<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[Graphic Omitted]
MFS(R) LIMITED
MATURITY FUND
ANNUAL REPORT o APRIL 30, 1999
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DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 30)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 6
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 14
Notes to Financial Statements ............................................. 21
Independent Auditors' Report .............................................. 27
MFS' Year 2000 Readiness Disclosure ....................................... 29
Trustees and Officers ..................................................... 33
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 James J. Calmas]
James J. Calmas
For the 12 months ended April 30, 1999, Class A shares of the Fund provided a
total return of 4.26%, Class B shares 3.48%, Class C shares 3.23%, and Class I
shares 4.28%. These returns include the reinvestment of 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 5.10%. The Fund's results also compare to a
6.04% 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. WHAT FACTORS CONTRIBUTED TO THE FUND'S UNDERPERFORMANCE?
A. Most of the problems came in the fourth quarter of 1998, but the Fund's
relative performance has improved in the past few months. The main problem
was a continuation of the decline in emerging markets. This decline
resulted in massive sales of corporate bonds by institutional investors who
had borrowed to buy emerging market bonds. The Fund had large positions in
corporate bonds. Holdings in some home equity lending companies were among
the hardest hit by the disruptions in the credit market. Those positions
detracted from our overall performance.
Q. WHAT ARE YOU DOING TO HELP IMPROVE PERFORMANCE?
A. Even before the credit market turmoil, we had begun a steady effort to
upgrade the credit quality of the portfolio. Although higher-rated bonds
have somewhat lower yields, their prices should be less volatile when
interest rates rise. We are continuing to upgrade the credit quality of our
portfolio. A year ago, the average credit quality, based on ratings from
either Moody's Investors Service or Standard & Poor's Corporation, was
"A-;'" it is now "A+."
Q. IN UPGRADING FROM "A-" TO "A+," WHAT ISSUERS HAVE YOU SOLD AND WHAT HAVE
YOU BOUGHT?
A. While cutting our home equity exposure, we increased our holdings in energy
and telecommunications. For example, we bought Boston Edison, an electric
utility; Columbia Gas Systems, a natural gas pipeline company; Occidental
Petroleum, an oil company; and Sprint Spectrum, which is Sprint's cellular
phone division. We believe all of these companies are in stronger financial
shape than the home-equity lending companies, and none are as reliant on
the bond markets for financing.
Q. HAVE YOU SOLD ALL OF YOUR CONSUMER FINANCE HOLDINGS?
A. No. We kept some companies that we think have done a better job of
evaluating the credit quality of their borrowers, as well as companies that
don't rely so much on the bond markets to raise capital. For example, we
own Providian National Bank, a leading provider of credit cards.
Q. HOW DOES THE FUND REFLECT YOUR VIEWS ON FIXED-INCOME MARKETS AND
INTEREST RATES?
A. We think the strong economy should help corporate debt. The strength of
industries such as housing, autos, and technology is providing momentum to
the economy and, with inflation in check, we think interest rates should
remain relatively stable. For that reason, the Fund's sensitivity to
interest-rate changes is about the same as that of the Lehman Index. That
means we don't have too many long-maturity bonds whose prices would decline
if interest rates increased, nor do we have too many short-maturity (but
low yielding) bonds. If interest rates do increase, or if there is an
unexpected event such as the emerging market crisis of 1997-98, we believe
the portfolio's increased credit quality should help limit a decline in the
price of the Fund.
/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.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
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, MERIDIAN 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(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>
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
OBJECTIVE: SEEKS AS HIGH A LEVEL OF CURRENT INCOME AS IS BELIEVED
TO BE CONSISTENT WITH PRUDENT INVESTMENT RISK. THE
FUND ALSO SEEKS TO PROTECT SHAREHOLDERS' CAPITAL.
