<PAGE>
[Logo]
75 MFS
INVESTMENT MANAGEMENT
YEARS
WE INVENTED THE MUTUAL FUND(R)
MFS GOVERNMENT
LIMITED MATURITY
FUND
ANNUAL REPORT o DECEMBER 31, 1998
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DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 28)
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 12
Notes to Financial Statements ............................................. 18
Independent Auditors' Report .............................................. 24
MFS Prepares for the Year 2000 ............................................ 26
Trustees and Officers ..................................................... 29
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE
YEARS AHEAD WILL BRING A NUMBER OF
CHALLENGES, OUR 75 YEARS OF EXPERIENCE
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
[GRAPHIC OMITTED]
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- -------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Graphic Omitted]
Jeffrey L. Shames
Dear Shareholders, In 1999, MFS celebrates its 75th anniversary. The nation's
first mutual fund -- our Massachusetts Investors Trust (MIT) -- was introduced
to the public on March 21, 1924. Since then, MFS Investment Management(R), the
company that grew out of that original fund, has helped guide shareholders
through many economic and investment cycles, primarily by focusing on the
long-term opportunities created by an expanding global economy. As of December
31, 1998, MFS manages nearly $100 billion, and the firm's 2,000 people serve
almost four million investors and their financial advisers worldwide. Meanwhile,
MIT's assets have grown to over $12 billion, and 56 mutual funds are offered in
the MFS Family of Funds(R).
One of the elements in the success of MIT did not exist before our founders
invented it in 1924. That is daily redemption. This innovation means that
if you want to sell your investment in any MFS mutual fund, you have the
security of knowing that you may do so immediately by exchanging into another
MFS fund. Or, if you need your money for other purposes, it can quickly be
wired or mailed to you. This daily redemption feature, through which new
shares were created when people invested in MIT and were redeemed when people
sold, brought another important change to the industry. Now, the price of a
mutual fund's shares wasn't determined by supply and demand, but by the value
of the securities owned by the fund.
Another factor in our growth was the development of one of the industry's
first in-house research departments in 1932. Unlike companies that rely on
Wall Street research reports, which can be used by many investors at the same
time, MIT's managers built its long-term track record by visiting companies,
talking to managers and competitors, and "kicking the tires" so they could
judge the quality and potential of each company's products and services for
themselves. Today, MFS has more than 100 full-time portfolio managers, stock
analysts, and credit analysts who track the equity and bond markets. That
number includes over 35 equity analysts who specialize in industries such as
aviation, media, technology, automobiles, and utilities.
While MIT introduced the daily redemption feature, that was not our only
invention. We also established the nation's first global bond fund, first
high-yield municipal bond fund, and first high-yield municipal closed-end
bond fund.
We are proud of the record of MIT and of the funds in the MFS Family of Funds,
but we are also proud of our long-standing relationship with financial
advisers. Not only do we believe investors can benefit from the advice of
these experts but, as was shown during the market volatility of 1998, people
who work with financial advisers are less likely to abandon their carefully
designed, long-term investment strategies.
Our ability to service your investment and information needs is also extremely
important to us. The MFS Service Center handles millions of transactions and
phone calls every year. Supporting the work of financial advisers, promptly
sending out statements and confirmations, and answering hundreds of investors'
questions every day are crucial elements in maintaining long-term relationships
with our fund shareholders. That link to our investors has also been enhanced by
our site on the World Wide Web: WWW.MFS.COM. Since 1996, this site has given
investors and the general public access to up- to-date information about MFS
products and services, as well as market outlooks and retirement information.
The site has rapidly become one of our primary vehicles for communicating with
our investors and educating the public about mutual funds in general and MFS in
particular.
If there is a common thread running through these milestones, it is our
always-increasing commitment to providing you with the best possible
investment management and shareholder service, just as we have done for the
past 75 years.
As we celebrate this anniversary, it is also a time for MFS to look ahead and
build on our 75 years of innovation and experience to help meet your
investment needs in the next century. We appreciate your confidence and
welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management
January 15, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Graphic Omitted]
D. Richard Smith
For the 12 months ended December 31, 1998, Class A shares of the Fund provided
a total return of 6.34%, Class B shares 5.43%, Class C shares 5.35%, and Class
I shares 6.25%. These returns assume the reinvestment of distributions but
exclude the effects of any sales charges and compare to a 6.96% return for the
Lehman Brothers One- to Three-Year Government Bond Index (an unmanaged,
market-value-weighted index comprised of debt issued by the U.S. government
and its agencies with remaining maturities of one to three years) and to a
5.83% return for the average short-term U.S. government debt fund as tracked
by Lipper Analytical Services, Inc., an independent firm that reports mutual
fund performance.
