipped with a Telecommunications
Financial Services Company Device for the Deaf.)
J. Dale Sherratt - President, Insight Resources, Inc. For share prices, account balances and
(Acquisition Planning Specialists) exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
Ward Smith - Former Chairman (until 1994), telephone.
NACCO Industries; Director, Sundstrand
Corporation
INVESTMENT ADVISER ----------------------------------------------
Massachusetts Financial Services Company TOP-RATED SERVICE
500 Boylston Street NUMBER MFS was rated first when
Boston, Massachusetts 02116-3741 1 securities firms evaluated the
DALBAR quality of service they receive
PORTFOLIO MANAGER from 40 mutual fund companies.
Maura Shaughnessy* MFS got high marks for answering
calls quickly, processing
TREASURER transactions accurately and sending
W. Thomas London* statements out on time.
(Source: 1994 DALBAR Survey)
ASSISTANT TREASURER ---------------------------------------------
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
Despite the strength in the bond market over the past several months, utility
stocks have underperformed the broader equity markets. During the six months
ended April 30, 1995, the return of the Standard & Poor's Utility Index (the S&P
Utility Index), an unmanaged, market-value-weighted total return index of all
utility stocks in the Standard & Poor's 500 Composite Index (the S&P 500), was
+9.92%, while the return of the S&P 500, a popular, unmanaged index of common
stock performance, was +10.46%. Over this same period, Class A shares of the
Fund provided a total return of +4.45%, Class B shares +3.92%, and Class C
shares +3.95%. These figures assume the reinvestment of distributions but
exclude the effects of any sales charges. A discussion of the Fund's performance
may be found in the Portfolio Performance and Strategy section of this letter.
Economic Outlook
As the economy enters its fifth year of expansion, it is evidencing a decidedly
decelerating trend from its robust pace of 1994, when gross domestic product
expanded by 4.1%. Estimated growth in this year's first quarter diminished to an
annual rate of 2.8%. Consumer spending slowed considerably during the quarter
and was accompanied by a correspondingly large increase in inventories. As we
begin the year's second quarter, the evidence suggests that the economy has
entered a phase of less-than-full-potential growth, as the April unemployment
rate showed a second consecutive monthly increase. We expect the economy to
continue to grow at this more subdued pace. We do not anticipate that the
slowdown will deteriorate into a recession and, conversely, we remain mindful of
the potential for a reliquified consumer sector to reassert itself as the year
progresses.
Interest Rates
As evidence of a slowdown has continued to mount, the fixed-income markets have
become increasingly convinced that the Federal Reserve Board has concluded its
monetary-tightening initiatives. Furthermore, as the economy has diminished in
its ability to create jobs and in its usage of available productive capacity,
apprehension concerning a cyclical upturn in inflation has receded. As a result,
long-term U.S. Treasury bond yields have declined to near 7.00% as of April 30,
1995, down from 7.87% at the beginning of the year and from their cyclical peak
of 8.15% in November 1994. Despite higher costs at the crude and intermediate
stages of production, prices have not increased appreciably at the consumer
level. For the 12 months ended in April of this year, the Consumer Price Index,
a popular measure of change in prices, increased by a still moderate 3.1%.
Continued benign growth in labor costs and the inability of many businesses to
effectively raise prices have combined to extend the favorable price
environment. Nevertheless, we do anticipate a minor cyclical pickup in
inflationary pressure this year to the 3% - 3 1/2% range.
The decline in interest rates has been particularly precipitous during the past
month, leaving the market potentially vulnerable to a near-term correction.
However, we believe continuing moderate growth will result in interest rates
trending near to, and possibly somewhat lower than, present levels during the
balance of this year.
Stock Market
The stock market has rebounded from its uninspiring performance during 1994,
posting its strongest quarterly results in four years. Recently, stock prices
have responded to growing confidence that the Federal Reserve is nearing the end
of its tightening initiatives and that gains in corporate earnings may remain
substantial. Although we expect the economy to slow in 1995, our outlook for
corporate earnings growth remains favorable. We have been deemphasizing many
cyclical areas such as autos and basic materials because of their less
attractive earnings outlook, and we have been emphasizing growth areas such as
consumer and household products. Despite the potential impact on corporate
profits of a slowing economy, we believe stock prices will respond to continued
growth in profitability.
Portfolio Performance and Strategy
Currently, the Fund is market weighted relative to the S&P Utility Index in the
domestic utility sector. This sector has underperformed because investors fear
that new competition entering the industry over the next several years may
threaten the earnings and dividend-paying power of all electric utilities.
