MFS(R) Variable Insurance Trust(SM)
MFS(R) Utilities Series
Semiannual Report
June 30, 1995
<PAGE>
Dear Contract Owner:
A general slowdown in most major economies has resulted in favorable performance
for both stock and bond markets around the world during the past six months.
Yields on many fixed-income securities declined over the period, resulting in
favorable price performance for these investments. At the same time, the decline
in interest rates and strong corporate earnings reports caused many stock prices
to rise over the period, producing strong returns. For the six months ended June
30, 1995, the market, as measured by the Standard & Poor's 500 Composite Index
(the S&P 500), a popular, unmanaged index of common stock performance, returned
+20.19%.
U.S. Outlook
In response to increasing evidence of economic weakness during the second
quarter, the Federal Reserve Board has reversed policy by lowering the federal
funds rate 0.25%. This marks the first time in three years that this rate has
been lowered, and brings the Federal Reserve's 18-month monetary-tightening
initiative to at least a temporary conclusion. Although inflation at the
consumer level has been trending higher this year at a 3 1/2% annualized rate,
recent evidence suggests that these pressures are beginning to moderate,
allowing the Federal Reserve to shift its policy focus toward sustaining
economic growth. Despite the economy's apparent lackluster performance in the
second quarter, we do not anticipate that the economy will lapse into recession.
Rather, we believe it will continue to expand at a more moderate, sustainable
pace, supported by lower prevailing interest rates and a healthy export sector.
Global Outlook
Economic recoveries in both Europe and Japan have been inhibited by the strength
of the yen and deutsche mark against the U.S. dollar. These export-led
expansions are struggling to compete in a global marketplace in which their
products are less competitively priced. Consumer sectors in these economies have
been impaired by relatively high unemployment rates and continued low growth in
domestic money supplies. Recently, the Bank of Japan lowered interest rates in
an effort to stimulate domestic demand as well as to arrest the strength of the
yen against the dollar. Germany's Bundesbank lowered rates in March, yet it
appears that controlled inflation and sluggish domestic demand should leave it
with further room to ease. Our view is that the global expansion remains intact,
yet at a sluggish pace, particularly in Japan. Inflation in overseas economies
remains in a downward trend, providing fixed-income investors with opportunities
for relatively attractive real (adjusted for inflation) rates of interest,
possibly accompanied by moderate price appreciation. While we view emerging
markets with caution, selected opportunities exist in both fixed-income and
equity markets, particularly at the more attractive levels resulting from
selloffs in many of those markets last year. Recently, the U.S. dollar has
stabilized in world currency markets. Although we believe that the dollar
continues to represent a sound store of value over the long term, in the near
term its relative strength will be restrained by the persistently large U.S.
current-account deficit.
Bond Markets
As the economy's ability to create jobs has diminished along with its use of
available productive capacity, fixed-income markets have become increasingly
convinced that inflationary pressures will remain subdued. As a result,
long-term U.S. Treasury bond yields have declined to 6.50% from their 7.85%
level at the beginning of the year. As bond yields continued to decline, it
became apparent that the markets had been anticipating an easing of the Federal
Reserve's policy. Now that the easing has begun, we believe that prevailing
rates may consolidate near present levels in the near term. Longer term, we feel
that continuing moderate growth should result in interest rates maintaining
their present levels or perhaps declining moderately over the balance of this
year.
The general slowdown of world economies has resulted in solid performance in
world bond markets during the past six months. European markets continue to be
buoyed by slow growth, low and controlled inflation and recent interest rate
cuts from key central banks. The Japanese market also has been strong as anemic
economic growth and consumer price deflation have helped interest rates stage a
major decline. We remain positive on overseas markets because we anticipate
<PAGE>
continued slow growth and minimal inflationary pressures.
Stock Market
The U.S. stock market has maintained its upward momentum as stock prices have
responded to the cessation of the Federal Reserve's monetary-tightening
initiative and to the belief that gains in corporate earnings may remain
substantial. Although we expect growth to remain moderate, our outlook for
corporate earnings growth remains favorable. We have been de-emphasizing many
cyclical areas such as autos and basic materials because of their less
attractive earnings outlook and have been emphasizing growth areas such as
technology, health care, consumer and household products, and financial
services.
