<PAGE>
[LOGO] M F S ANNUAL REPORT FOR
THE FIRST NAME IN MUTUAL FUNDS YEAR ENDED
APRIL 30, 1995
MFS(R) MUNICIPAL LIMITED MATURITY FUND
[GRAPHIC OMITTED: A 6 1/4" by 8 1/4" photo of a highway.]
<PAGE>
<TABLE>
<S> <C>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; AUDITORS
Former Chairman and Director (until 1991), Deloitte & Touche LLP
Massachusetts Financial Services Company
INVESTOR INFORMATION
Peter G. Harwood - Private Investor For MFS stock and bond market outlooks,
call toll free: 1-800-637-4458 anytime from
J. Atwood Ives - Chairman and Chief Executive a touch-tone telephone.
Officer, Eastern Enterprises
For information on MFS mutual funds,
Lawrence T. Perera - Partner, Hemenway & Barnes call your financial adviser or, for an
information kit, call toll free:
William J. Poorvu - Adjunct Professor, Harvard 1-800-637-2929 any business day from
University Graduate School of Business 9 a.m. to 5 p.m. Eastern time (or leave
Administration a message anytime).
Charles W. Schmidt - Private Investor; INVESTOR SERVICE
Former Senior Vice President and Group Executive MFS Service Center, Inc.
(until 1990), Raytheon Company P.O. Box 2281
Boston, MA 02107-9906
Arnold D. Scott* - Senior Executive Vice President
and Secretary, Massachusetts Financial Services Company For current account service, call toll free:
1-800-225-2606 any business day from
Jeffrey L. Shames* - President, Massachusetts 8 a.m. to 8 p.m. Eastern time.
Financial Services Company
For service to speech- or hearing-impaired,
Elaine R. Smith - Independent Consultant call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time. (To use this
David B. Stone - Chairman, North American service, your phone must be equipped with a
Management Corp. (Investment Advisers) Telecommunications Device for the Deaf.)
INVESTMENT ADVISER For share prices, account balances and
Massachusetts Financial Services Company exchanges, call toll free: 1-800-MFS-TALK
500 Boylston Street (1-800-637-8255) anytime from a touch-tone
Boston, Massachusetts 02116-3741 telephone.
PORTFOLIO MANAGER ------------------------------------------
Robert A. Dennis* TOP-RATED SERVICE
NUMBER MFS was rated first when
TREASURER 1 securities firms evaluated the
W. Thomas London* DALBAR quality of service they receive
from 40 mutual fund companies.
ASSISTANT TREASURER MFS got high marks for answering
James O. Yost* calls quickly, processing
transactions accurately and
SECRETARY sending statements out on time.
Stephen E. Cavan* (Source: 1994 DALBAR Survey)
-------------------------------------------
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Cover photo: Through their wide range of
investments, MFS mutual funds help you
*Affiliated with the Investment Adviser share in America's growth.
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
During the past 12 months, there have been wide swings in interest rates.
After rising dramatically through most of 1994 as the rate of economic growth
quickened and price increases in the manufacturing sector spurred fears of
higher inflation, interest rates peaked last November. Since then, yields on
most fixed-income securities have fallen substantially as it has become
increasingly apparent that the Federal Reserve Board's credit tightening moves
have succeeded in slowing down economic growth and keeping inflation in check.
Due to favorable supply and demand conditions, interest rate volatility in the
municipal market has been less severe than in other markets. Nevertheless,
yields on five-year AAA-rated municipal bonds, which were 4.90% at the end of
April 1994, rose to 5.60% by mid-November, and have since declined to 4.80% as
of April 30, 1995. For the 12 months ended April 30, 1995, Class A shares of
the Fund experienced a total return of +3.55%, while Class B shares had a
total return of +2.67%. Class C shares, available only since July 1, 1994, had
a total return of +2.53% for the 10 months ended April 30, 1995. These returns
assume the reinvestment of distributions but exclude the effects of any sales
charges.
Economic Outlook
As the economy enters its fifth year of expansion, it is evidencing a
decidedly decelerating trend from its robust pace of 1994, when gross domestic
product expanded by 4.1%. Estimated growth in this year's first quarter
diminished to an annual rate of 2.8%. Consumer spending slowed considerably
during the quarter and was accompanied by a correspondingly large increase in
inventories. As we begin the year's second quarter, the evidence suggests that
the economy has entered a phase of less-than-full-potential growth, as the
April unemployment rate showed a second consecutive monthly increase. We
expect the economy to continue to grow at this more subdued pace. We do not
anticipate that the slowdown will deteriorate into a recession and,
conversely, we remain mindful of the potential for a reliquified consumer
sector to reassert itself as the year progresses.
Interest Rates
As evidence of a slowdown has continued to mount, the fixed-income markets
have become increasingly convinced that the Federal Reserve has concluded its
monetary-tightening initiatives. Furthermore, as the economy has diminished in
its ability to create jobs and in its usage of available productive capacity,
apprehension concerning a cyclical upturn in inflation has receded. As a
result, long-term U.S. Treasury bond yields have declined to near 7.00% as of
April 30, 1995, down from 7.87% at the beginning of the year and from their
cyclical peak of 8.15% in November 1994. Despite higher costs at the crude and
intermediate stages of production, prices have not increased appreciably at
the consumer level. For the 12 months ended in April of this year, the
Consumer Price Index, a popular measure of change in prices, increased by a
still moderate 3.1%. Continued benign growth in labor costs and the inability
of many businesses to effectively raise prices have combined to extend the
favorable price environment. Nevertheless, we do anticipate a minor cyclical
pickup in inflationary pressure this year to the 3% - 3 1/2% range.
