<PAGE>
[Logo] Annual Report for
THE FIRST NAME IN MUTUAL FUNDS Year Ended
April 30, 1996
MFS(R) MUNICIPAL LIMITED MATURITY FUND
[Graphic Omitted]
<PAGE>
<TABLE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
<S> <C>
TRUSTEES ASSISTANT SECRETARY
A. Keith Brodkin* - Chairman and President James R. Bordewick, Jr.*
Richard B. Bailey* - Private Investor;
Former Chairman and Director (until 1991), CUSTODIAN
Massachusetts Financial Services Company; State Street Bank and Trust Company
Director, Cambridge Bancorp;
Director, Cambridge Trust Company AUDITORS
Deloitte & Touche LLP
Peter G. Harwood - Private Investor
INVESTOR INFORMATION
J. Atwood Ives - Chairman and Chief Executive For MFS stock and bond market outlooks,
Officer, Eastern Enterprises call toll free: 1-800-637-4458 anytime from
a touch-tone telephone.
Lawrence T. Perera - Partner, For information on MFS mutual funds,
Hemenway & Barnes call your financial adviser or, for an
information kit, call toll free:
William J. Poorvu - Adjunct Professor, 1-800-637-2929 any business day from
Harvard University Graduate School of 9 a.m. to 5 p.m. Eastern time (or leave
Business Administration a message anytime).
Charles W. Schmidt - Private Investor INVESTOR SERVICE
MFS Service Center, Inc.
Arnold D. Scott* - Senior Executive Vice P.O. Box 2281
President, Director and Secretary, Boston, MA 02107-9906
Massachusetts Financial Services Company For general information, call toll free:
1-800-225-2606 any business day from
Jeffrey L. Shames* - President and Director, 8 a.m. to 8 p.m. Eastern time.
Massachusetts Financial Services Company For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business
Elaine R. Smith - Independent Consultant day from 9 a.m. to 5 p.m. Eastern time.
(To use this service, your phone must be
David B. Stone - Chairman, North American equipped with a Telecommunications Device for
Management Corp. (investment advisers) the Deaf.)
For share prices, account balances and
INVESTMENT ADVISER exchanges, call toll free: 1-800-MFS-TALK
Massachusetts Financial Services Company (1-800-637-8255) anytime from a touch-tone
500 Boylston Street telephone.
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741 DALBAR TOP-RATED SERVICE
MFS #1 MFS For the second year in a
PORTFOLIO MANAGER DALBAR row, MFS earned a #1
Robert A. Dennis* ranking in DALBAR,
Inc.'s Broker/Dealer
TREASURER Survey, Main Office
W. Thomas London* Operations Service Quality
category. The firm achieved
ASSISTANT TREASURER a 3.49 overall score - on a scale of 1 to 4 - in the
James O. Yost* 1995 survey. A total of 71 firms responded, offering
input on the quality of service they receive from 36
SECRETARY mutual fund companies nationwide. The survey
Stephen E. Cavan* contained questions about service quality in 17
categories, including "knowledge of phone service
contacts," "accuracy of transaction processing," and
*Affiliated with the Investment Adviser "overall ease of doing business with the firm."
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
Sentiment in the fixed-income markets has turned decidedly negative in recent
months. Strong employment growth indicated that the economy has made a better-
than-expected recovery from the special factors (government shutdowns, severe
weather) that caused it to slow during mid-winter. Sharp rises in commodity and
energy prices added to the sudden realization that the best news regarding
inflation may be behind us. The failure of Congress and the administration to
reach a long-term balanced-budget agreement added to the dismal market
psychology. Nevertheless, compared to other markets such as comparable-maturity
U.S. Treasuries, short- and intermediate-term maturity municipals actually
performed quite well. For the 12-month period ended April 30, 1996, Class A
shares of the Fund provided a total return of 5.11%, while Class B and Class C
shares returned 4.34% and 4.23%, respectively. These returns assume the
reinvestment of distributions but exclude the effects of any sales charges. A
discussion of the Fund's performance may be found in the Portfolio Performance
and Strategy section of this letter.
