<PAGE> 1
SEMIANNUAL REPORT
June 30, 1997
[MFS LOGO]
MFS(R) GOVERNMENT LIMITED MATURITY FUND
Learning financial basics the easy way (see page 22)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter from the Chairman.......................................................... 1
Portfolio Manager's Overview...................................................... 2
Portfolio Manager's Profile....................................................... 3
Fund Facts........................................................................ 4
Performance Summary............................................................... 4
Portfolio of Investments.......................................................... 7
Financial Statements.............................................................. 8
Notes to Financial Statements..................................................... 16
The ABCs of Investing............................................................. 22
MFS Investment Opportunities...................................................... 23
The MFS Family of Funds(R)........................................................ 24
Trustees and Officers............................................................. 25
</TABLE>
HIGHLIGHTS
- FOR THE SIX MONTHS ENDED JUNE 30, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 2.85%, CLASS B SHARES
2.46%, CLASS C SHARES 2.43%, AND CLASS I SHARES 3.01%. (SEE
PERFORMANCE SUMMARY FOR MORE INFORMATION.)
- THE FUND IS CURRENTLY POSITIONED FOR WHAT WE BELIEVE WILL BE A PERIOD
OF STABLE INTEREST RATES OVER THE REMAINDER OF THE YEAR, WITH A HIGH
WEIGHTING IN MORTGAGE-BACKED PASS-THROUGH SECURITIES AND SHORT-TERM
INSTRUMENTS AND A LOW WEIGHTING IN U.S. TREASURY SECURITIES.
- THE FUND BENEFITED BY BEING DEFENSIVELY POSITIONED DURING A PERIOD
WHEN THE FEDERAL RESERVE BOARD RAISED INTEREST RATES, WHICH IS
CONSISTENT WITH AN ONGOING STRATEGY THAT SEEKS TO PROTECT PRINCIPAL
INVESTMENTS.
<PAGE> 3
LETTER FROM THE CHAIRMAN
Dear Shareholders:
An unprecedented combination of generally
positive factors has helped the U.S. economy
enjoy a sustained period of relative stability
and moderate growth in which thousands of new
[PICTURE A. KEITH BRODKIN] jobs have been created every month, inflation
remains under control, and the investment
climate -- at least until now -- has been
favorable. For example, the increased use of
technology and other productivity enhancements,
as well as corporate restructuring and global
competition, is improving companies' balance sheets and helping control
inflation. Meanwhile, borrowing by corporations and governments continues to
decline, while consumer confidence is increasing, although consumer debt levels
are still uncomfortably high. While some lenders are beginning to tighten
standards to address this problem, consumer debt and personal bankruptcies
continue to rise. Because of this, plus slight declines in other indicators
such as average hourly wages and the corporate purchasing-managers index, we do
not expect the rapid pace of growth seen in the first quarter of 1997 to
continue. While second-quarter growth has slowed dramatically, we do expect the
second half of the year to pick up once again with real (inflation-adjusted)
growth centering around 2 1/2%.
In the fixed-income markets, we have been encouraged by the Federal Reserve
Board's decision to not raise short-term interest rates at its July meeting. But
we cannot rule out the possibility of future monetary tightening in the second
half of the year if, as we now expect, the economy strengthens in the second
half of 1997. Therefore, our risk/reward outlook for the fixed-income markets is
neutral, and we believe that fixed-income investors should think in terms of
earning the coupon income from their investments rather than seeking possible
gains from price appreciation.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
July 14, 1997
1
<PAGE> 4
PORTFOLIO MANAGER'S OVERVIEW
Dear Shareholders:
Growth in the U.S. economy continues at a steady
pace, fueled in part by the high level of wealth
and income growth in the consumer sector. These
high levels of growth and a concern that they
[PICTURE D. RICHARD SMITH] could create upward pressure on inflation
D. Richard Smith prompted the Federal Reserve Board (the Fed) to
adjust the federal funds rate higher by 0.25% in
March. We expect that future rate increases will
be limited and the economy will moderate into
the latter half of the year. Interest rates, adjusted for the low levels of
reported inflation, are high by historical standards, and U.S. interest rates
are higher than those of most competing global markets.
For the six months ended June 30, 1997, Class A shares of the Fund provided
a total return of 2.85%, Class B shares 2.46%, Class C shares 2.43%, and Class I
shares 3.01%. These returns assume the reinvestment of distributions but exclude
the effects of any sales charges and compare to a 2.87% return for the Lehman
Brothers One- to Three-Year Government Index (the Lehman Index), a
market-weighted index comprised of debt issued by the U.S. government and its
agencies with remaining maturities of one to three years. The returns of the
Fund's Class A and Class I shares outperformed the 2.54% return for the average
short-term government debt fund as reported by Lipper Analytical Services, Inc.,
an independent firm that reports mutual fund performance.
The Fund's performance was a function of two portfolio positions over the
past six months. First, the portfolio was very defensively positioned during a
period when the Fed raised interest rates. This positioning is consistent with
an ongoing strategy that seeks to protect principal investments. Second, the
Fund continues to hold short-maturity, higher-yielding mortgage securities. The
incremental yield from these mortgage securities, as well as stable prepayment
characteristics, increases the likelihood of outperforming very short-maturity
government-debt instruments (although principal value and interest on Treasury
securities are guaranteed by the U.S. government if held to maturity). The
allocation to higher-yielding mortgage securities will be an important component
of the Fund's ongoing strategy.
