<PAGE> 1
[MFS LOGO] Annual Report
INVESTMENT MANAGEMENT for Year Ended
April 30, 1997
MFS(R) MUNICIPAL LIMITED MATURITY FUND
[ARTWORK]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter from the Chairman........................................................ 1
A Discussion with the Portfolio Manager......................................... 3
Portfolio Manager's Profile..................................................... 5
Fund Facts...................................................................... 6
Performance Summary............................................................. 6
Tax Form Summary................................................................ 8
Portfolio of Investments........................................................ 9
Financial Statements............................................................ 12
Notes to Financial Statements................................................... 18
Independent Auditors' Report.................................................... 24
Trustees and Officers........................................................... 25
</TABLE>
HIGHLIGHTS
- FOR THE 12 MONTHS ENDED APRIL 30, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 3.51%, CLASS B SHARES
2.71%, AND CLASS C SHARES 2.64%.
- THE FIXED-INCOME MARKETS WERE VOLATILE OVER THE PAST YEAR AS
INVESTORS' PERCEPTIONS ABOUT THE STRENGTH OF THE ECONOMY, THE
EXPECTATIONS FOR INFLATION, AND THE LIKELY COURSE OF FEDERAL RESERVE
BOARD MONETARY POLICY CHANGED FREQUENTLY AND, OFTEN, DRAMATICALLY.
- THE ALREADY NARROW YIELD DIFFERENTIAL BETWEEN HIGH- AND LOWER-RATED
INVESTMENT-GRADE BONDS CONTINUED TO DECLINE, AS THE STRONG NATIONAL
ECONOMY AND CONSERVATIVE FISCAL PRACTICES PUT MUNICIPAL CREDITS ON
THEIR STRONGEST FINANCIAL FOOTING IN MANY YEARS.
- BOND INSURANCE NOW ABSORBS ABOUT HALF OF THE NEW-ISSUE CALENDAR AS
WELL AS MUCH OF THE SECONDARY MARKET, CONTRIBUTING TO THE SCARCITY OF
HIGHER-YIELDING BONDS AND THE HISTORICALLY NARROW YIELD SPREADS
BETWEEN QUALITIES OF BONDS.
<PAGE> 3
LETTER FROM THE CHAIRMAN
Dear Shareholders:
After more than six years of expansion, the U.S.
economy is experiencing another year of growth
in 1997, although a few signs point to the
possibility of a modest rise in inflation during
[PHOTO] the year. On the positive side, the pattern of
moderate growth and inflation set over the past
few years now seems fairly well entrenched in
the economy and, short of a major international
A. Keith Brodkin or domestic crisis, appears to have enough
momentum to remain on track for some time. Also,
gains in such important sectors as housing, automobiles, industrial production,
and exports indicate a fair amount of underlying strength in the economy. Some
of that strength was seen in the first quarter, when the U.S. economy grew at an
annualized rate of 5.6% (based on preliminary estimates), a pace that would be
inflationary in the unlikely event that it were to continue. The ongoing
tightness in the labor market could also add some inflationary pressures to the
economy. At the same time, there is some reason for caution as a result of the
continuing high level of consumer debt and rising personal bankruptcies. Given
these somewhat conflicting indicators, we expect real (inflation-adjusted)
growth to revolve around 2% in 1997, with the strength of the first quarter
moderating as we move through the balance of the year.
In the bond markets, conflicting signals over the strength of the economy
have also created near-term volatility, and the Federal Reserve Board has begun
taking measured steps to control inflation by raising short-term interest rates.
Although we do not expect a repeat of the rapid growth in the first quarter, we
would expect the Fed to raise interest rates at least one more time in reaction
to the economic momentum that was built up during the period. While inflationary
forces largely remained in check in 1996, the continued strength in the labor
market suggests that a pickup in inflation is still possible. At the same time,
the U.S. budget deficit continues to decline and, as
1
<PAGE> 4
LETTER FROM THE CHAIRMAN - continued
a percentage of gross domestic product, is now approaching 1%, which we consider
a positive development for the bond markets. Although interest rates may remain
volatile over the coming months, we believe that, at current levels,
fixed-income markets remain equitably valued.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/S/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
May 14, 1997
2
<PAGE> 5
A DISCUSSION WITH THE PORTFOLIO MANAGER
For the 12 months ended April 30, 1997, Class A
shares of the Fund provided a total return of
3.51%, Class B shares 2.71%, and Class C shares
2.64%. These returns assume the reinvestment of
[PHOTO] distributions but exclude the effects of any
sales charges and compare to a 4.01% average
return for short/intermediate municipal bond
funds as compiled by Lipper Analytical Services,
Robert A. Dennis Inc., an independent firm that reports mutual
fund performance. The Fund's returns also
trailed the 4.60% and 4.66% 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. While we shortened the Fund's average maturity in recent months
in light of the volatile, generally rising course of interest rates, performance
might have been better relative to the funds in its Lipper universe if we had
shortened maturities somewhat sooner.
Q. In general, how would you describe the fixed-income environment over the past
year?