Yields on three- to five-year high-grade municipals, while still about 40 to
50 basis points (0.40% to 0.50%) lower than those of April 30, 1995, rose about
30 basis points (0.30%) over the six-month period ended April 30, 1996. Yields
were about 60 basis points (0.60%) higher than the lows for the period reached
in mid-February. However, yield increases in this market were significantly less
than those experienced by comparable-maturity U.S. Treasuries. Indicating the
market's favorable relative performance, the ratio of five-year AAA-rated (by
Standard & Poor's) municipal yields to five-year Treasuries, which was as high
as 79% in late January of this year, declined to a low of 71% as of April 30,
1996. By contrast, the comparable yield ratio for long-term maturity municipals
has been about 85%.
This year's rise in interest rates has served to further depress the
issuance of new municipal bonds. While supply has been limited, demand for
short- to intermediate-maturity municipals has been strong from investors
seeking to avoid the risks of the long-term market. Another positive for the
overall municipal market was the diminished sense of fear about radical tax
reform following the sharp attacks against the "flat-tax" concept that were
raised during the presidential primary season.
Economic Environment
We believe the U.S. economy will continue to show moderate growth in 1996,
although this growth may be somewhat uneven as we move from quarter to quarter.
Thus, while one quarter may experience an annualized rate of growth in gross
domestic product of less than 1%, another quarter may see annualized growth in
excess of 3% - but, for the year, we believe growth could stay within our
expected range of 2% to 2 1/2%. While some increase in consumer spending took
place in the early months of this year, consumers, who represent two-thirds of
the economy, remain in a somewhat weakened position, due in part to an increase
in consumer installment debt in excess of 30% over the past two years.
Meanwhile, growth is also being constrained by ongoing economic doldrums in
Europe and Japan, important markets for U.S. exports. Here again, we are seeing
a few tentative signs, particularly in Japan, of modest recoveries that could
lead to improved prospects for U.S. exporters. Also, the "lag effect" of
increases in short-term interest rates by the Federal Reserve Board in 1994 and
into 1995 is helping to keep growth in check. This lag effect can last up to two
years, and although the Fed did reduce short-term rates late last year and
earlier this year, we expect it to continue its diligent anti-inflationary
policies. At the same time, it appears that inflation is likely to remain under
control this year, due in part to a continued moderation in wage pressures and
the subdued level of economic growth. Finally, we believe the current upward
pressure on energy prices bears close scrutiny, as energy is an important
component of the inflation outlook.
Bond Markets
Persistent signs of economic weakness led to decreases in short-term interest
rates by the Federal Reserve in late 1995 and early 1996. However, should signs
of economic growth and, particularly, of higher inflation continue, we could
expect the Fed to maintain its anti-inflationary stance. This could likely mean
no further reductions in short-term interest rates and could lead to some modest
increases. In the beginning of the year, bond markets were trading in a narrow
range, as investors shifted between concern about the lack of a budget
resolution in Washington and hopes that sluggish economic reports and low
inflation might lead to lower interest rates. Later, fixed-income markets began
reacting to conflicting signals regarding the strength of the economy with
more-volatile trading patterns marked by an upward bias in interest rates.
Interest rates may move even higher over the coming months, but we believe the
current rise in bond yields is reaching a point where fixed-income markets are
becoming attractively valued.
Portfolio Performance and Strategy
The Fund's total return at net asset value for Class A shares was in line with
the 5.09% average return for short/intermediate municipal bond funds as compiled
by Lipper Analytical Services, Inc., an independent firm which reports mutual
fund performance, although Class B and Class C shares lagged this average for
the 12-month period. However, returns lagged the 6.26% and 6.86% returns
reported for the Lehman Brothers Municipal Bond Three-Year and Five-Year
indices, respectively. These are unmanaged indices of investment-grade,
fixed-rate municipal bonds.
Since there have been no major changes in yield relationships among major
sectors in the municipal market over the past year, performance has been mainly
determined by maturity structure. Optimal performance could have been obtained
by having maturities as long as possible while rates were stable or declining,
and by shortening maturities substantially prior to this year's rise in rates.
The Fund performed particularly well while interest rates were falling, since
its average maturity was at least four years. Beginning in March, the average
maturity was shortened, reaching 3.4 years by April 30, 1996, but performance
would have been better if the average maturity had been shortened earlier in the
year.
