<PAGE> 1
[Logo] MFS [Service Mark] Semiannual Report
Investment Management October 31, 1996
We invented the mutual fund [Service Mark]
- --------------------------------------------------------------------------------
MFS [Registered Trademark] Municipal Limited Maturity Fund
[Photo]
American learns how "We invented the mutual fund" (see page 23)
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<PAGE> 2
TABLE OF CONTENTS
Letter from the Chairman............................................. 1
Fund Facts........................................................... 2
Portfolio Manager's Overview......................................... 3
Portfolio Manager's Profile.......................................... 5
Performance Summary.................................................. 6
Portfolio of Investments............................................. 8
Financial Statements................................................. 12
Notes to Financial Statements........................................ 18
The MFS(R) Family of Funds........................................... 24
Trustees and Officers................................................ 25
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HIGHLIGHTS
- - FOR THE SIX MONTHS ENDED OCTOBER 31, 1996, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 2.06%, CLASS B SHARES 1.66%,
AND CLASS C SHARES 1.63%.
- - INTEREST RATES ON SHORT- AND INTERMEDIATE-MATURITY MUNICIPAL BONDS WERE
VOLATILE OVER THE PAST SIX MONTHS, AS INVESTOR PERCEPTIONS ABOUT THE STRENGTH
OF THE ECONOMY AND INFLATION CHANGED FREQUENTLY.
- - THE MUNICIPAL MARKET'S STRONG RELATIVE PERFORMANCE REFLECTS ITS FAVORABLE
TECHNICAL POSITION. SUPPLY REMAINS MODERATE AS RISING INTEREST RATES HAVE
RESTRAINED REFUNDING AND AS POLITICAL AND ECONOMIC TRENDS HAVE KEPT ISSUANCE
FOR NEW PUBLIC PROJECTS IN CHECK.
- - THE FUND'S LARGEST SECTOR CONCENTRATION, REPRESENTING ABOUT 25% OF TOTAL
ASSETS, IS IN TAX-SUPPORTED GENERAL OBLIGATION BONDS, HISTORICALLY THE MOST
SECURE OF MUNICIPAL CREDITS.
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<PAGE> 3
LETTER FROM THE CHAIRMAN
Dear Shareholders:
As we enter the final months of 1996, the U.S.
economy appears to have settled into a pattern of
[Photo] moderate growth and inflation -- two factors that
we think can be important contributors to a
favorable long-term investment climate. During the
first quarter of 1996, real (inflation-adjusted)
economic growth was 2.3% on an annualized basis,
followed by a rate of 4.7% in the second quarter.
However, this unexpectedly high level was followed by a more moderate 2.2% pace
during the third quarter. Overall, real growth in gross domestic product has
surpassed our expectations this year, and we now expect that growth for all of
1996 could exceed 2.5%. Although individual consumers appear to be carrying an
excessive debt load, the consumer sector itself, which represents two-thirds of
the economy, continues to support the automobile and housing markets. Consumer
spending has also been positively impacted by widespread job growth and, more
recently, rising wages. However, recent statistics appear to show a slowdown in
consumer spending. This is particularly true when considering overall retail
sales, which have been flat for several months. Furthermore, the economies of
Europe and Japan continue to be in the doldrums, weakening U.S. export markets
while subduing the capital spending plans of American corporations. Thus, while
economic growth should continue, we expect some slackening toward the end of the
year.
In the bond markets, persistent signs of economic weakness led to decreases
in short-term interest rates by the Federal Reserve Board in late 1995 and early
1996. Should signs of more rapid economic growth and, particularly, of higher
inflation resurface, we would expect the Fed to maintain its anti-inflationary
stance. In the beginning of the year, bond markets traded in a narrow range as
investors shifted between concern for the lack of a budget resolution in
Washington and hope that sluggish economic reports and low inflation might lead
to lower interest rates. Later, fixed-income markets began reacting to
conflicting signals regarding the economy's strength 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 equitably valued.
1
<PAGE> 4
LETTER FROM THE CHAIRMAN - continued
Finally, as you may notice, this report to shareholders incorporates a
number of changes which we hope you will find informative and useful. Following
the Portfolio Manager's Overview, we have added new information on the Fund's
holdings. Near the back of the report, telephone numbers and addresses are
listed if you would like to contact MFS.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
November 12, 1996
- --------------------------------------------------------------------------------
FUND FACTS
STRATEGY: 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.
COMMENCEMENT OF
INVESTMENT OPERATIONS: MARCH 17, 1992
SIZE: $57.0 MILLION NET ASSETS AS OF OCTOBER 31,
1996
- --------------------------------------------------------------------------------
2
<PAGE> 5
PORTFOLIO MANAGER'S OVERVIEW
Dear Shareholders:
For the six months ended October 31, 1996, Class A
shares of the Fund provided a total return of
2.06%, Class B shares 1.66%, and Class C shares
[Photo] 1.63%. These returns assume the reinvestment of
distributions but exclude the effects of any sales
charges.
