<PAGE>
[logo] M F S(R)
75 INVESTMENT MANAGEMENT
YEARS
WE INVENTED THE MUTUAL FUND(R)
MFS(R) LIMITED
MATURITY FUND
SEMINANUAL REPORT o OCTOBER 31, 1998
DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 27)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 13
Notes to Financial Statements ............................................. 20
Trustees and Officers ..................................................... 29
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE MFS 75 YEARS
YEARS AHEAD WILL BRING A NUMBER OF [graphic omitted]
CHALLENGES, OUR 75 YEARS OF EXPERIENCE EXPERIENCE THE FUTURE(SM)
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- -------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
In 1999, MFS celebrates its 75\t/\h/ anniversary. The nation's first mutual
fund -- our Massachusetts Investors Trust (MIT) -- was introduced to the
public on March 21, 1924. Since then, MFS Investment Management(R), the
company that grew out of that original fund, has helped guide shareholders
through many economic and investment cycles, primarily by focusing on the
long-term opportunities created by an expanding global economy. As of October
31, 1998, MFS manages nearly $87 billion, and the firm's 2,000 people serve
3.8 million investors and their financial advisers worldwide. Meanwhile, MIT's
assets have grown to over $10 billion, and 56 mutual funds are offered in the
MFS Family of Funds(R).
One of the elements to the success of MIT did not exist before our founders
invented it in 1924. That is liquidity. This innovation means that if you want
to sell your investment in any MFS mutual fund, you have the security of
knowing that you may do so immediately and the money may be exchanged into
another MFS fund or that you may add other MFS funds to your portfolio as your
investment needs change. If you need your money for other purposes, it can
quickly be wired or mailed to you. This daily redemption feature, through
which new shares were created when people invested in MIT and were redeemed
when people sold, brought another important change to the industry. Now, the
price of a mutual fund's shares wasn't determined by supply and demand, but by
the value of the securities owned by each portfolio.
Another factor in our growth was the development of one of the industry's
first in-house research departments in 1932. Unlike many other companies that
rely on Wall Street research reports, which can be used by many investors at
the same time, MIT's managers built its long-term track record by visiting
companies, talking to managers and competitors, and "kicking the tires" so
they could judge the quality and potential of each company's products and
services for themselves. Today, MFS has more than 100 full-time portfolio
managers, stock analysts, and credit analysts who track the equity and bond
markets. That number includes nearly 40 equity analysts who specialize in
industries such as aviation, media, technology, automobiles, and utilities.
While MIT was the first mutual fund, it was not our only invention. We also
established the nation's first global bond fund, first high-yield municipal
bond fund, and first high-yield municipal closed-end bond fund.
We are proud of the record of MIT and of the funds in the MFS Family of Funds,
but we are also proud of our long-standing relationship with financial
advisers. Not only do we believe investors can benefit from the advice of
these experts but, as was shown during the market volatility of 1998, people
who work with financial advisers are less likely to abandon their carefully
designed, long-term investment strategies.
Our ability to service your investment and information needs is also extremely
important to us. Today, the MFS Service Center handles millions of transactions
and phone calls every year. Supporting the work of financial advisers, promptly
sending out statements and confirmations, and answering hundreds of investors'
questions every day are crucial elements in maintaining long-term relationships
with our fund shareholders. That link to our investors has also been enhanced by
our site on the World Wide Web: ww.mfs.com. Since 1996, this site has given
investors and the general public access to up-to- date information about MFS
products and services, as well as market outlooks and retirement information.
The site has rapidly become one of our primary vehicles for communicating with
our investors and educating the public about mutual funds in general and MFS in
particular.
If there is a common thread running through these milestones, it is our
always-increasing commitment to providing you with the best possible
investment management and shareholder service, just as we have done for the
past 75 years.
As we celebrate this anniversary, it is also a time for MFS to look ahead and
build on our 75 years of innovation and experience to help meet your
investment needs in the next century. We appreciate your confidence and
welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
November 16, 1998
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of James J. Calmas]
James J. Calmas
For the six months ended October 31, 1998, Class A shares of the Fund provided
a total return of 2.33%, Class B shares 1.80%, Class C shares 1.75%, and Class
I shares 2.27%. These returns include the reinvestment of distributions but
exclude the effects of any sales charges and compare to a 4.52% return for the
Merrill Lynch One- to Three-Year Government/Corporate Bond Index
(a total return index comprised of coupon-bearing U.S. Treasury issues, debt
of agencies of the U.S. government, and corporate debt rated "Baa" or higher
by Moody's Investors Service Inc.). It is not possible to invest directly in
an index. The Fund's returns also compare to a 3.09% average return provided
by other funds with similar investment objectives and policies as tracked by
Lipper Analytical Services, Inc., an independent firm that reports mutual
fund performance.
Q. COULD YOU TALK ABOUT SOME THINGS THAT CONTRIBUTED TO THE FUND'S PERFORMANCE
OVER THE PAST SIX MONTHS?
