<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[Graphic Omitted]
MFS(R) MUNICIPAL
LIMITED MATURITY FUND
ANNUAL REPORT o APRIL 30, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 21
Independent Auditors' Report .............................................. 26
MFS' Year 2000 Readiness Disclosure ....................................... 28
Trustees and Officers ..................................................... 29
MFS(R) ORIGINAL RESEARCH(SM)
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
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
Over 75 years ago, MFS invented the mutual fund, giving Americans greater
access to the investment markets. Since then, we have been guided by a number
of fundamental principles, including diversification and professional
management backed by MFS(R) Original Research(SM), a process by which we seek
long-term investment opportunities.
We have found that these principles have matched those of our shareholders. In
a recent survey for MFS by Roper Starch Worldwide, Inc., a major consumer
research firm, over 60% of mutual fund shareholders said they are investing
for long-term goals such as retirement. The survey also showed that investors
realize that the extraordinary stock market gains of the past few years cannot
be sustained. These views certainly seem to have guided investors during last
year's market correction. Beginning with the collapse of Asian markets at the
end of 1997 and continuing with the volatility in U.S. markets through
October of 1998, only 7% of mutual fund investors took money out of the stock
market.
We are even more pleased that MFS investors reacted calmly to last year's
market turmoil, indicating their commitment to diversification. As a result,
throughout the late summer and fall of 1998, daily purchases of MFS stock and
bond funds were well ahead of redemptions.
Over the past year or so, however, diversified investment programs have not
financially rewarded investors. A very narrow band of about 25 stocks
representing the largest U.S. growth companies has, until recently, vastly
outperformed the rest of the market. In 1998, for example, the return on the
Standard & Poor's 500 Composite Index (a popular, unmanaged index of common
stock total return performance) increased 28.58%. However, over half of the
stocks in the index returned less than 10%, including 198 stocks that posted
negative returns.
While 1997 and 1998 were good years for large-company growth stocks, 1996 was
dominated by the mid-sized value category. Prices of value stocks do not fully
reflect the companies' underlying values or future prospects. In 1995, the
best-performing sector was small-company growth stocks. We believe this change
of market leadership shows that while diversification may not provide the best
performance in the short run, it should benefit investors over the long term. In
fact, as 1999 progresses, we are seeing signs of renewed strength from a broader
group of industries, including electric utilities and paper products and
chemical companies. We believe our diversified MFS Family of Funds(R), supported
by Original Research, is well positioned to benefit from a broader market.
Most mutual fund investors refrain from trying to predict short-term trends.
Despite the large stock market gains of the past several years, the Roper Starch
survey shows that people do not see performance as the only reason to invest.
These investors also cite a desire to put investment decisions in the hands of
experts, a belief that mutual funds can be less risky than other investments,
and an appreciation of the convenience of mutual fund investing.
We appreciate the fact that our fund shareholders and their advisers share our
belief that mutual fund investing is not a way to speculate in the markets but
is a way to use the investment markets to help them work toward their long-term
goals. Our goal at MFS is to offer professionally managed investment products
with the potential to sustain returns over a variety of market cycles.
We thank you for 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)
May 17, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of John P. Kihn]
John P. Kihn
For the 12 months ended April 30, 1999, Class A shares of the Fund provided a
total return of 4.65%, Class B shares 3.85%, and Class C shares 3.77%. These
returns include the reinvestment of distributions but exclude the effects of any
sales charges.
During the same period, the average short/intermediate-term municipal bond fund
tracked by Lipper Analytical Services, Inc., an independent firm that reports
mutual fund performance, returned 4.93%. The Fund's returns also compare to
returns of 5.75% and 6.48% for the Lehman Brothers Municipal Bond Three-Year and
Five-Year indices, respectively. These are unmanaged indices of
investment-grade, fixed-rate municipal bonds.
Q. WHAT FACTORS IMPACTED THE FUND'S PERFORMANCE OVER THE PAST 12 MONTHS?
A. During most of 1998, the Fund's average maturity was too short. Since
yields are lower on short-maturity bonds, our shorter maturity hurt the
Fund's relative yield return over the period.
Q. HOW ARE YOU ADDRESSING THIS ISSUE?
A. Starting in the latter part of 1997, we began a process to reposition the
portfolio. Because we're trying to get the best prices for the bonds we
sell and avoid overpaying for bonds we buy, the repositioning has taken
time to complete. Currently, the maturity dates of the Fund's holdings are
spread more broadly. The bulk of the portfolio had been concentrated in a
narrow range of three to five years. Now, most of the holdings are
scheduled to mature in three to 10 years, which we believe helps make the
portfolio more stable because fewer bonds are maturing around the same
time. We also increased the Fund's average maturity from 3.5 years to 4.5
years, which we believe may provide a slightly higher yield. Finally, we
raised the average credit quality of the portfolio. We reduced the number
of "BBB"-rated bonds and we added more "AAA"-rated bonds. We believe the
moves we made to reposition the portfolio may help provide a somewhat
higher yield.