As was the case in all segments of the
fixed-income markets, interest rates on short- and
intermediate-maturity municipal bonds were volatile over the past six months.
Investor perceptions about the strength of the economy and inflation
expectations changed frequently, as did market sentiment concerning the
possibility that the Federal Reserve would begin to tighten monetary policy.
Continuing the trend that began at the beginning of the year, rates generally
rose through the end of June before stabilizing and trending lower through the
summer and early fall.
As of October 31, 1996, rates on three- to five-year, high-grade municipals
were 10 to 15 basis points (0.10% to 0.15%) lower than on April 30. Since the
beginning of 1996, the municipal market's performance has been superior to that
of comparable-maturity U.S. Treasury bonds; for instance, rates on three-year
municipals were only about 20 basis points (0.20%) higher on October 31 than at
year-end, compared to an 80-basis-point (0.80%) increase by three-year
Treasuries. Since January, the yield ratio of three-year municipals rated "AAA"
by Standard & Poor's to Treasuries has declined from 76% to 70%. (Note that
principal value and interest on Treasury securities are guaranteed by the U.S.
government if held to maturity.)
The municipal market's strong relative performance reflects its favorable
technical position. Supply remains moderate as the rise in rates has restrained
refunding issuance and as political and economic trends have combined to stall
issuance for new public projects. On the demand side, both institutional and
retail demand for municipals, particularly in the short- and intermediate-term
maturities, has been consistently healthy, aided by substantially diminished
fears about radical tax reform.
Another factor favoring municipals has been the improved investor
confidence arising from the strong condition of municipal credits. Benefiting
from a healthy economy and sound budgeting and financial practices, the fiscal
condition of state and local governments and most revenue bond issuers
3
<PAGE> 6
PORTFOLIO MANAGER'S OVERVIEW - continued
is generally at its strongest in several years. This trend, combined with the
increasing role of municipal bond insurance, has also served to keep yield
spreads among sectors and rating categories narrow. Accordingly, 78% of the Fund
is invested in either "AAA"- or "AA"-rated bonds. The Fund's largest sector
concentration, representing about 25% of total assets, is in tax-supported
general obligation bonds, historically the most secure of municipal credits.
The Fund's net asset value returns of 2.06% for Class A shares, 1.66% for
Class B shares, and 1.63% for Class C shares over the past six months compare to
the 2.51% average return for short/intermediate municipal bond funds as compiled
by Lipper Analytical Services, Inc., an independent firm that reports mutual
fund performance. The Fund lagged the 2.73% and 3.10% 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.
In the absence of any major changes in the trading relationships among
sectors, regions, rating categories, or individual credits, performance is
predominantly attributable to maturity selection. As previously noted,
month-to-month volatility in the market was significant, even though the net
interest rate change over the six-month period was relatively small. The Fund's
average maturity varied within a moderate range of 2.5 to 3.5 years, but the
timing of the changes proved not to be optimal. For instance, a shorter maturity
would have been preferable in May when rates were rising; then, after being
shortened during June, a longer average maturity would have provided better
performance as rates declined in July.
4
<PAGE> 7
PORTFOLIO MANAGER'S OVERVIEW - continued
At present, the Fund is maintaining a generally neutral average maturity of
close to three years. Despite the persistence of favorable inflation reports,
the economic outlook remains uncertain. The economy slowed in the third quarter
from the second quarter's rapid growth pace, but it remains to be seen whether
this represents a temporary phenomenon or the beginning of a clear trend toward
slower growth. Also, despite some recent cheapening, we believe short-maturity
municipals are still fully valued relative to comparable U.S. Treasury bonds.
Respectfully,
/s/ Robert A. Dennis
Robert A. Dennis
Portfolio Manager
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S 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 MANAGED MFS MUNICIPAL LIMITED MATURITY FUND SINCE 1992. MR.
DENNIS IS A CHARTERED FINANCIAL ANALYST (C.F.A.).
- --------------------------------------------------------------------------------
5
<PAGE> 8
PERFORMANCE SUMMARY
Because mutual funds like MFS Municipal Limited Maturity Fund are designed for
investors with long-term goals, we have provided cumulative results as well as
the average annual total returns for Class A, Class B, and Class C shares for
the applicable time periods.
