<PAGE>
[MFS LOGO] SEMIANNUAL REPORT
INVESTMENT MANAGEMENT APRIL 30, 1997
MFS(RM) UTILITIES FUND
[GRAPHIC OMITTED]
LEARNING FINANCIAL BASICS THE EASY WAY (see page 26)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman ................................................... 1
Portfolio Manager's Overview ............................................... 3
Portfolio Manager's Profile ................................................ 4
Fund Facts ................................................................. 4
Performance Summary ........................................................ 5
Portfolio Concentration .................................................... 7
Portfolio of Investments ................................................... 8
Financial Statements .......................................................13
Notes to Financial Statements ..............................................20
The ABCs of Investing ......................................................26
It's Easy to Contact Us ....................................................27
The MFS Family of Funds(R) .................................................28
Trustees and Officers ......................................................29
- --------------------------------------------------------------------------------
HIGHLIGHTS
o FOR THE SIX MONTHS ENDED APRIL 30, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 10.66%, CLASS B SHARES
10.15%, CLASS C SHARES 10.27%, AND CLASS I SHARES 10.69%.
o THE FUND REMAINS OVERWEIGHTED IN NATURAL GAS PIPELINES BECAUSE THESE
COMPANIES HISTORICALLY HAVE OFFERED STRONG EARNINGS GROWTH PER SHARE, AN
ENVIRONMENTALLY FRIENDLY FUEL, GOOD RISK-MANAGEMENT AND MARKETING SKILLS,
AND LESS REGULATORY RISK THAN OTHER UTILITY SEGMENTS.
o IN THE DOMESTIC ELECTRIC UTILITY SECTOR, WE CONTINUE TO FOCUS ON
COMPANIES WITH REASONABLE VALUATIONS THAT ARE LOW-COST PROVIDERS IN
STRONG SERVICE TERRITORIES AND ON COMPANIES THAT ARE POSITIONING
THEMSELVES TO BENEFIT FROM DEREGULATION.
o THE FUND REMAINS UNDERWEIGHTED IN THE DOMESTIC TELECOMMUNICATIONS SECTOR
DUE TO UNCERTAINTY OVER THE IMPACT OF COMPETITION.
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
A. Keith Brodkin
Dear Shareholders:
After more than six years of expansion, the U.S. economy is experiencing another
year of growth in 1997, although a few signs point to the possibility of a
modest rise in inflation during the year. On the positive side, the pattern of
moderate growth and inflation set over the past few years now seems fairly well
entrenched in the economy and, short of a major international or domestic
crisis, appears to have enough momentum to remain on track for some time. Also,
gains in such important sectors as housing, automobiles, industrial production,
and exports indicate a fair amount of underlying strength in the economy. Some
of that strength was seen in the first quarter, when the U.S. economy grew at an
annualized rate of 5.6% (based on preliminary estimates), a pace that would be
inflationary in the unlikely event that it were to continue. The ongoing
tightness in the labor market could also add some inflationary pressures to the
economy. At the same time, there is some reason for caution as a result of the
continuing high level of consumer debt and rising personal bankruptcies. Given
these somewhat conflicting indicators, we expect real (inflation-adjusted)
growth to revolve around 2% in 1997, with the strength of the first quarter
moderating as we move through the balance of the year.
We continue to urge U.S. equity investors to remain cautious for 1997. Just as
the slowdown in corporate earnings growth and increases in interest rates in
1996 raised some near-term concerns, further interest-rate increases and the
fear of an acceleration of inflation have created extreme volatility in the
stock market in 1997. However, while the U.S. equity market enjoyed several
years without a major correction, we would like to point out that such downturns
are a natural part of the investment environment and, when they end, they often
result in more attractive valuations for stocks.
In the bond markets, conflicting signals over the strength of the economy have
also created near-term volatility, and the Federal Reserve Board (the Fed) has
begun taking measured steps to control inflation by raising short-term interest
rates. Although we do not expect a repeat of the rapid growth in the first
quarter, we would expect the Fed to raise interest rates at least one more time
in reaction to the economic momentum that was built up during the period. While
inflationary forces largely remained in check in 1996, the continued strength in
the labor market suggests that a pickup in inflation is still possible. At the
same time, the U.S. budget deficit continues to decline and, as a percentage of
gross domestic product, is now approaching 1%, which we consider a positive
development for the bond markets. Although interest rates may remain volatile
over the coming months, we believe that, at current levels, fixed-income markets
remain equitably valued.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
May 14, 1997
<PAGE>
PORTFOLIO MANAGER'S OVERVIEW
[Photo of Maura Shaughnessy]
Maura Shaughnessy
Dear Shareholders:
For the six months ended April 30, 1997, Class A shares of the Fund provided a
total return of 10.66%, Class B shares 10.15%, Class C shares 10.27%, and Class
I shares 10.69%. These returns, which include the reinvestment of distributions
but exclude the effects of any sales charges, compare to a -3.45% 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). For the same period, the S&P 500, an
unmanaged index of common stock total return performance, returned 14.71%.
Although the Fund has outperformed the Utility Index as well as the Lipper
Utility Fund Index (an unmanaged index representing the largest utility funds)
as tracked by Lipper Analytical Services, Inc., an independent firm that reports
mutual fund performance, which returned 4.63%, the Utility Index continues to
lag the overall market primarily due to poor performance by electric utility and
long-distance telephone stocks.
