<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MFS(R) MUNICIPAL
LIMITED MATURITY FUND
SEMIANNUAL REPORT O OCTOBER 31, 1998
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 6
Portfolio of Investments .................................................. 9
Financial Statements ...................................................... 14
Notes to Financial Statements ............................................. 20
Trustees and Officers ..................................................... 25
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.
- ------------------------------------------------------------------------------
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 75th 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:
WWW.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 John P. Kihn]
John P. Kihn
For the six months ended October 31, 1998, Class A shares of the Fund provided
a total return of 3.21%, Class B shares 2.81%, and Class C shares 2.77%. These
returns include the reinvestment of distributions but exclude the effects of
any sales charges and compare to returns of 3.77% and 4.52% for the Lehman
Brothers Municipal Bond Three-Year and Five-Year indices, respectively. These
are unmanaged indices of investment-grade, fixed-rate municipal bonds. It is
not possible to invest directly in an index. The Fund's returns also compare
to a 3.47% return for short/intermediate municipal bond funds as compiled 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?
A. The Fund was able to maintain competitive performance over the period by
improving its relative yield. Over the long run, most of the return is
expected to result from distributions made to shareholders.
Q. SO ARE YOU MORE CONCERNED ABOUT CREDIT QUALITY THAN ABOUT PROVIDING A
HIGHER YIELD?
A. Sustainability of yield has become very important. We are focused on trading
off credit quality against absolute and relative yield. Up to this point the
municipal market has been largely spared the credit problems and volatility
that have plagued many fixed-income markets. However, even a mild increase
in credit spreads in the taxable market would dramatically hurt credit
spreads in the municipal market. In light of this and the fact we do not see
many deals with positive credit-risk profiles versus the yields they offer,
we have been increasing the credit quality of the portfolio. Therefore,
while we are somewhat more concerned about credit quality than about
achieving the highest yield, this is merely a reflection of our focus on
achieving a relatively high, but sustainable, yield.
Q. IS IT HARDER TO WORK TOWARD SUSTAINABILITY OF YIELD IN THIS ECONOMIC
ENVIRONMENT?
A. Yes. The turmoil in domestic and overseas markets, interest rates that have
generally been declining over the past decade, and ever-narrowing municipal
credit spreads have made it difficult to maintain competitive yields without
taking on excessive credit risk.
Q. HOW WOULD YOU DESCRIBE THE MUNICIPAL MARKET?
A. On the surface, it is in very good shape. With few exceptions,
municipalities are in a good financial position, and yield spreads among
municipalities are very narrow. By these measures, we believe it is the best
of times.
Q. WHAT ABOUT THE FUND'S DURATION, OR ITS SENSITIVITY TO CHANGES IN INTEREST
RATES? HOW DOES THIS REFLECT YOUR OUTLOOK?
A. Relative to its peers, the Fund's duration is neutral. Our outlook has been
for a slowing domestic economy with flat to declining interest rates. This
continues to be our outlook, but we do not intend to take any extreme
duration positions either way.
Q. WHAT ABOUT THE RISE IN BOND INSURANCE?
A. Roughly half of all municipal bonds are insured. Insurance does not
eliminate credit risk; it merely transfers it to the insurer. Although
bondholders should be happy with this transfer of risk, the market charges a
premium for uninsured bonds rated "Aaa" by Moody's Investors Service, Inc.,
relative to "Aaa"-rated insured bonds. The market does not believe the risk
has been completely transferred, and neither do we. In addition, we do not
believe all bond insurers are created equal. Therefore, we feel it is best
to be careful when selecting insured bonds.
Q. HOW DO YOU THINK INVESTORS SHOULD VIEW THIS FUND?
A. We feel this Fund offers a competitive yield without taking excessive credit
risk. It is a high-quality fund because the prospectus limits the level of
below-investment-grade issues.
Q. WHAT DO YOU SEE AS THE BIGGEST RISK TO THE MUNICIPAL MARKET AND THE FUND
IN THE COMING MONTHS?
A. The two biggest risks are that interest rates increase and yield spreads
among credits widen dramatically. We have been positioning the Fund in an
effort to limit its exposure to these risks.