Comments from the portfolio manager of this Series are presented below. We
appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin /s/ Maura Shaughnessy
A. Keith Brodkin Maura Shaughnessy
Chairman and President Portfolio Manager
July 18, 1995
MFS(R) Utilities Series
Currently, the portfolio of MFS Utilities Series is market-weighted relative to
the Standard & Poor's Utility Index (the S&P Utility Index) in domestic
utilities. The S&P Utility Index is an unmanaged, market-value-weighted total
return index of all utility stocks in the S&P 500. Over the past six months,
this sector has underperformed the S&P Utility Index because investors fear that
new competition entering the industry over the next several years may threaten
the earnings and dividend-paying power of all electric utilities. However,
certain states which wanted to take aggressive steps to implement change have
slowed their pace dramatically. This has been viewed positively not only for the
utilities in those states, but for the industry as a whole. We plan to continue
to invest in companies which have positioned themselves for this changing
environment and which offer relatively robust earnings and dividend growth
potential.
The telecommunications sector, which underperformed the S&P Utility Index during
the past six months, has been underweighted in the portfolio. Many companies in
this sector are benefiting from solid growth in their core business, in part
driven by a strong economy. Ancillary services such as call waiting and caller
identification are helping to drive revenues as well. However, we believe that
fears of legislative action will affect this industry and will create
uncertainty until legislation is finally passed. In addition, to fund the
information superhighway , much capital is required, while the returns on some
of this capital currently are unclear. In spite of this, we believe certain
companies like MCI Communications and AT&T have been hurt unduly by legislative
and dilution fears. We believe both of these companies are well-positioned for a
more competitive telecommunications environment, whether that competition is
driven by legislation or the market or both.
We have continued to overweight gas utilities. This sector has outperformed the
S&P Utility Index recently as investors have perceived that they have seen the
lows in commodity prices. Finally, Real Estate Investment Trusts (REITs)
currently comprise about 14% of the Series' total assets because we believe
these investments offer above-average dividend growth with superior yield
potential. In keeping with our strategy of remaining well-diversified, we have
invested in apartment, storage, health care, factory-outlet and
manufactured-housing REITs.
<PAGE>
Portfolio Manager Profile
Maura Shaughnessy joined MFS in 1991 as an equity analyst. A graduate of Colby
College and the Amos Tuck School of Business at Dartmouth College, she was
promoted to Assistant Vice President in 1992 and Vice President in 1993. She has
managed MFS Utilities Series since March of 1992. Ms. Shaughnessy is a Chartered
Financial Analyst.
Objective and Policies
MFS Utilities Series' investment objective is to seek capital growth and current
income (income above that available from a portfolio invested entirely in equity
securities).
The MFS Utilities Series will seek to achieve its objective by investing, under
normal circumstances, at least 65% (but up to 100% at the discretion of the
Adviser) of its assets in equity and debt securities of both domestic and
foreign companies in the utilities industry. Equity securities in which the
Series may invest include common stocks, preferred stocks, securities
convertible into common stocks or preferred stocks, and warrants to purchase
common or preferred stocks. At least 80% of the debt securities held by the
Series will be rated at the time of investment at least Baa by Moody's or BBB by
S&P or by Fitch or will be of comparable quality as determined by the Adviser.
The Series may also invest in debt and equity securities of issuers in other
industries, although under normal circumstances not more than 35% of the Series'
assets will be so invested. In addition, the Series may hold a portion of its
assets in cash and money market instruments.
Performance Summary
The aggregate total return from January 3, 1995+ to June 30, 1995 was +12.60%.
All Series results represent past performance and are not necessarily an
indication of future results. Investment return and principal value will
fluctuate, and units, when redeemed, may be worth more or less than their
original cost. All Series 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. All Series results do not reflect expenses that would be
imposed by insurance company separate accounts.
+ Commencement of offering of shares.
