<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) MUNICIPAL
LIMITED MATURITY FUND
SEMIANNUAL REPORT o OCTOBER 31, 1999
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MUTUAL FUND GIFT KITS (see page 27)
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<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
MFS' Year 2000 Readiness Disclosure ....................................... 26
Trustees and Officers ..................................................... 29
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
The current investment and economic environment bears little resemblance to last
year's. One year ago, global economies were floundering, and the crisis in Asia
threatened an already weak U.S. economy. Corporate earnings were flat, and
economists used the word "deflation" for the first time in recent memory.
Entering 1999, expectations for corporate earnings growth were lowered
dramatically. In an attempt to foster U.S. growth, the Federal Reserve Board
(the Fed) lowered interest rates.
As a result, this year the U.S. economy is booming and unemployment is low. Many
corporations are focused on improving their profitability, and investors have
been rewarded with positive surprises across a variety of industries. Our
analysts predict that corporate earnings growth for 1999 will average 12% - 15%.
Global economies also are showing signs of strength, and the Asian crisis has
passed. In fact, Japan's economic woes seem to have reached bottom. Although the
process is in its infancy, some Japanese corporations not only are talking about
restructuring and cost cutting, they also are beginning to take action, looking
within to become more competitive and improve returns on equity. While still
lagging the United States, Europe is beginning to restructure and consolidate.
These signs of international growth have contributed to concerns that the U.S.
economy now may be too strong. In June, and again in August, the Fed raised
rates by one-quarter of a percentage point to help ward off the specter of
inflation.
After an unprecedented four years of 20% annual returns in the U.S. equity
market, we fear that many investors have become accustomed to high returns and
have lost sight of the risks they take on to achieve them. In the current
market many investors are taking on additional risk - whether through day
trading or investing in speculative Internet stocks.
Risks are as much a part of the market today as they were one year ago.
We believe the market remains overvalued, with stocks priced 30% above our
analysts' earnings projections. And market narrowness has not abated; the top
25 stocks in the Standard & Poor's 500 Composite Index, a popular, unmanaged
index of common stock total return performance, are still the most overvalued.
Such extreme overvaluation makes the stock market sensitive to interest-rate
news and any negative earnings surprises. The Year 2000 (Y2K) computer problem
is another factor causing investor concern. While we believe corporate America
is well prepared to address any Y2K situations that may arise at year-end, no
one can predict investor behavior. In our opinion, it is investor behavior
that has the greatest potential to create market volatility.
We believe the best way to address Y2K and other market risks is through our
continuing commitment to MFS Original Research(R) and our fundamental investment
tenet of long-term investing. Whether markets are up or down, MFS analysts focus
on analyzing industries and visiting companies to determine the long-term
winners and the prices that will make them attractive opportunities. Because all
companies will not benefit equally from the improving international environment,
bottom-up research remains critical to identifying those that we believe are
successfully restructuring, consolidating, and gaining market share.
Changes in market and economic conditions can't be predicted but should always
be expected. The changes we have seen over the past year only reinforce our
commitment to long-term planning and investing. We believe volatility helps to
create opportunity for long-term investors to buy solid companies at
attractive prices. For this reason, we are continuing to expand our domestic
and international capabilities to ensure that MFS has primary, in-house
research on companies worldwide. We believe that we have built the right
investment team, backed by MFS Original Research, to take advantage of those
opportunities for our shareholders.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
November 15, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Christopher J. Mier]
Christopher J. Mier
For the six months ended October 31, 1999, Class A shares of the Fund provided a
total return of -0.84%, Class B shares -1.23%, and Class C shares -1.27%. These
returns include the reinvestment of any 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 -0.78%. The Fund's returns
also compare to returns of 0.26% and -0.85% 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 LED TO THE NEGATIVE RETURNS OF THE MUNICIPAL BOND MARKET AND
THE FUND?
A. Rising interest rates were the main reason municipal bonds struggled during
the period. Remember, as rates rise, bond prices fall. Market rates started
to rise in the first quarter of 1999 and continued to do so through most of
the period. Rates rose in response to concerns that the continued strength
of the U.S economy would spark inflationary pressures. The Federal Reserve
Board (the Fed) was concerned enough to raise short-term interest rates in
June and in August. Municipal bond market performance relative to U.S.
Treasuries was restrained by issues related to supply and demand. (Principle
value and interest on Treasury securities are guaranteed by the U.S.
government if held to maturity.) On the supply side, new issuance was still
very strong, even though it didn't match the huge quantity that came to
market in 1998 when municipalities sought to take advantage of lower
interest rates to reduce their borrowing costs. However, demand was weak as
traditional purchasers of municipal bonds such as insurance companies were
less active. In addition, municipal bonds and other non-Treasury investments
lagged as market participants sought the liquidity offered by U.S. Treasury
securities in anticipation of any problems associated with the approach of
the year 2000.