A. The biggest thing was hedge fund liquidations that hurt the corporate bond
market. They caused a general credit crunch, particularly for financial
services companies, making it hard for them to borrow. Also, there has been
an increasing unwillingness on the part of investors to buy financial
assets at lower interest rates. This has pushed up rates on these
securities, which has hurt the asset-backed and commercial mortgage-backed
securities markets as well as companies that depend on those markets.
Unfortunately, the Fund owns the bonds of a few of these companies, and
this has hurt overall performance.
Q. SO WHERE DOES THIS SITUATION STAND TODAY? HAVE THE PROBLEMS BEEN CORRECTED?
A. Actually, in terms of defaults on credit cards and home equity loans, we
have not seen any decline in the strength of underlying credits. In fact,
there has been some improvement. Prepayments on home equity loans have
leveled off, and the quality of new loans is slightly better because there
is less competition for loans. So, on an ongoing basis, these businesses do
look better. However, their financial situation has been hurt by the flight
to quality U.S. Treasury securities and away from everything else.
(Principal value and interest on Treasury securities are guaranteed by the
U.S. government if held to maturity.)
Q. HAVE YOU MADE ANY ADJUSTMENTS TO THE FUND AS A RESULT OF THIS?
A. There is still quite a bit of turmoil in these markets and, since we don't
think there are underlying credit problems with home equity loans, we're
waiting for the environment to stabilize a little. We have already seen the
corporate bond market improve. Having said that, the risks for these
businesses have increased, so we may lighten up on our holdings in the
corporate bond sector. We're confident in our asset-backed holdings, all of
which are "AAA"-rated and many of which also have third- party insurance.
Q. HOW HAVE THE INTEREST-RATE CUTS BY THE FEDERAL RESERVE BOARD (THE FED)
AFFECTED YOUR MARKETS?
A. We think the Fed's rate cuts were caused by the hedge fund liquidations
mentioned previously and by an increased perception of financial risk in
the markets. Even though interest rates have come down, as financing has
been cut off the interest rates at which the average consumer has to borrow
have not. Rates on credit cards have not come down since this summer, and
companies are having increased difficulty raising capital. I think the Fed
saw this as a potentially major drag on the economy and has acted
aggressively to try and alleviate the credit crunch.
Q. WHAT EFFECT HAS THIS HAD ON THE FUND?
A. It has helped. If you look at the recent improvements in the stock market,
you can see that people don't foresee a major recession and that their
confidence seems to be coming back, which also helps the credit markets.
Q. DO YOU FEEL COMFORTABLE WITH THE OVERALL QUALITY OF THE PORTFOLIO?
A. We do. We are watching our holdings in consumer finance companies in the
home equity loan business very closely, but we're fairly confident about
the rest of the portfolio. We have reduced the investment-grade corporate
weighting, and it's now under 50% of assets, compared to about 60% six
months ago. At the same time, we think there is great value in the
corporate market right now, but we will be very selective in adding to our
holdings. Approximately 15% of assets are in lower-rated bonds that will
mature or be called in 1999. Money from those holdings will be invested in
higher-quality issues.
Q. WHAT IS THE FUND'S DURATION, OR MEASURE OF INTEREST-RATE SENSITIVITY?
A. The duration is about 1.9 years, which is slightly long, given the fact
that we think interest rates are going to remain low.
Q. WHAT DO YOU SEE AS THE BIGGEST RISK GOING FORWARD?
A. Because the Fund continues to have significant corporate exposure, the
biggest risk is that this market weakens. Right now, we don't see the
credit markets getting worse. A few companies in the portfolio, such as
home equity lenders, got caught in the credit crunch because they weren't
able to raise capital. Some of them have been downgraded to below "BBB,"
but they will mature within a year, so we're better off just holding them
until then.
Q. LOOKING AHEAD, WHAT IS YOUR OUTLOOK FOR THE FIXED-INCOME MARKETS?
A. We think that once we're through with what has been a very painful period
for everyone involved in the fixed-income markets, a more normal situation
will return, with interest rates tightening relative to Treasuries. This
should help the fixed-income markets behave more consistently.
/s/ James J. Calmas
James J. Calmas
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
- -------------------------------------------------------------------------------
JAMES J. CALMAS IS A VICE PRESIDENT -- INVESTMENTS IN THE FIXED INCOME
DEPARTMENT OF MFS INVESTMENT MANAGEMENT(R) AND IS PORTFOLIO MANAGER OF MFS(R)
LIMITED MATURITY FUND, MFS(R) LIMITED MATURITY SERIES, PART OF MFS(R) VARIABLE
INSURANCE TRUST(SM), AND MFS(R) MERIDIAN(SM) LIMITED MATURITY FUND.
MR. CALMAS JOINED MFS IN 1988 AND WAS NAMED ASSISTANT VICE PRESIDENT IN 1991 AND
VICE PRESIDENT IN 1993. HE IS A GRADUATE OF DARTMOUTH COLLEGE AND HOLDS AN
M.B.A. FROM THE AMOS TUCK SCHOOL OF BUSINESS ADMINISTRATION OF DARTMOUTH
COLLEGE.