However, certain states which wanted to take aggressive steps to implement
change have decided to slow their pace dramatically. This is viewed positively
for the utilities in these states as well as for the industry as a whole. We
will continue to invest in companies which are positioning themselves for this
changing environment and which are offering relatively robust earnings and
dividend growth potential. PECO Energy and Pinnacle West, two of the Fund's
largest holdings, fit these criteria.
The Fund remains underweighted in the telecommunications sector, which has
modestly outperformed the S&P Utility Index during the past six months. This
sector has benefited from solid growth in its core business as the strong
economy has created volume growth. In addition, ancillary services such as call
waiting have helped drive revenues. However, we believe fears of legislative
action will affect this industry and will create uncertainty until legislation
is finally passed. In addition, to fund the information superhighway build-out,
much capital is required, while the returns on some of this capital are
currently unclear. In spite of this, we believe the two large long-distance
stocks, MCI Communications and AT&T, have been hurt unduly by legislative and
dilution fears, and that both companies are well-positioned for a more
competitive telecommunications environment, whether competition is driven by
legislation or the market or both. Thus, the stocks of these companies now are
two of the Fund's largest holdings in this sector.
The Fund continues to be overweighted in gas utilities. This sector has enjoyed
favorable performance recently because investors perceive that they have seen
the lows in commodity prices. Westcoast Energy, a rapidly growing gas pipeline
and distribution company in Canada, is our largest gas holding.
Currently, about 21% of the Fund's total net assets is invested in international
utilities. These investments typically offer superior growth opportunities and
more favorable regulatory treatment than do the domestic utilities. We believe
Tele Danmark, the Fund's largest international holding, offers solid earnings
and dividend growth and has positioned itself as one of the low-cost
telecommunication providers in Europe.
Finally, Real Estate Investment Trusts (REITs) currently comprise about 10% of
the Fund's total net assets. We believe these investments offer above-average
dividend growth with superior yield potential. In keeping with our strategy of
remaining well-diversified, we have invested in apartment, storage, health care,
factory-outlet and manufactured-housing REITs.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin /s/ Maura Shaughnessy
A. Keith Brodkin Maura Shaughnessy
Chairman and President Portfolio Manager
May 17, 1995
<PAGE>
PERFORMANCE SUMMARY
Because mutual funds like MFS Utilities Fund are designed for investors with
long-term goals, we have provided cumulative results as well as the average
annual total returns for Class A, Class B, and Class C shares for the applicable
time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
Class A Investment Results
(net asset value change including reinvested distributions)
2/14/92+ -
6 Months 1 Year 4/30/95
- ------------------------------------------------------------------------------
Cumulative Total Return* +4.45% +4.02% +34.62%
- ------------------------------------------------------------------------------
Average Annual Total Return* -- +4.02% + 9.70%
- ------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the Securities and Exchange Commission
(the SEC), with all distributions reinvested and reflecting the maximum sales
charge of 4.75% for the 1-year period ended March 31, 1995 and for the period
from February 14, 1992+ to March 31, 1995, were -3.31% and +7.26, respectively.
Class B Investment Results
(net asset value change including reinvested distributions)
9/07/93+ -
6 Months 1 Year 4/30/95
- ------------------------------------------------------------------------------
Cumulative Total Return++ +3.92% +2.74% -0.51%
- ------------------------------------------------------------------------------
Average Annual Total Return++ -- +2.74% -0.32%
- ------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, for the 1-year period ended
March 31, 1995 and for the period from September 7, 1993+ to March 31, 1995,
with all distributions reinvested and reflecting the current maximum contingent
deferred sales charge (CDSC) of 4%, were -3.56% and -4.45%, respectively.
Class C Investment Results
(net asset value change including reinvested distributions)
1/03/94+ -
6 Months 1 Year 4/30/95
- ------------------------------------------------------------------------------
Cumulative Total Return(S) +3.95% +2.98% -0.08%
- ------------------------------------------------------------------------------
Average Annual Total Return(S) -- +2.98% -0.06%
- ------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, with all distributions
reinvested for the 1-year period ended March 31, 1995 and for the period from
January 3, 1994+ to March 31, 1995, were +0.38% and -2.34%, respectively.
All results represent past performance and are not necessarily an indication of
future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost. All
Fund results reflect the applicable expense subsidy which is explained in the
Notes to Financial Statements. Had the subsidy not been in effect, the results
would have been less favorable. The subsidy may be rescinded by MFS at any time.
+ Commencement of offering of this class of shares.
