UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4096
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MFS MUNICIPAL SERIES TRUST
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
James R. Bordewick, Jr.
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: March 31
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Date of reporting period: September 30, 2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
MFS(R) Mutual Funds
SEMIANNUAL REPORT 9/30/04
MFS(R) MUNICIPAL SERIES TRUST
For the States of: Alabama,
Arkansas, California, Florida,
Georgia, Maryland, Massachusetts
A path for pursuing opportunity
[graphic omitted]
[logo] M F S(R)
INVESTMENT MANAGEMENT
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MFS(R) PRIVACY POLICY: A COMMITMENT TO YOU
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Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about every MFS investment product and service that we
offer and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information;
we maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone except as permitted by law. We may share information
with companies or financial institutions that perform marketing services on our
behalf or to other financial institutions with which we have joint marketing
arrangements.
Access to your nonpublic personal information is limited to appropriate
personnel who provide products, services, or information to you. We maintain
physical, electronic, and procedural safeguards that comply with applicable
federal regulations.
If you have any questions about MFS' privacy policy, please call 1-800-225-2606
any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK OR CREDIT UNION GUARANTEE NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUIF
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MFS(R) MUNICIPAL SERIES TRUST
The investment objective of each fund is to provide current income exempt from
federal income tax and personal income tax, if any, of the state to which its
name refers.
THE 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.
TABLE OF CONTENTS
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MFS PRIVACY POLICY
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LETTER FROM THE CEO 1
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MFS ORIGINAL RESEARCH(R) 3
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MANAGEMENT REVIEW 4
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PORTFOLIO COMPOSITION 7
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PERFORMANCE SUMMARY 7
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EXPENSE TABLES 15
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PORTFOLIO OF INVESTMENTS 18
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FINANCIAL STATEMENTS 52
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NOTES TO FINANCIAL STATEMENTS 77
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TRUSTEES AND OFFICERS 93
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MONEY MANAGEMENT FOR ALL TYPES
OF INVESTORS 96
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CONTACT INFORMATION BACK COVER
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LETTER FROM THE CEO
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Dear Contract Owners,
[Photo of Robert J. Manning]
Dear Shareholders,
For most investors, the main factor in determining long-term success is asset
allocation - how they spread their money among stocks, bonds, and cash. In
fact, the total returns of investors may be more influenced by their asset
allocation strategy than by their security selection within each asset class.
The principle behind asset allocation is simple: by diversifying across a
variety of types of securities, investors reduce the overall risk of their
portfolio because gains in one area are likely to offset losses in another.
One of the dangers of not having an asset allocation plan is the temptation to
simply chase performance, by moving money into whichever asset class appears to
be outperforming at the moment. The problem with this approach is that by the
time a particular area of the market comes into favor, investors may have
already missed some of the best performance. We would suggest that one way to
benefit from swings in the market is to acquire a diversified portfolio so that
investors hold a range of asset classes before the market swings in their
direction.
UNDERSTAND YOUR EMOTIONS
It usually takes a bear market for people to appreciate the benefits of
diversification. At MFS, we believe proper asset allocation is important in all
market environments. But we understand that there are emotional components of
investment decisions that sometimes keep investors from achieving their long
term goals. The three common behaviors that negatively impact investment
decisions are overconfidence, looking backwards, and loss aversion.
o Overconfidence. After experiencing gains in the market, particularly during
a bull market, investors have a natural tendency to overestimate their own
abilities. During the global bull market of the late 1990s, for example, a
large number of investors traded their own stocks and made significant
profits. However, most of these same investors later handed back those
profits - and then some - because they focused more on short-term blips in
the market and less on the fundamental factors that affect a company's
long-term prospects.
o Looking backwards. Although security prices are determined by expectations
about the future, many investors make choices based on the recent past.
Investors who have achieved momentary success in the market tend to take on
too much risk, believing that better- than-average returns can be easily
duplicated. On the other hand, those who have had negative experiences tend
to become overly cautious and take on too little risk. Recent historical
experience tends to dictate an investor's frame of reference and may lead
to irrational decisions.
o Loss aversion. Simply put, investors would rather avoid the immediate pain
of losses than enjoy the future pleasure of gains. As a result, some
investors tend to overreact to short-term downturns in the market by
seeking to mitigate their losses, rather than remaining invested to benefit
from the long-term growth potential of the stock and bond markets.
THINK LIKE A PROFESSIONAL INVESTOR
Asset allocation helps reduce the emotional factors that tend to affect the
long-term returns of investors. Professional investors - those who manage
assets for money management firms, pension funds, and endowments - have tended
to outperform the average retirement investor because they focus on asset
allocation. For example, the investment performance of the average 401(k)
participant in the United States has lagged these professional investors by
more than two percentage points a year, on average, over the past 10 years.(1)
We think asset allocation is one of the most important decisions for investors.
A study of the performance of 91 large U.S. corporate pension plans with assets
of more than $100 million over a 10-year period beginning in 1974 concluded
that asset allocation policies accounted for 93.6% of their returns, while
individual security selection and the timing of their investments accounted for
only 6.4% for their overall performance.(2)
Professional investors target a realistic level of return based on the amount
of risk they are willing to take, then set allocations to meet their goals. On
average, U.S. professional investors allocate 35% to 40% of their assets to
U.S. equity stocks; 20% to 30% to fixed income issues; 10% to non-U.S. stocks;
and between 10% and 20% to other investment classes such as real estate.(3) And
within those categories, they hold a broad range of styles and asset classes.
In contrast, U.S. 401(k) participants who held company stock in their
retirement plans at the end of 2002 had roughly 42% of their retirement assets
in company stock while the rest was allocated to either growth or value stock
funds.(4) These participants virtually ignored the broad range of equity,
fixed-income, and non-U.S. offerings provided by their retirement plans.
ALLOCATE, DIVERSIFY, REBALANCE
We recommend working with a professional adviser to find an optimal mix of
investments based on your individual goals. In our view, a disciplined asset
allocation strategy is composed of three simple steps: allocate, diversify and
rebalance.
o Allocate. Investors should work with their financial adviser to specify
their long-term goals and tolerance for risk. Then investors should
allocate their assets across the major asset classes - stocks, bonds, and
cash - to help them pursue an investment return that is consistent with
their risk tolerance level.
o Diversify. By diversifying their assets, investors trade some performance
in the top performing categories for a more predictable and stable
portfolio. At the same time, investors should include different investment
styles and market capitalizations of stocks as well as a range of fixed
income investments. Because security subclasses tend to move in and out of
favor during various market and economic environments, a broad portfolio
increases the benefits of diversification.
o Rebalance. We suggest that investors consult with their professional
advisers periodically to rebalance their portfolios to maintain the
percentages that they have dedicated to each asset class. Allocations can
shift as markets rise and fall, making for a riskier or more conservative
portfolio than an investor originally intended. For example, a portfolio of
50% U.S. stocks and 50% U.S. bonds at the start of 2000 would have shifted
to 32% U.S. stocks and 68% U.S. bonds at the end of 2002 because of the
weak stock market.(5)
In short, these three simple concepts - allocate, diversify and rebalance -
help take emotion out of the investment process and help prevent investors from
trying to outguess the market. An asset allocation strategy cannot turn a down
market cycle into a good one, but it is an invaluable tool to manage risk and
keep investors on track toward reaching their long-term investment goals.
A DISCIPLINED INVESTMENT PROCESS IS PARAMOUNT
Disciplined diversification has helped investors pursue long-term, above-
average results through the years. Since 1924, when we invented the mutual
fund, MFS(R) has strived to give investors the products and tools they need to
maintain well-diversified portfolios in part by providing a variety of products
in each asset class. We recommend developing a comprehensive financial plan
with an investment advisor who is familiar with your risk tolerance, your
individual goals, and your financial situation.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
October 15, 2004
Asset allocation and diversification can not guarantee a profit.
The opinions expressed in this letter are those of MFS, and no forecasts can be
guaranteed.
(1) Source: Watson Wyatt
(2) "Determinants of Portfolio Performance," in Financial Analysts Journal,
January/February 1995, by
Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower
(3) Source: Greenwich Associates
(4) Source: Hewitt Associates
(5) Source: Lipper Inc.
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MFS ORIGINAL RESEARCH(R)
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THE MFS(R) DIFFERENCE
For 80 years MFS has been offering investors clear paths to pursuing specific
investment objectives. Today, millions of individuals and thousands of
institutions all over the world look to MFS to manage their assets with insight
and care.
Our success, we believe, has to do with the fact that we see investors as
people with plans, not just dollars to invest.
When you invest with MFS, you invest with a company dedicated to helping you
realize your long-term financial goals.
INVESTORS CHOOSE MFS FOR OUR
o global asset management expertise across all asset classes
o time-tested money management process for pursuing consistent results
o full spectrum of investment products backed by MFS Original Research(R)
o resources and services that match real-life needs
TURNING INFORMATION INTO OPPORTUNITY
Sound investments begin with sound information. MFS has been doing its own
research and analyzing findings in-house for decades. The process we use to
uncover opportunity is called MFS Original Research(R).
MFS ORIGINAL RESEARCH INVOLVES
o meeting with the management of 3,000 companies each year to assess their
business plans and the managers' ability to execute those plans
o making onsite visits to more than 2,000 companies annually to gain
first-hand knowledge of their operations and products
o analyzing financial statements and balance sheets
o talking extensively with companies' customers and competitors
o developing our own proprietary estimates of companies' earnings
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MANAGEMENT REVIEW
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MARKET ENVIRONMENT
In late 2003 and early 2004, before the period began, weakness in both
corporate spending and job creation increased the perceived risk that the
economic recovery could falter. This caused investors to push up long-term bond
prices because high-quality bonds have been seen as a refuge in times of
economic concern. Interest rates, which move in the opposite direction of bond
prices, retreated as economists pushed off the day when they believed the U.S.
Federal Reserve Board would have to raise short-term rates.
In early April, however, just as the period began, the U.S. government reported
that job growth in March was significantly higher than it had been for years.
Job reports for the next few months also came in strong. Driven in part by
rocketing oil prices, inflation began to creep up as well, after having been
dormant for some time. These factors, in our view, led investors to conclude
that a Fed rate increase could be imminent; interest rates across the yield
curve headed upward. And in fact the Fed raised rates for the first time in
four years on June 30 and hiked them again on August 10 and September 21.