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. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
- -------------------------------------------------------------------------------
FUND FACTS
- -------------------------------------------------------------------------------
OBJECTIVE: SEEKS AS HIGH A LEVEL OF CURRENT INCOME AS IS BELIEVED
TO BE CONSISTENT WITH PRUDENT INVESTMENT RISK. THE FUND
ALSO SEEKS TO PROTECT SHAREHOLDERS' CAPITAL.
COMMENCEMENT OF
INVESTMENT OPERATIONS: FEBRUARY 26, 1992
CLASS INCEPTION: CLASS A FEBRUARY 26, 1992
CLASS B SEPTEMBER 7, 1993
CLASS C JULY 1, 1994
CLASS I JANUARY 2, 1997
SIZE: $201.0 MILLION NET ASSETS AS OF OCTOBER 31, 1998
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH OCTOBER 31, 1998
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- -------------------------------------------------------------------------------
Cumulative Total
Return +2.33% +3.88% +17.49% +29.28% +46.49%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +3.88% + 5.52% + 5.27% + 5.88%
- -------------------------------------------------------------------------------
SEC Results -- +1.28% + 4.64% + 4.74% + 5.48%
- -------------------------------------------------------------------------------
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- -------------------------------------------------------------------------------
Cumulative Total
Return +1.80% +2.78% +14.41% +23.67% +39.96%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +2.78% + 4.59% + 4.34% + 5.16%
- -------------------------------------------------------------------------------
SEC Results -- -1.11% + 3.70% + 4.02% + 5.16%
- -------------------------------------------------------------------------------
CLASS C
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- -------------------------------------------------------------------------------
Cumulative Total
Return +1.75% +2.72% +14.41% +24.32% +40.85%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +2.72% + 4.59% + 4.45% + 5.26%
- -------------------------------------------------------------------------------
SEC Results -- +1.74% + 4.59% + 4.45% + 5.26%
- -------------------------------------------------------------------------------
CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- -------------------------------------------------------------------------------
Cumulative Total
Return +2.27% +3.75% +17.49% +29.28% +46.49%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +3.75% + 5.52% + 5.27% + 5.88%
- -------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
February 26, 1992, through October 31, 1998.
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 2.50% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
B and C results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of A for periods prior to the inception of B and C.
Because operating expenses of B and C are higher than those of A, B and C
performance generally would have been lower than A performance. The A
performance included in the B and C SEC performance has been adjusted to
reflect the CDSC generally applicable to B and C rather than the initial sales
charge generally applicable to A.
I results include the performance and the operating expenses (e.g., Rule
12b-1 fees) of A for periods prior to the inception of I. Because operating
expenses of A are greater than those of I, I performance generally would have
been higher than A performance. The A performance included in the
I performance has been adjusted to reflect the fact that I have no initial
sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. 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.
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 1998
QUALITY RATINGS
Source: Standard & Poor's and Moody's
Governments 32.9%
"AAA" 16.1%
"AA" 2.8%
"A" 5.4%
"BBB" 38.7%
"BB" 4.1%
Portfolio information is as of October 31, 1998. The portfolio is actively
managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - October 31, 1998
<TABLE>
<CAPTION>
Bonds - 94.7%
- -----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Bonds - 87.3%
Apparel and Textiles - 1.6%
Jones Apparel Group, Inc., 6.25s, 2001## $ 3,200 $ 3,229,920
- -----------------------------------------------------------------------------------------------
Consumer Goods and Services - 7.6%
Amerco Backed Assets, 6.65s, 1999## $ 5,700 $ 5,754,207
Fingerhut Cos., Inc., 7.375s, 1999 5,500 5,586,460
Hilfiger (Tommy) USA, Inc., 6.5s, 2003 4,023 4,005,701
------------
$ 15,346,368
- -----------------------------------------------------------------------------------------------
Containers - 2.2%
Owens-Illinois, Inc., 11s, 2003 $ 4,058 $ 4,321,770
- -----------------------------------------------------------------------------------------------