Since the yield differential between high- and low-quality bonds remains
very narrow, the Fund currently maintains a high-quality portfolio. Currently,
76% of the Fund's total net assets is invested in bonds rated AAA or AA by
Standard & Poor's, or in cash reserves of the highest quality. The Fund's
largest sector concentration, which represents about 28% of total 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,
[A Photo of A. Keith Brodkin, [A photo of 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 10, 1996
<PAGE>
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. A small portion of income may
be subject to state, federal, and/or alternative minimum tax. Capital gains, if
any, are subject to capital gains tax.
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.
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, 1996 were designated
as an exempt-interest dividend.
In January 1996, shareholders were 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 in the graph 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.
Please note that effective July 1, 1994, Class C shares were offered.
Information on Class C share performance appears on the next page.
Please note that the performance of other classes will be greater than or less
than the line shown, based on the differences in loads and fees paid by
shareholders investing in the different classes.
In the following table, we have included the average annual total returns of all
short/intermediate municipal debt funds (including the Fund) tracked by Lipper
Analytical Services, Inc. for the applicable time periods.
All results are historical and are not an indication of future results. The
investment return and principal value 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.
<PAGE>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the Period from April 1, 1992 to April 30, 1996)
MFS MUNICIPAL LIMITED MATURITY FUND (CLASS A)
LEHMAN BROTHERS MUNICIPAL BOND FIVE-YEAR INDEX
LEHMAN BROTHERS MUNICIPAL BOND THREE-YEAR INDEX
CPI
$10,000 4/1/92 - 4/30/96
MFS Lehman Brothers Lehman Brothers
Municipal Municipal Municipal
Limited Bond Bond
Maturity Five-Year Three-Year
Days Fund-A Index Index CPI
---- --------- --------------- --------------- ---
4/1/92 0 9,750 10,000 10,000 10,000
4/30/92 29 9,759 10,085 10,076 10,014
4/30/93 394 10,710 11,103 10,896 10,337
4/30/94 759 10,949 11,435 11,194 10,581
4/30/95 1,124 11,338 12,060 11,713 10,905
4/30/96 1,490 11,918 12,887 12,447 11,220
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
Life of Class
through
1 Year 3 Years 4/30/96
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Municipal Limited Maturity Fund (Class A)
including 2.50% sales charge +2.50% +2.73% +4.30%<F1>
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class A)
at net asset value +5.11% +3.63% +4.95%<F1>
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class B)
with CDSC<F2> +0.34% -- +0.97%
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class B)
without CDSC +4.34% -- +2.04%
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class C)
with CDSC<F4> +3.23% -- +3.69%<F5>
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class C)
without CDSC +4.23% -- +3.69%<F5>
- -------------------------------------------------------------------------------------
Average short/intermediate municipal debt fund<F6> +5.09% +3.93% +5.28%<F7>
- ---------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Three-Year
Index<F6> +6.26% +4.54% +5.51%<F7>
- ---------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Five-Year
Index<F6> +6.86% +5.09% +6.41%<F7>
- ---------------------------------------------------------------------------------------
Consumer Price Index<F8><F6> +2.90% +2.77% +2.86%<F7>
- ---------------------------------------------------------------------------------------
<FN>
<F1>For the period from the commencement of offering of Class A shares, March 17, 1992 to April 30, 1996.
<F2>These returns reflect the current Class B contingent deferred sales charge (CDSC) of 4% for the 1-year
period and 3% for the period commencing September 7, 1993.
<F3>For the period from the commencement of offering of Class B shares, September 7, 1993 to April 30, 1996.
<F4>Class C shares have no initial sales charge but, along with Class B shares, have higher annual fees and
expenses than Class A shares. Class C share purchases made on or after April 1, 1996, will be
subject to a 1% CDSC if redeemed within 12 months of purchase.
<F5>For the period from the commencement of offering of Class C shares, July 1, 1994 to April 30, 1996.
<F6>Source: Lipper Analytical Services, Inc.
<F7>Benchmark comparisons begin on April 1, 1992.
<F8>The Consumer Price Index is a popular measure of change in prices.