/s/ John P. Kihn
John P. Kihn
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>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
JOHN P. KIHN IS A VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND
PORTFOLIO MANAGER OF MFS(R) MUNICIPAL INCOME FUND, MFS(R) MUNICIPAL
LIMITED MATURITY FUND AND MFS(R) ALABAMA, ARKANSAS, CALIFORNIA, FLORIDA,
GEORGIA, MARYLAND, MASSACHUSETTS, MISSISSIPPI, NEW YORK, NORTH CAROLINA,
PENNSYLVANIA, SOUTH CAROLINA, TENNESSEE AND VIRGINIA MUNICIPAL BOND
FUNDS.
MR. KIHN JOINED MFS AS A QUANTITATIVE ANALYST IN OCTOBER 1997 AND WAS
NAMED PORTFOLIO MANAGER LATER THAT YEAR. HE PREVIOUSLY HAD WORKED AS A
SENIOR QUANTITATIVE ANALYST WITH A MAJOR INVESTMENT MANAGEMENT FIRM.
MR. KIHN EARNED A BACHELOR'S DEGREE IN ECONOMICS FROM THE UNIVERSITY OF
CALIFORNIA, BERKELEY, A MASTER'S DEGREE IN BUSINESS ECONOMICS FROM THE
UNIVERSITY OF CALIFORNIA, SANTA BARBARA AND A DOCTORATE DEGREE IN
ACCOUNTING AND FINANCE FROM THE LONDON SCHOOL OF ECONOMICS.
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
EXEMPT FROM FEDERAL INCOME TAXES AS IS
CONSISTENT WITH PROTECTION OF
SHAREHOLDERS' CAPITAL.
COMMENCEMENT OF
INVESTMENT OPERATIONS: MARCH 17, 1992
CLASS INCEPTION: CLASS A MARCH 17, 1992
CLASS B SEPTEMBER 7, 1993
CLASS C JULY 1, 1994
SIZE: $56.4 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
<TABLE>
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +3.21% +5.01% +13.40% +20.56% +36.96%
- --------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +5.01% + 4.28% + 3.81% + 4.86%
- --------------------------------------------------------------------------------------------------------------
SEC Results -- +2.39% + 3.40% + 3.29% + 4.46%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
CLASS B
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +2.81% +4.21% +10.81% +15.87% +31.35%
- --------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +4.21% + 3.48% + 2.99% + 4.20%
- --------------------------------------------------------------------------------------------------------------
SEC Results -- +0.21% + 2.53% + 2.64% + 4.20%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
CLASS C
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +2.77% +4.13% +10.55% +16.32% +32.10%
- --------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +4.13% + 3.40% + 3.07% + 4.29%
- --------------------------------------------------------------------------------------------------------------
SEC Results -- +3.13% + 3.40% + 3.07% + 4.29%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
March 17, 1992, through October 31, 1998.
<PAGE>
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.
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.
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.
A small portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax.
<PAGE>
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 1998
QUALITY RATINGS
Source: Standard & Poor's and Moody's.
"AAA" 49.9%
"AA" 17.6%
"A" 10.4%
"BBB" 19.9%
Other 2.2%
Portfolio concentration is as of October 31, 1998. The portfolio is actively
managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) - October 31, 1998
Municipal Bonds - 96.5%
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 23.0%
Chicago, IL, Board of Education, AMBAC, 0s, 2015 $1,000 $ 425,490
Commonwealth of Puerto Rico, 5.5s, 2001 500 521,915
Cook County, IL, High School District, 5s, 2005 500 522,375
Harrisburg, PA, 0s, 2004 825 653,367
Honolulu, HI, FGIC, 5s, 2002 350 365,288
Indianapolis, IN, Local Public Improvement Bond Bank,
6.25s, 2001 1,000 1,052,580
Irving, TX, Indepenent School District, 0s, 2003 350 296,226
Kane County, IL, Geneva Community School District, 6.1s, 2006 790 889,335
King County, WA, 4.75s, 2008 500 522,400
Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,133,800