But while the Fed seemed committed to a course of slowly raising short-term
rates, in the second half of the period we think several factors caused long-
term rates to retreat. Job growth faltered. Economic growth, as measured by
gross domestic product (GDP) growth, slowed in the second quarter. Excess
production capacity, which we feel has held back investments in new plants and
equipment for some years, did not come down as quickly as many observers had
hoped. In addition, we feel geopolitical concerns about the Iraq situation and
potential terrorist attacks sparked a "flight to quality" by some investors
seeking the safety of U.S. Treasuries and other high-quality issues. (Principal
and interest of U.S. Treasury securities are guaranteed by the U.S. government
if held to maturity.)
For the period as a whole, the net effect was that interest rates on the short
end of the yield curve moved up significantly more than rates on the long end,
causing the yield curve to flatten. From March 31 through September 30, the
yield on the two-year Treasury bond rose 1.04%; five-year Treasury yields
climbed 0.59%; 10-year Treasury yields went up 0.28%; and 30-year Treasury
yields increased just 0.12%. Municipal bond rates, as measured by "AAA"-rated
general obligation bonds tracked by Thomson Municipal Market Data, followed a
similar path with one exception. Municipal rates in the so-called "belly" of
the yield curve - the 15- to 20-year area - declined slightly, causing bonds in
that area to rise modestly in price.
HOW WE MANAGE THE FUNDS
All of the MFS state municipal bond funds are managed with a common investment
strategy. There are four key elements to our management strategy: duration,
yield curve positioning, credit quality, and sector allocation.
Duration is a measure of a fund's sensitivity to changes in interest rates. In
most market environments, we strive to be neutral in duration relative to our
Lipper peers (other single-state mutual funds), as we believe that trying to
predict the direction of interest rates is a relatively risky investment
tactic. Our strategy, however, may sometimes result in individual state funds
being longer or shorter in duration relative to the funds' benchmark, the
Lehman Brothers Municipal Bond Index (the Lehman Index). This may occur because
the Lehman Index is a national index composed of over 40,000 individual bonds,
while each state fund invests primarily in bonds issued within its state. For
that reason, the characteristics of individual state funds will not always
match those of the national index.
A yield curve for bonds shows the relationship between yield and time to
maturity. In a majority of market environments, longer-maturity bonds offer
higher yields but are more exposed to duration risk - the risk that a change in
interest rates may adversely affect a bond's price. In managing the funds, we
try to pick what we believe is the optimal spot on the yield curve - a time to
maturity that optimizes the combination of yield and risk. Our research for
some time has indicated to us that the 15- to 20-year part of the yield curve
is that optimal spot. For example, in our experience a 20-year bond typically
has paid 98% of the yield of a similar 30-year bond but carried only 75% to 80%
of the duration risk of that 30-year bond. For that reason, the funds have
tended to be overweighted in bonds with maturities in the 15- to 20-year range.
Credit quality refers to the perceived ability of a bond issuer to make
interest payments and repay a bond's principal. Major credit-rating agencies
rate bonds on a scale that usually runs from "AAA" down to "BBB" for
investment-grade bonds, and "BB" and below for lower-quality, noninvestment-
grade or so-called "junk" bonds. In general, lower-rated bonds pay higher rates
of interest to compensate investors for taking on additional risk. The funds
historically have focused on using our bottom-up research to seek out bonds
that offer higher yields than average "AAA"-rated insured bonds, yet also offer
what we believe is reasonable safety of principal and interest payments to
maturity.
Sector allocation refers to a fund's weightings in various types of municipal
bond issues, including bonds from sectors such as health care and housing. Our
research analysts constantly seek out sectors, and individual bonds within
those sectors, that we believe will benefit in a given market environment.
FACTORS THAT AFFECTED PERFORMANCE
The table on page 6 indicates the effects of those factors on individual fund
performance relative to the funds' benchmark, the Lehman Brothers Municipal
Bond Index (the Lehman Index).
The DURATION STRATEGY column indicates that our duration strategy had a
positive effect ("pos"), a negative effect ("neg"), or no meaningful
contribution to relative performance ("neutral"). As mentioned earlier, we try
to manage the funds to be neutral in duration relative to their Lipper peer
groups, which consist of municipal funds in the same state.
However, during the period this strategy resulted in all of the funds being
long in duration - i.e., more sensitive to interest rate changes - relative to
the national Lehman Index. In a period when rates rose and prices fell, most
funds with a long duration stance relative to the Lehman Index - all funds
except the Alabama and California funds - thus suffered a material negative
effect on relative performance.
YIELD CURVE indicates the effect of the fund's yield curve positioning on
performance. Compared with the Lehman Index, all funds except the Alabama fund
were more heavily weighted in bonds on the long end of the yield curve - bonds
with 10 to 30 years remaining to maturity - and underweighted in bonds on the
short end of the curve. On a relative basis, an overweighting in longer-
maturity bonds helped during the period because long-term municipal rates
either rose less than short-term rates or, in the 15- to 20-year part of the
curve, declined slightly. Longer-term bonds in the belly of the curve therefore
went up in price, while other longer-term bonds experienced smaller price
declines than short-term bonds. Meanwhile, bonds on the short end of the curve
experienced the worst price declines as they experienced the largest yield
increases, so it helped to be underweighted in that area. Yield curve
positioning therefore helped relative performance of all funds except the
Alabama fund over the period.
The average CREDIT QUALITY of most of the funds was similar to that of the
Lehman Index over the period. The effect of credit quality on relative
performance was therefore neutral for those funds. The California and
Massachusetts funds, however, were overweighted in lower-quality bonds rated
"BBB" or lower, which outperformed over the period. For those two funds, credit
quality thus had a positive effect on relative performance.
Funds for which SECTOR ALLOCATION was a positive factor were generally
overweighted in one or more sectors that outperformed over the period. Here
again, we would note that the table depicts performance relative to a national
index, and the investment universe in a particular state may differ from the
national spectrum of municipal bonds; for example, some states may offer large
opportunities to invest in certain sectors while other states may have few
available bonds in those same sectors.
On a sector basis, the Florida fund benefited from an overweighting in pre-
refunded bonds. (A bond is pre-refunded when the issuer decides to pay off the
bond before its first legal call date. In that situation, the issuer replaces
the original bond with high-quality U.S. government securities that are held in
an escrow account. This is good for bond holders because they receive their
original rate of interest up to the first call date but now own a higher-
quality issue. The price of a bond goes up significantly when it is pre-
refunded.) The Florida fund was also helped by an underweighting in credit-
enhanced, or insured, bonds, which typically underperform the overall market
during a period of rising rates. (Insured bonds offer an investor assurance
that principal and interest will continue to be paid even if the bond issuer
defaults; however, insured bonds pay less interest than a comparable uninsured
bond.)
The Maryland fund benefited from an overweighting in housing bonds. In a period
of modestly rising rates, housing bonds benefited from a decrease in prepayment
risk. (Prepayment risk is the risk that homeowners will prepay their mortgages
to refinance at a lower rate, forcing housing bond holders to reinvest at lower
prevailing rates.)
KEY FACTORS IN FUND PERFORMANCE RELATIVE TO BENCHMARK
(THE LEHMAN BROTHERS MUNICIPAL BOND INDEX)
3/31/04 - 9/30/04
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STATE FUND DURATION YIELD CREDIT SECTOR
STRATEGY CURVE QUALITY ALLOCATION
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ALABAMA neutral neutral neutral neutral
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ARKANSAS neg pos neutral neutral
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CALIFORNIA neutral pos pos neutral
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FLORIDA neg pos neutral pos
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GEORGIA neg pos neutral neutral
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MARYLAND neg pos neutral pos
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MASSACHUSETTS neg pos pos neutral
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Respectfully,
/s/ Michael L. Dawson /s/ Geoffrey L. Schechter
Michael L. Dawson Geoffrey L. Schechter
Portfolio Manager Portfolio Manager
The views expressed in this report are those of the portfolio managers only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market
and other conditions, and MFS disclaims any responsibility to update such
views. These views may not be relied upon as investment advice or as an
indication of trading intent on behalf of any MFS fund. References to specific
securities are not recommendations of such securities and may not be
representative of any MFS fund's current or future investments.
It is not possible to invest directly in an index.
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Visit mfs.com for our latest economic and investment outlook.
o Under Updates & Announcements, click Week in Review for a summary of recent
investment-related news.
o From Week in Review, link to MFS Global Perspective for our current view of
the world.
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PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
each fund over the applicable time periods. Performance results reflect the
percentage change in net asset value, including the reinvestment of dividends
and capital gains distributions. Each fund's results have been compared to the
average relevant state municipal debt fund tracked by Lipper Inc., an
independent firm that reports mutual fund performance. For those states where
Lipper does not track state-specific fund performance, we have provided the
average "other state" municipal debt fund returns. Each fund's results have
also been compared to the Lehman Brothers Municipal Bond Index, a broad
measure of the municipal bond market. However, while this index is considered
the benchmark for the performance of municipal bond funds, it is comprised of
municipal bonds issued nationwide, while each of the funds is limited to
investing in the bonds of a particular state. (See Notes to Performance
Summary.)
