<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, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 5
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 17
Notes to Financial Statements ............................................. 23
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,
If you've been reading our fund reports for any length of time, you've probably
sensed the pride we have in our research process. More than anything else, we
think MFS Original Research(R) -- and the performance results it has yielded for
shareholders -- makes us unique among investment management companies. We think
that uniqueness stems from three factors: philosophy, process, and people.
PHILOSOPHY
In over 75 years of managing mutual funds, we've developed a number of beliefs
about the best ways to invest over a variety of market conditions. First, we
believe in bottom-up research, which means we use a company-by-company, one-
security-at-a-time approach to building a portfolio. What we look for is the
truth about the fundamentals of a company's business -- things such as the
ability of management to execute its business plan, the ability of that plan to
be scaled up as the company grows, actual demand for the company's products and
services, cash flow, profits, and earnings.
Second, we believe that, over the long term, stock prices follow earnings. In
our view, stock prices are basically a multiple of projected earnings, with the
multiple increasing as the market perceives that a company has something
customers want and will continue to want. One of the major elements of Original
Research(SM) is doing our best to project a company's future earnings and
determine how much the market will pay for those earnings.
Third, we believe there are at least three ways to potentially achieve
competitive long-term performance: be early, uncover second chances, and avoid
mistakes. All of these are based on bottom-up research. In both domestic and
international markets, early discovery has historically been a hallmark of our
investment style. Some of the stocks with which MFS has been most successful are
those in which we've taken large positions before the market discovered or
believed in them. Similarly, some of our best fixed-income investments have been
early positions in companies or governments that our research revealed were
potential candidates for credit upgrades. (A credit upgrade causes the value of
a bond to rise because it indicates the market has increased confidence that
principal and interest on the bond will be repaid.)
"Second-chance" opportunities are companies whose stock prices have stumbled but
that we believe still have the potential to be market leaders. For example, a
quarterly earnings shortfall of a few cents may cause the market to temporarily
lose confidence in a company. If we believe the business remains fundamentally
strong, we may use the price decline as a buying opportunity.
Avoiding mistakes is another way we feel Original Research may help performance.
In fixed-income investing this means, among other things, trying to be better
than our peers at avoiding bond issuers that may default. In equity investing,
avoiding mistakes means we strive to know a company and its industry well enough
to distinguish truth from hype.
PROCESS
We acquire our information firsthand, by researching thousands of companies to
determine which firms may make good investments. Our analysis of an individual
company may include
o face-to-face contact with senior management as well as frontline workers
o analysis of the company's financial statements and balance sheets
o contact with the company's current and potential customers
o contact with the company's competitors
o our own forecasts of the company's future market share, cash flow, and
earnings
Our analysts and portfolio managers disseminate this information in the form of
daily notes e-mailed worldwide to all members of our investment team. This
ensures that our best ideas are shared throughout the company, without barriers
between equity and fixed-income, international and domestic, or value and growth
investment areas. We believe this allows each of our portfolio managers -- and
thus each of our investors -- to potentially benefit from any relevant item of
Original Research.
John Ballen, our President and Chief Investment Officer, has often said that the
thought he hopes managers will have when they read the daily notes is, "I could
never perform as well at any other investment company, because nowhere else
could the quality of the research be this good."
PEOPLE
Our team of research analysts and portfolio managers traces its roots back to
1932, when we created one of the first in-house research departments in the
industry. Today, we believe we have an investment team distinguished for its
unique blend of talent, continuity, and cohesiveness.
MFS' team culture and commitment to quality research have proven to be of
tremendous value in attracting some of the best and brightest talent from
leading business schools and from other investment management companies. Our
company culture was a key factor in our recognition by Fortune magazine in its
January 10, 2000, issue as one of the "100 Best Companies to Work For" in
America. As befits a great team, our people have tended to stick around -- the
average MFS tenure of our portfolio managers is 11 years, with over 16 years in
the investment industry. Contributing to this continuity is our policy that all
equity portfolio managers are promoted from within, after distinguishing
themselves first as research analysts. And because many of us who are now
managing funds or managing the company itself have been working together for
well over a decade, we have a cohesiveness, a shared philosophy of investing,
and a unity of purpose that we believe bodes well for the future of the company.
We also have scale. Our research analyst team is over 55 members strong and
growing. Each analyst is our in-house expert on a specific industry or group of
industries in a specific region of the globe. In pursuing their research, our
analysts and portfolio managers each year will visit more than 2,000 companies
throughout the world, meet with representatives from more than 3,000 companies
at one of our four worldwide offices, attend roughly 5,000 company presentations
sponsored by major Wall Street firms, and consult with over 1,000 analysts from
hundreds of U.S. and foreign brokerage houses.
All of this culminates in our analysts making buy and sell recommendations on a
wide range of potential investments for all of our portfolios. In the end, the
goal of Original Research is to try to give our portfolio managers an advantage
over their peers -- to enable our managers to deliver competitive performance by
finding opportunities before they are generally recognized by the market, and by
avoiding mistakes whenever possible. Original Research does, we believe, make a
difference.