Corporate Asset Backed - 15.0%
Aames Mortgage Trust, 6.75s, 2021 $ 3,889 $ 3,910,876
Amresco Residential Securities, 5.94s, 2015 4,039 4,027,640
Banamex Credit Card Merchant Voucher, 6.25s, 2003## 7,800 7,836,562
Charming Shoppes Master Trust, 7s, 1999 4,019 4,040,341
Green Tree Financial Corp., 6.04s, 2029 4,106 4,107,273
MBNA Master Credit Card Trust II, 5.25s, 2006 2,374 2,368,065
Merrill Lynch Mortgage Investors, Inc., 8.3s, 2011 3 2,597
Merrill Lynch Mortgage Investors, Inc., 10s, 2011 8 8,196
Merrill Lynch Mortgage Investors, Inc., 8.139s, 2022 391 390,572
Partners First Credit Card Master Trust, 5.509s, 2004 3,400 3,387,250
------------
$ 30,079,372
- -----------------------------------------------------------------------------------------------
Financial Institutions - 9.7%
ADVANTA Corp., 6.574s, 2000 $ 3,780 $ 3,648,154
Associates Corp. North America, 5.75s, 2003 3,145 3,154,404
Contifinancial Corp., 7.5s, 2002 2,082 1,330,606
GS Escrow Corp., 6.75s, 2001## 3,377 3,303,280
Lehman Brothers Holdings Inc., 6.25s, 2003 3,615 3,496,464
Merrill Lynch & Co., 6.02s, 2001 2,023 2,049,279
United Cos. Financial Corp., 9.35s, 1999 2,870 2,531,885
------------
$ 19,514,072
- -----------------------------------------------------------------------------------------------
Government National Mortgage Association - 3.5%
GNMA, 7.5s, 2007 - 2011 $ 6,500 $ 6,682,954
GNMA, 12.5s, 2011 292 333,734
------------
$ 7,016,688
- -----------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 1.9%
Columbia/HCA Healthcare Corp., 6.5s, 1999 $ 2,342 $ 2,333,288
Hospital Corp. of America, 0s, 1999 1,628 1,559,673
------------
$ 3,892,961
- -----------------------------------------------------------------------------------------------
Pollution Control - 1.0%
USA Waste Services, Inc., 6.125s, 2001 $ 2,044 $ 2,051,665
- -----------------------------------------------------------------------------------------------
Telecommunications and Cable - 10.1%
Continental Cablevision, Inc., 11s, 2007 $ 7,815 $ 8,459,972
Cox Communications, Inc., 6.15s, 2003 4,160 4,279,558
TKR Cable, Inc., 10.5s, 2007 3,320 3,646,954
WorldCom, Inc., 8.875s, 2006 3,659 4,009,825
------------
$ 20,396,309
- -----------------------------------------------------------------------------------------------
U.S. Federal Agencies - 2.7%
Federal Home Loan Mortgage Corp., 6.038s, 2027 $ 5,334 $ 5,384,273
- -----------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 26.8%
U.S. Treasury Notes, 9.125s, 1999 $ 2,074 $ 2,123,900
U.S. Treasury Notes, 5.375s, 2001 42,250 43,200,625
U.S. Treasury Notes, 6.25s, 2001 765 805,040
U.S. Treasury Notes, 6.5s, 2001 1,900 2,005,982
U.S. Treasury Notes, 5.75s, 2002 5,500 5,771,535
------------
$ 53,907,082
- -----------------------------------------------------------------------------------------------
Utilities -- Electric - 5.2%
Edison Mission Energy Funding Corp., 6.77s, 2003## $ 2,151 $ 2,228,213
Gulf States Utilities Co., 8.21s, 2002 5,520 5,710,937
Salton Sea Funding Corp., 6.69s, 2000 805 814,034
Salton Sea Funding Corp., 7.02s, 2000 1,609 1,623,933
------------
$ 10,377,117
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Total U.S. Bonds $175,517,597
- -----------------------------------------------------------------------------------------------
Foreign Bonds - 7.4%
Chile - 1.7%
Empresa Electric Guacolda S.A., 7.6s, 2001
(Utilities - Electric)## $ 3,305 $ 3,340,000
- -----------------------------------------------------------------------------------------------
China - 0.8%
Hero Asian BVI Ltd., 9.11s, 2001 (Utilities)## $ 1,484 $ 1,533,459
- -----------------------------------------------------------------------------------------------
Colombia - 1.5%
Republic of Colombia, 8.75s, 1999 $ 3,000 $ 2,973,750
- -----------------------------------------------------------------------------------------------
Norway - 1.6%
Union Bank Norway, 7.35s, 2049 (Banks and Credit Cos.)## $ 3,339 $ 3,289,449
- -----------------------------------------------------------------------------------------------
Supra-National - 1.8%
Corporacion Andina de Fomento, 7.1s, 2003
(Banks and Credit Cos.) $ 3,800 $ 3,645,340
- -----------------------------------------------------------------------------------------------
Total Foreign Bonds $ 14,781,998
- -----------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $191,934,330) $190,299,595
- -----------------------------------------------------------------------------------------------
Repurchase Agreement -- 1.0%
- -----------------------------------------------------------------------------------------------
Goldman Sachs, dated 10/30/98, due 11/02/98, total to
be received $2,068,927 (secured by various U.S.
