<PAGE>
[logo] MFS Annual Report
INVESTMENT MANAGEMENT for Year Ended
October 31, 1996
MFS{R) UTILITIES FUND
[graphic omitted]
AMERICA LEARNS HOW "WE INVENTED THE MUTUAL FUND", (see page 28)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman ................................................... 1
A Discussion with the Portfolio Manager .................................... 3
Portfolio Manager's Profile ................................................ 5
Fund Facts ................................................................. 5
Portfolio Concentration .................................................... 6
Tax Form Summary ........................................................... 6
Performance Summary ........................................................ 7
Portfolio of Investments ................................................... 9
Financial Statements .......................................................14
Notes to Financial Statements ..............................................20
Report of Independent Auditors .............................................26
MFS Family of Funds ........................................................27
Trustees and Officers ......................................................29
HIGHLIGHTS
* FOR THE YEAR ENDED OCTOBER 31, 1996, CLASS A SHARES OF THE FUND PROVIDED A
TOTAL RETURN AT NET ASSET VALUE OF 18.41%, CLASS B SHARES 17.50%, AND CLASS C
SHARES 17.57%.
* ELECTRIC UTILITY STOCKS COMPRISE APPROXIMATELY 42% OF THE FUND'S EQUITY
POSITION. ALTHOUGH ELECTRIC UTILITIES ARE FACING A PERIOD OF DEREGULATION,
THE PACE OF CHANGE HAS BEEN SLOWER THAN ANTICIPATED, WHICH IS FAVORABLE FOR
THESE STOCKS.
* WHILE THE WEAK BOND MARKET IN THE FIRST HALF OF THE FUND'S FISCAL YEAR HURT
INTEREST RATE SENSITIVE UTILITY STOCKS, THE BOND MARKET'S RECENT STRENGTH HAS
BENEFITED THESE STOCKS.
* ABOUT 20% OF THE FUND'S ASSETS ARE INVESTED IN INTERNATIONAL MARKETS, WHICH
CAN OFFER MUCH HIGHER GROWTH AND, AT TIMES, MORE CONSTRUCTIVE REGULATORY
ENVIRONMENTS THAN THE UNITED STATES. SEE THE FUND'S PROSPECTUS FOR RISKS
INVOLVED IN INTERNATIONAL INVESTING.
<PAGE>
LETTER FROM THE CHAIRMAN
[photo of A. Keith Brodkin]
Dear Shareholders:
As we enter the final months of 1996, the U.S. economy appears to have settled
into a pattern of moderate growth and inflation -- two factors that we think
can be important contributors to a favorable long-term investment climate.
During the first quarter of 1996, real (inflation-adjusted) economic growth
was 2.3% on an annualized basis, followed by a rate of 4.7% in the second
quarter. However, this unexpectedly high level was followed by a more moderate
2.2% pace during the third quarter. Overall, real growth in gross domestic
product has surpassed our expectations this year, and we now expect that
growth for all of 1996 could exceed 2.5%. Although individual consumers appear
to be carrying an excessive debt load, the consumer sector itself, which
represents two-thirds of the economy, continues to support the automobile and
housing markets. Consumer spending has also been positively impacted by
widespread job growth and, more recently, rising wages. However, recent
statistics appear to show a slowdown in consumer spending. This is
particularly true when considering overall retail sales, which have been flat
for several months. Furthermore, the economies of Europe and Japan continue to
be in the doldrums, weakening U.S. export markets while subduing the capital
spending plans of American corporations. Thus, while economic growth should
continue, we expect some slackening toward the end of the year.
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be positive about the equity market this
year. Although we believe the equity market represents fair value at current
levels, the expected slowdown in corporate earnings growth and interest rate
increases earlier in the year have raised some near-term concerns, as was seen
in July's stock market correction. Further interest rate increases, and an
acceleration of inflation coupled with an additional slowdown in corporate
earnings growth, could have a negative effect on the stock market in the near
term. However, to the extent that some earnings disappointments are taken as a
sign that the economy is not overheating, this may prove beneficial for the
equity market's longer-term health. We believe many of the technology-driven
productivity gains that U.S. companies have made in recent years will continue
to enhance corporate America's competitiveness and profitability. Therefore,
while we have some near-term concerns, we remain quite constructive on the
long-term viability of the equity market.
In the bond markets, persistent signs of economic weakness led to decreases
in short-term interest rates by the Federal Reserve Board in late 1995 and
early 1996. Should signs of more rapid economic growth and, particularly, of
higher inflation resurface, we would expect the Fed to maintain its anti-
inflationary stance. In the beginning of the year, the bond markets traded in
a narrow range as investors shifted between concern for the lack of a budget
resolution in Washington and hope that sluggish economic reports and low
inflation might lead to lower interest rates. Later, fixed-income markets
began reacting to conflicting signals regarding the economy's strength with
more volatile trading patterns marked by an upward bias in interest rates.
Interest rates may move even higher over the coming months, but we believe the
current rise in bond yields is reaching a point where fixed-income markets are
equitably valued.
Finally, as you may notice, this report to shareholders incorporates a number
of changes which we hope you will find informative and useful. Following a
discussion with the Portfolio Manager, we have added new information on the
Fund's holdings, including charts illustrating the portfolio's concentration in
the types of investments that meet its criteria. Near the back of the report,
telephone numbers and addresses are listed if you would like to contact MFS.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
November 12, 1996
<PAGE>
A DISCUSSION WITH THE PORTFOLIO MANAGER
[Photo of Maura Shaughnessy]
For the 12 months ended October 31, 1996, Class A shares of the Fund provided
a total return of 18.41%, Class B shares 17.50%, and Class C shares 17.57%.