The decline in interest rates has been particularly precipitous during the
past month, leaving the market potentially vulnerable to a near-term correction.
However, we believe continuing moderate growth will result in interest rates
trending near to, and possibly somewhat lower than, present levels during the
balance of this year.
Portfolio Performance and Strategy
The Fund's average maturity, which had been reduced from five years to less
than three years during 1994 in order to preserve principal during the period
of rising interest rates, has been extended to three-and-a-half years during
this year's market recovery. We do not anticipate further lengthening of the
Fund's average maturity at this time because the yield curve is less steep
than in previous years (that is, the incremental yield achieved from extending
beyond three years is historically low). Another reason for caution is that,
due to sharply reduced new-issue supply (total volume for 1995 is projected to
be only about 40% of 1993's issuance), municipals in the short-maturity range
appear fully priced relative to taxable alternatives.
The Fund's total returns for all classes of shares during the 12 months
ended April 30 lagged the +3.78% average return for the 37 short-term municipal
bond funds tracked by Lipper Analytical Services, Inc., an independent firm
which reports mutual fund performance. The Fund's performance did not compare
well to the +4.64% return of the Lehman Brothers Municipal Bond Three-Year Index
(an unmanaged index comprised of bonds issued within the past three years rated
Baa or better and with maturities between two and four years). The Fund's
performance would have been better if we had lengthened the average maturity
earlier. Longer maturities provided better returns as evidenced by the fact that
the Lehman Brothers Municipal Bond Five-Year Index (an unmanaged index comprised
of bonds issued within the last five years rated Baa or better and with
maturities between four and six years) had a return of +5.47% over this same
12-month period.
Since the yield differential between high- and low-quality bonds remains
very narrow, the Fund continues to maintain a high-quality portfolio. Currently,
72% of total net assets is invested in either AAA- or AA-rated bonds. The Fund's
largest sector concentration, which represents about 28% of total net assets, is
in tax-backed general obligations, historically the most secure of municipal
credits. This sector is benefiting not only from the conservative financial
practices generally employed by municipal governments in recent years, but also
from the improved revenues flowing into state and local governments as a result
of better economic conditions.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
- ---------------------- -----------------------
A 1 1/2" by 1 5/8" A 1 1/2" by 1 5/8"
photo of photo of
A. Keith Brodkin, Robert A. Dennis,
Chairman and President Portfolio Manager
- ---------------------- -----------------------
/s/ A. Keith Brodkin /s/ Robert A. Dennis
A. Keith Brodkin Robert A. Dennis
Chairman and President Portfolio Manager
May 17, 1995
<PAGE>
OBJECTIVE AND POLICIES
The Fund's investment objective is to provide as high a level of current
income exempt from federal income taxes as is considered consistent with
prudent investing and protection of shareholders' capital.
The Fund, under normal conditions, invests substantially all (at least 80%) of
its assets in debt securities issued by or on behalf of states, territories
and possessions of the United States and the District of Columbia and their
political subdivisions, agencies or instrumentalities, the interest on which
is exempt from federal income tax. As a defensive measure during times of
adverse market conditions, up to 50% of the Fund's assets may be temporarily
invested in short-term investments. Substantially all of the Fund's total
assets will be invested in: tax-exempt securities which are rated AAA, AA, A
or BBB by Standard & Poor's Corporation (S&P) or are rated Aaa, Aa, A or Baa
by Moody's Investors Service, Inc. (Moody's) (and comparable unrated
securities); notes of issuers having an issue of outstanding municipal bonds
rated AAA, AA, A or BBB by S&P or Aaa, Aa, A or Baa by Moody's (or issuers of
comparable quality) or which are guaranteed by the U.S. government;
obligations issued or guaranteed by the U.S. government or its agencies,
authorities or instrumentalities; and commercial paper, obligations of banks
(including certificates of deposit and bankers' acceptances) with $1 billion
of assets, and cash. Under normal market conditions, the dollar-weighted
average maturity of the Fund's portfolio will not exceed five years and
substantially all of the securities held by the Fund will have remaining
maturities of 10 years or less.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS
For federal income tax purposes, 100% of the total dividends paid by the Fund
from net investment income during the year ended April 30, 1995 was designated
as an exempt-interest dividend.
On December 30, 1994, Class A and Class B shares each paid a distribution from
net short-term capital gains of $0.000138 per share to shareholders of record
on December 30, 1994.
In January 1996, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1995.
PERFORMANCE
The information on the following page illustrates the historical performance
of MFS Municipal Limited Maturity Fund Class A shares in comparison to various
market indicators. Fund results reflect the deduction of the 2.50% maximum
sales charge; benchmark comparisons are unmanaged and do not reflect any fees
or expenses. You cannot invest in an index. All results reflect the
reinvestment of all dividends and capital gains.
Class B shares were offered effective September 7, 1993. Information on Class
B share performance appears on the next page.