<PAGE>
MFS Variable Insurance Trust --
MFS Utilities Series
Portfolio of Investments -- June 30, 1995
Common Stocks -- 97.3%
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
Real Estate Investment Trusts -- 14.0%
Factory Stores America, Inc. 400 $ 8,200
Meditrust Corp. 350 11,944
National Health Investors, Inc. 1,050 28,612
ROC Communities, Inc. 1,000 22,125
Reckson Associates Realty Corp. 200 4,850
Shurgard Storage Centers, Inc. 600 13,800
Sovran Self Storage, Inc. 900 20,700
Storage Equities, Inc. 1,500 24,563
Storage USA, Inc. 400 11,350
Sun Communities, Inc. 500 12,500
----------
$ 158,644
- --------------------------------------------------------------------------------
Telecommunications -- 8.0%
ALC Communications Corp.* 1,100 $ 49,637
AirTouch Communications, Inc.* 500 14,250
Portugal Telecom, ADR* 600 11,400
WorldCom, Inc.* 600 16,200
----------
$ 91,487
- --------------------------------------------------------------------------------
Utilities -- Electric -- 33.3%
CMS Energy Corp. 950 $ 23,394
Central Costanera, ADR## 600 19,386
DPL, Inc. 1,000 22,125
Eastern Utilities Assn 950 21,494
Empresa Nacional de Electricidad, ADR 200 9,850
FPL Group, Inc. 200 7,725
General Public Utilities Corp. 1,500 44,625
Illinova Corp. 1,800 45,675
NIPSCO Industries, Inc. 800 27,200
PECO Energy Co. 1,400 38,675
Pinnacle West Capital Corp. 1,600 39,200
Portland General Corp. 100 2,213
Public Service Company of New Mexico* 2,400 34,200
Unicom Corp. 1,600 42,600
----------
$ 378,362
- --------------------------------------------------------------------------------
Utilities -- Gas -- 9.4%
Pacific Enterprises 300 $ 7,350
Panhandle Eastern Corp. 800 19,500
Tenneco, Inc. 550 25,300
Westcoast Energy, Inc. 2,520 37,170
Williams Cos., Inc. 500 17,437
----------
$ 106,757
- --------------------------------------------------------------------------------
Utilities -- Telephone -- 25.0%
American Telephone & Telegraph Co. 500 $ 26,562
Ameritech Corp. 800 35,200
BellSouth Corp. 600 38,100
Frontier Corp. 700 16,800
GTE Corp. 1,100 37,537
MCI Communications Corp. 21,500 33,000
Motorola, Inc. 200 13,425
SBC Communications, Inc. 800 38,100
Tele Danmark, ADR 1,600 44,800
----------
$ 283,524
- --------------------------------------------------------------------------------
<PAGE>
Common Stocks -- continued
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
Foreign -- 7.6%
Italy -- 3.7%
Telecom Italia (Utilities -- Telephone) 19,500 $ 41,551
- --------------------------------------------------------------------------------
Philippines
Philippine Telephone (Utilities-- Telephone)* 700 $ 540
- --------------------------------------------------------------------------------
United Kingdom -- 3.9%
London Electricity (Utilities -- Electric) 700 $ 7,157
Midlands Electricity (Utilities -- Electric) 1,000 10,103
Southern Electric (Utilities -- Electric) 2,600 26,584
----------
$ 43,844
- --------------------------------------------------------------------------------
Total Foreign $ 85,935
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,005,253) $1,104,709
Other Assets, Less Liabilities -- 2.7% 30,970
- --------------------------------------------------------------------------------
Net Assets -- 100.0% $1,135,679
- --------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
MFS Variable Insurance Trust --
MFS Utilities Series
Statement of Assets and Liabilities
================================================================================
June 30, 1995
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,005,253) $1,104,709
Cash 3,780
Receivable for investments sold 24,842
Interest and dividends receivable 5,906
Receivable from investment adviser 8,379
Deferred organization expenses 5,260
----------
Total assets $1,152,876
----------
Liabilities:
Payable for investments purchased $ 10,103
Accrued expenses and other liabilities 7,094
----------
Total liabilities $ 17,197
----------
Net assets $1,135,679
==========
Net assets consist of:
Paid-in capital $1,008,600
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 99,469
Accumulated undistributed net realized gain
on investments and foreign currency transactions 7,906
Accumulated undistributed net investment income 19,704
----------
Total $1,135,679
==========
Shares of beneficial interest outstanding 100,860
==========
Net asset value, offering price and redemption price
per share (net assets / shares of beneficial
interest outstanding) $ 11.26
==========
See notes to financial statements
<PAGE>
MFS Variable Insurance Trust --
MFS Utilities Series
Statement of Operations
================================================================================