As always, we appreciate your confidence in MFS 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 16, 2000
A prospectus containing more complete information on any MFS product, including
charges and expenses, can be obtained from your investment professional. Please
read it carefully before you invest or send money. 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 six months ended October 31, 2000, Class A shares of the fund provided a
total return of 3.79%, Class B shares 3.38%, and Class C shares 3.35%. These
returns include the reinvestment of any distributions but exclude the effects of
any sales charges and compare to returns of 3.57% and 4.54%, respectively, over
the same period for the fund's benchmarks, the Lehman Brothers Municipal Bond
Three-Year and Five-Year indices. These are unmanaged indices of
investment-grade, fixed-rate municipal bonds. During the same period, the
average short/intermediate-term municipal debt fund tracked by Lipper Inc., an
independent firm that reports mutual fund performance, returned 3.45%.
Q. WHAT IS THE GOAL OF THE FUND?
A. Our long-term goal is to provide shareholders with a higher level of
after-tax income than a money market fund, with relatively low share price
volatility. Although this fund will necessarily have more price volatility
than a money market fund, which has historically maintained a fixed share
price, we try to have less volatility than a longer-term municipal
portfolio. We try to achieve an average bond maturity (time remaining to
redemption) of five years or less because, historically bonds with shorter
maturities have tended to be less volatile. So although our shareholders
will experience up and down price movements over shorter terms, we try to
provide longer-term total returns that outperform money market investments.
Q. DID THE ENVIRONMENT FOR BOND INVESTING CHANGE DURING THE PERIOD?
A. Yes, we've seen a dramatic change from the market conditions of six months
ago. In early May, we were in the midst of a bear market for bonds. Rates
had risen dramatically over the previous nine months, due largely to several
Federal Reserve Board (the Fed) rate increases, and the market expected
further increases over the course of 2000. The Fed did indeed raise rates
another 50 basis points (0.5%) in May, and gross domestic product (GDP)
growth in the second quarter was still high -- over 5%, annualized.
But late in the second quarter and into the third quarter, signs began to
emerge that the economy was slowing, and concerns about higher inflation and
further Fed rate increases began to recede. GDP growth in the third quarter
declined to under 3%, which falls within the range that economists and Fed
Chairman Alan Greenspan have previously talked about as long-term,
sustainable, noninflationary growth. And although we've had oil prices spike
to their highest level since the Gulf War, the effect has not been as
inflationary as many had feared. The prevailing view seems to be that higher
gas prices have served as a tax on consumers and made them rein in spending,
contributing to a "soft landing" for the economy. So over the past six
months we've seen a 180-degree turn in market conditions to a more favorable
environment for fixed income investing; investors seem optimistic that
growth will remain in a relatively noninflationary 2% to 312% range and
there is even some expectation that the Fed could begin easing rates next
year.
Q. HOW WERE THESE CHANGES IN THE MARKET ENVIRONMENT REFLECTED IN YOUR
MANAGEMENT OF THE PORTFOLIO?
A. To answer that question, it's first necessary to explain that the main
driver of performance in a short/intermediate fund such as ours has been
quantitative analysis of the yield curve. The yield curve for municipal
bonds shows the relationship between yield (interest rate) and time
remaining to maturity. In general, bonds with more time remaining to
maturity have tended to pay higher interest rates but can also be more
volatile. We try to maintain an average maturity in this portfolio of five
years or less, and we have achieved that by balancing investments in longer-
and shorter-term bonds. A key element of our strategy has been to use
quantitative analysis to determine the areas of the yield curve that we
believe offer investors an optimum balance of yield and volatility -- and
combining investments in those areas to achieve the five-year-or-under
average maturity.
As the period progressed and interest rates began to ease, we saw
opportunity in the shorter and longer parts of the yield curve, and we moved
to what's known as a barbell strategy, with strong weightings in the
one-totwo-year and the six- to seven-year areas of the curve, but with
little in between. We also have some holdings in the 15- to 20-year part of
the curve, which we think is very attractive. Our average maturity was still
under five years, and we have used our analysis to try to maximize return
for investors.
Q. WHAT OTHER FACTORS AFFECTED PERFORMANCE?
A. In this type of fund, another major driver of performance has been credit
quality. A lower-quality bond should offer a higher yield to compensate for
taking on greater risk; in our portfolio, which invests only in
investment-grade bonds (bonds rated "BBB" and above by the major rating
agencies), lower credit quality means bonds rated "A" or "BBB." We use our
Original Research(SM) process -- which we believe is adept at finding
opportunities, evaluating credit risk, and avoiding defaults -- to find
lower- as well as higher-rated bonds that we feel can add to performance at
a reasonable level of risk.
Our research analysts have found credit opportunities in several sectors,
including general obligation and health care. General obligation bonds are
backed by the full faith and credit of the issuing government, which
generally has unlimited power to tax its constituents to pay debt service on
its bonds. Because our healthy economy has led to strong state and local tax
revenues nationwide, the general obligation sector has performed quite well.