Q. WHAT CHANGES HAVE YOU MADE TO THE FUND SINCE TAKING IT OVER?
A. In managing the Fund, we look closely at its average maturity. Earlier in
1999, the Fund's average maturity was close to five years. Given the
pressure on interest rates, I sought to take a more defensive stance by
lowering the Fund's average maturity, reducing it to as low as 4.2 years at
one point. As we approached the end of the period, it became apparent that
interest rates had stabilized somewhat. As a result, I looked to move the
Fund's average maturity a bit closer to 4.5 years by the end of the period.
By doing so, I hoped to achieve a competitive rate of return while at the
same time maintaining a relatively neutral stance regarding the direction of
interest rates.
Q. WERE THERE OTHER STRATEGIES OF NOTE THAT YOU PURSUED?
A. Beyond adjusting the Fund's average maturity, there are two primary areas
where we can seek to add value: yield-curve positioning and credit quality.
The yield curve represents the yields available in the bond marketplace at
various maturities, such as one year, three years, five years, etc. During
the period, we employed a variety of yield-curve strategies designed to try
to take advantage of favorable trade-offs between maturity risk and return.
Looking at credit quality, I added marginally to the Fund's lower-quality
(but still investment-grade) "BBB"-rated bonds, within the limitations of
the prospectus. These investments are generally less susceptible to rising
interest rates than higher-rated securities and offer higher yields, but
they are also associated with additional credit risk -- the risk that their
issuers will not meet their payments. The combination of our effective
credit research and a healthy economy that helped municipal issues
experience more credit upgrades than downgrades helped us avoid any
significant credit problems.
Q. DID YOU FAVOR ANY PARTICULAR STATES OR SECTORS OF THE MARKET?
A. For several years, the U.S. economy as a whole has performed very well. It
used to be that we'd see a cycle in which one region would perform better
than the others, but recently that hasn't been the case. Thus, we haven't
pursued a state- or region-specific strategy. With regard to sectors, we've
generally been very cautious and selective with investments in the health
care industry. On the other hand, higher education and housing were more
attractive during the period.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
A. As far as interest rates are concerned, I believe we'll see them trade in a
relatively narrow range fairly close to current levels instead of moving
sharply up or down. As a result, I'll aim to maintain the Fund's neutral
posture. I suspect that we will see a gradual rebound in non-Treasury bond
sectors, including municipals, as we cross into the year 2000 and liquidity
becomes less of an issue. At this point, municipal securities are very
attractively valued on an absolute basis and relative to U.S. Treasuries. We
believe they offer very attractive yields, enjoy the advantage of being tax
exempt, and benefit from very strong credit quality at this point in the
economic cycle. In addition, we feel that shorter-term municipals offer
particularly attractive income relative to their volatility. As a result, we
believe there are many good reasons to own municipal bonds generally and the
Fund in particular.
/s/ Christopher J. Mier
Christopher J. Mier
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current only through the end of the period of the report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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CHRISTOPHER J. MIER IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R)
AND PORTFOLIO MANAGER OF MFS(R) MUNICIPAL LIMITED MATURITY FUND AND MFS(R)
MUNICIPAL INCOME FUND. HE IS ALSO A PORTFOLIO MANAGER OF THE MFS(R) ALABAMA,
ARKANSAS, CALIFORNIA, FLORIDA, MARYLAND, MASSACHUSETTS, MISSISSIPPI, NEW
YORK, PENNSYLVANIA, AND TENNESSEE MUNICIPAL BOND FUNDS.
MR. MIER JOINED MFS IN MAY 1999. PRIOR TO JOINING MFS, HE SPENT 13 YEARS AS A
MANAGING DIRECTOR AND PORTFOLIO MANAGER IN THE MUNICIPAL BOND DEPARTMENT AT A
MAJOR INTERNATIONAL MONEY MANAGER. HE EARNED A BACHELOR'S DEGREE IN ECONOMICS
FROM THE UNIVERSITY OF MICHIGAN AND A MASTER'S DEGREE IN MANAGEMENT FROM
NORTHWESTERN UNIVERSITY. HE IS A CHARTERED FINANCIAL ANALYST.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL
RESEARCH(R), A COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING SECURITIES.
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial consultant or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS AS HIGH A LEVEL OF CURRENT INCOME 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: $58.2 MILLION NET ASSETS AS OF OCTOBER 31, 1999
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends. (See Notes to
Performance Summary.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH OCTOBER 31, 1999
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge -0.84% +0.55% +10.53% +21.82% +37.69%
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Average Annual Total Return Excluding
Sales Charge -- +0.55% + 3.39% + 4.03% + 4.28%
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Average Annual Total Return Including
Sales Charge -- -1.97% + 2.52% + 3.50% + 3.94%
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<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge -1.23% -0.24% +8.00% +17.20% +30.99%
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Average Annual Total Return Excluding
Sales Charge -- -0.24% +2.60% + 3.22% + 3.61%
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Average Annual Total Return Including
Sales Charge -- -4.11% +1.66% + 2.87% + 3.61%
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<CAPTION>
CLASS C
6 Months 1 Year 3 Years 5 Years Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge -1.27% -0.31% +7.75% +16.71% +31.69%
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Average Annual Total Return Excluding
Sales Charge -- -0.31% +2.52% + 3.14% + 3.68%
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Average Annual Total Return Including
Sales Charge -- -1.28% +2.52% + 3.14% + 3.68%
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* For the period from the commencement of the Fund's investment operations, March 17, 1992, through
October 31, 1999.