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PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
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MFS(R) ALABAMA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-------------------------------------------
PORTFOLIO STRUCTURE*
-------------------------------------------
Bonds 98.0%
Cash & Other Net Assets 2.0%
-------------------------------------------
CREDIT QUALITY**
-------------------------------------------
AAA 59.2%
-------------------------------------------
AA 12.3%
-------------------------------------------
A 5.5%
-------------------------------------------
BBB 8.0%
-------------------------------------------
BB 0.2%
-------------------------------------------
Not Rated 13.1%
-------------------------------------------
Other 1.7%
-------------------------------------------
-------------------------------------------
TOP FIVE BOND INDUSTRIES*
-------------------------------------------
Water and Sewer Revenue 17.8%
-------------------------------------------
Healthcare/Hospitals 14.8%
-------------------------------------------
Municipal General Obligations/GP 13.2%
-------------------------------------------
Municipal Owned Utilities 12.1%
-------------------------------------------
Municipal General Obligations/IMPT 7.7%
-------------------------------------------
-------------------------------------------
PORTFOLIO FACTS
-------------------------------------------
Average Duration 7.2
-------------------------------------------
Average Life 16.4 Yrs
-------------------------------------------
Average Maturity 16.9 Yrs
-------------------------------------------
Average Quality (w/o MFS Ratings) AA
-------------------------------------------
Average Quality Short Term Bonds
(w/o MFS Ratings) A-1
-------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 2/1/1990 1.21% 3.45% 5.39% 6.45% 6.12%
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B 9/7/1993 0.83% 2.78% 4.60% 5.66% 5.32%
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- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
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Average Alabam a municipal
debt fund+ 0.95% 3.49% 5.09% 5.70% 5.55%
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Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
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- -----------------------
Average annual
with sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.60% -1.46% 3.69% 5.42% 5.61%
- ------------------------------------------------------------------------------
B -3.13% -1.19% 3.68% 5.33% 5.32%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.21% 3.45% 17.04% 36.69% 81.20%
- ------------------------------------------------------------------------------
B 0.83% 2.78% 14.44% 31.67% 67.86%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
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PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
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MFS(R) ARKANSAS MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-------------------------------------------
PORTFOLIO STRUCTURE*
-------------------------------------------
Bonds 98.5%
Cash & Other Net Assets 1.5%
-------------------------------------------
CREDIT QUALITY**
-------------------------------------------
AAA 63.7%
-------------------------------------------
AA 9.9%
-------------------------------------------
A 10.5%
-------------------------------------------
BBB 6.3%
-------------------------------------------
BB 0.7%
-------------------------------------------
Not Rated 7.9%
-------------------------------------------
Other 1.0%
-------------------------------------------
-------------------------------------------
TOP FIVE BOND INDUSTRIES*
-------------------------------------------
Water and Sewer Revenue 15.9%
-------------------------------------------
Single Family Housing Revenue State 12.2%
-------------------------------------------
Universities/Colleges 10.4%
-------------------------------------------
Healthcare/Hospitals 9.5%
-------------------------------------------
Municipal Owned Utilities 7.9%
-------------------------------------------
-------------------------------------------
PORTFOLIO FACTS
-------------------------------------------
Average Duration 6.9
-------------------------------------------
Average Life1 5.1 Yrs
-------------------------------------------
Average Maturity 15.7 Yrs
-------------------------------------------
Average Quality (w/o MFS Ratings) AA+
-------------------------------------------
Average Quality Short Term Bonds
(w/o MFS Ratings) A-1
-------------------------------------------
TOTAL RETURNS
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 2/3/1992 1.06% 3.33% 5.07% 6.26% 5.79%
- ------------------------------------------------------------------------------
B 9/7/1993 0.67% 2.53% 4.23% 5.43% 4.97%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
without sales charge
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average "other state"
municipal debt fund+ 1.06% 3.37% 4.44% 5.44% 5.44%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
- ------------------------------------------------------------------------------
A -3.74% -1.57% 3.38% 5.23% 5.28%
- ------------------------------------------------------------------------------
B -3.28% -1.43% 3.30% 5.11% 4.97%
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.06% 3.33% 15.99% 35.48% 75.65%
- ------------------------------------------------------------------------------
B 0.67% 2.53% 13.23% 30.27% 62.35%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.8%
Cash & Other Net Assets 1.2%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 50.1%
-----------------------------------------------
AA 7.3%
-----------------------------------------------
A 12.6%
-----------------------------------------------
BBB 16.6%
-----------------------------------------------
BB 0.5%
-----------------------------------------------
B 0.5%
-----------------------------------------------
Not Rated 11.5%
-----------------------------------------------
Other 0.9%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Municipal General Obligations/Schools 16.8%
-----------------------------------------------
State and Local Agencies 15.0%
-----------------------------------------------
Healthcare/Hospitals 10.2%
-----------------------------------------------
Water and Sewer Revenue 8.3%
-----------------------------------------------
Municipal General Obligations/GP 7.7%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.8
-----------------------------------------------
Average Life1 5.7 Yrs
-----------------------------------------------
Average Maturity 16.3 Yrs
-----------------------------------------------
Average Quality (w/o MFS Ratings) AA-
-----------------------------------------------
Average Quality Short Term Bonds
(w/o MFS Ratings) A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 6/18/1985 1.75% 5.06% 5.37% 6.43% 6.35%
- ------------------------------------------------------------------------------
B 9/7/1993 1.37% 4.08% 4.55% 5.59% 5.48%
- ------------------------------------------------------------------------------
C 1/3/1994 1.30% 4.13% 4.42% 5.50% 5.37%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average California municipal
debt fund+ 1.34% 4.64% 4.56% 5.80% 6.00%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.08% 0.07% 3.68% 5.40% 5.84%
- ------------------------------------------------------------------------------
B -2.61% 0.08% 3.62% 5.27% 5.48%
- ------------------------------------------------------------------------------
C 0.31% 3.13% 4.42% 5.50% 5.37%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.75% 5.06% 17.00% 36.57% 85.16%
- ------------------------------------------------------------------------------
B 1.37% 4.08% 14.27% 31.28% 70.56%
- ------------------------------------------------------------------------------
C 1.30% 4.13% 13.87% 30.73% 68.65%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) FLORIDA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 96.6%
Cash & Other Net Assets 3.4%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 54.1%
-----------------------------------------------
AA 10.9%
-----------------------------------------------
A 7.0%
-----------------------------------------------
BBB 10.1%
-----------------------------------------------
BB 0.7%
-----------------------------------------------
B 0.4%
-----------------------------------------------
Not Rated 13.8%
-----------------------------------------------
Other 3.0%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Healthcare/Hospitals 19.0%
-----------------------------------------------
Water and Sewer Revenue 13.6%
-----------------------------------------------
Municipal General Obligations/Schools 8.3%
-----------------------------------------------
Municipal General Obligations/GP 7.2%
-----------------------------------------------
State and Local Agencies 6.0%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.7
-----------------------------------------------
Average Life 17.8 Yrs
-----------------------------------------------
Average Maturity 18.5 Yrs
-----------------------------------------------
Average Quality (w/o MFS Ratings) AA
-----------------------------------------------
Average Quality Short Term Bonds
(w/o MFS Ratings) A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 2/3/1992 1.38% 4.03% 5.39% 6.36% 5.97%
- ------------------------------------------------------------------------------
B 9/7/1993 0.99% 3.23% 4.52% 5.52% 5.12%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average Florid a municipal
debt fund+ 1.08% 3.72% 4.58% 5.58% 5.87%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.43% -0.91% 3.69% 5.33% 5.46%
- ------------------------------------------------------------------------------
B -2.97% -0.75% 3.59% 5.19% 5.12%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.38% 4.03% 17.05% 36.11% 78.66%
- ------------------------------------------------------------------------------
B 0.99% 3.23% 14.17% 30.79% 64.71%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) GEORGIA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
----------------------------------------------
PORTFOLIO STRUCTURE*
----------------------------------------------
Bonds 98.9%
Cash & Other Net Assets 1.1%
----------------------------------------------
CREDIT QUALITY**
----------------------------------------------
AAA 40.2%
-----------------------------------------------
AA 27.3%
-----------------------------------------------
A 7.9%
-----------------------------------------------
BBB 7.8%
-----------------------------------------------
BB 0.7%
-----------------------------------------------
Not Rated 15.7%
-----------------------------------------------
Other 0.4%
-----------------------------------------------
----------------------------------------------
TOP FIVE BOND INDUSTRIES*
----------------------------------------------
Water and Sewer Revenue 27.9%
-----------------------------------------------
Universities/Colleges 9.6%
-----------------------------------------------
Healthcare/Hospitals 7.9%
-----------------------------------------------
Municipal Owned Utilities 7.6%
-----------------------------------------------
State and Local Agencies 7.4%
-----------------------------------------------
----------------------------------------------
PORTFOLIO FACTS
----------------------------------------------
Average Duration 7.8
-----------------------------------------------
Average Life 16.4 Yrs
-----------------------------------------------
Average Maturity 16.9 Yrs
-----------------------------------------------
Average Quality (w/o MFS Ratings) AA
-----------------------------------------------
Average Quality Short Term Bonds
(w/o MFS Ratings) A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 6/6/1988 1.18% 3.77% 5.22% 6.28% 5.88%
- ------------------------------------------------------------------------------
B 9/7/1993 0.81% 3.00% 4.44% 5.50% 5.08%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average Georgia municipal
debt fund+ 0.85% 3.20% 4.71% 5.77% 5.85%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.62% -1.16% 3.53% 5.25% 5.37%
- ------------------------------------------------------------------------------
B -3.15% -0.98% 3.51% 5.17% 5.08%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.18% 3.77% 16.50% 35.57% 77.10%
- ------------------------------------------------------------------------------
B 0.81% 3.00% 13.91% 30.69% 64.20%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) MARYLAND MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.6%
Cash & Other Net Assets 1.4%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 48.1%
-----------------------------------------------
AA 20.1%
-----------------------------------------------
A 12.0%
-----------------------------------------------
BBB 9.0%
-----------------------------------------------
B 0.3%
-----------------------------------------------
Not Rated 10.4%
-----------------------------------------------
Other 0.1%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Healthcare/Hospitals 22.1%
-----------------------------------------------
Municipal General Obligations/IMPT 15.2%
-----------------------------------------------
Universities/Colleges 10.8%
-----------------------------------------------
State and Local Agencies 9.3%
-----------------------------------------------
Municipal General Obligations/GP 7.4%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.6
-----------------------------------------------
Average Life 15.6 Yrs
-----------------------------------------------
Average Maturity 16.2 Yrs
-----------------------------------------------
Average Quality (w/o MFS Ratings) AA
-----------------------------------------------
Average Quality Short Term Bonds
(w/o MFS Ratings) A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 10/31/1984 1.12% 3.45% 5.14% 6.14% 5.73%
- ------------------------------------------------------------------------------
B 9/7/1993 0.71% 2.78% 4.46% 5.46% 5.04%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average Maryland municipal
debt fund+ 1.03% 3.47% 4.63% 5.53% 5.65%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.68% -1.47% 3.45% 5.11% 5.22%
- ------------------------------------------------------------------------------
B -3.25% -1.18% 3.54% 5.13% 5.04%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.12% 3.45% 16.22% 34.73% 74.64%
- ------------------------------------------------------------------------------
B 0.71% 2.78% 13.99% 30.45% 63.47%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.8%
Cash & Other Net Assets 1.2%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 43.7%
-----------------------------------------------
AA 26.3%
-----------------------------------------------
A 5.6%
-----------------------------------------------
BBB 10.5%
-----------------------------------------------
BB 1.4%
-----------------------------------------------
Not Rated 11.5%
-----------------------------------------------
Other 1.0%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Municipal General Obligations/GP 19.8%
-----------------------------------------------
Universities/Colleges 18.2%
-----------------------------------------------
Healthcare/Hospitals 11.0%
-----------------------------------------------
Municipal General Obligations/IMPT 5.8%
-----------------------------------------------
Universities/Secondary Schools 5.1%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.9
-----------------------------------------------
Average Life 15.6 Yrs
-----------------------------------------------
Average Maturity 16.9 Yrs
-----------------------------------------------
Average Quality (w/o MFS Ratings) AA
-----------------------------------------------
Average Quality Short Term Bonds
(w/o MFS Ratings) A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 4/9/1985 1.47% 4.10% 5.39% 6.29% 5.89%
- ------------------------------------------------------------------------------
B 9/7/1993 1.14% 3.43% 4.74% 5.62% 5.21%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average Massachusetts
municipal debt fund+ 1.12% 4.00% 4.90% 5.91% 5.90%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.35% -0.85% 3.69% 5.26% 5.38%
- ------------------------------------------------------------------------------
B -2.82% -0.56% 3.82% 5.29% 5.21%
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.47% 4.10% 17.06% 35.66% 77.29%
- ------------------------------------------------------------------------------
B 1.14% 3.43% 14.89% 31.41% 66.13%
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITION
LEHMAN BROTHERS MUNICIPAL BOND INDEX - a broad measure of the municipal bond
market.
