<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) LIMITED
MATURITY FUND
SEMIANNUAL REPORT o OCTOBER 31, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 14
Notes to Financial Statements ............................................. 21
MFS' Year 2000 Readiness Disclosure ....................................... 27
Trustees and Officers ..................................................... 29
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
The current investment and economic environment bears little resemblance to last
year's. One year ago, global economies were floundering, and the crisis in Asia
threatened an already weak U.S. economy. Corporate earnings were flat, and
economists used the word "deflation" for the first time in recent memory.
Entering 1999, expectations for corporate earnings growth were lowered
dramatically. In an attempt to foster U.S. growth, the Federal Reserve Board
(the Fed) lowered interest rates.
As a result, this year the U.S. economy is booming and unemployment is low. Many
corporations are focused on improving their profitability, and investors have
been rewarded with positive surprises across a variety of industries. Our
analysts predict that corporate earnings growth for 1999 will average 12% - 15%.
Global economies also are showing signs of strength, and the Asian crisis has
passed. In fact, Japan's economic woes seem to have reached bottom. Although the
process is in its infancy, some Japanese corporations not only are talking about
restructuring and cost cutting, they also are beginning to take action, looking
within to become more competitive and improve returns on equity. While still
lagging the United States, Europe is beginning to restructure and consolidate.
These signs of international growth have contributed to concerns that the U.S.
economy now may be too strong. In June, and again in August, the Fed raised
rates by one-quarter of a percentage point to help ward off the specter of
inflation.
After an unprecedented four years of 20% annual returns in the U.S. equity
market, we fear that many investors have become accustomed to high returns and
have lost sight of the risks they take on to achieve them. In the current market
many investors are taking on additional risk - whether through day trading or
investing in speculative Internet stocks.
Risks are as much a part of the market today as they were one year ago. We
believe the market remains overvalued, with stocks priced 30% above our
analysts' earnings projections. And market narrowness has not abated; the top 25
stocks in the Standard & Poor's 500 Composite Index, a popular, unmanaged index
of common stock total return performance, are still the most overvalued. Such
extreme overvaluation makes the stock market sensitive to interest-rate news and
any negative earnings surprises. The Year 2000 (Y2K) computer problem is another
factor causing investor concern. While we believe corporate America is well
prepared to address any Y2K situations that may arise at year-end, no one can
predict investor behavior. In our opinion, it is investor behavior that has the
greatest potential to create market volatility.
We believe the best way to address Y2K and other market risks is through our
continuing commitment to MFS Original Research(R) and our fundamental investment
tenet of long-term investing. Whether markets are up or down, MFS analysts focus
on analyzing industries and visiting companies to determine the long-term
winners and the prices that will make them attractive opportunities. Because all
companies will not benefit equally from the improving international environment,
bottom-up research remains critical to identifying those that we believe are
successfully restructuring, consolidating, and gaining market share.
Changes in market and economic conditions can't be predicted but should always
be expected. The changes we have seen over the past year only reinforce our
commitment to long-term planning and investing. We believe volatility helps to
create opportunity for long-term investors to buy solid companies at attractive
prices. For this reason, we are continuing to expand our domestic and
international capabilities to ensure that MFS has primary, in-house research on
companies worldwide. We believe that we have built the right investment team,
backed by MFS Original Research, to take advantage of those opportunities for
our shareholders.
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 15, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of James J. Calmas]
James J. Calmas
For the six months ended October 31, 1999, Class A shares of the Fund provided a
total return of 1.22%, Class B shares 0.83%, Class C shares 0.79%, and Class I
shares 1.30%. These returns include the reinvestment of any distributions but
exclude the effects of any sales charges.
During the same period, the average short-term investment-grade debt fund
tracked by Lipper Analytical Services, Inc., an independent firm that reports
mutual fund performance, returned 1.14%. The Fund's results also compare to a
1.74% return for the Lehman Brothers One- to Three-Year Government/Corporate
Bond Index (the Lehman Index), an unmanaged index 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.
Q. WHY DID THE FUND SLIGHTLY UNDERPERFORM THE LEHMAN INDEX?
A. Over the period, corporate bonds, which represent a higher proportion of the
Fund's assets than those of the index, did not perform as well as expected.
Their underperformance came mostly during August and September, when there
was a surge of bond issues from corporations. We believe that many companies
at that time were concerned about possible liquidity problems at the end of
this year and were motivated to move early to ensure adequate financing for
the coming year. This oversupply pushed down corporate bond prices and hurt
performance.
Q. WHY DO YOU OWN ASSET-BACKED SECURITIES?
A. Asset-backed securities are credit card receivables, home equity loans, and
auto loans. Nearly one-quarter of the portfolio's assets are invested in
these bonds, which we own because of their high "AAA"-rated quality,
attractive yields, and the diversification they offer the Fund. For some of
these, we are getting yields similar to lower-rated bonds without as much
risk. For example, we own bonds backed by a diversified, packaged, and
credit-enhanced group of car loans issued by Ford Motor which are
"AAA"-rated. These have similar yields to those issued by Ford Motor Co.,
which are only "A"-rated debt.