The Fund remains overweighted in natural gas pipelines because these
companies historically have offered: a) 10% to 15% earnings growth per share,
b) leverage to an environmentally friendly fuel, c) risk-management and
marketing skills that the electric utilities need to acquire, and d) less
regulatory risk than the other utility segments. Columbia Gas and KN Energy
are two of the Fund's largest natural gas positions.
The Fund is market weighted in the domestic electric utility sector. We
continue to focus on companies with reasonable valuations that are low-cost
providers in strong service territories and on companies that are positioning
themselves to benefit from deregulation. Certain utilities such as Sierra
Pacific Resources and CMS Energy trade at below-average valuations despite the
potential for relatively robust earnings and dividend growth.
Due to uncertainty over the impact of competition, the Fund remains
underweighted in the domestic telecommunications sector. In addition, many of
the large-capitalization companies need to build up their infrastructure, which
could prove quite costly in the short term (AT&T is the best example). WorldCom,
the nation's fourth-largest long-distance provider, is the Fund's largest
telecommunications position because it offers what we regard as an aggressive
management that is positioning the company correctly during this complex period.
Twenty-one percent of the Fund's assets are in the international markets due
to what we see as their generally higher growth rates, better regulatory
environments and, in some cases, very good valuations, albeit with higher risks.
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.
At the same time, Telebras, the leading Brazilian phone company, enjoys an
excellent combination of robust growth and restructuring potential.
Respectfully,
/s/ Maura Shaughnessy
Maura Shaughnessy
Portfolio Manager
---------------------------------------------------------------------------
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(R) UTILITIES FUND SINCE 1992. MS. SHAUGHNESSY
IS A CHARTERED FINANCIAL ANALYST (C.F.A.).
---------------------------------------------------------------------------
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FUND FACTS
STRATEGY: THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CAPITAL
GROWTH AND CURRENT INCOME (INCOME ABOVE THAT AVAILABLE
FROM A PORTFOLIO INVESTED ENTIRELY IN EQUITY
SECURITIES).
COMMENCEMENT OF
INVESTMENT OPERATIONS: CLASS A: FEBRUARY 14, 1992
CLASS B: SEPTEMBER 7, 1993
CLASS C: JANUARY 3, 1994
CLASS I: JANUARY 2, 1997
SIZE: $145.6 MILLION NET ASSETS AS OF APRIL 30, 1997
---------------------------------------------------------------------------
<PAGE>
PERFORMANCE SUMMARY
Because mutual funds like MFS Utilities Fund are designed for investors with
long-term goals, we have provided cumulative results as well as the average
annual total returns for Class A, Class B, Class C, and Class I shares for the
applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
AS OF APRIL 30, 1997
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
Life of
6 Months 1 Year 5 Years Fund*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +10.66% +19.76% +107.15% +106.78%
- ------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +19.76% + 15.68% + 14.96%
- ------------------------------------------------------------------------------------------------------------------------
SEC Results -- +14.05% + 14.56% + 13.91%
- ------------------------------------------------------------------------------------------------------------------------
CLASS B INVESTMENT RESULTS
(net asset value change including reinvested distributions)
Life of
6 Months 1 Year 5 Years Fund*
- ------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return +10.15% +18.73% +100.00% +99.69%
- ------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +18.73% + 14.87% +14.19%
- ------------------------------------------------------------------------------------------------------------------------
SEC Results -- +14.73% + 14.64% +14.08%
- ------------------------------------------------------------------------------------------------------------------------
CLASS C INVESTMENT RESULTS
(net asset value change including reinvested distributions)
Life of
6 Months 1 Year 5 Years Fund*
- ------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return +10.27% +18.77% +100.52% +100.21%
- ------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +18.77% + 14.93% + 14.25%
- ------------------------------------------------------------------------------------------------------------------------
SEC Results -- +17.77% + 14.93% + 14.25%
- ------------------------------------------------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
Life of
6 Months 1 Year 5 Years Fund*
- ------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return +10.69% +19.79% +107.24% +106.85%
- ------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +19.79% + 15.69% + 14.97%
- ------------------------------------------------------------------------------------------------------------------------
SEC Results -- +19.79% + 15.69% + 14.97%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
February 14, 1992, through April 30, 1997.
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
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. Class C share purchases are subject to a 1% CDSC
if redeemed within 12 months of purchase. Class I shares, which became available
on January 2, 1997, have no sales charge or Rule 12b-1 fees and are only
available to certain institutional investors.
Class B and Class C share SEC results include the performance and operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior
to the commencement of offering of Class B and Class C shares. Because operating
expenses attributable to Class B and Class C shares are higher than those of
Class A shares, Class B and Class C share performance generally would have been
lower than Class A share performance. The Class A share SEC performance included
in 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
sales charge generally applicable to Class A shares.
Class I share results include the performance and operating expenses (e.g., Rule
12b-1 fees) of Class A shares for periods prior to the commencement of offering
of Class I shares. Because operating expenses attributable to Class A shares are
greater than those of Class I shares, Class I share performance would have been
higher than Class A share performance. The Class A share performance included in
the Class I share performance has been adjusted to reflect the fact that Class I
shares have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies and
waivers may be discontinued at any time.