Q. WHAT WERE SOME OF THE FACTORS AFFECTING THE FUND'S PERFORMANCE THIS
PAST YEAR?
A. The number one factor was the decline of interest rates during the year.
The Federal Reserve Board (the Fed) lowered interest rates by 75 basis
points (0.75%), and the short-term end of the U.S. Treasury market moved in
a similar fashion, which helped the Fund's price performance. On the
negative side, a lot of the more yield-oriented products, such as mortgage-
backed securities, which are part of the Fund's core strategy, did not have
returns comparable to Treasuries because their yield spreads versus
Treasuries widened.
Q. YOU REDUCED THE FUND'S WEIGHTING IN MORTGAGE-BACKED SECURITIES IN 1998.
WHY WAS THAT?
A. We normally like to have about 75% of the Fund invested in mortgage-backed
pass-through securities. In the long run, we think we can find higher-
yielding, less price-sensitive assets in this market that will provide both
yield and return to the investor. However, we have lowered the weighting in
mortgage-backed securities over the past few years, mostly because of
prepayment risk. There has been a lot of supply and refinancing, and we
haven't been getting the yield advantage that we've seen in other periods.
In the meantime, lower interest rates and the resulting refinancing
opportunities have kept the housing market strong. Eventually, when the
consumer economy and the mortgage market stabilize, we expect yields on
mortgage securities to rise. We can then bring the mortgage allocation back
up to its historical level.
Q. HAVE WE REACHED A POINT WHERE MORTGAGE RATES ARE AS LOW AS THEY MIGHT GO
FOR A WHILE, SO THAT MOST REFINANCINGS HAVE ALREADY BEEN DONE?
A. Prepayment rates are well off the peak they reached several months ago, but
they're still high. As long as we have reasonable job growth and a
deflationary environment that keeps the general level of interest rates
low, people will continue to refinance.
Q. SO YOU HAVE HAD A HIGHER-THAN-AVERAGE WEIGHTING IN TREASURIES?
A. We have held an above-average weighting in Treasury securities this past
year because global liquidity concerns have caused the Fed to lower rates
and because we have a low-inflation global environment that should drive
them still lower. We also think issuance of Treasury securities is going to
be low because the U.S. economy is strong. The government is running a
surplus instead of a deficit and doesn't need to issue as many securities
as it did in the past. Also, the Treasury portion of many indices, after
increasing for a long time, is declining while their mortgage and corporate
bond allocations are rising. That has created a reinvestment demand -- and
slightly lower yields -- for Treasuries, especially for the shorter-term
securities. (Principal value and interest on Treasury securities are
guaranteed by the U.S. government if held to maturity.)
Q. WHAT DIRECTION DO YOU ANTICIPATE FOR INTEREST RATES GOING FORWARD?
A. Interest rates came down a lot last year, and the first few months of 1999
will tell us quite a bit about the direction they and the economy will take
going forward. Typically, we get a lot of information about the strength of
the U.S. and global economies in the first few months of the year. That's
because consumer spending habits are driven by income, and people tend to
receive a high percentage of their income in the first quarter from bonuses
and tax refunds. This year, we think the economy is going to slow from the
annual growth rate of 3% to 4% we've seen in the past three years. Given
all that, we see interest rates being stable to slightly down for the next
several months.
Q. WHAT DO YOU SEE THE FED DOING ABOUT INTEREST RATES THIS YEAR?
A. While the Fed has an overall objective of fighting inflation, its mandate
has expanded in the past year to respond to global needs for liquidity and
to help ease problems in financial markets. This has meant dealing with
many of the deflationary aspects that come from lower commodity prices,
higher productivity, and the better use of technology. For now, we think
the Fed is on hold, but if the stock market levels off or declines it may
lower rates again.
