<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) MUNICIPAL
LIMITED MATURITY FUND
ANNUAL REPORT o APRIL 30, 2000
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MUTUAL FUND GIFT KITS (see page 30)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 17
Notes to Financial Statements ............................................. 23
Independent Auditors' Report .............................................. 28
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
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
This spring, the U.S. stock market experienced record point drops and volatility
that have given many investors cause for concern. While the recent market
correction has rattled a lot of nerves, it's important to put the current market
environment in perspective. Throughout the history of the market, investors have
experienced numerous corrections (declines of more than 20%) and periods of
extreme volatility. Of course, past performance is no guarantee of future
results; however, over the long term, stock and bond investors have enjoyed
returns that have solidly outpaced inflation.
From our perspective, as we look at the global investment climate at the
beginning of the new millennium, we see many reasons for optimism, as well as
the need to voice some words of caution. Our reasons for being optimistic about
both stock and bond markets include
o STRONG CORPORATE EARNINGS GROWTH: We believe that, over time, the most
important driver of stock prices is corporate earnings. Our research
indicates that the average earnings growth for U.S. companies could approach
15% in 2000, which would bode very well for U.S. equities. We are also
seeing encouraging signs that companies worldwide, and particularly in
Europe, are beginning to focus more on earnings and shareholder value --
that is, delivering stock price performance that will reward investors. As
we research companies around the globe, we are finding that specific areas
of opportunity include technology companies, especially those involved in
wireless telecommunications and in supplying infrastructure and services for
the Internet.
o LOW INFLATION WORLDWIDE: We believe accelerating inflation is one of the
chief factors that could end the current economic boom. While the U.S.
economy continues to grow rapidly, we have not experienced significant signs
of inflation. In our opinion, perhaps the major force keeping inflation at
bay is worldwide productivity increases, fueled by advancing technology. A
technological revolution based on computerization and the Internet appears
to be making it possible for companies to produce more products with fewer
employees, thereby enabling companies to increase earnings without raising
prices. A related factor keeping inflation down is the heightened
competition of an increasingly global marketplace, where, for example,
businesses are beginning to use computer networks and the Internet to shop
worldwide for the lowest prices from suppliers.
o STRONG GLOBAL ECONOMIES: Our outlook is that a majority of national
economies will continue to experience healthy growth with low inflation. In
late January, the current economic boom in the United States became the
longest in the nation's history. It appears to us that the U.S. Federal
Reserve Board's (the Fed's) program of gradual interest-rate increases will
eventually be successful in cooling the somewhat overheated U.S. economy
while prolonging the boom. In Europe, we see strong evidence that most
countries will continue on a moderate growth path with low inflation. A
major reason for this is that European companies have begun to adopt the
practices of downsizing, outsourcing, and consolidation that have helped
revitalize U.S. industry over the past decade. We are witnessing a similar
situation in Japan, as more firms merge, restructure, and invest in
technology. In the Pacific Rim, most economies have recovered from the
economic turmoil of late summer 1998 and are surging ahead. We believe
progress toward restructuring Asia's banking systems and other ailing
industries bodes well for stronger investor confidence in the region. While
business conditions have been less favorable in Latin America due to
relatively high inflation, increased exports and industrial production
suggest to us that the region's recession has ended.
Amid this positive global outlook, however, we believe investors should also
heed some cautionary notes:
o IT IS HIGHLY UNLIKELY THAT U.S. EQUITY MARKETS WILL CONTINUE TO PERFORM AT
THE PACE OF THE LAST SEVERAL YEARS. Although our outlook for U.S. markets
this year is quite positive, we believe it is unrealistic for investors to
expect stock market returns, as measured by the Standard & Poor's 500
Composite Index,(1) to routinely exceed 20%, as they did for each of the
past four years.
o HIGH VALUATIONS, ESPECIALLY OF TECHNOLOGY STOCKS, HAVE MADE U.S. MARKETS
INCREASINGLY VOLATILE. Investor excitement over the past year has pushed
many technology-related stocks to very high relative prices, as expressed by
their price/earnings (P/E) ratios. In general, we believe these higher
valuations are largely supported by the strong earnings growth mentioned
earlier. However, as we've recently experienced, this backdrop has led to a
highly volatile environment, where the market is swift to punish companies
whose earnings are less than expected and where fear can rapidly overcome
the desire to invest for long-term goals.
o RISING INTEREST RATES MAY DAMPEN MARKETS IN THE SHORT TERM, PARTICULARLY IN
THE UNITED STATES AND EUROPE. The Fed's current program of raising interest
rates could potentially cool both stock and bond markets, and the European
Central Bank has tended to follow the lead of the Fed in adjusting its own
interest rates. It is our expectation, however, that in the long term
interest rates will trend down again, perhaps by the end of this year. We
believe that could be favorable for both equity and fixed-income
investments.
On balance, it appears to us that the current global investment climate is well
matched to MFS' research-oriented style of investing. In the equity markets,
where we believe earnings growth is the most reliable indicator of long-term
performance, we feel our research team is second to none in determining the real
value of a company and its long-term earnings potential. To do that, our
portfolio managers and our worldwide team of research analysts spend extensive
time visiting with companies, talking to their customers, and investigating
their competition. In fixed-income investing, we believe the quality of our
research gives us an advantage by helping us determine which types of securities
can add the most value to a fund and by helping us reduce credit risk, which is
the biggest danger to some higher-income bond funds. In sum, MFS Original
Research(R) is one of the most important factors in our ongoing effort to
deliver competitive performance to you, our investors.