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 2.50% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class C Share Performance Including Sales Charge takes into account the
deduction of the 1% CDSC applicable to Class C shares redeemed within 12
months.
Class B and C share performance include the performance of the Fund's Class A
shares for periods prior to their inception (blended performance). Class B and
C blended performance has been adjusted to take into account the CDSC
applicable to Class B and C shares rather than the initial sales charge (load)
applicable to Class A shares. These blended performance figures have not been
adjusted to take into account differences in class-specific operating
expenses. Because operating expenses of Class B and C shares are higher than
those of Class A, the blended Class B and C share performance is higher than
it would have been had Class B and C shares been offered for the
entire period.
All performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 1999
QUALITY RATINGS (U.S. PORTION ONLY)
Source: Standard & Poor's and Moody's.
"AAA" 54.0%
"AA" 20.1%
"A" 8.9%
"BBB" 8.2%
Not Rated 7.7%
Other 1.1%
The portfolio is actively managed, and current holdings may be different.
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited) -- October 31, 1999
Municipal Bonds - 98.3%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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<S> <C> <C>
General Obligation - 21.2%
Baltimore County, MD, Consolidated Public Improvement, 5s, 2005 $ 425 $ 431,136
Bloomington, MN, Independent School District, 5.25s, 2011 500 496,400
Central Falls, RI, 5.5s, 2005 440 449,108
Chicago, IL, Public Building Commerce Rev., FGIC, 5.5s, 2006 250 257,653
Commonwealth of Puerto Rico, 5.5s, 2001 500 508,445
Harris County, TX, 5.875s, 2006 500 528,840
Honolulu, HI, FGIC, 5s, 2002 115 116,658
Houston, TX, 5.5s, 2005 1,000 1,032,190
Hunt County, TX, Permanent Improvement, AMBAC, 5.5s, 2007 615 633,616
Indianapolis, IN, Local Public Improvement Bond Bank, 6.25s, 2001 1,000 1,022,010
Irving, TX, Independent School District, PSF, 0s, 2003 350 300,293
Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,070,010
New York City, NY, 5s, 2001 515 520,186
New York City, NY, 6.125s, 2001 525 539,647
New York City, NY, 5.7s, 2002 500 514,510
New York City, NY, 5.3s, 2003 500 509,635
North Slope Borough, AK, MBIA, 0s, 2001 600 570,174
Northern Mariana Islands Commonwealth, Public School
Systems Project, FSA, 5.125s, 2008 500 500,950
State of Hawaii, FGIC, 5s, 2001 500 506,245
State of Louisiana, FGIC, 6s, 2000 500 507,780
State of Mississippi, 5.5s, 2006 250 258,480
State of Mississippi, 5s, 2010 250 241,948
State of Washington, 5.6s, 2001 300 306,978
Stephenville, TX, Independent School District, PSF-GTD, 0s, 2004 500 406,590
Wisconsin Housing & Economic Development, AMBAC, 4.9s, 2005 160 159,189
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$12,388,671
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State and Local Appropriation - 13.5%
Massachusetts Development Finance Agency (Xaverian
Brothers High School), 4.9s, 2007 $ 175 $ 168,912
Michigan Building Authority Rev., 6.2s, 2002 1,000 1,047,800
New York Dormitory Authority Rev., Albany County State
Service Contract, 5s, 2003 180 181,507
New York Dormitory Authority Rev. (City University), 5s, 2000 500 502,685
New York Dormitory Authority Rev. (City University), 5s, 2003 1,060 1,069,455
New York Dormitory Authority Rev. (State University), 4.9s, 2000 250 251,302
New York Medical Care Facilities Finance Agency Rev., 5.9s, 2000 175 177,473
New York Urban Development Corp. Rev., 6s, 2002 1,000 1,028,830
New York Urban Development Corp. Rev
(Correctional Facilities), 5.5s, 2001 1,375 1,392,160
Ohio Building Authority, State Facilities Administration
Building, 5.375s, 2013 1,000 981,890
State of Utah, Building Ownership Authority Lease Rev., 5.5s, 2000 500 504,280
State of Utah, Building Ownership Authority Lease Rev., 0s, 2005 685 523,744
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$ 7,830,038
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Refunded and Special Obligations - 5.7%
Delaware County, IN, Hospital Authority (Ball Memorial
Hospital), AMBAC, 6.625s, 2001 $ 900 $ 916,074
Indiana Health Facility Hospital Rev. (Sisters of St
Francis Health), MBIA, 5s, 2002 5 5,074
Michigan Building Authority Rev., 5.4s, 2003 375 391,001
Michigan Hospital Finance Authority Rev. (Genesys Health
System), 5.5s, 2007 750 770,767
Milwaukee, WI, Metropolitan Sewage District, 6.7s, 2001 500 522,045