We've also added to the health care sector over the past six months. Because
of some high-profile hospital and nursing home problems and reductions in
Medicare funding, yields in this sector have climbed significantly in
comparison to higher-quality issues, providing us with an opportunity to add
incremental yield to the portfolio. Although the health care sector is
challenging, we think that we could potentially reap significant gains for
investors through individual security selection. The key is finding the
financially healthy issuers and avoiding defaults and credit problems. This
is where we think the quality of our in-house Original Research -- which may
include meetings with hospital or nursing home managements, meetings with
employees and competitors, and intense financial and competitive analysis --
gives us an edge.
/s/ Michael L. Dawson Geoffrey L. Schechter
Michael L. Dawson Geoffrey L. Schechter
Portfolio Manager Portfolio Manager
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.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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MICHAEL L. DAWSON IS ASSISTANT VICE PRESIDENT AND A PORTFOLIO MANAGER OF ALL
STATE MUNICIPAL BOND FUNDS AT MFS INVESTMENT MANAGEMENT(R). HE ALSO MANAGES
OTHER NATIONAL MUNICIPAL BOND PORTFOLIOS. HE JOINED MFS IN 1998 AND WAS NAMED
ASSISTANT VICE PRESIDENT AND PORTFOLIO MANAGER IN 1999. PRIOR TO JOINING MFS,
MICHAEL 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, CFA, CPA, IS VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND A PORTFOLIO MANAGER OF OUR MUNICIPAL BOND FUNDS. HE 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. GEOFF IS A GRADUATE OF THE
UNIVERSITY OF TEXAS AND HAS AN M.B.A. DEGREE FROM BOSTON UNIVERSITY. HE IS A
CHARTERED FINANCIAL ANALYST (CFA) AND A CERTIFIED PUBLIC ACCOUNTANT (CPA).
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 charges and expenses, for any 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 CONSIDERED CONSISTENT WITH
PRUDENT INVESTING WHILE SEEKING 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: $52.3 MILLION NET ASSETS AS OF OCTOBER 31, 2000
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 the reinvestment of dividends. (See Notes to Performance
Summary).
TOTAL RATES OF RETURN THROUGH OCTOBER 31, 2000
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years Life*
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +3.79% +5.07% +10.94% +19.78% +44.67%
--------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -- +5.07% + 3.52% + 3.68% + 4.37%
--------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -- +2.44% + 2.65% + 3.15% + 4.07%
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years Life*
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +3.38% +4.22% +8.35% +15.20% +36.52%
--------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -- +4.22% +2.71% + 2.87% + 3.68%
--------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -- +0.22% +1.77% + 2.52% + 3.68%
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
6 Months 1 Year 3 Years 5 Years Life*
--------------------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +3.35% +4.18% +8.14% +14.80% +37.19%
--------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge -- +4.18% +2.64% + 2.80% + 3.73%
--------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge -- +3.18% +2.64% + 2.80% + 3.73%
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*For the period from the commencement of the fund's investment operations, March 17, 1992, through October 31, 2000.
</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 in
effect during the periods shown; without these, the results would have been less
favorable. 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.
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 2000
QUALITY RATINGS
Source: Standard & Poor's and Moody's
"AAA" 48.4%
"AA" 22.7%
"A" 14.8%
"BBB" 12.3%
Other 1.8%
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- October 31, 2000
<TABLE>
<CAPTION>
Municipal Bonds - 96.7%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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<S> <C> <C>
General Obligation - 25.0%
Allen County, IN, Jail Building Corp., 5.75s, 2009 $ 235 $ 250,376
Berks County, PA, FGIC, 5.95s, 2002 500 515,005
Bloomington, MN, Independent School District, 5.25s, 2011 500 514,470
Central Falls, RI, Asset Guaranty, ASST GTY, 5.5s, 2005 440 453,847
Clackamas County, OR, School District, 6s, 2011 315 343,177