<TABLE>
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
Class A Investment Results
(net asset value change including reinvested distributions)
<CAPTION>
Life
6 Months 1 Year of Fund*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +2.06% +3.15% +23.57%
- ------------------------------------------------------------------------------------
Average Annual Total Return -- +3.15% + 4.86%
- ------------------------------------------------------------------------------------
SEC Results -- +0.63% + 4.29%
- ------------------------------------------------------------------------------------
Class B Investment Results
(net asset value change including reinvested distributions)
<CAPTION>
Life
6 Months 1 Year of Fund*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +1.66% +2.34% +21.29%
- ------------------------------------------------------------------------------------
Average Annual Total Return -- +2.34% + 4.26%
- ------------------------------------------------------------------------------------
SEC Results -- -1.63% + 3.88%
- ------------------------------------------------------------------------------------
Class C Investment Results
(net asset value change including reinvested distributions)
<CAPTION>
Life
6 Months 1 Year of Fund*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +1.63% +2.28% +22.21%
- ------------------------------------------------------------------------------------
Average Annual Total Return -- +2.28% + 4.43%
- ------------------------------------------------------------------------------------
SEC Results -- +1.29% + 4.43%
- ------------------------------------------------------------------------------------
<FN>
* For the period from the commencement of investment operations, March 17, 1992
to October 31, 1996.
</TABLE>
All results represent past performance and are not an indication of future
results. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost.
Class A SEC results include the maximum 2.50% sales charge. Class B 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
6
<PAGE> 9
PERFORMANCE SUMMARY - continued
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. See the prospectus for details.
Class B and Class C share performance includes the performance of the Fund's
Class A shares for periods prior to the commencement of offering of Class B
shares on September 7, 1993 and of Class C shares on July 1, 1994. Sales charges
and operating expenses for Class A, Class B, and Class C shares differ. The
Class A share performance, which is included within 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 initial sales charge
generally applicable to Class A shares. Class B and Class C share performance
has not been adjusted, however, to reflect differences in operating expenses
(e.g., Rule 12b-1 fees), which generally are lower for Class A shares.
7
<PAGE> 10
<TABLE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - October 31, 1996
Municipal Bonds - 102.2%
- ---------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 26.6%
Aldine, TX, Independent School District, PSFG,
7.25s, 1997 $ 600 $ 606,270
Baltimore County, MD, Consolidated Public
Improvement, 5s, 1997 500 503,735
Baltimore County, MD, Metropolitan District,
6.5s, 1997 500 509,465
Bridgeport, CT, AMBAC, 5.25s, 1999 1,155 1,182,558
Cleveland, OH, AMBAC, 5s, 2000 655 667,491
Commonwealth of Massachusetts, 7s, 1999 1,000 1,049,070
Cook County, IL, High School District No. 205
(Thornton Township), FGIC, 5.4s, 1997 450 453,893
District of Columbia, 4.3s, 1996 900 899,928
District of Columbia, AMBAC, 7.25s, 1998 500 520,545
Government of Guam, 5.75s, 1999 500 510,215
Indianapolis, IN, Local Public Improvement
Bond Bank, 6.25s, 2001 1,000 1,059,960
Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,194,660
Milwaukee, WI, Metropolitan Sewage District,
6.7s, 2001 500 544,135
New York City, NY, 5.125s, 1998 350 354,119
New York City, NY, 6s, 1999 350 359,457
New York City, NY, 6.125s, 2001 600 627,102
New York City, NY, 5.7s, 2002 500 510,105
New York City, NY, 5.25s, 2003 1,500 1,480,860
North Slope Borough, AK, MBIA, 0s, 1999 375 332,681
State of Louisiana, FGIC, 6s, 2000 500 525,325
State of Pennsylvania, FGIC, 5.25s, 1999 500 511,495
State of Virginia, 5.375s, 1999 750 771,428
-----------
$15,174,497
- ---------------------------------------------------------------------------------
State and Local Appropriation - 10.6%
California Public Works Board, Lease Rev.
(Secretary of State), AMBAC, 5.25s, 1998 $ 630 $ 643,854
District of Columbia, Certificates of
Participation, 6s, 1997 272 272,147
Michigan Building Authority Rev., 6.2s, 2002 1,000 1,072,950
New York Dormitory Authority Rev. (City
University), 5.25s, 1997 500 503,395
New York Dormitory Authority Rev. (City
University), 5s, 2000 500 502,785
New York Dormitory Authority Rev. (State
University), 4.9s, 2000 500 499,190
New York Medical Care Facilities Finance
Agency Rev., 5.9s, 2000 995 1,030,929
New York Urban Development (Correctional
Facility), 5.5s, 2001 1,000 1,020,110
State of Utah Building Ownership Authority,
5.5s, 2000 500 514,655
-----------
$ 6,060,015
- ---------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
Refunded and Special Obligations - 4.1%
Commonwealth of Massachusetts, 6.7s, 2002 $1,000 $ 1,053,340
Detroit, MI, 5.625s, 1997 750 757,282
New Jersey Transportation Authority Trust
Fund, 5.6s, 1998 495 506,826
----------
$ 2,317,448
- ---------------------------------------------------------------------------------
Airport and Port Revenue - 5.3%
Atlanta, GA, Airport Facilities Rev., 5.5s,
2001 $ 500 $ 517,335
Denver, CO, City & County Airport Rev., 5.5s,
1999 650 661,752
Indianapolis, IN, Airport Authority Rev.,
FGIC, 5s, 1999 1,000 1,014,820
Metropolitan Nashville, TN, Airport Rev.,
FGIC, 6.125s, 1999 800 829,504
-----------
$ 3,023,411