Q. WHAT ABOUT THE FUND'S DURATION, OR EXPOSURE TO CHANGES IN INTEREST RATES?
A. The Fund's duration is about as neutral as it has been for quite a while.
We usually have a target duration of about 1.6 to 1.8 years, and it's
around 1.7 years now.
Q. HOW DO YOU SEE THIS FUND'S ROLE IN AN INVESTMENT PORTFOLIO?
A. Historically, the Fund has provided a relatively stable net asset value and
generated more yield and return than a portfolio of money market
investments. For example, the Fund's total return for its Class A shares
was 6.34%. Meanwhile, the Lehman Brothers 3-Month Treasury Index, which is
close to the return of many money market funds, returned 5.20%. That means
the Fund returned over 100 basis points (1.00%) more than the index. The
Fund's Class A net asset value was relatively stable, starting the year at
$8.40 and finishing at $8.42, with a range of $8.35 to $8.55. While past
performance is no guarantee of future results, we think this has added up
to good income, a relatively stable net asset value, and a return in excess
of money market investments.
/s/ D. Richard Smith
D. Richard Smith
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
D. RICHARD SMITH IS VICE PRESIDENT -- INVESTMENTS AT MFS INVESTMENT
MANAGEMENT(R) AND PORTFOLIO MANAGER OF MFS(R) GOVERNMENT MORTGAGE FUND,
MFS(R) GOVERNMENT LIMITED MATURITY FUND, AND MFS(R) MERIDIAN(SM) U.S.
GOVERNMENT BOND FUND.
MR. SMITH JOINED MFS IN 1993. FROM 1986 TO 1993 HE WORKED IN RESEARCH
AND INSTITUTIONAL SALES ON WALL STREET.
HE IS A GRADUATE OF VASSAR COLLEGE AND HAS AN M.B.A. DEGREE FROM
VANDERBILT UNIVERSITY.
- --------------------------------------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
OBJECTIVE: SEEKS TO PRESERVE CAPITAL AND PROVIDE HIGH CURRENT
INCOME (COMPARED TO A PORTFOLIO INVESTED ENTIRELY IN
MONEY MARKET INSTRUMENTS).
COMMENCEMENT OF
INVESTMENT OPERATIONS: SEPTEMBER 26, 1988
CLASS INCEPTION: CLASS A SEPTEMBER 26, 1988
CLASS B SEPTEMBER 7, 1993
CLASS C AUGUST 1, 1994
CLASS I JANUARY 2, 1997
SIZE: $309.2 MILLION NET ASSETS AS OF DECEMBER 31, 1998
PERFORMANCE SUMMARY
The following information illustrates the historical performance of the Fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and
reflect the percentage change in net asset value, including reinvestment of
dividends. Benchmark comparisons are unmanaged and do not reflect any fees or
expenses. The performance of other share classes will be greater than or less
than the line shown. (See Notes to Performance Summary for more information.)
It is not possible to invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-year period ended December 31, 1998)
[Graphic Omitted]
MFS Lehman Lehman
Government Brothers Brothers
Limited 1-5 Year 1-3 Year Consumer
Maturity Government Government Price
Fund Bond Bond Index
- Class A Index Index - U.S.
- ------------------------------------------------------------------
12/93 $ 9,751 $10,000 $10,000 $10,000
12/94 9,677 9,920 10,049 10,268
12/95 10,680 11,179 11,139 10,521
12/96 10,998 11,693 11,707 10,878
12/97 11,691 12,525 12,486 11,063
12/98 12,432 13,483 13,356 11,262
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended December 31, 1998)
[Graphic Omitted]
MFS Lehman Lehman
Government Brothers Brothers
Limited 1-5 Year 1-3 Year Consumer
Maturity Government Government Price
Fund Bond Bond Index
- Class A Index Index - U.S.
