<PAGE>
[MFS Logo] ANNUAL REPORT FOR
THE FIRST NAME IN MUTUAL FUNDS YEAR ENDED
OCTOBER 31, 1995
MFS(R) UTILITIES FUND
[Front cover
A photo of a dam.]
<PAGE>
<TABLE>
<S> <C>
MFS(R) UTILITIES FUND
TRUSTEES SECRETARY
A. Keith Brodkin* - Chairman and President Stephen E. Cavan*
Richard B. Bailey* - Private Investor; ASSISTANT SECRETARY
Former Chairman and Director (until 1991), James R. Bordewick, Jr.*
Massachusetts Financial Services Company;
Director, Cambridge Bancorp; Director, CUSTODIAN
Cambridge Trust Company State Street Bank and Trust Company
Marshall N. Cohan - Private Investor AUDITORS
Ernst & Young LLP
Lawrence H. Cohn, M.D. - Chief of Cardiac
Surgery, Brigham and Women's Hospital; INVESTOR INFORMATION
Professor of Surgery, Harvard Medical School For MFS stock and bond market outlooks,
call toll free: 1-800-637-4458 anytime from
The Hon. Sir J. David Gibbons, KBE - Chief a touch-tone telephone.
Executive Officer, Edmund Gibbons Ltd.;
Chairman, Bank of N.T. Butterfield & Son Ltd. For information on MFS mutual funds,
call your financial adviser or, for an
Abby M. O'Neill - Private Investor; information kit, call toll free:
Director, Rockefeller Financial Services, Inc. 1-800-637-2929 any business day from
(investment adviser) 9 a.m. to 5 p.m. Eastern time (or leave
a message anytime).
Walter E. Robb, III - President and Treasurer,
Benchmark Advisers, Inc. (corporate financial INVESTOR SERVICE
consultants); President, Benchmark Consulting MFS Service Center, Inc.
Group, Inc. (office services); Trustee, P.O. Box 2281
Landmark Funds (mutual funds) Boston, MA 02107-9906
Arnold D. Scott* - Senior Executive Vice For general information, call toll free:
President, Director and Secretary, 1-800-225-2606 any business day from
Massachusetts Financial Services Company 8 a.m. to 8 p.m. Eastern time.
Jeffrey L. Shames* - President and Director, For service to speech- or hearing-impaired,
Massachusetts Financial Services Company call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time.
J. Dale Sherratt - President, Insight Resources, (To use this service, your phone must be
Inc. (acquisition planning specialists) equipped with a Telecommunications Device for
the Deaf.)
Ward Smith - Former Chairman (until 1994),
NACCO Industries; Director, Sundstrand For share prices, account balances and
Corporation exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
INVESTMENT ADVISER telephone.
Massachusetts Financial Services Company
500 Boylston Street -----------------------------------------------------
Boston, MA 02116-3741 TOP RATED SERVICE
DISTRIBUTOR NUMBER For the second year in a row, MFS earned
MFS Fund Distributors, Inc. 1 a #1 ranking in DALBAR, Inc's.
500 Boylston Street DALBAR Broker/Dealer Survey, Main Office
Boston, MA 02116-3741 Operations Service Quality category.
The firm achieved a 3.49 overall score - on
PORTFOLIO MANAGER a scale of 1 to 4 - in the 1995 survey. A total of
Maura Shaughnessy* 71 firms responded, offering input on the quality
of service they receive from 36 mutual fund companies
TREASURER nationwide. The survey contained questions about service
W. Thomas London* quality in 17 categories, including "knowledge of phone
service contacts," "accuracy of transaction processing,"
ASSISTANT TREASURER and "overall ease of doing business with the firm."
James O. Yost* -------------------------------------------------------
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
Declining interest rates provided a positive environment for utility stocks over
the past 12 months and helped bring their performance in line with broad market
averages. During the year ended October 31, 1995, 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), returned +29.28%, while the return of the S&P 500, a popular,
unmanaged index of common stock performance, was +26.41%. Over this same period,
Class A shares of the Fund provided a total return of+ 22.48%, Class B shares
+21.43%, and Class C shares +21.19%. 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
Moderate, but sustainable, growth appears to be the hallmark of the economic
expansion's fifth year. While initial estimates showed the U.S. economy growing
at an annual rate of 4.2% in the third quarter, this surprisingly strong growth
was mainly driven by a pickup in consumer spending and an increase in business
and government outlays. Although impressive, this growth rate is not expected to
continue in coming months. Recent retail sales have been disappointing, in part
because of rising levels of consumer debt. An extended period of lower mortgage
rates seems to have relieved much of the pent-up demand for housing. Growth is
not expected to get much help from the manufacturing sector, either, as order
flows from manufacturers have moderated. Export activity, meanwhile, is also
expected to remain modest as continued weakness abroad has limited demand for
many U.S. goods. However, the Federal Reserve Board's consistent and, so far,
successful efforts to fight inflation seem to be giving consumers and businesses
enough longer term confidence to help maintain modest growth in real (adjusted
for inflation) gross domestic product into 1996.