- ---------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 20.1%
Hillsborough County, FL, Utility Refunding,
MBIA, 0s, 1999 $1,000 $ 882,520
Intermountain Power Agency, UT, Power Supply
Rev., FSA, 5.25s, 2001 500 515,360
Intermountain Power Agency, UT, Power Supply
Rev., MBIA, 5.25s, 1999 500 507,755
Intermountain Power Agency, UT, Power Supply
Rev., MBIA, 5.5s, 1999 2,500 2,567,425
North Carolina Eastern Municipal Power Agency,
5s, 1999 250 250,480
Philadelphia, PA, Gas Works Rev., 5.4s, 1998 1,000 1,007,940
Sacramento, CA, Municipal Utility District
Electric Rev., FGIC, 6s, 2001 620 658,384
South Carolina Public Service Authority,
AMBAC, 5s, 1999 500 507,100
Washington Public Power Supply System Rev.,
5s, 2000 1,500 1,507,350
Washington Public Power Supply System Rev.,
5s, 2000 500 502,450
Washington Public Power Supply System Rev.,
5.45s, 2000 1,500 1,529,700
Washington Public Power Supply System Rev.,
Nuclear Project #2, 4.625s, 1998 1,000 1,001,910
-----------
$11,438,374
- ---------------------------------------------------------------------------------
Insured Health Care Revenue - 6.2%
Delaware County, IN, Hospital Authority (Ball
Memorial Hospital), AMBAC, 6.625s, 2001 $2,520 $ 2,722,759
Norman, OK, Regional Hospital Authority Rev.,
MBIA, 4.4s, 1999 400 397,500
Wisconsin Health and Educational Facilities,
MBIA, 4.5s, 1999 435 435,757
-----------
$ 3,556,016
- ---------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Municipal Bonds - continued
- --------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Multi-Family Housing Revenue - 3.6%
Rhode Island Housing & Mortgage Finance Corp.,
AMBAC, 5.15s, 2001 $1,000 $1,023,200
Rhode Island Housing & Mortgage Finance Corp.,
AMBAC, 5.25s, 2002 1,000 1,027,970
----------
$2,051,170
- --------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 2.7%
Arizona Transportation Board, Excise Tax Rev.
(Maricopa County Regional Area), MBIA, 6.8s,
1997 $1,000 $1,019,430
San Diego County, CA, Regional Transportation
Commission, Sales Tax Rev., MBIA, 5s, 1998 500 507,225
----------
$1,526,655
- --------------------------------------------------------------------------------
Single Family Housing Revenue - 0.9%
Texas Department of Housing and Community
Affairs, MBIA, 4.65s, 2000 $ 500 $ 499,965
- --------------------------------------------------------------------------------
Student Loan Revenue - 5.0%
Colorado Student Obligation Bond Authority, 6.125s,
1998 $ 255 $ 260,166
Louisiana Public Facilities Authority (Student Loan
Rev.), 6.5s, 2002 1,000 1,054,790
Nebraska Higher Education Loan Program Rev., 5s, 1998 500 499,105
New Mexico Educational Assistance Foundation, 5.25s,
1998 1,000 1,013,850
----------
$2,827,911
- --------------------------------------------------------------------------------
Universities - 1.8%
Illinois Educational Facilities Authority Rev.
(Northwestern University), 4.75s, 2000 $ 500 $ 501,670
Union County, PA, Higher Educational
Facilities Financing Authority (Bucknell
University), MBIA, 5.3s, 1998 500 509,120
----------
$1,010,790
- --------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 3.1%
Philadelphia, PA, Water and Sewer Rev., MBIA,
0s, 2002 $1,000 $ 756,620
San Antonio, TX, Water Rev., FGIC, 5.8s, 1999 1,000 1,035,060
----------
$1,791,680
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Municipal Bonds - continued
- ---------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------------
<S> <C> <C>
Miscellaneous Revenue - 12.2%
Connecticut Special Assessment, AMBAC, 5s,
1999 $1,000 $ 1,017,670
Michigan Underground Storage, AMBAC, 5s, 1999 3,365 3,424,763
Pennsylvania Intergovernmental Coop Authority,
FGIC, 5.4s, 1997 500 505,520
State of Minnesota, AMBAC, 5s, 1998 500 507,170
State of Minnesota, AMBAC, 5s, 1999 1,500 1,520,340
-----------
$ 6,975,463
- ---------------------------------------------------------------------------------
Total Investments (Identified Cost, $57,594,078) $58,253,395
Other Assets, Less Liabilities - (2.2)% (1,242,560)
- ---------------------------------------------------------------------------------
Net Assets - 100.0% $57,010,835
- ---------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
11
<PAGE> 14
<TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ---------------------------------------------------------------------------------
<CAPTION>
October 31, 1996
- ---------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $57,594,078) $58,253,395
Receivable for Fund shares sold 375,720
Interest and dividends receivable 912,231
Deferred organization expenses 1,554
Other assets 662
-----------
Total assets $59,543,562
===========
Liabilities:
Cash overdraft $ 688,600
Distributions payable 58,236
Payable for Fund shares reacquired 106,128
Payable for investments purchased 1,657,254
Payable to affiliates -
Management fee 619
Distribution fee 11,598
Accrued expenses and other liabilities 10,292
-----------
Total liabilities $ 2,532,727
===========
Net assets $57,010,835
===========
Net assets consist of:
Paid-in capital $57,269,822
Unrealized appreciation on investments 659,317
Accumulated net realized loss on investments (931,229)
Accumulated undistributed net investment income 12,925
-----------
Total $57,010,835
===========
Shares of beneficial interest outstanding 7,560,138
===========
Class A shares:
Net asset value and redemption price per share
(net assets of $46,623,690 / 6,181,843 shares of beneficial
interest outstanding) $7.54
=====
Offering price per share (100/97.5) $7.73
=====
Class B shares:
Net asset value and offering price per share
(net assets of $7,005,342 / 929,960 shares of beneficial
interest outstanding) $7.53
=====
Class C shares:
Net asset value and offering price per share
(net assets of $3,381,803 / 448,335 shares of beneficial
interest outstanding) $7.54
=====
<FN>
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.