Period Ended June 30, 1995 *
- --------------------------------------------------------------------------------
Net investment income:
Income --
Interest $ 1,810
Dividends 23,541
Foreign taxes withheld (659)
---------
Total investment income $ 24,692
---------
Expenses --
Management fee $ 3,740
Trustees' compensation 1,016
Shareholder servicing agent fee 174
Auditing fees 5,982
Legal fees 819
Amortization of organization costs 725
Printing 532
Custodian fee 347
Miscellaneous 524
---------
Total expenses $ 13,859
Preliminary reduction of expenses by
investment adviser (8,871)
---------
Net expenses $ 4,988
---------
Net investment income $ 19,704
---------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) --
Investment transactions $ 7,840
Foreign currency transactions 66
---------
Net realized gain on investments and
foreign currency transactions $ 7,906
---------
Change in unrealized appreciation --
Investments $ 99,456
Translation of assets and liabilities in
foreign currencies 13
---------
Net unrealized gain on investments $ 99,469
---------
Net realized and unrealized gain on
investments and foreign currency $ 107,375
---------
Increase in net assets from operations $ 127,079
=========
* For the period from the commencement of investment operations, January 3,
1995 to June 30, 1995.
See notes to financial statements
<PAGE>
MFS Variable Insurance Trust --
MFS Utilities Series
Statement of Changes in Net Assets
================================================================================
Period Ended June 30, 1995 *
- --------------------------------------------------------------------------------
Increase in net assets:
From operations --
Net investment income $ 19,704
Net realized gain on investments and
foreign currency transactions 7,906
Net unrealized gain on investments and
foreign currency translation 99,469
----------
Increase in net assets from operations $ 127,079
----------
Series share (principal) transactions --
Net proceeds from sale of shares $1,000,000
----------
Increase in net assets from Series
share transactions $1,000,000
----------
Total increase in net assets $1,127,079
Net assets:
At beginning of period 8,600
----------
At end of period (including accumulated
undistributed net investment income of $19,704) $1,135,679
==========
* For the period from the commencement of investment operations, January 3,
1995 to June 30, 1995.
See notes to financial statements
<PAGE>
MFS Variable Insurance Trust --
MFS Utilities Series
Financial Highlights
================================================================================
Period ended June 30, 1995 *
- --------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value -- beginning of period $ 10.00
------------
Income from investment operations# --
Net investment income## $ 0.20
Net realized and unrealized gain on investments
and foreign currency transactions 1.06
------------
Total from investment operations $ 1.26
------------
Net asset value -- end of period $ 11.26
============
Total return 12.60 %++
Ratios (to average net assets)/Supplemental data##:
Expenses 1.00 %+
Net investment income 3.988%+
Portfolio turnover 31 %
Net assets at end of period (000 omitted) $ 1,136
* For the period from the commencement of investment operations, June 14,
1994 to December 31, 1994 +Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
## The adviser voluntarily agreed to maintain the expenses of the Series at
not more than 1.00% of average daily net assets. To the extent actual
expenses were over these limitations, the net investment income per share
and the ratios would have been:
Net investment income $ 0.11
Ratios (to average net assets):
Expenses 2.73%+
Net investment income 2.13%+
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Utilities Series (the Series) is a non-diversified series of MFS Variable
Insurance Trust (the Trust) which is comprised of the following twelve series:
Bond Series, Emerging Growth Series, Growth Series, Growth with Income Series,
High Income Series, Limited Maturity Series, Money Market Series, Research
Series, Strategic Fixed Income Series, Total Return Series, Utilities Series,
and World Governments Series. 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.
The shareholders of each Series of the Trust are separate accounts of insurance
companies which offer variable annuity and/or life insurance products. The
Series was seeded on or about February 1, 1994 but has remained inactive until
the current period. The commencement of investment operations took place on
January 3, 1995. As of June 30, 1995, there were four shareholders, who own all
of the outstanding shares of the Series.