New York City, NY, 5s, 2001 135 139,706
New York City, NY, 5s, 2001 515 531,459
New York City, NY, 6.125s, 2001 600 636,600
New York City, NY, 5.7s, 2002 500 530,840
New York City, NY, 5.3s, 2003 500 526,945
North Slope Borough, AK, MBIA, 0s, 2001 600 553,764
State of Louisiana, FGIC, 6s, 2000 500 520,740
State of Mississippi, 5s, 2010 250 257,905
State of New Jersey, 5.5s, 2002 850 903,575
State of Rhode Island, 5s, 2008 250 265,060
State of Rhode Island, 5.125s, 2013 250 257,548
State of Wisconsin, 5s, 2004 500 525,315
State of Wisconsin, 5s, 2006 500 529,805
Stephenville, TX, Independent School District, 0s, 2004 500 405,860
-----------
$12,967,898
- ------------------------------------------------------------------------------------------------------
State and Local Appropriation - 14.0%
Michigan Building Authority Rev., 6.2s, 2002 $1,000 $ 1,080,490
Michigan Building Authority Rev., 5.4s, 2003 375 399,424
New York Dormitory Authority Rev., Albany County State
Service Contract, 5s, 2003 180 187,198
New York Dormitory Authority Rev. (City University), 5s, 2000 500 510,580
New York Dormitory Authority Rev. (City University), 5s, 2003 1,060 1,104,637
New York Dormitory Authority Rev. (State University), 4.9s, 2000 250 254,720
New York Medical Care Facilities Finance Agency Rev., 5.9s, 2000 175 181,809
New York Urban Development (Correctional Facilities), 5.5s, 2001 1,375 1,422,919
New York Urban Development Corp. Rev., 6s, 2002 1,000 1,061,160
Ohio Building Authority Rev., 5.25s, 2003 400 424,316
State of Utah, Building Ownership Authority, 5.5s, 2000 500 513,865
State of Utah, Building Ownership Authority Lease Rev., 0s, 2005 685 524,320
West Valley City, UT, Municipal Building Lease Rev., 4.65s, 2012 250 247,952
-----------
$ 7,913,390
- ------------------------------------------------------------------------------------------------------
Refunded and Special Obligations - 3.4%
Delaware County, IN, Hospital Authority (Ball Memorial
Hospital), AMBAC, 6.625s, 2001 $1,300 $ 1,358,994
Milwaukee, WI, Metropolitan Sewage District, 6.7s, 2001 500 540,980
-----------
$ 1,899,974
- ------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 2.5%
Atlanta, GA, Airport Facilities Rev., AMBAC, 5.5s, 2001 $ 500 $ 520,905
Denver, CO, City & County Airport Rev., 5.5s, 1999 650 661,648
Islip, NY, Airport Improvement, 5s, 2013 250 253,527
-----------
$ 1,436,080
- ------------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 10.5%
Intermountain Power Agency, UT, Power Supply Rev., FSA, 5.25s, 2001 $ 500 $ 521,100
Municipal Electric Authority, GA, MBIA, 5s, 2002 600 624,108
North Carolina Municipal Power, MBIA, 5s, 2001 500 513,865
Sacramento, CA, Municipal Utility District Electric Rev., FGIC,
6s, 2001 620 658,663
Southern California Public Power Authority, Power
Project Rev., FSA, 5s, 2004 500 526,515
Washington Public Power Supply System Rev., 5s, 2000 1,500 1,533,435
Washington Public Power Supply System Rev., 5.45s, 2000 1,500 1,544,205
-----------
$ 5,921,891
- ------------------------------------------------------------------------------------------------------
Health Care Revenue - 7.0%
Colorado Health Facilities Authority Rev. (National
Benevolent Assn.), 4.5s, 2002 $ 280 $ 283,013
Delaware County, PA, Hospital Rev. (Crozer-Chester
Medical Center), 4.75s, 2005 500 503,305
Denison, TX, Hospital Authority (Texoma Medical Center,
Inc.), 5.25s, 2001 215 220,682
Denver, CO, Health & Hospital Authority Rev., 5.125s, 2006 200 208,540
Massachusetts Health & Educational Facilities (Jordan
Hospital), 4.8s, 2006 600 609,096
Michigan Hospital Finance Authority Rev. (Genesys Health
System), 5.5s, 2007 750 789,503
Michigan Hospital Finance Authority Rev. (Mercy Health
Services), 5.5s, 2000 500 514,820
Missouri Health & Educational Facilities Authority Rev