Interest Rates
Given the unexpected strength of the economy in the third quarter, prospects for
further decreases in short-term interest rates by the Federal Reserve seem
uncertain in the near term. Long-term rates, meanwhile, have moved noticeably
downward in recent months in anticipation of more modest fourth-quarter growth
with continued low inflation. While there have been some increases in commodity
prices, companies have found it difficult to pass these on at the consumer level
as they continue to fight for market share. Additionally, unit labor costs
remain under control and seem to be growing at a pace that is near or below the
ongoing inflation rate. Thus, with long-term government bonds yielding over 6%
in an environment of 2% to 3% inflation, real rates of return in the
fixed-income markets remain relatively attractive.
Stock Market
After some volatility late in the third quarter, the stock market appears to
have stabilized. Although many companies reported solid third-quarter results,
there was some weakness in the earnings of retail, financial services and even
some technology companies. However, a slowdown in earnings may be a positive
development if it is an indication that the economy is not overheating and that
inflation - an enemy of long-term equity valuations - is under control. While we
see a deceleration of corporate earnings as the inevitable consequence of
traditional business cycles, we remain encouraged by the high absolute level of
profitability among U.S. companies. Also, many companies' increasing emphasis on
cost containment and growing use of technology have helped keep them highly
competitive and reasonably profitable. Looking ahead, we believe that a
stabilizing interest rate environment, coupled with reasonable earnings reports,
could justify current market valuations.
Portfolio Performance and Strategy
Currently, the Fund remains overweighted in domestic utility stocks relative to
the S&P Utility Index. Although competition is emerging in this industry, the
pace of change is slower than had been anticipated. Along with solid cost
control, we could see relatively strong earnings from this industry for the next
several quarters. The Fund is currently emphasizing electric utilities which are
taking the necessary steps to improve their competitive position. At this
juncture, we believe the mid-tier-quality group offers much higher risk-
adjusted returns than the high-quality segment. Portland General and PECO
Energy, two of the Fund's largest holdings, fit these criteria.
The Fund is underweighted in the regional Bell operating companies because
we believe most of the good news in terms of legislation and growth prospects is
reflected in the prices of the stocks, which have been strong performers so far
this year. Although stocks of the long-distance companies have been solid
performers, the Fund remains overweighted in these stocks because we are seeing
accelerating growth in long-distance volume and more reasonable valuations. Two
of the Fund's largest holdings, Frontier Corporation and MCI Communications, are
in the long-distance telephone sector.
The Fund is overweighted in gas utility stocks, focusing on pipeline
companies with expansion opportunities and/or those which are improving the
performance of their non-regulated subsidiaries. Williams Cos. and Westcoast
Energy are two such companies.
Currently, 13% of the Fund's total net assets is invested in international
utilities. These investments may offer growth opportunities and more favorable
regulatory treatment than domestic utilities. For example, Tele Danmark, the
Fund's largest international holding, offers solid earnings and dividend growth.
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 storage, health care,
industrial-office and manufactured-housing REITs.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
- --------------------------- ---------------------------
[A photo of A. Keith Brodkin, [A photo of Maura Shaughnessy,
Chairman and President.] Portfolio Manager.]
- --------------------------- ---------------------------
/s/ A. Keith Brodkin /s/ Maura Shaughnessy
Chairman and President Portfolio Manager
November 10, 1995
<PAGE>
PORTFOLIO MANAGER PROFILE
Maura Shaughnessy joined MFS in 1991 as an equity analyst. A graduate of Colby
College and the Amos Tuck School of Business at Dartmouth College, she was
promoted to Assistant Vice President in 1992, Vice President in 1993 and has
managed MFS Utilities Fund since March of 1992. Ms. Shaughnessy is a Chartered
Financial Analyst (C.F.A.).
OBJECTIVE AND POLICIES
Under normal market conditions, the Fund seeks capital growth and current income
(income above that available from a portfolio invested entirely in equity
securities).
The Fund invests at least 65% of its assets in equity and debt securities of
both domestic and foreign companies in the utilities industry. These securities
include common stocks, preferred stocks, securities convertible into common
stocks or preferred stocks, and warrants. The Fund may also invest up to 35% of
its assets in debt and equity securities of issuers in other industries, or in
cash.
TAX FORM SUMMARY
In January 1996, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1995.