<PAGE>
PORTFOLIO CONCENTRATION AS OF APRIL 30, 1997
TOP 10 EQUITY HOLDINGS
<TABLE>
<CAPTION>
<S> <C>
COLUMBIA GAS SYSTEMS, INC. PUBLIC SERVICE COMPANY OF NEW MEXICO
Natural gas production and pipeline company New Mexico utility company
WORLDCOM, INC. SIERRA PACIFIC RESOURCES
Long-distance telephone provider Western U.S. gas utility
POWERGEN PLC GTE CORP.
British electric utility Telecommunications company
SBC COMMUNICATIONS, INC. TELECOMUNICACOES BRASILEIRAS S.A., ADR
Integrated telecommunications company Brazilian telecommunications company
PORTLAND GENERAL CORP. KN ENERGY, INC.
Oregon electric utility Natural gas services company
LARGEST SECTORS
</TABLE>
Utilities & Communications 79.7%
Financial Services 14.5%
Energy 3.9%
Technology 0.5%
Miscellaneous 1.2%
For a more complete breakdown, refer to the Portfolio of Investments.
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - April 30, 1997
<TABLE>
<CAPTION>
Stocks - 80.4%
- ---------------------------------------------------------------------------------------------------------
Issuer Shares Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 61.3%
Cellular Telephones - 0.7%
AirTouch Communications, Inc.* 41,800 $ 1,065,900
- ---------------------------------------------------------------------------------------------------------
Oils - 1.7%
Enron Oil & Gas Co. 63,000 $ 1,173,375
Union Pacific Resources Group, Inc. 50,000 1,356,250
------------
$ 2,529,625
- ---------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts - 11.9%
American General Hospitality Corp. 29,100 $ 716,588
Beacon Properties Corp. 44,100 1,361,587
Boykin Lodging Co. 42,200 907,300
Brandywine RealtyTrust 58,800 1,109,850
Carramerica Realty Corp. 54,600 1,521,975
Cornerstone Properties, Inc.* 40,700 595,238
First Industrial Realty Trust, Inc. 30,000 885,000
Hospitality Properties Trust 43,000 1,327,625
Innkeepers USA Trust 88,000 1,232,000
Liberty Property Trust 34,100 822,662
Mid-America Apartment Communities, Inc. 18,100 468,338
National Health Investors, Inc. 24,200 901,450
Oasis Residential, Inc. 40,000 890,000
Shurgard Storage Centers, Inc. 10,000 262,500
Sovran Self Storage, Inc. 25,000 706,250
Storage Trust Realty 59,400 1,425,600
TriNet Corporate Realty Trust, Inc. 40,500 1,351,687
Winston Hotels, Inc. 69,600 887,400
------------
$ 17,373,050
- ---------------------------------------------------------------------------------------------------------
Telecommunications - 7.1%
Brooks Fiber Properties, Inc.* 65,500 $ 1,424,625
Cellular Communications International, Inc.* 45,000 1,125,000
Cincinnati Bell, Inc. 5,000 280,000
LCI International, Inc.* 95,000 1,579,375
Teleport Communications Group, Inc., "A"* 33,000 940,500
US West Communications Group 42,000 1,475,250
WorldCom, Inc.* 145,420 3,490,080
------------
$ 10,314,830
- ---------------------------------------------------------------------------------------------------------
Utilities - Electric - 15.3%
CMS Energy Corp. 76,000 $ 2,413,000
Dominion Resources, Inc. 24,600 845,625
Edison International 92,000 1,932,000
FPL Group, Inc. 20,000 892,500
GPU, Inc. 75,000 2,418,750
Illinova Corp. 49,900 1,122,750
Long Island Lighting Co. 51,000 1,166,625
Pinnacle West Capital Corp. 62,900 1,792,650
Portland General Corp. 88,800 3,241,200
Public Service Company of Colorado 38,200 1,480,250
Public Service Company of New Mexico 184,000 3,059,000
Texas Utilities Co. 30,000 1,012,500
Western Gas Resources, Inc. 55,200 848,700
------------
$ 22,225,550
- ---------------------------------------------------------------------------------------------------------
Utilities - Gas - 18.1%
Brooklyn Union Gas Co. 41,000 $ 1,122,375
Coastal Corp. 23,000 1,092,500
Columbia Gas Systems, Inc. 79,400 4,912,875
Eastern Enterprises 12,000 406,500
Energen Corp. 79,500 2,514,187
KN Energy, Inc. 72,700 2,708,075
National Fuel Gas Co. 31,500 1,311,188
NGC, Corp. 80,000 1,410,000
PanEnergy Corp. 48,300 2,137,275
Sierra Pacific Resources 106,900 3,033,287
Sonat, Inc. 39,000 2,227,875
Southwestern Energy Co. 20,000 252,500
Tejas Gas Corp.* 50,000 2,075,000
Utilicorp United, Inc. 42,300 1,099,800
------------
$ 26,303,437
- ---------------------------------------------------------------------------------------------------------
Utilities - Telephone - 6.5%
GTE Corp. 62,650 $ 2,874,069
ICG Communications, Inc. 65,000 682,500
MCI Communications Corp. 18,400 701,500
NYNEX Corp. 35,000 1,811,250
SBC Communications, Inc. 59,532 3,304,026
------------
$ 9,373,345
- ---------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 89,185,737
- ---------------------------------------------------------------------------------------------------------
Foreign Stocks - 19.1%
Argentina - 1.7%
Central Costanera, ADR (Utilities - Electric)## 31,200 $ 1,111,500
Telefonica de Argentina, S.A., "B" ADR
(Utilities - Telephone) 40,000 1,330,000
------------
$ 2,441,500
- ---------------------------------------------------------------------------------------------------------
Brazil - 5.4%
Cia Eletricidade da Bahia (Utilities - Electric)* 27,200 $ 2,161,979
Cia Parana Energia, Preferred (Utilities - Electric) 136,200 2,120,318
Light Servicos de Eletricidade S.A., (Utilities -
Electric) 1,900 789,954
Telecomunicacoes Brasileiras S.A., ADR
(Utilities - Telephone) 24,200 2,758,800
------------
$ 7,831,051
- ---------------------------------------------------------------------------------------------------------
Canada - 0.7%
BCE, Inc. (Telecommunications) 21,000 $ 979,125
- ---------------------------------------------------------------------------------------------------------
Chile - 1.6%
Chilectra S.A., ADR (Utilities - Electric) 26,200 $ 1,611,300
Empresa Nacional de Electricidad, ADR (Utilities -
Electric) 35,000 673,750
------------
$ 2,285,050
- ---------------------------------------------------------------------------------------------------------
Hong Kong - 0.4%
Asia Satellite Telecommunications Holdings Ltd.