Commonwealth of Massachusetts, 5.75s, 2005 500 523,635
Commonwealth of Massachusetts, 6s, 2011 310 339,338
Henderson, NV, Parks and Recreation, FGIC, 6s, 2006 340 362,916
Indianapolis, IN, Local Public Improvement Bond Bank, 6.25s, 2001 1,000 1,002,740
Jefferson County, KY, FSA, 0s, 2004 1,000 837,580
Kauai County, HI, FGIC, 6.25s, 2019 375 397,234
Lawrence, MA, AMBAC, 9.7s, 2001 1,000 1,019,170
Macon County and Decatur, IL, FGIC, 6.5s, 2005 325 347,457
Manistee, MI, Public Schools, FGIC, 5.15s, 2010 100 102,574
Mauston, WI, Joint School District, FGIC, 5.55s, 2005 500 517,315
Montgomery County, MD, 5.375s, 2005 500 516,350
New York City, NY, 5s, 2001 135 135,725
New York City, NY, 6.125s, 2001 490 496,355
New York City, NY, 5.7s, 2002 500 510,005
New York City, NY, 5.3s, 2003 500 509,665
North Slope Borough, AK, MBIA, 0s, 2001 600 595,548
Norwin, PA, School District, FGIC, 6s, 2020 250 259,693
Oconto Falls, WI, Public School District, FSA, 5.25s, 2007 500 519,515
Round Rock, TX, Independent School District, 6.5s, 2011 500 559,900
State of Mississippi, 5.5s, 2006 250 261,225
State of South Carolina, 5.75s, 2007 500 530,160
Taylor, MI, Building Authority, AMBAC, 5.5s, 2010 500 526,565
Wisconsin Housing & Economic Development, AMBAC, 4.9s, 2005 160 162,190
-----------
$13,109,730
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State and Local Appropriation - 13.7%
Florida State Board of Education, Lottery Rev., FGIC, 5.5s, 2011 $ 150 $ 157,589
Indiana Bond Bank Rev., AMBAC, 5.3s, 2007 350 361,553
Michigan Building Authority Rev., 6.2s, 2002 1,000 1,031,310
New York Urban Development Corp. Rev., 6s, 2002 1,000 1,016,490
New York Urban Development Corp. Rev., AMBAC, 5.4s, 2006 1,000 1,038,790
New York Urban Development Corp. Rev. (Correctional
Facilities), 5.5s, 2001 1,000 1,001,660
Ohio Building Authority, Adult Correctional Facilities,
5.75s, 2008 425 453,747
Ohio Building Authority, State Facilities Administration
Building, 5.375s, 2013 1,000 1,023,800
State of Oregon, AMBAC, 5.5s, 2008 500 523,430
State of Utah, Building Ownership Authority Lease Rev.,
FSA, 0s, 2005 685 548,438
-----------
$ 7,156,807
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Refunded and Special Obligations - 5.4%
Delaware County, IN, Hospital Authority (Ball Memorial
Hospital), AMBAC, 6.625s, 2001 $ 500 $ 507,540
Indiana Health Facility Hospital Rev. (Sisters of St.
Francis Health), MBIA, 5s, 2002 5 5,054
Michigan Building Authority Rev., 5.4s, 2002 375 388,478
Michigan Hospital Finance Authority Rev. (Genesys Health
System), 5.5s, 2007 750 788,632
Milwaukee, WI, Metropolitan Sewage District, 6.7s, 2001 500 510,495
New York City, NY, 6.125s, 2001 110 111,487
State of Mississippi, 6.2s, 2008 455 494,144
-----------
$ 2,805,830
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Airport and Port Revenue - 0.5%
Cleveland, OH, Airport Systems Rev., FSA, 5.5s, 2008 $ 250 $ 259,250
--------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 8.2%
American Public Energy Agency, Gas Supply Rev. (Nebraska
Public Gas Agency), AMBAC, 5s, 2007 $ 500 $ 488,270
Intermountain Power Agency, UT, Power Supply Rev., FSA,
5.25s, 2001 500 502,720
Lower Colorado River Authority, TX, FSA, 5.5s, 2008 600 628,230
Memphis, TN, 5.8s, 2003 500 513,730
Oklahoma Development Finance Authority (Public Service
Co. of Oklahoma), 4.875s, 2014 1,000 995,590
Sacramento, CA, Municipal Utility District Electric
Rev., FGIC, 6s, 2001 620 629,275
State of Wisconsin, 6s, 2004 500 524,505
-----------
$ 4,282,320
------------------------------------------------------------------------------------------------
Health Care Revenue - 8.7%
Baxter County, AR, Hospital Rev., 4.7s, 2005 $ 320 $ 298,470
Colorado Health Facilities Authority Rev. (National
Benevolent Assn.), 4.5s, 2002 280 276,139
Delaware County, PA, Hospital Rev. (Crozer-Chester
Medical Center), 4.75s, 2005 500 468,445
Denver, CO, Health & Hospital Rev., 5.125s, 2006 200 191,504
Iowa Finance Authority, Health Care Facilities (Genesis
Medical Center), 6s, 2010 210 217,085
Kentucky Economic Development Finance Authority (Norton
Healthcare, Inc.), 6.125s, 2010 150 149,340
Marion County, FL, Hospital District Rev., Health Systems,
4.75s, 2005 500 483,830
Maryland Health and Higher Educational Facilities
(University of Maryland), 6s, 2002 250 251,700
Massachusetts Development Finance Agency, 5.75s, 2006 260 265,252
Massachusetts Health & Education Facilities Authority
(Jordan Hospital), 4.8s, 2006 600 564,270
Missouri Health & Educational Facilities Authority Rev.