These returns, which include the reinvestment of distributions but exclude the
effects of any sales charges, compare to a 9.80% return for the Standard &
Poor's Utility Index (the Utility Index), an unmanaged, market-value weighted,
total-return index of all utility stocks in the Standard & Poor's 500
Composite Index (the S&P 500), and an 11.42% return for the average utility
fund as measured by Lipper Analytical Services, Inc., an independent firm that
reports mutual fund performance. For the same period, the S&P 500, an
unmanaged index of common stock performance, returned 24.08%.
Q. WHAT DO YOU SEE AS SOME REASONS FOR THE FUND'S FAVORABLE PERFORMANCE THIS
YEAR, MAURA?
A. The Fund has been overweighted in natural gas stocks, which have been
terrific performers this year. Also, two of the Fund's top holdings, Portland
General and MCI Communications, were bought out by Enron and British
Telephone, respectively.
Q. COULD YOU DISCUSS THE GENERAL BUSINESS AND ECONOMIC ENVIRONMENT YOU FACED
OVER THE PAST YEAR, PARTICULARLY AS IT RELATES TO THE FUND?
A. The Fund's assets are more interest rate sensitive than the overall market,
and the weak bond market in the first half of the Fund's fiscal year hurt
utility stocks. Recently, however, the bond market has strengthened, and this
has certainly helped these stocks.
Q. YOU'RE CURRENTLY OVERWEIGHTED IN ELECTRIC UTILITY STOCKS, AT LEAST WHEN
COMPARED TO THE WEIGHTINGS IN THE S&P UTILITY INDEX. WHAT IS YOUR ELECTRIC
UTILITY WEIGHTING, AND WHY ARE YOU AT THAT LEVEL?
A. Electric utility stocks comprise approximately 42% of the Fund's equity
position, with 14% of this position made up of international electric stocks.
Although electric utilities are facing a period of deregulation, the pace of
change has been slower than anticipated, which is favorable for these stocks.
The Fund's electric holdings include utilities that we believe should thrive
in this new environment.
Q. WHAT OTHER SECTORS DO YOU LIKE, AND WHY?
A. Natural gas companies are benefiting from stronger-than-expected earnings
growth due to robust earnings from nonregulated businesses, and these stocks
make up approximately 20% of the Fund's portfolio.
Q. ARE THERE SOME PARTS OF THE COUNTRY WHERE YOU'RE FINDING A MORE FAVORABLE
CLIMATE FOR UTILITY STOCKS THAN OTHERS?
A. There are certain parts of the country that are combining robust customer
growth with rational regulatory environments. States in these areas include
Florida, Texas, Arizona, and Oregon.
Q. CAN YOU TELL US ABOUT SOME SECTORS YOU MIGHT BE AVOIDING, OR
UNDERWEIGHTING, AND WHY?
A. The Fund has been underweighted in telecommunications stocks for the entire
year. The passage of the federal Telecommunications Act has created
uncertainty about these stocks, as we expect it will be several years before
we understand who are the winners and losers from this legislation. For the
large-capitalization stocks in this sector, we expect earnings per share
growth to decline.
Q. WE NOTICED THAT ABOUT 20% OF THE FUND'S ASSETS ARE INVESTED
INTERNATIONALLY. CAN YOU TELL US WHY YOU LIKE THESE INVESTMENTS AND GIVE US
SOME EXAMPLES?
A. Typically, international markets can offer much higher growth and, at
times, a more constructive regulatory environment than the United States.
Powergen, a U.K. electric generating company, is one of the cheapest utilities
in the world based on growth relative to its earnings and cash flow
generation. Telefonica del Peru, meanwhile, enjoys an excellent combination of
robust growth and rational regulation.
Q. YOU ALSO HAVE ABOUT 10% OF THE FUND'S ASSETS IN REITS (REAL ESTATE
INVESTMENT TRUSTS). WHAT IS IT YOU LIKE ABOUT REITS, AND WHAT TYPES OF REITS
DO YOU PARTICULARLY LIKE?
A. REITs often offer yields and dividend growth stronger than the typical
utility. Our strategy is to hold a diversified group of REITs, including
health care, self-storage, hotel, apartment, office, and industrial REITs.
Respectfully,
/s/ Maura Shaughnessy
Maura Shaughnessy
Portfolio Manager
<PAGE>
PORTFOLIO MANAGER'S 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 AND VICE PRESIDENT IN 1993. SHE HAS
MANAGED MFS UTILITIES FUND SINCE 1992. MS. SHAUGHNESSY IS A CHARTERED FINANCIAL
ANALYST (C.F.A.).
LARGEST SECTORS (% OF INVESTMENTS)
Utilities -- Electric 33.6%
Utilities -- Gas 20.7%
Communications 20.6%
Real Estate Investment Trust 11.8%
U.S. Treasuries 10.6%
Other 2.7%
FUND FACTS
STRATEGY: THE FUND SEEKS CAPITAL GROWTH AND CURRENT INCOME BY
INVESTING AT LEAST 65% OF ITS ASSETS UNDER NORMAL
MARKET CONDITIONS IN EQUITY AND DEBT SECURITIES OF
BOTH DOMESTIC AND FOREIGN COMPANIES IN THE
UTILITIES INDUSTRY.