The Fund is currently positioned for what we believe will be a period of
stable interest rates over the remainder of the year. The Fund has a high
weighting in mortgage-backed pass-through securities and short-term instruments.
The portfolio has a low weighting in U.S. Treasury securities and no
2
<PAGE> 5
PORTFOLIO MANAGER'S OVERVIEW - continued
exposure to agency debentures. Should the economy continue to grow at a pace
that could produce an increase in inflation, the Fund will once again move into
a defensive posture.
The portfolio's duration, or measure of sensitivity to interest rates, is
currently 1.7 years, the same as that of the Lehman Index. The cash position,
which is usually very low, is currently at 15%. This higher-than-normal level of
cash is due to the low level of incremental yield from one-year Treasury
securities. Another 23% of the portfolio is invested in U.S. Treasury issues.
These issues have two-, three-, and five-year maturities and control the overall
interest-rate and yield-curve exposure of the Fund.
The highest exposure to the portfolio is the 62% weighting in U.S. agency
mortgage securities. These issues are a combination of agency pass-through
securities and very short-term collateralized mortgage obligations (CMOs). The
pass-throughs are mostly seasoned securities that have stable prepayment
patterns and yield approximately 7.0%, or 0.80% more than two-year Treasuries.
In our opinion, the CMOs are extremely stable issues that yield approximately
6.6%, or 0.40% more than comparable Treasury issues. The Fund will continue to
add these types of issues as they become available in the marketplace at what we
feel are attractive yield levels. The targeted proportion of the Fund for these
mortgage issues is 75%.
Our ability to invest in both Treasury and mortgage-backed securities
within a range of maturities has proved helpful in times of rapidly changing
market environments. The Fund will, however, continue to adhere to its policy of
avoiding any exposure to futures, option contracts, or more volatile mortgage-
derivative securities. As always, we will continue to maintain our commitment to
providing competitive returns over the long term.
Respectfully,
/s/ D. Richard Smith
D. Richard Smith
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
D. RICHARD SMITH JOINED MFS IN 1993. HE WAS NAMED VICE
PRESIDENT - INVESTMENTS IN 1995 AND PORTFOLIO MANAGER OF MFS(R)
GOVERNMENT LIMITED MATURITY FUND IN FEBRUARY 1997. MR. SMITH IS A
GRADUATE OF VASSAR COLLEGE AND HAS AN M.B.A. FROM VANDERBILT UNIVERSITY.
3
<PAGE> 6
FUND FACTS
STRATEGY: THE FUND'S INVESTMENT OBJECTIVE IS TO PRESERVE
CAPITAL AND PROVIDE HIGH CURRENT INCOME (COMPARED
TO A PORTFOLIO ENTIRELY INVESTED IN MONEY MARKET
INSTRUMENTS).
COMMENCEMENT OF
INVESTMENT OPERATIONS: CLASS A: SEPTEMBER 26, 1988
CLASS B: SEPTEMBER 7, 1993
CLASS C: AUGUST 1, 1994
CLASS I: JANUARY 2, 1997
SIZE: $253.3 MILLION NET ASSETS AS OF JUNE 30, 1997
PERFORMANCE SUMMARY
Because mutual funds like MFS Government Limited Maturity Fund are designed for
investors with long-term goals, we have provided cumulative results as well as
the average annual total returns for Class A, Class B, Class C, and Class I
shares for the applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF JUNE 30, 1997
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
6 MONTHS 1 YEAR 5 YEARS LIFE OF FUND*
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +2.85% +5.83% +29.34% +67.06%
- -------------------------------------------------------------------------------------------
Average Annual Total Return -- +5.83% + 5.28% + 6.03%
- -------------------------------------------------------------------------------------------
SEC Results -- +3.14% + 4.75% + 5.72%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS B INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
6 MONTHS 1 YEAR 5 YEARS LIFE OF FUND*
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +2.46% +4.97% +24.92% +61.48%
- -------------------------------------------------------------------------------------------
Average Annual Total Return -- +4.97% + 4.55% + 5.62%
- -------------------------------------------------------------------------------------------
SEC Results -- +0.99% + 4.24% + 5.62%
- -------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
September 26, 1988, through June 30, 1997.
4
<PAGE> 7
PERFORMANCE SUMMARY - continued
CLASS C INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
6 MONTHS 1 YEAR 5 YEARS LIFE OF FUND*
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +2.43% +4.84% +25.70% +62.42%
- -------------------------------------------------------------------------------------------
Average Annual Total Return -- +4.84% + 4.68% + 5.69%
- -------------------------------------------------------------------------------------------
SEC Results -- +3.85% + 4.68% + 5.69%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
6 MONTHS 1 YEAR 5 YEARS LIFE OF FUND*
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +3.01% +5.85% +29.43% +67.20%
- -------------------------------------------------------------------------------------------
Average Annual Total Return -- +5.85% + 5.28% + 6.04%
- -------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
September 26, 1988, through June 30, 1997.