</TABLE>
See notes to financial statements
12
<PAGE> 15
<TABLE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- ---------------------------------------------------------------------------------
<CAPTION>
Six Months Ended October 31, 1996
- ---------------------------------------------------------------------------------
<S> <C>
Net investment income:
Interest income $1,414,559
----------
Expenses -
Management fee $ 119,405
Trustees' compensation 5,597
Shareholder servicing agent fee (Class A) 37,276
Shareholder servicing agent fee (Class B) 8,229
Shareholder servicing agent fee (Class C) 2,408
Distribution and service fee (Class A) 36,848
Distribution and service fee (Class B) 35,216
Distribution and service fee (Class C) 15,903
Custodian fee 16,398
Auditing fees 15,450
Postage 2,466
Printing 2,465
Amortization of organization expenses 2,086
Legal fees 587
Miscellaneous 42,708
----------
Total expenses $ 343,042
Reduction of expenses pursuant to reimbursement agreement (13,235)
Fees paid indirectly (3,030)
----------
Net expenses $ 326,777
----------
Net investment income $1,087,782
----------
Realized and unrealized gain (loss) on investments:
Realized loss on investment transactions (identified cost basis) $ (1,063)
Change in unrealized appreciation on investments 111,724
----------
Net realized and unrealized gain on investments $ 110,661
----------
Increase in net assets from operations $1,198,443
----------
</TABLE>
See notes to financial statements
13
<PAGE> 16
<TABLE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended
October 31, 1996 Year Ended
(Unaudited) April 30, 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 1,087,782 $ 2,600,902
Net realized loss on investments (1,063) (40,278)
Net unrealized gain on investments 111,724 816,807
------------ ------------
Increase in net assets from operations $ 1,198,443 $ 3,377,431
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (937,765) $ (2,223,764)
From net investment income (Class B) (111,374) (253,938)
From net investment income (Class C) (47,018) (70,381)
------------ ------------
Total distributions declared to shareholders $ (1,096,157) $ (2,548,083)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 7,866,310 $ 21,822,226
Net asset value of shares issued to shareholders
in reinvestment of distributions 743,725 1,783,696
Cost of shares reacquired (12,850,814) (37,340,487)
------------ ------------
Decrease in net assets from
Fund share transactions $ (4,240,779) $(13,734,565)
------------ ------------
Total decrease in net assets $ (4,138,493) $(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 $12,925
and $21,300, respectively) $ 57,010,835 $ 61,149,328
============ ============
</TABLE>
See notes to financial statements
14
<PAGE> 17
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights
- --------------------------------------------------------------------------------------------
<CAPTION>
Six Months
Ended Eight Months
October 31, Year Ended April 30, Ended Year Ended August 31,
1996 -------------------- April 30, ---------------------
(Unaudited) 1996 1995 1994 1993 1992*
- --------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------
<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. $ 0.14 $ 0.30 $ 0.28 $ 0.19 $ 0.31 $ 0.15
Net realized and
unrealized gain
(loss) on
investments (0.05) 0.08 (0.02) (0.22) 0.30 0.12
------- ------- ------- ------- ------- -------
Total from
investment
operations $ 0.09 $ 0.38 $ 0.26 $ (0.03) $ 0.61 $ 0.27
------- ------- ------- ------- ------- -------
Less distributions declared to
shareholders -
From net investment
income $ (0.08) $ (0.30) $ (0.28) $ (0.19)++ $ (0.31) $ (0.15)++
From net realized gain ++
on investments -- -- -- -- (0.01) --
In excess of net
investment income -- -- -- ++ -- -- --
In excess of net ++
realized gain on
investments -- -- -- (0.03) -- --
------- ------- ------- ------- ------- -------
Total
distributions
declared to
shareholders $ (0.08) $ (0.30) $ (0.28) $ (0.22) $ (0.32) $ (0.15)
------- ------- ------- ------- ------- -------
Net asset value - end of
period $ 7.54 $ 7.53 $ 7.45 $ 7.47 $ 7.72 $ 7.43
------- ------- ------- ------- ------- -------
Total return# 2.06% 5.11% 3.55% (0.59)%+ 8.47% (8.26)%+
Ratios (to average net assets)/Supplemental datasec.:
Expenses## 0.96%+ 0.95% 0.95% 0.89%+ 0.68% 0.55%+
Net investment income 3.77%+ 4.00% 3.74% 3.72%+ 4.04% 4.25%+
Portfolio turnover 50% 43% 50% 48% 69% 8%
Net assets at end of
period (000 omitted) $46,624 $50,387 $64,329 $83,367 $87,192 $21,312
<FN>
* 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 is based on average shares outstanding.