For the year ended October 31, 1995, the amount of distributions from income
eligible for the 70% dividends-received deduction for corporations came to
66.72%.
PERFORMANCE
The information on the following page illustrates the historical performance of
MFS Utilities Fund Class A shares in comparison to various market indicators.
Fund results in the graph reflect the deduction of the 4.75% maximum sales
charge. Benchmark comparisons are unmanaged and do not reflect any fees or
expenses. You cannot invest in an index. All results reflect the reinvestment of
all dividends and capital gains.
Class B shares were offered effective September 7, 1993. Information on Class B
share performance appears on the next page.
Please note that effective January 3, 1994, Class C shares were offered.
Information on Class C share performance appears on the next page.
Growth of a Hypothetical $10,000 Investment
(For the Period from March 1, 1992 to October 31, 1995)
Line graph representing the growth of a $10,000 investment for the four-year
period ended October 31, 1995. The graph is scaled from $8,000 to $18,000 in
$2,000 segments. The years are marked in 12-month segments from 1992 to 1995.
There are four lines drawn to scale. One is a solid line representing MFS
Utilities Fund (Class A), a second line of very-short dashes represents the S&P
500, a third line of short dashes represents the Lehman Brothers Corporate Bond
Utility Index, and a fourth line of medium-short dashes represents the Consumer
Price Index.
MFS Utilities Fund (Class A) $14,955
S&P 500 $16,148
Lehman Brothers Corporate Bond Utility Index $13,633
Consumer Price Index $11,089
AVERAGE ANNUAL TOTAL RETURNS
Life of
Class
through
1 Year 3 Years 10/31/95
- ------------------------------------------------------------------------------
MFS Utilities Fund (Class A) including
4.75% sales charge +16.65% +11.73% +11.63%*
- ------------------------------------------------------------------------------
MFS Utilities Fund (Class A) at net asset
value +22.48% +13.53% +13.08%*
- ------------------------------------------------------------------------------
MFS Utilities Fund (Class B) with
CDSC+ +17.43% -- + 5.97%++
- ------------------------------------------------------------------------------
MFS Utilities Fund (Class B) without CDSC +21.43% -- + 7.26%++
- ------------------------------------------------------------------------------
MFS Utilities Fund (Class C) +21.19% -- + 8.73%#
- ------------------------------------------------------------------------------
Average utility fund +17.55% + 8.77% + 9.78%
- ------------------------------------------------------------------------------
Lehman Brothers Corporate Bond Utility
Index## +20.12% + 8.61% + 8.88%
- ------------------------------------------------------------------------------
Standard & Poor's Utility Index +29.28% +12.44% +13.96%
- ------------------------------------------------------------------------------
Consumer Price Index** + 2.81% + 2.72% + 2.86%
- ------------------------------------------------------------------------------
*For the period from the commencement of offering of Class A shares, February
14, 1992 to October 31, 1995. Benchmark comparisons begin on March 1, 1992.
+These returns reflect the current Class B contingent deferred sales charge
(CDSC) of 4% for the 1-year period and 3% for the period commencing September
7, 1993.
++For the period from the commencement of offering of Class B shares, September
7, 1993 to October 31, 1995.
#For the period from the commencement of offering of Class C shares, January
3, 1994 to October 31, 1995. 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.
##The Lehman Brothers Corporate Bond Utility Index includes all publicly
issued, fixed-rate, nonconvertible investment-grade domestic utility debt.
**The Consumer Price Index is a popular measure of change in prices.
In the table on the previous page, we have included the average annual total
returns of all utility funds (including the Fund) tracked by Lipper Analytical
Services, Inc. (an independent firm which reports mutual fund performance) for
the applicable time periods. Because these returns do not reflect any
applicable sales charges, we have also included the Fund's results at net
asset value (no sales charge) for comparison.
All results are historical and, therefore, are not an indication of future
results. The investment return and principal value of an investment in a
mutual fund will vary with changes in market conditions, 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.