* These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++ These results do not include any CDSC. If the charge had been included, the
results would have been lower.
(S)Class C shares have no initial sales charge or CDSC but, along with Class B
shares, have higher annual fees and expenses than Class A shares.
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - April 30, 1995
Non-Convertible Bonds - 13.2%
- ------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------
Financial Institutions - 0.3%
General Motors Acceptance Corp., 5.95s, 1998 $ 250 $ 238,173
- -----------------------------------------------------------------------------
Telecommunications - 0.3%
Rogers Cablesystems, Inc., 10.125s, 2012 $ 200 $ 198,000
- -----------------------------------------------------------------------------
U.S. Government Guaranteed - 0.5%
Government National Mortgage Association - 0.5%
GNMA, 9s, 2017 $ 181 $ 187,977
GNMA, 9s, 2018 125 129,424
-----------
$ 317,401
- -----------------------------------------------------------------------------
U.S. Treasury Obligations - 6.1%
U.S. Treasury Notes, 4.75s, 1997 $3,200 $ 3,101,504
U.S. Treasury Bonds, 7.625s, 2025 1,200 1,240,692
-----------
$ 4,342,196
- -----------------------------------------------------------------------------
Utilities - Electric - 3.9%
First PV Funding Corp., 10.15s, 2016 $ 500 $ 497,500
Gulf States Utilities Co., 8.7s, 2024 250 251,738
Hidroelectrica Alicura, 8.375s, 1999## 150 121,500
Midland Cogeneration Venture Corp.,
10.33s, 2002 553 550,310
Mississippi Power & Light, 8.8s, 2005 500 499,505
Texas & New Mexico Power Co., 12.5s, 1999 300 325,878
Utilicorp United, Inc., 8.45s, 1999 500 517,335
-----------
$ 2,763,766
- -----------------------------------------------------------------------------
Utilities - Gas - 1.7%
ANR Pipeline Co., 7.375s, 2024 $ 500 $ 449,610
Oryx Energy Co., 9.3s, 1996 250 252,657
Union Texas Petroleum, 8.5s, 2007 500 505,625
-----------
$ 1,207,892
- -----------------------------------------------------------------------------
Utilities - Telephone - 0.4%
Northwestern Bell Telephone Co., 9.125s, 2030 $ 250 $ 262,062
- -----------------------------------------------------------------------------
Total Non-Convertible Bonds (Identified Cost, $9,371,660) $ 9,329,490
- -----------------------------------------------------------------------------
Convertible Bonds - 3.9%
- ------------------------------------------------------------------------------
Comcast Corp., 1.125s, 2007 (Utilities -
Telecommunications) $2,000 $ 845,000
Noble Affiliates, Inc., 4.25s, 2003
(Utilities - Gas) 470 442,975
Roche Holdings, Inc., 0s, 2010 (Medical
and Health Services)## 1,140 428,212
Rogers Communications, Inc., 2s, 2005
(Utilities - Telecommunications) 2,074 1,078,480
- -----------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $2,921,613) $ 2,794,667
- -----------------------------------------------------------------------------
Common Stocks - 79.4%
- ------------------------------------------------------------------------------
Shares
- -----------------------------------------------------------------------------
Real Estate Investment Trusts - 10.3%
Equity Residential Properties 19,700 $ 526,975
Evans Withycombe Residential, Inc. 31,800 596,250
Factory Stores America, Inc. 24,900 488,662
LTC Properties, Inc. 44,400 577,200
Meditrust Corp. 25,200 768,600
National Health Investors, Inc. 39,200 1,029,000
ROC Communities, Inc. 35,000 704,375
Storage Equities, Inc. 77,000 1,241,625
Sun Communities, Inc. 37,100 793,013
Tanger Factory Outlet Centers, Inc. 23,400 546,975
-----------
$ 7,272,675
- -----------------------------------------------------------------------------
Telecommunications - 5.0%
ALC Communications Corp.* 61,300 $ 2,337,063
AirTouch Communications, Inc.* 26,700 717,563
LCI International, Inc.* 18,700 472,175
-----------
$ 3,526,801
- -----------------------------------------------------------------------------
Utilities - Electric - 30.4%
AES (The) Corp. 14,230 $ 245,468
CMS Energy Corp. 53,000 1,238,875
Central Costanera, ADR## 35,900 1,041,100
Cinergy Corp. 29,349 737,394
Companhia Energetica de Minas Gerais, ADR* 34,638 822,653
Consolidated Edison Co. of New York, Inc. 36,000 999,000
DPL, Inc. 42,000 876,750
Eastern Utilities Assn. 42,600 1,017,075
Empresa Nacional de Electricidad, ADR 16,300 766,100
FPL Group, Inc. 35,000 1,286,250
General Public Utilities Corp. 46,900 1,336,650
Illinova Corp. 60,700 1,411,275
Korea Electric Power Corp., ADR* 27,000 567,000
NIPSCO Industries, Inc. 36,000 1,161,000
PECO Energy Co. 69,700 1,794,775
Pacific Gas & Electric Co. 30,000 806,250
Pinnacle West Capital Corp. 74,500 1,601,750
Portland General Corp. 10,700 222,025