(2) Significant Accounting Policies
Investment Valuations -- Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. 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. Securities for which there are no
such quotations or valuations are valued at fair value as determined in good
faith by or at the direction of the Trustees.
Repurchase Agreements -- The Series may enter into repurchase agreements with
institutions that the Series' investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Series requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Series to obtain those securities
in the event of a default under the repurchase agreement. The Series monitors,
on a daily basis, the value of the securities transferred to ensure that the
value, including accrued interest, of the securities under each repurchase
agreement is greater than amounts owed to the Series under each such repurchase
agreement.
Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, 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 Series in connection
with its organization have been deferred and are being amortized on a
straight-line basis over a five-year period beginning on the date of
commencement of operations of the Series.
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
<PAGE>
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 Series' policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Series 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. 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 Series 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 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.
(3) Transactions with Affiliates
Investment Adviser -- The Series 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
0.75% of average daily net assets. Under a temporary expense reimbursement
agreement with MFS, MFS has voluntarily agreed to limit the operating expenses
of the Series at levels which increase over time. Currently MFS has agreed to
limit the Series' expenses at an effective annual rate of 1.00% of average daily
net assets. MFS will pay all Series expenses in excess of the current limit
subject to reimbursement by the Series at a later date. To the extent that
actual Series' expenses do not reach the limit, the Series will reimburse MFS
for prior expenses paid by MFS on behalf of the Series such that the Series'
expense ratio does not exceed 1.00% of average daily net assets. At June 30,
1995, the aggregate unreimbursed expenses owed to MFS by the Series amounted to
$8,871.
The Series pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Series, all of whom receive
remuneration for their services to the Series from MFS. Certain of the officers
and Trustees of the Series are officers or directors of MFS and MFS Service
Center, Inc. (MFSC).
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 at an effective annual rate of up to
0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated $1,318,587
and $329,070, respectively.
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Series, as computed on a federal income tax basis, are as follows:
Aggregate cost $ 1,005,253
=============
Gross unrealized appreciation $ 109,400
Gross unrealized depreciation (9,944)
-------------
Net unrealized appreciation $ 99,456
=============
<PAGE>
(5) Shares of Beneficial Interest
The Series' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Series shares were as follows:
Period Ended June 30, 1995* Shares
- -------------------------------------------------------------------------------
Shares sold 100,000
-------
Net increase 100,000
=======
* For the period from the commencement of investment operations, January 3,
1995 to June 30, 1995.
(6) Line of Credit
The Series 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 Series shares. Interest is charged to each
funds, 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.
(7) Restricted Securities
The Series may invest not more than 15% of its total assets in securities which
are subject to legal or contractual restrictions on resale. At June 30, 1995,
the Series owned the following restricted security (constituting 1.7% of net
assets) which may not be publicly sold without registration under the Securities
Act of 1933 (the 1933 Act). The Series does not have the right to demand that
such security be registered. The value of this security is determined by
valuations supplied by a pricing service or brokers or, if not available, in
good faith by or at the direction of the Trustees. This security may be offered
and sold to "qualified institutional buyers" under Rule 144A of the 1933 Act.
Date of
Description Acquisition Share Amount Cost Value
- --------------------------------------------------------------------------------
Central Costanera, ADR 1/05/95 600 $14,100 $19,386
======= =======
<PAGE>
Independent Auditors' Report
To the Trustees of MFS Variable Insurance Trust and Shareholders of MFS
Utilities Series:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Utilities Series (the Series) (one of the
series constituting MFS Variable Insurance Trust) as of June 30, 1995, the
related statements of operations, changes in net assets, and financial
highlights for the period from January 3, 1995 (the commencement of investment
operations) to June 30, 1995. These financial statements and financial
highlights are the responsibility of the Series' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit 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 the securities owned at June 30, 1995 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. 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 audit provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Utilities Series
at June 30, 1995, the results of its operations, the changes in its net assets,
and its financial highlights for the period from January 3, 1995 (the
commencement of investment operations) to June 30, 1995 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 4, 1995
--------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