(Freeman Health Systems), 4.65s, 2003 450 439,308
Richland County, OH, Hospital Facilities, 5.4s, 2003 200 200,438
Steubenville, OH, 5.7s, 2010 220 219,107
Stillwater, OK, Medical Center Authority (Stillwater
Medical Center), 5.55s, 2001 170 170,190
Waco, TX, Health Facilities Development Corp. (Ascension
Health), 5.5s, 2009 250 250,253
West Virginia Hospital Finance Authority, Charleston
Area Medical Center, 6.5s, 2005 100 103,459
-----------
4,548,790
--------------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 1.2%
Dallas Fort Worth, TX International Airport (AMR Corp.),
5.95s, 2029 $ 250 $ 252,930
De Soto Parish, LA, Pollution Control Rev. (International
Paper Co.), 5.05s, 2002 350 350,739
-----------
$ 603,669
--------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 1.5%
Illinois Health Facilities Authority Rev. (Childrens
Memorial Hospital), AMBAC, 5.75s, 2011 $ 250 $ 262,300
Oklahoma State Development Finance Authority, Oklahoma
Hospital Assn., AMBAC, 5.25s, 2004 250 253,565
St. Cloud, MN, Health Care Rev. (St. Cloud Hospital), FSA,
5.5s, 2006 260 269,771
-----------
$ 785,636
--------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.1%
Alaska Housing Finance Corp., MBIA, 4.55s, 2002 $ 335 $ 335,647
Massachusetts Housing Finance Agency, MBIA, 5.35s, 2010 130 133,784
Panhandle, TX, Regional Housing Finance, 5.75s, 2003 205 206,933
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.15s, 2001 1,000 1,004,790
Rhode Island Housing & Mortgage Finance Corp., AMBAC,
5.25s, 2002 1,000 1,010,380
-----------
$ 2,691,534
--------------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 4.7%
Chicago, IL, AMBAC, 0s, 2006 $1,000 $ 742,980
Denver, CO, City & County Excise Tax, FSA, 5.25s, 2008 500 517,510
District of Columbia, Redevelopment Land Agency, 5.625s, 2010 200 201,098
Virgin Islands Public Finance Authority, 5.5s, 2005 1,000 1,015,450
-----------
$ 2,477,038
--------------------------------------------------------------------------------------------------
Single Family Housing Revenue - 7.2%
Chicago, IL, Single Family Mortgage Rev., GNMA, 5.4s, 2010 $ 150 $ 150,329
Colorado Housing Finance Authority, 7.25s, 2010 535 591,994
Colorado Housing Finance Authority, 6.7s, 2016 250 272,620
Colorado Housing Finance Authority, 8.4s, 2021 200 220,912
Ohio Housing Finance Agency, Single Family Mortgage
Rev., GNMA, 5.45s, 2006 500 515,035
Oklahoma Housing Development Authority Revenue, Lease
Purchase Program, 5.1s, 2005 200 199,738
Oklahoma Housing Finance Agency, GNMA, 7.6s, 2015 350 391,002
San Bernardino County, CA, GNMA, 6.45s, 2020 500 548,660
South Dakota Housing Development Authority, 5.65s, 2011 250 255,560
Wyoming Community Development Authority, Housing Rev., 5s, 2006 600 606,240
-----------
$ 3,752,090
--------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.9%
Massachusetts Industrial Finance Agency (Ogden
Haverhill), 5.15s, 2007 $ 500 $ 482,045
--------------------------------------------------------------------------------------------------
Student Loan Revenue - 2.3%
Alaska Student Loan Corp. Rev., AMBAC, 5s, 2003 $ 400 $ 401,256
Louisiana Public Facilities Authority (Student Loan Rev.),
6.5s, 2002 770 783,999
-----------
$ 1,185,255
--------------------------------------------------------------------------------------------------
Turnpike Revenue - 4.8%
Denver, CO, City & County Airport Rev., MBIA, 6s, 2006 $1,000 $ 1,064,720
New Mexico State Highway Commission, 5.5s, 2006 430 449,268
Orlando & Orange County, FL (Expressway Florida), FGIC,
5.636s, 2004(++) 1,000 1,019,620
-----------
$ 2,533,608
--------------------------------------------------------------------------------------------------
Universities - 2.9%
District of Columbia (Georgetown University), MBIA,
5.5s, 2001 $ 500 $ 502,270
Metropolitan Nashville, TN (Vanderbilt University),
5.25s, 2001 500 502,360
New Hampshire Health and Education (Derryfield School),
6.5s, 2010 200 206,094
State of New Hampshire, Higher Education & Health (New
Hampshire College), 5.65s, 2003 320 324,058
-----------
$ 1,534,782
--------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 3.8%
Fort Worth, TX, Water and Sewer Rev., 5.5s, 2004 $1,000 $ 1,028,900
Philadelphia, PA, Water & Sewer Rev., MBIA, 0s, 2002 500 457,695
Seattle, WA, Water Systems Rev., 5s, 2008 475 482,234
-----------
$ 1,968,829
--------------------------------------------------------------------------------------------------
Other - 0.8%
Phoenix, AZ, Civic Improvement, AMBAC, 5.5s, 2007 $ 250 $ 262,455
Suffolk County, NY, Judicial Facilities (John P. Cohalan
Complex), AMBAC, 5.75s, 2011 160 171,675
-----------
$ 434,130
--------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $50,241,094) $50,611,343
--------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 4.2%
--------------------------------------------------------------------------------------------------
Gulf Breeze, FL, due 11/01/00 100 $ 100,000
Harris County, TX, Hospital Rev. (Methodist Hospital),
due 11/01/00 400 400,000
Hillsborough County, FL, Pollution Control Rev. , due
11/01/00 100 100,000