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)
May 18, 2000
--------------
(1)The Standard & Poor's 500 Composite Index (the S&P 500) is a popular,
unmanaged index of common stock total return performance. It is not possible
to invest directly in an index.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
For the 12 months ended April 30, 2000, Class A shares of the Fund provided a
total return of 0.38%, Class B shares -0.43%, and Class C shares -0.48%. 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 Inc., an independent firm that reports
mutual fund performance, returned 0.16%. The Fund's results also compare to
returns of 1.57% and 0.37% 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 INFLUENCED THE FUND'S PERFORMANCE?
A. Like the fixed-income market's performance, the Fund's performance was
affected by rising interest rates. During the past 12 months, the market was
wracked by concerns that strong domestic and foreign economic growth, along
with low unemployment, would lead to an increase in inflation. These
concerns were reflected in higher interest rates, encouraged by five hikes
in short-term interest rates by the Federal Reserve Board (the Fed), which
was trying to cool off the economy and dampen inflationary pressures.
However, for most of the period, few signs of inflation emerged. The popular
media talked of the birth of a "new economy," in which technological
advancements would improve productivity to the point where growth could
proceed at a higher rate without inciting inflation.
That talk died down in April, when more signs of inflation emerged. Economic
growth in the last two quarters of 1999 and the first quarter of 2000 turned
out to be particularly strong. The Employment Cost Index -- a measure of the
cost to business for wages and benefits -- came in at its highest rate in
about five years. And the core Consumer Price Index -- which does not
include food or energy costs -- was twice as high as expected in April.
Interest rates rose as markets started to factor in the Fed's more
aggressive approach toward raising short-term rates.
Within that backdrop, the Fund performed more like the Lehman Brothers
Municipal Bond Five-Year Index than the Three-Year Index because our
portfolio had an average maturity of about five years. The shorter-term
bonds that make up the Three-Year Index performed better because
shorter-term securities are less susceptible than longer-term securities to
the bond price deterioration that accompanies rising interest rates.
Q. WHAT STRATEGIES DID YOU PURSUE WITH THE FUND?
A. As the year progressed, we became more cautious about the direction of
interest rates. From the beginning of May until mid-November 1999, we
shortened the Fund's average maturity and duration, the latter from 4.0
years to 3.4 years. Duration is a measure of a fund's sensitivity to changes
in interest rates. The longer the duration, the more sensitive a fund is to
rate changes, and vice versa. Since the end of November, we've let the
duration creep back up because we became more optimistic that we were closer
to the end of the Fed's rate-hike program. The Fund's duration on April 30
was at 3.8 years, a positioning that has helped us capture the benefits of
the overall rally (with the exception of April) that we've seen so far in
2000.
Q. WHAT'S THE FOCUS OF YOUR INVESTMENT APPROACH?
A. Our management of the Fund is driven by quantitative analysis of the
different value opportunities offered along the yield curve. The yield curve
is a graphic representation of the difference between short- and long-term
interest rates. Our quantitative approach incorporates historical analysis
that helps us pick bonds at what we believe is the optimal spot on the curve
-- where yields are most attractive relative to alternatives with different
maturities. While we maintain the Fund's average maturity at about five
years, we can achieve that by investing in any mix of bonds, including those
with very short maturities or those with maturities of up to 20 years. We
constantly shift the mix as a result of our ongoing analysis.
For example, one year ago 2.5% of the Fund was invested in securities with
maturities between zero and one year because we were optimistic about the
bond market. However, we became more defensive when it became clear that the
Fed had embarked on a protracted program of hiking short-term rates. We felt
that yields were under pressure and would probably continue to rise, so we
increased these short-term holdings to 14% of the Fund by the end of the
period. By doing so, we were able to capture higher short-term yields as
they emerged.
At the end of the period, the yield curve was very flat, so it didn't pay to
invest in longer-term securities. In such an environment, we feel it's best
to maintain a significant weighting in securities with very short maturities
and wait until the curve steepens to the point where long-term rates are
higher than shorter-term alternatives. For that to happen, longer yields
would have to rise or short-term rates would have to decline. If longer
yields rise, our minimal exposure there should insulate the Fund from price
depreciation in that part of the curve. If the curve steepens because
shorter-term rates come down, then we think the Fund should benefit from the
price appreciation enjoyed by those securities.
Q. WHAT APPROACH DID YOU TAKE CONCERNING CREDIT QUALITY?
A. Earlier in the period, we worked to upgrade the overall credit quality of
the Fund because lower-quality issues did not compensate us for taking on
their added credit risk. However, lower-quality bonds more recently started
to offer compelling values, so we've looked for opportunities to add to this
position in order to potentially benefit from the additional income they
currently offer. In our credit-quality approach, we aim to differentiate
ourselves with MFS Original Research(R), through which we implement a
fundamental, issuer-oriented, bottom-up approach to selecting securities for
the portfolio. We have a strong team of research analysts who examine the
fundamental strengths and weaknesses of each issuer. Our goal is to provide
income while managing risk for the benefit of our shareholders.
