<PAGE>
[logo] MFS SEMIANNUAL REPORT
THE FIRST NAME IN MUTUAL FUNDS OCTOBER 31, 1995
MFS(R) MUNICIPAL LIMITED MATURITY FUND
[Front cover
A photo of two airplanes.]
<PAGE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
<TABLE>
<S> <C>
TRUSTEES PORTFOLIO MANAGER
A. Keith Brodkin<F1> - Chairman and President Robert A. Dennis<F1>
Richard B. Bailey<F1> - Private Investor; TREASURER
Former Chairman and Director (until 1991), W. Thomas London<F1>
Massachusetts Financial Services Company;
Director, Cambridge Bancorp; ASSISTANT TREASURER
Director, Cambridge Trust Company James O. Yost<F1>
Peter G. Harwood - Private Investor SECRETARY
Stephen E. Cavan<F1>
J. Atwood Ives - Chairman and Chief
Executive Officer, Eastern Enterprises ASSISTANT SECRETARY
James R. Bordewick, Jr.<F1>
Lawrence T. Perera - Partner,
Hemenway & Barnes CUSTODIAN
State Street Bank and Trust Company
William J. Poorvu - Adjunct Professor,
Harvard University Graduate School of AUDITORS
Business Administration Deloitte & Touche LLP
Charles W. Schmidt - Private Investor
Arnold D. Scott<F1> - Senior Executive Vice --------------------------------------------------------
President, Director and Secretary, TOP RATED SERVICE
Massachusetts Financial Services Company
NUMBER For the second year in a row, MFS earned
Jeffrey L. Shames<F1> - President and Director, 1 a #1 ranking in DALBAR, Inc's.
Massachusetts Financial Services Company DALBAR Broker/Dealer Survey, Main Office
Operations Service Quality category.
Elaine R. Smith - Independent Consultant The firm achieved a 3.49 overall score - on
a scale of 1 to 4 - in the 1995 survey. A total of
David B. Stone - Chairman, North 71 firms responded, offering input on the quality
American Management Corp. of service they receive from 36 mutual fund companies
(investment advisers) nationwide. The survey contained questions about service
quality in 17 categories, including "knowledge of phone
INVESTMENT ADVISER service contacts," "accuracy of transaction processing,"
Massachusetts Financial Services Company and "overall ease of doing business with the firm."
500 Boylston Street --------------------------------------------------------
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
INVESTOR SERVICE
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
<FN>
<F1>Affiliated with the Investment Adviser
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
Moderate economic growth, low inflation, a stronger dollar and prospects for
major federal deficit reduction have provided a healthy environment for the
bond market during the past six months. Interest rates on high-grade
municipals in the 3- to 10-year maturity range fell by about 60 basis points
(0.60%) during the period. Interest rates on AAA-rated municipals of 3-, 5-,
7- and 10-year maturities stood at 4.10%, 4.30%, 4.50% and 4.80%,
respectively. For the six-month period ended October 31, 1995, Class A shares
of the Fund experienced a total return of +4.01%, while Class B and Class C
shares returned +3.64% and +3.57%, respectively. These returns assume the
reinvestment of distributions but exclude the effects of any sales charges. A
discussion of the factors that contributed to the Fund's performance may be
found in the Portfolio Performance and Strategy Section of this letter.
Economic Outlook
Moderate, but sustainable, growth appears to be the hallmark of the economic
expansion's fifth year. While initial estimates showed the U.S. economy
growing at an annual rate of 4.2% in the third quarter, this surprisingly
strong growth was mainly driven by a pickup in consumer spending and an
increase in business and government outlays. Although impressive, this growth
rate is not expected to continue in coming months. Recent retail sales have
been disappointing, in part because of rising levels of consumer debt. An
extended period of lower mortgage rates seems to have relieved much of the
pent-up demand for housing. Growth is not expected to get much help from the
manufacturing sector, either, as order flows from manufacturers have
moderated. Export activity, meanwhile, is also expected to remain modest as
continued weakness abroad has limited demand for many U.S. goods. However, the
Federal Reserve Board's consistent and, so far, successful efforts to fight
inflation seem to be giving consumers and businesses enough longer term
confidence to help maintain modest growth in real (adjusted for inflation)
gross domestic product into 1996.