New York City, NY, 5s, 2001 135 136,858
New York City, NY, 6.125s, 2001 75 77,373
State of Mississippi, ETM, 6.2s, 2008 455 487,733
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$ 3,306,925
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Airport and Port Revenue - 3.0%
Atlanta, GA, Airport Facilities Rev., AMBAC, 5.5s, 2001 $ 500 $ 506,635
Cleveland, OH, Airport Systems Rev., FSA, 5.5s, 2008 250 255,105
Houston, TX, Airport System Rev., FGIC, 5s, 2006 500 496,270
Minneapolis & St. Paul, MN, Airport Rev., FGIC, 5s, 2006 500 498,295
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$ 1,756,305
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Electric and Gas Utility Revenue - 9.8%
American Public Energy Agency, Gas Supply Rev. (Nebraska
Public Gas Agency), 5s, 2007 $ 500 $ 487,050
Beaver County, PA, Industrial Development Authority,
Pollution Control Rev. (Ohio Edison Co.), 4.65s, 2033 500 478,030
Georgia Municipal Electric Authority, MBIA, 5s, 2002 600 606,198
Intermountain Power Agency, UT, Power Supply Rev., FSA, 5.25s, 2001 500 507,425
North Carolina Municipal Power, MBIA, 5s, 2001 500 503,670
Oklahoma Development Finance Authority (Public Service
Company of Oklahoma), 4.875s, 2014 1,000 988,820
Sacramento, CA, Municipal Utility District Electric
Rev., FGIC, 6s, 2001 620 639,797
Washington Public Power Supply System Rev., 5.45s, 2000 1,500 1,515,825
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$ 5,726,815
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Health Care Revenue - 6.6%
Baxter County, AK, Hospital Rev., 4.7s, 2005 $ 320 $ 302,378
Colorado Health Facilities Authority Rev. (National
Benevolent Assn.), 4.5s, 2002 280 275,122
Delaware County, PA, Hospital Rev. (Crozer-Chester
Medical Center), 4.75s, 2005 500 471,560
Denver, CO, Health & Hospital Authority Rev., 5.125s, 2006 200 193,118
Marion County, FL, Hospital Dist. Rev., Health Systems, 4.75s, 2005 500 486,540
Massachusetts Health & Educational Facilities
(Jordan Hospital), 4.8s, 2006 600 568,068
Michigan Hospital Finance Authority Rev. (Mercy Health
Services), 5.5s, 2000 500 505,540
Missouri Health & Educational Facilities Authority Rev
(Freeman Health Systems), 4.65s, 2003 450 440,329
Stillwater, OK, Medical Center Authority (Stillwater
Medical Center), 5.55s, 2001 335 334,799
Waco, TX, Health Facilities Development Corp. (Ascension
Health), 5.5s, 2009 250 250,448
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$ 3,827,902
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Industrial Revenue (Corporate Guarantee) - 0.6%
De Soto Parish, LA, Pollution Control Rev
(International Paper Co.), 5.05s, 2002 $ 350 $ 350,182
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Insured Health Care Revenue - 6.8%
Huntsville, AL, Health Care Authority, MBIA, 4.3s, 2002 $ 500 $ 496,615
Illinois Educational Facilities Authority Rev
(Methodist Medical Center), 5.5s, 2005 500 516,190
Illinois Educational Facilities Authority Rev. (Sherman
Health Systems), AMBAC, 5s, 2003 250 252,958
Illinois Health Facilities Authority Rev. (Childrens
Memorial Hospital), AMBAC, 5s, 2001 750 758,355
Illinois Health Facilities Authority Rev. (Childrens
Memorial Hospital), AMBAC, 5.75s, 2011 250 254,812
Illinois Health Facilities Authority Rev. (Holy Family
Medical Center), MBIA, 5s, 2004 325 326,905
Indiana Health Facility Hospital Rev. (Sisters of St
Francis Health), MBIA, 5s, 2002 245 248,190
Jackson County, MI, Hospital Finance Authority (Foote
Memorial Hospital), AMBAC, 4.375s, 2002 200 199,392
Spartanburg County, SC, Health Service, MBIA, 4.5s, 2002 675 674,210
State of Utah, Board of Regents Rev. (University of Utah
Hospital), AMBAC, 5s, 2002 200 202,438
-----------
$ 3,930,065
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Multi-Family Housing Revenue - 4.1%
Alaska Housing Finance Corp., MBIA, 4.55s, 2002 $ 350 $ 349,093
Rhode Island Housing & Mortgage Finance Corp., AMBAC, 5.15s, 2001 1,000 1,009,970
Rhode Island Housing & Mortgage Finance Corp., AMBAC, 5.25s, 2002 1,000 1,014,340
-----------
$ 2,373,403
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Sales and Excise Tax Revenue - 5.2%
Denver, CO, City & County Excise Tax, FSA, 5.25s, 2008 $ 500 $ 503,200
District of Columbia, Redevelopment Land Agency, 5.625s, 2010 315 318,648
Pennsylvania Intergovernmental Cooperative Authority,
Special Tax Rev., FGIC, 5s, 2007 1,000 997,440
Virgin Islands Public Finance Authority, 5.5s, 2005 1,000 1,007,220
Washington, DC, Convention Center, AMBAC, 4.75s, 2005 200 197,914
-----------
$ 3,024,422
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Single Family Housing Revenue - 2.1%