- ------------------------------------------------------------------
12/88 $ 9,751 $10,000 $10,000 $10,000
12/90 11,299 12,264 12,173 11,104
12/92 13,050 14,780 14,440 11,772
12/94 13,858 15,675 15,302 12,423
12/96 15,749 18,472 17,826 13,162
12/98 17,803 21,300 20,336 13,627
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
CLASS A
1 Year 3 Years 5 Years 10 Years/Life
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Annual Total Return +6.34% +5.19% +4.98% +6.20%
- ---------------------------------------------------------------------------------------
SEC Results +3.68% +4.31% +4.45% +5.93%
- ---------------------------------------------------------------------------------------
CLASS B
1 Year 3 Years 5 Years 10 Years/Life
- ---------------------------------------------------------------------------------------
Average Annual Total Return +5.43% +4.36% +4.09% +5.72%
- ---------------------------------------------------------------------------------------
SEC Results +1.43% +3.46% +3.77% +5.72%
- ---------------------------------------------------------------------------------------
CLASS C
1 Year 3 Years 5 Years 10 Years/Life
- ---------------------------------------------------------------------------------------
Average Annual Total Return +5.35% +4.33% +4.18% +5.80%
- ---------------------------------------------------------------------------------------
SEC Results +4.35% +4.33% +4.18% +5.80%
- ---------------------------------------------------------------------------------------
CLASS I
1 Year 3 Years 5 Years 10 Years/Life
- ---------------------------------------------------------------------------------------
Average Annual Total Return +6.25% +5.21% +4.99% +6.21%
- ---------------------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year 3 Years 5 Years 10 Years/Life
- ---------------------------------------------------------------------------------------
Average short-term U.S.
government debt fund* +5.83% +5.41% +5.03% +6.52%
- ---------------------------------------------------------------------------------------
Lehman Brothers 1-3 Year
Government Bond Index** +6.96% +6.24% +5.96% +7.36%
- ---------------------------------------------------------------------------------------
Lehman Brothers 1-5 Year
Government Bond Index*+ +7.65% +6.45% +6.16% +7.49%
- ---------------------------------------------------------------------------------------
Consumer Price Index+# +1.80% +2.30% +2.41% +3.14%
- ---------------------------------------------------------------------------------------
</TABLE>
*Source: Lipper Analytical Services, Inc.
**Source: AIM.
+Effective immediately, the Lehman Brothers 1-5 Year Government Bond Index
will no longer be used as a benchmark because we believe the Lehman
Brothers 1-3 Year Government Bond Index better reflects the Fund's
investment policies and objectives.
+Source: CDA/Wiesenberger.
#The Consumer Price Index is published by the U.S. Bureau of Labor
Statistics and measures the cost of living (inflation).
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 2.50% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
B and C results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of A for periods prior to the inception of B and C.
Because operating expenses of B and C are higher than those of A, B and C
performance generally would have been lower than A performance. The A
performance included in the B and C SEC performance has been adjusted to
reflect the CDSC generally applicable to B and C rather than the initial sales
charge generally applicable to A.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of dividends and
capital gains.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been
higher than A performance. The A performance included in the I performance has
been adjusted to reflect the fact that I have no initial sales charge.
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.
Government guarantees apply to individual securities only and not to prices
and yields of shares in a managed portfolio.
PORTFOLIO CONCENTRATION AS OF DECEMBER 31, 1998
LARGEST SECTORS
[Graphic Omitted]
Mortgage Backed 52.0%
Cash 8.0%
U.S. Treasuries 40.0%
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- December 31, 1998
<TABLE>
<CAPTION>
Bonds - 90.7%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------------------------------
U.S. Federal Agencies - 41.2%
<S> <C> <C>
Federal Home Loan Mortgage Corp., 6.163s, 2027 $17,152 $ 17,227,308
Federal Home Loan Mortgage Corp., 7.5s, 2026 - 2028 10,079 10,349,552