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the maximum 2.50% sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC),
which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C
shares have no initial sales charge but, along with Class B shares, have higher
annual fees and expenses than Class A shares. Class C share purchases are
subject to a 1% CDSC if redeemed within 12 months of purchase. Class I shares,
which became available on January 2, 1997, have no sales charge or Rule 12b-1
fees and are only available to certain institutional investors.
Class B and Class C share results include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior
to the commencement of offering of Class B and Class C shares. Because operating
expenses attributable to Class B and Class C shares are higher than those of
Class A shares, Class B and Class C share performance generally would have been
lower than Class A share performance. The Class A share performance included in
the Class B and Class C share SEC performance has been adjusted to reflect the
CDSC generally applicable to Class B and Class C shares rather than the initial
sales charge generally applicable to Class A shares.
5
<PAGE> 8
PERFORMANCE SUMMARY - continued
Class I share results include the performance and the operating expenses (e.g.,
Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the
commencement of offering of Class I shares. Because operating expenses
attributable to Class A shares are greater than those of Class I shares, Class I
share performance generally would have been higher than Class A share
performance. The Class A share performance included in the Class I share
performance has been adjusted to reflect the fact that Class I shares have no
sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies and
waivers may be discontinued at any time.
6
<PAGE> 9
PORTFOLIO OF INVESTMENTS (UNAUDITED) - June 30, 1997
Bonds - 85.1%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Federal Agencies - 54.1%
Federal Home Loan Mortgage Corp., 6s, 2018 $13,345 $ 13,307,367
Federal Home Loan Mortgage Corp., 6.5s, 2001 13,686 13,675,236
Federal Home Loan Mortgage Corp., 7s, 2001 21,522 21,763,774
Federal Home Loan Mortgage Corp., 7.5s, 2002 9,499 9,687,410
Federal Home Loan Mortgage Corp., 8s, 2000 - 2020 20,189 20,518,364
Federal Home Loan Mortgage Corp., 9s, 2005 3,468 3,626,161
Federal Home Loan Mortgage Corp., 9.25s, 2010 - 2019 7,448 7,909,957
Federal National Mortgage Assn., 7s, 2002 - 2010 4,815 4,857,287
Federal National Mortgage Assn., 7.5s, 2000 - 2001 15,378 15,597,023
Federal National Mortgage Assn., 8s, 2001 - 2002 16,433 16,821,725
Federal National Mortgage Assn., 10s, 2025 8,537 9,332,837
------------
$137,097,141
- -----------------------------------------------------------------------------------------
U.S. Government Guaranteed - 31.0%
Government National Mortgage Association - 7.6%
GNMA, 6.875s, 2023 $ 5,975 $ 6,108,554
GNMA, 7s, 2008 2,861 2,879,274
GNMA, 7.5s, 2009 24 24,317
GNMA, 8.5s, 2002 - 2010 3,420 3,559,810
GNMA, 9s, 2001 - 2007 6,264 6,605,095
------------
$ 19,177,050
- -----------------------------------------------------------------------------------------
U.S. Treasury Obligations - 23.4%
U.S. Treasury Notes, 6.375s, 1999 $16,250 $ 16,336,288
U.S. Treasury Notes, 6.5s, 2002 6,750 6,777,405
U.S. Treasury Notes, 6.625s, 2002 10,000 10,092,200
U.S. Treasury Notes, 8s, 2001 10,000 10,562,500
U.S. Treasury Notes, 8.875s, 1998 15,000 15,567,150
------------
$ 59,335,543
- -----------------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 78,512,593
- -----------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $214,977,420) $215,609,734
- -----------------------------------------------------------------------------------------
Repurchase Agreement - 14.3%
- -----------------------------------------------------------------------------------------
Investments in repurchase agreements with Goldman
Sachs, in a joint trading account ($281,752,000),
dated 6/30/97, due 7/01/97, total to be received
$36,263,892, collateralized by various U.S.