COMMENCEMENT OF
INVESTMENT OPERATIONS: FEBRUARY 26, 1992
CLASS INCEPTION: CLASS A FEBRUARY 26, 1992
CLASS B SEPTEMBER 7, 1993
CLASS C JULY 1, 1994
CLASS I JANUARY 2, 1997
SIZE: $212.7 MILLION NET ASSETS AS OF APRIL 30, 1999
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 February 28, 1992, through April 30, 1999)
Lehman Brothers
One- to
Three-Year
MFS Limited Government/
Maturity Fund Corporate
-- Class A Bond Index
-------------------------------------------------------
2/92 $ 9,750 $10,000
4/95 11,572 11,750
4/97 13,166 13,342
4/99 14,546 15,159
AVERAGE ANNUAL TOTAL RETURNS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
CLASS A
10 Years/
1 Year 3 Years 5 Years Life*
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +4.26% +16.92% +33.38% +49.18%
- -----------------------------------------------------------------------------------------------------------
Average Annual Total Return +4.26% + 5.35% + 5.93% + 5.73%
- -----------------------------------------------------------------------------------------------------------
SEC Results +1.65% + 4.47% + 5.39% + 5.36%
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
10 Years/
1 Year 3 Years 5 Years Life*
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +3.48% +14.05% +27.81% +42.23%
- -----------------------------------------------------------------------------------------------------------
Average Annual Total Return +3.48% + 4.48% + 5.03% + 5.03%
- -----------------------------------------------------------------------------------------------------------
SEC Results -0.45% + 3.59% + 4.71% + 5.03%
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
10 Years/
1 Year 3 Years 5 Years Life*
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +3.23% +13.85% +27.69% +42.91%
- -----------------------------------------------------------------------------------------------------------
Average Annual Total Return +3.23% + 4.42% + 5.01% + 5.10%
- -----------------------------------------------------------------------------------------------------------
SEC Results +2.25% + 4.42% + 5.01% + 5.10%
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
10 Years/
1 Year 3 Years 5 Years Life*
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +4.28% +17.02% +33.44% +49.38%
- -----------------------------------------------------------------------------------------------------------
Average Annual Total Return +4.28% + 5.38% + 5.94% + 5.75%
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
COMPARATIVE INDICES
10 Years/
1 Year 3 Years 5 Years Life*
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average short-term investment-grade
debt fund** +5.10% + 5.87% + 5.85% + 5.55%
- -----------------------------------------------------------------------------------------------------------
Lehman Brothers One- to Three-Year
Government/Corporate Bond Index+ +6.04% + 6.45% + 6.42% + 5.97%
- -----------------------------------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations, February 26, 1992, through April
30, 1999. Index results are from February 28, 1992.
** Source: Lipper Analytical Services, Inc.
+ Source: Standard & Poor's Micropal, Inc.
</TABLE>
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 2.50% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
B and C results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of A for periods prior to the inception of B and C.
Because operating expenses of B and C are higher than those of A, B and C
performance generally would have been lower than A performance. The A
performance included in the B and C SEC performance has been adjusted to
reflect the CDSC generally applicable to B and C rather than the initial sales
charge generally applicable to A.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been
higher than A performance. The A performance included in the I performance has
been adjusted to reflect the fact that I have no initial
sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of dividends and
capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
PORTFOLIO CONCENTRATION AS OF APRIL 30, 1999
QUALITY RATINGS (U.S. PORTION ONLY)
Source: Standard & Poor's and Moody's
BBB 39.0%
AAA 27.3%
Government's 15.4%
A 14.5%
AA 3.8%
The portfolio is actively managed, and holdings are subject to change.