Interest Rates
Given the growth of the economy in the third quarter, prospects for further
decreases in short-term interest rates by the Federal Reserve seem uncertain
in the near term. Long-term rates, meanwhile, have moved noticeably downward
in recent months in anticipation of more modest fourth-quarter growth with
continued low inflation. While there have been some increases in commodity
prices, companies have found it difficult to pass these on at the consumer
level as they continue to fight for market share. Additionally, unit labor
costs remain under control and seem to be growing at a pace that is near or
below the ongoing inflation rate. Thus, with long-term government bonds
yielding over 6% in an environment of 2% to 3% inflation, real rates of return
in the fixed-income markets remain relatively attractive.
Portfolio Performance and Strategy
The performance of short-maturity municipal bonds actually lagged that of
Treasuries, whose corresponding rates declined by about 100 basis points
(1.00%) over the past six months. This was not surprising since municipals
were fully valued relative to Treasuries at the end of April (principal value
and interest on Treasury securities are guaranteed by the U.S. Government if
held to maturity). Even after the municipal market's underperformance during
the period, the inter-market yield ratios in this maturity range are much
lower than those for long-term municipals. For example, the ratio of 5-year,
AA-rated municipals to 5-year Treasury yields is 74%, while that for 30-year
maturities is about 88%. This phenomenon is due to the fact that demand for
short-maturity municipals has been much stronger than that for long-maturity
municipals, reflecting in part investors' recognition that short municipals
are unlikely to be affected by any of the major tax reform proposals that
might be considered by the next Congress. If enacted, some of the concepts
being discussed could ultimately have negative implications for the valuation
of municipals relative to Treasuries.
During the six months ended October 31, 1995, the Fund's average maturity
was lengthened from 3 1/2 to 4 years, a change that helped the Fund benefit from
the trend of declining interest rates. The Fund's total returns for Class A
shares exceeded the +3.46% average return for all the short-term municipal bond
funds tracked by Lipper Analytical Services, Inc., an independent firm which
reports mutual fund performance. The Fund's net asset value return ranked 17th
out of 49 funds in the category for the past 12 months. The Fund's total return
for the past six months was also comparable to the +4.44% return reported by the
Lehman Brothers Municipal Bond 3-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). As would be expected during such a time, the Fund's
total returns lagged the +5.37% return registered by the Lehman Brothers
Municipal Bond 5-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), since a fund with an average maturity of four years would typically have
less price sensitivity to changing interest rates than one with an average
maturity of five years. Over the past six months, performance was mainly
determined by maturity structures, as there were no major changes in yield
relationships among major sectors in the municipal bond market.
Since the yield differential between high- and low-quality bonds remains
very narrow, the Fund continues to maintain a high-quality portfolio.
Currently, 68% of the Fund's total net assets is invested in bonds rated AAA
or AA by Standard & Poor's. The Fund's largest sector concentration, which
represents about 28% of total net assets, is in tax-supported general
obligation bonds, historically the most secure municipal credits. This sector
has benefited 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,
[photo of A. Keith Brodkin, [photo of Robert A. Dennis, Portfolio Manager.]
Chairman and President]
/s/ A. Keith Brodkin /s/ Robert A. Dennis
A. Keith Brodkin Robert A. Dennis
Chairman and President Portfolio Manager
November 10, 1995
PORTFOLIO MANAGER PROFILE
A graduate of Massachusetts Institute of Technology and its Sloan School of
Management, Robert Dennis began his career at MFS in 1980 and was promoted to
Vice President - Investments in 1983. In 1986, he was named Senior Vice
President. He has been the Portfolio Manager of MFS Municipal Limited Maturity
Fund since 1992. Mr. Dennis is a Chartered Financial Analyst (C.F.A.).
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 by Fitch Investors Service,
Inc. (Fitch) 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 Fitch
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.
PERFORMANCE SUMMARY
Because mutual funds like MFS Municipal Limited Maturity 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 and Class C shares for
the applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
Class A Investment Results
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
3/17/92<F2>-
6 Months 1 Year 10/31/95
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return<F1> +4.01% +6.86% +20.78%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return<F1> -- +6.86% + 5.35%
- -------------------------------------------------------------------------------------------------------
<F1> These results do not include the sales charge. If the charge had been included, the results would have
been lower.
<F2> Commencement of offering of this class of shares.
</TABLE>
<PAGE>
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN - continued
<TABLE>
The average annual total returns, calculated for the period ended as of the most recent calendar quarter as
required by the Securities and Exchange Commission (the SEC), with all distributions reinvested and reflecting the
maximum sales charge of 2.50% on the initial investment for the 1-year period ended September 30, 1995 and for the
period from March 17, 1992<F1> to September 30, 1995, were +3.35% and +4.55%, respectively.