(Telecommunications) 233,000 $ 591,065
- ---------------------------------------------------------------------------------------------------------
Italy - 1.6%
Stet Societa Finanziaria Telefonica S.p.A.
(Utilities - Telephone) 139,000 $ 657,822
Telecom Italia S.p.A. (Telecommunications) 100,000 215,727
Telecom Italia S.p.A., Saving Shares
(Telecommunications) 810,000 1,498,772
------------
$ 2,372,321
- ---------------------------------------------------------------------------------------------------------
Peru - 1.3%
CPT Telefonica del Peru S.A., "B" (Utilities -
Telephone) 264,700 $ 637,903
Telefonica del Peru S.A., ADR, "B" (Utilities -
Telephone) 50,800 1,219,200
------------
$ 1,857,103
- ---------------------------------------------------------------------------------------------------------
Portugal - 0.8%
Portugal Telecom S.A. (Utilities - Telephone) 24,600 $ 908,186
Portugal Telecom S.A., ADR (Utilities - Telephone) 9,500 351,500
------------
$ 1,259,686
- ---------------------------------------------------------------------------------------------------------
South Korea
Korea Mobile Telecommunications (Utilities -
Telephone) 15 $ 11,528
- ---------------------------------------------------------------------------------------------------------
Spain - 0.8%
Iberdrola S.A. (Utilities - Electric) 100,000 $ 1,130,757
- ---------------------------------------------------------------------------------------------------------
United Kingdom - 4.8%
Cable & Wireless PLC (Telecommunications) 30,000 $ 693,750
National Grid Group (Utilities - Electric) 450,000 1,621,377
National Power (Utilities - Electric) 158,600 1,369,409
PowerGen PLC (Utilities - Electric)* 323,050 3,387,043
------------
$ 7,071,579
- ---------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 27,830,765
- ---------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $106,894,668) $117,016,502
- ---------------------------------------------------------------------------------------------------------
Bonds - 16.2%
- ---------------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------------------------------
U.S. Bonds - 15.0%
Airlines - 0.4%
Delta Air Lines, Inc., 8.5s, 2002 $ 500 $ 523,655
- ---------------------------------------------------------------------------------------------------------
Forest and Paper Products - 0.3%
Boise Cascade Co., 7.43s, 2005 $ 450 $ 438,188
- ---------------------------------------------------------------------------------------------------------
Oil Services - 0.3%
Transcontinental Gas Pipe Line, 7.25s, 2026 $ 405 $ 387,281
- ---------------------------------------------------------------------------------------------------------
Oils - 0.7%
Husky Oil Ltd., 7.125s, 2006 $ 1,000 $ 974,850
- ---------------------------------------------------------------------------------------------------------
Telecommunications - 0.1%
Rogers Cablesystems, Inc., 10.125s, 2012 $ 200 $ 204,500
- ---------------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 6.2%
Government National Mortgage Association - 2.0%
GNMA, 8s, 2017 - 2025 $ 786 $ 805,303
GNMA, 8.5s, 2026 - 2026 1,955 2,017,790
------------
$ 2,823,093
- ---------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 4.2%
U.S. Treasury Notes, 9.25s, 1998 $ 500 $ 519,220
U.S. Treasury Notes, 9.125s, 1999 1,000 1,053,280
U.S. Treasury Bonds, 10.75s, 2005 3,200 4,001,504
U.S. Treasury Bonds, 9.875s, 2015 450 582,327
------------
$ 6,156,331
- ---------------------------------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 8,979,424
- ---------------------------------------------------------------------------------------------------------
Utilities - Electric - 2.9%
Arkansas Power & Light Co., 8.75s, 2026 $ 500 $ 493,550
Cleveland Electric Illuminating Co., 9.375s, 2017 220 226,004
Long Island Lighting Co., 9s, 2022 500 541,835
Long Island Lighting Co., 8.2s, 2023 500 503,060
Louisiana Power & Light Co., 8.75s, 2026 250 249,945
Midland Cogeneration Venture Corp., 10.33s, 2002 444 475,431
Montana Power Co., 7.875s, 2026 500 485,000
System Energy Resources, 7.38s, 2000 500 493,185
Texas & New Mexico Power Co., 12.5s, 1999 300 322,749
Utilicorp United, Inc., 8.45s, 1999 500 517,440
------------
$ 4,308,199
- ---------------------------------------------------------------------------------------------------------
Utilities - Gas - 3.8%
Coastal Corp., 7.42s, 2037 $ 1,500 $ 1,426,455
Louis Dreyfus Natural Gas Corp., 9.25s, 2004 500 529,020
Oryx Energy Co., 10s, 2001 500 543,765
Tennessee Gas Pipeline Co., 7.625s, 2037 1,000 969,900
Tosco Corp., 7.625s, 2006 2,000 2,025,440
------------
$ 5,494,580
- ---------------------------------------------------------------------------------------------------------
Other - 0.3%