</FN>
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS - April 30, 1996
Municipal Bonds - 85.4%
- -----------------------------------------------------------------------------
S&P
Bond Rating Principal Amount
(Unaudited) Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------
General Obligation - 26.6%
AAA Aldine, TX, Independent School
District, PSFG, 7.25s, 1997 $ 600 $ 613,620
AAA Baltimore County, MD,
Consolidated Public
Improvement, 5s, 1997 500 506,535
AAA Baltimore County, MD,
Metropolitan District,
6.5s, 1997 500 514,755
AAA Clark County NV, FGIC, 5.5s, 2002 2,000 2,034,880
A+ Commonwealth of Massachusetts,
7s, 1999 1,000 1,053,530
AAA Cook County, IL, FGIC, 5.1s, 1999 1,000 1,016,760
AAA Cook County, IL, High School
District No. 205 (Thornton
Township), FGIC, 5.4s, 1997 450 456,800
B District of Columbia, 4.3s, 1996 900 892,197
AAA District of Columbia, AMBAC,
7.25s, 1998 500 526,045
NR Indianapolis, IN, Local Public
Improvement Bond Bank,
6.25s, 2001 1,000 1,062,010
AAA Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,197,720
AA- Milwaukee County, WI, 5.35s, 2001 2,410 2,467,334
AA Milwaukee, WI, Metropolitan
Sewage District, 6.7s, 2001 500 545,890
BBB+ New York City, NY, 5.3s, 2000 1,245 1,245,697
BBB+ New York City, NY, 6.125s, 2001 600 617,448
AA State of Hawaii, 5.4s, 2001 500 514,555
AA- State of Illinois, 5.5s, 2000 500 514,175
AAA State of Louisiana, MBIA,
5.3s, 2001 500 510,250
-----------
$16,290,201
- -----------------------------------------------------------------------------
Student Loan Revenue - 9.5%
NR Colorado Student Obligation
Bond Authority, Student Loan
Rev., 6.125s, 1998 $ 255 $ 260,238
NR Louisiana Public Facilities
Authority, Student Loan
Rev., 6.5s, 2002 1,000 1,050,240
NR Mississippi Higher Education
Student Loan,
5.4s, 2002 1,000 1,012,930
NR Nebraska Higher Education Loan
Program, Inc. Rev., 5s, 1998 500 496,760
NR Nebraska Higher Education Loan
Program, Inc. Rev., 5.2s, 1999 500 497,455
NR New Mexico Educational
Assistance Foundation,
5.25s, 1998 1,000 1,012,680
NR Virginia Educational Loan
Authority, Guaranteed
Student Loan Program, 5.05s, 2003 1,460 1,464,073
-----------
$ 5,794,376
- -----------------------------------------------------------------------------
State and Local Appropriation - 11.8%
AAA California Public Works Board
Rev. (Community
College Projects), AMBAC,
5.5s, 2001 850 877,939
AAA California Public Works Board,
Lease Rev. (Secretary of
State), AMBAC, 5.25s, 1998 630 645,202
B- District of Columbia,
Certificates of Participation,
6s, 1997 272 272,024
AA+ Indianapolis, IN, Local Public
Improvement, 5s, 2000 500 506,770
AA- Michigan Building Authority
Rev., 6.2s, 2002 1,000 1,071,070
BBB New York Dormitory Authority
Rev. (City University),
5.25s, 1997 500 505,350
BBB+ New York Medical Care
Facilities Finance Agency
Rev., 5.9s, 2000 995 1,030,452
BBB New York Urban Development
(Correctional Facility),
5.5s, 2001 1,000 1,004,760
AAA State of New Jersey,
Transportation System
Authority Rev., AMBAC, 5.5s, 2000 500 516,370
AA State of Utah, Building
Ownership Authority Lease
Rev., 5.125s, 2000 750 763,005
-----------
$ 7,192,942
- -----------------------------------------------------------------------------
Refunded and Special Obligation - 6.0%
A+ Commonwealth of Massachusetts,
6.7s, 2002 $1,000 $ 1,064,740
BBB+ Detroit, MI, Distributable
State Aid, 5.375s, 1996 750 750,007
BBB+ Detroit, MI, Distributable
State Aid, 5.625s, 1997 750 762,863
A+ New Jersey Transportation
Trust Fund Authority,
5.6s, 1998 495 508,870
AA State of Texas, 7.125s, 2020 500 553,060
-----------
$ 3,639,540
- -----------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.3%
AAA Rhode Island Housing &
Mortgage Finance Corp.,
AMBAC, 5.15s, 2001 $1,000 $ 1,017,840
AAA Rhode Island Housing &
Mortgage Finance Corp.,
AMBAC, 5.25s, 2002 1,000 1,021,180
-----------
$ 2,039,020
- -----------------------------------------------------------------------------
Insured Health Care Revenue - 6.0%
AAA Delaware County, IN, Hospital
Authority (Ball Memorial Hospital),
AMBAC, 6.625s, 2001 $2,520 $ 2,714,292
AAA Medical Center Hospital
Authority, GA, Anticipation
Certificates (Columbus
Regional Healthcare System),
MBIA, 5.9s, 2001 885 930,153
-----------
$ 3,644,445
- -----------------------------------------------------------------------------