# 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 fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
++ Includes a per share distribution from paid-in-capital of $0.0007.
++++ Includes a per share distribution in excess of net investment income of $0.002.
[Section] The investment adviser and distributor did not impose all or a portion of their 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:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $0.14 $0.30 $0.28 $0.18 $0.28 $0.13
Ratios (to average net assets):
Expenses 0.99%+ 0.99% 0.95% 1.12%+ 1.16% 1.16%+
Net investment income 3.74%+ 3.96% 3.74% 3.49%+ 3.57% 3.64%+
</TABLE>
See notes to financial statements
15
<PAGE> 18
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -------------------------------------------------------------------------------------
<CAPTION>
Six Months
Ended
October 31, Year Ended April 30,
1996 ------------------------------
(Unaudited) 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. $ 0.11 $ 0.25 $ 0.21 $ 0.14
Net realized and unrealized gain
(loss) on investments (0.02) 0.07 (0.02) (0.26)
------ ------ ------ ------
Total from investment operations $ 0.09 $ 0.32 $ 0.19 $(0.12)
------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.08) $(0.24) $(0.21) $(0.13)
In excess of net investment income -- -- -- +++ (0.01)
In excess of net realized gain on +++
investments -- -- -- (0.03)
------ ------ ------ ------
Total distributions declared to
shareholders $(0.08) $(0.24) $(0.21) $(0.17)
------ ------ ------ ------
Net asset value - end of period $ 7.53 $ 7.52 $ 7.44 $ 7.46
------ ------ ------ ------
Total return 1.66% 4.34% 2.67% (2.37)%+
Ratios (to average net
assets)/Supplemental datasec.:
Expenses## 1.75%+ 1.70% 1.80% 1.74%+
Net investment income 2.96%+ 3.25% 2.88% 2.79%+
Portfolio turnover 50% 43% 50% 48%
Net assets at end of period (000
omitted) $7,005 $7,749 $7,792 $7,415
<FN>
** 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 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.
++++++ Includes a per share distribution in excess of net investment income of $0.001.
[Section] The investment adviser did not impose all or a portion of its 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:
<S> <C> <C> <C> <C>
Net investment income $0.11 $0.25 $0.21 $0.12
Ratios (to average net assets):
Expenses 1.86% 1.74% 1.80% 2.05%+
Net investment income 2.85% 3.21% 2.88% 2.48%+
</TABLE>
See notes to financial statements
16
<PAGE> 19
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- ----------------------------------------------------------------------------------
<CAPTION>
Six Months
Ended
October 31, Year Ended April 30,
1996 --------------------
(Unaudited) 1996 1995***
- ----------------------------------------------------------------------------------
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. $ 0.11 $ 0.23 $ 0.21
Net realized and unrealized gain (loss) on
investments (0.02) 0.08 (0.02)
------ ------ ------
Total from investment operations $ 0.09 $ 0.31 $ 0.19
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.08) $(0.23) $(0.19)
In excess of net investment income -- -- -- +++
------ ------ ------ +++
Total distributions declared to
shareholders $(0.08) $(0.23) $(0.19)
------ ------ ------
Net asset value - end of period $ 7.54 $ 7.53 $ 7.45
------ ------ ------
Total return 1.63% 4.23% 2.53%
Ratios (to average net assets)/Supplemental
datasec.:
Expenses## 1.80%+ 1.80% 1.79%+
Net investment income 2.92%+ 3.16% 2.77%+
Portfolio turnover 50% 43% 50%
Net assets at end of period (000 omitted) $3,382 $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.