Treasury and Federal Agency Obligations in a
jointly traded account),
at Cost $ 2,068 $ 2,068,000
- -----------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $194,002,330) $192,367,595
Other Assets, Less Liabilities -- 4.3% 8,604,885
- -----------------------------------------------------------------------------------------------
Net Assets -- 100.0% $200,972,480
- -----------------------------------------------------------------------------------------------
## SEC Rule 144A restriction.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------
OCTOBER 31, 1998
- --------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $194,002,330) $192,367,595
Receivable for Fund shares sold 1,857,038
Receivable for investments sold 4,525,760
Interest receivable 2,777,167
Other assets 1,037
------------
Total assets $201,528,597
------------
Liabilities:
Distributions payable $ 238,024
Payable for Fund shares reacquired 151,957
Payable to affiliates -
Management fee 4,382
Shareholder servicing agent fee 1,232
Distribution and service fee 66,219
Administrative fee 164
Accrued expenses and other liabilities 94,139
------------
Total liabilities $ 556,117
-------------
Net assets $200,972,480
============
Net assets consist of:
Paid-in capital $210,982,565
Unrealized depreciation on investments (1,634,735)
Accumulated net realized loss on investments (7,821,062)
Accumulated distributions in excess of net
investment income (554,288)
------------
Total $200,972,480
============
Shares of beneficial interest outstanding 29,001,611
==========
Class A shares:
Net asset value per share
(net assets of $117,891,119 / 16,993,952 shares of
beneficial interest outstanding) $6.94
=====
Offering price per share (100 / 97.5) $7.12
=====
Class B shares:
Net asset value and offering price per share
(net assets of $53,688,336 / 7,766,245 shares of
beneficial interest outstanding) $6.91
=====
Class C shares:
Net asset value and offering price per share
(net assets of $27,317,616 / 3,941,396 shares of
beneficial interest outstanding) $6.93
=====
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $2,075,409 / 300,018 shares of
beneficial interest outstanding) $6.92
=====
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------
SIX MONTHS ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------
Net investment income:
Interest income $ 6,290,274
-----------
Expenses -
Management fee $ 360,529
Trustees' compensation 14,198
Shareholder servicing agent fee 101,398
Distribution and service fee (Class A) 85,068
Distribution and service fee (Class B) 196,508
Distribution and service fee (Class C) 107,687
Administrative fee 13,520
Custodian fee 44,378
Printing 16,310
Postage 10,377
Auditing fees 16,442
Legal fees 891
Miscellaneous 48,828
-----------
Total expenses $ 1,016,134
Fees paid indirectly (20,703)
-----------
Net expenses $ 995,431
-----------
Net investment income $ 5,294,843
-----------
Realized and unrealized gain (loss) on investments:
Realized loss (identified cost basis)
on investment transactions $ (466,789)
-----------
Change in unrealized depreciation on investments $(1,440,925)
-----------
Net realized and unrealized loss on investments $(1,907,714)
-----------
Increase in net assets from operations $ 3,387,129
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1998 APRIL 30, 1998
(UNAUDITED)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 5,294,843 $ 9,973,384
Net realized loss on investments (466,789) (2,372,957)
Net unrealized gain (loss) on investments (1,440,925) 710,434
------------- ------------
Increase in net assets from operations $ 3,387,129 $ 8,310,861
------------- ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,408,971) $ (6,198,763)
From net investment income (Class B) (1,142,727) (2,228,639)
From net investment income (Class C) (556,054) (1,187,764)
From net investment income (Class I) (59,708) (130,641)
------------- ------------
Total distributions declared to shareholders $ (5,167,460) $ (9,745,807)
------------- ------------
Net increase in net assets from Fund share transactions $ 46,585,396 $ 10,052,470
------------- ------------
Total increase in net assets $ 44,805,065 $ 8,617,524
Net assets:
At beginning of period 156,167,415 147,549,891
------------- ------------
At end of period (including accumulated distributions
in excess of net investment income of $554,288 and
$681,671, respectively) $ 200,972,480 $156,167,415
============= ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED -------------------------------------------------------------------
OCTOBER 31, 1998 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 6.99 $ 7.04 $ 7.12 $ 7.10 $ 7.14 $ 7.46
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.22 $ 0.48 $ 0.47 $ 0.48 $ 0.46 $ 0.44
Net realized and unrealized gain
(loss) on investments (0.06) (0.07) (0.06) 0.03 (0.04) (0.32)
------ ------ ------ ------ ------ ------
Total from investment operations $ 0.16 $ 0.41 $ 0.41 $ 0.51 $ 0.42 $ 0.12
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders --
From net investment income $(0.21) $(0.46) $(0.47) $(0.48) $(0.46) $(0.42)
In excess of net investment income -- -- (0.02) (0.01) -- (0.02)
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.21) $(0.46) $(0.49) $(0.49) $(0.46) $(0.44)
------ ------ ------ ------ ------ ------
Net asset value - end of period (000
omitted) $ 6.94 $ 6.99 $ 7.04 $ 7.12 $ 7.10 $ 7.14
====== ====== ====== ====== ====== ======
Total return(+) 2.33%++ 5.97% 5.83% 7.50% 6.09% 1.61%
Ratios (to average net assets)/
Supplemental data(S):
Expenses 0.85%+ 0.89% 0.94% 0.95% 0.95% 0.85%
Net investment income 6.19%+ 6.70% 6.57% 6.73% 6.54% 5.99%
Portfolio turnover 190% 288% 489% 385% 498% 861%
Net assets at end of period
(000 omitted) $117,891 $95,342 $91,887 $98,582 $85,773 $100,297
+ Annualized.