Class C shares were offered effective July 1, 1994. Information on Class C
share performance appears on the next page.
<PAGE>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the Period from April 1, 1992 to April 30, 1995)
Line graph representing the growth of a $10,000 investment for the life-of-class
period ended April 30, 1995. The graph is scaled from $9,000 to $14,000 in
$1,000 segments. The years are market from 1992 to 1995. There are four lines
drawn to scale. One is a solid line representing MFS Municipal Limited Maturity
Fund (Class A), a second line of short dashes represents the Lehman Brothers
Municipal Bond 5-Year Index, a third line of medium dashes represents the Lehman
Brothers Municipal Bond 3-Year Index, and a fourth line of long dashes
represents the Consumer Price Index.
MFS Municipal Limited Maturity Fund (Class A) $11,338
Lehman Brothers Municipal Bond
5-Year Index $12,060
Lehman Brothers Municipal Bond
3-Year Index $11,713
Consumer Price Index $10,905
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS
<CAPTION>
Life of Class
through
1 Year 3 Years 4/30/95
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Municipal Limited Maturity Fund (Class A)
including 2.50% sales charge +0.98% +4.23% +4.05%<F1>
- -------------------------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class A) at net
asset value +3.55% +5.13% +4.91%<F1>
- -------------------------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class B) with
CDSC<F3> -1.31% -- -1.67<F2>
- -------------------------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class B) without
CDSC +2.67% -- +0.68%<F2>
- -------------------------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class C) -- -- +2.53%<F4>
- -------------------------------------------------------------------------------------------------------
Average short-term municipal debt fund +3.78% +4.65% +4.73%<F5>
- -------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Three-Year Index +4.64% +5.15% +5.26%<F5>
- -------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Five-Year Index +5.47% +6.14% +6.26%<F5>
- -------------------------------------------------------------------------------------------------------
Consumer Price Index +3.05% +2.88% +2.85%<F5>
- -------------------------------------------------------------------------------------------------------
In the above table, we have included the average annual total returns of all
short-term municipal debt funds (including the Fund) tracked by Lipper
Analytical Services, Inc. for the applicable time periods (37, 18 and 18 funds
for the 1- and 3-year periods ended April 30, 1995 and for the period from
April 1, 1992 to April 30, 1995, respectively). Because these returns do not
reflect any applicable sales charges, we have also included the Fund's results
at net asset value (no sales charge) for comparison.
All results are historical and, therefore, are not an indication of future
results. The principal value and income return of an investment in a mutual
fund will vary with changes in market conditions, and shares, when redeemed,
may be worth more or less than their original cost.
<F1> For the period from the commencement of offering of Class A shares, March
17, 1992 to April 30, 1995.
<F2> For the period from the commencement of offering of Class B shares,
September 7, 1993 to April 30, 1995.
<F3> Class B share results reflect the maximum contingent deferred sales charge
(CDSC) of 4%.
<F4> Aggregate total return for the period from the commencement of offering of
Class C shares, July 1, 1994 to April 30, 1995. Class C shares have no
initial sales charge or CDSC but, along with Class B shares, have higher
annual fees and expenses than Class A shares.
<F5> Benchmark comparisons begin on April 1, 1992.
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS - April 30, 1995
Municipal Bonds - 97.5%
- ------------------------------------------------------------------------------
S&P
Bond Principal
Rating Amount
(Unaudited) Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------
General Obligation - 27.7%
AAA Aldine, TX, Independent School District,
PSFG, 7.25s, 1997 $ 600 $ 623,454
AA+ Baltimore County, MD, Consolidated Public
Improvement, 5s, 1997 500 503,565
AA+ Baltimore County, MD, Metropolitan
District, 6.5s, 1997 500 519,035
AAA Clark County, NV, FGIC, 5.5s, 2002 2,000 2,005,360
A+ Commonwealth of Massachusetts, 7.25s, 1996 1,000 1,026,830
A+ Commonwealth of Massachusetts, 7s, 1999 1,000 1,056,730
A+ Commonwealth of Massachusetts, 6.7s, 2002 1,000 1,058,270
AAA Cook County, IL, High School District No.