COMMENCEMENT OF
INVESTMENT OPERATIONS: FEBRUARY 14, 1992
SIZE: $118.5 MILLION NET ASSETS AS OF OCTOBER 31, 1996
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 1996
TOP TEN HOLDINGS
U.S. TREASURY NOTES, 9.125S, 1999 CINERGY CORP.
Midwestern electric utility
POWERGEN PLC PANENERGY CORP.
U.K. electric utility Natural gas transmission company
U.S. TREASURY NOTES, 7.875S, 2004 MCI COMMUNICATIONS CO., INC.
Telecommunications company
GTE CORP.
Telecommunications company CMS ENERGY CORP.
Michigan electric and gas utility
SIERRA PACIFIC RESOURCES
Western U.S. electric utility MFS COMMUNICATIONS CO., INC.
Telecommunications company
TAX FORM SUMMARY
IN JANUARY 1997, SHAREHOLDERS WILL BE MAILED A TAX FORM SUMMARY REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR 1996.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS
THE FUND HAS DESIGNATED $4,060,476 AS A LONG-TERM CAPITAL GAIN.
FOR THE YEAR ENDED OCTOBER 31, 1996, THE AMOUNT OF DISTRIBUTIONS FROM INCOME
ELIGIBLE FOR THE 70% DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATIONS CAME TO
20.4%.
<PAGE>
PERFORMANCE SUMMARY
The information below and on the following page illustrates the historical
performance of MFS Utilities Fund Class A shares in comparison to various
market indicators. Class A share results 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.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the Period from February 14, 1992 to October 31, 1996)
Lehman Brothers
MFS Utilities Consumer Price Corporate Bond
Fund Class A Index U.S. Index S&P Utility
------------- -------------- --------------- -----------
02/92 9532.00 10000.0 10000.0 10000.0
10/92 10280.0 10268.0 10790.0 11752.0
10/93 12729.0 10550.0 12425.0 13449.0
10/94 12284.0 10825.0 11781.0 12381.0
10/95 15046.0 11130.0 13994.0 17472.0
10/96 17913.0 11465.0 14865.0 17731.0
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 Year 3 Years Life of Fund(S)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Utilities Fund (Class A) including 4.75% sales charge +12.77% + 9.92% +13.03%
- -------------------------------------------------------------------------------------------------------
MFS Utilities Fund (Class A) at net asset value +18.41% +11.70% +14.18%
- -------------------------------------------------------------------------------------------------------
MFS Utilities Fund (Class B) with CDSC +13.50% + 9.88% +13.18%
- -------------------------------------------------------------------------------------------------------
MFS Utilities Fund (Class B) without CDSC +17.50% +10.70% +13.45%
- -------------------------------------------------------------------------------------------------------
MFS Utilities Fund (Class C) with CDSC +16.57% +10.63% +13.48%
- -------------------------------------------------------------------------------------------------------
MFS Utilities Fund (Class C) without CDSC +17.57% +10.63% +13.48%
- -------------------------------------------------------------------------------------------------------
Average utility fund* +11.42% + 5.79% + 9.06%
- -------------------------------------------------------------------------------------------------------
Lehman Brothers Corporate Bond Utility Total Return Index+ + 6.10% + 5.90% + 9.52%
- -------------------------------------------------------------------------------------------------------
Standard & Poor's Utility Index + 9.80% + 7.59% +12.38%
- -------------------------------------------------------------------------------------------------------
Consumer Price Index** + 3.01% + 2.81% +3.687%
- -------------------------------------------------------------------------------------------------------
<FN>
(S) For the period from the commencement of investment operations, February 14, 1992 to October 31, 1996.
* Source: Lipper Analytical Services.
** The Consumer Price Index is a popular measure of change in prices.
+ The Lehman Brothers Corporate Bond Utility Total Return Index is an unmanaged index that includes all
publicly issued, fixed-rate, nonconvertible investment-grade domestic utility debt.
</FN>
</TABLE>
Class A SEC results include the maximum 4.75% sales charge. Class B SEC
results reflect the applicable contingent deferred sales charge (CDSC), which
declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C shares
have no initial sales charge but, along with Class B shares, have higher
annual fees and expenses than Class A shares. As of April 1, 1996, Class C
shares redeemed within 12 months of purchase will be subject to a 1% CDSC. See
the prospectus for details.