Class B Investment Results
(net asset value change including reinvested distributions)
<CAPTION>
9/07/93<F1>-
6 Months 1 Year 10/31/95
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return<F2> +3.64% +6.03% +4.79%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return<F2> -- +6.03% +2.20%
- -------------------------------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most recent calendar quarter as
required by the SEC, with all distributions reinvested and reflecting the current maximum contingent deferred sales
charge (CDSC) of 4% for the 1-year period ended September 30, 1995 and for the period from September 7, 1993(sd) to
September 30, 1995, were +1.03% and +0.17%, respectively.
Class C Investment Results
(net asset value change including reinvested distributions)
<CAPTION>
7/01/94<F1>-
6 Months 1 Year 10/31/95
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return<F3> +3.57% +5.91% +6.18%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return<F3> -- +5.91% +4.60%
- -------------------------------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most recent calendar quarter as
required by the SEC, with all distributions reinvested for the 1-year period ended September 30, 1995 and for the period
from July 1, 1994(sd) to September 30, 1995, were +5.05% and +4.49%, respectively.
All results represent past performance and are not necessarily an indication of future results. Investment return
and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
<FN>
<F1> Commencement of offering of this class of shares.
<F2> These results do not include any CDSC. If the charge had been included, the results would have been lower.
<F3> 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.
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - October 31, 1995
Municipal Bonds - 99.7%
- -----------------------------------------------------------------------------
S&P
Bond Rating Principal Amount
(Unaudited)Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------
General Obligation - 27.6%
AAA Aldine, TX, Independent School
District, PSFG, 7.25s, 1997 $ 600 $ 624,180
AA+ Baltimore County, MD, Consolidated
Public Improvement, 5s, 1997 500 507,470
AA+ Baltimore County, MD, Metropolitan
District, 6.5s, 1997 500 520,185
AAA Clark County, NV, FGIC, 5.5s, 2002 2,000 2,059,840
A+ Commonwealth of Massachusetts,
7.25s, 1996 1,000 1,019,470
A+ Commonwealth of Massachusetts, 7s, 1999 1,000 1,068,130
AAA Cook County, IL, High School District
No. 205(Thornton Township),
FGIC, 5.4s, 1997 450 460,215
B District of Columbia, 4.3s, 1996 900 887,247
AAA District of Columbia, AMBAC, 7.25s, 1998 500 532,710
NR Indianapolis, IN, Local Public Improvement
Bond Bank, 6.25s, 2001 1,000 1,069,610
AAA Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,243,420
AA- Milwaukee County, WI, 5.35s, 2001 2,410 2,504,038
AA Milwaukee, WI, Metropolitan Sewage District,
6.7s, 2001 500 554,165
BBB+ New York, NY, 5.3s, 2000 2,000 2,010,740
BBB+ New York, NY, 6.125s, 2001 600 621,924
AA- State of Connecticut, 4.5s, 2001 650 647,348
AA State of Hawaii, 5.4s, 2001 500 524,505
AA- State of Illinois, 5.5s, 2000 500 521,595
AAA State of Louisiana, MBIA, 5.3s, 2001 500 519,135
AA+ State of Minnesota, 6.8s, 1996 750 766,875
-----------
$18,662,802
- -------------------------------------------------------------------------------
Student Loan Revenue - 10.9%
AAA Alaska Student Loan Corp., AMBAC,
5.125s, 2002 $1,000 $ 1,005,560
NR Colorado Student Obligation Board
Authority, Student Loan Rev.,
6.125s, 1998 315 324,072
NR Louisiana Public Facilities
Authority, Student Loan Rev.,
6.5s, 2002 1,000 1,062,860
NR Mississippi Higher Education Student
Loan, 5.4s, 2002 1,000 1,015,690
NR Nebraska Higher Education Loan
Program, Inc. Rev., 5s, 1998 500 498,430
NR Nebraska Higher Education Loan
Program, Inc. Rev., 5.2s, 1999 500 499,655
NR Nebraska Higher Education Loan
Program, Inc. Rev., 5.2s, 1999 500 499,270
NR New Mexico Educational Assistance
Foundation, 5.25s, 1998 1,000 1,019,560
NR Virginia Educational Loan Authority,
Guaranteed Student Loan Program, 5s, 2003 1,500 1,479,870
-----------
$ 7,404,967
- -------------------------------------------------------------------------------
State and Local Appropriation - 10.5%
BBB+ California Public Works Board, Energy
Efficiency Rev., 5.5s, 1996 $ 500 $ 505,645
AAA California Public Works Board, Lease
Rev. (Secretary of State), AMBAC,
5.25s, 1998 630 651,829
B- District of Columbia, Certificates of
Participation, 6s, 1997 532 533,420
AA- Michigan Building Authority Rev., 6.2s, 2002 1,000 1,093,110
BBB New York Dormitory Authority Rev.