Q. DID YOU FAVOR PARTICULAR STATES OR SECTORS?
A. As far as states were concerned, no. We've seen a vibrant economic
environment throughout the United States. This contrasts with the cycles we
used to experience, in which particular regions or states would perform
better than others. Looking at sectors, we added housing bonds because we
feel they provided income and good credit quality. In addition, we de-
emphasized health care. The damage has been very bad in this industry, as
managed care competition and concerns about declines in Medicare and
Medicaid reimbursements resulting from the Balanced Budget Act of 1997
caused significant difficulties. However, more recently we've started
looking for hospital bonds coming to market with attractive yields. Many
quality hospitals are trading very cheaply; their prices dropped just
because their industry fell from favor. At this point, we felt we could pick
and choose among rural hospitals that we feel have a strong financial
position, solid management, and no competition.
Q. WHAT IS YOUR OUTLOOK?
A. The Fed is widely anticipated to take a more aggressive approach toward
raising short-term rates. While we believe the Fed will do what is necessary
to contain inflation, we also feel we are getting close to a peak in rates.
New housing construction has started to slow and the volatile equity markets
have helped trim consumer confidence. If the Fed continues to hike
short-term rates and the economy starts to slow, we expect that interest
rates could be lower six months from now. In any event, over the next 12
months we don't expect the same kind of marked increase in interest rates we
experienced during the past 12 months. For our part, we'll maintain a heavy
weighting in short-maturity instruments, aiming to shift into longer-term
bonds over the next few months if opportunities present themselves.
/s/ Michael L. Dawson /s/ Geoffrey L. Schechter
Michael L. Dawson Geoffrey L. Schechter
Portfolio Manager Portfolio Manager
* Note to Shareholders: Effective March 23, 2000, Michael L. Dawson and
Geoffrey L. Schechter became managers of the Fund, replacing Christopher J.
Mier.
The opinions expressed in this report are those of the portfolio managers and
are current only through the end of the period of the report as stated on the
cover. The managers' 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 MANAGERS' PROFILES
--------------------------------------------------------------------------------
MICHAEL L. DAWSON IS ASSISTANT VICE PRESIDENT AND A PORTFOLIO MANAGER OF
ALL STATE MUNICIPAL BOND FUNDS AT MFS INVESTMENT MANAGEMENT(R). HE IS
ALSO A PORTFOLIO MANAGER OF MFS(R) MUNICIPAL BOND FUND, MFS(R) MUNICIPAL
LIMITED MATURITY FUND, AND MFS(R) MUNICIPAL INCOME FUND. HE JOINED MFS
IN 1998 AND WAS NAMED ASSISTANT VICE PRESIDENT AND PORTFOLIO MANAGER IN
1999. PRIOR TO JOINING MFS, MR. DAWSON WORKED IN INSTITUTIONAL SALES --
FIXED INCOME FOR FIDELITY CAPITAL MARKETS AND GOLDMAN SACHS. PRIOR TO
THAT, HE WAS A RESEARCH ANALYST IN THE MUNICIPAL BOND GROUP AT FRANKLIN
TEMPLETON. HE IS A GRADUATE OF SANTA CLARA UNIVERSITY AND RECEIVED AN
M.B.A. DEGREE FROM BABSON COLLEGE IN MAY 1999.
GEOFFREY L. SCHECHTER IS VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R)
AND A PORTFOLIO MANAGER OF MFS(R) MUNICIPAL BOND FUND, MFS(R) MUNICIPAL
LIMITED MATURITY FUND, AND MFS(R) MUNICIPAL INCOME FUND. HE IS ALSO A
PORTFOLIO MANAGER OF ALL MFS' STATE MUNICIPAL BOND FUNDS. MR. SCHECHTER
JOINED MFS AS INVESTMENT OFFICER IN 1993 AFTER WORKING AS A MUNICIPAL
CREDIT ANALYST WITH A MAJOR INSURANCE COMPANY. HE WAS NAMED PORTFOLIO
MANAGER IN 1993, ASSISTANT VICE PRESIDENT IN 1994, AND VICE PRESIDENT IN
1995. MR. SCHECHTER IS A GRADUATE OF THE UNIVERSITY OF TEXAS AND HAS AN
M.B.A. DEGREE FROM BOSTON UNIVERSITY. HE IS A CHARTERED FINANCIAL
ANALYST AND A CERTIFIED PUBLIC ACCOUNTANT.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL
RESEARCH(R), A GLOBAL, ISSUER-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 investment professional, 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: $52.0 MILLION NET ASSETS AS OF APRIL 30, 2000
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.) It is not possible to invest directly
in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the commencement of the Fund's investment operations,
March 17, 1992, through April 30, 2000. Index information is from April 1,
1992.)
MFS Municipal Lehman Brothers Lehman Brothers
Limited Maturity Municipal Bond Municipal Bond
Fund -- Class A Three-Year Index Five-Year Index
--------------------------------------------------------------------------------
3/92 $ 9,750 $10,000 $10,000
4/94 10,934 11,194 11,435
4/96 11,901 12,447 12,887
4/98 12,937 13,741 14,395
4/00 13,590 14,759 15,383
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH APRIL 30, 2000
<TABLE>
<CAPTION>
CLASS A
1 Year 3 Years 5 Years Life*
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +0.38% +10.32% +20.03% +39.39%
--------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +0.38% + 3.33% + 3.72% + 4.17%
--------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -2.13% + 2.46% + 3.20% + 3.85%
--------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
1 Year 3 Years 5 Years Life*
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -0.43% + 7.77% +15.49% +32.06%
--------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -0.43% + 2.53% + 2.92% + 3.49%
--------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -4.28% + 1.59% + 2.57% + 3.49%
--------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
1 Year 3 Years 5 Years Life*
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge -0.48% + 7.54% +15.04% +32.74%
--------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -0.48% + 2.45% + 2.84% + 3.55%
--------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -1.44% + 2.45% + 2.84% + 3.55%
--------------------------------------------------------------------------------------------------------------
<CAPTION>
COMPARATIVE INDICES(+)
1 Year 3 Years 5 Years Life*
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average short/intermediate-term municipal bond fund+ +0.16% + 3.50% + 3.93% + 4.55%
--------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Three-Year Index# +1.57% + 4.27% + 4.73% + 4.93%
--------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Five-Year Index# +0.37% + 4.48% + 4.99% + 5.47%
--------------------------------------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations, March 17, 1992, through April 30, 2000.