++ Not 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 has an expense offset arrangement which reduces the Fund's custodian
fee based upon the amount of cash maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses
are calculated without reduction for this expense.
(+) 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.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain expenses of the Fund, exclusive of management,
distribution and service fees, at not more than 0.40% of average daily net assets for certain of the periods indicated. The
investment adviser voluntarily waived a portion of its fees for certain of the periods indicated. To the extent actual expenses
were over/under this limitation and the waiver had not been in place, the net investment income per share and the ratios would
have been:
Net investment income $ -- $ 0.48 $ 0.47 $ 0.48 $ 0.46 $ 0.42
Ratios (to average net assets)
Expenses## -- 0.87% 0.89% 0.91% 0.97% 1.07%
Net investment income -- 6.72% 6.62% 6.77% 6.52% 5.77%
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED ---------------------------------------------------------------------
OCTOBER 31, 1998 1998 1997 1996 1995 1994**
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 6.97 $ 7.03 $ 7.11 $ 7.10 $ 7.14 $ 7.50
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.19 $ 0.41 $ 0.41 $ 0.42 $ 0.41 $ 0.21
Net realized and unrealized gain
(loss) on investments (0.06) (0.07) (0.05) 0.03 (0.05) (0.33)
------ ------ ------ ------ ------ ------
Total from investment operations $ 0.13 $ 0.34 $ 0.36 $ 0.45 $ 0.36 $(0.12)
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.19) $(0.40) $(0.42) $(0.42) $(0.40) $(0.23)
In excess of net investment income -- -- (0.02) (0.02) -- (0.01)
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.19) $(0.40) $(0.44) $(0.44) $(0.40) $(0.24)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 6.91 $ 6.97 $ 7.03 $ 7.11 $ 7.10 $ 7.14
====== ====== ====== ====== ====== ======
Total return 1.80%++ 4.98% 4.99% 6.52% 5.20% (1.69)%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses 1.60%+ 1.70% 1.78% 1.75% 1.81% 1.74%+
Net investment income 5.40%+ 5.80% 5.75% 5.90% 5.73% 4.90%+
Portfolio turnover 190% 288% 489% 385% 498% 861%
Net assets at end of period (000
omitted) $53,688 $39,229 $34,875 $26,464 $17,334 $12,072
** For the period from the inception of Class B, September 7, 1993, through April 30, 1994.
+ Annualized.
++ Not 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 has an expense offset arrangement which reduces the Fund's custodian
fee based upon the amount of cash maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses
are calculated without reduction for this expense.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain expenses of the Fund, exclusive of management,
distribution and service fees, at not more than 0.40% of average daily net assets for certain of the periods indicated. The
investment adviser voluntarily waived a portion of its fees for certain of the periods indicated. To the extent actual
expenses were over/under this limitation and the waiver had not been in place, the net investment income per share and the
ratios would have been:
Net investment income $ -- $ 0.41 $ 0.41 $ 0.42 $ 0.41 $ 0.20
Ratios (to average net assets)
Expenses## -- 1.68% 1.77% 1.77% 1.82% 1.96%+
Net investment income -- 5.82% 5.76% 5.88% 5.72% 4.68%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED ---------------------------------------------------------
OCTOBER 31, 1998 1998 1997 1996 1995***
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 6.99 $ 7.05 $ 7.13 $ 7.11 $ 7.08
------ ------ ------ ------ ------
Income from investment operations -
Net investment income(S) $ 0.18 $ 0.41 $ 0.41 $ 0.41 $ 0.37
Net realized and unrealized gain (loss) on
investments (0.06) (0.07) (0.06) 0.04 (0.01)
------ ------ ------ ------ ------
Total from investment operations $ 0.12 $ 0.34 $ 0.35 $ 0.45 $ 0.36
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.18) $(0.40) $(0.41) $(0.41) $(0.33)
In excess of net investment income -- -- (0.02) (0.02) --
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.18) $(0.40) $(0.43) $(0.43) $(0.33)
------ ------ ------ ------ ------
Net asset value - end of period $ 6.93 $ 6.99 $ 7.05 $ 7.13 $ 7.11
====== ====== ====== ====== ======
Total return 1.75%++ 4.94% 5.08% 6.44% 5.25%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.68%+ 1.74% 1.80% 1.80% 1.85%+
Net investment income 5.19%+ 5.76% 5.80% 5.76% 6.01%+
Portfolio turnover 190% 288% 489% 385% 498%
Net assets at end of period (000 omitted) $27,318 $20,131 $18,862 $13,842 $4,450
*** For the period from the inception of Class C, July 1, 1994, through April 30, 1995.
+ Annualized.
++ Not annualized.