Massachusetts Water Resources Authority, due 11/01/00 100 100,000
New York City, NY, due 11/01/00 300 300,000
Sevier County, TN, Public Building Authority, due 11/01/00 250 250,000
Sevier County, TN, Public Building Authority, due 11/02/00 850 850,000
Uinta County, WY, Pollution Control Rev. (Chevron), due 11/01/00 100 100,000
--------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $ 2,200,000
--------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $52,441,094) $52,811,343
Other Assets, Less Liabilities - (0.9%) (465,615)
--------------------------------------------------------------------------------------------------
Net assets - 100.0% $52,345,728
--------------------------------------------------------------------------------------------------
(++)Inverse floating rate security.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
---------------------------------------------------------------------------
OCTOBER 31, 2000
---------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $52,441,094) $52,811,343
Cash 3,037
Receivable for investments sold 115,000
Receivable for fund shares sold 43,689
Interest receivable 724,664
Other assets 383
-----------
Total assets $53,698,116
-----------
Liabilities:
Distributions payable $ 48,034
Payable for investments purchased 1,190,943
Payable for fund shares reacquired 101,597
Payable to affiliates -
Management fee 430
Reimbursement fee 7,956
Distribution and service fee 3,428
-----------
Total liabilities $ 1,352,388
-----------
Net assets $52,345,728
===========
Net assets consist of:
Paid-in capital $53,431,511
Unrealized appreciation on investments 370,249
Accumulated net realized loss on investments (1,479,406)
Accumulated undistributed net investment income 23,374
-----------
Total $52,345,728
===========
Shares of beneficial interest outstanding 7,008,645
=========
Class A shares:
Net asset value per share
(net assets of $42,603,054 / 5,703,155 shares of
beneficial interest outstanding) $7.47
=====
Offering price per share (100 / 97.5 of net asset value
per share) $7.66
=====
Class B shares:
Net asset value and offering price per share
(net assets of $6,576,223 / 881,676 shares of beneficial
interest outstanding) $7.46
=====
Class C shares:
Net asset value and offering price per share
(net assets of $3,166,451 / 423,814 shares of beneficial
interest outstanding) $7.47
=====
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, 2000
------------------------------------------------------------------------------
Net investment income:
Interest income $ 1,314,944
------------
Expenses -
Management fee $ 104,304
Trustees' compensation 4,346
Shareholder servicing agent fee 26,008
Distribution and service fee (Class A) 31,565
Distribution and service fee (Class B) 32,773
Distribution and service fee (Class C) 15,490
Administrative fee 4,551
Custodian fee 14,229
Printing 19,392
Postage 1,201
Auditing fees 13,460
Legal fees 190
Registration fees 25,547
Miscellaneous 7,637
------------
Total expenses $ 300,693
Fees paid indirectly (6,694)
Reduction of expenses by investment adviser (32,136)
------------
Net expenses $ 261,863
------------
Net investment income $ 1,053,081
------------
Realized and unrealized gain (loss) on investments:
Realized loss on investment transactions
(identified cost basis) $ (106,685)
Change in unrealized appreciation on investments 932,373
------------
Net realized and unrealized gain on investments $ 825,688
------------
Increase in net assets from operations $ 1,878,769
============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 2000 APRIL 30, 2000
(UNAUDITED)
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,053,081 $ 2,150,180
Net realized loss on investments (106,685) (805,029)
Net unrealized gain (loss) on investments 932,373 (1,342,385)
------------ ------------
Increase in net assets from operations $ 1,878,769 $ 2,766
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (880,278) $ (1,751,231)
From net investment income (Class B) (115,352) (261,029)
From net investment income (Class C) (51,630) (121,694)
------------ ------------
Total distributions declared to shareholders $ (1,047,260) $ (2,133,954)
------------ ------------
Net decrease in net assets from fund share transactions $ (511,825) $ (5,113,524)
------------ ------------
Total increase (decrease) in net assets $ 319,684 $ (7,244,712)
Net assets:
At beginning of period 52,026,044 59,270,756
------------ ------------
At end of period (including accumulated undistributed
net investment income of $23,374 and $17,553, respectively) $ 52,345,728 $ 52,026,044
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights
-----------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED --------------------------------------------------------
OCTOBER 31, 2000 2000 1999 1998 1997 1996
(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 $ 7.35 $ 7.62 $ 7.57 $ 7.50 $ 7.53 $ 7.45
------- ------- ------- ------- ------- -------
Income from investment operations# -
Net investment income(S) $ 0.16 $ 0.30 $ 0.29 $ 0.30 $ 0.29 $ 0.30
Net realized and unrealized
gain (loss) on investments 0.12 (0.27) 0.06 0.07 (0.03) 0.08