Massachusetts Housing Finance Agency, MBIA, 5.35s, 2010 $ 130 $ 129,665
Mississippi Home Corp. Single Family Housing Rev., GNMA, 5.1s, 2017 250 238,175
South Dakota Housing Development Authority, 5.65s, 2011 250 246,052
Wyoming Community Development Authority, Housing Rev., 5s, 2006 600 590,400
-----------
$ 1,204,292
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Solid Waste Revenue - 4.2%
Arlington County, VA, Industrial Development Authority,
Resource Recovery Rev. (Alexandria/Arlington Waste), 5.25s, 2009 $ 500 $ 494,330
Ashdown, AR, Pollution Control Rev. (Nekoosa Papers,
Inc.), 4.75s, 2008 500 468,915
Delaware County, PA, Industrial Development Authority
Rev. (Recovery Facilities), 5.5s, 2000 1,000 1,001,400
Massachusetts Industrial Finance Agency (Ogden
Haverhill), 5.15s, 2007 500 473,365
-----------
$ 2,438,010
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Student Loan Revenue - 2.7%
Alaska Student Loan Corp. Rev., AMBAC, 5s, 2003 $ 400 $ 402,364
Louisiana Public Facilities Authority (Student Loan Rev.), 6.5s, 2002 770 792,969
Michigan Higher Education Student Loan, AMBAC, 5s, 2007 410 402,690
-----------
$ 1,598,023
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Turnpike Revenue - 3.5%
Denver, CO, City & County Airport Rev., MBIA, 6s, 2006 $1,000 $ 1,056,810
New Jersey Transit Corp., FSA, 5s, 2000 1,000 1,003,750
-----------
$ 2,060,560
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Universities - 4.8%
California Educational Facilities Authority Rev
(College & University), 5.15s, 2000 $ 360 $ 361,868
District of Columbia (Georgetown University), MBIA, 5.5s, 2001 500 506,945
Metropolitan Nashville, TN (Vanderbilt University), 5.25s, 2001 500 507,165
State of New Hampshire, Higher Education & Health (New
Hampshire College), 5.65s, 2003 320 319,242
State of Texas, University Systems, Constitutional
Appropriation, 5s, 2004 1,065 1,081,699
-----------
$ 2,776,919
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Water and Sewer Utility Revenue - 3.3%
Massachusetts Water Resources Authority, FSA, 5.5s, 2008 $1,000 $ 1,023,760
Philadelphia, PA, Water & Sewer Rev., MBIA, 0s, 2002 500 437,750
Seattle, WA, Water Systems Rev., 5s, 2008 475 471,081
-----------
$ 1,932,591
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Other - 1.2%
Suffolk County, NY, Judicial Facilities (John P. Cohalan
Complex), AMBAC, 5.75s, 2011 $ 160 $ 164,110
Washington Motor Vehicle Fuel Tax, 6s, 2006 500 530,275
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$ 694,385
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Total Municipal Bonds (Identified Cost, $57,733,490) $57,219,508
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Floating Rate Demand Note - 0.2%
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Harris County, TX, Hospital Rev. (Methodist Hospital),
due 11/01/99, at Identified Cost $ 100 100,000
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Total Investments (Identified Cost, $57,833,490) $57,319,508
Other Assets, Less Liabilities - 1.5% 855,514
- --------------------------------------------------------------------------------------------------------
Net assets - 100.0% $58,175,022
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See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- -------------------------------------------------------------------------------
OCTOBER 31, 1999
- -------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $57,833,490) $57,319,508
Cash 45,401
Receivable for Fund shares sold 219,036
Receivable for investments sold 976,830
Interest receivable 796,380
Other assets 383
-----------
Total assets $59,357,538
-----------
Liabilities:
Distributions payable $ 66,627
Payable for Fund shares reacquired 435,098
Payable for investments purchased 668,783
Payable to affiliates -
Management fee 1,436
Distribution and service fee 1,435
Accrued expenses and other liabilities 9,137
-----------
Total liabilities $ 1,182,516
-----------
Net assets $58,175,022
===========
Net assets consist of:
Paid-in capital $59,643,156
Unrealized depreciation on investments (513,982)
Accumulated net realized loss on investments (951,211)
Accumulated distributions in excess of net investment income (2,941)
-----------
Total $58,175,022
===========
Shares of beneficial interest outstanding 7,850,087
=========
Class A shares:
Net asset value per share
(net assets of $45,322,729 / 6,114,421 shares of
beneficial interest outstanding) $7.41
=====
Offering price per share (100 / 97.5 of net asset value
per share) $7.60
=====
Class B shares:
Net asset value and offering price per share