Electric and Gas Utility Revenue - 9.2%
AAA Brownsville, TX, Utility Rev.,
AMBAC, 5s, 2000 $ 400 $ 404,904
AAA Intermountain Power Agency,
Utah Power Supply Rev.,
MBIA, 5.5s, 1999 2,000 2,055,800
BBB Philadelphia, PA, Gas Works
Rev., 5.4s, 1998 1,000 1,007,610
AAA Sacramento, CA, Municipal
Utility District Electric
Rev., FGIC, 6s, 2001 620 656,320
AAA South Carolina Public Service
Authority, AMBAC,
5s, 1999 $ 500 $ 506,420
AA Washington Public Power Supply
System Rev., Nuclear Project
#2, 4.625s, 1998 1,000 997,600
-----------
$ 5,628,654
- -----------------------------------------------------------------------------
Water and Sewer Utility Revenue - 5.9%
A Massachusetts Water Resources
Authority, 5.25s, 2001 $2,500 $ 2,539,550
AAA San Antonio, TX, Water Rev.,
FGIC, 5.8s, 1999 1,000 1,036,450
-----------
$ 3,576,000
- -----------------------------------------------------------------------------
Airport and Port Revenue - 3.0%
AAA Indianapolis, IN, Airport
Authority Rev., FGIC,
5s, 1999 $1,000 $ 1,011,580
AAA Metropolitan Nashville Airport
Authority, TN,
Airport Rev., FGIC, 6.125s, 1999 800 831,872
-----------
$ 1,843,452
- -----------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.5%
AAA Arizona State Transportation
Board, Excise Tax Rev.
(Maricopa County Regional
Area), MBIA,
6.8s, 1997 $1,000 $ 1,031,270
AAA San Diego County, CA, Regional
Transportation
Commission, Sales Tax Rev.,
FGIC, 5s, 1998 500 506,975
-----------
$ 1,538,245
- -----------------------------------------------------------------------------
Universities - 0.8%
AAA Union County, PA, Higher
Educational Facilities
Financing Authority
(Bucknell University), MBIA,
5.3s, 1998 $ 500 $ 509,700
- -----------------------------------------------------------------------------
Miscellaneous Revenue - 0.8%
AAA Pennsylvania Intergovernmental
Coop Authority (City of
Philadelphia Funding $ 500 $ 506,835
- -----------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $51,655,817) $52,203,410
- -----------------------------------------------------------------------------
Floating Rate Demand Notes - 7.8%
- -----------------------------------------------------------------------------
NR City of Grand Rapids, MI, due
1/01/20 $ 800 $ 800,000
A1+ Lincoln County, WY, Pollution
Control (Exxon),
due 11/01/14 100 100,000
NR Uinta County, WY, Pollution
Control Rev. (Chevron), due
8/15/20 3,900 3,900,000
-----------
$ 4,800,000
- -----------------------------------------------------------------------------
Total Investments (Identified Cost, $56,455,817) $57,003,410
Other Assets, Less Liabilities - 6.8% 4,145,918
- -----------------------------------------------------------------------------
Net Assets - 100.0% $61,149,328
- -----------------------------------------------------------------------------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
April 30, 1996
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $56,455,817) $57,003,410
Cash 14,080
Receivable for Fund shares sold 7,061
Receivable for investments sold 4,445,422
Interest and dividends receivable 854,066
Deferred organization expenses 3,637
Other assets 1,099
-----------
Total assets $62,328,775
-----------
Liabilities:
Distributions payable $ 59,460
Payable for Fund shares reacquired 79,165
Payable for investments purchased 1,016,313
Payable to affiliates -
Management fee 2,001
Distribution fee 8,748
Accrued expenses and other liabilities 13,760
-----------
Total liabilities $ 1,179,447
-----------
Net assets $61,149,328
===========
Net assets consist of:
Paid-in capital $61,510,601
Unrealized appreciation on investments 547,593
Accumulated net realized loss on investments (930,166)
Accumulated undistributed net investment income 21,300
-----------
Total $61,149,328
===========
Shares of beneficial interest outstanding 8,124,263
===========
Class A shares:
Net asset value and redemption price per share
(net assets of $50,386,771 / 6,693,361 shares of
beneficial interest outstanding) $7.53
=====
Offering price per share (100/97.5) $7.72
=====
Class B shares:
Net asset value and offering price per share
(net assets of $7,749,317 / 1,030,696 shares of
beneficial interest outstanding) $7.52
=====
Class C shares:
Net asset value, offering price and redemption price per
share (net assets of $3,013,240 / 400,206 shares of
beneficial interest outstanding) $7.53