++++++ Includes a per share distribution in excess of net investment income of
$0.001.
sec. The investment adviser did not impose all or a portion of its 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 $ 0.11 $ 0.23 $ 0.21
Ratios (to average net assets):
Expenses 1.84% 1.84% 1.79%+
Net investment income 2.88% 3.12% 2.77%+
</TABLE>
See notes to financial statements
17
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(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. Futures
contracts, options and options on futures contracts listed on commodities
exchanges are valued at closing settlement prices. Over-the-counter options are
valued by brokers through the use of a pricing model which takes into account
closing bond valuations, implied volatility and short-term repurchase rates.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its organization have been deferred and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of
operations of the Fund.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations.
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 (UNAUDITED) - 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. 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, 2003 ($798,921) and April 30, 2004
($32,070).
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
19
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
computed daily and paid monthly at an effective annual rate of 0.40% of the
Fund's average daily net assets.
Under a temporary expense reimbursement agreement with MFS, MFS has volun-
tarily 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. The Fund in
turn will pay MFS an expense reimbursement fee not greater than 0.40% of average
daily net assets. To the extent that the expense reimbursement fee exceeds the
Fund's actual expenses, the excess will be applied to amounts paid by MFS in
prior years. As of October 31, 1996, the aggregate unreimbursed expenses owed to
MFS by the Fund amounted to $167,578, after $13,235 net reimbursement in the
current period.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain of the officers and Trustees of
the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD) and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $5,597 for the period ended
October 31, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$2,667 as its portion of the sales charge on sales of Class A shares of the Fund
for the period ended October 31, 1996. The Trustees have adopted separate
distribution plans for Class A, Class B and Class C shares pursuant to Rule
12b-1 of the Investment Company Act of 1940 as follows:
The Class A distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum (reduced to a maximum of 0.15% per annum for an indefinite
period) of the Fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer, a distribution fee to MFD of
up to 0.10% per annum of the Fund's average daily net assets attributable to
Class A shares, commissions to dealers and payments to MFD wholesalers for sales
at or above a certain dollar level, and other such distribution-related expenses
that are approved by the Fund. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $13,073 for the period
ended October 31, 1996. 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 period ended October 31, 1996
were 0.15% of the Fund's average daily net assets attributable to Class A shares
on an annualized basis.
20
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
The Class B and Class C distribution plans provide that the Fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per annum,
of the Fund's average daily net assets attributable to Class B and Class C
shares. The service fee is currently being reduced to 0.15% 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 $2,174 and $42 for Class
B and Class C shares, respectively, for the period ended October 31, 1996. Fees
incurred under the distribution plans during the period ended October 31, 1996
were 0.95% 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 and certain purchases into
retirement plans 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 period ended
October 31, 1996, were $72, $50,785 and $334 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 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 $33,845,734
and $27,790,532, 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 $57,594,078
-----------
Gross unrealized appreciation $ 666,318
Gross unrealized depreciation (7,001)
-----------
Net unrealized appreciation $ 659,317
-----------
</TABLE>
21
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - 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>
Six Months Ended Year Ended
October 31, 1996 April 30, 1996
------------------------- -------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 769,527 $ 5,780,015 1,999,874 $ 15,164,604
Shares issued to shareholders
in reinvestment of
distributions 84,906 638,021 206,976 1,568,611
Shares reacquired (1,365,951) (10,265,464) (4,146,143) (31,416,230)
---------- ------------ ---------- ------------
Net decrease (511,518) $ (3,847,428) (1,939,293) $(14,683,015)
========== ============ ========== ============
</TABLE>
Class B Shares
<TABLE>
<CAPTION>
Six Months Ended Year Ended
October 31, 1996 April 30, 1996
------------------------- -------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 169,448 $ 1,273,376 395,418 $ 2,988,803
Shares issued to shareholders
in reinvestment of
distributions 8,095 60,748 19,614 148,492
Shares reacquired (278,279) (2,090,255) (431,218) (3,263,193)
---------- ------------ ---------- ------------
Net decrease (100,736) $ (756,131) (16,186) $ (125,898)
========== ============ ========== ============
</TABLE>
Class C Shares
<TABLE>
<CAPTION>
Six Months Ended Year Ended
October 31, 1996 April 30, 1996
------------------------- -------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 108,079 $ 812,919 483,511 $ 3,668,819
Shares issued to shareholders
in reinvestment of
distributions 5,981 44,956 8,781 66,593
Shares reacquired (65,931) (495,095) (351,660) (2,661,064)
---------- ------------ ---------- ------------
Net increase 48,129 $ 362,780 140,632 $ 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 $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the six months ended
October 31, 1996 was $300.
---------------------------------------------------------------------
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.
22
<PAGE> 25
Ads Illustrate MFS' Unparalleled Experience
- --------------------------------------------------------------------------------
[Photo]
- --------------------------------------------------------------------------------
MFS' new advertisements look back at some of the most important events of the
twentieth century to demonstrate a simple point -- no other fund company can
match MFS' experience. MFS has been managing money for investors since 1924
when we "invented" the nation's first fund, Massachusetts Investors Trust.