(City University), 5.25s, 1997 500 507,745
BBB+ New York Dormitory Authority Rev.
(State University), 5.1s, 2000 500 500,140
BBB+ New York Medical Care Facilities
Finance Agency Rev., 5.9s, 2000 995 1,036,113
BBB New York Urban Development (Correctional
Facility), 5.1s, 2002 1,000 1,001,100
AAA State of New Jersey, Transportation
System Authority Rev., AMBAC, 5.5s, 2000 500 523,390
AA State of Utah, Building Ownership
Authority Lease Rev., 5.125s, 2000 750 774,600
-----------
$ 7,127,092
- -------------------------------------------------------------------------------
Refunded and Special Obligation - 15.0%
A+ Commonwealth of Massachusetts, 6.7s, 1998 $1,000 $ 1,074,120
AA+ De Kalb County, GA, 7.3s, 1997 1,000 1,056,690
A Kentucky Turnpike Authority Economic
Development Road Rev., 7.6s, 1996 1,150 1,199,829
A+ New Jersey Transportation Trust Fund
Authority, 5.6s, 1998 495 511,973
AAA Snohomish County, WA, Public Utility 1,
7.875s, 1997 1,000 1,062,550
AA+ State of New Jersey, 7.3s, 1996 3,550 3,681,918
AA State of Texas, 7.125s, 2000 500 561,240
AA State of Washington, 5.85s, 1996 1,000 1,008,830
-----------
$10,157,150
- -------------------------------------------------------------------------------
Single Family Housing Revenue - 3.7%
AAA Alaska State Housing Finance Corp.,
MBIA, 4.6s, 2000 $1,000 $ 998,810
AA New York Housing Corp. Revenue
Refunding, 4.9s, 2002 1,000 987,580
A+ Tennessee Housing Development Agency,
4.95s, 2000 500 499,125
-----------
$ 2,485,515
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.0%
AAA Rhode Island Housing & Mortgage
Finance Corp.,
AMBAC, 5.15s, 2001 $1,000 $ 1,024,570
AAA Rhode Island Housing & Mortgage
Finance Corp.,
AMBAC, 5.25s, 2002 1,000 1,028,570
-----------
$ 2,053,140
- -------------------------------------------------------------------------------
Insured Health Care Revenue - 5.5%
AAA Delaware County, IN, Hospital
Authority (Ball Memorial Hospital),
AMBAC, 6.625s, 2001 $2,520 $ 2,775,654
AAA Medical Center Hospital Authority,
GA, Anticipation Certificates
(Columbus Regional Healthcare
System), MBIA, 5.9s, 2001 885 941,321
-----------
$ 3,716,975
- -------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 8.5%
AAA Brownsville, TX, Utility Rev., AMBAC,
5s, 2000 $ 400 $ 409,460
BBB+ North Carolina Eastern Municipal
Power Agency,
Power Systems Rev., 7.3s, 1998 2,000 2,067,100
BBB Philadelphia, PA, Gas Works Rev.,
5.4s, 1998 1,000 1,017,500
AAA Sacramento, CA, Municipal Utility
District Electric
Rev., FGIC, 6s, 2001 620 667,126
AA Washington Public Power Supply
System, 4.625s, 1998 1,000 1,005,530
AA Washington Public Power Supply
System, 5.1s, 2000 600 610,404
-----------
$ 5,777,120
- -------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 6.9%
A Massachusetts Water Resources
Authority, 5.25s, 2001 $2,500 $ 2,578,950
AA Milwaukee, WI, Metropolitan Sewage
District, 5.4s, 1996 1,000 1,013,150
AAA San Antonio, TX, Water Rev., FGIC,
5.8s, 1999 1,000 1,051,670
-----------
$ 4,643,770
- -------------------------------------------------------------------------------
Airport and Port Revenue - 1.3%
AAA Metropolitan Nashville Airport
Authority, TN, Airport Rev., FGIC,
6.125s, 1999 $ 800 $ 845,304
- -------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.3%
AAA Arizona State Transportation Board,
Excise Tax Rev.(Maricopa County Regional
Area), MBIA, 6.8s, 1997 $1,000 $ 1,045,310
AAA San Diego County, CA, Regional
Transportation Commission, Sales Tax
Rev., FGIC, 5s, 1998 500 513,215
-----------
$ 1,558,525
- -------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 0.7%
A+ Monroe County, GA, Development
Authority Pollution Control Rev.