=====
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, Class
B and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- ------------------------------------------------------------------------------
Year Ended April 30, 1996
- ------------------------------------------------------------------------------
Net investment income:
Interest income $3,314,103
----------
Expenses -
Management fee $ 267,876
Trustees' compensation 11,404
Shareholder servicing agent fee (Class A) 85,183
Shareholder servicing agent fee (Class B) 17,575
Shareholder servicing agent fee (Class C) 3,400
Distribution and service fee (Class A) 85,052
Distribution and service fee (Class B) 71,907
Distribution and service fee (Class C) 22,763
Printing 39,885
Auditing fees 33,730
Custodian fee 29,260
Postage 7,396
Amortization of organization expenses 4,148
Legal fees 1,480
Miscellaneous 60,891
----------
Total expenses $ 741,950
Reduction of expenses pursuant to reimbursement agreement (25,934)
Fees paid indirectly (2,815)
----------
Net expenses $ 713,201
----------
Net investment income $2,600,902
----------
Realized and unrealized gain (loss) on investments:
Realized loss on investment transactions (identified cost
basis) $ (40,278)
Change in unrealized appreciation on investments 816,807
----------
Net realized and unrealized gain on investments $ 776,529
----------
Increase in net assets from operations $3,377,431
==========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------------
Year Ended April 30, 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 2,600,902 $ 3,098,003
Net realized loss on investments (40,278) (409,013)
Net unrealized gain on investments 816,807 136,714
------------ ------------
Increase in net assets from operations $ 3,377,431 $ 2,825,704
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (2,223,764) $ (2,806,873)
From net investment income (Class B) (253,938) (234,092)
From net investment income (Class C) (70,381) (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 $ (2,548,083) $ (3,116,182)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 21,822,226 $ 34,025,377
Net asset value of shares issued to shareholders in
reinvestment of distributions 1,783,696 2,114,934
Cost of shares reacquired (37,340,487) (52,576,887)
------------ ------------
Decrease in net assets from Fund share transactions $(13,734,565) $(16,436,576)
------------ ------------
Total decrease in net assets $(12,905,217) $(16,727,054)
Net assets:
At beginning of period 74,054,545 90,781,599
------------ ------------
At end of period $ 61,149,328 $ 74,054,545
============ ============
Accumulated undistributed (distributions in excess of)
net investment income $ 6,189 $ (46,630)
============ ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ---------------------------------------------------------------------------------------
Eight
Year Ended Months Year Ended
April 30, Ended August 31,
---------------- April 30, ------------------
1996 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<F9> $ 0.30 $ 0.28 $ 0.19 $ 0.31 $ 0.15
Net realized and
unrealized gain (loss)
on investments 0.08 (0.02) (0.22) 0.30 0.12
------- ------- ------- ------- ------
Total from investment
operations $ 0.38 $ 0.26 $ (0.03) $ 0.61 $ 0.27
------- ------- ------- ------- ------
Less distributions declared to shareholders -
From net investment
income $ (0.30) $ (0.28) $ (0.19)<F7> $ (0.31) $(0.15)<F6>
In excess of net
investment income -- -- <F8> -- -- --
From net realized gain
on investments -- -- -- (0.01) --
In excess of net
realized gain on
investments -- -- (0.03) -- --
------- ------- ------- ------- ------
Total distributions
declared to
shareholders $ (0.30) $ (0.28) $ (0.22) $ (0.32) $(0.15)
------- ------- ------- ------- ------
Net asset value - end of
period $ 7.53 $ 7.45 $ 7.47 $ 7.72 $ 7.43
======= ======= ======= ======= ======
Total return<F4> 5.11% 3.55% (0.59)%<F2> 8.47% (8.26)%<F2>
Ratios (to average net assets)/Supplemental data<F9>:
Expenses<F5> 0.95% 0.95% 0.89%<F2> 0.68% 0.55%<F2>
Net investment income 4.00% 3.74% 3.72%<F2> 4.04% 4.25%<F2>
Portfolio turnover 43% 50% 48% 69% 8%
Net assets at end of
period (000 omitted) $50,387 $64,329 $83,367 $87,192 $21,312
<FN>
<F1>For the period from the commencement of investment operations, March 17, 1992 to August 31, 1992.