Q. IS IT DIFFICULT TO SUSTAIN YIELD IN THE CURRENT LOW-INTEREST-RATE
ENVIRONMENT?
A. It is, because when rates decline, issuers redeem outstanding bonds before
maturity in order to borrow at lower rates. Also, with short- to
intermediate-term funds such as this, bonds mature more frequently. In the
current environment, when we reinvest we have to do so at lower interest
rates. Generally a larger portion of our portfolio is subject to this type
of risk than long-maturity portfolios would be.
Q. WHAT KINDS OF BONDS HAVE YOU BEEN BUYING?
A. We've bought a lot of bonds that are insured by private municipal-bond
insurance companies. (Municipal bond insurance only applies to the
underlying securities, not to the price of the Fund's shares.) Even with
"AAA"-rated bonds, we can get about 10 to 15 basis points (0.10% to 0.15%)
of additional yield if the bonds are insured. Among sectors, we prefer
bonds issued for essential services, such as water and sewer systems. When
new housing is built, new water and sewer lines, as well as streets and
roads, are needed. These services are paid for by taxes, which means a more
secure revenue stream.
Q. ARE YOU CAUTIOUS ON ANY ISSUERS?
A. We believe health care could be a problem. Rules regarding Medicare
reimbursement for hospitals and other health care providers are tightening,
so we think these providers will be under tremendous financial pressure for
at least the next year. Therefore, we're looking for health care facilities
with only the strongest balance sheets.
Q. WHAT HAS THE MUNICIPAL MARKET BEEN LIKE OVER THE PAST YEAR OR SO?
A. In contrast to other fixed-income markets, the municipal market has been
extraordinarily well behaved. Prices and yields have traded in a narrow
range, with the average return around 5%. That is because interest rates
have been stable, but another important reason is that the financial
condition of state and local governments has been strong. For several years
in a row, we saw more municipal bonds upgraded than downgraded by credit-
rating agencies. The economy is strong, people have jobs, and they're
buying houses and paying taxes. Also, even though local and state
governments have steady revenue coming in, they haven't increased their
spending very much. In the past, when times were good governments tended to
spend a lot more. But in this economic cycle they have been much more
conservative. As a result, most, if not all, states are either running
surpluses or have been able to cut taxes while keeping strong credit
ratings.
Q. WHAT REGIONS OF THE UNITED STATES ARE YOU FOCUSING ON NOW?
A. We are carefully moving into regions of the country that sell commodities
such as agricultural products to overseas markets, particularly to Asia and
Latin America. Because problems in Asia and Latin America seem to be
diminishing, we believe the outlook for these domestic regions has
improved.
Q. ARE YOU CONCERNED ABOUT THE POSSIBILITY OF HIGHER INTEREST RATES?
A. We think higher interest rates are a possibility because the economy has
been so strong. Even if rates do rise, we believe the Fund's new
positioning across the maturity and credit-quality spectrums should help
provide a somewhat more competitive yield.
/s/ John P. Kihn
John P. Kihn
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.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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JOHN P. KIHN IS A VICE PRESIDENT AND CHIEF RISK OFFICER OF FIXED INCOME
AT MFS INVESTMENT MANAGEMENT.(R) MR. KIHN JOINED MFS AS A QUANTITATIVE
ANALYST IN 1997 AND HAS SERVED AS PORTFOLIO MANAGER OF MFS(R) MUNICIPAL
INCOME FUND, MFS(R) MUNICIPAL LIMITED MATURITY FUND AND OF STATE
MUNICIPAL BOND FUNDS. HE WAS NAMED CHIEF RISK OFFICER OF FIXED INCOME IN
1999. PRIOR TO JOINING MFS, HE 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.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY
AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS(R) ORIGINAL
RESEARCH(SM), 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 adviser, 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
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: $59.3 MILLION NET ASSETS AS OF APRIL 30, 1999
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PERFORMANCE SUMMARY
The following information illustrates the historical performance of the Fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and
reflect the percentage change in net asset value, including reinvestment of
dividends. Benchmark comparisons are unmanaged and do not reflect any fees or
expenses. The performance of other share classes will be greater than or less
than the line shown. (See Notes to Performance Summary for more information.)