------- ------- ------- ------- ------- -------
Total from investment operations $ 0.28 $ 0.03 $ 0.35 $ 0.37 $ 0.26 $ 0.38
------- ------- ------- ------- ------- -------
Less distributions declared to
shareholders from net investment income $ (0.16) $ (0.30) $ (0.30) $ (0.30) $ (0.29) $ (0.30)
------- ------- ------- ------- ------- -------
Net asset value - end of period $ 7.47 $ 7.35 $ 7.62 $ 7.57 $ 7.50 $ 7.53
======= ======= ======= ======= ======= =======
Total return(+) 3.79%++ 0.38% 4.65% 5.02% 3.51% 5.11%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.88%+ 0.88% 0.88% 0.87% 0.95% 0.95%
Net investment income 4.21%+ 3.99% 3.84% 3.97% 3.86% 4.00%
Portfolio turnover 16% 60% 31% 51% 78% 43%
Net assets at end of period (000 Omitted) $42,603 $42,277 $45,840 $37,595 $40,953 $50,387
(S) Subject to reimbursement by the fund, the investment adviser 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 the periods indicated. To the extent actual
expenses were over 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 $ 0.30 $ 0.28 $ 0.30 $ 0.29 $ 0.30
Ratios (to average net assets):
Expenses## 1.00%+ 0.91% 0.99% 1.01% 1.02% 0.99%
Net investment income 4.09%+ 3.96% 3.71% 3.85% 3.79% 3.96%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED --------------------------------------------------------
OCTOBER 31, 2000 2000 1999 1998 1997 1996
(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 $ 7.34 $ 7.61 $ 7.56 $ 7.49 $ 7.52 $ 7.44
------- ------- ------- ------- ------- -------
Income from investment operations# -
Net investment income(S) $ 0.13 $ 0.24 $ 0.23 $ 0.24 $ 0.23 $ 0.25
Net realized and unrealized
gain (loss) on investments 0.12 (0.27) 0.06 0.07 (0.03) 0.07
------- ------- ------- ------- ------- -------
Total from investment operations $ 0.25 $ (0.03) $ 0.29 $ 0.31 $ 0.20 $ 0.32
------- ------- ------- ------- ------- -------
Less distributions declared to
shareholders from net
investment income $ (0.13) $ (0.24) $ (0.24) $ (0.24) $ (0.23) $ (0.24)
------- ------- ------- ------- ------- -------
Net asset value - end of period $ 7.46 $ 7.34 $ 7.61 $ 7.56 $ 7.49 $ 7.52
======= ======= ======= ======= ======= =======
Total return 3.38%++ (0.43)% 3.85% 4.22% 2.71% 4.34%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.69%+ 1.69% 1.66% 1.64% 1.73% 1.70%
Net investment income 3.40%+ 3.18% 3.06% 3.20% 3.08% 3.25%
Portfolio turnover 16% 60% 31% 51% 78% 43%
Net assets at end of period (000 Omitted) $ 6,576 $ 6,781 $ 9,149 $ 7,618 $ 6,503 $ 7,749
(S) Subject to reimbursement by the fund, the investment adviser 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 the periods indicated. To the extent actual
expenses were over 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 $ 0.24 $ 0.22 $ 0.24 $ 0.23 $ 0.25
Ratios (to average net assets):
Expenses## 1.81%+ 1.72% 1.77% 1.78% 1.80% 1.74%
Net investment income 3.28%+ 3.15% 2.93% 3.08% 3.01% 3.21%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
SIX MONTHS ENDED --------------------------------------------------------
OCTOBER 31, 2000 2000 1999 1998 1997 1996
(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 $ 7.35 $ 7.63 $ 7.57 $ 7.50 $ 7.53 $ 7.45
------- ------- ------- ------- ------- -------
Income from investment operations# -
Net investment income(S) $ 0.13 $ 0.23 $ 0.23 $ 0.23 $ 0.23 $ 0.23
Net realized and unrealized
gain (loss) on investments 0.11 (0.28) 0.06 0.08 (0.03) 0.08
------- ------- ------- ------- ------- -------
Total from investment operations $ 0.24 $ (0.05) $ 0.29 $ 0.31 $ 0.20 $ 0.31
------- ------- ------- ------- ------- -------
Less distributions declared to
shareholders from net
investment income $ (0.12) $ (0.23) $ (0.23) $ (0.24) $ (0.23) $ (0.23)
------- ------- ------- ------- ------- -------
Net asset value - end of period $ 7.47 $ 7.35 $ 7.63 $ 7.57 $ 7.50 $ 7.53
------- ------- ------- ------- ------- -------
Total return 3.35%++ (0.48)% 3.77% 4.13% 2.64% 4.23%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.73%+ 1.73% 1.73% 1.72% 1.80% 1.80%
Net investment income 3.36%+ 3.14% 2.98% 3.11% 3.03% 3.16%
Portfolio turnover 16% 60% 31% 51% 78% 43%
Net assets at end of period (000 Omitted) $ 3,167 $ 2,968 $ 4,282 $ 3,250 $ 3,297 $ 3,013
(S) Subject to reimbursement by the fund, the investment adviser 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 the periods indicated. To the extent actual
expenses were over 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 $ 0.23 $ 0.22 $ 0.23 $ 0.22 $ 0.23
Ratios (to average net assets):
Expenses## 1.85%+ 1.76% 1.84% 1.86% 1.87% 1.84%
Net investment income 3.24%+ 3.11% 2.85% 2.99% 2.96% 3.12%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS 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 net 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 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, 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 that 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 shown as a reduction of total
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, 2000, aggregate unreimbursed expenses amounted to $169,759.