(Oglethorpe Power Corp.), 5.1s, 1997 $ 500 $ 505,696
- -------------------------------------------------------------------------------
Universities - 0.8%
AAA Union County, PA, Higher Educational
Facilities Financing Authority, (Bucknell
University), MBIA, 5.3s, 1998 $ 500 $ 514,780
- -------------------------------------------------------------------------------
Miscellaneous Revenue - 3.0%
BBB+ Detroit, MI, Distributable State Aid,
5.375s, 1996 $ 750 $ 753,480
BBB+ Detroit, MI, Distributable State Aid,
5.625s, 1997 750 762,818
AAA Pennsylvania Intergovernmental Coop
Authority(City of Philadelphia Funding
Program), FGIC, 5.4s, 1997 500 510,516
-----------
$ 2,026,814
- -------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $66,474,780) $67,479,650
- -------------------------------------------------------------------------------
Floating Rate Demand Note - 0.1%
- -------------------------------------------------------------------------------
NR Uinta County, WY, Pollution Control
Rev. (Chevron), due 8/15/20, at
Amortized Cost $ 100 $ 100,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $66,574,780) $67,579,650
Other Assets, Less Liabilities - 0.2% 143,095
===============================================================================
Net Assets - 100.0% $67,722,745
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
October 31, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $66,574,780) $67,579,650
Cash 28,008
Receivable for Fund shares sold 45,707
Interest receivable 1,203,056
Deferred organization expenses 5,700
Other assets 1,098
-----------
Total assets $68,863,219
-----------
Liabilities:
Distributions payable $ 59,469
Payable for investments purchased 1,003,833
Payable for Fund shares reacquired 47,222
Payable to affiliates -
Management fee 2,216
Distribution fee 9,435
Accrued expenses and other liabilities 18,299
-----------
Total liabilities $ 1,140,474
-----------
Net assets $67,722,745
===========
Net assets consist of:
Paid-in capital $67,566,840
Unrealized appreciation on investments 1,004,870
Accumulated net realized loss on investments (831,170)
Accumulated distributions in excess of net investment
income (17,795)
-----------
Total $67,722,745
===========
Shares of beneficial interest outstanding 8,917,301
=========
Class A shares:
Net asset value and redemption price per share
(net assets of $57,517,128 / 7,572,409 shares of
beneficial interest outstanding) $7.60
=====
Offering price per share (100/97.50) $7.79
=====
Class B shares:
Net asset value and offering price per share
(net assets of $8,053,462 / 1,061,588 shares of
beneficial interest outstanding) $7.59
=====
Class C shares:
Net asset value, offering price and redemption price per share
(net assets of $2,152,155 / 283,304 shares of beneficial
interest outstanding) $7.60
=====
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 (Unaudited)
- ------------------------------------------------------------------------------
Six Months Ended October 31, 1995
- ------------------------------------------------------------------------------
Income:
Interest $1,730,037
----------
Expenses -
Management fee $ 141,469
Trustees' compensation 6,371
Shareholder Servicing Agent Fee (Class A) 45,657
Shareholder Servicing Agent Fee (Class B) 8,826
Shareholder Servicing Agent Fee (Class C) 1,407
Distribution and service fee (Class A) 45,613
Distribution and service fee (Class B) 34,755
Distribution and service fee (Class C) 9,411
Registration costs 32,676
Custodian fee 13,944
Auditing fees 6,550
Printing 5,189
Postage 3,360
Amortization of organization expenses 2,085
Miscellaneous 9,664
----------
Total expenses $ 366,977
Fees paid indirectly (2,815)
Preliminary refund of expenses pursuant to reimbursement
agreement 8,554
----------
Net expenses $ 372,716
----------
Net investment income $1,357,321
----------
Realized and unrealized gain (loss) on investments:
Realized gain on investment transactions (identified cost