Federal Home Loan Mortgage Corp., 8s, 2011 - 2012 8,731 9,017,992
Federal Home Loan Mortgage Corp., 9.25s, 2019 1,823 1,979,149
Federal National Mortgage Assn., 6s, 2009 - 2011 42,547 42,653,174
Federal National Mortgage Assn., 6.221s, 2014 11,315 11,479,340
Federal National Mortgage Assn., 6.5s, 2028 6,384 6,426,294
Federal National Mortgage Assn., 7s, 2011 - 2013 10,813 11,042,772
Federal National Mortgage Assn., 7.5s, 2000 - 2013 16,818 17,258,103
--------------
$ 127,433,684
- --------------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 49.5%
Government National Mortgage Association - 10.1%
GNMA, 7.5s, 2023 $ 4,004 $ 4,131,725
GNMA, 8s, 2023 - 2028 20,453 21,283,372
GNMA, 8.5s, 2002 - 2010 2,000 2,104,784
GNMA, 9s, 2001 - 2007 3,522 3,732,865
--------------
$ 31,252,746
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 39.4%
U.S. Treasury Notes, 5.375s, 2000 $20,000 $ 20,218,800
U.S. Treasury Notes, 7.875s, 2001 32,000 34,499,840
U.S. Treasury Notes, 8s, 2001 23,750 25,505,362
U.S. Treasury Notes, 6.375s, 2002 20,000 21,096,800
U.S. Treasury Notes, 6.625s, 2002 9,500 10,041,785
U.S. Treasury Notes, 5.625s, 2008 9,600 10,243,489
--------------
$ 121,606,076
- --------------------------------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 152,858,822
- --------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $280,033,874) $ 280,292,506
Repurchase Agreement - 13.5%
- --------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 12/31/98, due 1/04/99, total
to be received $41,900,870 (secured by various
U.S. Treasury and Federal Agency obligations in a
jointly traded account), at Cost $41,879 $ 41,879,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $321,912,874) $ 322,171,506
Other Assets, Less Liabilities - (4.2)% (12,956,471)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 309,215,035
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------
DECEMBER 31, 1998
- --------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $280,033,874) $280,292,506
Repurchase agreement, at value 41,879,000
------------
Total investments at value (identified cost,
$321,912,874) $322,171,506
------------
Cash 661
Receivable for Fund shares sold 1,411,981
Receivable for investments sold 10,149,983
Interest receivable 3,109,790
Other assets 1,723
------------
Total assets $336,845,644
------------
Liabilities:
Distributions payable $ 482,083
Payable for Fund shares reacquired 373,892
Payable for investments purchased 26,578,776
Payable to affiliates -
Management fee 3,396
Shareholder servicing agent fee 955
Distribution and service fee 20,100
Accrued expenses and other liabilities 171,407
------------
Total liabilities $ 27,630,609
------------
Net assets $309,215,035
============
Net assets consist of:
Paid-in capital $332,514,135
Unrealized appreciation on investments 258,632
Accumulated net realized loss on investments (22,896,569)
Accumulated distributions in excess of net investment
income (661,163)
------------
Total $309,215,035
============
Shares of beneficial interest outstanding 36,766,052
==========
Class A shares:
Net asset value per share
(net assets of $215,876,774 / 25,644,828 shares of
beneficial interest outstanding) $8.42
=====
Offering price per share (100 / 97.5) $8.64
=====
Class B shares:
Net asset value and offering price per share
(net assets of $68,866,987 / 8,200,043 shares of
beneficial interest outstanding) $8.40
=====
Class C shares:
Net asset value and offering price per share
(net assets of $24,285,833 / 2,899,100 shares of
beneficial interest outstanding) $8.38
=====
Class I shares:
Net asset value, offering price, and redemption
price per share (net assets of $185,441 /
22,081 shares of beneficial interest outstanding) $8.40
=====
On sales of $50,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A,
Class B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations
- -------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998
- -------------------------------------------------------------------------------
Net investment income:
Interest income $ 17,736,239
------------
Expenses -
Management fee $ 1,048,747
Trustees' compensation 42,411
Shareholder servicing agent fee 294,944
Distribution and service fee (Class A) 293,700
Distribution and service fee (Class B) 412,270
Distribution and service fee (Class C) 202,948
Administrative fee 31,729
Custodian fee 91,684
Printing 46,471
Postage 29,425
Auditing fees 34,445
Legal fees 25,949
Miscellaneous 159,744
------------
Total expenses $ 2,714,467
Fees paid indirectly (60,127)