It is not possible to invest directly in an index.
Percentages are based on net assets as of 9/30/04.
* For purposes of this graphical presentation, the bond component includes
both the accrued interest on bonds and the equivalent exposure from any
derivative holdings if applicable.
** Credit quality ratings are based on a weighted average of each security's
rating from Moody's Investors Service. If not rated by Moody's, the rating
will be that assigned by Standard & Poor's. Likewise, if not assigned a
rating by Standard & Poor's, it will be based on the rating assigned by
Fitch, Inc. If not rated by any of the three agencies, the security is
considered not rated, except for U.S. Treasuries and mortgage-backed
securities, which are included in the "AAA"-rated category.
The portfolio is actively managed, and current holdings may be different.
- -------------------------------------------------------------------------------
NOTES TO PERFORMANCE SUMMARY AND RISK CONSIDERATIONS
- -------------------------------------------------------------------------------
NOTES TO PERFORMANCE SUMMARY
Class A results, including sales charge, reflect the deduction of the maximum
4.75% sales charge. Class B results, including sales charge, reflect the
deduction of the applicable contingent deferred sales charge (CDSC), which
declines over six years from 4% to 0%. For those funds that offer Class C
shares, Class C results, including sales charge (assuming redemption within one
year from the end of the calendar month of purchase), reflect the deduction of
the 1% CDSC.
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers, the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
VISIT MFS.COM FOR THE MOST RECENT MONTH-END PERFORMANCE RESULTS. MARKET
VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE
OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. ANY
HIGH, SHORT-TERM RETURNS MAY BE AND LIKELY WERE ATTRIBUTABLE TO RECENT
FAVORABLE MARKET CONDITIONS, WHICH MAY NOT BE REPEATED. THE PERFORMANCE SHOWN
DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY
ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RISK CONSIDERATIONS
The portfolio may invest in high yield or lower-rated securities, which may
provide greater returns but are subject to greater-than-average risk.
The portfolio may invest a relatively high percentage of its assets in a small
number of issuers or even in a single issuer. This makes the fund's value more
sensitive to developments associated with the issuer and the overall market.
A portion of income may be subject to state, federal and/or alternative minimum
tax. Capital gains, if any, are subject to a capital gains tax.
If you are not a resident of the state to which the fund is targeted, the state
tax exemption will not apply.
The portfolio may concentrate its investments in one state. By doing so, the
portfolio is more susceptible to adverse economic, political or regulatory
developments affecting that state than is a portfolio that invests more
broadly.
The fund may invest in municipal bonds that are general obligations backed by
the full faith and credit of the municipal issuer. The fund may also invest in
municipal bonds called revenue obligations which are subject to a higher degree
of credit risk than general obligations. Revenue obligations finance specific
projects, such as building a hospital, and are not backed by the full faith and
credit of the municipal issuer. The fund may invest in assets in revenue bonds
relating to any one specific industry (e.g., housing, health care, water and
sewer, etc.). Because revenue obligations are repaid from the revenues from a
facility, they are subject to a risk of default in payments of principal and
interest if the facility does not generate enough income. Municipal securities
backed by current or and revenues from a specific project or specific assets
can be negatively affected by the discontinuance of the taxation supporting the
project or assets or the inability to collect revenues for the project or from
the assets. If the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest from the
security could become taxable and the security could decline significantly in
value.
The fund's investment in municipal securities may include municipal lease
obligations. Municipal lease obligations are undivided interests issued by a
state or municipality in a lease or installment purchase which generally
relates to equipment or facilities. When a fund invests in municipal lease
obligations, it may have limited recourse in the event of default or
termination. In some cases, payments under municipal leases do not have to be
made unless the appropriate legislative body specifically approves money for
that purposes.
The portfolio focuses on companies in a limited number of sectors or industries
making it more susceptible to adverse economic, political, or regulatory
developments affecting those sectors or industries than a portfolio that
invests more broadly.
The portfolio's value will fluctuate in response to market conditions and
issuer, regulatory, economic, or political developments. In general, fixed
income securities will decline when interest rates rise and will increase when
interest rates fall. Many fixed income securities also involve credit risk,
which is the risk that issuers may fail to make timely principal or interest
payments. In addition, fixed income securities with longer maturity dates will
be subject to greater price fluctuations than those with shorter maturity
periods. Please see the prospectus for further information regarding these and
other risk considerations.
- -------------------------------------------------------------------------------
FUND EXPENSE TABLES
- -------------------------------------------------------------------------------
FUND EXPENSES BORNE BY SHAREHOLDERS DURING THE PERIOD FROM
APRIL 1, 2004, THROUGH SEPTEMBER 30, 2004.
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1)
fees; and other fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period April 1, 2004 through September 30,
2004.
ACTUAL EXPENSES
The first line for each share class in the table below provides information
about actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the table below provides information
about hypothetical account values and hypothetical expenses based on the fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
MFS(R) ALABAMA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.82% $1,000 $1,012 $4.14
A ------------------------------------------------------------------------
Hypothetical 0.82% $1,000 $1,021 $4.15
- --------------------------------------------------------------------------------
Actual 1.57% $1,000 $1,008 $7.90
B -------------------------------------------------------------------------
Hypothetical 1.57% $1,000 $1,017 $7.94
- --------------------------------------------------------------------------------
MFS(R) ARKANSAS MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.61% $1,000 $1,011 $3.07
A ------------------------------------------------------------------------
Hypothetical 0.61% $1,000 $1,022 $3.09
- --------------------------------------------------------------------------------
Actual 1.38% $1,000 $1,007 $6.94
B -------------------------------------------------------------------------
Hypothetical 1.38% $1,000 $1,018 $6.98
- --------------------------------------------------------------------------------
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.58% $1,000 $1,018 $2.93
A ------------------------------------------------------------------------
Hypothetical 0.58% $1,000 $1,022 $2.94
- --------------------------------------------------------------------------------
Actual 1.33% $1,000 $1,014 $6.71
B -------------------------------------------------------------------------
Hypothetical 1.33% $1,000 $1,018 $6.73
- --------------------------------------------------------------------------------
Actual 1.48% $1,000 $1,013 $7.47
C ------------------------------------------------------------------------
Hypothetical 1.48% $1,000 $1,018 $7.49
- --------------------------------------------------------------------------------
MFS(R) FLORIDA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.54% $1,000 $1,014 $2.73
A ------------------------------------------------------------------------
Hypothetical 0.54% $1,000 $1,022 $2.74
- --------------------------------------------------------------------------------
Actual 1.31% $1,000 $1,010 $6.60
B -------------------------------------------------------------------------
Hypothetical 1.31% $1,000 $1,018 $6.63
- --------------------------------------------------------------------------------
MFS(R) GEORGIA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.87% $1,000 $1,012 $4.39
A ------------------------------------------------------------------------
Hypothetical 0.87% $1,000 $1,021 $4.41
- --------------------------------------------------------------------------------
Actual 1.62% $1,000 $1,008 $8.16
B -------------------------------------------------------------------------
Hypothetical 1.62% $1,000 $1,017 $8.19
- --------------------------------------------------------------------------------
MFS(R) MARYLAND MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.86% $1,000 $1,011 $4.34
A ------------------------------------------------------------------------
Hypothetical 0.86% $1,000 $1,021 $4.36
- --------------------------------------------------------------------------------
Actual 1.51% $1,000 $1,007 $7.60
B -------------------------------------------------------------------------
Hypothetical 1.51% $1,000 $1,017 $7.64
- --------------------------------------------------------------------------------
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio^ 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.81% $1,000 $1,015 $4.09
A ------------------------------------------------------------------------
Hypothetical 0.81% $1,000 $1,021 $4.10
- --------------------------------------------------------------------------------
Actual 1.46% $1,000 $1,011 $7.36
B -------------------------------------------------------------------------
Hypothetical 1.46% $1,000 $1,018 $7.38
- --------------------------------------------------------------------------------
* Ending account value reflects each class" ending account value assuming the
actual class return per year before expenses (Actual) and a hypothetical 5%
class return per year before expenses (Hypothetical).
** Expenses paid is equal to each class" annualized expense ratio for the most
recent six month period, as shown above, multiplied by the average account
value over the period, multiplied by the number of days in the period,
divided by the number of days in the year. Expenses paid do not include any
applicable sales charges (loads) or redemption fees. If these transaction
costs had been included, your costs would have been higher.
^ MFS Massachusetts Municipal Bond Fund's annualized expense ratios include a
non-recurring reimbursement
of shareholder servicing costs. Had the reimbursement not occurred, the
expense ratios would have increased
by 0.06%.