## For fiscal years ending after September 1, 1995, the Fund has an expense offset arrangement which reduces the Fund's custodian
fee based upon the amount of cash maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses
are calculated without reduction for this expense.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain expenses of the Fund, exclusive of management,
distribution and service fees, at not more than 0.40% of average daily net assets for certain of the periods indicated. The
investment adviser voluntarily waived a portion of its fees for certain of the periods indicated. To the extent actual
expenses were over/under this limitation and the waiver had not been in place, the net investment income per share and the
ratios would have been:
Net investment income $ -- $ 0.41 $ 0.41 $ 0.41 $ 0.37
Ratios (to average net assets)
Expenses## -- 1.72% 1.81% 1.75% 1.88%+
Net investment income -- 5.78% 5.80% 5.81% 5.98%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED ------------------------------------------
OCTOBER 31, 1998 1998 1997****
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $ 6.98 $ 7.04 $ 7.08
------ ------ ------
Income from investment operations -
Net investment income(S) $ 0.22 $ 0.48 $ 0.15
Net realized and unrealized loss on investments (0.06) (0.07) (0.03)
------ ------ ------
Total from investment operations $ 0.16 $ 0.41 $ 0.12
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.22) $(0.47) $(0.15)
In excess of net investment income -- -- (0.01)
------ ------ ------
Total distributions declared to shareholders $(0.22) $(0.47) $(0.16)
------ ------ ------
Net asset value - end of period $ 6.92 $ 6.98 $ 7.04
====== ====== ======
Total return 2.27%++ 5.98% 1.72%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 0.68%+ 0.74% 1.17%+
Net investment income 6.20%+ 6.75% 8.68%+
Portfolio turnover 190% 288% 489%
Net assets at end of period (000 omitted) $2,075 $1,466 $1,925
**** For the period from the inception of Class I, January 2, 1997, through April 30, 1997.
+ Annualized.
++ Not annualized.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain expenses of the Fund, exclusive of management,
distribution and service fees, at not more than 0.40% of average daily net assets for certain of the periods indicated. The
investment adviser voluntarily waived a portion of its fees for certain of the periods indicated. To the extent actual
expenses were over/under this limitation and the waiver had not been in place, the net investment income per share and the
ratios would have been:
Net investment income $ -- $ 0.49 $ 0.15
Ratios (to average net assets):
Expenses -- 0.72% 1.17%+
Net investment income -- 6.77% 8.68%+
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS 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 listed on commodities exchanges are reported at
market value using closing settlement prices. 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.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund requires
that the securities collateral in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a default under the repurchase agreement. The Fund
monitors, on a daily basis, the value of the collateral to ensure that its
value, including accrued interest, is greater than amounts owed to the Fund
under each such repurchase agreement. The Fund, along with other affiliated
entities of Massachusetts Financial Services Company (MFS), may utilize a
joint trading account for the purpose of entering into one or more repurchase
agreements.
Futures Contracts - The Fund may enter into futures contracts for the delayed
delivery of securities or contracts based on financial indices at a fixed
price on a future date. In entering such contracts, the Fund is required to
deposit with the broker either in cash or securities an amount equal to a
certain percentage of the contract amount. Subsequent payments are made or
received by the Fund each day, depending on the daily fluctuations in the
value of the contract, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. The Fund's investment in futures
contracts is designed to hedge against anticipated future changes in interest
rates. Investments in interest rate futures for purposes other than hedging
may be made to modify the duration of the portfolio without incurring the
additional transaction costs involved in buying and selling the underlying
securities. Should interest rates move unexpectedly, the Fund may not achieve
the anticipated benefits of the futures contracts and may realize a loss.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement and tax
reporting purposes as required by federal income tax regulations. Interest
payments received in additional securities are recorded on the ex-interest
date in an amount equal to the value of the security on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Code, which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. Accordingly, the amount of net investment income and net realized
gain reported on these financial statements may differ from that reported on
the Fund's tax return and, consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV.
Distributions 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 net realized gains.
At April 30, 1998, the Fund, for federal income tax purposes, had a capital loss
carryforward of $5,601,702 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, ($3,619,464), April 30, 2005, ($1,432,459), and April 30,
2006, ($549,779).
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on the value
of 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. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with 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.
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 of its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $5,062 for the six months
ended October 31, 1998.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$27,771 for the six months ended October 31, 1998, 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 paid to each
securities dealer that enters into a sales agreement with MFD of up to 0.25% per
annum of the Fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer and 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. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $7,698 for the six months ended October 31,
1998. Fees incurred under the distribution plan during the six months ended
October 31, 1998, were 0.15% of average daily net assets attributable to Class A
shares on an annualized basis. Payment of the remaining 0.10% per annum Class A
service fee and of the 0.10% per annum Class A distribution fee will be
implemented on such date as the Trustees of the Trust may determine.