Q. WHAT IS THE ALLOCATION OF ASSETS TO DIFFERENT TYPES OF BONDS?
A. The breakdown is 42.8% to high-grade corporates, 24.7% to asset-backed
securities, 9.5% to cash, 8.8% to mortgage-backed securities, 8.3% to
Yankees (many of the "AAA"-rated dollar-denominated bonds issued in the
United States by foreign governments and corporations), and 2.0% to emerging
markets. We are holding a relatively large amount of cash in order to handle
any end of year liquidity concerns. We are also holding some floating-rate
securities, notes whose interest rates are tied to a money market index, so
that if interest rates go up, these short-term issues may help provide some
additional return.
Q. CAN YOU COMMENT ON THE CREDIT QUALITY OF THE CORPORATE BONDS IN THE FUND?
A. The prospectus states that bonds must be investment grade, that is "BBB"-
through "AAA"-rated, when we purchase them. We have been upgrading the
overall credit quality during the past 18 months in response to a gradual
rise in default rates over the past several years, with our analysts having
no difficulty finding bonds in the upper range of "A" to "AAA." But if we
identify companies issuing bonds in the lower range whose risks we believe
we will be compensated for, then we may certainly consider those issues.
Q. WHERE DO YOU SEE OPPORTUNITIES FOR THE FUND?
A. We continue to favor bonds issued by telecommunications companies. There's a
lot of consolidation in the industry -- we own bonds issued by Sprint
Spectrum, for example. We need to make sure that any mergers will not hurt
the credit profile of companies that we own. Utilities are another promising
sector because of consolidation. Utilities are also rationalizing their
businesses, that is, making sure that their businesses make sense in terms
of their strengths and the market environment. For example, Boston Edison is
getting out of electricity generation to focus on transmission and
distribution.
Q. LOOKING AHEAD, HOW DO YOU SEE INTEREST RATES AFFECTING THE FUND?
A. The bond markets reacted calmly to the two interest-rate increases so far
this year, and we don't think any future increase should cause a major
sell-off in the bond market. We believe that the additional yield from our
corporate bond holdings may provide some cushion if rates were to rise. We
think inflation has been kept in check; therefore, we have kept the duration
of our bonds (which indicates a portfolio's sensitivity to changes in
interest rates) the same as the Lehman Index. Currently, the duration is
approximately 1.7 years.
/s/ James J. Calmas
James J. Calmas
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current 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.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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JAMES J. CALMAS IS VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND PORTFOLIO
MANAGER OF MFS(R) INTERMEDIATE INCOME FUND, MFS(R) LIMITED MATURITY FUND, AND
MFS(R) LIMITED MATURITY SERIES (PART OF MFS(R) VARIABLE INSURANCE TRUST(SM)).
MR. CALMAS JOINED MFS IN 1988 AND WAS NAMED ASSISTANT VICE PRESIDENT IN 1991,
VICE PRESIDENT IN 1993, AND PORTFOLIO MANAGER IN 1998.
HE IS A GRADUATE OF DARTMOUTH COLLEGE AND HOLDS AN M.B.A. DEGREE FROM THE AMOS
TUCK SCHOOL OF BUSINESS ADMINISTRATION OF DARTMOUTH COLLEGE.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL RESEARCH(R), A
COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING SECURITIES.
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 consultant, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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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: $205.1 MILLION NET ASSETS AS OF OCTOBER 31, 1999
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. (See Notes to Performance
Summary.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH OCTOBER 31, 1999
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales
Charge +1.22% +3.13% +14.40% +32.59% +51.02%
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Average Annual Total Return Excluding
Sales Charge -- +3.13% + 4.59% + 5.80% + 5.51%
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Average Annual Total Return Including
Sales Charge -- +0.55% + 3.71% + 5.27% + 5.17%
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<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales
Charge +0.83% +2.49% +11.62% +27.31% +43.39%
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Average Annual Total Return Excluding
Sales Charge -- +2.49% + 3.73% + 4.95% + 4.81%
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Average Annual Total Return Including
Sales Charge -- -1.41% + 2.84% + 4.63% + 4.81%
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<CAPTION>
CLASS C
6 Months 1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales
Charge +0.79% +2.26% +11.22% +26.92% +44.01%
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Average Annual Total Return Excluding
Sales Charge -- +2.26% + 3.61% + 4.88% + 4.87%
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Average Annual Total Return Including
Sales Charge -- +1.28% + 3.61% + 4.88% + 4.87%
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<CAPTION>
CLASS I
6 Months 1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales
Charge +1.30% +3.29% +14.58% +32.80% +51.25%
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Average Annual Total Return Excluding
Sales Charge -- +3.29% + 4.64% + 5.84% + 5.54%
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* For the period from the commencement of the Fund's investment operations, February 26, 1992, through October 31, 1999.