<PAGE>
PORTFOLIO OF INVESTMENTS - October 31, 1995
Non-Convertible Bonds - 19.1%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------
U.S. Bonds - 18.9%
Telecommunications - 0.2%
Rogers Cablesystems, Inc., 10.125s, 2012 $ 200 $ 208,000
- -----------------------------------------------------------------------------
U.S. Government Guaranteed - 10.5%
Government National Mortgage Association - 0.3%
GNMA, 9s, 2018 $ 291 $ 305,775
- -----------------------------------------------------------------------------
U.S. Treasury Obligations - 10.2%
U.S. Treasury Notes, 6.875s, 1999 $3,000 $ 3,108,270
U.S. Treasury Notes, 9.125s, 1999 3,000 3,317,340
U.S. Treasury Notes, 6.125s, 2000 2,000 2,024,680
U.S. Treasury Notes, 7.25s, 2004 530 573,889
U.S. Treasury Bonds, 7.625s, 2025 200 232,188
-----------
$ 9,256,367
- -----------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 9,562,142
- -----------------------------------------------------------------------------
Utilities - Electric - 5.3%
BVPS II Funding Corp., 8.33s, 2007 $ 167 $ 165,051
Commonwealth Edison, 8.375s, 2023 500 528,665
First PV Funding Corp., 10.15s, 2016 500 506,250
Gulf States Utilities Co., 8.25s, 2004 250 267,733
Gulf States Utilities Co., 8.7s, 2024 250 261,650
Louisiana Land & Exploration, 7.65s, 2023 500 496,765
Midland Cogeneration Venture Corp.,
10.33s, 2002 523 546,179
Niagara Mohawk Power, 7.75s, 2006 150 137,203
Ohio Edison, 7.375s, 2002 500 514,230
System Energy Resources, 7.38s, 2000 500 494,375
Texas & New Mexico Power Co., 12.5s, 1999 300 337,500
Utilicorp United, Inc., 8.45s, 1999 500 534,985
-----------
$ 4,790,586
- -----------------------------------------------------------------------------
Utilities - Gas - 2.6%
ANR Pipeline Co., 7s, 2025 $ 500 $ 525,045
Coastal Corp., 10.375s, 2000 500 571,920
Coastal Corp., 7.75s, 2035 500 491,875
Oryx Energy Co., 9.3s, 1996 250 252,643
Southern Union Co., 7.6s, 2024 500 504,230
-----------
$ 2,345,713
- -----------------------------------------------------------------------------
Utilities - Telephone - 0.3%
Northwestern Bell Telephone Co., 9.125s, 2030 $ 250 $ 259,883
- -----------------------------------------------------------------------------
Total U.S. Bonds $17,166,324
- -----------------------------------------------------------------------------
Foreign Bonds - 0.2%
Argentina
Hidroelectrica Alicura, 8.375s, 1999
(Utilities - Electric)## $ 150 $ 132,000
- -----------------------------------------------------------------------------
Total Non-Convertible Bonds (Identified Cost, $17,179,523) $17,298,324
- -----------------------------------------------------------------------------
CONVERTIBLE BONDS - 3.0%
- -----------------------------------------------------------------------------
U.S. Bonds - 1.8%
ADT Operations, Inc., 0s, 2010 (Financial
Institutions) $1,870 $ 825,138
Assisted Living Concepts, 7s, 2005 (Real
Estate Investment Trusts) 710 798,750
- -----------------------------------------------------------------------------
Total U.S. Bonds $ 1,623,888
- -----------------------------------------------------------------------------
Foreign Bonds - 1.2%
Canada
Rogers Communications, Inc., 2s, 2005
(Utilities - Telecommunications) CAD 2,074 $ 1,078,480
- -----------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $2,769,124) $ 2,702,368
- -----------------------------------------------------------------------------
COMMON STOCKS - 73.0%
- -----------------------------------------------------------------------------
Shares
- -----------------------------------------------------------------------------
U.S. Stocks - 62.8%
Financial Institutions - 1.6%
Philip Morris Cos., Inc. 17,100 $ 1,444,950
- -----------------------------------------------------------------------------
Real Estate Investment Trusts - 9.7%
Beacon Properties Corp. 30,000 $ 652,500
Factory Stores America, Inc. 14,900 286,825
Hospitality Properties Trust 30,500 800,625
LTC Properties, Inc. 54,400 788,800
National Health Investors, Inc. 39,200 1,176,000
Reckson Associates Realty Corp. 49,500 1,330,313
Sovran Self Storage, Inc. 29,400 727,650
Storage Equities, Inc. 73,000 1,341,375
Sun Communities, Inc. 20,000 497,500
TriNet Corporate Realty Trust, Inc. 45,000 1,203,750
-----------
$ 8,805,338
- -----------------------------------------------------------------------------
Utilities - Electric - 27.2%