A. The fixed-income markets were volatile over the past year as investors'
perceptions about the strength of the economy, the expectations for inflation,
and the likely course of Federal Reserve Board monetary policy changed
frequently and, often, dramatically.
Q. And what about the municipal market? How would you describe the environment
there?
A. After the dissipation of the flat-tax scare that caused the market to cheapen
during the spring of 1996, the municipal market -- while reflecting the overall
volatility of the bond market -- has performed very well versus comparable
taxable-bond markets, as supply has remained moderate and demand has been
consistent. Nevertheless, the general trend of short- to intermediate-term
maturities has been toward higher rates, and three- and five-year high-grade
municipal bond interest rates have risen by 32 and 35 basis points (0.32% and
0.35%), respectively, over the past 12 months.
Q. Have there been any major developments in this market over the past year?
A. The already narrow yield differential between high- and lower-rated
investment-grade bonds declined further, as the strong national economy and
conservative fiscal practices put municipal credits on their strongest financial
3
<PAGE> 6
A DISCUSSION WITH THE PORTFOLIO MANAGER - continued
footing in many years. Nevertheless, there were a number of downgrades among
credits, particularly in the electric utility sector, in which competitiveness
has been threatened by deregulation trends.
Q. How has the rise in the use of bond insurance affected the market in general
and the Fund in particular?
A. It is truly startling that bond insurance now absorbs about half of the new-
issue calendar as well as much of the secondary market. This has clearly
contributed to the scarcity of higher-yielding bonds and to the historically
narrow yield spreads between qualities in the market.
Q. The credit quality of the Fund is fairly high, with over 70% of assets in
securities rated "AAA" or "AA." Is that unusually high for this Fund, or is it a
reflection of your outlook for the market?
A. It is not a reflection of our market outlook, but rather of the very narrow
yield spreads in the market and the fact that about half of available bonds now
carry bond insurance, giving them "Aaa" and "AAA" ratings from Moody's Investors
Service and Standard & Poor's, respectively. If and when credit spreads begin to
widen, we believe our experienced credit research staff will give us a clear
advantage in finding attractive investment opportunities.
Q. At the same time, the Fund's average maturity is under three years, which is
below its historical average. Why is that?
A. We have maintained a relatively short average maturity to help protect
shareholders' principal during this period of volatile interest rates.
Q. Do you foresee any reasons you might change the average maturity in the next
several months?
A. We will consider lengthening the average maturity when we feel confident that
the Federal Reserve has concluded its tightening cycle; that is, when it becomes
evident that economic growth has begun to slow in response to the recent rise in
interest rates.
Q. In your last report, you said there were few major changes in the trading
relationships among sectors, regions, rating categories, or individual credits.
Is this still the case, or have there been some changes in any of these areas?
A. There still have been no major changes but, as previously mentioned,
lower-investment-grade bonds, with "Baa" or "BBB" ratings, have generally been
the best performers since their yield advantage over high-grade bonds has
continued to tighten.
4
<PAGE> 7
A DISCUSSION WITH THE PORTFOLIO MANAGER - continued
Q. If there haven't been any changes, does this mean performance is still
closely tied to maturity selection, and have you carried out this strategy in
the past year?
A. Yes, maturity selection is still key. As the economy appeared to be in a
period of healthy growth and some wage pressures began to be reported, we
shortened the Fund's maturity in an effort to protect it against continued
market volatility and the trend toward higher interest rates.
/S/ Robert A. Dennis
Robert A. Dennis
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
ROBERT A. DENNIS HAS BEEN PORTFOLIO MANAGER OF MFS(R) MUNICIPAL LIMITED
MATURITY FUND SINCE 1992. MR. DENNIS JOINED MFS IN 1980 AND WAS NAMED
ASSISTANT VICE PRESIDENT - INVESTMENTS IN 1981, VICE
PRESIDENT - INVESTMENTS IN 1983, AND SENIOR VICE PRESIDENT IN 1986. HE
IS A GRADUATE OF THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY AND OF ITS
SLOAN SCHOOL OF MANAGEMENT.
5
<PAGE> 8
<TABLE>
<S> <C>
FUND FACTS
STRATEGY: THE INVESTMENT OBJECTIVE OF THE FUND IS TO PROVIDE
AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM
FEDERAL INCOME TAXES AS IS CONSIDERED CONSISTENT
WITH PRUDENT INVESTING WHILE SEEKING PROTECTION OF
SHAREHOLDERS' CAPITAL.