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 2.50% sales charge. Class B Share Performance Including
Sales Charge takes into account the deduction of the applicable contingent
deferred sales charge (CDSC), which declines over six years from 4% to 0%. Class
C Share Peformance Including Sales Charge takes into account the deduction of
the 1% CDSC applicable to Class C shares redeemed within 12 months. Class I
shares have no sales charge and are only available to certain institutional
investors.
Class B, C, and I share performance include the performance of the Fund's Class
A shares for periods prior to their inception (blended performance). Class B and
C blended performance has been adjusted to take into account the CDSC applicable
to Class B and C shares rather than the initial sales charge (load) applicable
to Class A shares. Class I share blended performance has been adjusted to
account for the fact that Class I shares have no sales charge. These blended
performance figures have not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B and C
shares are higher than those of Class A, the blended Class B and C share
performance is higher than it would have been had Class B and C shares been
offered for the entire period. Conversely, because operating expenses of Class I
shares are lower than those of Class A, the blended Class I share performance is
lower than it would have been had Class I shares been offered for the entire
period.
All 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 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, 1999
QUALITY RATINGS (U.S. PORTION ONLY)
Source: Standard & Poor's and Moody's
"AAA" 32.8%
"AA" 2.7%
"A" 21.1%
"BBB" 27.1%
"BB" 2.3%
Not Rated 0.3%
Governments 13.7%
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- October 31, 1999
Bonds - 91.9%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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U.S. Bonds - 81.7%
Airlines - 0.5%
Delta Airlines, Inc., 6.65s, 2004 $ 1,151 $ 1,115,181
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Apparel and Textiles - 0.6%
Jones Apparel Group, Inc., 6.25s, 2001 $ 1,280 $ 1,255,654
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Automotive - 3.7%
DaimlerChrysler NA Holding Corp., 6.63s, 2001 $ 2,653 $ 2,656,979
Ford Capital BV, 9.875s, 2002 1,800 1,927,152
Ford Motor Credit Co., 6.446s, 2002 3,000 3,016,110
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$ 7,600,241
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Banks and Credit Companies - 4.3%
Fleet Boston Corp., 9.9s, 2001 $ 2,017 $ 2,116,458
Great Western Financial Corp., 6.375s, 2000 2,366 2,364,817
GS Escrow Corp., 6.75s, 2001 1,903 1,853,855
Providian National Bank, 6.75s, 2002 2,563 2,509,895
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$ 8,845,025
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Conglomerates - 1.0%
General Electric Capital Corp., 6.52s, 2002 $ 2,127 $ 2,119,343
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Consumer Goods and Services - 1.1%
Hilfiger (Tommy) USA, Inc., 6.5s, 2003 $ 2,283 $ 2,187,160
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Containers - 2.1%
Owens-Illinois, Inc., 11s, 2003 $ 4,058 $ 4,200,030
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Corporate Asset Backed - 24.5%
Aames Mortgage Trust, 6.75s, 2021 $ 3,889 $ 3,857,402
American Express Credit Account Trust, 5.6s, 2006 1,000 957,180
Americredit Automobile Receivables Trust,
5.78s, 2003 2,050 2,019,891
Amresco Residential Securities Mortgage Loan,
5.94s, 2015 4,039 3,996,717
Banamex Credit Card Merchant Voucher, 6.25s, 2003# 6,663 6,589,934
BankBoston Home Equity Loan Trust, 5.89s, 2013 1,894 1,862,113
Chase Credit Card Master Trust, 5.666s, 2004 2,815 2,817,618
Citibank Credit Card Master Trust I, 5.5s, 2006 1,993 1,898,950
First Chicago Master Trust II, 5.686s, 2003 3,106 3,111,808
Fleet Credit Card Master Trust II, 5.63s, 2007 2,505 2,505,000
Ford Credit Auto Owner Trust, 5.31s, 2001 806 803,962
Ford Credit Auto Owner Trust, 6.2s, 2002 2,402 2,398,997
GE Capital Mortgage Services, Inc., 6.035s, 2020 2,035 1,963,139
Green Tree Financial Corp., 6.04s, 2029 3,407 3,389,774
Green Tree Financial Corp., 6.39s, 2029 1,387 1,386,827
MBNA Master Credit Card Trust II, 5.25s, 2006 2,374 2,256,772
Merrill Lynch Mortgage Investors, Inc., 5.65s, 2030 1,802 1,713,038
Partners First Credit Card Master Trust, 5.506s, 2004 3,400 3,395,750
Pemex Finance Ltd., 5.72s, 2003# 1,010 965,924
Providian Home Equity Loan Trust, 5.7s, 2025 887 885,158
SLM Student Loan Trust, 5.574s, 2009 1,470 1,445,194
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$ 50,221,148
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Entertainment - 1.0%
Time Warner Pass-Through Asset Trust, 6.1s, 2001# $ 2,103 $ 2,072,359
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Financial Institutions - 4.4%
Aristar, Inc., 7.375s, 2004 $ 1,860 $ 1,871,049
Countrywide Home Loan, Inc., 6.85s, 2004 2,506 2,481,466
Lehman Brothers Holdings, Inc., 6.375s, 2001 2,185 2,176,959
Merrill Lynch & Co., 6.06s, 2001 2,520 2,498,227
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$ 9,027,701
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Food and Beverage Products - 2.3%
Seagram (Joseph E) & Sons, Inc., 5.79s, 2001 $ 2,470 $ 2,430,628
Whitman Corp., 6s, 2004 2,385 2,278,391
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$ 4,709,019
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Forest and Paper Products - 1.2%
Georgia-Pacific Corp., 9.95s, 2002 $ 2,293 $ 2,448,374