Baltimore Gas & Electric Co. 30,000 $ 802,500
CMS Energy Corp. 63,000 1,740,375
Cinergy Corp. 25,549 724,953
Eastern Utilities Assn. 20,000 470,000
Entergy Corp. 34,000 969,000
FPL Group, Inc. 35,000 1,465,625
General Public Utilities Corp. 69,800 2,181,250
Houston Industries, Inc. 40,700 1,887,463
Illinova Corp. 65,900 1,869,912
NIPSCO Industries, Inc. 17,500 638,750
New England Electric System 10,000 390,000
PECO Energy Co. 65,700 1,921,725
PP&L Resources, Inc. 45,000 1,012,500
Pacific Gas & Electric Co. 55,200 1,621,500
Pinnacle West Capital Corp. 69,500 1,911,250
Portland General Corp. 80,600 2,186,275
Public Service Company of New Mexico* 50,000 837,500
Sithe Energies, Inc.* 11,200 79,800
Unicom Corp. 58,200 1,906,050
-----------
$24,616,428
- -----------------------------------------------------------------------------
Utilities - Gas - 11.9%
Coastal Corp. 63,500 $ 2,055,813
Enron Corp. 44,200 1,519,375
Pacific Enterprises 49,000 1,212,750
Panhandle Eastern Corp. 46,000 1,161,500
Transcanada Pipe Ltd. 35,000 468,125
Westcoast Energy, Inc. 112,000 1,652,000
Williams Cos., Inc. 71,500 2,761,687
-----------
$10,831,250
- -----------------------------------------------------------------------------
Utilities - Telephone- 12.4%
AT&T Corp. 9,600 $ 614,400
Ameritech Corp. 24,200 1,306,800
Frontier Corp. 97,600 2,635,200
GTE Corp. 35,650 1,470,562
MCI Communications Corp. 76,800 1,915,200
SBC Communications, Inc. 22,000 1,229,250
Sprint Corp. 20,500 789,250
US West Communications Group 27,600 1,314,450
-----------
$11,275,112
- -----------------------------------------------------------------------------
Total U.S. Stocks $56,973,078
- -----------------------------------------------------------------------------
Foreign Stocks - 10.2%
Argentina - 1.3%
Central Costenera, ADR (Utilities - Electric)## 44,200 $ 1,204,450
- -----------------------------------------------------------------------------
Denmark - 2.0%
Tele Danmark, ADR (Utilities - Telephone) 67,900 $ 1,773,887
- -----------------------------------------------------------------------------
Italy - 2.1%
Telecom Italia S.p.A. (Utilities -
Telecommunications) 68,000 $ 114,402
Telecom Italia S.p.A. Di Risp (Utilities
- Telecommunications) 1,309,400 1,457,634
Telecom Italia S.p.A. - RNC (Utilities -
Telecommunications) 300,000 354,717
-----------
$ 1,926,753
- -----------------------------------------------------------------------------
Spain - 1.9%
Empresa Nacional de Electricidad, ADR
(Utilities - Electric) 16,300 $ 819,075
Iberdrola (Utilities - Electric) 121,000 912,833
-----------
$ 1,731,908
- -----------------------------------------------------------------------------
United Kingdom - 2.9%
East Midlands Electricity (Utilities -
Electric) 80 $ 1,098
London Electricity (Utilities - Electric) 54,300 774,352
National Power (Utilities - Electric)* 100,000 319,362
PowerGen (Utilities - Electric) 108,050 970,298
PowerGen - 195 (Utilities - Electric) 127,500 516,038
-----------
$ 2,581,148
- -----------------------------------------------------------------------------
Total Foreign Stocks $ 9,218,146
- -----------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $58,107,188) $66,191,224
- -----------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK - 0.9%
- -----------------------------------------------------------------------------
Argentina - 0.9%
Compania Inversiones Telephone, 7% (Utilities -
Telephone)## (Identified Cost, $994,600) 18,400 $ 800,400
- -----------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.9%
- -----------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -----------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 11/16/95 $ 900 $ 897,889
General Electric Co., due 11/01/95 1,780 1,780,000
- -----------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 2,677,889
- -----------------------------------------------------------------------------
Total Investments (Identified Cost, $81,728,324) $89,670,205
OTHER ASSETS, LESS LIABILITIES - 1.1% 985,960
=============================================================================
Net Assets - 100.0% $90,656,165
- -----------------------------------------------------------------------------
*Non-income producing security.
##SEC Rule 144A restriction.
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. Dollar. A list of abbreviations is shown
below.