Treasury and federal agency obligations (with
$280,591,000 par and valued at $284,822,193), at
cost $36,258 $ 36,258,000
- -----------------------------------------------------------------------------------------
Total Investments (Identified Cost, $251,235,420) $251,867,734
Other Assets, Less Liabilities - 0.6% 1,475,523
- -----------------------------------------------------------------------------------------
Net Assets - 100.0% $253,343,257
- -----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE> 10
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
June 30, 1997
- ------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $251,235,420) $251,867,734
Cash 5
Receivable for Fund shares sold 519,471
Interest receivable 1,834,362
Other assets 2,587
------------
Total assets $254,224,159
------------
Liabilities:
Payable for Fund shares reacquired $ 257,717
Distribution payable 468,367
Payable to affiliates -
Distribution and service fee 21,944
Management fee 8,223
Administrative fee 308
Shareholder servicing agent fee 2,673
Accrued expenses and other liabilities 121,670
------------
Total liabilities $ 880,902
------------
Net assets $253,343,257
------------
Net assets consist of:
Paid-in capital $277,764,981
Unrealized appreciation on investments 632,314
Accumulated net realized loss on investments (24,849,159)
Accumulated distributions in excess of net investment income (204,879)
------------
Total $253,343,257
============
Shares of beneficial interest outstanding 30,259,736
============
Class A shares:
Net asset value per share
(net assets of $201,071,878 / 24,002,111 shares of beneficial
interest outstanding) $8.38
=====
Offering price per share
(100 / 97.5 of net asset value per share) $8.59
=====
Class B shares:
Net asset value and offering price per share
(net assets of $33,555,957 / 4,013,860 shares of beneficial
interest outstanding) $8.36
=====
Class C shares:
Net asset value and offering price per share
(net assets of $18,578,534 / 2,227,424 shares of beneficial
interest outstanding) $8.34
=====
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $136,888 / 16,341 shares of beneficial interest
outstanding) $8.38
=====
</TABLE>
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
8
<PAGE> 11
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Six Months Ended June 30, 1997
- ------------------------------------------------------------------------------------
<S> <C>
Net investment income:
Interest income $ 9,422,546
-----------
Expenses -
Management fee $ 525,827
Trustees' compensation 26,255
Shareholder servicing agent fee 170,894
Distribution and service fee (Class A) 156,726
Distribution and service fee (Class B) 155,443
Distribution and service fee (Class C) 103,386
Administrative fee 13,094
Custodian fee 56,498
Printing 35,643
Postage 23,851
Auditing fee 4,751
Legal fee 1,855
Miscellaneous 53,389
-----------
Total expenses $ 1,327,612
Fees paid indirectly (43,757)
-----------
Net expenses $ 1,283,855
-----------
Net investment income $ 8,138,691
-----------
Realized and unrealized gain (loss) on investments:
Realized loss (identified cost basis) $(3,825,291)
Change in unrealized appreciation 2,850,343
-----------
Net realized and unrealized loss on investments $ (974,948)
-----------
Increase in net assets from operations $ 7,163,743
===========
</TABLE>
See notes to financial statements
9
<PAGE> 12
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 8,138,691 $ 18,926,751
Not realized loss on investments (3,825,291) (4,741,975)
Net unrealized gain (loss) on investments 2,850,343 (6,064,184)
------------- -------------
Increase in net assets from operations $ 7,163,743 $ 8,120,592
------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (6,643,831) $ (15,042,192)
From net investment income (Class B) (921,045) (1,810,243)
From net investment income (Class C) (569,199) (1,094,415)
From net investment income (Class I) (4,617) --
In excess of net investment income (Class A) (86,547) --
In excess of net investment income (Class B) (16,461) --
In excess of net investment income (Class C) (11,805) --
In excess of net investment income (Class I) (54) --
------------- -------------
Total distributions declared to shareholders $ (8,253,559) $ (17,946,850)
------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 34,248,442 $ 92,855,987
Net asset value of shares issued to shareholders in
reinvestment of distributions 5,109,099 11,747,911
Cost of shares reacquired (68,758,768) (111,021,792)
------------- -------------
Decrease in net assets from Fund share
transactions $ (29,401,227) $ (6,417,894)
------------- -------------
Total decrease in net assets $ (30,491,043) $ (16,244,152)
Net assets:
At beginning of period 283,834,300 300,078,452
------------- -------------
At end of period (including distributions in excess
of net investment income of $204,879 and $90,011,
respectively) $ 253,343,257 $ 283,834,300
============= =============
</TABLE>
See notes to financial statements.
10
<PAGE> 13
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
- ------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ------------------------------
(Unaudited) 1996 1995 1994
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 8.41 $ 8.68 $ 8.42 $ 8.99
-------- -------- -------- --------
Income from investment operations# -
Net investment income $ 0.26 $ 0.56 $ 0.59 $ 0.54
Net realized and unrealized gain
(loss) on investments (0.02) (0.30) 0.25 (0.61)
-------- -------- -------- --------
Total from investment
operations $ 0.24 $ 0.26 $ 0.84 $ (0.07)
-------- -------- -------- --------
Less distributions declared to
shareholders -
From net investment income $ (0.26) $ (0.53) $ (0.58) $ (0.50)
In excess of net investment income (0.01) -- -- --
-------- -------- -------- --------
Total distributions declared to
shareholders $ (0.27) $ (0.53) $ (0.58) $ (0.50)
-------- -------- -------- --------
Net asset value - end of period $ 8.38 $ 8.41 $ 8.68 $ 8.42
======== ======== ======== ========
Total return++ 2.85%++ 2.98% 10.36% (0.76)%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.81%+ 0.84% 0.88% 0.89%
Net investment income 6.32%+ 6.55% 6.91% 6.28%
Portfolio turnover 178% 301% 447% 328%
Net assets at end of period (000 omitted) $201,072 $226,976 $248,955 $257,154
+ Annualized.
++ Not annualized.
++ 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.