(net assets of $8,681,268 / 1,172,916 shares of
beneficial interest outstanding) $7.40
=====
Class C shares:
Net asset value and offering price per share
(net assets of $4,171,025 / 562,750 shares of beneficial
interest outstanding) $7.41
=====
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- -------------------------------------------------------------------------------
SIX MONTHS ENDED OCTOBER 31, 1999
- -------------------------------------------------------------------------------
Net investment income:
Interest income $ 1,406,348
-----------
Expenses -
Management fee $ 119,717
Trustees' compensation 6,275
Shareholder servicing agent fee 30,010
Distribution and service fee (Class A) 35,298
Distribution and service fee (Class B) 40,580
Distribution and service fee (Class C) 21,255
Administrative fee 4,502
Custodian fee 12,804
Printing 301
Postage 3,170
Auditing fees 15,845
Legal fees 1,137
Registration fees 29,505
Miscellaneous 9,971
-----------
Total expenses $ 330,370
Fees paid indirectly (8,374)
Reduction of expenses by investment adviser (14,807)
-----------
Net expenses $ 307,189
-----------
Net investment income $ 1,099,159
-----------
Realized and unrealized gain on investments:
Realized loss on investment transactions (identified
cost basis) $ (383,519)
Change in unrealized depreciation on investments (1,294,243)
-----------
Net realized and unrealized loss on investments $(1,677,762)
-----------
Decrease in net assets from operations $ (578,603)
===========
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1999 APRIL 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,099,159 $ 1,939,196
Net realized gain (loss) on investments (383,519) 131,130
Net unrealized gain (loss) on investments (1,294,243) 216,980
----------- -----------
Increase (decrease) in net assets from operations $ (578,603) $ 2,287,306
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ (906,471) $(1,603,398)
From net investment income (Class B) (133,552) (243,023)
From net investment income (Class C) (63,404) (120,982)
----------- -----------
Total distributions declared to shareholders $(1,103,427) $(1,967,403)
----------- -----------
Net increase in net assets from Fund share transactions $ 586,296 $10,486,783
----------- -----------
Total increase (decrease) in net assets $(1,095,734) $10,806,686
Net assets:
At beginning of period 59,270,756 48,464,070
----------- -----------
At end of period (including accumulated undistributed
(distributions in excess of) net investment income of
($2,941) and $1,327, respectively) $58,175,022 $59,270,756
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED -------------------------------------------------------------------------
OCTOBER 31, 1999 1999 1998 1997 1996 1995
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 7.62 $ 7.57 $ 7.50 $ 7.53 $ 7.45 $ 7.47
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.15 $ 0.29 $ 0.30 $ 0.29 $ 0.30 $ 0.28
Net realized and unrealized
gain (loss) on investments (0.21) 0.06 0.07 (0.03) 0.08 (0.02)
------ ------ ------ ------ ------ ------
Total from investment
operations $(0.06) $ 0.35 $ 0.37 $ 0.26 $ 0.38 $ 0.26
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.15) $(0.30) $(0.30) $(0.29) $(0.30) $(0.28)
In excess of net investment
income -- -- -- -- -- (0.00)+++
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(0.15) $(0.30) $(0.30) $(0.29) $(0.30) $(0.28)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 7.41 $ 7.62 $ 7.57 $ 7.50 $ 7.53 $ 7.45
====== ====== ====== ====== ====== ======
Total return(+) (0.84)%++ 4.65% 5.02% 3.51% 5.11% 3.55%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.88%+ 0.88% 0.87% 0.95% 0.95% 0.95%
Net investment income 3.85%+ 3.84% 3.97% 3.86% 4.00% 3.74%
Portfolio turnover 31% 31% 51% 78% 43% 50%
Net assets at end of period
(000 Omitted) $45,323 $45,840 $37,595 $40,953 $50,387 $64,329
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed, under a temporary expense reimbursement agreement, to pay
all of the Fund's operating expenses, exclusive of management and distribution and service fees. The Fund pays MFS a fee
not greater than 0.40% of average daily net assets. In addition, the investment adviser voluntarily waived a portion of its
fee 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 and the ratios would have been:
Net investment income $ 0.15 $ 0.28 $ 0.30 $ 0.29 $ 0.30 $ 0.28
Ratios (to average net
assets):
Expenses## 0.93%+ 0.99% 1.01% 1.02% 0.99% 0.95%
Net investment income 3.80%+ 3.71% 3.85% 3.79% 3.96% 3.74%
+ Annualized.
++ Not 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.