It is not possible to invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from March 31, 1992, through April 30, 1999)
MFS Municipal Lehman Brothers Lehman Brothers
Limited Maturity Municipal Municipal
Fund Three-Year Five-Year
-- Class A Index Index
- ------------------------------------------------------------------
3/92 $ 9,750 $10,000 $10,000
4/93 10,690 10,810 11,010
4/95 11,320 11,630 11,960
4/97 12,320 12,930 13,380
4/99 13,539 14,426 15,200
AVERAGE ANNUAL TOTAL RETURNS THROUGH APRIL 30, 1999
<TABLE>
CLASS A
<CAPTION>
1 Year 3 Years 5 Years 10 Years/Life*
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<S> <C> <C> <C> <C>
Cumulative Total Return +4.65% +13.76% +23.84% +38.89%
- ------------------------------------------------------------------------------------------------------------
Average Annual Total Return +4.65% + 4.39% + 4.37% + 4.72%
- ------------------------------------------------------------------------------------------------------------
SEC Results +2.04% + 3.51% + 3.84% + 4.35%
- ------------------------------------------------------------------------------------------------------------
CLASS B
1 Year 3 Years 5 Years 10 Years/Life*
- ------------------------------------------------------------------------------------------------------------
Cumulative Total Return +3.85% +11.16% +19.11% +32.68%
- ------------------------------------------------------------------------------------------------------------
Average Annual Total Return +3.85% + 3.59% + 3.56% + 4.05%
- ------------------------------------------------------------------------------------------------------------
SEC Results -0.15% + 2.65% + 3.21% + 4.05%
- ------------------------------------------------------------------------------------------------------------
CLASS C
1 Year 3 Years 5 Years 10 Years/Life*
- ------------------------------------------------------------------------------------------------------------
Cumulative Total Return +3.77% +10.90% +18.94% +33.41%
- ------------------------------------------------------------------------------------------------------------
Average Annual Total Return +3.77% + 3.51% + 3.53% + 4.13%
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SEC Results +2.77% + 3.51% + 3.53% + 4.13%
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COMPARATIVE INDICES
1 Year 3 Years 5 Years 10 Years/Life*
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Average short/intermediate-term municipal
bond fund** +4.93% + 4.73% + 4.81% + 5.06%
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Lehman Brothers Municipal Three-Year Index+ +5.75% + 5.30% + 5.36% + 5.42%
- ------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Five-Year Index+ +6.48% + 5.95% + 6.04% + 6.22%
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*For the period from the commencement of the Fund's investment operations, March 17, 1992,
through April 30, 1999. Index information is from March 31, 1992.
**Source: Lipper Analytical Services, Inc.
+Source: Standard & Poor's Micropal, Inc.
</TABLE>
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.
PORTFOLIO CONCENTRATION AS OF APRIL 30, 1999
QUALITY RATINGS
Source: Standard & Poor's and Moody's
OTHER 3.0%
"A" 9.8%
"AA" 13.1%
"BBB" 18.1%
"AAA" 56.0%
The portfolio is actively managed, and holdings are subject to change.
<PAGE>
PORTFOLIO OF INVESTMENTS -- April 30, 1999
<TABLE>
<CAPTION>
Municipal Bonds - 95.6%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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<S> <C> <C>
General Obligation - 20.5%
Anchorage, AK, FGIC, 5s, 2007 $ 935 $ 977,907
Commonwealth of Puerto Rico, 5.5s, 2001 500 518,980
Cook County, IL, High School District, FSA, 5s, 2005 500 525,350
Honolulu, HI, FGIC, 5s, 2002 115 119,785
Indianapolis, IN, Local Public Improvement Bond Bank,
6.25s, 2001 1,000 1,040,360
Irving, TX, Indepenent School District, PSF, 0s, 2003 350 301,252
Kane County, IL, Geneva Community School District, FGIC,
6.1s, 2006 790 880,518
Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,107,250
New York City, NY, 5s, 2001 515 528,673
New York City, NY, 6.125s, 2001 600 629,628
New York City, NY, 5.7s, 2002 500 527,415
New York City, NY, 5.3s, 2003 500 525,850
North Slope Borough, AK, MBIA, 0s, 2001 600 564,480
Northern Mariana Islands Commonwealth, Public School
Systems Project, FSA, 5.125s, 2008(S)(S) 500 535,420
Philadelphia, PA, School District, MBIA, 5s, 2005 500 525,635
State of Louisiana, FGIC, 6s, 2000 500 515,115
State of Mississippi, 5s, 2010 250 257,375
State of New Jersey, 5.5s, 2002 850 897,226