Class B and Class C share performance includes the performance of the Fund's
Class A shares for periods prior to the commencement of offering of Class B
shares on September 7, 1993 and of Class C shares on January 3, 1994. Sales
charges and operating expenses for Class A, Class B, and Class C shares
differ. The Class A share performance, which is included within the Class B
and Class C share SEC performance, has been adjusted to reflect the CDSC
generally applicable to Class B and Class C shares rather than the initial
sales charge generally applicable to Class A shares. Class B and Class C share
performance has not been adjusted, however, to reflect differences in
operating expenses (e.g., Rule 12b-1 fees), which generally are lower for
Class A shares.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
All Class C share 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.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS - October 31, 1996
<CAPTION>
Non-Convertible Bonds - 21.2%
- -------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Bonds - 20.2%
Financial Institutions - 0.4%
Boise Cascade Co., 7.43s, 2005 $ 450 $ 452,812
- -------------------------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.4%
Loewen Group International, Inc., 7.75s, 2001## $ 500 $ 508,125
- -------------------------------------------------------------------------------------------------
Telecommunications - 0.2%
Rogers Cablesystems, Inc., 10.125s, 2012 $ 200 $ 198,000
- -------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 10.8%
U.S. Treasury Obligations
U.S. Treasury Notes, 9.125s, 1999 $ 5,000 $ 5,379,700
U.S. Treasury Notes, 7.875s, 2004 4,000 4,390,000
U.S. Treasury Bonds, 12s, 2005 810 1,108,307
U.S. Treasury Bonds, 6s, 2026 970 884,824
U.S. Treasury Bonds, 6.75s, 2026 1,000 1,011,870
------------
$ 12,774,701
- -------------------------------------------------------------------------------------------------
Utilities - Electric - 3.2%
Arkansas Power & Light Co., 8.75s, 2026 $ 500 $ 516,695
First PV Funding Corp., 10.3s, 2014 400 424,500
First PV Funding Corp., 10.15s, 2016 737 784,905
Louisiana Power & Light Co., 8.75s, 2026 250 257,188
Midland Cogeneration Venture Corp., 10.33s, 2002 468 495,251
System Energy Resources, 7.38s, 2000 500 499,910
Texas & New Mexico Power Co., 12.5s, 1999 300 328,440
Utilicorp United, Inc., 8.45s, 1999 500 525,675
------------
$ 3,832,564
- -------------------------------------------------------------------------------------------------
Utilities - Gas - 4.3%
Coastal Corp., 7.75s, 2035 $ 1,000 $ 1,011,670
Louis Dreyfus Natural Gas Corp., 9.25s, 2004 500 527,670
NGC Corp., 6.75s, 2005 1,000 987,600
Oryx Energy Co., 10s, 1999 500 533,235
PanEnergy Corp., 7s, 2006 1,000 1,003,180
Tosco Corp., 7.625s, 2006 1,000 1,029,300
------------
$ 5,092,655
- -------------------------------------------------------------------------------------------------
Other - 0.9%
Delta Air Lines, Inc., 8.5s, 2002 $ 500 $ 533,640
McDonnell Douglas Corp., 6.875s, 2006 500 495,910
------------
$ 1,029,550
- -------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 23,888,407
- -------------------------------------------------------------------------------------------------
Foreign Bonds - 1.0%
Argentina - 0.1%
Hidroelectrica Alicura, 8.375s, 1999
(Utilities - Electric)## $ 150 $ 145,875
- -------------------------------------------------------------------------------------------------
Foreign Bonds - continued
Chile - 0.9%
Empresa Electric Del Norts, 7.75s, 2006
(Utilities - Electric)## $ 600 $ 609,000
Empresa Electric Guacolda S.A., 7.6s, 2001
(Utilities - Electric)## 500 508,900
------------
$ 1,117,900
- -------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 1,263,775
- -------------------------------------------------------------------------------------------------
Total Non-Convertible Bonds (Identified Cost, $25,324,969) $ 25,152,182
- -------------------------------------------------------------------------------------------------
Stocks - 80.3%
- -------------------------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------------------------------
U.S. Stocks - 61.1%
Consumer Goods and Services - 1.5%
Philip Morris Cos., Inc. 19,100 $ 1,769,138
- -------------------------------------------------------------------------------------------------
Real Estate Investment Trusts - 11.6%
American General Hospitality Corp. 94,100 $ 1,870,237
Arden Realty, Inc.* 17,900 404,988
Boykin Lodging Co.* 13,400 268,000
FelCor Suite Hotels, Inc. 27,200 890,800
First Industrial Realty Trust, Inc. 31,500 815,063
Hospitality Properties Trust 43,000 1,118,000
Innkeepers USA Trust 93,000 1,092,750
National Health Investors, Inc. 38,500 1,342,687
Oasis Residential, Inc. 30,000 637,500
Patriot American Hospitality, Inc. 13,700 481,213
Prentiss Properties Trust* 48,100 992,062
Public Storage, Inc. 9,800 225,400
Sovran Self Storage, Inc. 25,000 671,875
Storage Trust Realty 90,000 2,081,250
Winston Hotels, Inc. 69,600 870,000
------------
$ 13,761,825
- -------------------------------------------------------------------------------------------------
Utilities - Electric - 18.2%
Allegheny Power Systems, Inc. 65,600 $ 1,959,800
Boston Edison Co. 29,000 696,000
Cinergy Corp. 91,249 3,022,623
CMS Energy Corp. 73,000 2,308,625
Edison International 40,000 790,000
FPL Group, Inc. 35,000 1,610,000
GPU, Inc. 37,000 1,216,375
Illinova Corp. 79,900 2,177,275
NIPSCO Industries, Inc. 50,200 1,901,325