(Freeman Health Systems), 4.65s, 2003 450 456,210
Stillwater, OK, Medical Center Authority (Stillwater
Medical Center), 5.55s, 2001 335 342,675
-----------
$ 3,927,844
- ------------------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 0.6%
De Soto Parish, LA, Pollution Control Rev
(International Paper Co.), 5.05s, 2002 $ 350 $ 359,531
- ------------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 6.8%
Allegheny County, PA, Hospital Development Authority
Rev. (Magee Womens Hospital), 5.2s, 2005 $ 250 $ 266,542
Huntsville, AL, Health Care Authority, MBIA, 4.3s, 2002 500 509,110
Illinois Educational Facilities Authority Rev
(Methodist Medical Center), 5.5s, 2005 500 544,935
Illinois Educational Facilities Authority Rev. (Sherman
Health Systems), AMBAC, 5s, 2003 250 262,690
Illinois Health Facilities Authority Rev. (Holy Family
Medical Center), MBIA, 5s, 2004 325 342,917
Indiana Health Facilities Hospital Rev. (Sisters of St
Francis Health), MBIA, 5s, 2002 250 260,825
Jackson County, MI, Hospital Finance Authority, (Foote
Memorial Hospital), AMBAC, 4.375s, 2002 200 204,006
Mesa, AZ, Industrial Development Authority Rev
(Lutheran Health Systems), 5.25s, 2012 500 520,800
Spartanburg County, SC, Health Service, MBIA, 4.5s, 2002 675 690,775
State of Utah, Board Regents Rev. (University of Utah
Hospital), AMBAC, 5s, 2002 200 208,854
-----------
$ 3,811,454
- ------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.9%
Alaska Housing Finance Corp., MBIA, 4.55s, 2002 $ 350 $ 354,578
Illinois Housing Development Authority, 4.65s, 2007 350 350,756
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.15s, 2001 1,000 1,027,400
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.25s, 2002 1,000 1,038,300
-----------
$ 2,771,034
- ------------------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.0%
District of Columbia, Redevelopment Land Agency, 5.625s, 2010 $ 415 $ 428,944
Virgin Islands Public Finance Authority, 5.5s, 2005 1,000 1,045,430
Washington, DC, Convention Center, 4.75s, 2005 500 520,880
Washington, DC, Convention Center, 5.25s, 2013 250 259,790
-----------
$ 2,255,044
- ------------------------------------------------------------------------------------------------------
Single Family Housing Revenue - 1.0%
Mississippi Home Corp. Single Family Housing Rev., 5.1s, 2017 $ 250 $ 249,068
Nebraska Investment Finance Authority, 4.25s, 2006 330 328,287
-----------
$ 577,355
- ------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 3.7%
Delaware County, PA, Industrial Development Authority
Rev. (Recovery Facilities), 5.5s, 2000 $1,000 $ 1,015,280
Massachusetts Industrial Finance Agency (Ogden
Haverhill), 5.15s, 2007 500 500,710
Spokane, WA, Regional Solid Waste, 6.5s, 2008 500 567,285
-----------
$ 2,083,275
- ------------------------------------------------------------------------------------------------------
Student Loan Revenue - 2.2%
Alaska Student Loan Corp. Rev., AMBAC, 5s, 2003 $ 400 $ 412,548
Colorado Student Obligation Bond Authority, 6.125s, 1998 40 40,055
Louisiana Public Facilities Authority (Student Loan Rev.),
6.5s, 2002 770 812,866
-----------
$ 1,265,469
- ------------------------------------------------------------------------------------------------------
Turnpike Revenue - 2.7%
New Jersey Transit Corp., FSA, 5s, 2000 $1,000 $ 1,020,380
Pennsylvania Turnpike Commission, 5.25s, 2012 500 528,490
-----------
$ 1,548,870
- ------------------------------------------------------------------------------------------------------
Universities - 4.7%
California Educational Facilities Authority Rev
(College & University), 5.15s, 2000 $ 360 $ 366,642
District of Columbia (Georgetown University), MBIA, 5.5s, 2001 500 521,240
Metropolitan Nashville, TN (Refunding Vanderbilt
University), 5.25s, 2001 500 518,765