(+) 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.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED -------------------------------------------------------------------------
OCTOBER 31, 1999 1999 1998 1997 1996 1995
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 7.61 $ 7.56 $ 7.49 $ 7.52 $ 7.44 $ 7.46
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.12 $ 0.23 $ 0.24 $ 0.23 $ 0.25 $ 0.21
Net realized and unrealized
gain (loss) on investments (0.21) 0.06 0.07 (0.03) 0.07 (0.02)
------ ------ ------ ------ ------ ------
Total from investment
operations $(0.09) $ 0.29 $ 0.31 $ 0.20 $ 0.32 $ 0.19
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.12) $(0.24) $(0.24) $(0.23) $(0.24) $(0.21)
In excess of net investment
income -- -- -- -- -- (0.00)+++
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(0.12) $(0.24) $(0.24) $(0.23) $(0.24) $(0.21)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 7.40 $ 7.61 $ 7.56 $ 7.49 $ 7.52 $ 7.44
====== ====== ====== ====== ====== ======
Total return (1.23)%++ 3.85% 4.22% 2.71% 4.34% 2.67%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.66%+ 1.66% 1.64% 1.73% 1.70% 1.80%
Net investment income 3.06%+ 3.06% 3.20% 3.08% 3.25% 2.88%
Portfolio turnover 31% 31% 51% 78% 43% 50%
Net assets at end of period
(000 Omitted) $8,681 $9,149 $7,618 $6,503 $7,749 $7,792
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed, under a temporary expense reimbursement agreement, to pay
all of the Fund's operating expenses, exclusive of management and distribution and service fees. The Fund pays MFS a fee
not greater than 0.40% of average daily net assets. In addition, the investment adviser voluntarily waived a portion of its
fee 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 and the ratios would have been:
Net investment income $ 0.12 $ 0.22 $ 0.24 $ 0.23 $ 0.25 $ 0.21
Ratios (to average net
assets):
Expenses## 1.71%+ 1.77% 1.78% 1.80% 1.74% 1.80%
Net investment income 3.01%+ 2.93% 3.08% 3.01% 3.21% 2.88%
+ Annualized.
++ Not 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.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED -------------------------------------------------------------------------
OCTOBER 31, 1999 1999 1998 1997 1996 1995*
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 7.63 $ 7.57 $ 7.50 $ 7.53 $ 7.45 $ 7.45
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.10 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.21
Net realized and unrealized
gain (loss) on investments (0.21) 0.06 0.08 (0.03) 0.08 (0.02)
------ ------ ------ ------ ------ ------
Total from investment
operations $(0.11) $ 0.29 $ 0.31 $ 0.20 $ 0.31 $ 0.19
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.11) $(0.23) $(0.24) $(0.23) $(0.23) $(0.19)
In excess of net investment
income -- -- -- -- -- (0.00)+++
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(0.11) $(0.23) $(0.24) $(0.23) $(0.23) $(0.19)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 7.41 $ 7.63 $ 7.57 $ 7.50 $ 7.53 $ 7.45
====== ====== ====== ====== ====== ======
Total return (1.27)%++ 3.77% 4.13% 2.64% 4.23% 2.53%+
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.73%+ 1.73% 1.72% 1.80% 1.80% 1.79%+
Net investment income 2.98%+ 2.98% 3.11% 3.03% 3.16% 2.77%+
Portfolio turnover 31% 31% 51% 78% 43% 50%
Net assets at end of period
(000 Omitted) $4,171 $4,282 $3,250 $3,297 $3,013 $1,934
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed, under a temporary expense reimbursement agreement, to pay
all of the Fund's operating expenses, exclusive of management and distribution and service fees. The Fund pays MFS a fee
not greater than 0.40% of average daily net assets. In addition, the investment adviser voluntarily waived a portion of its
fee 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 and the ratios would have been:
Net investment income $ 0.11 $ 0.22 $ 0.23 $ 0.22 $ 0.23 $ 0.21
Ratios (to average net
assets):
Expenses## 1.78%+ 1.84% 1.86% 1.87% 1.84% 1.79%+
Net investment income 2.93%+ 2.85% 2.99% 2.96% 3.12% 2.77%+
* For the period from the inception of Class C, July 1, 1994, through April 30, 1995.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data 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.
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Municipal Limited Maturity Fund (the Fund) is a diversified series of MFS
Series Trust IX (the Trust). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, are valued on the
basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
exchange or over-the-counter prices. Short-term obligations, which mature in
60 days or less, are valued at amortized cost, which approximates market
value. Securities for which there are no such quotations or valuations are
valued in good faith by 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. 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 the 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.
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. 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
October 31, 1999, aggregate unreimbursed expenses amounted to $187,607.
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 $1,974
for the six months ended October 31, 1999.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$4,871 for the six months ended October 31, 1999, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class
C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
paid to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum of the Fund's average daily net assets attributable to
Class A shares which are attributable to that securities dealer and a
distribution fee to MFD of up to 0.10% per annum of the Fund's average daily
net assets attributable to Class A shares. 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 $4,297 for the six months ended October
31, 1999. Fees incurred under the distribution plan during the six months
ended October 31, 1999, were 0.15% of average daily net assets attributable to
Class A shares on an annualized basis.