<F2>Annualized.
<F3>Per share data for the periods subsequent to April 30, 1994 is based on average shares outstanding.
<F4>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.
<F5>For fiscal years 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 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 $ 0.30 $ 0.28 $ 0.18 $ 0.28 $ 0.13
Ratios (to average net assets):
Expenses 0.99% 0.95% 1.12%<F2> 1.16% 1.16%<F2>
Net investment income 3.96% 3.74% 3.49%<F2> 3.57% 3.64%<F2>
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ---------------------------------------------------------------------------------------------
Year Ended April 30,
----------------------------------------------------------
1996 1995 1994<F1> 1996 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<F5> -
Net investment income<F7> $ 0.25 $ 0.21 $ 0.14 $ 0.23 $ 0.21
Net realized and unrealized
gain (loss) on investments 0.07 (0.02) (0.26) 0.08 (0.02)
------ ------ ------ ------ ------
Total from investment
operations $ 0.32 $ 0.19 $(0.12) $ 0.31 $ 0.19
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.24) $(0.21) $(0.13) $(0.23) $(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 $(0.24) $(0.21) $(0.17) $(0.23) $(0.19)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.52 $ 7.44 $ 7.46 $ 7.53 $ 7.45
====== ====== ====== ====== ======
Total return 4.34% 2.67% (2.37)%<F4> 4.23% 2.53%
Ratios (to average net assets)/Supplemental data<F7>:
Expenses<F3> 1.70% 1.80% 1.74%<F4> 1.80% 1.79%<F4>
Net investment income 3.25% 2.88% 2.79%<F4> 3.16% 2.77%<F4>
Portfolio turnover 43% 50% 48% 43% 50%
Net assets at end of
period (000 omitted) $7,749 $7,792 $7,415 $3,013 $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>For fiscal years ending after September 1, 1995, the Fund's expenses
are calculated without reduction for fees paid indirectly.
<F4>Annualized.
<F5>Per share data for the periods subsequent to April 30, 1994 is based
on average shares outstanding.
<F6>Includes a per share distribution in excess of net investment income of $0.001.
<F7>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 $ 0.25 $ 0.21 $ 0.12 $ 0.23 $ 0.21
Ratios (to average net assets):
Expenses 1.74% 1.80% 2.05%<F4> 1.84% 1.79%<F4>
Net investment income 3.21% 2.88% 2.48%<F4> 3.12% 2.77%<F4>
</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
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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.
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. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as a part of an income producing strategy reflecting the view of
the Fund's management on the direction of interest rates.
Futures Contracts - The Fund may enter into futures contracts for the delayed
delivery of 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 futures contracts is designed to hedge against
anticipated future changes in interest rates. Investments in interest rate
futures for purposes other than hedging may be made to modify 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 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 financial statement and
tax reporting purposes as required by federal income tax regulations.
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 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 tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B, and Class C shares. The three classes of shares differ in their
respective shareholder servicing agent, distribution, and service fees. All
shareholders bear the common expenses of the Fund pro rata based on 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.