# Per share data for the period subsequent to December 31, 1993, are based on
average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
11
<PAGE> 14
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
- -------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
Year Ended December 31, February 28,
----------------------------------------- -------------------
1993 1992 1991 1990sec. 1990 1989*
- -------------------------------------------------------------------------------------------
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 $ 8.98 $ 9.06 $ 9.09 $ 9.33 $ 9.51 $ 9.63
-------- -------- -------- -------- -------- --------
Income from investment
operations# -
Net investment income $ 0.52 $ 0.49 $ 0.52 $ 0.53 $ 0.69 $ 0.23
Net realized and
unrealized gain (loss)
on investments 0.10 0.07 0.21 -- 0.10 (0.11)
-------- -------- -------- -------- -------- --------
Total from
investment
operations $ 0.62 $ 0.56 $ 0.73 $ 0.53 $ 0.79 $ 0.12
-------- -------- -------- -------- -------- --------
Less distributions
declared to
shareholders -
From net investment
income $ (0.51) $ (0.45) $ (0.49) $ (0.48) $ (0.67) $ (0.17)
From net realized gain
on investments (0.10) (0.14) -- -- (0.14) (0.02)
From paid-in capital -- (0.05) (0.27) (0.29) (0.16) (0.05)
-------- -------- -------- -------- -------- --------
Total distributions
declared to
shareholders $ (0.61) $ (0.64) $ (0.76) $ (0.77) $ (0.97) $ (0.24)
-------- -------- -------- -------- -------- --------
Net asset value - end of
period $ 8.99 $ 8.98 $ 9.06 $ 9.09 $ 9.33 $ 9.51
======== ======== ======== ======== ======== ========
Total return++ 7.00% 6.51% 8.44% 7.39%+ 8.43% 3.02%+
Ratios (to average net assets)/Supplemental data:
Expenses 1.14% 1.38% 1.33% 1.40%+ 1.43% 1.41%+
Net investment income 5.62% 5.50% 5.89% 7.01%+ 7.16% 6.97%+
Portfolio turnover 247% 391% 1,256% 845% 615% 170%
Net assets at end of
period (000 omitted) $345,597 $296,788 $365,644 $427,849 $350,011 $117,584
sec. For the ten months ended December 31, 1990.
* For the period from the commencement of the Fund's investment operations, September
26, 1988, through February 28, 1989.
+ Annualized.
++ 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.
# Per share data for the period subsequent to December 31, 1993, are based on average
shares outstanding.
</TABLE>
See notes to financial statements
12
<PAGE> 15
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 -------------------------------------
(Unaudited) 1996 1995 1994 1993**
- ------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $ 8.39 $ 8.67 $ 8.41 $ 8.98 $ 9.17
------- ------- ------- ------- -------
Income from investment
operations# -
Net investment income $ 0.23 $ 0.47 $ 0.51 $ 0.47 $ 0.12
Net realized and unrealized
gain (loss) on investments (0.03) (0.30) 0.25 (0.62) (0.17)
------- ------- ------- ------- -------
Total from investment
operations $ 0.20 $ 0.17 $ 0.76 $ (0.15) $ (0.05)
------- ------- ------- ------- -------
Less distributions declared to
shareholders -
From net investment income==== $ (0.23) $ (0.45) $ (0.50) $ (0.42) $ (0.11)
From net realized gain on
investments -- -- -- -- (0.03)
------- ------- ------- ------- -------
Total distributions declared
to shareholders $ (0.23) $ (0.45) $ (0.50) $ (0.42) $ (0.14)
------- ------- ------- ------- -------
Net asset value - end of period $ 8.36 $ 8.39 $ 8.67 $ 8.41 $ 8.98
======= ======= ======= ======= =======
Total return 2.46%== 2.08% 9.31% (1.65)% (1.54)%=
Ratios (to average net assets)/Supplemental data:
Expenses## 1.59%= 1.72% 1.74% 1.79% 1.83%=
Net investment income 5.53%= 5.67% 6.02% 5.42% 4.58%=
Portfolio turnover 178% 301% 447% 328% 247%
Net assets at end of period (000
omitted) $33,556 $34,643 $33,759 $23,918 $11,268
** For the period from the commencement of offering of Class B shares, September 7,
1993, through December 31, 1993.
= Annualized.
== Not annualized.
==== Includes distributions in excess of net investment income of $0.004 for the six
months ended June 30, 1997.
# Per share data for the period subsequent to December 31, 1993, are based on
average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
13
<PAGE> 16
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ------------------------------
(Unaudited) 1996 1995 1994***
- ----------------------------------------------------------------------------------------
Class C
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $ 8.37 $ 8.65 $ 8.39 $ 8.62
------- ------- ------- --------
Income from investment operations# -
Net investment income $ 0.23 $ 0.48 $ 0.51 $ 0.17
Net realized and unrealized gain
(loss) on investments (0.03) (0.30) 0.25 (0.20)
------- ------- ------- --------
Total from investment
operations $ 0.20 $ 0.18 $ 0.76 $ (0.03)
------- ------- ------- --------
Less distributions declared to
shareholders -
From net investment income++++ $ (0.23) $ (0.46) $ (0.50) $ (0.20)
------- ------- ------- --------
Net asset value - end of period $ 8.34 $ 8.37 $ 8.65 $ 8.39
======= ======= ======= ========
Total return 2.43%++ 2.12% 9.33% (0.33)%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.65%+ 1.69% 1.73% 1.62%+
Net investment income 5.47%+ 5.68% 5.87% 6.10%+
Portfolio turnover 178% 301% 447% 328%
Net assets at end of period (000
omitted) $18,579 $22,215 $17,365 $ 3,403
*** For the period from the commencement of offering of Class C shares, August 1,
1994, through December 31, 1994.
+ Annualized.