basis) $ 58,895
Change in unrealized appreciation on investments 1,274,084
----------
Net realized and unrealized gain on investments $1,332,979
----------
Increase in net assets from operations $2,690,300
==========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
Six Months Ended
October 31, 1995 Year Ended
(Unaudited) April 30, 1995
- ------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,357,321 $ 3,098,003
Net realized gain (loss) on
investments 58,895 (409,013)
Net unrealized gain on investments 1,274,084 136,714
------------ ------------
Increase in net assets from
operations $ 2,690,300 $ 2,825,704
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,173,691) $ (2,806,873)
From net investment income (Class B) (126,432) (234,092)
From net investment income (Class C) (28,363) (57,037)
In excess of net investment income
(Class A) -- (16,471)
In excess of net investment income
(Class B) -- (1,374)
In excess of net investment income
(Class C) -- (335)
------------ ------------
Total distributions declared to
shareholders $ (1,328,486) $ (3,116,182)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 9,669,219 $ 34,025,377
Net asset value of shares issued to
shareholders in
reinvestment of distributions 932,713 2,114,934
Cost of shares reacquired (18,295,546) (52,576,887)
------------ ------------
Decrease in net assets from Fund
share transactions $ (7,693,614) $(16,436,576)
------------ ------------
Total decrease in net assets $ (6,331,800) $(16,727,054)
Net assets:
At beginning of period 74,054,545 90,781,599
------------ ------------
At end of period (including
accumulated distributions in excess
of net investment income of $17,795
and $46,630, respectively) $ 67,722,745 $ 74,054,545
============ ============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Six
Months Ended Eight
October 31, Year Ended Months Ended Year Ended August 31,
1995 April 30, April 30, --------------------------
(Unaudited) 1995 1994 1993 1992<F1>
- -----------------------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 7.45 $ 7.47 $ 7.72 $ 7.43 $ 7.31
------- ------- ------- ------- -------
Income from investment operations<F3> -
Net investment income $ 0.15 $ 0.28 $ 0.19 $ 0.31 $ 0.15
Net realized and unrealized gain (loss) on investments 0.15 (0.02) (0.22) 0.30 0.12
------- ------- ------- ------- -------
Total from investment operations $ 0.30 $ 0.26 $ 0.03 $ 0.61 $ 0.27
------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.15) $ (0.28)<F8> $ (0.19)<F7> $ (0.31) $ (0.15)<F6>
From net realized gain on investments -- -- -- (0.01) --
In excess of net realized gains on investments -- -- (0.03) -- --
------- ------- ------- ------- -------
Total distributions declared to shareholders $ (0.15) $ (0.28) $ (0.22) $ (0.32) $ (0.15)
------- ------- ------- ------- -------
Net asset value - end of period $ 7.60 $ 7.45 $ 7.47 $ 7.72 $ 7.43
======= ======= ======= ======= =======
Total return<F4> 4.01% 3.55% (0.59)%<F2> 8.47% (8.26)%<F2>
Ratios (to average net assets)/Supplemental data<F9>:
Expenses<F5> 0.95%<F2> 0.95% 0.89%<F2> 0.68% 0.55%<F2>
Net investment income 3.93%<F2> 3.74% 3.72<F2> 4.04% 4.25%<F2>
Portfolio turnover 20% 50% 48% 69% 8%
Net assets at end of period (000 omitted) $57,517 $64,329 $83,367 $87,192 $21,312
<FN>
<F1> For the period from the commencement of offering of Class A shares, March 17, 1992 to August 31, 1992.
<F2> Annualized.
<F3> Per share data for the period subsequent to April 30, 1994 is based on average shares outstanding.
<F4> Total returns for Class A shares do not include applicable sales charge. If the charge had been included, the result would
have been lower.
<F5> For periods ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
<F6> Includes a per share distribution from paid-in capital of $0.0007.
<F7> Includes a per share distribution in excess of net investment income of $0.002.
<F8> Includes a per share distribution in excess of net investment income of $0.002.