Index information is from April 1, 1992.
(+) Average annual rates of return.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
</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. MORE
RECENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS.
A small portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax. See the
prospectus for details.
<PAGE>
PORTFOLIO CONCENTRATION AS OF APRIL 30, 2000
QUALITY RATINGS
Source: Standard & Poor's and Moody's
"AAA" 47.8%
"AA" 20.8%
"A" 15.7%
"BBB" 12.4%
Other 3.3%
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- April 30, 2000
Municipal Bonds - 95.0%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
--------------------------------------------------------------------------------
General Obligation - 21.3%
Bloomington, MN, Independent School District,
5.25s, 2011 $ 500 $ 500,465
Central Falls, RI, Asset Guaranty, 5.5s, 2005 440 445,610
Chicago, IL, Public Building Commerce Rev., FGIC,
5.5s, 2006 250 254,965
Commonwealth of Massachusetts, 5.75s, 2005 500 514,570
Harris County, TX, 5.875s, 2006 500 521,145
Indianapolis, IN, Local Public Improvement Bond Bank,
6.25s, 2001 1,000 1,011,200
Jefferson County, KY, FSA, 0s, 2004 1,000 802,030
Kauai County, HI, FGIC, 6.25s, 2019 375 385,054
Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,044,490
Manistee, MI, Public Schools, FGIC, 5.15s, 2010 100 98,951
Mauston, WI, Joint School District, FGIC, 5.55s, 2005 500 508,365
Montgomery County, MD, 5.375s, 2005 500 508,295
New York City, NY, 5s, 2001 135 135,668
New York City, NY, 6.125s, 2001 525 533,516
New York City, NY, 5.7s, 2002 500 507,300
New York City, NY, 5.3s, 2003 500 502,615
North Slope Borough, AK, MBIA, 0s, 2001 600 582,228
Norwin, PA, School District, FGIC, 6s, 2020 250 251,715
Round Rock, TX, Independent School District, PSF,
6.5s, 2011 500 546,285
State of Louisiana, FGIC, 6s, 2000 500 501,855
State of Mississippi, 5.5s, 2006 250 255,432
State of South Carolina, 5.75s, 2007 500 518,640
Wisconsin Housing & Economic Development, AMBAC,
4.9s, 2005 160 158,461
-----------
$11,088,855
--------------------------------------------------------------------------------
State and Local Appropriation - 14.7%
Indiana Bond Bank Rev., AMBAC, 5.3s, 2007 $ 350 $ 352,296
Michigan Building Authority Rev., 6.2s, 2002 1,000 1,031,470
New York Dormitory Authority Rev. (City University),
5s, 2003 1,060 1,055,346
New York Medical Care Facilities Finance Agency Rev.,
5.9s, 2000 175 175,632
New York Urban Development Corp. Rev., 6s, 2002 1,000 1,014,560
New York Urban Development Corp. Rev., AMBAC, 5.4s, 2006 1,000 1,014,250
New York Urban Development Corp. Rev. (Correctional
Facilities), 5.5s, 2001 1,000 1,006,380
Ohio Building Authority, State Facilities Administration
Building, 5.375s, 2013 1,000 991,630
State of Oregon, AMBAC, 5.5s, 2008 500 507,450
State of Utah, Building Ownership Authority Lease Rev.,
FSA, 0s, 2005 685 524,546
-----------
$ 7,673,560
--------------------------------------------------------------------------------
Refunded and Special Obligations - 6.0%
Delaware County, IN, Hospital Authority (Ball Memorial
Hospital), AMBAC, 6.625s, 2001 $ 900 $ 906,750
Indiana Health Facility Hospital Rev. (Sisters of St.