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 $1,391 for the six months ended October 31, 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
$2,375 for the six months ended October 31, 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 $3,085 for
the six months ended October 31, 2000. Fees incurred under the distribution plan
during the six months ended October 31, 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 $6 and $26
for Class B and Class C shares, respectively, for the six months ended October
31, 2000. Fees incurred under the distribution plan during the six months ended
October 31, 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 six months ended October
31, 2000, were $0, $4,088, and $270 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 annual rate of 0.10%.
(4) Portfolio Securities
Purchases and sales of investments and short-term obligations, aggregated
$8,531,013 and $8,143,205, 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 $52,441,094
-----------
Gross unrealized appreciation $ 584,750
Gross unrealized depreciation (214,501)
-----------
Net unrealized appreciation $ 370,249
===========
(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, 2000 YEAR ENDED APRIL 30, 2000
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 843,059 $ 6,247,175 3,055,083 $ 22,711,978
Shares issued to shareholders in
reinvestment of distributions 85,569 635,165 151,026 1,121,357
Shares reacquired (978,503) (7,226,430) (3,465,242) (25,727,065)
------------ ------------ ------------ ------------
Net decrease (49,875) $ (344,090) (259,133) $ (1,893,730)
============ ============ ============ ============
<CAPTION>
Class B shares
SIX MONTHS ENDED OCTOBER 31, 2000 YEAR ENDED APRIL 30, 2000
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 93,828 $ 696,322 363,110 $ 2,697,098
Shares issued to shareholders in
reinvestment of distributions 7,632 56,502 18,457 136,923
Shares reacquired (143,933) (1,068,874) (658,984) (4,886,961)
------------ ------------ ------------ ------------
Net decrease (42,473) $ (316,050) (277,417) $ (2,052,940)
============ ============ ============ ============
<CAPTION>
Class C shares
SIX MONTHS ENDED OCTOBER 31, 2000 YEAR ENDED APRIL 30, 2000
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 53,688 $ 398,638 252,597 $ 1,878,868
Shares issued to shareholders in
reinvestment of distributions 5,910 43,882 13,398 99,472
Shares reacquired (39,606) (294,205) (423,754) (3,145,194)
------------ ------------ ------------ ------------
Net increase (decrease) 19,992 $ 148,315 (157,759) $ (1,166,854)
============ ============ ============ ============
</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 temporary 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 six months ended
October 31, 2000, was $234. The fund had no borrowings during the period.
<PAGE>
MFS(R) MUNICIPAL LIMITED MATURITY FUND
<TABLE>
<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 INVESTOR INFORMATION
Business Administration For information on MFS mutual funds, call
your investment professional or, for an
Charles W. Schmidt + - Private Investor information kit, call toll free: 1-800-637-2929
any business day from 9 a.m. to 5 p.m.
Arnold D. Scott* - Senior Executive Eastern time (or leave a message anytime).
Vice President, Director, and Secretary,
MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman and Chief P.O. Box 2281
Executive Officer, MFS Investment Boston, MA 02107-9906
Management
For general information, call toll free:
Elaine R. Smith + - Independent Consultant 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
David B. Stone + - Chairman, North American
Management Corp. (investment adviser) For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business day
INVESTMENT ADVISER from 9 a.m. to 5 p.m. Eastern time. (To use
Massachusetts Financial Services Company this service, your phone must be equipped with
500 Boylston Street a Telecommunications Device for the Deaf.)
Boston, MA 02116-3741 For share prices, account balances, exchanges,
or stock and bond outlooks, call toll free:
DISTRIBUTOR 1-800-MFS-TALK (1-800-637-8255) anytime
MFS Fund Distributors, Inc. from a touch-tone telephone.
500 Boylston Street
Boston, MA 02116-3741 WORLD WIDE WEB
www.mfs.com
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGERS
Michael L. Dawson*
Geoffrey L. Schechter*
TREASURER
James O. Yost*
ASSISTANT TREASURERS
Mark E. Bradley*
Robert R. Flaherty*
Laura F. Healy*
Ellen Moynihan*
+ Independent Trustee
*MFS Investment Management
</TABLE>
<PAGE>
MFS(R) MUNICIPAL ------------
LIMITED MATURITY FUND PRSRT STD
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)2000 MFS Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MML-3 12/00 9M 37/237/337