North Dakota Board of Higher Education (University
Housing & Auxiliary Facilities), 4.7s, 2011 855 864,277
State of New Hampshire, Higher Education & Health (New
Hampshire College), 5.65s, 2003 345 354,563
-----------
$ 2,625,487
- ------------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.1%
Erie, PA, Water Authority Rev., 4.6s, 2009 $1,000 $ 1,020,490
Philadelphia, PA, Water & Sewer Rev., MBIA, 0s, 2002 500 432,090
San Antonio, TX, Water Revenue, FGIC, 5.8s, 1999 825 836,707
-----------
$ 2,289,287
- ------------------------------------------------------------------------------------------------------
Other - 1.4%
Connecticut Special Assessment, AMBAC, 5s, 1999 $ 750 $ 765,795
- ------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $53,302,765) $54,419,678
- ------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 3.9%
- ------------------------------------------------------------------------------------------------------
Burke County, Development Authority, Pollution Control
Rev. (Vogtle), due 09/01/26 $ 200 $ 200,000
Burke County, GA, Development Authority Pollution
(Georgia Power Co.), due 09/01/25 300 300,000
Burke County, GA, Development Authority, Pollution
Control Rev. (Georgia Power Co.), due 04/01/32 100 100,000
Coweta County, GA, Development Authority (Georgia Power
Co.), due 03/01/24 300 300,000
East Baton Rouge, LA, Pollution Control Rev. (Exxon Corp.),
due 03/01/22 100 100,000
Harris County, TX, Hospital Rev. (Methodist Hospital),
due 12/01/25 1,200 1,200,000
- ------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,200,000
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $55,502,765 ) $56,619,678
Other Assets, Less Liabilities - (0.4)% (214,458)
- ------------------------------------------------------------------------------------------------------
Net assets - 100.0% $56,405,220
- ------------------------------------------------------------------------------------------------------
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $55,502,765) $56,619,678
Cash 14,958
Receivable for Fund shares sold 137,297
Receivable for investments sold 585,345
Interest receivable 719,584
Other assets 383
-----------
Total assets $58,077,245
-----------
Liabilities:
Distributions payable $ 64,903
Payable for Fund shares reacquired 47,585
Payable for investments purchased 1,536,534
Payable to affiliates -
Management fee 928
Shareholder servicing agent fee 335
Distribution and service fee 13,444
Administrative fee 45
Accrued expenses and other liabilities 8,251
-----------
Total liabilities $ 1,672,025
-----------
Net assets $56,405,220
===========
Net assets consist of:
Paid-in capital $55,900,239
Unrealized appreciation on investments 1,116,913
Accumulated net realized loss on investments (630,035)
Accumulated undistributed net investment income 18,103
-----------
Total $56,405,220
===========
Shares of beneficial interest outstanding 7,362,469
=========
Class A shares:
Net asset value per share
(net assets of $43,212,992 / 5,639,397 shares of
beneficial interest outstanding) $7.66
=====
Offering price per share (100 / 97.5) $7.86
=====
Class B shares:
Net asset value and offering price per share
(net assets of $8,643,199 / 1,129,449 shares of
beneficial interest outstanding) $7.65
=====
Class C shares:
Net asset value and offering price per share
(net assets of $4,549,029 / 593,623 shares of beneficial
interest outstanding) $7.66
=====
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
<TABLE>
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------------------
SIX MONTHS ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------------------
<S> <C>
Net investment income:
Interest income $1,190,730
----------
Expenses -
Management fee $ 100,374
Trustees' compensation 6,447