Public Service Company of New Mexico* 79,000 1,007,250
Sithe Energies, Inc.* 63,600 556,500
Unicom Corp. 75,900 1,992,375
-----------
$21,487,515
- -----------------------------------------------------------------------------
Utilities - Gas - 6.6%
Enron Corp. 15,700 $ 533,800
Pacific Enterprises 15,800 389,075
Panhandle Eastern Corp. 46,000 1,104,000
Tenneco, Inc. 17,500 802,813
Westcoast Energy, Inc. 87,000 1,381,125
Williams Cos., Inc. 15,000 493,125
-----------
$ 4,703,938
- -----------------------------------------------------------------------------
Utilities - Telephone - 19.5%
Alltel Corp. 15,000 $ 371,250
American Telephone & Telegraph Co. 29,600 1,502,200
Ameritech Corp. 28,200 1,269,000
BellSouth Corp. 22,600 1,384,250
Compania de Telefonos de Chile, ADR 8,000 552,000
Frontier Corp. 50,100 1,008,262
GTE Corp. 41,650 1,421,306
LDDS Communications, Inc.* 23,537 564,888
MCI Communications Corp. 83,700 1,820,475
Motorola, Inc. 9,600 546,000
SBC Communications, Inc. 28,000 1,235,500
Tele Danmark, ADR* 56,400 1,480,500
Telecom Argentina, ADR 15,000 656,250
-----------
$13,811,881
- -----------------------------------------------------------------------------
Foreign Stocks - 7.6%
Italy - 2.2%
Telecom Italia (Utilities - Telecommunications) 737,000 $ 1,535,416
- -----------------------------------------------------------------------------
Spain - 1.2%
Iberdrola (Utilities - Electric) 131,000 $ 859,886
- -----------------------------------------------------------------------------
United Kingdom - 4.2%
East Midlands Electricity (Utilities - Electric) 80 $ 849
London Electricity (Utilities - Electric) 74,300 764,906
Midlands Electricity (Utilities - Electric) 50,000 519,373
National Power (Utilities - Electric) 29,200 84,679
PowerGen (Utilities - Electric) 83,050 646,926
PowerGen - 195 (Utilities - Electric) 17,400 53,823
Southern Electric (Utilities - Electric)* 85,000 905,187
-----------
$ 2,975,743
- -----------------------------------------------------------------------------
Total Foreign Stocks $ 5,371,045
- -----------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $54,087,398) $56,173,855
- -----------------------------------------------------------------------------
Convertible Preferred Stocks - 1.1%
- ------------------------------------------------------------------------------
Kenetech Corp., 8.25% (Utilities - Electric) 20,300 $ 289,273
Tejas Gas Corp., 5.25% (Utilities - Gas) 10,000 467,500
- ------------------------------------------------------------------------------
Total Convertible Preferred Stocks
(Identified Cost, $911,075) $ 756,773
- ------------------------------------------------------------------------------
Short-Term Obligation - 1.3%
- ------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -----------------------------------------------------------------------------
Dow Chemical Co., due 5/01/95, at
Amortized Cost $ 900 $ 900,000
- -----------------------------------------------------------------------------
Total Investments (Identified Cost, $68,191,746) $69,954,785
Other Assets, Less Liabilities - 1.1% 773,479
- -----------------------------------------------------------------------------
Net Assets - 100.0% $70,728,264
- -----------------------------------------------------------------------------
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
April 30, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $68,191,746) $69,954,785
Cash 2,516
Receivable for investments sold 1,020,050
Receivable for Fund shares sold 135,298
Interest and dividends receivable 568,602
Deferred organization expenses 15,604
Other assets 35,344
-----------
Total assets $71,732,199
-----------
Liabilities:
Distributions payable $ 43,713
Payable for investments purchased 748,129
Payable for Fund shares reacquired 103,217
Payable to affiliates -
Management fee 2,173
Shareholder servicing agent fee 1,010
Distribution fee 6,978
Accrued expenses and other liabilities 98,715
-----------
Total liabilities $ 1,003,935
-----------
Net assets $70,728,264
-----------
Net assets consist of:
Paid-in capital $71,461,313
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 1,764,426
Accumulated distributions in excess of net realized
gain on investments (2,601,697)
Accumulated undistributed net investment income 104,222
-----------
Total $70,728,264
-----------
Shares of beneficial interest outstanding 9,921,120
-----------
Class A shares:
Net asset value and redemption price per share
(net assets of $42,361,707 / 5,937,204 shares of
beneficial interest outstanding) $7.14
-----
Offering price per share (100/95.25 of net asset value
per share) $7.50
-----
Class B shares:
Net asset value, offering price, and redemption price per share