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) ALABAMA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.9%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port
Revenue - 2.2% Alabama Docks Department Facilities Rev., MBIA, 5.5%, 2022 $1,000,000 $1,086,970
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Port Authority Docks Facility MBIA, 5.25%, 2026 1,000,000 1,037,820
- -------------------------------------------------------------------------------------------------------------------------------
$2,124,790
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 13.1% Boaz, AL, School Warrants, "A", XLCA, 5%, 2025 - 2029 $1,650,000 $1,694,664
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, "A", 5%, 2029 1,000,000 1,010,980
- -------------------------------------------------------------------------------------------------------------------------------
Fairfield, AL, Refunding Warrants, AMBAC, 5.25%, 2025 1,030,000 1,094,200
- -------------------------------------------------------------------------------------------------------------------------------
Gadsden, AL, Warrants, "B", AMBAC, 5.125%, 2028 1,500,000 1,562,115
- -------------------------------------------------------------------------------------------------------------------------------
Hoover, AL, "B", 6%, 2017 500,000 566,730
- -------------------------------------------------------------------------------------------------------------------------------
Houston County, AL, AMBAC, 6.25%, 2019 750,000 881,888
- -------------------------------------------------------------------------------------------------------------------------------
Huntsville, AL, "A", 5.5%, 2020 1,000,000 1,021,480
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, School Warrants, FSA, 5.5%, 2020 1,750,000 1,908,533
- -------------------------------------------------------------------------------------------------------------------------------
Mobile County, AL, 6%, 2009(++) 1,345,000 1,550,287
- -------------------------------------------------------------------------------------------------------------------------------
Russell County, AL, Warrants, "A", AMBAC, 5%, 2017 1,000,000 1,077,880
- -------------------------------------------------------------------------------------------------------------------------------
$12,368,757
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 7.6% Birmingham, AL, 5.75%, 2019 $2,000,000 $2,236,400
- -------------------------------------------------------------------------------------------------------------------------------
Birmingham, AL, "A", 5.75%, 2017 1,000,000 1,134,070
- -------------------------------------------------------------------------------------------------------------------------------
Birmingham, AL, Refunding & Capital Improvement, "B", AMBAC, 5.25%, 2022 1,000,000 1,081,340
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Capital Improvement & Refunding Warrants, "A",
MBIA, 5%, 2023 1,000,000 1,040,560
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery, AL, Warrants, MBIA, 5.1%, 2021 1,005,000 1,063,602
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA, 9.1574%, 2017+(+) 500,000 609,780
- -------------------------------------------------------------------------------------------------------------------------------
$7,165,752
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 5.3% Bessemer, AL, School Warrants, AMBAC, 5.5%, 2020 $2,015,000 $2,220,328
- -------------------------------------------------------------------------------------------------------------------------------
Phenix City, AL, AMBAC, 5.65%, 2021 1,500,000 1,664,190
- -------------------------------------------------------------------------------------------------------------------------------
Tuscaloosa, AL, Warrants, 5.7%, 2018 1,000,000 1,117,620
- -------------------------------------------------------------------------------------------------------------------------------
$5,002,138
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Alabama Special Care Facilities Financing Authority (Daughters of
Hospitals - 14.6% Charity), AMBAC, ETM, 5%, 2025(++) $1,500,000 $1,514,820
- -------------------------------------------------------------------------------------------------------------------------------
Baldwin County, AL, Eastern Shore Health Care Authority Rev. (Thomas
Hospital), 6.75%, 2015 500,000 516,075
- -------------------------------------------------------------------------------------------------------------------------------
Birmingham Medical Center, East Alabama, Special Health Care Facilities,
Eastern Health Systems, "B", 5%, 2018 500,000 492,015
- -------------------------------------------------------------------------------------------------------------------------------
Birmingham, AL, Baptist Health Systems, "A", (Baptist Medical Center),
5.625%, 2015 300,000 321,573
- -------------------------------------------------------------------------------------------------------------------------------
Cullman, AL, Medical Park, South Clinic, "A", 6.5%, 2023 1,000,000 1,003,010
- -------------------------------------------------------------------------------------------------------------------------------
DCH Health Care Authority, Alabama Facilities Rev., 5.25%, 2016 1,000,000 1,060,070
- -------------------------------------------------------------------------------------------------------------------------------
Houston County, AL, Health Care Authority, AMBAC, 6.125%, 2022 1,000,000 1,132,260
- -------------------------------------------------------------------------------------------------------------------------------
Huntsville, AL, Health Care Authority Rev., 5.625%, 2026 950,000 981,246
- -------------------------------------------------------------------------------------------------------------------------------
Huntsville, AL, Health Care Authority Rev., "A", MBIA, 5%, 2023 1,000,000 1,024,400
- -------------------------------------------------------------------------------------------------------------------------------
Lauderdale County & Florence, AL, Health Care Authority Rev. (Eliza
Coffee Memorial Hospital), MBIA, 5.75%, 2008(++) 1,000,000 1,124,410
- -------------------------------------------------------------------------------------------------------------------------------
Lauderdale County & Florence, AL, Health Care Authority Rev., "A",
(Coffee Health Group), MBIA, 5.75%, 2014 1,000,000 1,123,300
- -------------------------------------------------------------------------------------------------------------------------------
Marshall County, AL, Health Care Authority Rev., "A", 5.75%, 2032 1,000,000 1,027,040
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery, AL, Medical Clinic Board Rev. (Jackson Hospital & Clinic),
AMBAC, 5.875%, 2016 1,000,000 1,067,640
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery, AL, Special Care Facilities Financing Authority Rev., "C"
(Baptist Medical Center), FSA, 5.375%, 2019 1,150,000 1,223,566
- -------------------------------------------------------------------------------------------------------------------------------
Valley, AL, Special Care Facilities Financing Authority, "A" (Lanier
Memorial Hospital), 5.65%, 2022 13,827,956 13,827,956
- -------------------------------------------------------------------------------------------------------------------------------
$13,827,956
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Mobile County, AL, Industrial Development Authority Rev. (Ipsco, Inc.),
Metals - 0.5% 6.875%, 2030 $500,000 $515,605
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Other - 0.5% Fairfield, AL, Environment Improvement Rev. (USX Corp.), 5.4%, 2016 $400,000 $446,624
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Paper - 3.3% Butler, AL, Solid Waste Disposal Rev. (James River Corp.), 8%, 2028 $150,000 $154,256
- -------------------------------------------------------------------------------------------------------------------------------
Camden, AL, Industrial Development Board Exempt Rev., "B",
(Weyerhaeuser), 6.375%, 2024 500,000 526,425
- -------------------------------------------------------------------------------------------------------------------------------
Mobile, AL, Industrial Development Board Improvement Rev., "A"
(International Paper Co.), 6.35%, 2016 650,000 704,353
- -------------------------------------------------------------------------------------------------------------------------------
Mobile, AL, Industrial Development Board Improvement Rev., "B"
(International Paper Co.), 6.45%, 2019 350,000 378,354
- -------------------------------------------------------------------------------------------------------------------------------
Phenix City, AL, Environmental Improvement Rev., 6.35%, 2035 750,000 786,795
- -------------------------------------------------------------------------------------------------------------------------------
Selma, AL, Industrial Development Board, "A" (International Paper Co.),
6.7%, 2018 500,000 551,335
- -------------------------------------------------------------------------------------------------------------------------------
$3,101,518
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Birmingham, AL, Downtown Redevelopment Authority Rev. (Social Security
Other - 3.6% Administrative Building), ETM, 12.5%, 2010(++) $1,735,000 $2,269,692
- -------------------------------------------------------------------------------------------------------------------------------
East Central Alabama Industrial Development Authority Rev., AMBAC,
5.4%, 2008(++) 210,000 233,764
- -------------------------------------------------------------------------------------------------------------------------------
East Central Alabama Industrial Development Authority Rev., Unrefunded
Balance, AMBAC, 5.4%, 2015 790,000 866,693
- -------------------------------------------------------------------------------------------------------------------------------
$3,370,149
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Alabama Housing Finance Authority, Multi-Family Residential Development
Revenue - 2.6% Rev., "K", (South Bay Apartments), FNMA, 5.875%, 2021 $960,000 $1,015,200
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Housing Finance Authority, Multi-Family Residential Development
Rev., FHA, 7.25%, 2023 1,185,000 1,190,249
- -------------------------------------------------------------------------------------------------------------------------------
Birmingham, AL, Multi-Family Housing Rev., "C" (Beaconview Apartments),
8%, 2030* 395,000 78,533
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Finance Corp., Multi-Family Mortgage Rev., LOC,
7.5%, 2015 175,000 175,560
- -------------------------------------------------------------------------------------------------------------------------------
$2,459,542
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Alabama Housing Finance Authority, Collateral Home Mortgage Bond Program
State - 2.4% II, "B", 5.15%, 2019 $400,000 $409,732
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Housing Finance Authority, Single Family Mortgage Rev.,
Collateral Home Mortgage Bond Program I, "B", 5.7%, 2015 575,000 597,551
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Housing Finance Authority, Single Family Mortgage Rev.,
Collateral Home Mortgage Bond Program II, "A", GNMA, 5.4%, 2022 835,000 852,385
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Housing Finance Authority, Single Family Mortgage Rev.,
Collateral Home Mortgage Bond Program II, "B", 5.15%, 2019 410,000 419,975
- -------------------------------------------------------------------------------------------------------------------------------
$2,279,643
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 7.2% Alabama Building Renovation Authority, AMBAC, 6%, 2014 $1,515,000 $1,748,901
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Public School & College, Capital Improvement, "A", 5%, 2019 500,000 527,320
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Public School & College, Capital Improvement, "C", 5.75%,
2017 - 2018 2,035,000 2,286,958
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Board of Education, "A", FSA, 5.8%, 2020 865,000 948,438
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.8516%, 2013 - 2016+(+) 1,000,000 1,317,400
- -------------------------------------------------------------------------------------------------------------------------------