Pinnacle West Capital Corp. 43,900 1,355,413
Portland General Corp. 46,800 2,047,500
Public Service Company of Colorado 34,600 1,280,200
Texas Utilities Co. 15,000 607,500
Unicom Corp. 22,000 572,000
------------
$ 21,544,636
- -------------------------------------------------------------------------------------------------
Utilities - Gas - 15.6%
Coastal Corp. 41,000 $ 1,763,000
Columbia Gas Systems, Inc. 32,400 1,968,300
El Paso Natural Gas Co. 33,300 1,615,050
KN Energy, Inc. 41,300 1,543,588
Noble Affiliates, Inc. 15,000 652,500
PanEnergy Corp. 77,900 2,999,150
Questar Corp. 10,000 360,000
Sierra Pacific Resources 110,700 3,085,762
Sonat, Inc. 39,000 1,920,750
Tejas Gas Corp.* 10,000 406,250
Williams Cos., Inc. 40,500 2,116,125
------------
$ 18,430,475
- -------------------------------------------------------------------------------------------------
Utilities - Telephone - 14.2%
BellSouth Corp. 33,000 $ 1,344,750
Frontier Corp. 16,800 487,200
GTE Corp. 82,650 3,481,631
ICG Communications, Inc.* 40,000 750,000
MCI Communications Corp. 118,400 2,974,800
MFS Communications Co., Inc. 44,200 2,215,525
Pacific Telesis Group 40,000 1,360,000
SBC Communications, Inc. 26,000 1,264,250
Telco Communications Group* 58,200 945,750
Telephone & Data Systems, Inc. 32,000 1,120,000
Teleport Communications Group, Inc.* 36,900 904,050
------------
$ 16,847,956
- -------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 72,354,030
- -------------------------------------------------------------------------------------------------
Foreign Stocks - 19.2%
Argentina - 1.1%
Central Costanera, ADR (Utilities - Electric)## 41,200 $ 1,284,925
- -------------------------------------------------------------------------------------------------
Brazil - 0.9%
Multicanal Participacoes S.A., ADR (Telecommunications)* 36,700 $ 513,800
Telecomunicacoes Brasileiras S.A., ADR (Utilities - Telephone) 8,000 594,000
------------
$ 1,107,800
- -------------------------------------------------------------------------------------------------
Canada - 1.3%
TransCanada Pipelines Ltd. (Utilities - Gas) 40,000 $ 675,000
Westcoast Energy, Inc. (Utilities - Gas) 49,800 821,700
------------
$ 1,496,700
- -------------------------------------------------------------------------------------------------
Chile - 2.8%
Chilectra S.A., ADR (Utilities - Electric) 26,000 $ 1,410,500
Chilgener S.A., ADR (Utilities - Electric) 40,000 905,000
Empresa Nacional de Electricidad, ADR (Utilities - Electric) 53,000 973,875
------------
$ 3,289,375
- -------------------------------------------------------------------------------------------------
Italy - 1.2%
Telecom Italia S.p.A. (Utilities - Telephone) 89,200 $ 184,217
Telecom Italia S.p.A. Di Risp (Utilities - Telephone) 1,110,000 1,265,020
------------
$ 1,449,237
- -------------------------------------------------------------------------------------------------
Peru - 1.9%
Telefonica del Peru S.A., "B" (Utilities - Telephone) 264,700 $ 561,267
Telefonica del Peru S.A., ADR (Utilities - Telephone) 84,800 1,749,000
------------
$ 2,310,267
- -------------------------------------------------------------------------------------------------
Philippines - 0.4%
Pilipino Telephone (Utilities - Telephone) 475,000 $ 420,875
- -------------------------------------------------------------------------------------------------
Portugal - 0.7%
Portugal Telecom S.A. (Utilities - Telephone) 24,600 $ 638,045
Portugal Telecom S.A., ADR (Utilities - Telephone) 9,500 245,812
------------
$ 883,857
- -------------------------------------------------------------------------------------------------
South Korea - 1.2%
Korea Mobile Telecommunications (Utilities - Telephone) 500 $ 501,517
Korea Mobile Telecommunications, ADR (Utilities - Telephone)* 72,500 906,250
------------
$ 1,407,767
- -------------------------------------------------------------------------------------------------
Spain - 2.0%
Empresa Nacional de Electricidad, ADR (Utilities - Electric) 14,000 $ 861,000
Iberdrola S.A. (Utilities - Electric) 96,000 1,017,045
Telefonica de Espana S.A., ADR (Utilities - Telephone) 8,000 482,000
------------
$ 2,360,045
- -------------------------------------------------------------------------------------------------
United Kingdom - 5.7%
East Midlands Electricity (Utilities - Electric) 20,000 $ 177,288
National Power (Utilities - Electric) 188,600 1,242,370
PowerGen PLC (Utilities - Electric) 638,050 5,292,721
------------
$ 6,712,379
- -------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 22,723,227
- -------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $84,692,734) $ 95,077,257
- -------------------------------------------------------------------------------------------------
Convertible Preferred Stock - 0.4%
- -------------------------------------------------------------------------------------------------
Issuer Shares Value
- -------------------------------------------------------------------------------------------------
Argentina
Compania Inversiones Telephone, 7%
(Utilities - Telephone)## (Identified Cost, $561,475) 10,900 $ 506,850
- -------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $110,579,178) $120,736,289
Other Assets, Less Liabilities - (1.9)% (2,283,736)
- -------------------------------------------------------------------------------------------------
Net Assets - 100.0% $118,452,553
- -------------------------------------------------------------------------------------------------
<FN>
*Non-income producing security.