(net assets of $24,497,551 / 3,440,956 shares of beneficial
interest outstanding) $7.12
-----
Class C shares:
Net asset value, offering price, and redemption price per share
(net assets of $3,869,006 / 542,960 shares of beneficial
interest outstanding) $7.13
-----
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 and
Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- ------------------------------------------------------------------------------
Six Months Ended April 30, 1995
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 1,344,813
Interest 536,862
-----------
Total investment income $ 1,881,675
-----------
Expenses -
Management fee $ 244,857
Trustees' compensation 15,649
Shareholder servicing agent fee (Class A) 31,383
Shareholder servicing agent fee (Class B) 25,293
Shareholder servicing agent fee (Class C) 2,207
Distribution and service fee (Class B) 114,603
Distribution and service fee (Class C) 14,651
Custodian fee 19,849
Auditing fees 10,000
Postage 9,061
Printing 6,030
Legal fees 2,576
Amortization of organization expenses 2,398
Miscellaneous 64,623
-----------
Total expenses $ 563,180
Reduction of expenses by investment adviser (198,859)
-----------
Net expenses $ 364,321
-----------
Net investment income $ 1,517,354
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $(1,561,842)
Foreign currency transactions 52,475
-----------
Net realized gain (loss) on investments $(1,509,367)
-----------
Change in unrealized appreciation (depreciation) -
Investments $ 2,815,201
Translation of assets and liabilities in foreign
currencies 39,494
-----------
Net unrealized gain on investments $ 2,854,695
-----------
Net realized and unrealized gain on investments
and foreign currency $ 1,345,328
-----------
Net increase in net assets from operations $ 2,862,682
-----------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended
April 30, 1995 Year Ended
(Unaudited) October 31, 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,517,354 $ 2,541,280
Net realized loss on investments and foreign
currency transactions (1,509,367) (1,048,132)
Net unrealized gain (loss) on investments and
foreign currency transactions 2,854,695 (3,868,794)
------------ ------------
Increase (decrease) in net assets from
operations $ 2,862,682 $(2,375,646)
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (993,809) $(2,081,568)
From net investment income (Class B) (426,409) (524,361)
From net investment income (Class C) (54,969) (42,372)
From net realized gain on investments and foreign
currency transactions (Class A) -- (1,205,090)
From net realized gain on investments and foreign
currency transactions (Class B) -- (217,435)
------------ ------------
Total distributions declared to shareholders $ (1,475,187) $(4,070,826)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 21,891,639 $ 45,045,270
Net asset value of shares issued to shareholders
in reinvestment of distributions 1,202,796 3,351,049
Cost of shares reacquired (17,953,898) (26,584,135)
------------ ------------
Increase in net assets from Fund share
transactions $ 5,140,537 $ 21,812,184
------------ ------------
Total increase in net assets $ 6,528,032 $ 15,365,712
Net assets:
At beginning of period 64,200,232 48,834,520
------------ ------------
At end of period (including accumulated
undistributed net investment income of
$104,222 and $62,055, respectively) $ 70,728,264 $ 64,200,232
------------ ------------
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended Year Ended October 31,
April 30, 1995 --------------------------------------------------------
(Unaudited) 1994 1993 1992<F1>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 7.00 $ 7.86 $ 6.68 $ 6.33
------ ------ ------ ------
Income from investment operations<F5> -
Net investment income<F6> $ 0.17 $ 0.33 $ 0.40 $ 0.17
Net realized and unrealized gain (loss)
on investments 0.14 (0.63) 1.19 0.30
------ ------ ------ ------
Total from investment operations $ 0.31 $(0.30) $ 1.59 $ 0.47
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.17) $(0.35) $(0.38) $(0.12)
From net realized gain on investments -- (0.21) (0.03) --
------ ------ ------ ------
Total distributions declared to shareholders $(0.17) $(0.56) $(0.41) $(0.12)
------ ------ ------ ------
Net asset value - end of period $ 7.14 $ 7.00 $ 7.86 $ 6.68
====== ====== ====== ======
Total return<F4> 4.45%<F3> (3.89)% 24.39% 11.02%<F2>
Ratios (to average net assets)/Supplemental data<F6>:
Expenses 0.68%<F2> 0.65% 0.65% 0.65%<F2>
Net investment income 4.96%<F2> 4.58% 4.57% 5.44%<F2>
Portfolio turnover 78% 115% 119% 63%
Net assets at end of period (000 omitted) $42,362 $42,027 $43,423 $12,859
<FN>
<F1> For the period from the commencement of investment operations, February 14,
1992 to October 31, 1992.