<PAGE>
PORTFOLIO OF INVESTMENTS -- April 30, 1999
<TABLE>
<CAPTION>
Bonds - 94.6%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Bonds - 84.8%
Apparel and Textiles - 2.2%
Hilfiger (Tommy) USA, Inc., 6.5s, 2003 $ 2,283 $ 2,262,339
Jones Apparel Group, Inc., 6.25s, 2001 2,560 2,524,800
------------
$ 4,787,139
- --------------------------------------------------------------------------------------------------------
Automotive - 0.9%
Ford Capital BV, 9.875s, 2002 $ 1,800 $ 1,994,544
- --------------------------------------------------------------------------------------------------------
Banks and Credit Companies - 4.1%
Aristar, Inc., 5.85s, 2004 $ 1,860 $ 1,836,155
Great Western Financial Corp., 6.375s, 2000 2,366 2,384,029
GS Escrow Corp., 6.75s, 2001 1,903 1,904,840
Providian National Bank, 6.75s, 2002 2,563 2,571,509
------------
$ 8,696,533
- --------------------------------------------------------------------------------------------------------
Containers - 2.0%
Owens-Illinois, Inc., 11s, 2003 $ 4,058 $ 4,230,465
- --------------------------------------------------------------------------------------------------------
Corporate Asset Backed - 22.1%
Aames Mortgage Trust, 6.75s, 2021 $ 3,889 $ 3,927,890
American Express Credit Account Master Trust, 5.6s, 2006 1,000 995,543
Amresco Residential Securities Mortgage Loan, 5.94s, 2015 4,039 4,038,369
Banamex Credit Card Merchant Voucher, 6.25s, 2003# 7,352 7,340,712
BankBoston Home Equity Loan Trust, 5.89s, 2013 1,894 1,893,038
Citibank Credit Card Master Trust I, 5.5s, 2006 1,993 1,959,358
Discover Card Master Trust I, 5.85s, 2006 3,643 3,630,468
First Chicago Master Trust II, 5.206s, 2003 3,106 3,107,941
Ford Credit Auto Owner Trust, 5.31s, 2001 920 920,285
GE Capital Mortgage Services, Inc., 6.035s, 2020 2,035 2,036,908
Green Tree Financial Corp., 6.04s, 2029 4,106 4,122,670
Green Tree Financial Corp., 6.39s, 2029 1,985 1,996,771
MBNA Master Credit Card Trust II, 5.25s, 2006 2,374 2,322,793
Merrill Lynch Mortgage Investors, Inc., 5.65s, 2030 1,860 1,822,772
Partners First Credit Card Master Trust, 5.026s, 2004 3,400 3,395,750
Pemex Finance Ltd., 5.72s, 2003 1,010 1,016,161
Providian Master Trust, 5.29s, 2004 940 927,160
SLM Student Loan Trust, 5.217s, 2009 1,470 1,449,328
------------
$ 46,903,917
- --------------------------------------------------------------------------------------------------------
Financial Institutions - 4.8%
AT&T Capital Corp., 6.875s, 2001 $ 2,072 $ 2,106,437
Bear Stearns Co., 6.15s, 2004 1,990 1,959,513
Lehman Brothers Holdings, 6.375s, 2001 2,185 2,194,417
Merrill Lynch & Co., 6.06s, 2001 2,520 2,537,413
Morgan Stanley Dean Witter, 5.625s, 2004 1,519 1,496,671
------------
$ 10,294,451
- --------------------------------------------------------------------------------------------------------
Food and Beverage Products - 1.1%
Whitman Corp., 6s, 2004 $ 2,385 $ 2,371,882
- --------------------------------------------------------------------------------------------------------
Forest and Paper Products - 1.2%
Georgia-Pacific Corp., 9.95s, 2002 $ 2,293 $ 2,529,294
- --------------------------------------------------------------------------------------------------------
Insurance - 1.4%
Conseco, Inc., 7.875s, 2000 $ 972 $ 987,863
Conseco, Inc., 6.4s, 2001 1,963 1,940,524
------------
$ 2,928,387
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Medical and Health Technology and Services - 0.8%
Hospital Corp. of America, 0s, 1999 $ 1,628 $ 1,618,395
- --------------------------------------------------------------------------------------------------------
Oils - 1.3%
Occidental Petroleum Corp., 10.125s, 2001 $ 2,607 $ 2,818,115
- --------------------------------------------------------------------------------------------------------
Stores - 3.5%
Fingerhut Cos., Inc., 7.375s, 1999 $ 3,000 $ 3,015,720
Rite Aid Corp., 6.7s, 2001 2,100 2,104,704
Safeway, Inc., 5.875s, 2001 2,430 2,430,462
------------
$ 7,550,886
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Telecommunications and Cable - 9.0%
Continental Cablevision, Inc., 11s, 2007 $ 6,315 $ 6,684,743
Sprint Capital Corp., 5.875s, 2004 2,454 2,428,331