Francis Health), MBIA, 5s, 2002 5 5,013
Michigan Building Authority Rev., 5.4s, 2003 375 385,958
Michigan Hospital Finance Authority Rev. (Genesys Health
System), ETM, 5.5s, 2007 750 762,735
Milwaukee, WI, Metropolitan Sewage District, ETM,
6.7s, 2001 500 513,610
New York City, NY, ETM, 6.125s, 2001 75 76,380
State of Mississippi, ETM, 6.2s, 2008 455 482,195
-----------
$ 3,132,641
--------------------------------------------------------------------------------
Airport and Port Revenue - 0.5%
Cleveland, OH, Airport Systems Rev., FSA, 5.5s, 2008 $ 250 $ 251,063
--------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 9.5%
American Public Energy Agency, Gas Supply Rev. (Nebraska
Public Gas Agency), AMBAC, 5s, 2007 $ 500 $ 477,585
Beaver County, PA, Industrial Development Authority,
Pollution Control Rev. (Ohio Edison Co.), 4.65s, 2033 500 471,350
Intermountain Power Agency, UT, Power Supply Rev., FSA,
5.25s, 2001 500 502,480
Lower Colorado River Authority, TX, FSA, 5.5s, 2008 600 610,542
Oklahoma Development Finance Authority (Public Service
Co. of Oklahoma), 4.875s, 2014 1,000 977,110
Sacramento, CA, Municipal Utility District Electric
Rev., FGIC, 6s, 2001 620 631,420
State of Wisconsin, 6s, 2004 500 516,770
Washington Public Power Supply System Rev., 5.45s, 2000 750 751,043
-----------
$ 4,938,300
--------------------------------------------------------------------------------
Health Care Revenue - 7.4%
Baxter County, AR, Hospital Rev., 4.7s, 2005 $ 320 $ 294,400
Colorado Health Facilities Authority Rev. (National
Benevolent Assn.), 4.5s, 2002 280 272,902
Delaware County, PA, Hospital Rev. (Crozer-Chester
Medical Center), 4.75s, 2005 500 458,800
Denver, CO, Health & Hospital Rev., 5.125s, 2006 200 188,724
Marion County, FL, Hospital District Rev., Health
Systems, 4.75s, 2005 500 472,145
Maryland Health and Higher Educational Facilities
(University of Maryland), 6s, 2002 250 250,878
Massachusetts Health & Education Facilities Authority
(Jordan Hospital), 4.8s, 2006 600 552,168
Michigan Hospital Finance Authority Rev. (Mercy Health
Services), 5.5s, 2000 500 501,325
Missouri Health & Educational Facilities Authority Rev.
(Freeman Health Systems), 4.65s, 2003 450 432,904
Stillwater, OK, Medical Center Authority (Stillwater
Medical Center), 5.55s, 2001 170 170,248
Waco, TX, Health Facilities Development Corp. (Ascension
Health), 5.5s, 2009 250 246,765
-----------
$ 3,841,259
--------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 0.7%
De Soto Parish, LA, Pollution Control Rev.
(International Paper Co.), 5.05s, 2002 $ 350 $ 348,400
--------------------------------------------------------------------------------
Insured Health Care Revenue - 1.0%
Illinois Health Facilities Authority Rev. (Childrens
Memorial Hospital), AMBAC, 5.75s, 2011 $ 250 $ 254,655
St. Cloud, MN, Health Care Rev. (St. Cloud Hospital),
FSA, 5.5s, 2005 260 262,181
-----------
$ 516,836
--------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.2%
Alaska Housing Finance Corp., MBIA, 4.55s, 2002 $ 350 $ 345,443
Massachusetts Housing Finance Agency, MBIA, 5.35s, 2010 130 129,277
Panhandle, TX, Regional Housing Finance, 5.75s, 2003 205 204,717
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.15s, 2001 1,000 1,004,510
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.25s, 2002 1,000 1,005,600
-----------
$ 2,689,547
--------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 3.5%
Denver, CO, City & County Excise Tax, FSA, 5.25s, 2008 $ 500 $ 499,670
District of Columbia, Redevelopment Land Agency,
5.625s, 2010 315 317,073
Virgin Islands Public Finance Authority, 5.5s, 2005 1,000 994,540
-----------
$ 1,811,283
--------------------------------------------------------------------------------
Single Family Housing Revenue - 5.4%
Colorado Housing Finance Authority, 7.25s, 2010 $ 535 $ 583,658
Colorado Housing Finance Authority, 6.7s, 2016 250 267,058
Mississippi Home Corp., GNMA, 5.1s, 2017 250 235,128
Ohio Housing Finance Agency, Single Family Mortgage
Rev., GNMA, 5.45s, 2006 500 500,565
Oklahoma Housing Finance Agency, GNMA/FNMA, 7.6s, 2015 350 384,331
South Dakota Housing Development Authority, FNMA,
5.65s, 2011 250 245,957
Wyoming Community Development Authority, Housing Rev.,
5s, 2006 600 583,374
-----------
$ 2,800,071
--------------------------------------------------------------------------------
Solid Waste Revenue - 2.3%
Arlington County, VA, Industrial Development Authority,
Resource Recovery Rev. (Alexandria/Arlington Waste),
FSA, 5.25s, 2009 $ 500 $ 495,225
Ashdown, AR, Pollution Control Rev. (Nekoosa Papers,
Inc.), 4.75s, 2008 250 228,645
Massachusetts Industrial Finance Agency (Ogden
Haverhill), 5.15s, 2007 500 468,800
-----------
$ 1,192,670
--------------------------------------------------------------------------------
Student Loan Revenue - 3.0%
Alaska Student Loan Corp. Rev., AMBAC, 5s, 2003 $ 400 $ 397,784
Louisiana Public Facilities Authority (Student Loan
Rev.), 6.5s, 2002 770 784,745
Michigan Higher Education Student Loan, AMBAC, 5s, 2007 410 397,024
-----------
$ 1,579,553
--------------------------------------------------------------------------------
Turnpike Revenue - 5.8%
Denver, CO, City & County Airport Rev., MBIA, 6s, 2006 $ 1,000 $ 1,041,440
New Jersey Transit Corp., FSA, 5s, 2000 1,000 1,002,140
Orlando & Orange County, FL (Expressway Florida), FGIC,
6.064s, 2004(++) 1,000 987,680
-----------
$ 3,031,260
--------------------------------------------------------------------------------
Universities - 3.8%
District of Columbia (Georgetown University), MBIA,
5.5s, 2001 $ 500 $ 504,840
Massachusetts Development Finance Agency (Xaverian
Brothers High School), 4.9s, 2007 175 167,585
Metropolitan Nashville, TN (Vanderbilt University),
5.25s, 2001 500 504,575
State of New Hampshire, Higher Education & Health (New
Hampshire College), 5.65s, 2003 320 318,029
University of New Mexico, 5.75s, 2020 500 496,405