COMMENCEMENT OF
INVESTMENT
OPERATIONS: CLASS A: MARCH 17, 1992
CLASS B: SEPTEMBER 7, 1993
CLASS C: JULY 1, 1994
SIZE: $50.8 MILLION NET ASSETS AS OF APRIL 30, 1997
</TABLE>
PERFORMANCE SUMMARY
The information below illustrates the historical performance of MFS Municipal
Limited Maturity Fund - Class A shares in comparison to various market
indicators. Class A share performance results reflect the deduction of the 2.50%
maximum sales charge; benchmark comparisons are unmanaged and do not reflect any
fees or expenses. The performance of other share 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. It is not possible to invest in
an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from April 1, 1992, through April 30, 1997)
[PERFORMANCE GRAPH]
6
<PAGE> 9
PERFORMANCE SUMMARY - continued
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS Life of
AS OF APRIL 30, 1997 1 Year 3 Years 5 Years Fund*
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Municipal Limited Maturity Fund (Class A)
including 2.50% sales charge (SEC Results) +0.96% +3.19% +4.27% +4.16%
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class A)
at net asset value +3.51% +4.06% +4.80% +4.67%
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class B)
with CDSC (SEC Results) -1.27% +2.29% +3.82% +3.88%
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class B)
at net asset value +2.71% +3.24% +4.16% +4.05%
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class C)
with CDSC (SEC Results) +1.64% +3.25% +4.31% +4.20%
- ---------------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund (Class C)
at net asset value +2.64% +3.25% +4.31% +4.20%
- ---------------------------------------------------------------------------------------
Average short/intermediate municipal bond
index** +4.01% +4.51% +5.02% +5.00%
- ---------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Three-Year
Index++ +4.60% +5.16% +5.26% +5.24%
- ---------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Five-Year
Index++ +4.66% +5.66% +5.99% +5.96%
- ---------------------------------------------------------------------------------------
Consumer Price Index+ +2.80% +2.89% +2.85% +2.91%
- ---------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
March 17, 1992, to April 30, 1997.
**Source: Lipper Analytical Services.
+The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
++Source: CDA/Wiesenberger.
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the 2.50% maximum sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC) which
declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C shares
have no initial sales charge but, along with Class B shares, have higher annual
fees and expenses than Class A shares. Class C share purchases are subject to a
1% CDSC if redeemed within 12 months of purchase.
Class B and Class C share SEC results include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior
to the commencement of offering of Class B and Class C shares. Because operating
expenses attributable to Class B and Class C shares are higher than those of
Class A shares, Class B and Class C share performance generally would have been
lower than Class A share performance. The Class A
7
<PAGE> 10
PERFORMANCE SUMMARY - continued
share performance included in the Class B and Class C share SEC performance has
been adjusted to reflect the CDSC generally applicable to Class B and Class C
shares rather than the sales charge generally applicable to Class A shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the performance results would have been less favorable. Current
subsidies and waivers may be discontinued at any time.
TAX FORM SUMMARY
IN JANUARY 1997, SHAREHOLDERS WERE MAILED A TAX FORM SUMMARY REPORTING
THE FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR
YEAR 1996.
EXEMPT-INTEREST DIVIDENDS
FOR FEDERAL INCOME TAX PURPOSES, 100% OF THE TOTAL DIVIDENDS PAID BY THE
FUND FROM NET INVESTMENT INCOME DURING THE YEAR ENDED APRIL 30, 1997, IS
DESIGNATED AS AN EXEMPT-INTEREST DIVIDEND.
8
<PAGE> 11
PORTFOLIO OF INVESTMENTS - April 30, 1997
Municipal Bonds - 96.7%
<TABLE>
<CAPTION>
=========================================================================================
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 22.8%
Baltimore County, MD, Metropolitan District, 6.5s, 1997 $ 500 $ 502,035
Bridgeport, CT, AMBAC, 5.25s, 1999 1,155 1,175,351
Commonwealth of Massachusetts, 7s, 1999 1,000 1,050,940
Commonwealth of Puerto Rico, 5.5s, 2001 500 509,930
Cook County, IL, High School District No. 205 (Thornton
Township), FGIC, 5.4s, 1997 450 450,437
District of Columbia, AMBAC, 7.25s, 1998sec.sec. 500 515,110
Government of Guam, 5.75s, 1999 500 506,110
Indianapolis, IN, Local Public Improvement Bond Bank,
6.25s, 2001 1,000 1,047,320
Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,166,880
Milwaukee, WI, Metropolitan Sewage District, 6.7s, 2001 500 536,040
New York City, NY, 6s, 1999 100 102,473
New York City, NY, 6s, 1999 250 254,712
New York City, NY, 6.125s, 2001 600 626,550
New York City, NY, 5.7s, 2002 500 512,505
New York City, NY, 5.3s, 2003 500 497,495
North Slope Borough, AK, MBIA, 0s, 1999 375 339,596
State of Louisiana, FGIC, 6s, 2000 500 520,185
State of Pennsylvania, FGIC, 5.25s, 1999 500 508,245
State of Virginia, 5.375s, 1999 750 765,945
----------
$11,587,859
- -----------------------------------------------------------------------------------------
State and Local Appropriation - 9.8%
Michigan Building Authority Rev., 6.2s, 2002 $1,000 $ 1,060,960
New York Dormitory Authority Rev. (City University),
5s, 2000 500 501,410
New York Dormitory Authority Rev. (State University),
4.9s, 2000 500 500,545
New York Medical Care Facilities Finance Agency Rev.,
5.9s, 2000 995 1,028,959