State of Rhode Island, FGIC, 5s, 2008 250 262,848
State of Wisconsin, 5s, 2004 500 523,625
Stephenville, TX, Independent School District, PSF,
0s, 2004 500 409,895
------------
$ 12,174,587
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State and Local Appropriation - 13.3%
Michigan Building Authority Rev., 6.2s, 2002 $1,000 $ 1,075,310
Michigan Building Authority Rev., 5.4s, 2003 375 401,704
New York Dormitory Authority Rev., Albany County State
Service Contract, 5s, 2003 180 186,244
New York Dormitory Authority Rev. (City University), 5s, 2000 500 507,490
New York Dormitory Authority Rev. (City University), 5s, 2003 1,060 1,099,655
New York Dormitory Authority Rev. (State University),
4.9s, 2000 250 254,007
New York Medical Care Facilities Finance Agency Rev.,
5.9s, 2000 175 179,905
New York Urban Development Corp. Rev. (Correctional
Facilities), 5.5s, 2001 1,375 1,412,084
New York Urban Development Corp. Rev., 6s, 2002 1,000 1,051,660
Ohio Building Authority Rev., 5.25s, 2003 400 422,644
State of Utah, Building Ownership Authority Lease Rev.,
5.5s, 2000 500 511,380
State of Utah, Building Ownership Authority Lease Rev.,
FSA, 0s, 2005 685 531,704
West Valley City, UT, Municipal Building Lease Rev.,
AMBAC, 4.65s, 2012 250 244,915
------------
$ 7,878,702
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Refunded and Special Obligations - 3.8%
Delaware County, IN, Hospital Authority (Ball Memorial
Hospital), AMBAC, 6.625s, 2001 $1,300 $ 1,350,232
Honolulu, HI, FGIC, 5s, 2002 235 245,561
Milwaukee, WI, Metropolitan Sewage District, 6.7s, 2001 500 535,030
New York City, NY, 5s, 2001 135 139,140
------------
$ 2,269,963
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Airport and Port Revenue - 2.2%
Atlanta, GA, Airport Facilities Rev., AMBAC, 5.5s, 2001 $ 500 $ 514,785
Houston, TX, Airport System Rev., FGIC, 5s, 2006 500 518,525
Islip, NY, Airport Improvement, FSA, 5s, 2013 250 252,355
------------
$ 1,285,665
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Electric and Gas Utility Revenue - 10.0%
American Public Energy Agency, NE, Gas Supply Rev.
(Nebraska Public Gas Agency), AMBAC, 5s, 2007 $ 500 $ 520,940
Intermountain Power Agency, UT, Power Supply Rev., FSA,
5.25s, 2001 500 515,890
Municipal Electric Authority, GA, MBIA, 5s, 2002 600 618,762
North Carolina Municipal Power, MBIA, 5s, 2001 500 510,080
Sacramento, CA, Municipal Utility District Electric
Rev., 6s, 2001 620 652,407
Southern California Public Power Authority, Power
Project Rev., FSA, 5s, 2004 500 526,725
Tennessee Energy Acquisition Corp., Gas Rev., AMBAC,
5s, 2007 1,000 1,047,940
Washington Public Power Supply System Rev., 5.45s, 2000 1,500 1,532,595
------------
$ 5,925,339
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Health Care Revenue - 6.2%
Colorado Health Facilities Authority Rev. (National
Benevolent Assn.), 4.5s, 2002 $ 280 $ 283,511
Delaware County, PA, Hospital Rev. (Crozer-Chester
Medical Center), 4.75s, 2005 500 501,040
Denver, CO, Health & Hospital Authority Rev., 5.125s, 2006 200 207,170
Massachusetts Health & Educational Facilities (Jordan
Hospital), 4.8s, 2006 600 608,568
Michigan Hospital Finance Authority Rev. (Genesys Health
System), 5.5s, 2007 750 773,468
Michigan Hospital Finance Authority Rev. (Mercy Health
Services), 5.5s, 2000 500 511,670
Missouri Health & Educational Facilities Authority Rev.
(Freeman Health Systems), 4.65s, 2003 450 456,822
Stillwater, OK, Medical Center Authority (Stillwater
Medical Center), 5.55s, 2001 335 342,326
------------
$ 3,684,575
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Industrial Revenue (Corporate Guarantee) - 0.6%
De Soto Parish, LA, Pollution Control Rev.
(International Paper Co.), 5.05s, 2002 $ 350 $ 356,969
- -------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 6.4%
Allegheny County, PA, Hospital Development Authority
Rev. (Magee Womens Hospital), FGIC, 5.2s, 2005 $ 250 $ 264,888
Huntsville, AL, Health Care Authority, MBIA, 4.3s, 2002 500 506,595
Illinois Educational Facilities Authority Rev.
(Methodist Medical Center), MBIA, 5.5s, 2005 500 537,620
Illinois Educational Facilities Authority Rev. (Sherman
Health Systems), AMBAC, 5s, 2003 250 260,420
Illinois Health Facilities Authority Rev. (Holy Family
Medical Center), MBIA, 5s, 2004 325 339,742
Indiana Health Facilities Hospital Rev. (Sisters of St.
Francis Health), MBIA, 5s, 2002 250 259,550
Jackson County, MI, Hospital Finance Authority (Foote
Memorial Hospital), AMBAC, 4.375s, 2002 200 203,532
Mesa, AZ, Industrial Development Authority Rev.