$6,829,017
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.1% Virgin Islands Public Finance Authority, "A", ASST GTY, 5.5%, 2018 $1,000,000 $1,048,620
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.4% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $470,000 $423,531
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Alabama Board of Education Rev., Refunding & Improvement (Southern Union
Colleges - 5.0% State Community College), MBIA, 5%, 2022 $1,000,000 $1,050,360
- -------------------------------------------------------------------------------------------------------------------------------
Auburn University, General Fee Rev., AMBAC, 5%, 2029 1,000,000 1,021,760
- -------------------------------------------------------------------------------------------------------------------------------
Mobile, AL, Spring Hill College, Educational Building Authority Rev.,
"A", 5.25%, 2034 1,000,000 1,041,060
- -------------------------------------------------------------------------------------------------------------------------------
University of Alabama, General Rev. "A", MBIA, 5%, 2029 1,000,000 1,022,690
- -------------------------------------------------------------------------------------------------------------------------------
University of Alabama, University Rev., General Fee, FGIC, 5%, 2021 525,000 557,198
- -------------------------------------------------------------------------------------------------------------------------------
$4,693,068
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 11.9% Alabama Municipal Electric Power Authority, "A", MBIA, 5%, 2023 $1,000,000 $1,051,390
- -------------------------------------------------------------------------------------------------------------------------------
DeKalb & Cherokee County, AL, Gas Rev., AMBAC, 5.4%, 2016 2,000,000 2,132,360
- -------------------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2013+(+) 500,000 607,950
- -------------------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES, AMBAC, 8.0918%, 2018+(+) 4,500,000 5,007,870
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 905,468
- -------------------------------------------------------------------------------------------------------------------------------
Southeastern Alabama Gas District Systems Rev., "A", AMBAC, 5.5%, 2020 1,000,000 1,101,190
- -------------------------------------------------------------------------------------------------------------------------------
Tuskegee, AL, Utilities Board, AMBAC, 5.5%, 2022 400,000 426,260
- -------------------------------------------------------------------------------------------------------------------------------
$11,232,488
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Alabama Drinking Water Finance Authority, Revolving Fund Loan, "A",
Revenue - 15.6% AMBAC, 6%, 2021 $725,000 $835,113
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Drinking Water Finance Authority, Revolving Fund Loan, "C",
AMBAC, 5.75%, 2018 1,000,000 1,127,840
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Water Pollution Control Authority, Revolving Fund Loan, "B",
AMBAC, 5.5%, 2016 - 2020 2,380,000 2,525,572
- -------------------------------------------------------------------------------------------------------------------------------
Alabama Water Pollution Control Authority, Revolving Fund Loan, AMBAC,
5.75%, 2019 1,000,000 1,119,360
- -------------------------------------------------------------------------------------------------------------------------------
Alabaster, AL, Sewer Rev., AMBAC, 5%, 2029 750,000 766,125
- -------------------------------------------------------------------------------------------------------------------------------
Bessemer, AL, Water Rev. Warrants, "A", 5.75%, 2026 1,000,000 1,080,710
- -------------------------------------------------------------------------------------------------------------------------------
Birmingham, AL, Waterworks & Sewer Board Rev., "A", FGIC, 5%, 2034 1,365,000 1,396,449
- -------------------------------------------------------------------------------------------------------------------------------
Jasper, AL, Waterworks & Sewer Board, "A", AMBAC, 5.2%, 2020 750,000 808,290
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Warrants, "D", FGIC, 5.7%, 2007(++) 1,000,000 1,090,430
- -------------------------------------------------------------------------------------------------------------------------------
Limestone County, AL, Water Authority, FGIC, 5.5%, 2026 2,650,000 2,834,785
- -------------------------------------------------------------------------------------------------------------------------------
Madison, AL, Water & Wastewater Board, MBIA, 5.5%, 2019 1,000,000 1,087,480
- -------------------------------------------------------------------------------------------------------------------------------
Ozark, AL, Utilities Board Water & Sewer Rev. AMBAC, 5%, 2031 100,000 101,634
- -------------------------------------------------------------------------------------------------------------------------------
$14,773,788
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $84,685,324) $91,662,986
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.0%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., due 10/07/04 $200,000 $200,000
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement
Warrants, "A", due 10/07/04 1,000,000 1,000,000
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Warrants, "B-4", due 10/07/04 700,000 700,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes (Identified Cost, $1,900,000) $1,900,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $86,585,324) $93,562,986
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.1% 1,089,833
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $94,652,819
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) ARKANSAS MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.7%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port
Revenue - 1.3% Little Rock, AR, Airport Rev., "A", FSA, 5.25%, 2019 $800,000 $849,000
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Island Authority Marine Rev., "A", FSA, 5.25%, 2018 1,000,000 1,069,070
- -------------------------------------------------------------------------------------------------------------------------------
$1,918,070
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 7.5% Arkansas College Savings, "A", 0%, 2017 $1,840,000 $1,083,686
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Federal Highway, Grant Anticipation Tax Rev., 5%, 2014 1,500,000 1,646,550
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Federal Highway, Grant Anticipation Tax Rev., "A", 5.5%, 2011 850,000 949,186
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Infrastructure, RITES, ETM, 9.121%, 2019+
(+),(++) 1,250,000 1,546,725
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, MBIA, 9.621%, 2020+(+) 3,000,000 3,852,720
- -------------------------------------------------------------------------------------------------------------------------------
Sebastian County, AR, Community Refunding & Improvement, AMBAC,
5.6%, 2007(++) 1,500,000 1,646,280
- -------------------------------------------------------------------------------------------------------------------------------
$10,725,147
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations - Puerto Rico Municipal Finance Agency, RITES, FSA, 9.157%, 2017 - 2018+
Improvement - 3.4% (+) $3,985,000 $4,835,312
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 4.8% Arkansas, Capital Appreciation, College Savings, "B", 0%, 2012 - 2015 $4,450,000 $3,119,508
- -------------------------------------------------------------------------------------------------------------------------------
Little Rock, AR, School District Construction, "C", FSA, 5%, 2017 1,000,000 1,065,000
- -------------------------------------------------------------------------------------------------------------------------------
Little Rock, AR, School District, "A", FSA, 5.5%, 2005 490,000 496,184
- -------------------------------------------------------------------------------------------------------------------------------
Little Rock, AR, School District, "A", FSA, 5.4%, 2017 1,000,000 1,084,670
- -------------------------------------------------------------------------------------------------------------------------------
Rogers, AR, School District, Number 030, Refunding & Construction, "A",
AMBAC, 5%, 2007(++) 1,000,000 1,080,180
- -------------------------------------------------------------------------------------------------------------------------------
$6,845,542
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Arkansas Development Finance Authority, Health Refunding (Sister of
Hospitals - 9.4% Mercy), "A", MBIA, 5%, 2013 $4,340,000 $4,786,195
- -------------------------------------------------------------------------------------------------------------------------------
Batesville, AR, Medical District Rev. (White River Medical Center),
5.5%, 2024 750,000 764,685
- -------------------------------------------------------------------------------------------------------------------------------
Baxter County, AR, Hospital Rev., Refunding & Improvement,
"B", 5.6%, 2021 1,500,000 1,529,580
- -------------------------------------------------------------------------------------------------------------------------------
Crittenden County, AR, Hospital Rev., Refunding & Improvement,
7.15%, 2025 750,000 741,608
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AR, Hospital Rev., Refunding & Improvement (Regional
Medical Center), 5.8%, 2021 1,000,000 1,050,420
- -------------------------------------------------------------------------------------------------------------------------------
Little Rock, AR, Health Facilities Board, Baptist Health-Bri Project,
5%, 2014 500,000 533,170
- -------------------------------------------------------------------------------------------------------------------------------
Little Rock, AR, Health Facilities Hospital Board Rev. (Baptist Medical
Center), 6.9%, 2009 400,000 462,392
- -------------------------------------------------------------------------------------------------------------------------------
North Little Rock, AR, Baptist Health Facilities, 5.7%, 2022 500,000 520,255
- -------------------------------------------------------------------------------------------------------------------------------
Pulaski County, AR, Hospital Rev. (Arkansas Children's Hospital), "B",
5.25%, 2015 - 2016 1,500,000 1,566,400
- -------------------------------------------------------------------------------------------------------------------------------
Sebastian County, AR, Health Facilities Improvement (Sparks Regional
Medical Center), "A", 5.25%, 2021 1,000,000 1,020,480
- -------------------------------------------------------------------------------------------------------------------------------
State of Arkansas, Development Finance Authority Rev. (Washington
Regional Medical Center), 7.25%, 2020 500,000 551,685
- -------------------------------------------------------------------------------------------------------------------------------
$13,526,870
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Arkansas Development Finance Authority Rev. (Evangelical Lutheran
Term Care - 1.0% Project), "B", AMBAC, 5.375%, 2019 $1,315,000 $1,430,917
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Jonesboro, AR, Industrial Development Rev., Anheuser Busch Project,
Other - 1.0% 4.6%, 2012 $1,000,000 $1,064,170
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa LLC), 5.875%, 2022 335,000 353,077
- -------------------------------------------------------------------------------------------------------------------------------
$1,417,247
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Arkansas State Development Finance Authority, Industrial Facilities
Paper - 1.3% Rev. (Potlatch Corp.), 7.75%, 2025 $250,000 $270,690
- -------------------------------------------------------------------------------------------------------------------------------
Camden, AR, Environmental Improvement (International Paper Co.), "A",
7.625%, 2018 1,000,000 1,024,010
- -------------------------------------------------------------------------------------------------------------------------------
Pine Bluff, AR, Environmental Improvement (International Paper Co.),
"A", 5.55%, 2022 250,000 254,675