Print and broadcast ads will offer dramatic portraits of what that 72 years'
worth of experience means. By the time the Apollo rockets began taking off for
the moon, for example, MFS had already been exploring the universe of stocks for
more than four decades. The company was also on the scene, as other ads will
illustrate, when Louis Armstrong was redefining jazz and when the great
racehorse Whirlaway was galloping to a Triple Crown victory.
As MFS Chairman Keith Brodkin emphasizes, in today's increasingly competitive
mutual fund industry, it's important to have a recognizable brand name. The goal
of the MFS ad campaign is to increase public awareness of the company and its
unique role in the industry as the inventor of the mutual fund.
The across-the-board strength of the MFS Family of Funds[Registered Trademark]
will be highlighted in the print ads, which cite the performance results and
Morningstar ratings of various MFS funds.
The broadcast ads appear on a number of cable and network television news and
sports programs. The print ads appear in newspapers such as The Wall Street
Journal and USA Today; in financial magazines such as Kiplinger's Personal
Finance and Money, and in leisure magazines such as Golf Digest and Tennis.
(The cost of the campaign is being underwritten by MFS. It is neither a fund
shareholder nor an annuity contractholder expense.)
23
<PAGE> 26
The MFS Family of Funds [Registered Trademark]
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-225-2606
any business day from 8 a.m. to 8 p.m. Eastern time (or leave a message
anytime). This material should be read carefully before investing or sending
money.
<TABLE>
<S> <C>
STOCK WORLD
- ------------------------------------------------------- -------------------------------------------------------------------
Massachusetts Investors Trust MFS[Registered Trademark]/Foreign & Colonial Emerging Markets
Massachusetts Investors Growth Stock Fund Equity Fund
MFS[Registered Trademark] Capital Growth Fund MFS[Registered Trademark]/Foreign & Colonial International
MFS[Registered Trademark] Emerging Growth Fund Growth Fund
MFS[Registered Trademark] Gold & Natural Resources Fund MFS[Registered Trademark]/Foreign & Colonial International
MFS[Registered Trademark] Growth Opportunities Fund Growth and Income Fund
MFS[Registered Trademark] Managed Sectors Fund MFS[Registered Trademark] World Asset Allocation Fund[Service Mark]
MFS[Registered Trademark] OTC Fund MFS[Registered Trademark] World Equity Fund
MFS[Registered Trademark] Research Fund MFS[Registered Trademark] World Governments Fund
MFS[Registered Trademark] Value Fund MFS[Registered Trademark] World Growth Fund
MFS[Registered Trademark] World Total Return Fund
STOCK AND BOND
- ------------------------------------------------------- NATIONAL TAX-FREE BOND
MFS[Registered Trademark] Total Return Fund -------------------------------------------------------------------
MFS[Registered Trademark] Utilities Fund MFS[Registered Trademark] Municipal Bond Fund
MFS[Registered Trademark] Municipal High Income Fund
BOND MFS[Registered Trademark] Municipal Income Fund
- ------------------------------------------------------- MFS[Registered Trademark] Bond Fund
MFS[Registered Trademark] Government Mortgage Fund
MFS[Registered Trademark] Government Securities Fund STATE TAX-FREE BOND
MFS[Registered Trademark] High Income Fund -------------------------------------------------------------------
MFS[Registered Trademark] Intermediate Income Fund Alabama, Arkansas, California, Florida, Georgia, Maryland,
MFS[Registered Trademark] Strategic Income Fund Massachusetts, Mississippi, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Virginia, West Virginia
LIMITED MATURITY BOND
- ------------------------------------------------------- MONEY MARKET
MFS[Registered Trademark] Government Limited Maturity Fund -------------------------------------------------------------------
MFS[Registered Trademark] Limited Maturity Fund MFS[Registered Trademark] Cash Reserve Fund
MFS[Registered Trademark] Municipal Limited Maturity Fund MFS[Registered Trademark] Government Money Market Fund
MFS[Registered Trademark] Money Market Fund
</TABLE>
24
<PAGE> 27
MFS[Registered Trademark] 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
Laurence 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 Service 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
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
MFSService 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
DALBAR, Inc. Broker/Dealer Survey, Main Office Operations
[Logo] Services 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 companyies nationwide. The survey
contained questions about service quality in 15 categories, including "knowledge
of phone service contacts," "accuracy of transaction porcessing," and "overall
ease of doing business with the firm."
25
<PAGE> 28
<TABLE>
<CAPTION>
<S> <C> <C>
MFS[Registered Trademark] MUNICIPAL [DALBAR LOGO]
LIMITED MATURITY ----------------------
FUND BULK RATE
U.S. POSTAGE
500 Boylston Street PAID
Boston, MA 02116 PERMIT #55638
BOSTON, MA
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[MFS LOGO]
INVESTMENT MANAGEMENT
We invented the mutual fund[servicemark]
[Copyright]1996 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116 MML-3 12/96 14M 37/237/337
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