205 (Thornton Township), FGIC,
5.4s, 1997 450 455,598
B District of Columbia, 4.3s, 1996 900 869,778
AAA District of Columbia, AMBAC, 7.25s, 1998 500 528,295
N/R Indianapolis, IN, Local Public Improvement
Bond Bank, 6.25s, 2001 1,000 1,043,070
AAA Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,213,900
AA- Milwaukee County, WI, 5.35s, 2001 2,410 2,402,939
AA Milwaukee, WI, Metropolitan Sewage
District, 6.7s, 2001 500 538,350
AA- Pinellas County, FL, Capital Improvement
Rev., 5.3s, 1996 2,325 2,354,364
AA State of Hawaii, 3.6s, 1996 1,000 983,100
AA- State of Illinois, 5.5s, 1998 1,000 1,017,980
AAA State of Louisiana, MBIA, 5.3s, 2001 500 502,180
AA+ State of Minnesota, 6.8s, 1996 750 771,218
AA+ State of South Carolina, 5.5s, 1996 1,000 1,008,960
-----------
$20,482,976
- ------------------------------------------------------------------------------
Student Loan Revenue - 11.1%
N/R Colorado Student Obligation Bond
Authority, 6.125s, 1998 $ 315 $ 322,724
N/R Louisiana Public Facilities Authority,
6.5s, 2002 1,000 1,031,250
N/R Mississippi Higher Education Assistance
Corp., 5.4s, 2002 1,000 982,590
N/R Nebraska Higher Education Loan Program,
Inc. Rev., 5s, 1998 500 494,035
N/R Nebraska Higher Education Loan Program,
Inc. Rev., 5.2s, 1999 500 494,575
N/R Nebraska Higher Education Loan Program,
Inc. Rev., 5.2s, 1999 500 494,125
N/R New Mexico Educational Assistance
Foundation, 5.25s, 1998 1,000 1,000,270
A+ South Dakota Student Loan Finance Corp.,
5.3s, 1997 1,000 1,002,420
N/R South Texas Higher Education Authority,
Inc., 4.45s, 1998 1,000 983,130
N/R Virginia Education Loan Authority,
Guaranteed Student Loan Program Rev.,
5.05s, 2003 1,500 1,438,934
-----------
$ 8,244,053
- ------------------------------------------------------------------------------
State and Local Appropriation - 9.0%
BBB+ California Public Works Board, Energy
Efficiency Rev., 5.5s, 1996 $ 500 $ 501,975
AAA California Public Works Board, Lease Rev.
(Secretary of State), AMBAC,
5.25s, 1998 630 637,327
B- District of Columbia, Certificates of
Participation, 6s, 1997 532 530,872
A+ Massachusetts Bay Transportation
Authority, 5s, 1996 1,000 1,004,410
State and Local Appropriation - continued
AA- Michigan Building Authority Rev.,
6.2s, 2002 1,000 1,055,100
A+ New Jersey Transportation Trust Fund
Authority, 5.6s, 1998 495 506,717
BBB New York Dormitory Authority Rev. (City
University), 5.25s, 1997 500 499,155
BBB+ New York Medical Care Facilities Finance
Agency Rev. (Mental Health Services
Facilities Improvement),
5.9s, 2000 995 1,001,815
BBB New York Urban Development Corp.
(Correctional
Facility), 5.1s, 2002 1,000 946,520
-----------
$ 6,683,891
- ------------------------------------------------------------------------------
Refunded and Special Obligation - 10.0%
AAA De Kalb County, GA, 7.3s, 1997 $ 1,000 $ 1,061,850
AAA Snohomish County, WA, Public Utility
District No. 1, Electric Rev.
(Generation System), 7.875s, 1997 1,000 1,070,090
AA+ State of New Jersey, 7.3s, 1996 3,550 3,702,970
AA State of Texas, 7.125s, 2000 500 553,530
AA State of Washington, 5.85s, 1996 1,000 1,014,910
-----------
$ 7,403,350
- ------------------------------------------------------------------------------
Single Family Housing Revenue - 1.3%
AA New York City Housing Corp. Rev., 4.9s,
2002 $ 1,000 $ 958,100
- ------------------------------------------------------------------------------
Insured Health Care Revenue - 4.9%
AAA Delaware County, IN, Hospital Authority
(Ball Memorial Hospital), AMBAC,
6.625s, 2001 $ 2,520 $ 2,721,146
AAA Medical Center Hospital Authority, GA,
Anticipation Certificates (Columbus Regional
Healthcare System), MBIA, 5.9s, 2001 885 915,506
-----------
$ 3,636,652
- ------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 9.3%
AA Jacksonville, FL, Electric Authority Rev.,
6.4s, 1995 $ 1,000 $ 1,008,220
A- North Carolina Eastern Municipal Power
Agency, Power Systems Rev., 7.3s, 1998 2,000 2,082,020
BBB Philadelphia, PA, Gas Works Rev.,
5.4s, 1998 1,000 998,200
A+ Platte River Power Authority, CO, Power
Rev., 5.4s, 1995 1,015 1,015,873
AAA Sacramento, CA, Municipal Utility District
Electric Rev., FGIC, 6s, 2001 620 647,007
AA Washington Public Power Supply System
(Nuclear Project No. 2), 4.2s, 1996 1,150 1,132,394
-----------
$ 6,883,714
- ------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 6.1%
A Massachusetts Water Resources Authority,
5.25s, 2001 $ 2,500 $ 2,481,700
AA Milwaukee, WI, Metropolitan Sewerage
District, 5.4s, 1996 1,000 1,010,460
AAA San Antonio, TX, Water Rev., FGIC,
5.8s, 1999 1,000 1,028,320
-----------
$ 4,520,480
- ------------------------------------------------------------------------------
Turnpike Revenue - 2.3%
A Kentucky Turnpike Authority, Economic
Development Road Rev., 7.6s, 1999 $ 1,150 $ 1,208,098
A New Jersey Turnpike Authority, 5.6s, 2000 500 509,165
-----------
$ 1,717,263
- ------------------------------------------------------------------------------
Airport and Port Revenue - 10.3%
AAA Hawaii Airports System Rev., MBIA,
4.75s, 1996 $ 6,800 $ 6,804,080
AAA Metropolitan Nashville Airport Authority,
TN, Airport Rev., FGIC, 6.125s, 1999 800 831,112
-----------
$ 7,635,192
- ------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 1.4%
AAA Arizona Transportation Board, Excise Tax
Rev. (Maricopa County Regional Area),
MBIA, 6.8s, 1997 $ 1,000 $ 1,038,740
- ------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 0.7%
A+ Monroe County, GA, Development Authority,
Pollution Control Rev. (Oglethorpe
Power Corp.), 5.1s, 1997 $ 500 $ 500,670
- ------------------------------------------------------------------------------
Universities - 0.7%
AAA Union County, PA, Higher Educational
Facilities Financing Authority
(Bucknell University), MBIA,
5.3s, 1998 $ 500 $ 508,440
- ------------------------------------------------------------------------------
Miscellaneous Revenue - 2.7%
BBB+ Detroit, MI, Distributable State Aid,
5.375s, 1996 $ 750 $ 750,022
BBB+ Detroit, MI, Distributable State Aid,
5.625s, 1997 750 750,758
AAA Pennsylvania Intergovernmental Cooperative
Authority (City of Philadelphia
Funding), FGIC, 5.4s, 1997 500 505,325
-----------
$ 2,006,105
- ------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $72,488,840) $72,219,626
- ------------------------------------------------------------------------------
Floating Rate Demand Note - 1.2%
- ------------------------------------------------------------------------------
Uinta County, WY, Pollution Control Rev.