Paramount Communications, Inc., 7.5s, 2002 $ 500 $ 497,115
- ---------------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 21,807,792
- ---------------------------------------------------------------------------------------------------------
Foreign Bonds - 1.2%
Argentina - 0.1%
Hidroelectrica Alicura, 8.375s, 1999 (Utilities -
Electric)## $ 150 $ 149,812
- ---------------------------------------------------------------------------------------------------------
Chile - 1.1%
Empresa Electrica Del Norts, 7.75s, 2006
(Utilities - Electric)## $ 600 $ 578,250
Empresa Electric Guacolda S.A., 7.6s, 2001
(Utilities - Electric)## 500 503,310
Enersis S.A., 6.9s, 2006 (Utilities - Electric) 500 474,555
------------
$ 1,556,115
- ---------------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 1,705,927
- ---------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $23,783,512) $ 23,513,719
- ---------------------------------------------------------------------------------------------------------
Convertible Bond - 0.9%
- ---------------------------------------------------------------------------------------------------------
Financial Institutions - 0.9%
ADT Operations, Inc., 0s, 2010
(Identified Cost, $1,117,953) $ 1,720 $ 1,345,900
- ---------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks - 0.9%
- ---------------------------------------------------------------------------------------------------------
U.S. - 0.4%
Aes Trust I, (Utilities - Electric)* $ 12 $ 671,888
- ---------------------------------------------------------------------------------------------------------
Argentina - 0.5%
Compania Inversiones Telephone, 7%*
(Utilities - Telephone)## $ 11 697,600
- ---------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost, $1,176,475) $ 1,369,488
- ---------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $132,972,608) $143,245,609
Other Assets, Less Liabilities - 1.6% 2,338,918
- ---------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $145,584,527
- ---------------------------------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
<TABLE>
- ------------------------------------------------------------------------------------------
April 30, 1997
- ------------------------------------------------------------------------------------------
<CAPTION>
Assets:
<S> <C>
Investments, at value (identified cost, $132,972,608) $143,245,609
Cash 1,383,740
Receivable for Fund shares sold 775,175
Receivable for investments sold 1,818,049
Interest and dividends receivable 945,305
Deferred organization expenses 8,492
Other assets 5,031
------------
Total assets $148,181,401
------------
Liabilities:
Distributions payable $ 82,365
Payable for Fund shares reacquired 118,251
Payable for investments purchased 2,246,617
Payable to affiliates -
Management fee 1,980
Administrative fee 59
Shareholder servicing agent fee 440
Distribution and service fee 36,489
Accrued expenses and other liabilities 110,673
------------
Total liabilities $ 2,596,874
------------
Net assets $145,584,527
============
Net assets consist of:
Paid-in capital $125,326,355
Unrealized appreciation on investments and translation of assets and
liabilities in foreign currencies 10,272,281
Accumulated undistributed net realized gain on investments and foreign
currency transactions 10,090,536
Accumulated distributions in excess of net investment income (104,645)
------------
Total $145,584,527
============
Shares of beneficial interest outstanding 16,079,779
==========
Class A shares:
Net asset value per share
(net assets of $68,499,820 / 7,556,054 shares of beneficial interest
outstanding) $9.07
=====
Offering price per share (100 / 95.25 of net value per share) $9.52
=====
Class B shares:
Net asset value and offering price per share
(net assets of $64,073,994 / 7,086,542 shares of beneficial interest
outstanding) $9.04
=====
Class C shares:
Net asset value and offering price per share
(net assets of $12,353,329 / 1,364,705 shares of beneficial interest
outstanding) $9.05
=====
Class I shares:
Net asset value and offering price per share
(net assets of $657,384 / 72,478 shares of beneficial interest
outstanding) $9.07
=====
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
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- -------------------------------------------------------------------------------
Six Months Ended April 30, 1997
- -------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 2,051,332
Interest 1,080,965
Foreign taxes withheld (54,631)
------------
Total investment income $ 3,077,666
------------
Expenses -
Management fee $ 439,703
Administrative fee 3,601
Trustees' compensation 21,598
Shareholder servicing agent fee (Common) 59,456
Shareholder servicing agent fee (Class A) 15,832