<F9> The investment adviser did not impose a portion of its management fee and assumed some of the operating expenses of the
Fund for certain of the periods indicated. If these fees had been incurred by the Fund and if the expense reimbursement
agreement had not been in effect, the net investment income per share and the ratios would have been:
Net investment income $ 0.15 $ 0.28 $ 0.18 $ 0.28 $ 0.13
Ratios (to average net assets):
Expenses<F5> 0.92%<F2> 0.95% 1.12%<F2> 1.16% 1.16%<F2>
Net investment income 3.96%<F2> 3.74% 3.49%<F2> 3.57% 3.64%<F2>
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Six Six
Months Ended Eight Months Ended Ten
October 31, Year Ended Months Ended October 31, Months Ended
1995 April 30, April 30, 1995 April 30,
(Unaudited) 1995 1994<F1> (Unaudited) 1995<F2>
- -----------------------------------------------------------------------------------------------------------------------------------
Class B Class C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $ 7.44 $ 7.46 $ 7.75 $ 7.45 $ 7.45
------ ------ ------ ------ ------
Income from investment operations<F4> -
Net investment income $ 0.12 $ 0.21 $ 0.14 $ 0.11 $ 0.21
Net realized and
unrealized
gain (loss) on
investments 0.15 (.02) (0.26) 0.15 (0.02)
------ ------ ------ ------ ------
Total from investment
operations $ 0.27 $ 0.19 $(0.12) $ 0.26 $ 0.19
------ ------ ------ ------ ------
Less distributions
declared to shareholders -
From net investment
income $(0.12) $(0.21) $(0.13) $(0.11) $(0.19)
In excess of net investment
income -- -- <F6> (0.01) -- -- <F6>
In excess of net
realized gain on
investments -- -- (0.03) -- --
------ ------ ------ ------ ------
Total distributions declared
to shareholders $ (0.12) $ (0.21) $ (0.17) $ (0.11) $ (0.19)
------ ------ ------ ------ ------
Net asset value - end of
period $ 7.59 $ 7.44 $ 7.46 $ 7.60 $ 7.45
====== ====== ====== ====== ======
Total return 3.64% 2.67% (2.37)%<F3> 3.57% 2.53%
Ratios (to average net assets)/Supplemental data<F7>:
Expenses<F5> 1.67%<F3> 1.80% 1.74%<F3> 1.80%<F3> 1.79%<F3>
Net investment income 3.21%<F3> 2.88% 2.79<F3> 3.09%<F3> 2.77%<F3>
Portfolio turnover 20% 50% 48% 20% 50%
Net assets at end of period
(000 omitted) $8,053 $7,792 $7,415 $2,152 $1,934
<FN>
<F1> For the period from the commencement of offering of Class B shares, September 7, 1993 to April 30, 1994.
<F2> For the period from the commencement of offering of Class C shares, July 1, 1994 to April 30, 1995.
<F3> Annualized.
<F4> Per share data for the periods subsequent to April 30, 1994 is based on average shares outstanding.
<F5> For periods ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
<F6> Includes a per share distribution in excess of net investment income of $0.001 (Class B and Class C).
<F7> The investment adviser did not impose a portion of its management fee and assumed some of the operating expenses of the Fund
for certain of the periods indicated. If these fees had been incurred by the Fund and if the expense reimbursement agreement
had not been in effect, the net investment income per share and the ratios would have been:
Net investment
income $ 0.12 $ 0.21 $ 0.12 $ 0.11 $ 0.21
Ratios (to average net assets):
Expenses<F5> 1.71%<F3> 1.80% 2.05%<F3> 1.77%<F3> 1.79%<F3>
Net investment income
3.18%<F3> 2.88% 2.48%<F3> 3.12%<F3> 2.77%<F3>
</TABLE>
See notes to financial statements
<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 market
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.
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.
Interest payments received in additional securities are recorded on the ex-
interest date in an amount equal to the value of the security on such date.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on
the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of
net investment income and net realized gain reported on these financial
statements may differ from that reported on the Fund's tax return, and
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders on Form
1099-DIV. 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.
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. 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.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B, and Class C shares. The three classes of shares differ in their
respective shareholder servicing agent, distribution and service fees.
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 is computed daily and paid monthly at an effective annual rate
of 0.40% of average daily net assets.
Under a temporary expense reimbursement agreement with MFS, MFS has
voluntarily agreed to pay all of the Fund's operating expenses, exclusive of
management and distribution fees until February 28, 2002 or the date upon
which the operating expenses attributable to the Fund are repaid. The Fund in
turn will pay MFS an expense reimbursement fee not greater than 0.40% of
average daily net assets. To the extent that the expense reimbursement fee
exceeds the Fund's actual expenses, the excess will be applied to amounts paid
by MFS in prior years. At October 31, 1995, the aggregate unreimbursed
expenses owed to MFS by the Fund amounted to $119,855, after $8,554 net
reimbursement in the current period.
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 of its independent Trustees and Mr.
Bailey. Included in Trustees' compensation is a net periodic pension expense
of $1,041 for the six months ended October 31, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$21,442 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%
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
period ended October 31, 1995 were 0.15% of average daily net assets
attributable to Class A shares on an annualized basis and amounted to $45,613
(of which MFD retained $11,156).