(Chevron), due 8/15/20, at Cost $ 900 $ 900,000
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $73,388,840) $73,119,626
Other Assets, Less Liabilities - 1.3% 934,919
- ------------------------------------------------------------------------------
Net Assets - 100.0% $74,054,545
- ------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
April 30, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $73,388,840) $ 73,119,626
Cash 42,323
Receivable for Fund shares sold 36,229
Interest receivable 1,263,373
Deferred organization expenses 7,785
Other assets 1,289
------------
Total assets $ 74,470,625
------------
Liabilities:
Distributions payable $ 62,500
Payable for Fund shares reacquired 319,889
Payable to affiliates -
Management fee 2,438
Distribution fee 10,638
Accrued expenses and other liabilities 20,615
------------
Total liabilities $ 416,080
------------
Net assets $ 74,054,545
------------
Net assets consist of:
Paid-in capital $ 75,260,454
Unrealized depreciation on investments (269,214)
Accumulated net realized loss on investments (890,065)
Accumulated distributions in excess of net investment income (46,630)
------------
Total $ 74,054,545
------------
Shares of beneficial interest outstanding 9,939,110
------------
Class A shares:
Net asset value and redemption price per share
(net assets of $64,328,662 / 8,632,654 shares of beneficial
interest outstanding) $7.45
-----
Offering price per share (100/97.5) $7.64
-----
Class B shares:
Net asset value, offering price, and redemption price per share
(net assets of $7,791,671 / 1,046,882 shares of beneficial
interest outstanding) $7.44
-----
Class C shares:
Net asset value, offering price, and redemption price per share
(net assets of $1,934,212 / 259,574 shares of beneficial
interest outstanding) $7.45
-----
On sales of $50,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A
and Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -continued
Statement of Operations
- ------------------------------------------------------------------------------
Year Ended April 30, 1995
- ------------------------------------------------------------------------------
Net investment income:
Interest income $ 3,999,372
-----------
Expenses -
Management fee $ 343,251
Trustees' compensation 12,021
Shareholder servicing agent fee (Class A) 112,881
Shareholder servicing agent fee (Class B) 17,838
Shareholder servicing agent fee (Class C) 2,929
Distribution and service fee (Class A) 112,991
Distribution and service fee (Class B) 81,287
Distribution and service fee (Class C) 19,654
Printing 39,958
Auditing fees 33,841
Custodian fee 33,017
Postage 6,869
Amortization of organization expenses 4,136
Legal fees 2,245
Miscellaneous 86,989
-----------
Total expenses $ 909,907
Reduction of expenses pursuant to reimbursement agreement (8,538)
-----------
Net expenses $ 901,369
-----------
Net investment income $ 3,098,003
-----------
Realized and unrealized gain (loss) on investments:
Realized loss on investment transactions
(identified cost basis) $ (409,013)
Change in unrealized depreciation on investments 136,714
-----------
Net realized and unrealized loss on investments $ (272,299)
-----------
Increase in net assets from operations $ 2,825,704
-----------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -continued
<TABLE>
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended Eight Months Ended Year Ended
April 30, 1995 April 30, 1994 August 31, 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 3,098,003 $ 2,337,474 $ 2,026,554
Net realized gain (loss) on
investments (409,013) (398,570) 338,305
Net unrealized gain (loss) on
investments 136,714 (2,390,077) 1,776,497
------------ ------------ ------------
Increase (decrease) in net
assets from operations $ 2,825,704 $ (451,173) $ 4,141,356
------------ ------------ ------------
Distributions declared to
shareholders -
From net investment income
(Class A) $ (2,806,873) $ (2,254,836) $ (2,025,682)
From net investment income
(Class B) (234,092) (83,510) --
From net investment income
(Class C) (57,037) -- --
In excess of net investment
income (Class A) (16,471) (25,083) --
In excess of net investment
income (Class B) (1,374) (3,368) --
In excess of net investment
income (Class C) (335) -- --
From net realized gain on
investments -- -- (64,041)
In excess of net realized gain
on investments -- (372,507) --
------------ ------------ ------------
Total distributions declared to
shareholders $ (3,116,182) $ (2,739,304) $ (2,089,723)
------------ ------------ ------------
Fund share (principal)