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Insurance - 0.9%
Conseco, Inc., 6.4s, 2001 $ 1,963 $ 1,897,033
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Oils - 1.4%
Occidental Petroleum Corp., 10.125s, 2001 $ 2,607 $ 2,756,277
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Railroads - 1.0%
Union Pacific Corp., 6.34s, 2003 $ 2,100 $ 2,040,969
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Supermarkets - 1.2%
Safeway, Inc., 5.875s, 2001 $ 2,430 $ 2,382,007
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Telecommunications and Cable - 5.4%
Comcast Corp., 9.125s, 2006 $ 2,666 $ 2,820,308
Cox Communications Inc., 7s, 2001 2,025 2,028,625
Sprint Capital Corp., 5.875s, 2004 881 842,034
Sprint Spectrum LP, 11s, 2006 2,046 2,297,044
Telecomunicaiones De Puerto Rico, 6.15s, 2002# 2,598 2,553,626
United States West Communications Inc.,
7.2s, 2004# 500 503,850
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$ 11,045,487
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Tobacco - 1.0%
RJ Reynolds Tobacco Holdings, 7.375s, 2003# $ 2,145 $ 2,105,961
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Transportation - 1.3%
Hertz Corp., 6.5s, 2000 $ 2,736 $ 2,739,666
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U.S. Federal Agencies - 9.7%
Federal Home Loan Mortgage Corp., 5.83s, 2013 $ 2,015 $ 2,002,365
Federal National Mortgage Assn., 6.75s, 2003 2,087 2,077,583
Federal National Mortgage Assn., 7s, 2009 5,170 5,161,883
Federal National Mortgage Assn., 6s, 2014 5,783 5,562,139
Government National Mortgage Assn., 7.5s,
2007 - 2011 4,711 4,788,807
Government National Mortgage Assn., 12.5s, 2011 244 278,590
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$ 19,871,367
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U.S. Treasury Obligations - 3.3%
U.S. Treasury Notes, 5s, 2001 $ 900 $ 891,981
U.S. Treasury Notes, 5.375s, 2001 165 164,253
U.S. Treasury Notes, 5.75s, 2001 1,325 1,323,754
U.S. Treasury Notes, 6.25s, 2001 765 771,097
U.S. Treasury Notes, 6.5s, 2001## 900 910,404
U.S. Treasury Notes, 6s, 2004 1,176 1,178,752
U.S. Treasury Notes, 7.875s, 2004 1,350 1,454,625
------------
$ 6,694,866
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Utilities - Electric - 8.8%
Boston Edison Co., 6.8s, 2000 $ 3,175 $ 3,178,270
California Infrastructure, 6.17s, 2003 2,855 2,848,748
CMS Panhandle Holding Co., 6.125s, 2004 1,820 1,738,664
Commonwealth Edison Transition Funding Trust,
5.29s, 2003 1,894 1,865,552
Duke Capital Corp., 7.25s, 2004 848 853,436
Edison Mission Energy Funding Corp., 6.77s, 2003# 1,817 1,769,324
Gulf States Utilities Co., 8.21s, 2002 1,528 1,567,208
Midamerican Funding LLC, 5.85s, 2001# 3,039 3,007,011
Narragansett Electric Co., 7.83s, 2002 500 513,705
Salton Sea Funding Corp., 6.69s, 2000 370 370,488
Salton Sea Funding Corp., 7.02s, 2000 390 390,652
------------
$ 18,103,058
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Utilities - Gas - 1.0%
Columbia Gas Systems, Inc., 6.39s, 2000 $ 2,127 $ 2,116,174
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Total U.S. Bonds $167,554,100
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Foreign Bonds - 10.2%
Argentina - 0.4%
Republic of Argentina, 0s, 2001 $ 941 $ 832,785
- -------------------------------------------------------------------------------
Australia - 0.6%
Westpac Banking, 9.125s, 2001
(Banks and Credit Cos.) $ 1,175 $ 1,222,470
- -------------------------------------------------------------------------------
Chile - 0.7%
Empresa Electric Guacolda S.A., 7.6s, 2001
(Utilities - Electric)# $ 1,520 $ 1,488,962
- -------------------------------------------------------------------------------
China - 0.5%
Hero Asian BVI Co. Ltd., 9.11s, 2001 (Utilities)# $ 1,033 $ 1,005,938
- -------------------------------------------------------------------------------
Germany - 2.3%
KFW International Finance Inc., 9.4s, 2004 $ 1,068 $ 1,177,961
Landesbank Baden Wurttemberg, 7.875s, 2004
(Banks and Credit Cos.) 3,445 3,585,212
------------
$ 4,763,173
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Norway - 1.6%
Union Bank Norway, 7.35s, 2049
(Banks and Credit Cos.)# $ 3,339 $ 3,265,208
- -------------------------------------------------------------------------------
South Korea - 0.5%
Export-Import Bank Korea, 7.1s, 2007
(Banks and Credit Cos.) $ 900 $ 887,760
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Spain - 1.0%
Kingdom of Spain, 9.125s, 2000 $ 2,000 $ 2,043,160
- -------------------------------------------------------------------------------
Supra-National - 1.8%
Corporacion Andina de Fomento, 7.1s, 2003
(Banks and Credit Cos.) $ 3,800 $ 3,723,240
- -------------------------------------------------------------------------------
Sweden - 0.8%
AB Spintab, 6.8s, 2049 (Banks and Credit Cos.)# $ 1,620 $ 1,574,526
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Total Foreign Bonds $ 20,807,222
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Total Bonds (Identified Cost, $191,747,074) 188,361,322
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Repurchase Agreement - 10.8%
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Goldman Sachs, dated 10/29/99, due 11/01/99,
total to be received $22,179,570 (secured by
various U.S. Treasury and Federal Agency
obligations in a jointly traded account), at Cost $ 22,170 $ 22,170,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $213,917,074) $210,531,322
Other Assets, Less Liabilities - (2.7)% (5,468,905)
- -------------------------------------------------------------------------------
Net Assets - 100.0% $205,062,417