##SEC Rule 144A restriction.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
October 31, 1996
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $110,579,178) $120,736,289
Receivable for Fund shares sold 812,701
Receivable for investments sold 2,822,625
Interest and dividends receivable 915,152
Deferred organization expenses 10,394
Other assets 1,049
------------
Total assets $125,298,210
------------
Liabilities:
Cash overdraft $ 261,828
Distributions payable 67,641
Payable for Fund shares reacquired 1,067,504
Payable for investments purchased 5,314,880
Payable to affiliates -
Management fee 1,208
Shareholder servicing agent fee 503
Distribution fee 27,276
Accrued expenses and other liabilities 104,817
------------
Total liabilities $ 6,845,657
------------
Net assets $118,452,553
============
Net assets consist of:
Paid-in capital $ 97,583,426
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 10,157,769
Accumulated undistributed net realized gain on investments
and foreign currency transactions 10,275,332
Accumulated undistributed net investment income 436,026
------------
Total $118,452,553
============
Shares of beneficial interest outstanding 13,006,847
==========
Class A shares:
Net asset value per share
(net assets of $60,345,357 / 6,619,062 shares of beneficial
interest outstanding) $ 9.12
======
Offering price per share (100/95.25 of net asset value per
share) $ 9.57
======
Class B shares:
Net asset value and offering price per share
(net assets of $49,876,586 / 5,483,735 shares of beneficial
interest outstanding) $ 9.10
======
Class C shares:
Net asset value and offering price per share
(net assets of $8,230,610 / 904,050 shares of beneficial
interest outstanding) $ 9.10
======
On sales of $100,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A,
Class B and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- ------------------------------------------------------------------------------
Year Ended October 31, 1996
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 4,048,085
Interest 1,809,261
Foreign taxes withheld (241,032)
-----------
Total investment income $ 5,616,314
-----------
Expenses -
Management fee $ 732,288
Trustees' compensation 37,488
Shareholder servicing agent fee (Class A) 81,480
Shareholder servicing agent fee (Class B) 92,130
Shareholder servicing agent fee (Class C) 9,761
Distribution and service fee (Class A) 135,801
Distribution and service fee (Class B) 418,771
Distribution and service fee (Class C) 65,072
Custodian fee 70,764
Auditing fees 27,850
Printing 26,535
Postage 24,530
Legal fees 4,749
Amortization of organization expenses 3,804
Miscellaneous 124,545
-----------
Total expenses $ 1,855,568
Fees paid indirectly (3,689)
Reduction of expenses by investment adviser (347,146)
-----------
Net expenses $ 1,504,733
-----------
Net investment income $ 4,111,581
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $10,558,170
Foreign currency transactions (19,445)
-----------
Net realized gain on investments and foreign currency
transactions $10,538,725
-----------
Change in unrealized appreciation -
Investments $ 2,215,230
Translation of assets and liabilities in foreign
currencies 879
-----------
Net unrealized gain on investments and foreign
currency translation $ 2,216,109
-----------
Net realized and unrealized gain on investments and
foreign currency $12,754,834
-----------
Increase in net assets from operations $16,866,415
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------
Year Ended October 31, 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 4,111,581 $ 2,830,796
Net realized gain on investments and foreign currency
transactions 10,538,725 3,089,196
Net unrealized gain on investments and
foreign currency translation 2,216,109 9,031,929
------------ ------------
Increase in net assets from operations $ 16,866,415 $ 14,951,921
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (2,063,623) $ (1,950,814)
From net investment income (Class B) (1,256,601) (894,547)
From net investment income (Class C) (199,785) (123,779)
From net realized gain on investments and foreign currency
transactions (Class A) (1,254,112) --
From net realized gain on investments and foreign currency
transactions (Class B) (921,552) --
From net realized gain on investments and foreign currency
transactions (Class C) (134,537) --
------------ ------------
Total distributions declared to shareholders $ (5,830,210) $ (2,969,140)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 63,557,253 $ 54,589,877
Net asset value of shares issued to shareholders in
reinvestment of distributions 4,859,274 2,417,592
Cost of shares reacquired (51,656,344) (42,534,317)
------------ ------------
Increase in net assets from Fund share transactions $ 16,760,183 $ 14,473,152
------------ ------------
Total increase in net assets $ 27,796,388 $ 26,455,933
Net assets:
At beginning of period 90,656,165 64,200,232
------------ ------------
At end of period (including accumulated undistributed net
investment income (accumulated distributions in excess
of net investment income) of $436,026 and $(137,970),
respectively) $118,452,553 $ 90,656,165
============ ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------
Year Ended October 31, 1996 1995 1994 1993 1992*
- ----------------------------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 8.20 $ 7.00 $ 7.86 $ 6.68 $ 6.33
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.38 $ 0.31 $ 0.33 $ 0.40 $ 0.17
Net realized and unrealized
gain (loss) on investments and
foreign currency transactions 1.07 1.22 (0.63) 1.19 0.30
------ ------ ------ ------ ------
Total from investment operations $ 1.45 $ 1.53 $(0.30) $ 1.59 $ 0.47
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.32) $(0.33) $(0.35) $(0.38) $(0.12)
From net realized gain on
investments and foreign
currency transactions (0.21) -- (0.21) (0.03) --
------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.53) $(0.33) $(0.56) $(0.41) $(0.12)
------ ------ ------ ------ ------
Net asset value - end of period $ 9.12 $ 8.20 $ 7.00 $ 7.86 $ 6.68
====== ====== ====== ====== ======
Total return(+) 18.41% 22.48% (3.89)% 24.39% 11.02%+
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.08% 0.83% 0.65% 0.65% 0.65%+
Net investment income 4.37% 4.30% 4.58% 4.57% 5.44%+
Portfolio turnover 137% 152% 115% 119% 63%
Average commission rate### $0.0422 -- -- -- --
Net assets at end of period (000 omitted) $60,345 $52,474 $42,027 $43,423 $12,859
<FN>
*For the period from the commencement of investment operations, February 14, 1992 to October 31, 1992.
+Annualized.
#Per share data for the periods subsequent to October 31, 1993 is based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
###Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
(+)Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would
have been lower.