- -------------------------------------------------------------------------------------------------------------------------------
Pine Bluff, AR, Environmental Refunding (International Paper Co.), "A",
6.7%, 2020 300,000 330,054
- -------------------------------------------------------------------------------------------------------------------------------
$1,879,429
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Fort Smith, AR, Residential Housing (Gorman Towers), "A", GNMA,
Revenue - 0.7% 5.45%, 2037 $1,000,000 $1,032,290
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Harrison, AR, Residential Housing Facilities Board, Single Family
Local - 7.3% Mortgage Rev., FGIC, ETM, 7.4%, 2011(++) $4,000,000 $5,019,240
- -------------------------------------------------------------------------------------------------------------------------------
Lonoke County, AR, Residential Housing Facilities, FNMA, 7.9%, 2011 170,119 176,758
- -------------------------------------------------------------------------------------------------------------------------------
Pulaski County, AR, Public Facilities Board Rev., "C", FNMA, 0%, 2014 2,750,000 1,727,631
- -------------------------------------------------------------------------------------------------------------------------------
Pulaski County, AR, Public Facilities Board, "A", GNMA, 5.75%, 2034 1,900,000 1,960,857
- -------------------------------------------------------------------------------------------------------------------------------
Sherwood, AR, Residential Housing Facilities Board, Single Family Rev.,
MBIA, 7.5%, 2010(++) 1,250,000 1,551,587
- -------------------------------------------------------------------------------------------------------------------------------
$10,436,073
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
State - 12.1% Arkansas Development Finance Authority Rev., "1", 0%, 2011 $750,000 $444,960
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev., "A", GNMA, 4.7%, 2024 1,625,000 1,618,679
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Mortgage Backed Securities
Program, "B", 5%, 2029 315,000 317,942
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Mortgage Backed Securities
Program, "C", GNMA, 5.35%, 2027 1,975,000 2,002,018
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Mortgage Backed Securities
Program, "E", GNMA, 5.4%, 2034 960,000 976,301
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Single Family Mortgage Rev.,
"B", GNMA, 5.125%, 2024 500,000 513,965
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Single Family Mortgage Rev.,
"B", GNMA, 5.25%, 2035 3,500,000 3,601,010
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Finance Authority, Mortgage Backed Securities Program, "B",
GNMA, 4.45%, 2034 1,760,000 1,792,314
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Finance Authority, Single Family, "F", GNMA, 7.45%, 2027 432,500 440,341
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Finance Authority, Single Family, Mortgage Backed Securities
Program, 5.3%, 2023 780,000 794,063
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Finance Authority, Single Family, Mortgage Backed Securities
Program, "B", GNMA, 6.7%, 2027 1,110,000 1,143,189
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Finance Authority, Single Family, Mortgage Backed Securities
Program, "D", 5.85%, 2024 1,425,000 1,493,201
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Finance Authority, Single Family, Mortgage Backed Securities
Program, "I", GNMA, 5.3%, 2033 690,000 700,702
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Housing Development Agency, Single Family Mortgage Program,
ETM, 8.375%, 2011(++) 1,000,000 1,318,510
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Finance Authority, Mortgage Backed Securities, "A",
4.375%, 2017 180,000 183,109
- -------------------------------------------------------------------------------------------------------------------------------
$17,340,304
- -------------------------------------------------------------------------------------------------------------------------------
State & Local Arkansas Development Finance Authority, Economic Development Rev., "B",
Agencies - 3.8% 5%, 2018 $175,000 $180,541
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Economic Development Rev., "B",
AMBAC, 5.8%, 2020 500,000 532,345
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Park Mt. Magazine Project, FSA,
5%, 2019 1,715,000 1,846,883
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Public Health, Laboratory Project, AMBAC, 5%, 2018 580,000 624,266
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Buildings Authority Rev. (State Office Building),
XCLA, 5.25%, 2025 2,000,000 2,262,300
- -------------------------------------------------------------------------------------------------------------------------------
$5,446,335
- -------------------------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 1.5% Arkansas Student Loan Authority, "B", 6.25%, 2006(++) $2,000,000 $2,139,720
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 3.1% Little Rock, AR, Hotel & Restaurant Gross Receipts Tax, 7.375%, 2015 $2,790,000 $3,478,935
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., 5.5%, 2022 1,000,000 1,030,840
- -------------------------------------------------------------------------------------------------------------------------------
$4,509,775
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.1% Children's Trust Fund, Settlement Rev., PR, 5.375%, 2033 $240,000 $216,271
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Commonwealth of Puerto Rico Highway & Transportation Authority, "B",
Tax - 2.5% MBIA, 5.875%, 2021 $2,000,000 $2,283,460
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority, "G",
5%, 2023 750,000 773,670
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority, "G",
FGIC, 5%, 2022 500,000 531,740
- -------------------------------------------------------------------------------------------------------------------------------
$3,588,870
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Arkansas State University, Student Fee-ASU Newport Campus, AMBAC,
Colleges - 10.2% 5%, 2028 $700,000 $707,735
- -------------------------------------------------------------------------------------------------------------------------------
Conway, AR, Public Facilities Rev. (Hendrix College), 5.85%, 2016 1,000,000 1,050,470
- -------------------------------------------------------------------------------------------------------------------------------
Siloam Springs, AR, Public Education Facilities, Capital Improvement
(John Brown University), AMBAC, 5.35%, 2020 500,000 540,105
- -------------------------------------------------------------------------------------------------------------------------------
University of Arkansas, University Facilities Rev. (Fayetteville
Campus), FGIC, 5.5%, 2020 2,870,000 3,216,352
- -------------------------------------------------------------------------------------------------------------------------------
University of Arkansas, University Facilities Rev. (Fayetteville
Campus), FGIC, 5%, 2027 - 2032 5,655,000 5,771,345
- -------------------------------------------------------------------------------------------------------------------------------
University of Arkansas, University Revs. (Fayetteville Campus), FGIC,
5.5%, 2016 1,765,000 2,020,713
- -------------------------------------------------------------------------------------------------------------------------------
University of Central Arkansas, "A", AMBAC, 5%, 2023 1,100,000 1,139,237
- -------------------------------------------------------------------------------------------------------------------------------
University of Central Arkansas, Student Housing Rev., "C", FGIC,
5%, 2034 250,000 252,015
- -------------------------------------------------------------------------------------------------------------------------------
$14,697,972
- -------------------------------------------------------------------------------------------------------------------------------
Universities -
Dormitories - 2.7% Arkansas State University Rev., Housing Systems, AMBAC, 5.15%, 2021 $1,240,000 $1,314,685
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Tech University Rev., Housing Systems, AMBAC, 5.2%, 2026 1,000,000 1,046,830
- -------------------------------------------------------------------------------------------------------------------------------
Pope County, AR, Residential Housing, Arkansas Tech University Project,
"A", 6%, 2027 1,000,000 962,660
- -------------------------------------------------------------------------------------------------------------------------------
University of Central Arkansas, Student Housing Rev., "C", FGIC,
5.25%, 2029 500,000 514,930
- -------------------------------------------------------------------------------------------------------------------------------
$3,839,105
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor Jefferson County, AR, Pollution Control Rev. (Arkansas Power & Light
Owned - 0.7% Co.), 6.3%, 2018 $1,050,000 $1,078,035
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 7.8% Benton, AR, Utilities Rev., AMBAC, 5%, 2030 $470,000 $478,300
- -------------------------------------------------------------------------------------------------------------------------------
North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2010 - 2015 8,000,000 9,643,040
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,000,000 1,046,370
- -------------------------------------------------------------------------------------------------------------------------------
$11,167,710
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 15.5% Arkansas Community Public Water Systems, "B", MBIA, 5%, 2017 $1,400,000 $1,512,070
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Waste, Revolving Loan Fund, "A",
5%, 2011 1,000,000 1,102,060
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Economic Development Rev., "I",
AMBAC, 5.65%, 2014 375,000 397,792
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Revolving Loan Fund, "A",
5.85%, 2006(++) 2,130,000 2,292,902
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Revolving Loan Fund, "A",
5.5%, 2018 1,750,000 2,041,760
- -------------------------------------------------------------------------------------------------------------------------------
Beaver, AR, Water District Rev., AMBAC, 5%, 2016 - 2017 2,000,000 2,167,970
- -------------------------------------------------------------------------------------------------------------------------------
Fort Smith, AR, Water & Sewer Rev., "C", FSA, 5.25%, 2020 1,315,000 1,438,926
- -------------------------------------------------------------------------------------------------------------------------------
Fort Smith, AR, Water & Sewer Rev., AMBAC, 5.65%, 2019 1,000,000 1,107,000
- -------------------------------------------------------------------------------------------------------------------------------
Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA,
5%, 2019 - 2021 4,875,000 5,140,550
- -------------------------------------------------------------------------------------------------------------------------------
Little Rock, AR, Sewer Rev., Refunding & Construction, 5%, 2022 1,750,000 1,803,795
- -------------------------------------------------------------------------------------------------------------------------------
Paragould, AR, Water Sewer & Electric Rev., AMBAC, 5.6%, 2020 765,000 852,279
- -------------------------------------------------------------------------------------------------------------------------------
South Sebastian County, AR, Water Refunding, MBIA, 5%, 2038 1,000,000 1,008,090
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 1,250,000 1,338,663
- -------------------------------------------------------------------------------------------------------------------------------
$22,203,857
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $128,712,328) $140,274,851
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.6%
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A",
due 10/07/04 $200,000 $200,000
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev. (Exxon Mobile Corp.),
due 10/01/04 1,900,000 1,900,000
- -------------------------------------------------------------------------------------------------------------------------------
Mt. Vernon Industrial Pollution Control Rev. (General Electric Co.