New York Urban Development (Correctional Facilities),
5.5s, 2001 375 380,415
New York Urban Development (Correctional Facilities),
5.5s, 2001 1,000 1,013,770
State of Utah Building Ownership Authority, 5.5s, 2000 500 511,580
----------
$ 4,997,639
- -----------------------------------------------------------------------------------------
Refunded and Special Obligations - 1.5%
Detroit, MI, 5.625s, 1997 $ 750 $ 750,000
- -----------------------------------------------------------------------------------------
Airport and Port Revenue - 5.9%
Atlanta, GA, Airport Facilities Rev., AMBAC, 5.5s, 2001 $ 500 $ 511,905
Denver, CO, City & County Airport Rev., 5.5s, 1999 650 656,234
Indianapolis, IN, Airport Authority Rev., FGIC, 5s,
1999 1,000 1,008,260
Metropolitan Nashville, TN, Airport Rev., FGIC, 6.125s,
1999 800 822,224
----------
$ 2,998,623
- -----------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 20.0%
Hillsborough County, FL, Utility Refunding, MBIA, 0s,
1999 $1,000 $ 900,620
Intermountain Power Agency, UT, Power Supply Rev., FSA,
5.25s, 2001 500 507,725
</TABLE>
9
<PAGE> 12
PORTFOLIO OF INVESTMENTS - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
=========================================================================================
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Electric and Gas Utility Revenue - continued
Intermountain Power Agency, UT, Power Supply Rev.,
MBIA, 5.25s, 1999 $ 500 $ 506,565
Intermountain Power Agency, UT, Power Supply Rev.,
MBIA, 5.5s, 1999 2,500 2,548,075
Philadelphia, PA, Gas Works Rev., 5.4s, 1998 1,000 1,004,030
Sacramento, CA, Municipal Utility District Electric
Rev., FGIC, 6s, 2001 620 649,760
South Carolina Public Service Authority, AMBAC, 5s,
1999 500 503,675
Washington Public Power Supply System Rev., 5.45s, 2000 1,500 1,519,800
Washington Public Power Supply System Rev., "A", 5s,
2000 1,500 1,500,330
Washington Public Power Supply System Rev., "B", 5s,
2000 500 500,110
----------
$10,140,690
- -----------------------------------------------------------------------------------------
Health Care Revenue - 2.1%
Denison, TX, Hospital Authority (Texoma Medical Center,
Inc.), 5.25s, 2001 $ 215 $ 214,443
Michigan Hospital Finance Authority Rev. (Mercy Health
Services), 5.5s, 2000 500 508,940
Stillwater, OK, Medical Center Authority (Stillwater
Medical Center), 5.55s, 2001 335 335,000
----------
$ 1,058,383
- -----------------------------------------------------------------------------------------
Insured Health Care Revenue - 5.2%
Delaware County, IN, Hospital Authority (Ball Memorial
Hospital), AMBAC, 6.625s, 2001 $2,520 $ 2,641,867
- -----------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.0%
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.15s, 2001 $1,000 $ 1,002,990
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.25s, 2002 1,000 1,004,150
----------
$ 2,007,140
- -----------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.0%
Arizona Transportation Board, Excise Tax Rev. (Maricopa
County Regional Area), MBIA, 6.8s, 1997 $1,000 $ 1,004,500
- -----------------------------------------------------------------------------------------
Solid Waste Revenue - 2.0%
Delaware County, PA, Industrial Development Authority
Rev. (Recovery Facilities), 5.5s, 2000 $1,000 $ 1,011,970
- -----------------------------------------------------------------------------------------
Student Loan Revenue - 5.2%
Colorado Student Obligation Bond Authority, 6.125s,
1998 $ 155 $ 157,246
Louisiana Public Facilities Authority (Student Loan
Rev.), 6.5s, 2002 1,000 1,061,420
Nebraska Higher Education Loan Program Rev., 5s, 1998 500 498,785
New Mexico Educational Assistance Foundation, 5.25s,
1998 925 933,843
----------
$ 2,651,294
- -----------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
PORTFOLIO OF INVESTMENTS - continued
Municipal Bonds - continued
<TABLE>
<CAPTION>
=========================================================================================
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Universities - 1.7%
California Educational Facilities Authority Rev.
(College & University), 5.15s, 2000 $ 360 $ 359,309
District of Columbia Rev. (Georgetown University),
MBIA, 5.5s, 2001 500 504,860
-----------
$ 864,169
- -----------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 2.8%
Philadelphia, PA, Water & Sewer Rev., MBIA, 0s, 2002 $ 500 $ 380,815
San Antonio, TX, Water Rev., FGIC, 5.8s, 1999 1,000 1,025,690
-----------
$ 1,406,505
- -----------------------------------------------------------------------------------------
Other - 11.7%
Connecticut Special Assessment, AMBAC, 5s, 1999 $1,000 $ 1,012,760
Michigan Underground Storage, AMBAC, 5s, 1999 3,365 3,401,107
State of Minnesota Rev., AMBAC, 5s, 1999 1,500 1,515,135
-----------
$ 5,929,002
- -----------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $48,762,807) $49,049,641
- -----------------------------------------------------------------------------------------
</TABLE>
Floating Rate Demand Note - 4.5%
<TABLE>
<S> <C> <C>
=========================================================================================
Jackson County, MS, Pollution Control Rev. (Chevron),
due 5/01/97
(Identified Cost, $2,300,000) $2,300 $ 2,300,000
- -----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $51,062,807) $51,349,641
Other Assets, Less Liabilities - (1.2)% (596,057)
=========================================================================================
Net Assets - 100.0% $50,753,584
- -----------------------------------------------------------------------------------------
</TABLE>
(sec.sec.) When-issued security. At April 30, 1997, the Fund had sufficient cash
and/or securities at least equal to the value of the when-issued
security.