<F2> Annualized.
<F3> Not annualized.
<F4> 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.
<F5> Per share data for the periods subsequent to October 31, 1993 are based on
average shares outstanding.
<F6> The investment adviser did not impose a portion of its management fee
and/or agreed to reduce expenses of the Fund. If these expenses had been
incurred by the Fund, the net investment income per share and the ratios
would have been:
Net investment income $ 0.15 $ 0.28 $ 0.31 $ 0.13
Ratios (to average net assets):
Expenses 1.28%<F2> 1.41% 1.68% 2.63%<F2>
Net investment income 4.36%<F2> 3.82% 4.20% 3.46%<F2>
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
Six Months Ended Year Ended October 31, Six Months Ended Year Ended
April 30, 1995 ---------------------- April 30, 1995 October 31,
(Unaudited) 1994 1993<F1> (Unaudited) 1994<F2>
- ----------------------------------------------------------------------------------------------------------------
Class B Class C
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $ 6.98 $ 7.84 $ 7.83 $ 6.99 $7.48
------ ------ ------ ------ -----
Income from investment operations<F5> -
Net investment income<F6> $ 0.13 $ 0.25 $ 0.05 $ 0.13 $ 0.25
Net realized and unrealized gain
(loss) on investments 0.14 (0.63) 0.01 0.14 (0.54)
------ ------ ------ ------ -----
Total from investment
operations $ 0.27 $(0.38) $ 0.06 $ 0.27 $(0.29)
------ ------ ------ ------ -----
Less distributions declared to shareholders -
From net investment income $(0.13) $(0.27) $(0.05) $(0.13) $(0.20)
From net realized gain on
investments -- (0.21) -- -- --
------ ------ ------ ------ -----
Total distributions
declared to shareholders $(0.13) $(0.48) $(0.05) $(0.13) $(0.20)
------ ------ ------ ------ -----
Net asset value - end of period $ 7.12 $ 6.98 $ 7.84 $ 7.13 $ 6.99
------ ------ ------ ------ -----
Total Return 3.92%<F4> (4.92)% 0.69%<F4> 3.95%<F4> (3.87)%<F4>
Ratios (to average net assets)/
Supplemental data<F6>:
Expenses 1.76%<F3> 1.72% 1.50%<F3> 1.71%<F3> 1.65%<F3>
Net investment income 3.88%<F3> 3.51% 1.80%<F3> 3.99%<F3> 3.56%<F3>
Portfolio turnover 78% 115% 119% 78% 115%
Net assets at end of period
(000 omitted) $24,498 $19,774 $5,412 $3,869 $2,399
<FN>
- ------------
<F1> For the period from the commencement of offering of Class B shares,
September 7, 1993 to October 31, 1993.
<F2> For the period from the commencement of offering of Class C shares, January
3, 1994 to October 31, 1994.
<F3> Annualized.
<F4> Not annualized.
<F5> Per share data for the periods subsequent to October 31, 1993 are based on
average shares outstanding.
<F6> The investment adviser did not impose a portion of its management fee
and/or agreed to reduce expenses of the Fund. If these expenses had been
incurred by the Fund, the net investment income per share and the ratios
would have been:
Net investment income $ 0.11 $ 0.20 $(0.07) $ 0.11 $ 0.20
Ratios (to average net assets):
Expenses 2.35%<F3> 2.48% 3.27%<F3> 2.31%<F3> 2.41%<F3>
Net investment income 3.29%<F3> 2.74% 1.53%<F3> 3.39%<F3> 2.80%<F3>
</TABLE>
See notes to financial statements
<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
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed issues
and forward contracts, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates value. Non-U.S. dollar denominated short-term
obligations are valued at amortized cost as calculated in the base currency and
translated into U.S. dollars at the closing daily exchange rate. Futures
contracts, options and options on futures contracts listed on commodities
exchanges are valued at closing settlement prices. Over-the- counter options are
valued by brokers through the use of a pricing model which takes into account
closing bond valuations, implied volatility and short-term repurchase rates.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The Fund requires that the
securities purchased in a repurchase transaction be transferred to the custodian
in a manner sufficient to enable the Fund to obtain those securities in the
event of a default under the repurchase agreement. The Fund monitors, on a daily
basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Fund under each such repurchase agreement.