(S)The investment adviser voluntarily waived a portion of its management fee. If this fee had been incurred by the Fund, the net
investment income per share and ratios would have been:
Net investment income $ 0.34 $ 0.28 $ 0.28 $ 0.31 $ 0.13
Ratios (to average net assets):
Expenses## 1.42% 1.23% 1.41% 1.68% 2.63%+
Net investment income 4.03% 3.90% 3.82% 4.20% 3.46%+
</FN>
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- --------------------------------------------------------------------------------------
Year Ended October 31, 1996 1995 1994 1993**
- --------------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 8.18 $ 6.98 $ 7.84 $ 7.83
------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.31 $ 0.24 $ 0.25 $ 0.05
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 1.07 1.22 (0.63) 0.01
------ ------ ------ ------
Total from investment operations $ 1.38 $ 1.46 $(0.38) $ 0.06
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.25) $(0.26) $(0.27) $(0.05)
From net realized gain on
investments and foreign
currency transactions (0.21) -- (0.21) --
------ ------ ------ ------
Total distributions declared
to shareholders $(0.46) $(0.26) $(0.48) $(0.05)
------ ------ ------ ------
Net asset value - end of period $ 9.10 $ 8.18 $ 6.98 $ 7.84
====== ====== ====== ======
Total return 17.50% 21.43% (4.92)% 0.69%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.89% 1.74% 1.72% 1.50%+
Net investment income 3.53% 3.33% 3.51% 1.80%+
Portfolio turnover 137% 152% 115% 119%
Average commission rate### $0.0422 -- -- --
Net assets at end of period (000 omitted) $49,877 $33,239 $19,774 $5,412
<FN>
**For the period from the commencement of offering of Class B shares, September 7, 1993
to October 31, 1993.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to October 31, 1993 is based on average
shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated
without reduction for fees paid indirectly.
###Average commission rate is calculated for funds with fiscal years beginning on or
after September 30, 1995.
(S)The investment adviser voluntarily waived a portion of its management fee. If this
fee had been incurred by the Fund, the net investment income per share and ratios
would have been:
Net investment income (loss) $ 0.28 $ 0.21 $ 0.20 $(0.07)
Ratios (to average net assets):
Expenses## 2.23% 2.14% 2.48% 3.27%+
Net investment income 3.19% 2.93% 2.74% 1.53%+
</FN>
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- ------------------------------------------------------------------------------
Year Ended October 31, 1996 1995 1994***
- ------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 8.18 $ 6.99 $ 7.48
------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.31 $ 0.24 $ 0.25
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.07 1.21 (0.54)
------ ------ ------
Total from investment operations $ 1.38 $ 1.45 $(0.29)
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.25) $(0.26) $(0.20)
From net realized gain on investments and
foreign currency transactions (0.21) -- --
------ ------ ------
Total distributions declared to
shareholders $(0.46) $(0.26) $(0.20)
------ ------ ------
Net asset value - end of period $ 9.10 $ 8.18 $ 6.99
====== ====== ======
Total return 17.57% 21.19% (3.87)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.82% 1.81% 1.65%+
Net investment income 3.60% 3.32% 3.56%+
Portfolio turnover 137% 152% 115%
Average commission rate### $0.0422 -- --
Net assets at end of period (000 omitted) $8,231 $4,943 $2,399
***For the period from the commencement of offering of Class C shares, January
3, 1994 to October 31, 1994.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to October 31, 1993 is based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
###Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
(S)The investment adviser voluntarily waived a portion of its management fee. If
this fee had been incurred by the Fund, the net investment income per share
and ratios would have been:
Net investment income $ 0.28 $ 0.21 $ 0.20
Ratios (to average net assets):
Expenses## 2.16% 2.21% 2.41% +
Net investment income 3.26% 2.83% 2.80% +
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Utilities Fund (the Fund) is a non-diversified series of MFS Series Trust
VI (the Trust). The Trust is organized as a Massachusetts business trust and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are 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 market 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 Fund
operations.
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 contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. The Fund may also use contracts in a manner intended to protect
foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains
or losses are recorded 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
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 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, 1996, accumulated undistributed net
investment income was decreased by $17,576, accumulated undistributed net
realized gain on investments and foreign currency transactions was increased by
$2,493, and paid-in capital was increased by $15,083, due primarily to
differences between book and tax accounting for foreign currency transactions.
This change had no effect on the net assets or net asset value per share.