Sprint Spectrum LP, 11s, 2006 2,046 2,347,315
Time Warner Pass-Through Asset Trust, 6.1s, 2001# 2,103 2,115,765
TKR Cable, Inc., 10.5s, 2007 1,520 1,633,666
WorldCom, Inc., 8.875s, 2006 3,659 3,930,644
------------
$ 19,140,464
- --------------------------------------------------------------------------------------------------------
Transportation - 5.9%
Amerco Backed Assets, 6.65s, 1999# $ 5,700 $ 5,695,440
Delta Air Lines, 6.65s, 2004 1,904 1,922,202
Hertz Corp., 6.5s, 2000 2,736 2,754,714
Union Pacific Corp., 6.34s, 2003 2,100 2,105,376
------------
$ 12,477,732
- --------------------------------------------------------------------------------------------------------
U.S. Federal Agencies - 10.6%
Federal Home Loan Mortgage Corp., 5.83s, 2013 $ 2,684 $ 2,678,678
Federal National Mortgage Assn., 6s, 2014 6,000 5,943,720
Federal National Mortgage Assn., 6.75s, 2003 2,105 2,141,970
Federal National Mortgage Assn., 7s, 2012 5,644 5,765,683
Government National Mortgage Assn., 7.5s, 2007 - 2011 5,564 5,750,099
Government National Mortgage Assn., 12.5s, 2011 267 308,737
------------
$ 22,588,887
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 4.0%
U.S. Treasury Notes, 9.125s, 1999 $ 2,074 $ 2,076,592
U.S. Treasury Notes, 5s, 2001 900 898,731
U.S. Treasury Notes, 5.375s, 2001 165 165,825
U.S. Treasury Notes, 6.25s, 2001 765 784,722
U.S. Treasury Notes, 6.5s, 2001 900 926,856
U.S. Treasury Notes, 5.75s, 2002 3,000 3,051,570
U.S. Treasury Notes, 7.25s, 2004 500 542,970
------------
$ 8,447,266
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Utilities - Electric - 8.0%
Boston Edison Co., 6.8s, 2000 $ 3,175 $ 3,210,465
California Infrastructure, 6.17s, 2003 2,855 2,880,866
Commonwealth Edison Transition Funding Trust, 5.29s, 2003 1,894 1,886,291
Edison Mission Energy Funding Corp., 6.77s, 2003# 1,984 2,009,006
Gulf States Utilities Co., 8.21s, 2002 2,680 2,750,591
Midamerican Funding LLC, 5.85s, 2001# 3,039 3,040,216
Salton Sea Funding Corp., 6.69s, 2000 535 538,820
Salton Sea Funding Corp., 7.02s, 2000 694 698,632
------------
$ 17,014,887
- --------------------------------------------------------------------------------------------------------
Utilities - Gas - 1.9%
CMS Panhandle Holding Co., 6.125s, 2004# $ 1,820 $ 1,810,900
Columbia Gas Systems, Inc., 6.39s, 2000 2,127 2,142,804
------------
$ 3,953,704
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Total U.S. Bonds $180,346,948
- --------------------------------------------------------------------------------------------------------
Foreign Bonds - 9.8%
Australia - 0.6%
Westpac Banking, 9.125s, 2001 (Banks and Credit Cos.) $ 1,175 $ 1,247,286
- --------------------------------------------------------------------------------------------------------
Chile - 0.7%
Empresa Electric Guacolda S.A., 7.6s, 2001 (Utilities - Electric)# $ 1,520 $ 1,448,195
- --------------------------------------------------------------------------------------------------------
China - 0.6%
Hero Asian BVI Ltd., 9.11s, 2001 (Utilities)# $ 1,264 $ 1,231,628
- --------------------------------------------------------------------------------------------------------
Colombia - 1.4%
Republic of Colombia, 8.75s, 1999 $ 3,000 $ 3,000,000
- --------------------------------------------------------------------------------------------------------
Germany - 1.7%
Landesbank Baden Wurttemberg, 7.875s, 2004 (Banks and Credit Cos.) $ 3,445 $ 3,709,231
- --------------------------------------------------------------------------------------------------------
Norway - 1.6%
Union Bank Norway, 7.35s, 2049 (Banks and Credit Cos.)# $ 3,339 $ 3,382,574
- --------------------------------------------------------------------------------------------------------
South Korea - 0.4%
Export-Import Bank Korea, 7.1s, 2007 (Banks and Credit Cos.) $ 900 $ 899,883
- --------------------------------------------------------------------------------------------------------
Spain - 1.0%
Kingdom of Spain, 9.125s, 2000 $ 2,000 $ 2,087,800
- --------------------------------------------------------------------------------------------------------
Supra-National - 1.8%