See notes to financial statements
11
<PAGE> 14
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
======================================================================================
April 30, 1997
- --------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $51,062,807) $51,349,641
Cash 58,371
Receivable for Fund shares sold 27,107
Interest receivable 820,110
Other assets 165
-----------
Total assets $52,255,394
-----------
Liabilities:
Distributions payable $ 53,752
Payable for Fund shares reacquired 72,076
Payable for investments purchased 846,624
Payable for when-issued investment purchased 507,335
Payable to affiliates -
Management fee 556
Distribution and service fee 13,290
Accrued expenses and other liabilities 8,177
-----------
Total liabilities $ 1,501,810
-----------
Net assets $50,753,584
===========
Net assets consist of:
Paid-in capital $51,309,907
Unrealized appreciation on investments 286,834
Accumulated net realized loss on investments (873,818)
Accumulated undistributed net investment income 30,661
-----------
Total $50,753,584
===========
Shares of beneficial interest outstanding 6,770,143
===========
Class A shares:
Net asset value per share (net assets of $40,953,175 / 5,461,987
shares of beneficial interest outstanding) $7.50
=====
Offering price per share (100/97.5) $7.69
=====
Class B shares:
Net asset value and offering price per share
(net assets of $6,503,337 / 868,468 shares of beneficial
interest outstanding) $7.49
=====
Class C shares:
Net asset value and offering price per share
(net assets of $3,297,072 / 439,688 shares of beneficial
interest outstanding) $7.50
=====
</TABLE>
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
12
<PAGE> 15
FINANCIAL STATEMENTS - continued
Statement of Operations
<TABLE>
<CAPTION>
=====================================================================================
Year Ended April 30, 1997
- -------------------------------------------------------------------------------------
<S> <C>
Net investment income:
Interest income $2,731,886
----------
Expenses -
Management fee $ 226,043
Trustees' compensation 11,365
Shareholder servicing agent fee 22,347
Shareholder servicing agent fee (Class A) 48,863
Shareholder servicing agent fee (Class B) 10,850
Shareholder servicing agent fee (Class C) 3,263
Distribution and service fee (Class A) 69,278
Distribution and service fee (Class B) 66,548
Distribution and service fee (Class C) 32,339
Administrative fee 1,298
Registration fee 47,638
Auditing fees 33,853
Custodian fee 31,587
Printing 26,738
Postage 6,078
Amortization of organization expenses 3,637
Legal fees 2,914
Miscellaneous 18,747
----------
Total expenses $ 663,386
Reduction of expenses pursuant to reimbursement agreement (37,574)
Fees paid indirectly (5,561)
----------
Net expenses $ 620,251
----------
Net investment income $2,111,635
----------
Realized and unrealized gain (loss) on investments:
Realized gain on investment transactions (identified cost basis) $ 56,348
Change in unrealized appreciation on investments (260,759)
----------
Net realized and unrealized loss on investments $ (204,411)
----------
Increase in net assets from operations $1,907,224
==========
</TABLE>
See notes to financial statements
13
<PAGE> 16
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
=======================================================================================
Year Ended April 30, 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,111,635 $ 2,600,902
Net realized gain (loss) on investments 56,348 (40,278)
Net unrealized gain (loss) on investments (260,759) 816,807
------------ ------------
Increase in net assets from operations $ 1,907,224 $ 3,377,431
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,788,875) $ (2,223,764)
From net investment income (Class B) (218,897) (253,938)
From net investment income (Class C) (97,816) (70,381)
------------ ------------
Total distributions declared to shareholders $ (2,105,588) $ (2,548,083)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 15,035,170 $ 21,822,226
Net asset value of shares issued to shareholders in
reinvestment of distributions 1,422,095 1,783,696
Cost of shares reacquired (26,654,645) (37,340,487)
------------ ------------
Decrease in net assets from Fund share transactions $(10,197,380) $(13,734,565)
------------ ------------
Total decrease in net assets $(10,395,744) $(12,905,217)
Net assets:
At beginning of period 61,149,328 74,054,545
------------ ------------
At end of period (including accumulated undistributed
net investment income of $30,661 and $21,300,
respectively) $ 50,753,584 $ 61,149,328
============ ============