transactions -
Net proceeds from sale of
shares $ 34,025,377 $ 61,689,627 $106,302,146
Net asset value of shares
issued to shareholders in
reinvestment of
distributions 2,114,934 1,750,648 1,518,361
Cost of shares reacquired (52,576,887) (56,659,710) (43,992,275)
------------ ------------ ------------
Increase (decrease) in net
assets from Fund share
transactions $(16,436,576) $ 6,780,565 $ 63,828,232
------------ ------------ ------------
Total increase (decrease) in
net assets (16,727,054) 3,590,088 $ 65,879,865
Net assets:
At beginning of period 90,781,599 87,191,511 21,311,646
------------ ------------ ------------
At end of period $ 74,054,545 $ 90,781,599 $ 87,191,511
------------ ------------ ------------
Accumulated undistributed
(distributions in excess
of) net investment income $ (46,630) $ (28,451) $ 872
------------ ------------ ------------
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -continued
<TABLE>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Eight Eight Ten
Year Months Year Ended Year Months Months
Ended Ended August 31, Ended Ended Ended
April 30, April 30, ----------------------- April 30, April 30, April 30,
1995 1994 1993 1992<F1> 1995 1994<F2> 1995<F3>
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning
of period $ 7.47 $ 7.72 $ 7.43 $ 7.31 $ 7.46 $ 7.75 $ 7.45
------ ------ ------ ------ ------ ------ ------
Income from investment operations<F5> -
Net investment income<F10> $ 0.28 $ 0.19 $ 0.31 $ 0.15 $ 0.21 $ 0.14 $ 0.21
Net realized and unrealized gain
(loss) on investments (0.02) (0.22) 0.30 0.12 (0.02) (0.26) (0.02)
------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.26 $(0.03) $ 0.61 $ 0.27 $ 0.19 $(0.12) $ 0.19
------ ------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.28)<F6> $(0.19)<F8> $(0.31) $(0.15)<F7> $(0.21) $(0.13) $(0.19)
In excess of net investment income --<F9> -- -- -- --<F9> (0.01) --<F9>
From net realized gain on investments -- -- (0.01) -- -- -- --
In excess of net realized gain on
investments -- (0.03) -- -- -- (0.03) --
------ ------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.28) $(0.22) $(0.32) $(0.15) $(0.21) $(0.17) $(0.19)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of period $ 7.45 $ 7.47 $ 7.72 $ 7.43 $ 7.44 $ 7.46 $ 7.45
------ ------ ------ ------ ------ ------ ------
Total return<F6> 3.55% (0.59)%<F4> 8.47% 8.26%<F4> 2.67% (2.37)%<F4> 2.53%
Ratios (to average net assets)/
Supplemental data<F10>:
Expenses 0.96% 0.89%<F4> 0.68% 0.55%<F4> 1.81% 1.74%<F4> 1.79%<F4>
Net investment income 3.74% 3.72%<F4> 4.04% 4.25%<F4> 2.88% 2.79%<F4> 2.77%<F4>
Portfolio turnover 50% 48% 69% 8% 50% 48% 50%
Net assets at end of period
(000 omitted) $64,329 $83,367 $87,192 $21,312 $ 7,792 $ 7,415 $ 1,934
<FN>
<F1> For the period from the commencement of investment operations, March 17, 1992 to August 31, 1992.
<F2> For the period from the commencement of offering of Class B shares, September 7, 1993 to April 30, 1994.
<F3> For the period from the commencement of offering of Class C shares, July 1, 1994 to April 30, 1995.
<F4> Annualized.
<F5> Per share data for the periods subsequent to April 30, 1994 are based on average shares outstanding.
<F6> 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.
<F7> Includes a per share distribution from paid-in capital of $0.0007.
<F8> Includes a per share distribution in excess of net investment income of $0.002.
<F9> Includes a per share distribution in excess of net investment income of $0.002 (Class A) and $0.001 (Class B and Class C).
<F10> The investment adviser did not impose all or a portion of its advisory, distribution or expense reimbursement fees for the
periods indicated. If these fees had been incurred by the Fund, the net investment income per share and the ratios would
have been:
Net investment income $ 0.28 $ 0.18 $ 0.28 $ 0.13 $ 0.21 $ 0.12 $ 0.21
Ratios (to average net
assets):
Expenses 0.95% 1.12%<F4> 1.16% 1.16%<F4> 1.80% 2.05%<F4> 1.79%
Net investment income 3.74% 3.49%<F4> 3.57% 3.64%<F4> 2.88% 2.48%<F4> 2.77%
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Municipal Limited Maturity Fund (the Fund) is a diversified series of MFS
Fixed Income Trust (the Trust). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
(2) Significant Accounting Policies
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, are valued on the
basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon
exchange or over-the-counter prices. Short-term obligations, which mature in
60 days or less, are valued at amortized cost, which approximates value.