Corporacion Andina de Fomento, 7.1s, 2003 (Banks and Credit Cos.) $ 3,800 $ 3,762,760
- --------------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 20,769,357
- --------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $202,692,908) $201,116,305
- --------------------------------------------------------------------------------------------------------
Repurchase Agreement - 5.8%
- --------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 4/30/99, due 5/03/99, total to
be received $12,409,055 (secured by various U.S.
Treasury and Federal Agency obligations in a
jointly traded account), at cost $12,404 $ 12,404,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $215,096,908) $213,520,305
Other Assets, Less Liabilities - (0.4)% (864,855)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $212,655,450
- --------------------------------------------------------------------------------------------------------
# SEC Rule 144A restriction.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
APRIL 30, 1999
- -------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $215,096,908) $213,520,305
Cash 542
Receivable for Fund shares sold 5,404,676
Interest receivable 2,765,468
Other assets 2,282
------------
Total assets $221,693,273
------------
Liabilities:
Distributions payable $ 225,120
Payable for Fund shares reacquired 4,263,599
Payable for investments purchased 4,370,199
Payable to affiliates -
Management fee 2,336
Shareholder servicing agent fee 584
Distribution and service fee 65,390
Administrative fee 88
Accrued expenses and other liabilities 110,507
------------
Total liabilities $ 9,037,823
------------
Net assets $212,655,450
============
Net assets consist of:
Paid-in capital $224,521,869
Unrealized depreciation on investments (1,576,603)
Accumulated net realized loss on investments (9,958,157)
Accumulated distributions in excess of net investment income (331,659)
------------
Total $212,655,450
============
Shares of beneficial interest outstanding 30,985,414
==========
Class A shares:
Net asset value per share
(net assets of $134,086,305 / 19,517,658 shares of
beneficial interest outstanding) $6.87
=====
Offering price per share (100 / 97.5 of net asset value
per share) $7.05
=====
Class B shares:
Net asset value and offering price per share
(net assets of $52,882,543 / 7,725,403 shares of
beneficial interest outstanding) $6.85
=====
Class C shares:
Net asset value and offering price per share
(net assets of $24,227,976 / 3,529,487 shares of
beneficial interest outstanding) $6.86
=====
Class I shares:
Net asset value, offering price, and redemption price
per share (net assets of $1,458,626 / 212,866
shares of beneficial interest outstanding) $6.85
=====
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 $12,964,492
-----------
Expenses -
Management fee $ 748,001
Trustees' compensation 20,752
Shareholder servicing agent fee 208,259
Distribution and service fee (Class A) 174,249
Distribution and service fee (Class B) 425,430
Distribution and service fee (Class C) 225,422
Administrative fee 23,442
Custodian fee 88,165
Printing 30,246
Postage 27,003
Auditing fees 30,824
Legal fees 4,760
Miscellaneous 113,598
-----------
Total expenses $ 2,120,151
Fees paid indirectly (44,697)
-----------
Net expenses $ 2,075,454
-----------
Net investment income $10,889,038
-----------
Realized and unrealized gain (loss) on investments:
Realized loss (identified cost basis) on investment
transactions $(2,645,933)
Change in unrealized depreciation on investments (1,382,793)
-----------
Net realized and unrealized loss on investments $(4,028,726)
-----------
Increase in net assets from operations $ 6,860,312
===========
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 $ 10,889,038 $ 9,973,384
Net realized loss on investments (2,645,933) (2,372,957)
Net unrealized gain (loss) on invesments (1,382,793) 710,434
------------ ------------
Increase in net assets from operations $ 6,860,312 $ 8,310,861
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (6,851,802) $ (6,198,763)
From net investment income (Class B) (2,396,262) (2,228,639)
From net investment income (Class C) (1,138,922) (1,187,764)