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. 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 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 $1,297 and $64 for Class B and Class C shares, respectively, for the
six months ended October 31, 1998. Fees incurred under the distribution plan
during the six months ended October 31, 1998, were 0.91% and 1.00% of average
daily net assets attributable to Class B and Class C shares on an annualized
basis, respectively. Except in the case of the 0.25% per annum Class B service
fee paid upon the sale of Class B shares in the first year, the Class B service
fee is 0.15% per annum and may increase to a maximum of 0.25% per annum on such
date as the Trustees of the Trust may determine.
Certain Class A shares and Class C shares are subject to a contingent deferred
sales charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the six months ended October
31, 1998, were $549, $47,400, and $5,196 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
0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than short-term obligations, were as
follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
U.S. government securities $305,367,623 $261,311,253
------------ ------------
Investments (non-U.S. government securities) $ 62,410,754 $ 62,551,355
------------ ------------
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $194,002,330
------------
Gross unrealized depreciation $ (2,574,783)
Gross unrealized appreciation 940,048
------------
Net unrealized depreciation $ (1,634,735)
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED OCTOBER 31, 1998 YEAR ENDED APRIL 30, 1998
--------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 58,293,944 $ 407,913,585 63,435,881 $445,921,523
Shares issued to shareholders
in reinvestment of
distributions 348,182 2,434,641 632,833 4,458,800
Shares reacquired (55,292,559) (386,779,939) (63,470,826) (446,086,457)
----------- ------------- ----------- -------------
Net increase 3,349,567 $ 23,568,287 597,888 $ 4,293,866
=========== ============= =========== =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED OCTOBER 31, 1998 YEAR ENDED APRIL 30, 1998
--------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,182,707 $ 29,188,443 4,477,191 $ 31,495,141
Shares issued to shareholders
in reinvestment of
distributions 112,278 781,785 209,931 1,476,294
Shares reacquired (2,157,195) (15,026,956) (4,017,485) (28,243,968)
----------- ------------- ----------- -------------
Net increase 2,137,790 $ 14,943,272 669,637 $ 4,727,467
=========== ============= =========== =============
<CAPTION>
Class C Shares
SIX MONTHS ENDED OCTOBER 31, 1998 YEAR ENDED APRIL 30, 1998
--------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,330,399 $ 16,315,867 2,081,330 $ 14,705,683
Shares issued to shareholders
in reinvestment of
distributions 54,905 383,576 116,955 825,247
Shares reacquired (1,323,591) (9,254,591) (1,992,536) (14,059,660)
----------- ------------- ----------- -------------
Net increase 1,061,713 $ 7,444,852 205,749 $ 1,471,270
=========== ============= =========== =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED OCTOBER 31, 1998 YEAR ENDED APRIL 30, 1998
--------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 87,918 $ 614,566 128,478 $ 910,579
Shares issued to shareholders
in reinvestment of
distributions 8,563 59,707 18,451 130,116
Shares reacquired (6,482) (45,288) (210,244) (1,480,828)
----------- ------------- ----------- -------------
Net increase (decrease) 89,999 $ 628,985 (63,315) $ (440,133)
=========== ============= =========== =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $805 million unsecured
line
of credit provided by a syndication of banks under a line of credit agreement.
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, 1998, was $771.
<PAGE>
MFS(R) LIMITED MATURITY FUND
<TABLE>
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified services
company) INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll
Lawrence T. Perera - Partner, Hemenway free:
& Barnes (attorneys) 1-800-637-4458 anytime from a touch-tone telephone.
William J. Poorvu - Adjunct Professor, Harvard For information on MFS mutual funds, call your
University Graduate School of Business Administration financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from
Charles W. Schmidt - Private Investor 9 a.m. to 5 p.m. Eastern time (or leave a message
anytime).
Arnold D. Scott* - Senior Executive
Vice President, Director, and Secretary, INVESTOR SERVICE
MFS Investment Management MFS Service Center, Inc.
P.O. Box 2281
Jeffrey L. Shames* - Chairman, Chief Boston, MA 02107-9906
Executive Officer, and Director,
MFS Investment Management For general information, call toll free:
1-800-225-2606 any business day from
Elaine R. Smith - Independent Consultant 8 a.m. to 8 p.m. Eastern time.
David B. Stone - Chairman and Director, For service to speech- or hearing-impaired,
North American Management Corp. call toll free: 1-800-637-6576 any business day
(investment advisers) from 9 a.m. to 5 p.m. Eastern time. (To use this
service, your phone must be equipped with a
INVESTMENT ADVISER Telecommunications Device for the Deaf.)
Massachusetts Financial Services Company
500 Boylston Street For share prices, account balances, and exchanges,
Boston, MA 02116-3741 call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
DISTRIBUTOR telephone.
MFS Fund Distributors, Inc.
500 Boylston Street WORLD WIDE WEB
Boston, MA 02116-3741 www.mfs.com
PORTFOLIO MANAGER
James J. Calmas*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
----------------
MFS(R) LIMITED MATURITY FUND Bulk Rate
U.S. Postage
Paid
MFS
----------------
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(c)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MLM-3 12/98 14M 36/236/336/836