Shareholder servicing agent fee (Class B) 19,552
Shareholder servicing agent fee (Class C) 2,315
Distribution and service fee (Class A) 80,942
Distribution and service fee (Class B) 292,290
Distribution and service fee (Class C) 51,577
Printing 36,707
Custodian fee 28,915
Auditing fees 22,677
Postage 19,141
Amortization of organization expenses 1,902
Legal fees 1,192
Miscellaneous 79,277
------------
Total expenses $ 1,176,677
Reduction of expenses by investment adviser (173,270)
------------
Net expenses $ 1,003,407
------------
Net investment income $ 2,074,259
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $10,413,549
Foreign currency transactions (11,510)
-----------
Net realized gain on investments and foreign
currency transactions $10,402,039
-----------
Change in unrealized appreciation -
Investments $ 115,890
Translation of assets and liabilities in foreign currencies (1,378)
-----------
Net unrealized gain on investments and foreign
currency translation $ 114,512
-----------
Net realized and unrealized gain on investments
and foreign currency $10,516,551
-----------
Increase in net assets from operations $12,590,810
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months Ended
April 30, 1997 Year Ended
(Unaudited) October 31, 1996
- -------------------------------------------------------------------------------------------------
Increase in net assets:
From operations -
<S> <C> <C>
Net investment income $ 2,074,259 $ 4,111,581
Net realized gain on investments and foreign
currency transactions 10,402,039 10,538,725
Net unrealized gain on investments and foreign
currency translation 114,512 2,216,109
------------ ------------
Increase in net assets from operations $ 12,590,810 $ 16,866,415
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,409,928) $ (2,063,623)
From net investment income (Class B) (1,011,863) (1,256,601)
From net investment income (Class C) (181,894) (199,785)
From net investment income (Class I) (11,245) --
From net realized gain on investments and foreign
currency transactions (Class A) (5,350,416) (1,254,112)
From net realized gain on investments and foreign
currency transactions (Class B) (4,454,053) (921,552)
From net realized gain on investments and foreign
currency transactions (Class C) (782,366) (134,537)
From net realized gain on investments and foreign
currency transactions (Class I) -- --
------------ ------------
Total distributions declared to shareholders $(13,201,765) $ (5,830,210)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 39,247,691 $ 63,557,253
Net asset value of shares issued to shareholders
in reinvestment of distributions 10,917,034 4,859,274
Cost of shares reacquired (22,421,796) (51,656,344)
------------ ------------
Increase in net assets from Fund share
transactions $ 27,742,929 $ 16,760,183
------------ ------------
Total increase in net assets $ 27,131,974 $ 27,796,388
Net assets:
At beginning of period 118,452,553 90,656,165
------------ ------------
At end of period (including accumulated undistributed
(distributions in excess of net investment income) and
accumulated undistributed net investment income of
($104,645) and $436,026, respectively) $145,584,527 $118,452,553
============ ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 1997 ---------------------------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992*
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 9.12 $ 8.20 $ 7.00 $ 7.86 $ 6.68 $ 6.33
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.16 $ 0.38 $ 0.31 $ 0.33 $ 0.40 $ 0.17
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 0.77 1.07 1.22 (0.63) 1.19 0.30
------ ------ ------ ------ ------ ------
Total from investment operations $ 0.93 $ 1.45 $ 1.53 $(0.30) $ 1.59 $ 0.47
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.68) $(0.32) $(0.33) $(0.35) $(0.38) $(0.12)
From net realized gain on investments
and foreign currency transactions (0.30) (0.21) -- (0.21) (0.03) --
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.98) $(0.53) $(0.33) $(0.56) $(0.41) $(0.12)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.07 $ 9.12 $ 8.20 $ 7.00 $ 7.86 $ 6.68
====== ====== ====== ====== ====== ======
Total return(+) 10.66%++ 18.41% 22.48% (3.89)% 24.39% 11.02%+
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.10%+ 1.08% 0.83% 0.65% 0.65% 0.65%+
Net investment income 3.51%+ 4.37% 4.30% 4.58% 4.57% 5.44%+
Portfolio turnover 77% 137% 152% 115% 119% 63%
Average commission rate###
$0.0419 $0.0422 $ -- $ -- $ -- $ --
Net assets at end of period (000
omitted) $68,500 $60,345 $52,474 $42,027 $43,423 $12,859
<CAPTION>
*For the period from the commencement of investment operations,
February 14, 1992, to October 31, 1992.
+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.