</TABLE>
See notes to financial statements
14
<PAGE> 17
FINANCIAL STATEMENTS - continued
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Eight Months Year Ended August
Year Ended April 30, Ended 31,
------------------------- April 30, -----------------
1997 1996 1995 1994 1993 1992*
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A
<CAPTION>
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $ 7.53 $ 7.45 $ 7.47 $ 7.72 $ 7.43 $ 7.31
------- ------- ------- -------- -------
Income from investment
operations# -
Net investment incomesec. $ 0.29 $ 0.30 $ 0.28 $ 0.19 $ 0.31 $ 0.15
Net realized and unrealized
gain (loss) on investments (0.03) 0.08 (0.02) (0.22) 0.30 0.12
------- ------- ------- -------- -------
Total from investment
operations $ 0.26 $ 0.38 $ 0.26 $ (0.03) $ 0.61 $ 0.27
------- ------- ------- -------- -------
Less distributions declared to
shareholders -
From net investment
income++++++ $ (0.29) $ (0.30) $ (0.28) $ (0.19) $ (0.31) $(0.15)
From net realized gain on
investments -- -- -- -- (0.01) --
In excess of net investment
income++++ -- -- (0.00) (0.00) -- --
In excess of net realized gain
on investments -- -- -- (0.03) -- --
------- ------- ------- -------- -------
Total distributions
declared to shareholders $ (0.29) $ (0.30) $ (0.28) $ (0.22) $ (0.32) $(0.15)
------- ------- ------- -------- -------
Net asset value - end of period $ 7.50 $ 7.53 $ 7.45 $ 7.47 $ 7.72 $ 7.43
------- ------- ------- -------- ------- -------
Total return++ 3.51% 5.11% 3.55% (0.59)%+ 8.47% 8.26%+
Ratios (to average net assets)/Supplemental data(sec.):
Expenses## 0.95% 0.95% 0.95% 0.89%+ 0.68% 0.55%+
Net investment income 3.86% 4.00% 3.74% 3.72%+ 4.04% 4.25%+
Portfolio turnover 78% 43% 50% 48% 69% 8%
Net assets at end of period
(000 omitted) $40,953 $50,387 $64,329 $ 83,367 $87,192 $21,312
* For the period from the commencement of investment operations, March 17, 1992, to
August 31, 1992.
+ Annualized.
# Per share data for the periods subsequent to April 30, 1994, are based on average
shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++ 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.
++++ For the year ended April 30, 1995, and the eight months ended April 30, 1994, the
per share distributions in excess of net investment income were $0.002 and
$0.002, respectively.
++++++ For the period ended August 31, 1992, the per share distributions from net
investment income includes a per share distribution from paid-in capital of
$0.0007.
(sec.) The investment advisor voluntarily agreed to maintain the expenses of the fund at
not more than 0.95% of average daily net assets. To the extent actual expenses
exceeded the limitation, the net investment income per share and the ratios would
have been:
Net investment income $ 0.29 $ 0.30 $ 0.28 $ 0.18 $ 0.28 $ 0.13
Ratios (to average net assets):
Expenses 1.02% 0.99% 0.95% 1.12%+ 1.16% 1.16%+
Net investment income 3.79% 3.96% 3.74% 3.49%+ 3.57% 3.64%+
</TABLE>
See notes to financial statements
15
<PAGE> 18
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended April 30, 1997 1996 1995 1994**
-----------------------------------------------------------------------------------
Class
B
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 7.52 $ 7.44 $ 7.46 $ 7.75
------ ------ ------ ------
Income from investment operations# -
Net investment incomesec. $ 0.23 $ 0.25 $ 0.21 $ 0.14
Net realized and unrealized gain (loss)
on investments (0.03) 0.07 (0.02) (0.26)
------ ------ ------ ------
Total from investment operations $ 0.20 $ 0.32 $ 0.19 $ (0.12)
------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.23) $(0.24) $(0.21) $ (0.13)
In excess of net investment income++++ -- -- (0.00) (0.01)
In excess of net realized gain on
investments -- -- -- (0.03)
------ ------ ------ ------
Total distributions declared to
shareholders $(0.23) $(0.24) $(0.21) $ (0.17)
------ ------ ------ ------
Net asset value - end of period $ 7.49 $ 7.52 $ 7.44 $ 7.46
------ ------ ------ ------
Total return 2.71% 4.34% 2.67% (2.37)%
Ratios (to average net assets)/Supplemental data(sec.):
Expenses## 1.73% 1.70% 1.80% 1.74%+
Net investment income 3.08% 3.25% 2.88% 2.79%+
Portfolio turnover 78% 43% 50% 48%
Net assets at end of period (000 omitted) $6,503 $7,749 $7,792 $ 7,415
** For the period from the commencement of offering of Class B shares, September 7,
1993, to April 30, 1994.
+ Annualized.
# Per share data for the periods subsequent to April 30, 1994, are based on average
shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++++ For the year ended April 30, 1995, the per share distribution in excess of net
investment income was $0.001.