From net investment income (Class I) (109,991) (130,641)
------------ ------------
Total distributions declared to shareholders $(10,496,977) $ (9,745,807)
------------ ------------
Net increase in net assets from Fund share transactions $ 60,124,700 $ 10,052,470
------------ ------------
Total increase in net assets $ 56,488,035 $ 8,617,524
Net assets:
At beginning of period 156,167,415 147,549,891
------------ ------------
At end of period (including accumulated distributions in
excess of net investment income of $331,659 and $681,671,
respectively) $212,655,450 $156,167,415
============ ============
See notes to financial statements
</TABLE>
<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 $ 6.99 $ 7.04 $ 7.12 $ 7.10 $ 7.14
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.43 $ 0.48 $ 0.47 $ 0.48 $ 0.46
Net realized and unrealized gain (loss)
on investments (0.14) (0.07) (0.06) 0.03 (0.04)
------ ------ ------ ------ ------
Total from investment operations $ 0.29 $ 0.41 $ 0.41 $ 0.51 $ 0.42
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(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 $(0.41) $(0.46) $(0.49) $(0.49) $(0.46)
------ ------ ------ ------ ------
Net asset value - end of period $ 6.87 $ 6.99 $ 7.04 $ 7.12 $ 7.10
====== ====== ====== ====== ======
Total return(+) 4.26% 5.97% 5.83% 7.50% 6.09%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.84% 0.89% 0.94% 0.95% 0.95%
Net investment income 6.14% 6.70% 6.57% 6.73% 6.54%
Portfolio turnover 278% 288% 489% 385% 498%
Net assets at end of period (000 omitted) $134,086 $95,342 $91,887 $98,582 $85,773
# 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 expenses of the Fund, exclusive of
management and distribution and service fees, at not more 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%
See notes to financial statements
</TABLE>
<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 $ 6.97 $ 7.03 $ 7.11 $ 7.10 $ 7.14
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.38 $ 0.41 $ 0.41 $ 0.42 $ 0.41
Net realized and unrealized gain (loss)
on investments (0.14) (0.07) (0.05) 0.03 (0.05)
------ ------ ------ ------ ------
Total from investment operations $ 0.24 $ 0.34 $ 0.36 $ 0.45 $ 0.36
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(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 $(0.36) $(0.40) $(0.44) $(0.44) $(0.40)
------ ------ ------ ------ ------
Net asset value - end of period $ 6.85 $ 6.97 $ 7.03 $ 7.11 $ 7.10
====== ====== ====== ====== ======
Total return 3.48% 4.98% 4.99% 6.52% 5.20%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.61% 1.70% 1.78% 1.75% 1.81%
Net investment income 5.33% 5.80% 5.75% 5.90% 5.73%
Portfolio turnover 278% 288% 489% 385% 498%
Net assets at end of period (000 omitted) $52,883 $39,229 $34,875 $26,464 $17,334
# 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 expenses of the Fund, exclusive of
management and distribution and service fees, at not more 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%
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, PERIOD 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 $ 6.99 $ 7.05 $ 7.13 $ 7.11 $ 7.08
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.36 $ 0.41 $ 0.41 $ 0.41 $ 0.37
Net realized and unrealized gain (loss) on
investments (0.14) (0.07) (0.06) 0.04 (0.01)
------ ------ ------ ------ ------
Total from investment operations $ 0.22 $ 0.34 $ 0.35 $ 0.45 $ 0.36
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(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 $(0.35) $(0.40) $(0.43) $(0.43) $(0.33)
------ ------ ------ ------ ------
Net asset value - end of period $ 6.86 $ 6.99 $ 7.05 $ 7.13 $ 7.11
====== ====== ====== ====== ======
Total return 3.23% 4.94% 5.08% 6.44% 5.25%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.69% 1.74% 1.80% 1.80% 1.85%+
Net investment income 5.19% 5.76% 5.80% 5.76% 6.01%+
Portfolio turnover 278% 288% 489% 385% 498%
Net assets at end of period (000 omitted) $24,228 $20,131 $18,862 $13,842 $4,450
* For the period from the inception of Class C, July 1, 1994, through April 30, 1995.