(+)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 the ratios would have been:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $ 0.15 $ 0.34 $ 0.28 $ 0.28 $ 0.31 $ 0.13
Ratios (to average net assets):
Expenses## 1.36%+ 1.42% 1.23% 1.41% 1.68% 2.63%+
Net investment income 3.25%+ 4.03% 3.90% 3.82% 4.20% 3.46%+
</TABLE>
See notes to financial statements
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 1997 -------------------------------------------------------
(Unaudited) 1996 1995 1994 1993**
- ------------------------------------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 9.10 $ 8.18 $ 6.98 $ 7.84 $ 7.83
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.11 $ 0.31 $ 0.24 $ 0.25 $ 0.05
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.77 1.07 1.22 (0.63) 0.01
------ ------ ------ ------ ------
Total from investment operations $ 0.88 $ 1.38 $ 1.46 $(0.38) $ 0.06
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.64) $(0.25) $(0.26) $(0.27) $(0.05)
From net realized gain on investments and
foreign currency transactions (0.30) (0.21) -- (0.21) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.94) $(0.46) $(0.26) $(0.48) $(0.05)
------ ------ ------ ------ ------
Net asset value - end of period $ 9.04 $ 9.10 $ 8.18 $ 6.98 $ 7.84
====== ====== ====== ====== ======
Total return 10.15%++ 17.50% 21.43% (4.92)% 0.69%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.89%+ 1.89% 1.74% 1.72% 1.50%+
Net investment income 2.74%+ 3.53% 3.33% 3.51% 1.80%+
Portfolio turnover 77% 137% 152% 115% 119%
Average commission rate### $0.0419 $0.0422 $ -- $ -- $ --
Net assets at end of period (000 omitted) $64,074 $49,877 $33,239 $19,774 $ 5,412
<CAPTION>
**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 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 the ratios would have been:
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $ 0.11 $ 0.28 $ 0.21 $ 0.20 $(0.07)
Ratios (to average net assets):
Expenses## 2.15%+ 2.23% 2.14% 2.48% 3.27%+
Net investment income 2.48%+ 3.19% 2.93% 2.74% 1.53%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
April 30, 1997 --------------------------------------------
(Unaudited) 1996 1995 1994***
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
- ----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 9.10 $ 8.18 $ 6.99 $ 7.48
------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.13 $ 0.31 $ 0.24 $ 0.25
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 0.77 1.07 1.21 (0.54)
------ ------ ------ ------
Total from investment operations $ 0.90 $ 1.38 $ 1.45 $(0.29)
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.65) $(0.25) $(0.26) $(0.20)
From net realized gain on investments and foreign
currency transactions (0.30) (0.21) -- --
------ ------ ------ ------
Total distributions declared to shareholders $(0.95) $(0.46) $(0.26) $(0.20)
------ ------ ------ ------
Net asset value - end of period $ 9.05 $ 9.10 $ 8.18 $ 6.99
====== ====== ====== ======
Total return 10.27%++ 17.57% 21.19% (3.87)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.86%+ 1.82% 1.81% 1.65%+
Net investment income 2.78%+ 3.60% 3.32% 3.56%+
Portfolio turnover 77% 137% 152% 115%
Average commission rate### $0.0419 $0.0422 $ -- $ --
Net assets at end of period (000 omitted) $12,353 $ 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 the ratios would have been:
<S> <C> <C> <C> <C>
Net investment income $ 0.11 $ 0.28 $ 0.21 $ 0.20
Ratios (to average net assets):
Expenses## 2.12%+ 2.16% 2.21% 2.41%+
Net investment income 2.52%+ 3.26% 2.83% 2.80%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
FINANCIAL HIGHLIGHTS - continued
- --------------------------------------------------------------------------------
Period Ended
April 30, 1997****
(Unaudited)
- --------------------------------------------------------------------------------
Class I
- --------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 8.90
------
Income from investment operations# -
Net investment income(S) $ 0.14
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.15
------
Total from investment operations $ 0.29
------
Less distributions declared to shareholders -
From net investment income $(0.12)
From net realized gain on investments and foreign
currency transactions --
------
Total distributions declared to shareholders $(0.12)
------
Net asset value - end of period $ 9.07
======
Total return 3.25%++ Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.87%+
Net investment income 3.51%+
Portfolio turnover 77%
Average commission rate### $0.0419
Net assets at end of period (000 omitted) $657
****For the period from the commencement of offering of Class I shares,
January 2, 1997, to April 30, 1997.
+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 the ratios would have been:
Net investment income $ 0.10
Ratios (to average net assets):
Expenses 1.13%+
Net investment income 3.25%+
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS Utilities Fund (the Fund) is a non-diversified series of MFS Series Trust VI
(the Trust). The Trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(2) Significant Accounting Policies
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 reported at market value using 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 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 as unrealized until the contract settlement date. On contract
settlement date the gains or losses are recorded as realized foreign currency
transactions.
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.
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.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B, Class C, and Class I shares. The four classes of shares differ in their
respective 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 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
preliminary reduction of expenses in the Statement of Operations.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain of the officers and Trustees of
the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD),
and MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit
plan for all its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $3,773 for the period ended
April 30, 1997.
Administrator - Effective March 1, 1997, the Trust has an administrative
services agreement with MFS to provide the Trust with certain financial, legal,
compliance, shareholder communications, and other administrative services. As
partial reimbursement for the cost of providing these services, each Fund pays
MFS an administrative fee up to 0.015% per annum of each Fund's average daily
net assets, provided that the administrative fee is not assessed on Fund assets
that exceed $3 billion.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$28,576 for the period ended April 30, 1997, as its portion of the sales charge
on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee 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 $13,471 for the period ended April 30,