++ Not annualized.
++++ Includes distributions in excess of net investment income of $0.005 for the six
months ended June 30, 1997.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
14
<PAGE> 17
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
- ------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended
June 30, 1997****
(Unaudited)
- ------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 8.40
------
Income from investment operations# -
Net investment income $ 0.27
Net realized and unrealized loss on investments (0.02)
------
Total from investment operations $ 0.25
------
Less distributions declared to shareholders -
From net investment income++++ $(0.27)
------
Net asset value - end of period $ 8.38
======
Total return 3.01% ++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.67% +
Net investment income 6.59% +
Portfolio turnover 178%
Net assets at end of period (000 omitted) $ 137
**** For the period from the commencement of offering of Class I shares, January 2,
1997, through June 30, 1997.
+ Annualized.
++ Not annualized.
++++ Includes distributions in excess of net investment income of $0.003 for the six
months ended June 30, 1997.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
15
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS Government Limited Maturity Fund (the Fund) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Valuations - Debt securities (other than short-term obligations which
mature in 60 days or less), including listed issues, are valued on the basis of
valuations furnished by dealers or by a pricing service with consideration to
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics,
and other market data, without exclusive reliance upon exchange or over-the-
counter prices. Short-term obligations, which mature in 60 days or less, are
valued at amortized cost, which approximates market value. Securities for which
there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Trustees.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The Fund requires that the
securities purchased in a repurchase transaction be transferred to the custodian
in a manner sufficient to enable the Fund to obtain those securities in the
event of a default under the repurchase agreement. The Fund monitors, on a daily
basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Fund under each such repurchase agreement. The
Fund, along with other affiliated entities of Massachusetts Financial Services
Company (MFS), may utilize a joint trading account for the purpose of entering
into one or more repurchase agreements.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premiums and
16
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
original issue discounts are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Interest
payments received in additional securities are recorded on the ex-interest date
in an amount equal to the value of the security on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's average daily net assets. The fee is reduced according to an
arrangement which measures the value of cash deposited with the custodian by the
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
The Fund files a tax return annually using tax accounting methods required under
provisions of the Code which may differ from generally accepted accounting
principles, the basis on which these financial statements are prepared.
Accordingly, the amount of net investment income and net realized gain reported
on these financial statements may differ from that reported on the Fund's tax
return and, consequently, the character of distributions to shareholders
reported in the financial highlights may differ from that reported to
shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a tax return of 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 accumulated net realized gains.
At December 31, 1996, the Fund, for federal income tax purposes, had a capital
loss carryforward of $20,968,145, which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on December 31, 2002 ($14,381,215), December 31, 2003 ($2,302,419),
and December 31, 2004 ($4,284,511).
17
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares. The classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Fund pro rata
based on the settled shares outstanding of each class, without distinction
between share classes. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend rates
are generally due to differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with MFS to
provide overall investment advisory and administrative services and general
office facilities. The management fee is computed daily and paid monthly at an
effective annual rate of 0.40% of average daily net assets.
Administrator - Effective March 1, 1997, the Fund has an administrative services
agreement with MFS to provide the Fund with certain financial, legal,
compliance, shareholder communications, and other administrative services. As a
partial reimbursement for the cost of providing these services, the Fund pays
MFS an administrative fee up to 0.015% per annum of the Fund's average daily net
assets, provided that the administrative fee is not assessed on Fund assets that
exceed $3 billion.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all of its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $5,730 for the period ended
June 30, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$9,775 for the period ended June 30, 1997, 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
18
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum (reduced to a maximum of 0.15% per annum for an indefinite
period) of the Fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer, 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, commissions to dealers, and payments to MFD wholesalers for
sales at or above a certain dollar level, and other such distribution-related
expenses that are approved by the Fund. MFD retains the service fee for accounts
not attributable to a securities dealer which amounted to $24,112 for the period
ended June 30, 1997. Payments of the 0.10% per annum Class A distribution fee
will commence on such dates as the Trustees of the Fund may determine. Fees
incurred under the distribution plan during the period ended June 30, 1997, 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. The
service fee is currently being reduced to 0.15% on Class B shares held over one
year. 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 additional
consideration for services rendered by the dealer with respect to Class B and
Class C shares. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $3,908 and $585 for Class B and Class C
shares, respectively, for the period ended June 30, 1997. Fees incurred under
the distribution plan during the period ended June 30, 1997, were 0.94% and
1.00% of average daily net assets attributable to Class B and Class C shares on
an annualized basis respectively.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within 12 months following such 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.
A contingent deferred sales charge is imposed on shareholder redemptions of
19
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
Class C shares in the event of a shareholder redemption within twelve months of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the period ended June 30, 1997, were
$13,561, $81,136, and $27,617 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 average daily net assets of each class of shares at an
effective annual rate of 0.13%. Prior to January 1, 1997, the fee was calculated
as a percentage of the average daily net assets of each class of shares at an
effective annual rate of up to 0.15%, up to 0.22%, and up to 0.15% attributable
to Class A, Class B, and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. government securities $396,185,389 $441,488,197
</TABLE>
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost $251,235,420
============
Gross unrealized appreciation $ 798,900
Gross unrealized depreciation (166,586)
------------
Net unrealized appreciation $ 632,314
============
</TABLE>
(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 (without par value).