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 $155 and $34
for Class B and Class C shares, respectively, for the six months ended October
31, 1999. Fees incurred under the distribution plan during the six months ended
October 31, 1999, were 0.93% and 1.00% of average daily net assets attributable
to Class B and Class C shares, respectively on an annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the six months ended October
31, 1999, were $46, $4,153, and $1,069 for Class A, Class B, and Class C
shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the Fund's average daily net assets at an effective annual
rate of 0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities, and
short-term obligations, aggregated $20,713,983 and $18,051,538, 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 $57,833,490
-----------
Gross unrealized depreciation $ (764,428)
Gross unrealized appreciation 250,446
-----------
Net unrealized depreciation $ (513,982)
===========
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED OCTOBER 31, 1999 YEAR ENDED APRIL 30, 1999
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,542,329 $ 11,567,054 3,475,079 $ 26,565,639
Shares issued to shareholders in
reinvestment of distributions 76,091 568,726 136,838 1,045,283
Shares reacquired (1,516,162) (11,333,521) (2,569,307) (19,623,471)
---------- ------------ ---------- ------------
Net increase 102,258 $ 802,259 1,042,610 $ 7,987,451
========== ============ ========== ============
<CAPTION>
Class B Shares
SIX MONTHS ENDED OCTOBER 31, 1999 YEAR ENDED APRIL 30, 1999
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 242,007 $ 1,804,619 693,816 $ 5,299,094
Shares issued to shareholders in
reinvestment of distributions 9,854 73,568 15,191 116,037
Shares reacquired (280,511) (2,098,598) (515,764) (3,932,950)
---------- ------------ ---------- ------------
Net increase (decrease) (28,650) $ (220,411) 193,243 $ 1,482,181
========== ============ ========== ============
<CAPTION>
Class C Shares
SIX MONTHS ENDED OCTOBER 31, 1999 YEAR ENDED APRIL 30, 1999
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 165,284 $ 1,232,397 547,055 $ 4,186,765
Shares issued to shareholders in
reinvestment of distributions 6,832 51,053 13,289 101,514
Shares reacquired (170,947) (1,279,002) (428,393) (3,271,128)
---------- ------------ ---------- ------------
Net increase 1,169 $ 4,448 131,951 $ 1,017,151
========== ============ ========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $820 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of
Fund shares. Interest is charged to each fund, based on its borrowings, at a
rate equal to the bank's base rate. In addition, a commitment fee, based on
the average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated
to the Fund for the six months ended October 31, 1999, was $197.
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), as an investment adviser and
on behalf of the MFS funds, is committed to the effective
use of technology in managing our portfolio investments,
delivering high-quality service to MFS fund shareholders, [Graphic Omitted]
retirement plan participants, and MFS' institutional
clients, and supporting the financial consultants who sell
our products.
MFS can now say that it is ready for the Year 2000. Our testing has demonstrated
that MFS' computer hardware and software will recognize "00" as the Year 2000
and will not confuse those digits with 1900. All of our critical business
applications and processes have been successfully tested, and we have adopted
companywide policies that will help us maintain our readiness through the
remainder of the year. Any new technology that is brought into the company
before the end of the year will be held to the samestringent standards as our
current technology. We have also developed a vendor readiness survey, contacted
over 700 of our vendors, and established an ongoing process to review responses,
as well as to review readiness statements of new vendors and products.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original Research(R)
process of evaluating portfolio investments, one of the many relevant factors
that MFS' portfolio managers and research analysts may consider is a company's
Y2K readiness.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS fund shareholders, retirement plan participants, or
institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program, please
visit our Web site at www.mfs.com, call our toll-free line, 1-800-637-4406, or
write to the MFS Year 2000 Program Management Office by e-mail at [email protected] or
by letter at 500 Boylston Street, Boston, MA 02116-3741.
<PAGE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
<TABLE>
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey - Private Investor; Former Stephen E. Cavan*
Chairman and Director (until 1991), MFS Investment
Management(R) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
J. Atwood Ives+ - Chairman and Chief Executive
Officer, Eastern Enterprises (diversified services CUSTODIAN
company) State Street Bank and Trust Company
Lawrence T. Perera+ - Partner, Hemenway & Barnes INVESTOR INFORMATION
(attorneys) For information on MFS mutual funds, call your
financial consultant or, for an information kit,
William J. Poorvu+ - Adjunct Professor, Harvard call toll free: 1-800-637-2929 any business day
University Graduate School of Business from 9 a.m. to 5 p.m. Eastern time (or leave a
Administration message anytime).
Charles W. Schmidt+ - Private Investor INVESTOR SERVICE
MFS Service Center, Inc.
Arnold D. Scott* - Senior Executive Vice P.O. Box 2281
President, Director, and Secretary, MFS Investment Boston, MA 02107-9906
Management
For general information, call toll free:
Jeffrey L. Shames* - Chairman and Chief Executive 1-800-225-2606 any business day from
Officer, MFS Investment Management 8 a.m. to 8 p.m. Eastern time.
Elaine R. Smith+ - Independent Consultant For service to speech- or hearing-impaired, call
toll free: 1-800-637-6576 any business day from
David B. Stone+ - Chairman, North American 9 a.m. to 5 p.m. Eastern time. (To use this service,
Management Corp. (investment advisers) your phone must be equipped with a
Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, exchanges, or
500 Boylston Street MFS stock and bond market outlooks, call toll
Boston, MA 02116-3741 free: 1-800-MFS-TALK (1-800-637-8255) anytime from
a touch-tone telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc. WORLD WIDE WEB
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
Christopher J. Mier*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
+ Independent Trustee
* MFS Investment Management
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<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 Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MML-3 12/99 8.8M 37/237/337