1997. 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 period ended April 30, 1997, were 0.25% of average
daily net assets attributable to Class A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be 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 $6,562 and $1,151 for Class B and Class C shares,
respectively, for the period ended April 30, 1997. Fees incurred under the
distribution plans during the period ended April 30, 1997, 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 period ended
April 30, 1997, were $93, $56,319 and $2,482 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 each Fund's average daily net assets at an effective annual rate
of 0.13%. Prior to January 1, 1997, the fee was calculated as a percentage of
each Fund's 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 $ 13,037,599 $16,466,344
============ ===========
Investments (non-U.S. government securities) $100,515,860 $85,631,866
============ ===========
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 $132,972,608
============
Gross unrealized appreciation $ 13,612,937
Gross unrealized depreciation (3,339,936)
------------
Net unrealized appreciation $ 10,273,001
============
(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
<TABLE>
<CAPTION>
Six Months Ended April 30, 1997 Year Ended October 31, 1996
------------------------------- --------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,531,944 $13,966,088 2,539,349 $22,019,033
Shares issued to shareholders in
reinvestment of distributions 637,838 5,652,907 323,805 2,748,691
Shares transferred to Class I (120,449) (1,071,996) -- --
Shares reacquired (1,112,341) (10,025,593) (2,646,692) (22,729,788)
--------- ----------- --------- -----------
Net increase 936,992 $ 8,521,406 216,462 $ 2,037,936
========= =========== ========= ===========
<CAPTION>
Class B Shares
Six Months Ended April 30, 1997 Year Ended October 31, 1996
------------------------------- ---------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,186,673 $19,834,875 4,096,390 $35,220,452
Shares issued to shareholders in
reinvestment of distributions 509,102 4,496,881 216,988 1,834,501
Shares reacquired (1,092,968) (9,914,793) (2,894,405) (24,930,962)
--------- ----------- --------- -----------
Net increase 1,602,807 $14,416,963 1,418,973 $12,123,991
========= =========== ========= ===========
<CAPTION>
Class C Shares
Six Months Ended April 30, 1997 Year Ended October 31, 1996
------------------------------- ---------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 477,884 $4,347,856 734,010 $6,317,768
Shares issued to shareholders in
reinvestment of distributions 85,501 756,105 32,617 276,082
Shares reacquired (102,730) (926,968) (466,623) (3,995,594)
------- ---------- ------- ----------
Net increase 460,655 $4,176,993 300,004 $2,598,256
======= ========== ======= ==========
</TABLE>
Class I Shares
Period Ended April 30, 1997*
----------------------------
Shares Amount
- -----------------------------------------------------------------------
Shares sold 3,016 $ 26,876
Shares transferred from Class A 120,449 1,071,996
Shares issued to shareholders in
reinvestment of distributions 1,225 11,141
Shares reacquired (52,212) (482,446)
------ ----------
Net increase 72,478 $ 627,567
====== ==========
*For the period from the commencement of offering of Class I shares, January
2, 1997, to April 30, 1997.
(6) Line of Credit
The Fund and other affiliated funds participate in a $400 million unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average daily
unused portion of the line of credit, is allocated among the participating funds
at the end of each quarter. The commitment fee allocated to the Fund for the
period ended April 30, 1997, was $611.
--------------------------------------
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>
<S> <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; Director, INVESTOR INFORMATION
Cambridge Trust Company For MFS stock and bond market outlooks, call
toll free: 1-800-637-4458 anytime from a
Marshall N. Cohan - Private Investor touch-tone telephone. For information on MFS
mutual funds, call your financial adviser
Lawrence H. Cohn, M.D. - Chief of Cardiac or, for an information kit, call toll free:
Surgery, Brigham and Women's Hospital; 1-800-637-2929 any business day from 9 a.m.
Professor of Surgery, Harvard Medical School to 5 p.m. Eastern time (or leave a message
anytime).
The Hon. Sir J. David Gibbons, KBE - Chief
Executive Officer, Edmund Gibbons Ltd.; INVESTOR SERVICE
Chairman, Bank of N.T. Butterfield & Son Ltd. MFS Service Center, Inc.
P.O. Box 2281
Abby M. O'Neill - Private Investor; Boston, MA 02107-9906
Director, Rockefeller Financial Services,
Inc. (investment advisers) For general information, call toll free:
1-800-225-2606 any business day from
Walter E. Robb, III - President and 8 a.m. to 8 p.m. Eastern time.
Treasurer, Benchmark Advisors, Inc.
(corporate financial consultants); For service to speech-or hearing-impaired,
President, Benchmark Consulting Group, Inc. call toll free: 1-800-637-6576 any business
(office services); Trustee, Landmark Funds day from 9 a.m. to 5 p.m. Eastern time. (To
(mutual funds) use this service, your phone must be
equipped with a Telecommunications Device
Arnold D. Scott* - Senior Executive Vice for the Deaf.)
President, Director and Secretary,
Massachusetts Financial Services Company For share prices, account balances, and
exchanges, call toll free: 1-800-MFS-TALK
Jeffrey L. Shames* - President and Director, (1-800-637-8255) anytime from a touch-tone
Massachusetts Financial Services Company telephone.
J. Dale Sherratt - President, Insight WORLD WIDE WEB
Resources, Inc. (acquisition planning www.mfs.com
specialists)
----------------------------------------------
Ward Smith - Former Chairman (until 1994), [DALBAR Logo] For the third year in a
NACCO Industries; Director, Sundstrand row, MFS earned a #1
Corporation ranking in the DALBAR, Inc. Broker/
Dealer Survey, Main Office Operations
INVESTMENT ADVISER Service Quality Category. The firm
Massachusetts Financial Services Company achieved a 3.48 overall score on a
500 Boylston Street scale of 1 to 4 in the 1996 survey.
Boston, MA 02116-3741 A total of 110 firms responded,
offering input on the quality of
DISTRIBUTOR service they received from 29 mutual
MFS Fund Distributors, Inc. fund companies nationwide. The survey
500 Boylston Street contained questions about service
Boston, MA 02116-3741 quality in 15 categories, including
"knowledge of phone service
PORTFOLIO MANAGER contacts," "accuracy of transaction
Maura Shaughnessy* processing," and "overall ease of
doing business with the firm."
TREASURER ----------------------------------------------
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
------------
MFS(R) UTILITIES [DALBAR Logo] Bulk Rate
FUND U.S. Postage
500 Boylston Street P A I D
Boston, MA 02116-3741 MFS
------------
[MFS logo]
INVESTMENT MANAGEMENT
WE INVENTED THE MUTUAL FUND(SM)
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MUF-3 6/97 22M 35/235/335/835