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#SEC Rule 144A restriction.
##Security segregated as collateral for an open futures contract.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statement of Assets and Liabilities (Unaudited)
- ----------------------------------------------------------------------------------------
OCTOBER 31, 1999
- ----------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $191,747,074) $ 188,361,322
Repurchase agreement, at value 22,170,000
-------------
Total investments, at value (identified cost, $213,917,074) $ 210,531,322
Cash 41,303
Receivable for Fund shares sold 1,103,825
Receivable for investments sold 3,306,556
Interest receivable 2,609,939
Other assets 2,282
-------------
Total assets $ 217,595,227
-------------
Liabilities:
Distributions payable $ 228,193
Payable for Fund shares reacquired 829,292
Payable for investments purchased 11,284,094
Payable for daily variation margin on open futures contracts 28,000
Payable to affiliates -
Management fee 6,737
Shareholder servicing agent fee 1,684
Distribution and service fee 11,850
Administrative fee 253
Accrued expenses and other liabilities 142,707
-------------
Total liabilities $ 12,532,810
-------------
Net assets $ 205,062,417
=============
Net assets consist of:
Paid-in capital $ 220,292,497
Unrealized depreciation on investments (3,374,224)
Accumulated net realized loss on investments (11,648,829)
Accumulated distributions in excess of net investment income (207,027)
-------------
Total $ 205,062,417
-------------
Shares of beneficial interest outstanding 30,370,345
=============
Class A shares:
Net asset value per share
(net assets of $125,188,899 / 18,521,966 shares of beneficial
interest outstanding) $6.76
=====
Offering price per share (100 / 97.5 of net asset value per share) $6.93
=====
Class B shares:
Net asset value and offering price per share
(net assets of $53,601,625 / 7,958,531 shares of beneficial interest
outstanding) $6.74
=====
Class C shares:
Net asset value and offering price per share
(net assets of $24,621,846 / 3,645,129 shares of beneficial interest
outstanding) $6.75
=====
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $1,650,047 / 244,719 shares of beneficial interest
outstanding) $6.74
=====
On sales of $50,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, and
Class C shares.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------
SIX MONTHS ENDED OCTOBER 31, 1999
- --------------------------------------------------------------------------
Net investment income:
Interest income $ 6,880,384
-----------
Expenses -
Management fee $ 416,182
Trustees' compensation 12,515
Shareholder servicing agent fee 104,045
Distribution and service fee (Class A) 96,861
Distribution and service fee (Class B) 249,454
Distribution and service fee (Class C) 119,189
Administrative fee 15,606
Custodian fee 46,866
Printing 19,402
Postage 12,546
Auditing fees 16,158
Legal fees 2,021
Miscellaneous 126,263
-----------
Total expenses $ 1,237,108
Fees paid indirectly (11,581)
-----------
Net expenses $ 1,225,527
-----------
Net investment income $ 5,654,857
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $(1,733,701)
Futures contracts 43,029
-----------
Net realized loss on investments $(1,690,672)
-----------
Change in unrealized appreciation (depreciation) -
Investments $(1,809,149)
Futures contracts 11,528
-----------
Net unrealized loss on investments $(1,797,621)
-----------
Net realized and unrealized loss on investments $(3,488,293)
-----------
Increase in net assets from operations $ 2,166,564
===========
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1999 APRIL 30, 1999
(UNAUDITED)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 5,654,857 $ 10,889,038
Net realized loss on investments (1,690,672) (2,645,933)
Net unrealized loss on investments (1,797,621) (1,382,793)
------------- -------------
Increase in net assets from operations $ 2,166,564 $ 6,860,312
------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,623,286) $ (6,851,802)
From net investment income (Class B) (1,293,880) (2,396,262)
From net investment income (Class C) (566,172) (1,138,922)
From net investment income (Class I) (46,887) (109,991)
------------- -------------
Total distributions declared to shareholders $ (5,530,225) $ (10,496,977)
------------- -------------
Net increase (decrease) in net assets from Fund share
transactions $ (4,229,372) $ 60,124,700
------------- -------------
Total increase (decrease) in net assets $ (7,593,033) $ 56,488,035
Net assets:
At beginning of period 212,655,450 156,167,415
------------- -------------
At end of period (including accumulated distributions in
excess of net investment income of $207,027 and
$331,659, respectively) $ 205,062,417 $ 212,655,450
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED ----------------------------------------------------------------------
OCTOBER 31, 1999 1999 1998 1997 1996 1995
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 6.87 $ 6.99 $ 7.04 $ 7.12 $ 7.10 $ 7.14
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.20 $ 0.43 $ 0.48 $ 0.47 $ 0.48 $ 0.46
Net realized and unrealized gain
(loss) on investments (0.12) (0.14) (0.07) (0.06) 0.03 (0.04)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.08 $ 0.29 $ 0.41 $ 0.41 $ 0.51 $ 0.42
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.19) $(0.41) $(0.46) $(0.47) $(0.48) $(0.46)
In excess of net investment
income -- -- -- (0.02) (0.01) --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.19) $(0.41) $(0.46) $(0.49) $(0.49) $(0.46)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 6.76 $ 6.87 $ 6.99 $ 7.04 $ 7.12 $ 7.10