Futures contracts, options and options on futures contracts listed on
commodities exchanges are valued at closing settlement prices. Over-the-
counter options are valued by brokers through the use of a pricing model which
takes into account closing bond valuations, implied volatility and short-term
repurchase rates. Securities for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Trustees.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its organization have been deferred and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of
operations of the Fund.
Written Options - The Fund may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. The Fund, as writer of an option, may have no
control over whether the underlying security may be sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option.
Futures Contracts - The Fund may enter into financial futures contracts for
the delayed delivery of fixed-income securities, or indices of such
securities, at a fixed price on a future date. In entering such contracts,
the Fund is required to deposit either in cash or securities an amount equal
to a certain percentage of the contract amount. Subsequent payments are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the underlying security, and are recorded for financial statement
purposes as unrealized gains or losses by the Fund. The Fund's investment in
financial futures contracts is designed to hedge against anticipated future
changes in interest rates. The Fund may also invest in financial futures
contracts for non-hedging purposes. For example, interest rate futures may be
used in modifying the duration of the portfolio without incurring the
additional transaction costs involved in buying and selling the underlying
securities. Should interest rates move unexpectedly, the Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a
loss.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount are amortized or accreted for both financial
statement and tax reporting purposes as required by federal income tax
regulations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Code which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. Accordingly, the amount of net investment income and net realized
gain reported on these financial statements may differ from that reported on
the Fund's tax return and, consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV.
Distributions paid by the Fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for federal
income tax purposes because the Fund intends to meet certain requirements of
the Code applicable to regulated investment companies which will enable the
Fund to pay exempt-interest dividends. The portion of such interest, if any,
earned on private activity bonds issued after August 7, 1986, may be
considered a tax preference item to shareholders. 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 return of
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B and Class C shares. Class B and Class C shares were first offered to
the public on September 7, 1993 and July 1, 1994, respectively. The three
classes of shares differ in their respective shareholder servicing agent,
distribution and service fees. Shareholders of each class also bear certain
expenses that pertain only to that particular class. All shareholders bear
the common expenses of the Fund pro rata based on the average daily net assets
of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend
rights; differences in per share dividend rates are generally due to
differences in separate class expenses, including distribution and shareholder
service fees.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee, computed daily and paid monthly at an effective annual rate of
0.40% of average daily net assets, amounted to $343,251 for the year ended
April 30, 1995.
Under an expense reimbursement agreement with MFS, MFS has agreed to pay all
of the operating expenses of the Fund, exclusive of management and
distribution fees, until February 28, 2002 or the date upon which the
operating expenses attributable to the Fund are repaid. To accomplish such
reimbursement, the Fund pays an expense reimbursement fee to MFS of 0.40% of
average daily net assets. The cumulative unreimbursed amount subject to
reimbursement by the Fund at April 30, 1995 amounted to $128,409. For the year
ended April 30, 1995, MFS paid expenses amounting to $351,338, of which the
Fund reimbursed $342,800. The difference ($8,538) is reflected as a reduction
of expenses in the Statement of Operations.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain of the officers
and Trustees of the Fund are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC).
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$20,393 as its portion of the sales charge on sales of Class A shares of the
Fund. The Trustees have adopted separate distribution plans for Class A, Class
B and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of
1940 as follows:
The Class A Distribution Plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service
fee to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum (reduced to a maximum of 0.15% per annum for an
indefinite period) 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 is not
imposing the 0.10% distribution fee for an indefinite period. Fees incurred
under the distribution plan during the year ended April 30, 1995 were 0.15% of
average daily net assets attributable to Class A shares on an annualized basis
and amounted to $112,991 (of which MFD retained $12,598).
The Class B and Class C Distribution Plans provide that the Fund will pay MFD
a monthly distribution fee, equal to 0.75% per annum, and a quarterly service
fee of up to 0.25% per annum, of the Fund's average daily net assets
attributable to Class B and Class C shares. MFD will pay to securities
dealers that enter into a sales agreement with MFD, all or a portion of the
service fee attributable to Class B and Class C shares, and will pay to such
securities dealers all of the distribution fee attributable to Class C shares.
The service fee is intended to be additional consideration for services
rendered by the dealer with respect to Class B and Class C shares. Fees
incurred under the distribution plans during the year ended April 30, 1995
were 1.00% of average daily net assets attributable to Class B and Class C
shares on an annualized basis and amounted to $81,287 and $19,654,
respectively (of which MFD retained $756 and $635, respectively).
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within twelve months following the share purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of
Class B shares in the event of a shareholder redemption within six years of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the year ended April 30, 1995 were
$7,604 and $40,063 for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earned
$112,881, $17,838 and $2,929 for Class A, Class B and Class C shares,
respectively, for its services as shareholder servicing agent. The fee is
calculated as a percentage of the average daily net assets of each class of
shares at an effective annual rate of up to 0.15%, up to 0.22% and up to 0.15%
attributable to Class A, Class B and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$40,977,556 and $55,468,467, respectively.
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 $73,388,840
-----------
Gross unrealized depreciation $ (488,394)
Gross unrealized appreciation 219,180
-----------
Net unrealized depreciation $ (269,214)
-----------
At April 30, 1995, the Fund, for federal income tax purposes, had a capital
loss carryforward of $798,921, which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on April 30, 2003.