The Class B and Class C distribution plans provide that the Fund will pay MFD
a distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. Except in the case of the first year service fee, the service
fee is reduced to 0.15% per annum of the Fund's average daily net assets
attributable to Class B 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 period ended October 31, 1995 were 0.87% and
1.00% of average daily net assets attributable to Class B and Class C shares,
respectively, on an annualized basis and amounted to $34,755 and $9,411,
respectively (of which MFD retained $899 and $281, 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 12 months following the share purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of
Class B shares in the event of a shareholder redemption within six years of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the period ended October 31, 1995 were
$3,157 and $26,984 for Class A shares and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the average daily net assets of each class of share 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
$13,609,710 and $19,426,464, 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 $66,574,780
===========
Gross unrealized appreciation $ 1,106,318
Gross unrealized depreciation (101,448)
-----------
Net unrealized appreciation $ 1,004,870
===========
(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
Period Ended Year Ended
October 31, 1995 April 30, 1995
--------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 869,231 $ 6,559,136 3,162,482 $ 23,485,000
Shares issued to
shareholders in
reinvestment of
distributions 110,117 832,003 256,666 1,915,510
Shares reacquired (2,039,593) (15,375,145) (5,948,248) (44,193,995)
---------- ----------- ---------- -----------
Net decrease (1,060,245) $ (7,984,006) (2,529,100) $(18,793,485)
========== ============= ========== ============
Class B Shares
Period Ended Year Ended
October 31, 1995 April 30, 1995
--------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 204,493 $ 1,537,714 502,731 $ 3,735,135
Shares issued to
shareholders in
reinvestment of
distributions 9,853 74,357 20,109 149,528
Shares reacquired (199,640) (1,502,301) (469,653) (3,479,709)
---------- ----------- ---------- -----------
Net increase 14,706 $ 109,770 53,187 $ 404,954
========== ============= ========== ============
Class C Shares
Period Ended Year Ended
October 31, 1995 April 30, 1995*
--------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 208,469 $ 1,572,369 915,597 $ 6,805,242
Shares issued to
shareholders in
reinvestment of
distributions 3,487 26,353 6,704 49,896
Shares reacquired (188,226) (1,418,100) (662,727) (4,903,183)
---------- ----------- ---------- -----------
Net increase 23,730 $ 180,622 259,574 $ 1,951,955
========== =========== ========== ===========
*For the period from the commencement of offering of Class C shares, July 1,
1994 to April 30, 1995.
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the six months ended
October 31, 1995 was $446.
---------------------------------------------
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 INVESTMENT OPPORTUNITIES
MUTUAL FUNDS
The MFS Family of Funds(R), shown on the facing page, falls into the eight
general categories below. All offer full-time professional management, a
diversified portfolio, and a wide array of shareholder services.
STOCK FUNDS seek growth of capital rather than income through investments in
stocks.
STOCK AND BOND FUNDS seek current income and growth of capital through
investments in both stocks and bonds.
BOND FUNDS seek current income through investments in debt securities.
WORLD FUNDS seek stock, balanced, and bond fund objectives through
investments in U.S. and foreign stocks and bonds.
LIMITED-MATURITY FUNDS seek current income and preservation of capital through
investments in debt securities with remaining maturities of five years or less.
NATIONAL TAX-FREE BOND FUNDS seek current income exempt from federal income
tax through investments in debt securities issued by states and
municipalities.\1/
STATE TAX-FREE BOND FUNDS seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state
and its municipalities.\1/
MONEY MARKET FUNDS seek preservation of capital and current income through
investments in short-term debt securities.\2/
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call MFS Investor Information for
literature\3/ on MFS products and services: 1-800-637-2929, from 9 a.m. to 5
p.m. Eastern time any business day (leave a message any time).
\1/A small portion of the income may be subject to federal, state and/or
alternative minimum tax.
\2/Investments in money market funds are not issued or guaranteed by the U.S.
government and there is no assurance that the fund will be able to maintain
a stable net asset value.
\3/Including a prospectus containing more complete information including
charges and expenses. Read the prospectus carefully before investing.
<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>
<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)
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Municipal Income Fund
BOND ----------------------------------------------------
- ----------------------------------------------------
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,
- ---------------------------------------------------- ----------------------------------------------------
MFS(R) Strategic Income Fund Texas, 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 [logo]
LIMITED MATURITY NUMBER
FUND 1
DALBAR
500 Boylston Street TOP-RATED SERVICE
Boston, MA 02116
BULK RATE
U.S. POSTAGE
P A I D
PERMIT #55638
BOSTON, MA
MML-3 1/96 3M--37/237/337
[logo]
MFS
THE FIRST NAME IN MUTUAL FUNDS