====== ====== ====== ====== ====== ======
Total return(+) 1.22%++ 4.26% 5.97% 5.83% 7.50% 6.09%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.89%+ 0.84% 0.89% 0.94% 0.95% 0.95%
Net investment income 5.75%+ 6.14% 6.70% 6.57% 6.73% 6.54%
Portfolio turnover 35% 278% 288% 489% 385% 498%
Net assets at end of period (000
Omitted) $125,189 $134,086 $95,342 $91,887 $98,582 $85,773
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed, under a temporary expense reimbursement agreement, to pay
all of the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund
pays MFS a fee not greater than 0.40% of average daily net assets. To the extent actual expenses were over/under this
limitation, the net investment income per share and the ratios would have been:
Net investment income -- -- $ 0.48 $ 0.47 $ 0.48 $ 0.46
Ratios (to average net assets):
Expenses## -- -- 0.87% 0.89% 0.91% 0.97%
Net investment income -- -- 6.72% 6.62% 6.77% 6.52%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) 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.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED ---------------------------------------------------------------------
OCTOBER 31, 1999 1999 1998 1997 1996 1995
(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 $ 6.85 $ 6.97 $ 7.03 $ 7.11 $ 7.10 $ 7.14
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.17 $ 0.38 $ 0.41 $ 0.41 $ 0.42 $ 0.41
Net realized and unrealized gain
(loss) on investments (0.11) (0.14) (0.07) (0.05) 0.03 (0.05)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.06 $ 0.24 $ 0.34 $ 0.36 $ 0.45 $ 0.36
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.17) $(0.36) $(0.40) $(0.42) $(0.42) $(0.40)
In excess of net investment income -- -- -- (0.02) (0.02) --
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.17) $(0.36) $(0.40) $(0.44) $(0.44) $(0.40)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 6.74 $ 6.85 $ 6.97 $ 7.03 $ 7.11 $ 7.10
====== ====== ====== ====== ====== ======
Total return 0.83%++ 3.48% 4.98% 4.99% 6.52% 5.20%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.67%+ 1.61% 1.70% 1.78% 1.75% 1.81%
Net investment income 4.95%+ 5.33% 5.80% 5.75% 5.90% 5.73%
Portfolio turnover 35% 278% 288% 489% 385% 498%
Net assets at end of period
(000 Omitted) $53,602 $52,883 $39,229 $34,875 $26,464 $17,334
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed, under a temporary expense reimbursement agreement, to pay
all of the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund
pays MFS a fee not greater than 0.40% of average daily net assets. To the extent actual expenses were over/under this
limitation, the net investment income per share and the ratios would have been:
Net investment income -- -- $ 0.41 $ 0.41 $ 0.42 $ 0.41
Ratios (to average net assets):
Expenses## -- -- 1.68% 1.77% 1.77% 1.82%
Net investment income -- -- 5.82% 5.76% 5.88% 5.72%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, PERIOD ENDED
SIX MONTHS ENDED -------------------------------------------------- APRIL 30,
OCTOBER 31, 1999 1999 1998 1997 1996 1995*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 6.86 $ 6.99 $ 7.05 $ 7.13 $ 7.11 $ 7.08
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.17 $ 0.36 $ 0.41 $ 0.41 $ 0.41 $ 0.37
Net realized and unrealized gain
(loss) on investments (0.12) (0.14) (0.07) (0.06) 0.04 (0.01)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.05 $ 0.22 $ 0.34 $ 0.35 $ 0.45 $ 0.36
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.16) $(0.35) $(0.40) $(0.41) $(0.41) $(0.33)
In excess of net investment income -- -- -- (0.02) (0.02) --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.16) $(0.35) $(0.40) $(0.43) $(0.43) $(0.33)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 6.75 $ 6.86 $ 6.99 $ 7.05 $ 7.13 $ 7.11
====== ====== ====== ====== ====== ======
Total return 0.79%++ 3.23% 4.94% 5.08% 6.44% 5.25%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.74%+ 1.69% 1.74% 1.80% 1.80% 1.85%+
Net investment income 4.88%+ 5.19% 5.76% 5.80% 5.76% 6.01%+
Portfolio turnover 35% 278% 288% 489% 385% 498%
Net assets at end of period
(000 Omitted) $24,622 $24,228 $20,131 $18,862 $13,842 $4,450
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed, under a temporary expense reimbursement agreement, to pay
all of the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund
pays MFS a fee not greater than 0.40% of average daily net assets. To the extent actual expenses were over/under this
limitation, 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%+
* For the period from the inception of Class C, July 1, 1994, through April 30, 1995.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, PERIOD ENDED
SIX MONTHS ENDED ------------------------------ APRIL 30,
OCTOBER 31, 1999 1999 1998 1997*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 6.85 $ 6.98 $ 7.04 $ 7.08
------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.20 $ 0.43 $ 0.48 $ 0.15
Net realized and unrealized loss on investments (0.11) (0.14) (0.07) (0.03)
------ ------ ------ ------
Total from investment operations $ 0.09 $ 0.29 $ 0.41 $ 0.12
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.20) $(0.42) $(0.47) $(0.15)
In excess of net investment income -- -- -- (0.01)
------ ------ ------ ------
Total distributions declared to shareholders $(0.20) $(0.42) $(0.47) $(0.16)
------ ------ ------ ------
Net asset value - end of period $ 6.74 $ 6.85 $ 6.98 $ 7.04
====== ====== ====== ======