(Lutheran Health Systems), MBIA, 5.25s, 2012 500 522,060
Spartanburg County, SC, Health Service, MBIA, 4.5s, 2002 675 687,845
State of Utah, Board Regents Rev. (University of Utah
Hospital), AMBAC, 5s, 2002 200 207,176
------------
$ 3,789,428
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Multi-Family Housing Revenue - 4.7%
Alaska Housing Finance Corp., MBIA, 4.55s, 2002 $ 350 $ 353,899
Illinois Housing Development Authority, FSA, 4.65s, 2007 350 350,448
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.15s, 2001 1,000 1,026,180
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.25s, 2002 1,000 1,036,060
------------
$ 2,766,587
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Sales and Excise Tax Revenue - 5.5%
District of Columbia, Redevelopment Land Agency, 5.625s, 2010 $ 395 $ 407,506
Pennsylvania Intergovernmental Cooperative Authority,
Special Tax Rev., FGIC, 5s, 2007 1,000 1,045,510
Virgin Islands Public Finance Authority, 5.5s, 2005 1,000 1,047,580
Washington, DC, Convention Center, AMBAC, 4.75s, 2005 500 517,505
Washington, DC, Convention Center, AMBAC, 5.25s, 2013 250 259,915
------------
$ 3,278,016
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Single Family Housing Revenue - 1.3%
Harrisonburg, VA, Redevelopment & Housing Authority
Lease Rev., 4.2s, 2004 $ 500 $ 496,765
Mississippi Home Corp. Single Family Housing Rev., GNMA,
5.1s, 2017 250 248,780
------------
$ 745,545
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Solid Waste Revenue - 5.2%
Arlington County, VA, Industrial Development Authority,
Resource Recovery Rev. (Alexandria/Arlington Waste),
FSA, 5.25s, 2009 $ 500 $ 524,455
Ashdown, AR, Pollution Control Rev. (Nekoosa Papers,
Inc.), 4.75s, 2008 500 498,630
Delaware County, PA, Industrial Development Authority
Rev. (Recovery Facilities), 5.5s, 2000 1,000 1,009,680
Massachusetts Industrial Finance Agency (Ogden
Haverhill), 5.15s, 2007 500 505,650
Spokane, WA, Regional Solid Waste, AMBAC, 6.5s, 2008 500 556,710
------------
$ 3,095,125
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Student Loan Revenue - 2.1%
Alaska Student Loan Corp. Rev., AMBAC, 5s, 2003 $ 400 $ 413,104
Louisiana Public Facilities Authority (Student Loan
Rev.), 6.5s, 2002 770 808,038
------------
$ 1,221,142
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Turnpike Revenue - 3.5%
New Jersey Transit Corp., FSA, 5s, 2000 $1,000 $ 1,012,740
Pennsylvania Turnpike Commission, AMBAC, 5.25s, 2012 500 525,540
Southeastern Pennsylvania Transportation Authority,
Special Rev., FGIC, 5.25s, 2013 500 523,140
------------
$ 2,061,420
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Universities - 5.2%
California Educational Facilities Authority Rev.
(College & University), 5.15s, 2000 $ 360 $ 365,238
District of Columbia (Georgetown University), MBIA,
5.5s, 2001 500 516,115
Illinois Educational Facilities Authority Rev. (Illinois
Institute of Technology), AMBAC, 5s, 2005 500 525,055
Metropolitan Nashville, TN (Refunding Vanderbilt
University), 5.25s, 2001 500 515,500
North Dakota Board of Higher Education (University
Housing & Auxiliary Facilities), AMBAC, 4.7s, 2011 855 854,513
State of New Hampshire, Higher Education & Health (New
Hampshire College), 5.65s, 2003 320 327,814
------------
$ 3,104,235
- -------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 4.3%
Erie, PA, Water Authority Rev., FGIC, 4.6s, 2009 $1,000 $ 1,001,660
Massachusetts Water Resources Authority, FSA, 5.5s, 2008 1,000 1,087,790
Philadelphia, PA, Water & Sewer Rev., MBIA, 0s, 2002 500 439,840
------------
$ 2,529,290
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Other - 0.8%
Philadelphia, PA, Parking Authority Rev., AMBAC, 5s, 2016 $ 500 $ 501,100
- -------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $55,887,427) $ 56,667,688
- -------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 3.9%
- -------------------------------------------------------------------------------------------------
District of Columbia, due 05/03/99 1,200 1,200,000
Harris County, TX, Hospital Rev. (Methodist Hospital),
due 05/03/99 400 400,000
Maricopa County, AZ, Pollution Control Rev. (Arizona
Public Service Co.), due 05/03/99 300 300,000
Pinellas County, FL, Health Facility Authority, due 05/03/99 400 400,000
- -------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,300,000
- -------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $58,187,427) $ 58,967,688
Other Assets, Less Liabilities - 0.5% 303,068
- -------------------------------------------------------------------------------------------------
Net assets - 100.0% $ 59,270,756
- -------------------------------------------------------------------------------------------------
(S)(S) When-issued security. At April 30, 1999, the Fund had sufficient cash and/or securities at
least equal to the value of the when-issued security.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
APRIL 30, 1999
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $58,187,427) $58,967,688
Cash 47,889
Receivable for Fund shares sold 146,521
Receivable for investments sold 877,073
Interest receivable 756,470
Other assets 383
-----------
Total assets $60,796,024
-----------
Liabilities:
Distributions payable $ 60,637
Payable for Fund shares reacquired 47,859
Payable for investments purchased 856,728
Payable for when-issued investments purchased 537,200
Payable to affiliates -
Management fee 487
Shareholder servicing agent fee 159