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 and income and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its organization have been deferred and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of
operations of the Fund.
Written Options - The Fund may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. The Fund, as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as a part of an income producing strategy reflecting the view of
the Fund's management on the direction of interest rates.
Futures Contracts - The Fund may enter into financial futures contracts for the
delayed delivery of securities, currency or contracts based on financial indices
at a fixed price on a future date. In entering such contracts, the Fund is
required to deposit either in cash or securities an amount equal to a certain
percentage of the contract amount. Subsequent payments are made or received by
the Fund each day, depending on the daily fluctuations in the value of the
underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. The Fund's investment in financial
futures contracts is designed to hedge against anticipated future changes in
interest or exchange rates. For example, interest rate futures may be used in
modifying the duration of the portfolio without incurring the additional
transaction costs involved in buying and selling the underlying securities.
Should interest or exchange rates move unexpectedly, the Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a
loss.
Security Loans - The Fund may lend its securities to member banks of the Federal
Reserve System and to member firms of the New York Stock Exchange or
subsidiaries thereof. The loans are collateralized at all times by cash or
securities with a market value at least equal to the market value of securities
loaned. As with other extensions of credit, the Fund may bear the risk of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Fund receives compensation for lending its
securities in the form of fees or from all or a portion of the income from
investment of the collateral. The Fund would also continue to earn income on the
securities loaned. At April 30, 1995, the Fund had no securities on loan.
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 these contracts from the potential inability of counterparties to meet
the terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. The Fund will enter into forward
contracts for hedging purposes as well as for non-hedging purposes. For hedging
purposes, the Fund may enter into contracts to deliver or receive foreign
currency it will receive from or require for its normal investment activities.
It 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 for financial statement purposes as unrealized until the contract
settlement date.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for both financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. 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.
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.
The Fund files a tax return annually using tax accounting methods required under
provisions of the Code which may differ from generally accepted accounting
principles, the basis on which these financial statements are prepared.
Accordingly, the amount of net investment income and net realized gain reported
on these financial statements may differ from that reported on the Fund's tax
return and, consequently, the character of distributions to shareholders
reported in the financial highlights may differ from that reported to
shareholders on Form 1099-DIV. Distributions to shareholders are recorded on the
ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B and Class C shares. Class B and Class C shares were first offered to the
public on September 7, 1993 and January 3, 1994, respectively. The three classes
of shares differ in their respective shareholder servicing agent, distribution
and service fees. Shareholders of each class also bear certain expenses that
pertain only to that particular class. All shareholders bear the common expenses
of the Fund pro rata based on the average daily net assets of each class,
without distinction between share classes. Dividends are declared separately for
each class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses,
including distribution and shareholder service fees.
(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, computed daily and paid monthly at an effective annual rate of
0.375% of average daily net assets and 6.25% of investment income, amounted to
$244,857 for the six months ended April 30, 1995. The investment adviser did not
impose a portion of its fee ($198,859), which is reflected as a preliminary
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 of the 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 its independent Trustees. Included in Trustees' compensation is a net
periodic pension expense of $2,535 for the six months ended April 30, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$9,982 as its portion of the sales charge on sales of Class A shares of the
Fund. The Trustees have adopted separate distribution plans for Class A, Class B
and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940
as follows:
The Class A Distribution Plan provides that the Fund will pay MFD up to 0.35% of
its average daily net assets attributable to Class A shares annually 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 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, 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,
commissions to dealers and payments to MFD wholesalers for sales at or above a
certain dollar level, and other such distribution-related expenses that are
approved by the Fund. Payments will commence under the distribution plan when
the net assets of the Fund attributable to Class A shares first equals or
exceeds $50 million.
The Class B and Class C Distribution Plans provide that the Fund will pay MFD a
monthly distribution fee, equal to 0.75% per annum, and a quarterly 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 additional consideration for services rendered by the dealer with respect to
Class B and Class C shares. Fees incurred under the distribution plans for the
six months ended April 30, 1995 were 1.00% of average daily net assets
attributable to Class B and Class C shares on an annualized basis and amounted
to $114,603 and $14,651, respectively (of which MFD retained $0 and $16,
respectively).