-----------
$ 1,991,434
--------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 3.7%
Fort Worth, TX, Water and Sewer Rev., 5.5s, 2004 $1,000 $ 1,014,890
Philadelphia, PA, Water & Sewer Rev., MBIA, 0s, 2002 500 443,560
Seattle, WA, Water Systems Rev., 5s, 2008 475 468,739
-----------
$ 1,927,189
--------------------------------------------------------------------------------
Other - 1.2%
Oregon Department of Administrative Services, Lottery
Rev., FSA, 5s, 2009 $ 200 $ 196,078
Phoenix, AZ, Civic Improvement, AMBAC, 5.5s, 2007 250 254,555
Suffolk County, NY, Judicial Facilities (John P. Cohalan
Complex), AMBAC, 5.75s, 2011 160 165,778
-----------
$ 616,411
--------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $49,992,456) $49,430,332
--------------------------------------------------------------------------------
Floating Rate Demand Notes - 3.3%
--------------------------------------------------------------------------------
Gulf Breeze, FL, due 05/03/00 $ 300 $ 300,000
Sevier County, TN, Public Building Authority,
due 05/04/00 1,400 1,400,000
--------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 1,700,000
--------------------------------------------------------------------------------
Total Investments (Identified Cost, $51,692,456) $51,130,332
Other Assets, Less Liabilities - 1.7% 895,712
--------------------------------------------------------------------------------
Net assets - 100.0% $52,026,044
--------------------------------------------------------------------------------
(++) Inverse floating rate security.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
------------------------------------------------------------------------------
APRIL 30, 2000
------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $51,692,456) $51,130,332
Cash 13,415
Receivable for Fund shares sold 353,433
Receivable for investments sold 165,000
Interest receivable 730,648
Other assets 383
-----------
Total assets $52,393,211
-----------
Liabilities:
Distributions payable $ 57,115
Payable for Fund shares reacquired 34,015
Payable for investments purchased 262,853
Payable to affiliates -
Management fee 1,279
Reimbursement fee 2,202
Distribution and service fee 6,618
Accrued expenses and other liabilities 3,085
-----------
Total liabilities $ 367,167
-----------
Net assets $52,026,044
===========
Net assets consist of:
Paid-in capital $53,943,336
Unrealized depreciation on investments (562,124)
Accumulated net realized loss on investments (1,372,721)
Accumulated undistributed net investment income 17,553
-----------
Total $52,026,044
===========
Shares of beneficial interest outstanding 7,081,001
=========
Class A shares:
Net asset value per share
(net assets of $42,276,917 / 5,753,030 shares of
beneficial interest outstanding) $7.35
=====
Offering price per share (100 / 97.5 of net asset value
per share) $7.54
=====
Class B shares:
Net asset value and offering price per share
(net assets of $6,781,123 / 924,149 shares of beneficial
interest outstanding) $7.34
=====
Class C shares:
Net asset value and offering price per share
(net assets of $2,968,004 / 403,822 shares of beneficial
interest outstanding) $7.35
=====
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, 2000
-------------------------------------------------------------------------------
Net investment income:
Interest income $ 2,730,396
-----------
Expenses -
Management fee $ 225,836
Trustees' compensation 11,356
Shareholder servicing agent fee 56,525
Distribution and service fee (Class A) 66,476
Distribution and service fee (Class B) 79,095
Distribution and service fee (Class C) 39,368
Administrative fee 7,438
Custodian fee 24,958
Printing 2,883
Postage 4,992
Auditing fees 32,823
Legal fees 1,687
Registration fees 38,872
Miscellaneous 18,907
-----------
Total expenses $ 611,216
Fees paid indirectly (13,320)
Reduction of expenses by investment adviser (17,680)
-----------
Net expenses $ 580,216
-----------
Net investment income $ 2,150,180
-----------
Realized and unrealized loss on investments:
Realized loss on investment transactions (identified cost basis) $ (805,029)
Change in unrealized depreciation on investments (1,342,385)
-----------
Net realized and unrealized loss on investments $(2,147,414)
-----------
Increase in net assets from operations $ 2,766
===========
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 2000 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,150,180 $ 1,939,196
Net realized gain (loss) on investments (805,029) 131,130
Net unrealized gain (loss) on investments (1,342,385) 216,980
------------ ------------
Increase in net assets from operations $ 2,766 $ 2,287,306
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,751,231) $ (1,603,398)
From net investment income (Class B) (261,029) (243,023)
From net investment income (Class C) (121,694) (120,982)
------------ ------------
Total distributions declared to shareholders $ (2,133,954) $ (1,967,403)
------------ ------------
Net increase (decrease) in net assets from Fund
share transactions $ (5,113,524) $ 10,486,783
------------ ------------
Total increase (decrease) in net assets $ (7,244,712) $ 10,806,686
Net assets:
At beginning of period 59,270,756 48,464,070
------------ ------------
At end of period (including accumulated undistributed net
investment income of $17,553 and $1,327, respectively) $ 52,026,044 $ 59,270,756
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 7.62 $ 7.57 $ 7.50 $ 7.53 $ 7.45
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.30 $ 0.29 $ 0.30 $ 0.29 $ 0.30
Net realized and unrealized gain (loss)
on investments (0.27) 0.06 0.07 (0.03) 0.08
------ ------ ------ ------ ------
Total from investment operations $ 0.03 $ 0.35 $ 0.37 $ 0.26 $ 0.38
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net investment income $(0.30) $(0.30) $(0.30) $(0.29) $(0.30)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.35 $ 7.62 $ 7.57 $ 7.50 $ 7.53