Distribution and service fee 14,483
Administrative fee 24
Accrued expenses and other liabilities 7,691
-----------
Total liabilities $ 1,525,268
-----------
Net assets $59,270,756
===========
Net assets consist of:
Paid-in capital $59,056,860
Unrealized appreciation on investments 780,261
Accumulated net realized loss on investments (567,692)
Accumulated undistributed net investment income 1,327
-----------
Total $59,270,756
===========
Shares of beneficial interest outstanding 7,775,310
=========
Class A shares:
Net asset value per share
(net assets of $45,840,009 / 6,012,163 shares of
beneficial interest outstanding) $7.62
=====
Offering price per share (100 / 97.5 of net asset value
per share) $7.82
=====
Class B shares:
Net asset value and offering price per share
(net assets of $9,148,615 / 1,201,566 shares of
beneficial interest outstanding) $7.61
=====
Class C shares:
Net asset value and offering price per share
(net assets of $4,282,132 / 561,581 shares of beneficial
interest outstanding) $7.63
=====
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations
- ------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 1999
- ------------------------------------------------------------------------------
Net investment income:
Interest income $2,483,838
----------
Expenses -
Management fee $211,912
Trustees' compensation 12,447
Shareholder servicing agent fee 59,007
Distribution and service fee (Class A) 61,811
Distribution and service fee (Class B) 72,524
Distribution and service fee (Class C) 39,861
Administrative fee 6,560
Custodian fee 22,654
Printing 30,480
Postage 7,583
Auditing fees 31,180
Legal fees 4,208
Miscellaneous 45,254
----------
Total expenses $ 605,481
Fees paid indirectly (16,215)
Reduction of expenses by investment adviser (44,624)
----------
Net expenses $ 544,642
----------
Net investment income $1,939,196
----------
Realized and unrealized gain on investments:
Realized gain on investment transactions (identified cost basis) $ 131,130
Change in unrealized appreciation on investments 216,980
----------
Net realized and unrealized gain on investments $ 348,110
----------
Increase in net assets from operations $2,287,306
==========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,939,196 $ 1,849,651
Net realized gain on investments 131,130 174,996
Net unrealized gain on investments 216,980 276,447
----------- -----------
Increase in net assets from operations $ 2,287,306 $ 2,301,094
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $(1,603,398) $(1,537,831)
From net investment income (Class B) (243,023) (218,920)
From net investment income (Class C) (120,982) (94,027)
----------- -----------
Total distributions declared to shareholders $(1,967,403) $(1,850,778)
----------- -----------
Net increase (decrease) in net assets from Fund share
transactions $10,486,783 $(2,739,830)
----------- -----------
Total increase (decrease) in net assets $10,806,686 $(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 $1,327 and $29,534, respectively) $59,270,756 $48,464,070
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<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 $ 7.47
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.29 $ 0.30 $ 0.29 $ 0.30 $ 0.28
Net realized and unrealized gain (loss) on
investments 0.06 0.07 (0.03) 0.08 (0.02)
------ ------ ------ ------ ------
Total from investment operations $ 0.35 $ 0.37 $ 0.26 $ 0.38 $ 0.26
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.30) $(0.30) $(0.29) $(0.30) $(0.28)
In excess of net investment income -- -- -- -- (0.00)+
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.30) $(0.30) $(0.29) $(0.30) $(0.28)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.62 $ 7.57 $ 7.50 $ 7.53 $ 7.45
====== ====== ====== ====== ======
Total return(+) 4.65% 5.02% 3.51% 5.11% 3.55%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.88% 0.87% 0.95% 0.95% 0.95%
Net investment income 3.84% 3.97% 3.86% 4.00% 3.74%
Portfolio turnover 31% 51% 78% 43% 50%
Net assets at end of period
(000 omitted) $45,840 $37,595 $40,953 $50,387 $64,329
+ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## 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. For fiscal years ending after September 1, 1995, 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 its fees for certain of the periods indicated. To the extent actual expenses were over/under
this limitation and the waiver had not been in place, the net investment income per share and the ratios would have been:
Net investment income $ 0.28 $ 0.30 $ 0.29 $ 0.30 $ 0.28
Ratios (to average net assets):
Expenses## 0.99% 1.01% 1.02% 0.99% 0.95%
Net investment income 3.71% 3.85% 3.79% 3.96% 3.74%
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
<S> <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
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.23 $ 0.24 $ 0.23 $ 0.25 $ 0.21
Net realized and unrealized gain (loss) on
investments 0.06 0.07 (0.03) 0.07 (0.02)
------ ------ ------ ------ ------
Total from investment operations $ 0.29 $ 0.31 $ 0.20 $ 0.32 $ 0.19
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.24) $(0.24) $(0.23) $(0.24) $(0.21)
In excess of net investment income -- -- -- -- (0.00)+
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.24) $(0.24) $(0.23) $(0.24) $(0.21)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.61 $ 7.56 $ 7.49 $ 7.52 $ 7.44
====== ====== ====== ====== ======