Transactions in Fund shares were as follows:
Class A Shares
<TABLE>
<CAPTION>
Period Ended June 30, 1997 Year Ended December 31, 1996
---------------------------- ----------------------------
Shares Amount Shares Amount
=============================================================================================
<S> <C> <C> <C> <C>
Shares sold 2,726,114 $ 22,850,557 5,719,260 $ 48,727,419
Shares issued to shareholders in
reinvestment of distributions 493,715 4,135,922 1,141,768 9,677,959
Transfer to Class I (18,266) (153,434) -- --
Shares reacquired (6,189,065) (51,870,780) (8,536,403) (72,327,666)
---------- ------------ ---------- ------------
Net decrease (2,987,502) $(25,037,735) (1,675,375) $(13,922,288)
========== ============ ========== ============
</TABLE>
20
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
<TABLE>
Class B Shares
<CAPTION>
Period Ended June 30, 1997 Year Ended December 31, 1996
--------------------------- ----------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,073,625 $ 8,975,990 2,611,809 $ 22,099,165
Shares issued to shareholders in
reinvestment of distributions 69,451 580,507 135,194 1,143,275
Shares reacquired (1,256,910) (10,509,309) (2,513,098) (21,287,379)
---------- ------------ ---------- ------------
Net increase (decrease) (113,834) $ (952,812) 233,905 $ 1,955,061
========== ============ ========== ============
<CAPTION>
Class C Shares
Period Ended June 30, 1997 Year Ended December 31, 1996
--------------------------- ----------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 289,567 $ 2,415,017 2,592,106 $ 22,029,403
Shares issued to shareholders in
reinvestment of distributions 46,528 387,990 109,719 926,677
Shares reacquired (761,469) (6,351,064) (2,056,120) (17,406,747)
-------- ----------- ---------- ------------
Net increase (decrease) (425,374) $(3,548,057) 645,705 $ 5,549,333
======== =========== ========== ============
<CAPTION>
Class I Shares
Period Ended June 30, 1997
--------------------------
Shares Amount
- --------------------------------------------------------------
<S> <C> <C>
Shares sold 823 $ 6,878
Shares issued to shareholders in
reinvestment of distributions 558 4,680
Transfer from Class A 18,266 153,434
Shares reacquired (3,306) (27,615)
------ --------
Net increase 16,341 $137,377
====== ========
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $400 million unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average daily
unused portion of the line of credit, is allocated among the participating funds
at the end of each quarter. The commitment fee allocated to the Fund for the
period ended June 30, 1997, was $1,183.
---------------------------------------------------------------------
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.
21
<PAGE> 24
INTRODUCING A QUICK AND EASY WAY TO LEARN SOME FINANCIAL BASICS:
THE ABCS OF INVESTING
Part of MFS(R) Heritage Planning(SM)
This series of brief messages provides an overview of investment topics,
including:
* Dollar-cost Averaging: a simple method of investing that could work for
anyone
* Interest Rate Changes: what every fixed-income investor should know
* Lump-sum Rollovers: how to handle a windfall
* Professional Financial Advisers: why even smart investors may need one
* Straw into Gold: tips for weaving small lifestyle changes into dollars to
invest
* Weathering Market Downturns: how to maintain perspective
* Basic Steps Smart Investors Take Automatically
The series will include messages on other topics as they become available.
You can read through each topic quickly in five minutes at most. Of course,
these materials are not designed to turn you into an expert. Your financial
adviser can provide more information on any of the ABC subjects. A conversation
with your adviser might also provide an opportune occasion to review your
portfolio and to assess your present and future financial needs.
To request your free copy of The ABCs OF INVESTING series, call MFS at
1-800-225-2606 any business day from 8 a.m. to 8 p.m. Eastern time.
As part of MFS Heritage Planning, your adviser has access to a wide range of MFS
materials he or she would be happy to share with you on topics related to the
intergenerational concerns of people today. These include financing college
tuition and a secure retirement, eldercare, tax-smart gifting strategies, estate
and health care planning, and other issues.
22
<PAGE> 25
MFS INVESTMENT OPPORTUNITIES
MUTUAL FUNDS
The MFS Family of FundsRegistration Mark falls into the eight general categories
below. All offer full-time professional management, a diversified portfolio, and
a wide array of shareholder services.
STOCK FUNDS seek growth of capital rather than income through investments in
stocks.
STOCK AND BOND FUNDS seek current income and growth of capital through
investments in both stocks and bonds.
BOND FUNDS seek current income through investments in debt securities.
LIMITED-MATURITY FUNDS seek current income and preservation of capital through
investments in debt securities with remaining maturities of five years or less.
WORLD FUNDS seek stock, balanced, and bond fund objectives through investments
in U.S. and foreign stocks and bonds.
NATIONAL TAX-FREE BOND FUNDS seek current income exempt from federal income tax
through investments in debt securities issued by states and municipalities.(1)
STATE TAX-FREE BOND FUNDS seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state and
its municipalities.(1)
MONEY MARKET FUNDS seek preservation of capital and current income through
investments in short-term debt securities.(2)
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call for literature(3) on MFS
products and services: 1-800-225-2606, from 8 a.m. to 8 p.m. Eastern time any
business day.