CAD = Canadian Dollars GBP = British Pounds
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
October 31, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $81,728,324) $89,670,205
Cash 1,098
Net receivable for forward foreign currency exchange
contracts purchased 319
Receivable for Fund shares sold 381,689
Receivable for investments sold 2,647,806
Interest and dividends receivable 690,683
Deferred organization expenses 14,198
-----------
Total assets $93,405,998
-----------
Liabilities:
Distributions payable $ 37,538
Payable for Fund shares reacquired 150,941
Payable for investments purchased 2,448,547
Payable to affiliates -
Management fee 2,757
Shareholder servicing agent fee 1,216
Distribution fee 15,673
Accrued expenses and other liabilities 93,161
-----------
Total liabilities $ 2,749,833
-----------
Net assets $90,656,165
===========
Net assets consist of:
Paid-in capital $80,808,160
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 7,941,660
Accumulated undistributed net realized gain on investments
and foreign currency transactions 2,044,315
Accumulated distributions in excess of net investment income (137,970)
-----------
Total $90,656,165
===========
Shares of beneficial interest outstanding 11,071,408
===========
Class A shares:
Net asset value and redemption price per share
(net assets of $52,474,150 / 6,402,600 shares of
beneficial interest outstanding) $8.20
=====
Offering price per share (100/95.25 of net value per share) $8.61
=====
Class B shares:
Net asset value and offering price per share
(net assets of $33,238,550 / 4,064,762 shares of
beneficial interest outstanding) $8.18
=====
Class C shares:
Net asset value, offering price and redemption price per share
(net assets of $4,943,465 / 604,046 shares of beneficial
interest outstanding) $8.18
=====
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
- ------------------------------------------------------------------------------
Year Ended October 31, 1995
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 2,630,729
Interest 1,126,691
Foreign taxes withheld (62,693)
-----------
Total investment income $ 3,694,727
-----------
Expenses -
Management fee $ 505,241
Trustees' compensation 35,886
Shareholder servicing agent fee (Class A) 65,882
Shareholder servicing agent fee (Class B) 55,762
Shareholder servicing agent fee (Class C) 5,418
Distribution and service fee (Class A) 12,209
Distribution and service fee (Class B) 221,808
Distribution and service fee (Class C) 35,932
Custodian fee 39,928
Printing 39,208
Auditing fees 32,800
Postage 16,156
Legal fees 3,868
Amortization of organization expenses 3,804
Miscellaneous 79,384
-----------
Total expenses $ 1,153,286
Fees paid indirectly (3,514)
Reduction of expenses by investment adviser (285,841)
-----------
Net expenses $ 863,931
-----------
Net investment income $ 2,830,796
===========
Realized and unrealized gain on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 3,134,194
Foreign currency transactions (44,998)
-----------
Net realized gain on investments and foreign currency
transactions $ 3,089,196
-----------
Change in unrealized appreciation -
Investments $ 8,994,045
Translation of assets and liabilities in foreign currencies 37,884
-----------
Net unrealized gain on investments $ 9,031,929
-----------
Net realized and unrealized gain on investments and
foreign currency $12,121,125
-----------
Net increase in net assets from operations $14,951,921
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
- -----------------------------------------------------------------------------------------------
Year Ended October 31, 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 2,830,796 $ 2,541,280
Net realized gain (loss) on investments and foreign
currency transactions 3,089,196 (1,048,132)
Net unrealized gain (loss) on investments and foreign
currency translation 9,031,929 (3,868,794)
----------- -----------
Increase (decrease) in net assets from operations $14,951,921 $(2,375,646)
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $(1,950,814) $(2,081,568)
From net investment income (Class B) (894,547) (524,361)
From net investment income (Class C) (123,779) (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 $(2,969,140) $(4,070,826)
----------- -----------
Fund share (principal) transactions -
Net proceeds from sale of shares $54,589,877 $45,045,270
Net asset value of shares issued to shareholders in
reinvestment of distributions 2,417,592 3,351,049
Cost of shares reacquired (42,534,317) (26,584,135)
----------- -----------
Increase in net assets from Fund share transactions $14,473,152 $21,812,184
----------- -----------
Total increase in net assets $26,455,933 $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 [accumulated distributions in
excess of net investment income] of $(137,970) and
$62,055, respectively) $90,656,165 $64,200,232
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended October 31, 1995 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<F3> -
Net investment income<F6> $ 0.31 $ 0.33 $ 0.40 $ 0.17
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 1.22 (0.63) 1.19 0.30
------ ------ ------ ------
Total from investment operations $ 1.53 $(0.30) $ 1.59 $ 0.47
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.33) $(0.35) $(0.38) $(0.12)
From net realized gain on investments and foreign currency
transactions -- (0.21) (0.03) --
------ ------ ------ ------
Total distributions declared to shareholders $(0.33) $(0.56) $(0.41) $(0.12)
------ ------ ------ ------
Net asset value - end of period $ 8.20 $ 7.00 $ 7.86 $ 6.68
====== ====== ====== ======
Total return<F5> 22.48% (3.89)% 24.39% 11.02%<F2>
Ratios (to average net assets)/Supplemental data<F6>:
Expenses<F4> 0.83% 0.65% 0.65% 0.65%<F2>
Net investment income 4.30% 4.58% 4.57% 5.44%<F2>
Portfolio turnover 152% 115% 119% 63%
Net assets at end of period (000 omitted) $52,474 $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>Per share data for the periods subsequent to October 31, 1993 is based on average shares outstanding.