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 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 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 $7,013 for the year ended
October 31, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$54,931 for the year ended October 31, 1996, 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 $22,024 for the year
ended October 31, 1996. Payment of the 0.10% per annum Class A distribution fee
will commence on such date as the Trustees of the Trust may determine. Fees
incurred under the distribution plan during the year ended October 31, 1996 were
0.25% 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. 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 $10,481 and $1,061 for Class B and Class C
shares, respectively, for the year ended October 31, 1996. Fees incurred under
the distribution plans during the year ended October 31, 1996 were 1.00% of
average daily net assets attributable to Class B and Class C shares on an
annualized basis.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within 12 months following such 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.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class C shares in the event of a shareholder redemption within 12 months of
purchases made on or after April 1, 1996. MFD receives all contingent deferred
sales charges. Contingent deferred sales charges imposed during the year ended
October 31, 1996 were $700, $96,691 and $716 for Class A, Class B and Class C
shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the 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 $ 23,698,549 $ 19,896,841
============ ============
Investments (non-U.S. government securities) $134,166,312 $118,811,330
============ ============
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 $110,884,906
============
Gross unrealized appreciation $ 11,858,862
Gross unrealized depreciation (2,007,479)
------------
Net unrealized appreciation $ 9,851,383
============
(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
Year Ended October 31, 1996 Year Ended October 31, 1995
--------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,539,349 $ 22,019,033 2,699,306 $ 20,628,776
Shares issued to
shareholders in
reinvestment of
distributions 323,805 2,748,691 214,458 1,568,560
Shares reacquired (2,646,692) (22,729,788) (2,514,510) (18,778,516)
---------- ------------ ---------- ------------
Net increase 216,462 $ 2,037,936 399,254 $ 3,418,820
========== ============ ========== ============
Class B Shares
Year Ended October 31, 1996 Year Ended October 31, 1995
--------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,096,390 $ 35,220,452 4,097,196 $ 30,083,089
Shares issued to
shareholders in
reinvestment of
distributions 216,988 1,834,501 101,411 742,636
Shares reacquired (2,894,405) (24,930,962) (2,964,865) (21,644,727)
--------- ------------ --------- ------------
Net increase 1,418,973 $ 12,123,991 1,233,742 $ 9,180,998
========= ============ ========= ============
Class C Shares
Year Ended October 31, 1996 Year Ended October 31, 1995
--------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 734,010 $6,317,768 533,340 $3,878,012
Shares issued to
shareholders in
reinvestment of
distributions 32,617 276,082 14,452 106,396
Shares reacquired (466,623) (3,995,594) (286,745) (2,111,074)
------- ---------- ------- ----------
Net increase 300,004 $2,598,256 261,047 $1,873,334
======= ========== ======= ==========
(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, 1996 was $1,195.
<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, 1996, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the three 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, 1996, 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, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the three years in
the period then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 12, 1996
--------------------------------------------
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
<TABLE>
<C> <C>
TRUSTEES ASSISTANT SECRETARY
A. Keith Brodkin* - Chairman and President James R. Bordewick, Jr.*
Richard B. Bailey* - Private Investor; CUSTODIAN
Former Chairman and Director (until 1991), State Street Bank and Trust Company
Massachusetts Financial Services Company;
Director, Cambridge Bancorp; AUDITORS
Director, Cambridge Trust Company Ernst & Young LLP
Marshall N. Cohan - Private Investor INVESTOR INFORMATION
For MFS stock and bond market outlooks,
Lawrence H. Cohn, M.D. - Chief of Cardiac call toll free: 1-800-637-4458
Surgery, Brigham and Women's Hospital; anytime from a touch-tone telephone.
Professor of Surgery, Harvard Medical School
For information on MFS mutual funds,
The Hon. Sir J. David Gibbons, KBE - Chief call your financial adviser or, for an
Executive Officer, Edmund Gibbons Ltd.; information kit, call toll free:
Chairman, Bank of N.T. Butterfield & Son Ltd. 1-800-637-2929 any business day from
9 a.m. to 5 p.m. Eastern time (or leave
Abby M. O'Neill - Private Investor; a message anytime).
Director, Rockefeller Financial Services, Inc.
(investment advisers) INVESTOR SERVICE
MFS Service Center, Inc.
Walter E. Robb, III - President and Treasurer, P.O. Box 2281
Benchmark Advisors, Inc. (corporate financial Boston, MA 02107-9906
consultants); President, Benchmark Consulting
Group, Inc. (office services); Trustee, For general information, call toll free:
Landmark Funds (mutual funds) 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
Arnold D. Scott* - Senior Executive
Vice President, Director and Secretary, 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.
Jeffrey L. Shames* - President and Director, (To use this service, your phone must
Massachusetts Financial Services Company be equipped with a Telecommunications
Device for the Deaf.)
J. Dale Sherratt - President, Insight Resources,
Inc. (acquisition planning specialists) For share prices, account balances, and
exchanges, call toll free: 1-800-MFS-TALK
Ward Smith - Former Chairman (until 1994), (1-800-637-8255) anytime from a touch-tone
NACCO Industries; Director, Sundstrand Corporation telephone.
INVESTMENT ADVISER WORLD WIDE WEB
Massachusetts Financial Services Company www.mfs.com
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR [DALBAR For the third year in a row,
MFS Fund Distributors, Inc. LOGO] MFS earned a #1 ranking in
500 Boylston Street TOP RATED DALBAR, Inc. Broker/Dealer
Boston, MA 02116-3741 SERVICE Survey, Main Office Operations
Service Quality Category. The
PORTFOLIO MANAGER firm achieved a 3.48 overall score on a
Maura Shaughnessy* scale of 1 to 4 in the 1996 survey. A total
of 110 firms responded, offering input on the
TREASURER quality of service they received from 29
W. Thomas London* mutual fund companies nationwide. The survey
contained questions about service quality in
ASSISTANT TREASURER 15 categories, including "knowledge of phone
James O. Yost* service contacts," "accuracy of transaction
processing," and "overall ease of doing
SECRETARY business with the firm."
Stephen E. Cavan*
*Affiliated with the Investment Adviser
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MFS(R) UTILITIES FUND [DALBAR LOGO: #1 BULK RATE
TOP RATED SERVICE] U.S. POSTAGE
500 Boylston Street PAID
Boston, MA 02116 PERMIT #55638
BOSTON, MA
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[LOGO: M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)]
(C)1996 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116
MUF-2 12/96 16.5M 35/235/335