Shareholder servicing agent fee 28,263
Distribution and service fee (Class A) 29,559
Distribution and service fee (Class B) 35,626
Distribution and service fee (Class C) 16,055
Administrative fee 3,769
Custodian fee 10,206
Printing 12,818
Postage 1,841
Auditing fees 16,092
Legal fees 459
Registration fee 18,283
Miscellaneous 6,919
----------
Total expenses $ 286,711
Fees paid indirectly (7,114)
Preliminary reduction of expenses by investment adviser (22,676)
----------
Net expenses $ 256,921
----------
Net investment income $ 933,809
----------
Realized and unrealized gain on investments:
Realized gain on investment transactions (identified cost basis) $ 68,787
Change in unrealized appreciation on investments 553,632
----------
Net realized and unrealized gain on investments $ 622,419
----------
Increase in net assets from operations $1,556,228
==========
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Statement of Changes in Net Assets
<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 $ 933,809 $ 1,849,651
Net realized gain on investments 68,787 174,996
Net unrealized gain on investments 553,632 276,447
----------- -----------
Increase in net assets from operations $ 1,556,228 $ 2,301,094
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ (774,929) $(1,537,831)
From net investment income (Class B) (120,850) (218,920)
From net investment income (Class C) (49,461) (94,027)
----------- -----------
Total distributions declared to shareholders $ (945,240) $(1,850,778)
----------- -----------
Net increase (decrease) in net assets from Fund share
transactions $ 7,330,162 $(2,739,830)
----------- -----------
Total increase (decrease) in net assets $ 7,941,150 $(2,289,514)
Net assets:
At beginning of period 48,464,070 50,753,584
----------- -----------
At end of period (including accumulated undistributed net
investment income of $18,103 and $29,534, respectively) $56,405,220 $48,464,070
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
EIGHT
MONTHS YEAR
SIX MONTHS ENDED YEAR ENDED APRIL 30, ENDED ENDED
OCTOBER 31, -------------------------------------------- APRIL 30, AUGUST 31,
1998 1998 1997 1996 1995 1994 1993
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $ 7.57 $ 7.50 $ 7.53 $ 7.45 $ 7.47 $ 7.72 $ 7.43
------ ------ ------ ------ ------ ------ ------
Income from investment
operations# -
Net investment
income(S) $ 0.15 $ 0.30 $ 0.29 $ 0.30 $ 0.28 $ 0.19 $ 0.31
Net realized and
unrealized gain (loss)
on investments 0.09 0.07 (0.03) 0.08 (0.02) (0.22) 0.30
------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.24 $ 0.37 $ 0.26 $ 0.38 $ 0.26 $(0.03) $ 0.61
------ ------ ------ ------ ------ ------ ------
Less distributions declared
to shareholders --
From net investment
income $(0.15) $(0.30) $(0.29) $(0.30) $(0.28) $(0.19) $(0.31)
From net realized gain
on investments -- -- -- -- -- -- (0.01)
In excess of net
investment income -- -- -- -- (0.00)+++ (0.00)+++ --
In excess of net
realized gain on
investments -- -- -- -- -- (0.03) --
------ ------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(0.15) $(0.30) $(0.29) $(0.30) $(0.28) $(0.22) $(0.32)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of
period $ 7.66 $ 7.57 $ 7.50 $ 7.53 $ 7.45 $ 7.47 $ 7.72
====== ====== ====== ====== ====== ====== ======
Total return(+) 3.21%++ 5.02% 3.51% 5.11% 3.55% (0.59)%+ 8.47%
Ratios (to average net assets)/
Supplemental data(S):
Expenses 0.85%+ 0.87% 0.95% 0.95% 0.95% 0.89%+ 0.68%
Net investment income 3.89%+ 3.97% 3.86% 4.00% 3.74% 3.72%+ 4.04%
Portfolio turnover 17% 51% 78% 43% 50% 48% 69%
Net assets at end of
period (000 omitted) $43,213 $37,595 $40,953 $50,387 $64,329 $83,367 $87,192
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data for the periods subsequent to April 30, 1994, are based on average shares outstanding.