+ Annualized.
++ Not annualized.
# 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 expenses of the Fund, exclusive of
management and distribution and service fees, at not more 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%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, PERIOD ENDED
-------------------------------- APRIL 30,
1999 1998 1997*
- -------------------------------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 6.98 $ 7.04 $ 7.08
------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.43 $ 0.48 $ 0.15
Net realized and unrealized loss on investments (0.14) (0.07) (0.03)
------ ------ ------
Total from investment operations $ 0.29 $ 0.41 $ 0.12
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.42) $(0.47) $(0.15)
In excess of net investment income -- -- (0.01)
------ ------ ------
Total distributions declared to shareholders $(0.42) $(0.47) $(0.16)
------ ------ ------
Net asset value - end of period $ 6.85 $ 6.98 $ 7.04
====== ====== ======
Total return 4.28% 5.98% 1.72%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.69% 0.74% 1.17%+
Net investment income 6.21% 6.75% 8.68%+
Portfolio turnover 278% 288% 489%
Net assets at end of period (000 omitted) $1,459 $1,466 $1,925
* 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.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain expenses of the Fund, exclusive of
management and distribution and service fees, at not more 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%+
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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. Securities for which there are no such quotations or valuations are
valued at fair value as determined in good faith by or at the direction of the
Trustees.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund requires
that the securities collateral in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a default under the repurchase agreement. The Fund
monitors, on a daily basis, the value of the collateral to ensure that its
value, including accrued interest, is greater than amounts owed to the Fund
under each such repurchase agreement. The Fund, along with other affiliated
entities of Massachusetts Financial Services Company (MFS), may utilize a
joint trading account for the purpose of entering into one or more repurchase
agreements.
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.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Code, which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. Accordingly, the amount of net investment income and net realized
gain reported on these financial statements may differ from that reported on
the Fund's tax return and, consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as 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.
During the year ended April 30, 1999, $42,049 was reclassified from
accumulated distributions in excess of net investment income to accumulated
net realized loss on investments due to differences between book and tax
accounting for mortgage-back securities. This change had no effect on the net
assets or net asset value per share.
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. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with MFS to
provide overall investment advisory and administrative services, and general
office facilities. The management fee is computed daily and paid monthly at an
annual rate of 0.40% of the Fund's average daily net assets.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of $4,096
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
$69,462 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. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $16,205
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. 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 $2,613 and $97 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 0.92% and 1.00% of average daily net assets attributable to Class B
and Class C shares on an annualized basis, respectively. Except in the case of
the 0.25% per annum Class B service fee paid upon the sale of Class B shares
in the first year, the Class B service fee is 0.15% per annum and may increase
to a maximum of 0.25% per annum on such date as the Trustees of the Trust may
determine.