Total return 1.30%++ 4.28% 5.98% 1.72%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.74%+ 0.69% 0.74% 1.17%+
Net investment income 5.89%+ 6.21% 6.75% 8.68%+
Portfolio turnover 35% 278% 288% 489%
Net assets at end of period (000 Omitted) $1,650 $1,459 $1,466 $1,925
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed, under a temporary expense reimbursement agreement, to pay
all of the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund
pays MFS a fee not greater than 0.40% of average daily net assets. To the extent actual expenses were over/under this
limitation, 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%+
* For the period from the inception of Class I, January 2, 1997, through April 30, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</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 in good faith by 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 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. Investment 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 discount is
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.
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 be reported in the financial statements as distributions from paid-in
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, 1999, the Fund, for federal income tax purposes, had a capital loss
carryforward of $9,938,324 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), April 30, 2006,
($549,779), and April 30, 2007, ($4,336,622).
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. Differences in per
share dividend rates are generally due to differences in separate class expense.
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 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 $4,403 for the six months
ended October 31, 1999.
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
$26,180 for the six months ended October 31, 1999, 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 $7,972 for the six months ended October 31,
1999. Fees incurred under the distribution plan during the six months ended
October 31, 1999, 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 $1,047 and $24 for Class B and Class C shares, respectively, for the
six months ended October 31, 1999. Fees incurred under the distribution plan
during the six months ended October 31, 1999, were 0.93% and 1.00% of average
daily net assets attributable to Class B and Class C shares, respectively, on an
annual basis. 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 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, 1999, were $21,860, $102,585, and $4,339 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
0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than short-term obligations, were as
follows:
PURCHASES SALES
- -------------------------------------------------------------------------------
U.S. government securities $17,783,712 $21,931,160
----------- -----------
Investments (non-U.S. government securities) $49,243,443 $54,344,585
----------- -----------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $213,917,074
------------
Gross unrealized depreciation $ (3,494,851)
Gross unrealized appreciation 109,099
------------
Net unrealized depreciation $ (3,385,752)
============
(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. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED OCTOBER 31, 1999 YEAR ENDED APRIL 30, 1999
--------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 13,332,468 $ 90,899,287 89,884,749 $ 625,609,406
Shares issued to shareholders
in reinvestment of
distributions 413,789 2,806,665 718,455 4,986,426
Shares reacquired (14,741,949) (100,501,689) (84,729,931) (589,753,636)
------------- ------------- ------------- -------------
Net increase (decrease) (995,692) $ (6,795,737) 5,873,273 $ 40,842,196
============= ============= ============= =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED OCTOBER 31, 1999 YEAR ENDED APRIL 30, 1999
--------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,510,031 $ 16,995,191 7,595,456 $ 52,632,457
Shares issued to shareholders
in reinvestment of
distributions 137,943 932,726 247,817 1,712,458
Shares reacquired (2,414,846) (16,349,446) (5,746,325) (39,697,324)
------------- ------------- ------------- -------------
Net increase 233,128 $ 1,578,471 2,096,948 $ 14,647,591
============= ============= ============= =============
<CAPTION>
Class C Shares
SIX MONTHS ENDED OCTOBER 31, 1999 YEAR ENDED APRIL 30, 1999
--------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,716,883 $ 11,623,939 3,684,433 $ 25,649,796
Shares issued to shareholders
in reinvestment of
distributions 53,069 359,808 109,967 762,710
Shares reacquired (1,654,310) (11,212,339) (3,144,596) (21,810,087)
------------- ------------- ------------- -------------
Net increase 115,642 $ 771,408 649,804 $ 4,602,419
============= ============= ============= =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED OCTOBER 31, 1999 YEAR ENDED APRIL 30, 1999
--------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 36,067 $ 245,192 153,379 $ 1,065,556
Shares issued to shareholders
in reinvestment of
distributions 6,932 46,920 15,876 109,990
Shares reacquired (11,146) (75,626) (166,408) (1,143,052)
------------- ------------- ------------- -------------
Net increase 31,853 $ 216,486 2,847 $ 32,494
============= ============= ============= =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $820 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, 1999, was $663. The Fund had no
significant borrowings during the period.