------------
Net expenses $ 2,654,340
------------
Net investment income $ 15,081,899
------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) on investment
transactions $ 962,768
Change in unrealized depreciation on investments (742,723)
------------
Net realized and unrealized gain on investments $ 220,045
------------
Increase in net assets from operations $ 15,301,944
============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998 1997
- --------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
Net investment income $ 15,081,899 $ 15,684,380
Net realized gain (loss) on investments 962,768 (3,540,264)
Net unrealized gain (loss) on investments (742,723) 3,219,384
------------- -------------
Increase in net assets from operations $ 15,301,944 $ 15,363,500
------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (11,563,809) $ (12,733,885)
From net investment income (Class B) (2,356,980) (1,844,464)
From net investment income (Class C) (1,034,259) (1,062,463)
From net investment income (Class I) (27,187) (9,589)
------------- -------------
Total distributions declared to shareholders $ (14,982,235) $ (15,650,401)
------------- -------------
Net increase (decrease) in net assets from Fund share
transactions $ 65,638,958 $ (40,291,031)
------------- -------------
Total increase (decrease) in net assets $ 65,958,667 $ (40,577,932)
Net assets:
At beginning of period 243,256,368 283,834,300
------------- -------------
At end of period (including accumulated distributions in
excess of net investment income of $661,163 and $618,632,
respectively) $ 309,215,035 $ 243,256,368
============= =============
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout
each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 8.40 $ 8.41 $ 8.68 $ 8.42 $ 8.99
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.50 $ 0.53 $ 0.56 $ 0.59 $ 0.54
Net realized and unrealized gain (loss)
on investments 0.02 (0.02) (0.30) 0.25 (0.61)
------ ------ ------ ------ ------
Total from investment operations $ 0.52 $ 0.51 $ 0.26 $ 0.84 $(0.07)
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net investment income $(0.50) $(0.52) $(0.53) $(0.58) $(0.50)
------ ------ ------ ------ ------
Net asset value - end of period $ 8.42 $ 8.40 $ 8.41 $ 8.68 $ 8.42
====== ====== ====== ====== ======
Total return(+) 6.34% 6.30% 2.98% 10.36% (0.76)%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.84% 0.84% 0.84% 0.88% 0.89%
Net investment income 5.95% 6.27% 6.55% 6.91% 6.28%
Portfolio turnover 368% 266% 301% 447% 328%
Net assets at end of period (000 omitted) $215,877 $190,039 $226,976 $248,955 $257,154
</TABLE>
#Per share data are based on average shares outstanding.
##The Fund has an expense offset arrangement which reduces the Fund's custodian
fee based upon the amount of cash maintained by the Fund with its custodian
and dividend disbursing agent. For fiscal years ending after September 1,
1995, the Fund's expenses are calculated without reduction for this expense
offset arrangement.
(+)Total returns for Class A shares do not include the applicable sales charge.
If the charge had been included, the results would have been lower.
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout
each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 8.39 $ 8.39 $ 8.67 $ 8.41 $ 8.98
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.43 $ 0.46 $ 0.47 $ 0.51 $ 0.47
Net realized and unrealized gain (loss)
on investments 0.01 -- (0.30) 0.25 (0.62)
------ ------ ------ ------ ------
Total from investment operations $ 0.44 $ 0.46 $ 0.17 $ 0.76 $(0.15)
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net investment income $(0.43) $(0.46) $(0.45) $(0.50) $(0.42)
------ ------ ------ ------ ------
Net asset value - end of period $ 8.40 $ 8.39 $ 8.39 $ 8.67 $ 8.41
====== ====== ====== ====== ======
Total return 5.43% 5.61% 2.08% 9.31% (1.65)%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.60% 1.63% 1.72% 1.74% 1.79%
Net investment income 5.17% 5.48% 5.67% 6.02% 5.42%
Portfolio turnover 368% 266% 301% 447% 328%
Net assets at end of period (000 omitted) $68,867 $34,843 $34,643 $33,759 $23,918
</TABLE>
#Per share data are based on average shares outstanding.
##The Fund has an expense offset arrangement which reduces the Fund's custodian
fee based upon the amount of cash maintained by the Fund with its custodian
and dividend disbursing agent. For fiscal years ending after September 1,
1995, the Fund's expenses are calculated without reduction for this expense
offset arrangement.