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within 12 months following the share 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, 1995 were $4 and $39,977
for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earned
$31,383, $25,293 and $2,207 for Class A, Class B and Class C shares,
respectively, for its services as shareholder servicing agent. The fee is
calculated as a percentage of the average daily net assets of each class of
shares at an effective annual rate of up to 0.15%, up to 0.22% and up to 0.15%
attributable to Class A, Class B and Class C shares, respectively.
(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 $11,495,689 $11,692,449
=========== ===========
Investments (non-U.S. government securities) $43,246,680 $38,796,507
=========== ===========
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $ 68,191,746
============
Gross unrealized appreciation $ 3,438,754
Gross unrealized depreciation (1,675,715)
------------
Net unrealized appreciation $ 1,763,039
============
At April 30, 1995, the Fund, for federal income tax purposes, had a capital loss
carryforward of $967,620, which may be applied against any net taxable realized
gains of each succeeding year until the earlier of its utilization or expiration
on October 31, 2002.
(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 (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1995 October 31, 1994
--------------------------------- --------------------------------
Class A Shares Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 914,855 $ 6,333,393 2,190,865 $16,077,771
Shares issued to shareholders in
reinvestment of distributions 115,499 799,859 370,127 2,689,482
Shares reacquired (1,096,496) (7,555,108) (2,083,365) (15,124,516)
---------- ----------- ---------- -----------
Net increase (decrease) (66,142) $ (421,856) 477,627 $ 3,642,737
========== =========== ========== ===========
Six Months Ended Year Ended
April 30, 1995 October 31, 1994
--------------------------------- --------------------------------
Class B Shares Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
Shares sold 1,954,106 $13,410,321 3,158,234 $22,915,060
Shares issued to shareholders in
reinvestment of distributions 51,331 354,878 86,550 623,513
Shares reacquired (1,395,501) (9,579,017) (1,103,660) (7,857,710)
---------- ----------- ---------- -----------
Net increase 609,936 $ 4,186,182 2,141,124 $15,680,863
========== =========== ========== ===========
Six Months Ended Period Ended
April 30, 1995 October 31, 1994*
--------------------------------- --------------------------------
Class C Shares Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
Shares sold 312,481 $ 2,147,925 841,006 $ 6,052,439
Shares issued to shareholders in
reinvestment of distributions 6,934 48,059 5,376 38,054
Shares reacquired (119,454) (819,773) (503,383) (3,601,909)
---------- ----------- ---------- -----------
Net increase 199,961 $ 1,376,211 342,999 $ 2,488,584
========== =========== ========== ===========
</TABLE>
*For the period from the commencement of offering of Class C shares, January 3,
1994 to October 31, 1994.
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS, or an affiliate of MFS, in an unsecured line of credit
with a bank which permits borrowings up to $350 million, collectively.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average daily
unused portion of the line of credit, is allocated among the participating funds
at the end of each quarter. The commitment fee allocated to the Fund for the six
months ended April 30, 1995 was $527.
(7) Restricted Securities
The Fund may invest not more than 10% of its net assets in securities which are
subject to legal or contractual restrictions on resale. At April 30, 1995, the
Fund owned the following restricted securities (constituting 2.3% of net assets)
which may not be publicly sold without registration under the Securities Act of
1933. The Fund does not have the right to demand that such securities be
registered. The value of these securities is determined by valuations supplied
by a pricing service or brokers or, if not available, in good faith by or at the
direction of the Trustees. Certain of these securities may be offered and sold
to "qualified institutional buyers" under Rule 144A of the 1933 Act.
Description Date of Acquisition Share/Par Amount Cost Value
- --------------------------------------------------------------------------------
Central
Costanera, ADR 12/17/93 - 1/31/95 35,900 $834,550 $1,041,100
Roche Holdings,
Inc., 0s, 2010 4/12/95 1,140,000 407,015 428,212
Hidroelectrica
Alicura,
8.375s, 1999 4/08/94 150,000 142,730 121,500
----------
$1,590,812
----------
---------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
MFS(R) UTILITIES NUMBER
FUND 1
DALBAR
TOP-RATED SERVICE
500 Boylston Street
Boston, MA 02116
-------------
Bulk Rate
U.S. Postage
PAID
Permit #55638
Boston, MA
-------------
[Logo] MFS
THE FIRST NAME IN MUTUAL FUNDS
MUF-3 6/95/12M 35/235/335