(7) Financial Instruments
The Fund trades financial instruments with off-balance-sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates. These financial instruments include futures contracts.
The notional or contractual amounts of these instruments represent the
investment the Fund has in particular classes of financial instruments and does
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
Futures Contracts
UNREALIZED
DESCRIPTION EXPIRATION CONTRACTS POSITION APPRECIATION
- --------------------------------------------------------------------------------
U.S. Treasury Notes December 1999 56 Short $11,528
At October 31, 1999, the Fund had sufficient cash and/or securities to cover any
margin requirements under these contracts.
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), as an investment adviser and
on behalf of the MFS funds, is committed to the effective
use of technology in managing our portfolio investments,
delivering high-quality service to MFS fund shareholders, [Graphic Omitted]
retirement plan participants, and MFS' institutional
clients, and supporting the financial consultants who sell
our products.
MFS can now say that it is ready for the Year 2000. Our testing has demonstrated
that MFS' computer hardware and software will recognize "00" as the Year 2000
and will not confuse those digits with 1900. All of our critical business
applications and processes have been successfully tested, and we have adopted
companywide policies that will help us maintain our readiness through the
remainder of the year. Any new technology that is brought into the company
before the end of the year will be held to the samestringent standards as our
current technology. We have also developed a vendor readiness survey, contacted
over 700 of our vendors, and established an ongoing process to review responses,
as well as to review readiness statements of new vendors and products.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original Research(R)
process of evaluating portfolio investments, one of the many relevant factors
that MFS' portfolio managers and research analysts may consider is a company's
Y2K readiness.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS fund shareholders, retirement plan participants, or
institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program, please
visit our Web site at www.mfs.com, call our toll-free line, 1-800-637-4406, or
write to the MFS Year 2000 Program Management Office by e-mail at [email protected] or
by letter at 500 Boylston Street, Boston, MA 02116-3741.
<PAGE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
<TABLE>
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey - Private Investor; Former Stephen E. Cavan*
Chairman and Director (until 1991), MFS Investment
Management(R) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
J. Atwood Ives+ - Chairman and Chief Executive
Officer, Eastern Enterprises (diversified services CUSTODIAN
company) State Street Bank and Trust Company
Lawrence T. Perera+ - Partner, Hemenway & Barnes INVESTOR INFORMATION
(attorneys) For information on MFS mutual funds, call your
financial consultant or, for an information kit,
William J. Poorvu+ - Adjunct Professor, Harvard call toll free: 1-800-637-2929 any business day
University Graduate School of Business from 9 a.m. to 5 p.m. Eastern time (or leave a
Administration message anytime).
Charles W. Schmidt+ - Private Investor INVESTOR SERVICE
MFS Service Center, Inc.
Arnold D. Scott* - Senior Executive Vice P.O. Box 2281
President, Director, and Secretary, MFS Investment Boston, MA 02107-9906
Management
For general information, call toll free:
Jeffrey L. Shames* - Chairman and Chief Executive 1-800-225-2606 any business day from
Officer, MFS Investment Management 8 a.m. to 8 p.m. Eastern time.
Elaine R. Smith+ - Independent Consultant For service to speech- or hearing-impaired, call
toll free: 1-800-637-6576 any business day from
David B. Stone+ - Chairman, North American 9 a.m. to 5 p.m. Eastern time. (To use this service,
Management Corp. (investment advisers) your phone must be equipped with a
Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, exchanges, or
500 Boylston Street MFS stock and bond market outlooks, call toll
Boston, MA 02116-3741 free: 1-800-MFS-TALK (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
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
James J. Calmas*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<PAGE>
MFS(R) LIMITED MATURITY FUND ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MLM-3 12/99 16.5M 36/236/336/836