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994*** 1998 1997****
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C CLASS I
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of
period $ 8.37 $ 8.37 $ 8.65 $ 8.39 $ 8.62 $ 8.40 $ 8.40
------ ------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.43 $ 0.45 $ 0.48 $ 0.51 $ 0.17 $ 0.46 $ 0.53
Net realized and unrealized
gain (loss) on investments 0.01 -- (0.30) 0.25 (0.20) 0.05 --
------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.44 $ 0.45 $ 0.18 $ 0.76 $(0.03) $ 0.51 $ 0.53
------ ------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders from net
investment income $(0.43) $(0.45) $(0.46) $(0.50) $(0.20) $(0.51) $(0.53)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of period $ 8.38 $ 8.37 $ 8.37 $ 8.65 $ 8.39 $ 8.40 $ 8.40
====== ====== ====== ====== ====== ====== ======
Total return 5.35% 5.56% 2.12% 9.33% (0.33)%++ 6.25% 6.55%++
Ratios (to average net assets)/
Supplemental data:
Expenses## 1.69% 1.69% 1.69% 1.73% 1.62%+ 0.66% 0.69%+
Net investment income 5.10% 5.42% 5.68% 5.87% 6.10%+ 6.23% 6.42%+
Portfolio turnover 368% 266% 301% 447% 328% 368% 266%
Net assets at end of period
(000 omitted) $24,286 $18,192 $22,215 $17,365 $3,403 $185 $182
</TABLE>
***For the period from the inception of Class C, August 1, 1994, through
December 31, 1994.
****For the period from the inception of Class I, January 2, 1997, through
December 31, 1997.
+Annualized.
++Not annualized.
#Per share data are based on average shares outstanding.
##The Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund with its
custodian and dividend disbursing agent. For fiscal years ending after
September 1, 1995, the Fund's expenses are calculated without reduction for
this expense offset arrangement.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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 collateral in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a default under the repurchase agreement. The Fund
monitors, on a daily basis, the value of the collateral to ensure that its
value, including accrued interest, is greater than amounts owed to the Fund
under each such repurchase agreement. The Fund, along with other affiliated
entities of Massachusetts Financial Services Company (MFS), may utilize a
joint trading account for the purpose of entering into one or more repurchase
agreements.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is 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. Some
securities may be purchased on a "when-issued" or "forward delivery" basis,
which means that the securities will be delivered to the Fund at a future
date, usually beyond customary settlement time.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matter and Distributions - The Fund's policy is to comply with provisions
of the Internal Revenue Code (the Code) applicable to regulated investment
companies and to distributed 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 purpose are classified as
distributions in excess of net investment income or net realized gains. During
the year ended December 31, 1998, $142,195 was reclassified from accumulated
net realized loss on investments to accumulated distributions in excess of net
investment income due to differences between book and tax accounting for
mortgage-backed securities. This change had no effect on the net assets or net
asset value per share.
At December 31, 1998, the Fund, for federal income tax purposes, had a capital
loss carryforward of $22,849,986 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, ($13,198,644), December 31, 2003,
($2,302,419), December 31, 2004, ($4,284,511), December 31, 2005, ($3,064,412).
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with MFS to
provide overall investment advisory and administrative services, and general
office facilities. The management fee is computed daily and paid monthly at an
annual rate of the lesser of (i) 0.40% of the Fund's average daily net assets or
(ii) 0.38% of Fund's average daily net assets and 5.36% of gross investment
income.
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
$11,606 for the year ended December 31, 1998.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$42,557 for the year ended December 31, 1998, 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 (reduced to a maximum of 0.15% for an indefinite period)
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. Payment of the 0.10% per annum Class A distribution fee will
commence on such date as the Trustees of the Fund may determine. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $29,720 for the year ended December 31, 1998. Fees incurred under
the distribution plan during the year ended December 31, 1998, 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 consideration for services rendered by the dealer with respect to Class
B and Class C shares. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $2,877 and $229 for
Class B and Class C shares, respectively, for the year ended December 31,
1998. Fees incurred under the distribution plan during the year ended December
31, 1998, were 0.90% and 1.00% of average daily net assets attributable to
Class B and Class C shares on an annualized basis, respectively.