Total return 3.85% 4.22% 2.71% 4.34% 2.67%
Ratios (to average net assets)/
Supplemental data(S):
Expenses 1.66% 1.64% 1.73% 1.70% 1.80%
Net investment income 3.06% 3.20% 3.08% 3.25% 2.88%
Portfolio turnover 31% 51% 78% 43% 50%
Net assets at end of period (000 omitted) $9,149 $7,618 $6,503 $7,749 $7,792
+ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
(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 its fees for certain of the periods indicated. To the extent actual expenses were over/
under this limitation and the waiver had not been in place, the net investment income per share and the ratios would have
been:
Net investment income $ 0.22 $ 0.24 $ 0.23 $ 0.25 $ 0.21
Ratios (to average net assets):
Expenses## 1.77% 1.78% 1.80% 1.74% 1.80%
Net investment income 2.93% 3.08% 3.01% 3.21% 2.88%
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 1999 1998 1997 1996 1995*
- -----------------------------------------------------------------------------------------------------------------------------------
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) $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.21
Net realized and unrealized gain (loss) on
investments 0.06 0.08 (0.03) 0.08 (0.02)
------ ------ ------ ------ ------
Total from investment operations $ 0.29 $ 0.31 $ 0.20 $ 0.31 $ 0.19
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.23) $(0.24) $(0.23) $(0.23) $(0.19)
In excess of net investment income -- -- -- -- (0.00)++
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.23) $(0.24) $(0.23) $(0.23) $(0.19)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.63 $ 7.57 $ 7.50 $ 7.53 $ 7.45
====== ====== ====== ====== ======
Total return 3.77% 4.13% 2.64% 4.23% 2.53%+
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.73% 1.72% 1.80% 1.80% 1.79%+
Net investment income 2.98% 3.11% 3.03% 3.16% 2.77%+
Portfolio turnover 31% 51% 78% 43% 50%
Net assets at end of period (000 omitted) $4,282 $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.
++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## 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. For fiscal years ending after September 1, 1995, 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 its fees for certain of the periods indicated. To the extent actual expenses were over/under
this limitation and the waiver had not been in place, the net investment income per share and the ratios would have been:
Net investment income $ 0.22 $ 0.23 $ 0.22 $ 0.23 $ 0.21
Ratios (to average net assets):
Expenses## 1.84% 1.86% 1.87% 1.84% 1.79%+
Net investment income 2.85% 2.99% 2.96% 3.12% 2.77%+
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Municipal Limited Maturity Fund (the Fund) is a diversified series of MFS
Series Trust IX (the Trust). The Trust is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Valuations - Debt securities (other than short-term obligations which
mature in 60 days or less), including listed issues, are valued on the basis of
valuations furnished by dealers or by a pricing service with consideration to
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics,
and other market data, without exclusive reliance upon exchange or
over-the-counter prices. Short-term obligations, which mature in 60 days or
less, are valued at amortized cost, which approximates market value. Securities
for which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Trustees.
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 paid by the
Fund from net interest received on tax-exempt municipal bonds are not includable
by shareholders as gross income for federal income tax purposes because the Fund
intends to meet certain requirements of the Code applicable to regulated
investment companies, which will enable each Fund to pay exempt- interest
dividends. The portion of such interest, if any, earned on private activity
bonds issued after August 7, 1986, may be considered a tax-preference item to
shareholders.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as 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. For the
year ended April 30, 1999, no such adjustments were made.
At April 30, 1999, the Fund, for federal income tax purposes, had a capital loss
carryforward of $(567,692) 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, ($492,795), 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 the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.40% of
the Fund's average daily net assets. The investment adviser has voluntarily
agreed to waive a portion of its fee, which is reflected as a 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
April 30, 1999, the aggregate unreimbursed expenses owed to MFS by the Fund
amounted to $202,492.
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 $6,072 for the year ended
April 30, 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
$9,677 for the year ended April 30, 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. 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 0.10% per annum Class A distribution fee will be implemented on
such a 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
$7,480 for the year ended April 30, 1999. Fees incurred under the distribution
plan during the year ended April 30, 1999, 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 a
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 $211 and $14
for Class B and Class C shares, respectively, for the year ended April 30, 1999.