<F4>For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
<F5>Total returns for Class A shares do not include the applicable sales charge. If the sales charge had been included, the results
would have been lower.
<F6>The investment adviser did not impose a portion of its management fee and 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:
</FN>
Net investment income $ 0.28 $ 0.28 $ 0.31 $ 0.13
Ratios (to average net assets):
Expenses 1.23% 1.41% 1.68% 2.63%+
Net investment income 3.90% 3.82% 4.20% 3.46%+
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - continued
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended October 31, 1995 1994 1993<F1> 1995 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<F7> $ 0.24 $ 0.25 $ 0.05 $ 0.24 $ 0.25
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 1.22 (0.63) 0.01 1.21 (0.54)
------ ------ ------ ------ ------
Total from investment operations $ 1.46 $(0.38) $ 0.06 $ 1.45 $(0.29)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.26) $(0.27) $(0.05) $(0.26) $(0.20)
From net realized gain on investments and
foreign currency transactions -- (0.21) -- -- --
Total distributions declared to
shareholders $(0.26) $(0.48) $(0.05) $(0.26) $(0.20)
------ ------ ------ ------ ------
Net asset value - end of period $ 8.18 $ 6.98 $ 7.84 $ 8.18 $ 6.99
====== ====== ====== ====== ======
Total return 21.43% (4.92)% 0.69%<F4> 21.19% (3.87)%<F4>
Ratios (to average net assets)/Supplemental data<F7>:
Expenses<F6> 1.74% 1.72% 1.50%<F3> 1.81% 1.65%<F3>
Net investment income 3.33% 3.51% 1.80%<F3> 3.23% 3.56%<F3>
Portfolio turnover 152% 115% 119% 152% 115%
Net assets at end of period (000 omitted) $33,239 $19,774 $5,412 $4,943 $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 is based on average shares outstanding.
<F6>For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
<F7>The investment adviser did not impose a portion of its management fee and 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 $ 0.21 $ 0.20 $ (0.07) $ 0.21 $ 0.20
Ratios (to average net assets):
Expenses 2.14% 2.48% 3.27%<F3> 2.21% 2.41%<F3>
Net investment income 2.93% 2.74% 1.53%<F3> 2.83% 2.80%<F3>
See notes to financial statements
</TABLE>
<PAGE>
Notes to Financial Statements
(1) Business and Organization
MFS Utilities Fund (the Fund) is a non-diversified series of MFS Series Trust VI
(the Trust). The Trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(2) Significant Accounting Policies
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.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Deferred 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.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Fund will enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. 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 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.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on the
Fund's average daily net assets. The fee is reduced according to a fee offset
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its 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. Foreign taxes have been provided for on interest
and dividend income earned on foreign investments in accordance with the
applicable country's tax rates and to the extent unrecoverable are recorded as a
reduction of investment income. 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. During the year ended October 31, 1995, accumulated distributions in
excess of net investment income was increased by $61,681, accumulated
undistributed net realized gain on investments and foreign currency transactions
was increased by $47,449 and paid-in capital was increased by $14,232 due to
differences between book and tax accounting for mortgage-backed securities,
currency transactions and non-taxable dividends. This change had no effect on
the net assets or net asset value per share. At October 31, 1995, accumulated
distributions in excess of net investment income and realized gain on
investments and foreign currency transactions under book accounting were
different from tax accounting due to temporary differences in accounting for
non-deductible pension expense and wash sales.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B and Class C shares. The three classes of shares differ in their
respective shareholder servicing agent, distribution and service fees. 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.
(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 effective annual rate of
0.375% of average daily net assets and 6.25% of investment income. The
investment adviser did not impose a portion of its fee, which is reflected as a
reduction of expenses in the Statement of Operations.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain 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 and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $4,511 for the year ended
October 31, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$135,056 for the year ended October 31, 1995, 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%
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
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. MFD retains the service fee for accounts
not attributable to a securities dealer, which amounted to $0 for the year ended
October 31, 1995. MFD is not imposing the 0.10% distribution fee for an
indefinite period. Fees incurred under the distribution plan during the year
ended October 31, 1995 were 0.03% of average daily net assets attributable to
Class A shares on an annualized basis.
The Class B and Class C distribution plans provide 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. The service fee is currently suspended for Class B shares held over one
year. 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. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $0 and $83 for Class B and Class C shares,
respectively, for the year ended October 31, 1995. Fees incurred under the
distribution plans during the year ended October 31, 1995 were 0.88% and 1.00%
of average daily net assets attributable to Class B and Class C shares,
respectively, on an annualized basis.