Certain Class A shares 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 redemption's of Class B shares in the event of a shareholder
redemption within six years of purchase. MFD receives all contingent deferred
sales charges. Contingent deferred sales charges imposed during the year ended
December 31, 1998, were $2,635, $149,545, and $15,124 for Class A, Class B,
and Class C shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an effective annual rate of
0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
U.S. government securities $958,446,905 $875,320,478
------------ ------------
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:
Aggregate cost $321,959,458
------------
Gross unrealized appreciation $ 944,934
Gross unrealized depreciation (732,886)
------------
Net unrealized appreciation $ 212,048
============
<PAGE>
(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:
Class A Shares
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 YEAR ENDED DECEMBER 31, 1997
-------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 29,281,668 $ 246,268,535 10,108,169 $ 84,893,500
Shares issued to shareholders
in reinvestment of
distributions 916,057 7,701,202 941,826 7,902,273
Transfer to Class I -- -- (18,266) (153,434)
Shares reacquired (27,164,945) (228,440,457) (15,409,294) (129,355,674)
----------- -------------- ----------- --------------
Net increase (decrease) 3,032,780 $ 25,529,280 (4,377,565) $ (36,713,335)
=========== ============== =========== ==============
<CAPTION>
Class B Shares
YEAR ENDED DECEMBER 31, 1998 YEAR ENDED DECEMBER 31, 1997
-------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 9,867,183 $ 82,888,758 2,799,236 $ 23,450,174
Shares issued to shareholders
in reinvestment of
distributions 170,684 1,432,840 136,154 1,140,244
Shares reacquired (5,992,436) (50,294,123) (2,908,472) (24,358,371)
----------- -------------- ----------- --------------
Net increase 4,045,431 $ 34,027,475 26,918 $ 232,047
=========== ============== =========== ==============
<CAPTION>
Class C Shares
YEAR ENDED DECEMBER 31, 1998 PERIOD ENDED DECEMBER 31, 1997*
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,517,949 $ 21,107,329 741,477 $ 6,196,341
Shares issued to shareholders
in reinvestment of
distributions 76,670 641,780 84,275 703,994
Shares reacquired (1,869,980) (15,665,854) (1,304,089) (10,891,877)
----------- -------------- ----------- --------------
Net increase (decrease) 724,639 $ 6,083,255 (478,337) $ (3,991,542)
=========== ============== =========== ==============
</TABLE>
*For the period from the inception of Class I, January 2, 1997, through
December 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
Class I Shares
YEAR ENDED DECEMBER 31, 1998 PERIOD ENDED DECEMBER 31, 1997*
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 161,015 $ 1,345,535 5,857 $ 49,184
Shares issued to shareholders
in reinvestment of
distributions 3,240 26,257 1,145 9,607
Transfer from Class A -- -- 18,266 153,434
Shares reacquired (163,802) (1,372,844) (3,640) (30,427)
----------- ------------ ----------- --------------
Net increase (decrease) 453 $ (1,052) 21,628 $ 181,799
=========== ============ =========== ==============
</TABLE>
*For the period from the inception of Class I, January 2, 1997, through
December 31, 1997.
(6) Line of Credit
The Fund and other affiliated funds participate in an $805 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
shares. Interest is charged to each fund, based on its borrowings, at a rate
equal to the bank's base rate. In addition, a commitment fee, based on the
average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
the Fund for the year ended December 31, 1998, was $1,957.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of MFS Government Limited Maturity Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Government Limited Maturity Fund (the Fund), including the schedule of
portfolio investments as of December 31, 1998 and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned at December 31, 1998, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Government Limited Maturity Fund at December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 12, 1999
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
- --------------------------------------------------------------------------------
IN JANUARY 1999, SHAREHOLDERS WERE MAILED A FORM 1099 REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR
1998.
- --------------------------------------------------------------------------------
<PAGE>
MFS(R) GOVERNMENT LIMITED MATURITY FUND
TRUSTEES
Richard B. Bailey* - Private Investor;
Former Chairman and Director (until 1991), MFS Investment Management
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, Colonial Insurance Company, Ltd.
Abby M. O'Neill - Private Investor
Walter E. Robb, III - President and Treasurer, Benchmark Advisors, Inc.
(corporate financial consultants); President, Benchmark Consulting Group, Inc.
(office services)
Arnold D. Scott* - Senior Executive Vice President, Director, and Secretary, MFS
Investment Management
Jeffrey L. Shames* - Chairman, Chief Executive Officer, and Director, MFS
Investment Management
J. Dale Sherratt - President, Insight Resources, Inc. (acquisition planning
specialists)
Ward Smith - Former Chairman (until 1994), NACCO Industries (holding company)
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
AUDITORS
Ernst & Young LLP
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
MFS Service 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
*Affiliated with the Investment Adviser
<PAGE>
MFS(R) GOVERNMENT BULK RATE
LIMITED MATURITY FUND U.S. POSTAGE
PAID
MFS
[LOGO] MFS(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(C)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MGL-2 2/99 20M 28/228/328/828