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
Class A Shares
<CAPTION>
Year Ended Period Ended Year Ended
April 30, 1995 April 30, 1994<F1> August 31, 1993
--------------------------------- ------------------------------ -----------------------------
Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,162,482 $ 23,485,000 6,931,273 $ 53,339,832 14,020,174 $106,302,146
Shares issued to shareholders in
reinvestment of distributions 256,666 1,915,510 222,507 1,693,444 199,882 1,518,361
Shares reacquired (5,948,248) (44,193,995) (7,285,561) (55,885,672) (5,793,059) (43,992,275)
---------- ------------- ---------- -------------- --------- ------------
Net increase (decrease) (2,529,100) $ (18,793,485) (131,781) $ (852,396) 8,426,997 $ 63,828,232
---------- ------------- ---------- -------------- --------- ------------
Class B Shares
Year Ended Period Ended
April 30, 1995 April 30, 1994<F2>
--------------------------------- ------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------
Shares sold 502,731 $3,735,135 1,086,892 $8,349,795
Shares issued to shareholders in
reinvestment of distributions 20,109 149,528 7,522 57,204
Shares reacquired (469,653) (3,479,709) (100,719) (774,038)
-------- ---------- --------- ----------
Net increase 53,187 $ 404,954 993,695 $7,632,961
-------- ---------- --------- ----------
Class C Shares
Period Ended
April 30, 1995<F3>
---------------------------------
Shares Amount
- ------------------------------------------------------------------
Shares sold 915,597 $6,805,242
Shares issued to shareholders in
reinvestment of distributions 6,704 49,896
Shares reacquired (662,727) (4,903,183)
-------- ----------
Net increase 259,574 $1,951,955
-------- ----------
<FN>
<F1> For the eight-month period ended April 30, 1994.
<F2> For the period from the commencement of offering of Class B shares,
September 7, 1993 to April 30, 1994.
<F3> For the period from the commencement of offering of Class C shares, July 1,
1994 to April 30, 1995.
</TABLE>
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS, or an affiliate of MFS, in an unsecured line of credit
with a bank which permits borrowings up to $350 million, collectively.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average
daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated
to the Fund for the year ended April 30, 1995 was $1,291.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Fixed Income Trust and
Shareholders of MFS Municipal Limited Maturity Fund:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of MFS Municipal Limited Maturity Fund
(one of the series constituting MFS Fixed Income Trust) as of April 30, 1995,
the related statement of operations for the year then ended, the statement of
changes in net assets for the year ended April 30, 1995, the eight months
ended April 30, 1994, and the year ended August 31, 1993, and the financial
highlights for the year ended April 30, 1995, the eight months ended April 30,
1994, and the years ended August 31, 1993 and 1992. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the
securities owned at April 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
audits 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 Municipal
Limited Maturity Fund at April 30, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
June 2, 1995
---------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
THE MFS FAMILY OF FUNDS(R)
AMERICA'S OLDEST MUTUAL FUND GROUP
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or, leave a message any
time). This material should be read carefully before investing or sending money.
<TABLE>
<CAPTION>
<S> <C>
STOCK LIMITED MATURITY BOND
Massachusetts Investors Trust MFS(R) Government Limited Maturity Fund
Massachusetts Investors Growth Stock Fund MFS(R) Limited Maturity Fund
MFS(R) Capital Growth Fund MFS(R) Municipal Limited Maturity Fund
MFS(R) Emerging Growth Fund WORLD
MFS(R) Gold & Natural Resources Fund MFS(R) World Asset Allocation Fund
MFS(R) Growth Opportunities Fund MFS(R) World Equity Fund
MFS(R) Managed Sectors Fund MFS(R) World Governments Fund
MFS(R) OTC Fund MFS(R) World Growth Fund
MFS(R) Research Fund MFS(R) World Total Return Fund
MFS(R) Value Fund NATIONAL TAX-FREE BOND
STOCK AND BOND MFS(R) Municipal Bond Fund
MFS(R) Total Return Fund MFS(R) Municipal High Income Fund
MFS(R) Utilities Fund (closed to new investors)
BOND MFS(R) Municipal Income Fund
MFS(R) Bond Fund STATE TAX-FREE BOND
MFS(R) Government Mortgage Fund Alabama, Arkansas, California, Florida,
MFS(R) Government Securities Fund Georgia, Louisiana, Maryland, Massachusetts,
MFS(R) High Income Fund Mississippi, New York, North Carolina,
MFS(R) Intermediate Income Fund Pennsylvania, South Carolina, Tennessee, Texas,
MFS(R) Strategic Income Fund Virginia, Washington, West Virginia
(formerly MFS(R) Income & Opportunity Fund) MONEY MARKET
MFS(R) Cash Reserve Fund
MFS(R) Government Money Market Fund
MFS(R) Money Market Fund
</TABLE>
<PAGE>
MFS(R) MUNICIPAL -------------
LIMITED MATURITY [LOGO: NUMBER 1 DALBAR BULK RATE
FUND TOP-RATED SERVICE] U.S. POSTAGE
PAID
500 Boylston Street PERMIT #55638
Boston, MA 02116 BOSTON, MA
-------------
[LOGO: M F S
THE FIRST NAME IN MUTUAL FUNDS]
MML-2 6/95/7M 37/237/337