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 year ended October 31, 1995 were $41 and $76,193 for
Class A and Class B 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 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 short-term obligations, were as
follows:
Purchases Sales
- ------------------------------------------------------------------------------
U.S. Government securities $21,436,670 $16,469,325
=========== ===========
Investments (non-U.S. Government securities) $95,486,562 $89,076,821
=========== ===========
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 $82,013,201
===========
Gross unrealized appreciation $ 8,499,534
Gross unrealized depreciation (842,530)
-----------
Net unrealized appreciation $ 7,657,004
===========
(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:
Class A Shares
1995 1994
Year Ended October ------------------------- ------------------------
31, Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,699,306 $ 20,628,776 2,190,865 $ 16,077,771
Shares issued to
shareholders in
reinvestment of
distributions 214,458 1,568,560 370,127 2,689,482
Shares reacquired (2,514,510) (18,778,516) (2,083,365) (15,124,516)
--------- ------------ --------- -----------
Net increase 399,254 $ 3,418,820 477,627 $ 3,642,737
========= ============ ========= ============
Class B Shares
1995 1994
Year Ended ------------------------ ------------------------
October 31, Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,097,196 $ 30,083,089 3,158,234 $ 22,915,060
Shares issued to
shareholders in
reinvestment of
distributions 101,411 742,636 86,550 623,513
Shares reacquired (2,964,865) (21,644,727) (1,103,660) (7,857,710)
--------- ------------ --------- -----------
Net increase 1,233,742 $ 9,180,998 2,141,124 $ 15,680,863
========= ============ ========= ============
Class C Shares
1995 1994
Year Ended ------------------------ ------------------------
October 31, Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 533,340 $ 3,878,012 841,006 $ 6,052,439
Shares issued to
shareholders in
reinvestment of
distributions 14,452 106,396 5,376 38,054
Shares reacquired (286,745) (2,111,074) (503,383) (3,601,909)
------- --------- ------- ----------
Net increase 261,047 $ 1,873,334 342,999 $ 2,488,584
======= ============ ======= ============
+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, 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 year ended October 31,
1995 was $325.
(7) Financial Instruments
The Fund trades financial instruments with off-balance sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include forward foreign currency exchange contracts. The notional or
contractual amounts of these instruments represent the investment the Fund has
in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered.
<TABLE>
Forward Foreign Currency Exchange Contracts
<CAPTION>
Contracts to Contracts Net Unrealized
Settlement Date Deliver/Receive In Exchange for at Value Appreciation
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases 11/01/95 - 11/07/95 GBP 364,876 $576,550 $576,869 $319
======== ======== ====
</TABLE>
At October 31, 1995, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
(8) 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 October 31, 1995, the
Fund owned the following restricted securities (constituting 2.36% of net
assets) which may not be publicly sold without registration under the Securities
Act of 1933 (the 1933 Act). 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. All of these securities may
be offered and sold to "qualified institutional buyers" under Rule 144A of the
1933 Act.
<TABLE>
<CAPTION>
Share/
Description Date of Acquisition Par Amount Cost Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Central Costenera, ADR 12/17/93 - 1/31/95 44,200 $1,047,088 $1,204,450
Compania Inversiones Telephone, 7% 2/24/94 18,400 994,600 800,400
Hidroelectrica Alicura, 8.375s, 1999 4/08/94 150,000 143,526 132,000
----------
$2,136,850
==========
</TABLE>
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Trustees of MFS Series Trust VI and Shareholders of MFS Utilities Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Utilities Fund, including the schedule of portfolio investments, as of October
31, 1995 and the related statement of operations for the year then ended and the
statement of changes in net assets and financial highlights for each of the two
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for the year ended October 31,
1993, and for the period February 14, 1992 (commencement of investment
operations) to October 31, 1992 for Class A shares, and for the period September
7, 1993 (commencement of investment operations) to October 31, 1993 for Class B
shares, were audited by other auditors whose report dated December 14, 1993
expressed an unqualified opinion on those statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers or by other
appropriate auditing procedures where replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Utilities Fund at October 31, 1995, the results of its operations for the year
then ended, and the changes in its net assets and financial highlights for each
of the two years in the period then ended, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 8, 1995
---------------------------------------------
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 Fund NUMBER ----------------------
1 Bulk Rate
500 Boylston Street DALBAR U.S. Postage
Boston, MA 02116 P A I D
TOP-RATED SERVICE Permit #55638
Boston, MA
----------------------
[LOGO]
MFS
THE FIRST NAME IN MUTUAL FUNDS
MUF-2 12/95 11M 35/235/335