Fees incurred under the distribution plan during the year ended April 30, 1999,
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 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 year ended April 30, 1999,
were $41,564, $26,996, and $7,543 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%. Prior to April 1, 1999, the fee was 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, and
short-term obligations, aggregated $24,955,609 and $16,098,745, respectively.
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 $58,187,427
-----------
Gross unrealized appreciation $ 892,804
Gross unrealized depreciation (112,543)
-----------
Net unrealized appreciation $ 780,261
===========
(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
YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,475,079 $ 26,565,639 2,109,268 $ 15,995,108
Shares issued to shareholders in
reinvestment of distributions 136,838 1,045,283 131,414 997,128
Shares reacquired (2,569,307) (19,623,471) (2,733,116) (20,723,328)
---------- ------------ ---------- ------------
Net increase (decrease) 1,042,610 $ 7,987,451 (492,434) $ (3,731,092)
========== ============ ========== ============
<CAPTION>
Class B Shares
YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 693,816 $ 5,299,094 341,799 $ 2,591,558
Shares issued to shareholders in
reinvestment of distributions 15,191 116,037 15,368 116,495
Shares reacquired (515,764) (3,932,950) (217,312) (1,644,108)
---------- ------------ ---------- ------------
Net increase 193,243 $ 1,482,181 139,855 $ 1,063,945
========== ============ ========== ============
<CAPTION>
Class C Shares
YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 547,055 $ 4,186,765 168,203 $ 1,277,137
Shares issued to shareholders in
reinvestment of distributions 13,289 101,514 11,712 88,876
Shares reacquired (428,393) (3,271,128) (189,973) (1,438,696)
---------- ------------ ---------- ------------
Net increase (decrease) 131,951 $ 1,017,151 (10,058) $ (72,683)
========== ============ ========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $720 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
year ended April 30, 1999, was $275.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Series Trust IX and Shareholders of
MFS Municipal Limited Maturity Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Municipal Limited Maturity Fund (one of the
series constituting MFS Series Trust IX) as of April 30, 1999, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended April 30, 1999 and 1998, and the financial highlights
for each of the years in the five-year period ended April 30, 1999. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
April 30, 1999 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Municipal
Limited Maturity Fund at April 30, 1999, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
- --------------------------------------------------------------------------------
IN JANUARY 2000, SHAREHOLDERS WILL BE MAILED A FORM 1099 REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR
1999.
FOR FEDERAL INCOME TAX PURPOSES, 100% OF THE TOTAL DIVIDENDS PAID BY THE
FUND FROM NET INVESTMENT INCOME DURING THE YEAR ENDED APRIL 30, 1999, IS
DESIGNATED AS AN EXEMPT-INTEREST DIVIDEND.
<PAGE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
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 State Street Bank and Trust Company
Executive Officer, Eastern Enterprises
(diversified services company) AUDITORS
Deloitte & Touche LLP
Lawrence T. Perera - Partner, Hemenway
& Barnes (attorneys) INVESTOR INFORMATION
For MFS stock and bond market
William J. Poorvu - Adjunct Professor, outlooks, call toll free:
Harvard University Graduate School of 1-800-637-4458 anytime from a
Business Administration touch-tone telephone.
Charles W. Schmidt - Private Investor For information on MFS mutual
funds, call your financial adviser
Arnold D. Scott* - Senior Executive or, for an information kit, call
Vice President, Director, and toll free: 1-800-637-2929 any
Secretary, MFS Investment Management business day from 9 a.m. to 5 p.m.
Eastern time (or leave a message
Jeffrey L. Shames* - Chairman, Chief anytime).
Executive Officer, and Director,
MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Elaine R. Smith - Independent P.O. Box 2281
Consultant Boston, MA 02107-9906
David B. Stone - Chairman and Director, For general information, call toll
North American Management Corp. free: 1-800-225-2606 any business
(investment advisers) day from 8 a.m. to 8 p.m. Eastern
time.
INVESTMENT ADVISER
Massachusetts Financial Services Company For service to speech- or
500 Boylston Street Boston, MA hearing-impaired, call toll free:
02116-3741 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time.
DISTRIBUTOR (To use this service, your phone
MFS Fund Distributors, Inc. must be equipped with a
500 Boylston Street Telecommunications Device for the
Boston, MA 02116-3741 Deaf.)
PORTFOLIO MANAGER For share prices, account balances,
John P. Kihn* and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255)
TREASURER anytime from a touch-tone
W. Thomas London* telephone.
ASSISTANT TREASURERS WORLD WIDE WEB
Mark E. Bradley* www.mfs.com
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
<PAGE>
MFS(R) MUNICIPAL 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 Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MML-2 6/99 4M 37/237/337