(sec.) The investment advisor voluntarily agreed to maintain the expenses of the fund at
not more than 1.80% of average daily net assets. To the extent actual expenses
exceeded the limitation, the net investment income per share and the ratios would
have been:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Net investment income $ 0.23 $ 0.25 $ 0.21 $ 0.12
Ratios (to average net assets):
1.80% 1.74% 1.80% 2.05%+
Expenses
3.01% 3.21% 2.88% 2.48%+
Net investment income
</TABLE>
See notes to financial statements
16
<PAGE> 19
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended April 30, 1997 1996 1995***
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
<CAPTION>
Class C
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 7.53 $ 7.45 $ 7.45
------ ------ ------
Income from investment operations#-
Net investment incomesec. $ 0.23 $ 0.23 $ 0.21
Net realized and unrealized gain (loss) on
investments (0.03) 0.08 (0.02)
------ ------ ------
Total from investment operations $ 0.20 $ 0.31 $ 0.19
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.23) $ (0.19)
In excess of net investment income++++ -- -- (0.00)
------ ------ ------
Total distributions declared to shareholders $ (0.23) $ (0.23) $ (0.19)
------ ------ ------
Net asset value - end of period $ 7.50 $ 7.53 $ 7.45
------ ------ ------
Total return 2.64% 4.23% 2.53%+
Ratios (to average net assets)/Supplemental data(sec.):
Expenses## 1.80% 1.80% 1.79%+
Net investment income 3.03% 3.16% 2.77%+
Portfolio turnover 78% 43% 50%
Net assets at end of period (000 omitted) $ 3,297 $ 3,013 $ 1,934
*** For the period from the commencement of offering of Class C shares, July 1, 1994,
to April 30, 1995.
+ Annualized.
# Per share data for the periods subsequent to April 30, 1994, is based on average
shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
++++ For the period ended April 30, 1995, the per share distribution in excess of net
investment income
was $0.001.
(sec.) The investment advisor voluntarily agreed to maintain the expenses of the fund at
not more than 1.80% of average daily net assets. To the extent actual expenses
exceeded the limitation, the net investment income per share and the ratios would
have been:
Net investment income $ 0.22 $ 0.23 $ 0.21
Ratios (to average net assets):
Expenses 1.87% 1.84% 1.79%+
Net investment income 2.96% 3.12% 2.77%+
</TABLE>
See notes to financial statements
17
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Municipal Limited Maturity Fund (the Fund) is a diversified series of MFS
Series Trust IX (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. 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 Fund
operations.
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.
18
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS - continued
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. During the year ended April 30, 1997, $3,314 was reclassified to
accumulated undistributed net investment income from paid-in capital due to
permanent differences between book and tax accounting. This change had no effect
on the net assets or net asset value per share.
At April 30, 1997, the Fund, for federal income tax purposes, had a capital loss
carryforward of $873,818, which may be applied against any net taxable realized
gains in each succeeding year until the earlier of its utilization or expiration
on April 30, 2003, ($798,921), April 30, 2004, ($32,070) and April 30, 2005,
($42,827).
19
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS - continued
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 distribution and service fees. All shareholders bear the common
expenses of the Fund pro rata based on settled shares outstanding 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 annual rate of 0.40% of
the Fund's 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. 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 to MFS in prior years. At April 30,
1997, the aggregate unreimbursed expenses owed to MFS by the Fund amounted to
$191,917, including $37,574 incurred 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 officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $2,890 for the year ended
April 30, 1997.
Administrator - Effective March 1, 1997, the Fund has an administrative services
agreement with MFS to provide the Fund with certain financial, legal,
compliance, shareholder communications, and other administrative services. As a
partial reimbursement for the cost of providing these services, each Fund pays
MFS an administrative fee up to 0.015% per annum of each Fund's
20
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS - continued
average daily net assets, provided that the administrative fee is not assessed
on Fund assets that exceed $3 billion.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$5,862 for the year ended April 30, 1997, as its portion of the sales charge on
sales of Class A shares of the Fund. The Trustees have adopted a distribution
plan for Class A, Class B, and Class C shares pursuant to Rule 12b-1 of the
Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee to each securities
dealer that enters into a sales agreement with MFD of up to 0.25% per annum
(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 $15,260 for the year ended April 30, 1997.
Payment of the 0.10% per annum Class A distribution fee will commence on such
date as the Trustees of the Trust may determine. Fees incurred under the
distribution plan during the year ended April 30, 1997, were 0.15%, of the
average daily net assets attributable to Class A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. The
service fee is currently being reduced to 0.17% on Class B shares held over one
year. 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 $1,781 and $56 for Class B and Class C
shares, respectively, for the year ended April 30, 1997.
21
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS - continued
Fees incurred under the distribution plan during the year ended April 30, 1997,
were 0.93% and 1.00% of the Fund's average daily net assets attributable to
Class B and Class C shares, respectively, on an annualized basis.