## For the 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 offset arrangement.
(+) 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 the expenses of the Fund, exclusive of
management, distribution and service fees, at not more than 0.40% of average daily net assets. The investment adviser
voluntarily waived a portion of their 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 $ 0.15 $ 0.30 $ 0.29 $ 0.30 $ 0.28 $ 0.18 $ 0.28
Ratios (to average net assets):
Expenses## 0.97%+ 1.01% 1.02% 0.99% 0.95% 1.12%+ 1.16%
Net investment income 3.77%+ 3.85% 3.79% 3.96% 3.74% 3.49%+ 3.57%
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 30,
OCTOBER 31, -------------------------------------------------------------------------
1998 1998 1997 1996 1995 1994*
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $ 7.56 $ 7.49 $ 7.52 $ 7.44 $ 7.46 $ 7.75
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.12 $ 0.24 $ 0.23 $ 0.25 $ 0.21 $ 0.14
Net realized and unrealized
gain (loss) on investments 0.09 0.07 (0.03) 0.07 (0.02) (0.26)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.21 $ 0.31 $ 0.20 $ 0.32 $ 0.19 $(0.12)
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.12) $(0.24) $(0.23) $(0.24) $(0.21) $(0.13)
In excess of net investment
income -- -- -- -- (0.00)+++ (0.01)
In excess of net realized gain
on investments -- -- -- -- -- (0.03)
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.12) $(0.24) $(0.23) $(0.24) $(0.21) $(0.17)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 7.65 $ 7.56 $ 7.49 $ 7.52 $ 7.44 $ 7.46
====== ====== ====== ====== ====== ======
Total return 2.81%++ 4.22% 2.71% 4.34% 2.67% (2.37)%+
Ratios (to average net assets)/
Supplemental data(S):
Expenses 1.63%+ 1.64% 1.73% 1.70% 1.80% 1.74%+
Net investment income 3.11%+ 3.20% 3.08% 3.25% 2.88% 2.79%+
Portfolio turnover 17% 51% 78% 43% 50% 48%
Net assets at end of period (000
omitted) $8,643 $7,618 $6,503 $7,749 $7,792 $7,415
* For the period from the inception of Class B, September 7, 1993, through April 30, 1994.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# 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 offset arrangement.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of the Fund, exclusive of
management, distribution and service fees, at not more than 0.40% of average daily net assets. The investment adviser
voluntarily waived a portion of their 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 $ 0.12 $ 0.24 $ 0.23 $ 0.25 $ 0.21 $ 0.12
Ratios (to average net assets):
Expenses## 1.75%+ 1.78% 1.80% 1.74% 1.80% 2.05%+
Net investment income 2.99%+ 3.08% 3.01% 3.21% 2.88% 2.48%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 30,
OCTOBER 31, -------------------------------------------------------------------
1998 1998 1997 1996 1995**
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 7.57 $ 7.50 $ 7.53 $ 7.45 $ 7.45
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.12 $ 0.23 $ 0.23 $ 0.23 $ 0.21
Net realized and unrealized gain (loss)
on investments 0.09 0.08 (0.03) 0.08 (0.02)
------ ------ ------ ------ ------
Total from investment operations $ 0.21 $ 0.31 $ 0.20 $ 0.31 $ 0.19
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.12) $(0.24) $(0.23) $(0.23) $(0.19)
In excess of net investment income -- -- -- -- (0.00)+++
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.12) $(0.24) $(0.23) $(0.23) $(0.19)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.66 $ 7.57 $ 7.50 $ 7.53 $ 7.45
====== ====== ====== ====== ======
Total return 2.77%++ 4.13% 2.64% 4.23% 2.53%+
Ratios (to average net assets)/
Supplemental data(S):
Expenses 1.70%+ 1.72% 1.80% 1.80% 1.79%+
Net investment income 3.04%+ 3.11% 3.03% 3.16% 2.77%+
Portfolio turnover 17% 51% 78% 43% 50%
Net assets at end of period (000 omitted) $4,549 $3,250 $3,297 $3,013 $1,934
** For the period from the inception of Class C, July 1, 1994, through April 30, 1995.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data for the periods subsequent to April 30, 1994, are based on average shares outstanding.
## For the 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 offset arrangement.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of the Fund, exclusive of
management, distribution and service fees, at not more than 0.40% of average daily net assets. The investment adviser
voluntarily waived a portion of their 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 $ 0.12 $ 0.23 $ 0.22 $ 0.23 $ 0.21
Ratios (to average net assets):
Expenses## 1.82%+ 1.86% 1.87% 1.84% 1.79%+
Net investment income 2.92%+ 2.99% 2.96% 3.12% 2.77%+
See notes to financial statements
</TABLE>
<PAGE>
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. 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.
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 is amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
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 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 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 $698,822, 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, ($623,925), April 30, 2004, ($32,070), and April 30, 2005,
($42,827).
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 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
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.40%
of average daily net assets. The investment adviser has voluntarily agreed to
waive a portion of its fee, which is reflected as a preliminary reduction of
expenses in the Statement of Operations.
The Fund has a temporary expense reimbursement agreement whereby MFS has
voluntarily agreed to pay all of the Fund's operating expenses, exclusive of
management, distribution and service fees. The Fund in turn will pay MFS an
expense reimbursement fee not greater than 0.40% of average daily net assets.
To the extent that the expense reimbursement fee exceeds the Fund's actual
expenses, the excess will be applied to amounts paid by MFS in prior years. At
October 31, 1998, the aggregate unreimbursed expenses owed to MFS by the Fund
amounted to $208,539.