(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,
distribution and service fees, until February 28, 2002 or the date upon which
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, 1996 amounted to $154,343. For the year
ended April 30, 1996, MFS paid expenses amounting to $294,246, of which the Fund
reimbursed $268,312. The difference ($25,934) is reflected as a reduction of
expenses on the Statement of Operations.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain of the officers and Trustees of
the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD) and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all of its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $2,344 for the year ended
April 30, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$11,207 as its portion of the sales charge on sales of Class A shares of the
Fund. The Trustees have adopted a separate distribution plan for Class A, Class
B, and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of
1940 as follows:
The 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 retains the service fee for accounts not
attributable to a securities dealer which amounted to $10,411 for the year ended
April 30, 1996. 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, 1996, were 0.15% of average daily net assets attributable to Class A shares
on an annualized basis.
The Class B and Class C distribution plans provide that the Fund will pay MFD a
monthly distribution fee of 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. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $580 and $36 for Class B
and Class C shares, respectively, for the year ended April 30, 1996. Fees
incurred under the distribution plans during the year ended April 30, 1996, were
1.00% of average daily net assets attributable to Class B and Class C shares on
an annualized basis.
Purchases over $1 million into Class A shares and certain purchases by
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within twelve months following such purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of Class
B shares in the event of a shareholder redemption within six years of purchase.
MFD receives all contingent deferred sales charges. Contingent deferred sales
charges imposed during the year ended April 30, 1996, were $112 and $33,644 for
Class A 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 shares at an
effective annual rate of up to 0.15%, up to 0.22%, and up to 0.15% attributable
to Class A, Class B, and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, aggregated $28,159,825 and $48,571,531, 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 $56,455,817
===========
Gross unrealized appreciation $ 613,681
Gross unrealized depreciation (66,088)
-----------
Net unrealized appreciation $ 547,593
===========
At April 30, 1996, the Fund, for federal income tax purposes, had a capital loss
carryforward of $830,991, 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, 2004.
(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 1996 1995
Year Ended April --------------------------- ---------------------------
30, Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,999,874 $ 15,164,604 3,162,482 $ 23,485,000
Shares issued to
shareholders in
reinvestment of
distributions 206,976 1,568,611 256,666 1,915,510
Shares reacquired (4,146,143) (31,416,230) (5,948,248) (44,193,995)
---------- ------------- ---------- -------------
Net decrease (1,939,293) $ (14,683,015) (2,529,100) $ (18,793,485)
========== ============= ========== =============
Class B Shares
1996 1995
Year Ended April --------------------------- ---------------------------
30, Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 395,418 $ 2,988,803 502,731 $ 3,735,135
Shares issued to
shareholders in
reinvestment of
distributions 19,614 148,492 20,109 149,528
Shares reacquired (431,218) (3,263,193) (469,653) (3,479,709)
------- ----------- ------- -----------
Net increase
(decrease) (16,186) $ (125,898) 53,187 $ 404,954
======= =========== ======= ===========
Class C Shares
1996 1995*
Year Ended April --------------------------- ---------------------------
30, Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 483,511 $ 3,668,819 915,597 $ 6,805,242
Shares issued to
shareholders in
reinvestment of
distributions 8,781 66,593 6,704 49,896
Shares reacquired (351,660) (2,661,064) (662,727) (4,903,183)
-------- ------------ -------- ------------
Net increase 140,632 $ 1,074,348 259,574 $ 1,951,955
======= ============ ======= ============
*For the period from 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 year ended April 30,
1996 was $792.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Series Trust
IX 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 (of the
series constituting MFS Series Trust IX) as of April 30, 1996, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended April 30, 1996 and 1995, and the financial highlights
for each of the years in the five-year period ended April 30, 1996. 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, 1996 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, 1996, 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 7, 1996
---------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
MFS(R) MUNICIPAL -------------
LIMITED MATURITY [DALBAR LOGO] BULK RATE
FUND U.S. POSTAGE
PAID
500 Boylston Street PERMIT #55638
Boston, MA 02116 BOSTON, MA
-------------
[LOGO] MFS(R)
THE FIRST NAME IN MUTUAL FUNDS
MML-2 6/96 7M 37/237/337