Purchases over $1 million of Class A shares are subject to a contingent deferred
sales charge in the event of a shareholder redemption within 12 months following
such purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. A contingent deferred sales charge is imposed on
shareholder redemptions of Class C shares in the event of a shareholder
redemption within 12 months of purchases made on or after April 1, 1996. MFD
receives all contingent deferred sales charges. Contingent deferred sales
charges imposed during the year ended April 30, 1997, were $121, $35,651, and
$1,032, for Class A, Class B, and Class C shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an effective annual rate of
0.13%. Prior to January 1, 1997, the fee was calculated as a percentage of the
average daily net assets of each class of shares at an effective annual rate of
up to 0.15%, up to 0.22%, and up to 0.15% attributable to Class A, Class B, and
Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$42,228,840 and $44,976,564, 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:
<TABLE>
<S> <C>
Aggregate cost $51,062,807
----------
Gross unrealized appreciation $ 330,910
Gross unrealized depreciation (44,076)
-----------
Net unrealized appreciation $ 286,834
----------
</TABLE>
22
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS - continued
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
Class A Shares
<TABLE>
<CAPTION>
Year Ended April 30, 1997 Year Ended April 30, 1996
--------------------------- ---------------------------
Shares Amount Shares Amount
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,574,476 $ 11,862,568 1,999,874 $ 15,164,604
Shares issued to shareholders in
reinvestment of distributions 160,862 1,211,040 206,976 1,568,611
Shares reacquired (2,966,712) (22,348,637) (4,146,143) (31,416,230)
-------- ---------- -------- ----------
Net decrease (1,231,374) $ (9,275,029) (1,939,293) $(14,683,015)
-------- ---------- -------- ----------
</TABLE>
Class B Shares
<TABLE>
<CAPTION>
Year Ended April 30, 1997 Year Ended April 30, 1996
--------------------------- ---------------------------
Shares Amount Shares Amount
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 222,124 $ 1,670,226 395,418 $ 2,988,803
Shares issued to shareholders in
reinvestment of distributions 15,642 117,619 19,614 148,492
Shares reacquired (399,994) (3,007,251) (431,218) (3,263,193)
-------- ---------- -------- ----------
Net decrease (162,228) $ (1,219,406) (16,186) $ (125,898)
-------- ---------- -------- ----------
</TABLE>
Class C Shares
<TABLE>
<CAPTION>
Year Ended April 30, 1997 Year Ended April 30, 1996
--------------------------- ---------------------------
Shares Amount Shares Amount
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 199,462 $ 1,502,376 483,511 $ 3,668,819
Shares issued to shareholders in
reinvestment of distributions 12,406 93,436 8,781 66,593
Shares reacquired (172,386) (1,298,757) (351,660) (2,661,064)
-------- ---------- -------- ----------
Net increase 39,482 $ 297,055 140,632 $ 1,074,348
-------- ---------- -------- ----------
</TABLE>
(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 $400 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,
1997 was $560.
23
<PAGE> 26
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 (one of the
series constituting MFS Series Trust IX) as of April 30, 1997, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended April 30, 1997 and 1996, and the financial highlights
for each of the years in the six-year period ended April 30, 1997. 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, 1997, 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, 1997, 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
May 30, 1997
---------------------------------------------------------------------
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.
24
<PAGE> 27
MFS(R) MUNICIPAL LIMITED MATURITY FUND
TRUSTEES
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Peter G. Harwood - Private Investor
J. Atwood Ives - Chairman and Chief Executive Officer, Eastern Enterprises
Lawrence T. Perera - Partner, Hemenway & Barnes
William J. Poorvu - Adjunct Professor, Harvard University Graduate School of
Business Administration
Charles W. Schmidt - Private Investor
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
Elaine R. Smith - Independent Consultant
David B. Stone - Chairman, North American Management Corp. (investment
advisers)
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Robert A. Dennis*
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
CUSTODIAN
State Street Bank and Trust Company
*Affiliated with the Investment Adviser
AUDITORS
Deloitte & Touche LLP
INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll free: 1-800-637-4458
anytime from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for an
information kit, call toll free: 1-800-637-2929 any business day from 9 a.m. to
5 p.m. Eastern time (or leave a message anytime).
INVESTOR SERVICE
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from 8
a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any
business day from 9 a.m. to 5 p.m. Eastern time. (To use this service, your
phone must be equipped with a Telecommunications Device for the Deaf.)
For share prices, account balances, and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
WORLD WIDE WEB
www.mfs.com
For the third year in a row, MFS earned a #1 ranking in the
[LOGO] DALBAR, Inc. Broker/Dealer Survey, Main Office Operations
Service Quality Category. The firm achieved a 3.48 overall
score on a scale of 1 to 4 in the 1996 survey. A total of
110 firms responded, offering input on the quality of
service they received from 29 mutual fund companies nationwide. The survey
contained questions about service quality in 15 categories, including "knowledge
of phone service contacts," "accuracy of transaction processing," and "overall
ease of doing business with the firm."
25
<PAGE> 28
<TABLE>
<CAPTION>
<S> <C> <C>
MFS(R) MUNICIPAL LIMITED LOGO
MATURITY FUND ----------------------
500 Boylston Street BULK RATE
Boston, MA 02116-3741 U.S. POSTAGE
LOGO PAID
MFS
----------------------
</TABLE>
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MML-2 6/97 9M 37/237/337