====== ====== ====== ====== ======
Total return(+) 0.38% 4.65% 5.02% 3.51% 5.11%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.88% 0.88% 0.87% 0.95% 0.95%
Net investment income 3.99% 3.84% 3.97% 3.86% 4.00%
Portfolio turnover 60% 31% 51% 78% 43%
Net assets at end of period (000 omitted) $42,277 $45,840 $37,595 $40,953 $50,387
(S) Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed under a temporary expense
reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management and distribution and service
fees. In consideration, the Fund pays the investment adviser a reimbursement 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 $ 0.30 $ 0.28 $ 0.30 $ 0.29 $ 0.30
Ratios (to average net assets):
Expenses## 0.91% 0.99% 1.01% 1.02% 0.99%
Net investment income 3.96% 3.71% 3.85% 3.79% 3.96%
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would
have been lower.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------
CLASS B
------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 7.61 $ 7.56 $ 7.49 $ 7.52 $ 7.44
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.24 $ 0.23 $ 0.24 $ 0.23 $ 0.25
Net realized and unrealized gain (loss)
on investments (0.27) 0.06 0.07 (0.03) 0.07
------ ------ ------ ------ ------
Total from investment operations $(0.03 )$ 0.29 $ 0.31 $ 0.20 $ 0.32
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net investment income $(0.24) $(0.24) $(0.24) $(0.23) $(0.24)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.34 $ 7.61 $ 7.56 $ 7.49 $ 7.52
====== ====== ====== ====== ======
Total return (0.43)% 3.85% 4.22% 2.71% 4.34%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.69% 1.66% 1.64% 1.73% 1.70%
Net investment income 3.18% 3.06% 3.20% 3.08% 3.25%
Portfolio turnover 60% 31% 51% 78% 43%
Net assets at end of period (000 omitted) $6,781 $9,149 $7,618 $6,503 $7,749
(S) Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed under a temporary expense
reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management and distribution and service
fees. In consideration, the Fund pays the investment adviser a reimbursement 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 $ 0.24 $ 0.22 $ 0.24 $ 0.23 $ 0.25
Ratios (to average net assets):
Expenses## 1.72% 1.77% 1.78% 1.80% 1.74%
Net investment income 3.15% 2.93% 3.08% 3.01% 3.21%
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------
CLASS C
------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 7.63 $ 7.57 $ 7.50 $ 7.53 $ 7.45
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23
Net realized and unrealized gain (loss)
on investments (0.28) 0.06 0.08 (0.03) 0.08
------ ------ ------ ------ ------
Total from investment operations $(0.05 )$ 0.29 $ 0.31 $ 0.20 $ 0.31
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net investment income $(0.23) $(0.23) $(0.24) $(0.23) $(0.23)
------ ------ ------ ------ ------
Net asset value - end of period $ 7.35 $ 7.63 $ 7.57 $ 7.50 $ 7.53
====== ====== ====== ====== ======
Total return (0.48)% 3.77% 4.13% 2.64% 4.23%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.73% 1.73% 1.72% 1.80% 1.80%
Net investment income 3.14% 2.98% 3.11% 3.03% 3.16%
Portfolio turnover 60% 31% 51% 78% 43%
Net assets at end of period (000 omitted) $2,968 $4,282 $3,250 $3,297 $3,013
(S) Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed under a temporary expense
reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management and distribution and service
fees. In consideration, the Fund pays the investment adviser a reimbursement 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 $ 0.23 $ 0.22 $ 0.23 $ 0.22 $ 0.23
Ratios (to average net assets):
Expenses## 1.76% 1.84% 1.86% 1.87% 1.84%
Net investment income 3.11% 2.85% 2.99% 2.96% 3.12%
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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,
at fair value, 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 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 total 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 tax-exempt
and taxable 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 be reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. For the
year ended April 30, 2000, no such adjustments were made.
At April 30, 2000, the Fund, for federal income tax purposes, had a capital loss
carryforward of ($951,212) 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), April 30, 2005,
($42,827), and April 30, 2008, ($383,520).
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
April 30, 2000, the aggregate unreimbursed expenses owed to MFS by the Fund
amounted to $163,911.
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. Included in Trustees' compensation is a net
periodic pension expense of $3,544 for the year ended April 30, 2000.
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 incurs an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$7,142 for the year ended April 30, 2000, 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 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 date
as the Trustees of the Trust may determine. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $7,903 for
the year ended April 30, 2000. Fees incurred under the distribution plan during
the year ended April 30, 2000, were 0.15% of average daily net assets
attributable to Class A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. Except in the
case of the 0.25% per annum Class B service fee paid by the Fund upon the sale
of Class B shares in the first year, the Class B service fee is currently set at
0.15% per annum and may be increased to a maximum of 0.25% per annum on such
date as the Trustees of the Trust may determine. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $214 and $69
for Class B and Class C shares, respectively, for the year ended April 30, 2000.