Certain Class A 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 $18,710, $108,658, and $13,747 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 short-term obligations, were
as follows:
PURCHASES SALES
- -------------------------------------------------------------------------------
U.S. government securities $377,880,180 $366,863,006
------------ ------------
Investments (non-U.S. government
securities) $180,303,374 $134,564,321
------------ ------------
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 $215,116,741
------------
Gross unrealized depreciation $ (1,974,758)
Gross unrealized appreciation 378,322
------------
Net unrealized depreciation $ (1,596,436)
============
(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 89,884,749 $ 625,609,406 63,435,881 $ 445,921,523
Shares issued to shareholders
in reinvestment of
distributions 718,455 4,986,426 632,833 4,458,800
Shares reacquired (84,729,931) (589,753,636) (63,470,826) (446,086,457)
----------- ------------- ----------- -------------
Net increase 5,873,273 $ 40,842,196 597,888 $ 4,293,866
=========== ============= =========== =============
<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 7,595,456 $ 52,632,457 4,477,191 $ 31,495,141
Shares issued to shareholders
in reinvestment of
distributions 247,817 1,712,458 209,931 1,476,294
Shares reacquired (5,746,325) (39,697,324) (4,017,485) (28,243,968)
----------- ------------- ----------- -------------
Net increase 2,096,948 $ 14,647,591 669,637 $ 4,727,467
=========== ============= =========== =============
<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 3,684,433 $ 25,649,796 2,081,330 $ 14,705,683
Shares issued to shareholders
in reinvestment of
distributions 109,967 762,710 116,955 825,247
Shares reacquired (3,144,596) (21,810,087) (1,992,536) (14,059,660)
----------- ------------- ----------- -------------
Net increase 649,804 $ 4,602,419 205,749 $ 1,471,270
=========== ============= =========== =============
<CAPTION>
Class I Shares
YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 153,379 $ 1,065,556 128,478 $ 910,579
Shares issued to shareholders
in reinvestment of
distributions 15,876 109,990 18,451 130,116
Shares reacquired (166,408) (1,143,052) (210,244) (1,480,828)
----------- ------------- ----------- -------------
Net increase (decrease) 2,847 $ 32,494 (63,315) $ (440,133)
=========== ============= =========== =============
</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 $1,483. The Fund had no significant borrowings
during the year.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Series Trust IX and Shareholders of MFS Limited
Maturity Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS 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 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.
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MFS(R) LIMITED MATURITY FUND
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TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified
services company) AUDITORS
Deloitte & Touche LLP
Lawrence T. Perera - Partner, Hemenway
& Barnes (attorneys) INVESTOR INFORMATION
For MFS stock and bond market outlooks, call
William J. Poorvu - Adjunct Professor, Harvard toll free: 1-800-637-4458 anytime from a
University Graduate School of Business touch-tone telephone.
Administration
For information on MFS mutual funds, call your
Charles W. Schmidt - Private Investor financial adviser or, for an information kit,
call toll free: 1-800-637-2929 any business day
Arnold D. Scott* - Senior Executive from 9 a.m. to 5 p.m. Eastern time (or leave a
Vice President, Director, and Secretary, message anytime).
MFS Investment Management
INVESTOR SERVICE
Jeffrey L. Shames* - Chairman, Chief MFS Service Center, Inc.
Executive Officer, and Director, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Elaine R. Smith - Independent Consultant For general information, call toll free:
1-800-225-2606 any business day from
David B. Stone - Chairman and Director, 8 a.m. to 8 p.m. Eastern time.
North American Management Corp.
(investment advisers) For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business day
INVESTMENT ADVISER from 9 a.m. to 5 p.m. Eastern time. (To use
Massachusetts Financial Services Company this service, your phone must be equipped with
500 Boylston Street a Telecommunications Device for the Deaf.)
Boston, MA 02116-3741
For share prices, account balances, and
DISTRIBUTOR exchanges, call toll free: 1-800-MFS-TALK
MFS Fund Distributors, Inc. (1-800-637-8255) anytime from a touch-tone
500 Boylston Street telephone.
Boston, MA 02116-3741
WORLD WIDE WEB
PORTFOLIO MANAGER www.mfs.com
James J. Calmas*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
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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 Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MLM-2 6/99 15M 36/236/336/836