(1) A small portion of the income may be subject to federal, state, and/or
alternative minimum tax.
(2) Investments in money market funds are neither insured nor guaranteed by the
U.S. government and there is no assurance that the fund will be able to
maintain a stable net asset value.
(3) Including a prospectus containing more complete information on charges and
expenses. Please read the prospectus carefully before investing.
23
<PAGE> 26
THE MFS FAMILY OF FUNDS(R)
AMERICA'S OLDEST MUTUAL FUND GROUP
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-225-2606
any business day from 8 a.m. to 8 p.m. Eastern time. This material should be
read carefully before investing or sending money.
STOCK
- ----------------------------------------------------
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS(R) Capital Growth Fund
MFS(R) Emerging Growth Fund
MFS(R) Growth Opportunities Fund
MFS(R) Managed Sectors Fund
MFS(R) OTC Fund
MFS(R) Research Fund
MFS(R) Research Growth and Income Fund
MFS(R) Strategic Growth Fund
MFS(R) Union Standard(R) Equity Fund
MFS(R) Value Fund
STOCK AND BOND
- ----------------------------------------------------
MFS(R) Total Return Fund
MFS(R) Utilities Fund
BOND
- ----------------------------------------------------
MFS(R) Bond Fund
MFS(R) Government Mortgage Fund
MFS(R) Government Securities Fund
MFS(R) High Income Fund
MFS(R) Intermediate Income Fund
MFS(R) Strategic Income Fund
LIMITED MATURITY BOND
- ----------------------------------------------------
MFS(R) Government Limited Maturity Fund
MFS(R) Limited Maturity Fund
MFS(R) Municipal Limited Maturity Fund
WORLD
- ----------------------------------------------------
MFS(R)/Foreign & Colonial Emerging Markets Equity Fund
MFS(R)/Foreign & Colonial International Growth Fund
MFS(R)/Foreign & Colonial International Growth and Income Fund
MFS(R) World Asset Allocation Fund(SM)
MFS(R) World Equity Fund
MFS(R) World Governments Fund
MFS(R) World Growth Fund
MFS(R) World Total Return Fund
NATIONAL TAX-FREE BOND
- ----------------------------------------------------
MFS(R) Municipal Bond Fund
MFS(R) Municipal High Income Fund
MFS(R) Municipal Income Fund
STATE TAX-FREE BOND
- ----------------------------------------------------
Alabama, Arkansas, California, Florida, Georgia, Maryland, Massachusetts,
Mississippi, New York, North Carolina, Pennsylvania, South Carolina,
Tennessee, Virginia, West Virginia
MONEY MARKET
- ----------------------------------------------------
MFS(R) Cash Reserve Fund
MFS(R) Government Money Market Fund
MFS(R) Money Market Fund
24
<PAGE> 27
MFS(R) GOVERNMENT LIMITED MATURITY FUND
TRUSTEES
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Marshall N. Cohan - Private Investor
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, Brigham and Women's
Hospital; Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief Executive Officer, Edmund Gibbons
Ltd.; Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill - Private Investor; Director, Rockefeller Financial Services,
Inc. (investment advisers)
Walter E. Robb, III - President and Treasurer, Benchmark Advisors, Inc.
(corporate financial consultants); President, Benchmark Consulting Group,
Inc. (office services); Trustee, Landmark Funds (mutual funds)
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial
Services Company
J. Dale Sherratt - President, Insight Resources, Inc. (Acquisition Planning
Specialists)
Ward Smith - Former Chairman (until 1994), NACCO Industries; Director,
Sundstrand Corporation
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
D. Richard Smith*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
CUSTODIAN
State Street Bank and Trust Company
INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll free: 1-800-637-4458
anytime from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for an
information kit, call toll free: 1-800-637-2929 any business day from 9 a.m. to
5 p.m. Eastern time (or leave a message anytime).
INVESTOR SERVICE
MFSService Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any
business day from 9 a.m. to 5 p.m. Eastern time. (To use this service, your
phone must be equipped with a Telecommunications Device for the Deaf.) For share
prices, account balances, and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
WORLD WIDE WEB
www.mfs.com
For the third year in a row, MFS earned a #1 ranking in the DALBAR, Inc.
Broker/Dealer Survey, Main Office Operations Service Quality Category. The firm
achieved a 3.48 overall score on a scale of 1 to 4 in the 1996 survey. A total
of 110 firms responded, offering input on the quality of service they received
from 29 mutual fund companies nationwide. The survey contained questions about
service quality in 15 categories, including "knowledge of phone service
contacts," "accuracy of transaction processing," and "overall ease of doing
business with the firm.
- ---------------------------------------
* Affiliated with the Investment Adviser
25
<PAGE> 28
MFS(R) GOVERNMENT [LOGO] ------------
LIMITED MATURITY
FUND BULK RATE
U.S. POSTAGE
500 Boylston Street PAID
Boston, MA 02116-3741 MFS
------------
[MFS LOGO]
(C)1997 MFS Fund Distributors, Inc., MGL-3 8/97 23M 28/228/328/828
500 Boylston Street, Boston, MA 02116-3741