Fees incurred under the distribution plan during the year ended April 30, 2000,
were 0.96% 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 year ended April 30, 2000,
were $1,901, $20,995, and $3,042 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 and short-term obligations, aggregated
$32,897,253 and $37,866,901 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 $51,692,456
-----------
Gross unrealized depreciation $ (678,414)
Gross unrealized appreciation 116,290
-----------
Net unrealized depreciation $ (562,124)
===========
(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, 2000 YEAR ENDED APRIL 30, 1999
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,055,083 $ 22,711,978 3,475,079 $ 26,565,639
Shares issued to shareholders
in reinvestment of
distributions 151,026 1,121,357 136,838 1,045,283
Shares reacquired (3,465,242) (25,727,065) (2,569,307) (19,623,471)
------------ ------------ ------------ ------------
Net increase (decrease) (259,133) $ (1,893,730) 1,042,610 $ 7,987,451
============ ============ ============ ============
<CAPTION>
Class B Shares
YEAR ENDED APRIL 30, 2000 YEAR ENDED APRIL 30, 1999
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 363,110 $ 2,697,098 693,816 $ 5,299,094
Shares issued to shareholders
in reinvestment of
distributions 18,457 136,923 15,191 116,037
Shares reacquired (658,984) (4,886,961) (515,764) (3,932,950)
------------ ------------ ------------ ------------
Net increase (decrease) (277,417) $ (2,052,940) 193,243 $ 1,482,181
============ ============ ============ ============
<CAPTION>
Class C Shares
YEAR ENDED APRIL 30, 2000 YEAR ENDED APRIL 30, 1999
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 252,597 $ 1,878,868 547,055 $ 4,186,765
Shares issued to shareholders
in reinvestment of
distributions 13,398 99,472 13,289 101,514
Shares reacquired (423,754) (3,145,194) (428,393) (3,271,128)
------------ ------------ ------------ ------------
Net increase (decrease) (157,759) $ (1,166,854) 131,951 $ 1,017,151
============ ============ ============ ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $1.1 billion unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made for temporarily financing needs. 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,
2000, was $364. The Fund had no borrowings during the year.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Trustees of MFS Series Trust IX and Shareholders of MFS Municipal Limited
Maturity Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Municipal Limited Maturity Fund (one of the
series constituting MFS Series Trust IX) as of April 30, 2000, the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years ended in the five-year period ended
April 30, 2000. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements 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, 2000 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 present fairly, in all material
respects, the financial position of MFS Municipal Limited Maturity Fund at April
30, 2000, the results of its operations, the changes in its net assets, and its
financial highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
June 7, 2000
--------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
--------------------------------------------------------------------------------
IN JANUARY 2001, SHAREHOLDERS WILL BE MAILED A FORM 1099-DIV, IF
APPLICABLE, REPORTING THE FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID
DURING THE CALENDAR YEAR 2000.
FOR FEDERAL INCOME TAX PURPOSES, 100% OF THE TOTAL DIVIDENDS PAID BY THE FUND
FROM NET INVESTMENT INCOME DURING THE YEAR ENDED APRIL 30, 2000, IS
DESIGNATED AS AN EXEMPT-INTEREST DIVIDEND.
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
<S> <C>
TRUSTEES SECRETARY
J. Atwood Ives+ - Chairman and Chief Stephen E. Cavan*
Executive Officer, Eastern Enterprises
(diversified services company) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Lawrence T. Perera+ - Partner, Hemenway
& Barnes (attorneys) CUSTODIAN
State Street Bank and Trust Company
William J. Poorvu+ - Adjunct Professor,
Harvard University Graduate School of AUDITORS
Business Administration Deloitte & Touche LLP
Charles W. Schmidt+ - Private Investor INVESTOR INFORMATION
For information on MFS mutual funds, call
Arnold D. Scott* - Senior Executive your investment professional or, for an
Vice President, Director, and Secretary, information kit, call toll free: 1-800-637-2929
MFS Investment Management any business day from 9 a.m. to 5 p.m.
Eastern time (or leave a message anytime).
Jeffrey L. Shames* - Chairman and Chief
Executive Officer, MFS Investment INVESTOR SERVICE
Management MFS Service Center, Inc.
P.O. Box 2281
Elaine R. Smith+ - Independent Consultant Boston, MA 02107-9906
David B. Stone+ - Chairman, North American For general information, call toll free:
Management Corp. (investment adviser) 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
INVESTMENT ADVISER
Massachusetts Financial Services Company For service to speech- or hearing-impaired,
500 Boylston Street call toll free: 1-800-637-6576 any business day
Boston, MA 02116-3741 from 9 a.m. to 5 p.m. Eastern time. (To use
this service, your phone must be equipped with
DISTRIBUTOR a Telecommunications Device for the Deaf.)
MFS Fund Distributors, Inc.
500 Boylston Street For share prices, account balances, exchanges,
Boston, MA 02116-3741 or stock and bond outlooks, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime
CHAIRMAN AND PRESIDENT from a touch-tone telephone.
Jeffrey L. Shames*
WORLD WIDE WEB
PORTFOLIO MANAGERS www.mfs.com
Michael L. Dawson*
Geoffrey L. Schechter*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<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
(R)2000 MFS Investment Management(R) .
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MML-2 06/ 00 11M 37/ 237/ 337