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 $3,594
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
$2,291 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. A portion of the Class A service
fee is currently being paid by the Fund; payment of the remaining portion of
the Class A service fee will become payable on such a date as the Trustees of
the Trust may determine. Payment of the 10% per annum Class A distribution fee
will be implemented on such date as the Trustees of the Trust may determine.
MFD retains the service fee for accounts not attributable to a securities
dealer, which amounted to $3,765 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.
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. Except in the case of the 0.25% per annum Class B
service fee paid by the Fund upon the sale of Class B shares in the first
year, the Class B service fee is currently set at 0.15% per annum and may be
increased to a maximum of 0.25% per annum on such date as the Trustees of the
Trust may determine. MFD retains the service fee for accounts not attributable
to a securities dealer, which amounted to $117 and $1 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
0.93% and 1.00% of average daily net assets attributable to Class B and Class
C shares on an annualized basis, respectively.
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 $10,995, $6,171, and $5,374 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 U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$14,704,761 and $8,418,201, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $55,502,765
-----------
Gross unrealized appreciation $ 1,159,154
Gross unrealized depreciation (42,241)
-----------
Net unrealized appreciation $ 1,116,913
===========
(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>
Class A Shares
<CAPTION>
SIX MONTHS ENDED OCTOBER 31, 1998 YEAR ENDED APRIL 30, 1998
--------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,490,058 $ 11,370,070 2,109,268 $ 15,995,108
Shares issued to shareholders in
reinvestment of distributions 66,069 503,929 131,414 997,128
Shares reacquired (886,283) (6,738,690) (2,733,116) (20,723,328)
--------- ------------ ---------- ------------
Net increase (decrease) 669,844 $ 5,135,309 (492,434) $ (3,731,092)
========= ============ ========== ============
</TABLE>
<TABLE>
Class B Shares
<CAPTION>
SIX MONTHS ENDED OCTOBER 31, 1998 YEAR ENDED APRIL 30, 1998
--------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 292,541 $ 2,234,531 341,799 $ 2,591,558
Shares issued to shareholders in
reinvestment of distributions 7,170 54,765 15,368 116,495
Shares reacquired (178,585) (1,356,642) (217,312) (1,644,108)
--------- ------------ ---------- ------------
Net increase 121,126 $ 932,654 139,855 $ 1,063,945
========= ============ ========== ============
</TABLE>
<TABLE>
Class C Shares
<CAPTION>
SIX MONTHS ENDED OCTOBER 31, 1998 YEAR ENDED APRIL 30, 1998
--------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 353,320 $ 2,704,661 168,203 $ 1,277,137
Shares issued to shareholders in
reinvestment of distributions 6,043 46,078 11,712 88,876
Shares reacquired (195,370) (1,488,540) (189,973) (1,438,696)
--------- ------------ ---------- ------------
Net increase (decrease) 163,993 $ 1,262,199 (10,058) $ (72,683)
========= ============ ========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $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 $457.
<PAGE>
<TABLE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
<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
Lawrence T. Perera - Partner, Hemenway toll free: 1-800-637-4458 anytime from a
& Barnes (attorneys) touch-tone telephone.
William J. Poorvu - Adjunct Professor, Harvard For information on MFS mutual funds, call your
University Graduate School of Business financial adviser or, for an information kit,
Administration call toll free: 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time (or leave a
Charles W. Schmidt - Private Investor message anytime).
Arnold D. Scott* - Senior Executive INVESTOR SERVICE
Vice President, Director, and Secretary, MFS Service Center, Inc.
MFS Investment Management P.O. Box 2281
Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman, Chief
Executive Officer, and Director, For general information, call toll free:
MFS Investment Management 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
Elaine R. Smith - Independent Consultant
For service to speech- or hearing-impaired,
David B. Stone - Chairman and Director, call toll free: 1-800-637-6576 any business day
North American Management Corp. from 9 a.m. to 5 p.m. Eastern time. (To use
(investment advisers) this service, your phone must be equipped with
a Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, and
500 Boylston Street exchanges, call toll free: 1-800-MFS-TALK
Boston, MA 02116-3741 (1-800-637-8255) anytime from a touch-tone
telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc. World Wide Web
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
PORTFOLIO MANAGER
John P. Kihn*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
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MML-3 12/98 6M 37/237/337