Project), due 10/01/04 200,000 200,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes (Identified Cost, $2,300,000) $2,300,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $131,012,328) $142,574,851
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 0.7% 1,045,318
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $143,620,169
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) CALIFORNIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.8%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port
Revenue - 3.7% Long Beach, CA, Habor Rev., "A" FGIC, 5.25%, 2018 $3,500,000 $3,730,510
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Department of Airports Rev. (Ontario International
Airport), "A", FGIC, 6%, 2017 4,100,000 4,346,328
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Habor Department Rev.,"B", 5.375%, 2023 3,000,000 3,084,029
- -------------------------------------------------------------------------------------------------------------------------------
Port Oakland, CA, "K", FGIC, 5.75%, 2020 4,000,000 4,366,480
- -------------------------------------------------------------------------------------------------------------------------------
$15,527,347
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations - Commonwealth of Puerto Rico, ROLS, Series II R 124B, XLCA,
General Purpose - 7.6% 9.136%, 2017+(+) $1,500,000 $2,004,000
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLS, Series II R 184C, FGIC,
9.236%, 2016+(+) 3,300,000 4,469,454
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, RITES, 8.582%, 2014+(+) 5,405,000 6,895,159
- -------------------------------------------------------------------------------------------------------------------------------
State of California, 10%, 2007 1,055,000 1,280,485
- -------------------------------------------------------------------------------------------------------------------------------
State of California, 5.5%, 2016 3,000,000 3,337,710
- -------------------------------------------------------------------------------------------------------------------------------
State of California, 5.125%, 2025 2,000,000 2,073,160
- -------------------------------------------------------------------------------------------------------------------------------
State of California, 5.25%, 2029 2,000,000 2,059,900
- -------------------------------------------------------------------------------------------------------------------------------
State of California, AMBAC, 7.2%, 2008 1,600,000 1,856,144
- -------------------------------------------------------------------------------------------------------------------------------
State of California, AMBAC, 6.3%, 2010 3,000,000 3,512,340
- -------------------------------------------------------------------------------------------------------------------------------
State of California, AMBAC, 7%, 2010 2,000,000 2,415,980
- -------------------------------------------------------------------------------------------------------------------------------
State of California, RITES, "B", 9.5623%, 2017+(+) 1,250,000 1,589,200
- -------------------------------------------------------------------------------------------------------------------------------
$31,493,532
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 16.7% Antelope Valley, CA (Union High School), "A", MBIA, 5%, 2027 $1,500,000 $1,537,845
- -------------------------------------------------------------------------------------------------------------------------------
Butte Glenn Community College District, "A", MBIA, 5%, 2026 1,885,000 1,939,458
- -------------------------------------------------------------------------------------------------------------------------------
Campbell, CA, Union High School District, FSA, 5%, 2021 1,280,000 1,348,621
- -------------------------------------------------------------------------------------------------------------------------------
Campbell, CA, Union School District, Election 2002, "B", FGIC,
5.5%, 2033 2,270,000 2,453,121
- -------------------------------------------------------------------------------------------------------------------------------
Capistrano, CA, Union High School District, "A", FGIC, 5.875%, 2020 1,185,000 1,351,658
- -------------------------------------------------------------------------------------------------------------------------------
Centinela Valley, CA, Union High School Election, "C", FGIC, 5.2%, 2032 1,000,000 1,043,070
- -------------------------------------------------------------------------------------------------------------------------------
Chaffey, CA, Union High School District, "C", FSA, 5%, 2027 1,000,000 1,024,650
- -------------------------------------------------------------------------------------------------------------------------------
Colton, CA, Joint Union School District, "A", FGIC, 5.375%, 2026 1,200,000 1,292,904
- -------------------------------------------------------------------------------------------------------------------------------
Coronada, CA, Union School District, "A", 5.7%, 2020 1,285,000 1,443,016
- -------------------------------------------------------------------------------------------------------------------------------
Escondido, CA, Union School District, "A", FSA, 5%, 2026 1,000,000 1,026,040
- -------------------------------------------------------------------------------------------------------------------------------
Glendale, CA, Union School District, "B", FSA, 5.5%, 2018 4,275,000 4,742,471
- -------------------------------------------------------------------------------------------------------------------------------
Inglewood, CA, Union School District, "A", FGIC, 6%, 2019 1,695,000 1,925,418
- -------------------------------------------------------------------------------------------------------------------------------
Little Lake, CA, City School District, "A", FSA, 6.125%, 2025 1,035,000 1,174,756
- -------------------------------------------------------------------------------------------------------------------------------
Live Oak, CA, School District, Santa Cruz County, Election 2004, "A",
MBIA, 5%, 2033 1,360,000 1,391,348
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Union School District Election of 1997, "E", MBIA,
5.125%, 2027 5,000,000 5,212,350
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Union School District, RITES, FSA, 8.582%, 2020+(+) 5,000,000 5,955,200
- -------------------------------------------------------------------------------------------------------------------------------
Manhattan Beach, CA, Union High School, Election of 2000, Capital
Appreciation, "A", FGIC, 0%, 2020 2,415,000 1,129,157
- -------------------------------------------------------------------------------------------------------------------------------
Moreno Valley, CA, Union School Distric,t Election 2004, "A", FSA,
5%, 2026 1,715,000 1,769,211
- -------------------------------------------------------------------------------------------------------------------------------
Moreno Valley, CA, Union School District, Election 2004, "A", FSA,
5%, 2025 1,075,000 1,115,882
- -------------------------------------------------------------------------------------------------------------------------------
Morgan Hill, CA, Union School District, FGIC, 5.5%, 2020 2,545,000 2,810,062
- -------------------------------------------------------------------------------------------------------------------------------
Natomas Union School District, Election 2002 "B", FGIC, 5%, 2028 1,430,000 1,467,523
- -------------------------------------------------------------------------------------------------------------------------------
Oceanside, CA, Union School District Election of 2000, "C", MBIA,
5.25%, 2032 1,940,000 2,031,199
- -------------------------------------------------------------------------------------------------------------------------------
Rowland, CA, Union School District, "A", FSA, 5.5%, 2020 1,250,000 1,381,750
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA, City Union School District, "A", 5.875%, 2009(++) 2,075,000 2,421,919
- -------------------------------------------------------------------------------------------------------------------------------
San Diego, CA, Union School District, "C", FSA, 5%, 2026 2,150,000 2,211,598
- -------------------------------------------------------------------------------------------------------------------------------
San Gabriel, CA, Union School District, "A", FSA, 5%, 2024 2,000,000 2,072,040
- -------------------------------------------------------------------------------------------------------------------------------
San Jose, CA, Evergreen Community College District, "B", FGIC,
5.5%, 2020 1,425,000 1,613,015
- -------------------------------------------------------------------------------------------------------------------------------
San Ysidro, CA, School District, AMBAC, 6.125%, 2021 960,000 1,125,811
- -------------------------------------------------------------------------------------------------------------------------------
Santa Clara, CA, Union School District, FGIC, 5.5%, 2019 2,210,000 2,454,448
- -------------------------------------------------------------------------------------------------------------------------------
Santa Maria, CA, Joint Union High School District, "A", FSA, 5.375%,
2020 - 2021 2,330,000 2,608,732
- -------------------------------------------------------------------------------------------------------------------------------
Tehachapi, CA, Union School District, "A", FGIC, 5.625%, 2020 1,100,000 1,222,155
- -------------------------------------------------------------------------------------------------------------------------------
Visalia, CA, Union School District, Certificate Participants, MBIA,
0%, 2005 4,655,000 4,563,250
- -------------------------------------------------------------------------------------------------------------------------------
Vista, CA, Union School District, "A", FSA, 5%, 2023 1,000,000 1,041,400
- -------------------------------------------------------------------------------------------------------------------------------
Washington, CA, Union School District, Election of 1999, "A", FGIC,
5.625%, 2021 1,000,000 1,120,320
- -------------------------------------------------------------------------------------------------------------------------------
$69,021,398
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue -
Hospitals - 10.0% Abag Finance Authority Rev. (San Diego Hospital), "C", 5.375%, 2020 $1,000,000 $1,022,040
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev. (Marshall
Hospital), "A", 5.25%, 2018 1,000,000 1,044,100
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev., Catholic
Healthcare West, "G", 5.25%, 2023 2,000,000 2,024,740
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev., Health
Facilities (Adventist Health Systems), "A", 5%, 2033 1,750,000 1,719,043
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev. (Henry Mayo
Newhall Memorial Hospital), "A", 5%, 2018 2,000,000 2,107,420
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev. (Kaiser
Permanente), "A", 5.5%, 2032 2,000,000 2,069,880
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev. (Los
Angeles Childrens Hospital), 5.125%, 2019 4,000,000 4,143,920
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev., CHFC, ETM,
0%, 2007 - 2008(++) 9,990,000 9,092,320
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev., Health
Facilities (Memorial Health Services), "A", 6%, 2023 1,500,000 1,612,665
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development, "B", 5.625%, 2042 4,000,000 4,137,200
- -------------------------------------------------------------------------------------------------------------------------------
Central California Joint Powers Health Financing (Community Hospitals
of Central California), 5.625%, 2021 1,000,000 1,020,000
- -------------------------------------------------------------------------------------------------------------------------------
Corona, CA, Certificate of Participants, Corona Community Mand Tnr,
8%, 2005(++) 585,000 600,742
- -------------------------------------------------------------------------------------------------------------------------------
Kaweah Delta Health Care District Rev., 6%, 2034 2,000,000 2,128,680
- -------------------------------------------------------------------------------------------------------------------------------
Rancho Mirage, CA, Joint Powers (Eisenhower Medical Center),
5.625%, 2029 3,000,000 3,085,500
- -------------------------------------------------------------------------------------------------------------------------------
Tahoe Forest, CA, Hospital District Rev., "A", 5.85%, 2022 1,000,000 1,026,520
- -------------------------------------------------------------------------------------------------------------------------------
University of California Revs. (UCLA Medical Center), "A", AMBAC,
5.25%, 2030 1,250,000 1,302,000
- -------------------------------------------------------------------------------------------------------------------------------
Washington Township, CA, Health Care Rev., 5%, 2018 1,000,000 1,023,960
- -------------------------------------------------------------------------------------------------------------------------------
West Contra Costa California Healthcare District, AMBAC, 5.5%, 2029 2,000,000 2,110,020
- -------------------------------------------------------------------------------------------------------------------------------
$41,270,750
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long California Health Facilities Financing Authority Rev. (Paradise Valley
Term Care - 0.6% Estates), 5.125%, 2022 $1,000,000 $1,035,730
- -------------------------------------------------------------------------------------------------------------------------------
La Verne, CA, Certificate Participants (Brethren Hillcrest Homes), "B",
6.625%, 2025 1,000,000 1,026,450
- -------------------------------------------------------------------------------------------------------------------------------
Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae),
7.375%, 2027 475,000 495,539
- -------------------------------------------------------------------------------------------------------------------------------
$2,557,719
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Abag Finance Authority for Non-Profit Corporations (Rhoda Haas Goldman
Other - 0.5% Plaza), CHFC, 5.125%, 2015 $2,000,000 $2,121,320
- -------------------------------------------------------------------------------------------------------------------------------
Human Services - 0.4% California Statewide Communities Development Authority (Prides
Industries), 7.125%, 2016 $1,820,000 $1,871,743
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Environmental California Pollution Control Financing Authority, Solid Waste Disposal
Services - 1.3% Rev. (Browning Ferris, Inc.), 5.8%, 2016 $2,000,000 $1,890,440
- -------------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid Waste Disposal
Rev. (Waste Management Project), "A", 5.125%, 2031 2,250,000 2,342,025
- -------------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Rev. (Laidlaw, Inc.), "A",
6.7%, 2007* 2,750,000 123,750
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Community Development Authority, Solid Waste
Facilities Rev. (Republic Services, Inc.), "A", 4.95%, 2012 1,000,000 1,052,860
- -------------------------------------------------------------------------------------------------------------------------------
$5,409,075
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - California Pollution Control, Financing Authority Rev. (Frito-Lay,
Other - 0.5% Inc.), 6.375%, 2004 $1,025,000 $1,029,110
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 960,000 1,011,802
- -------------------------------------------------------------------------------------------------------------------------------
$2,040,912
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Entertainment &
Tourism - 0.7% Del Mar, CA, Race Track Authority Rev., 6.2%, 2011 $1,365,000 $1,447,432
- -------------------------------------------------------------------------------------------------------------------------------
Del Mar, CA, Race Track Authority Rev., 6.45%, 2013 1,350,000 1,354,995
- -------------------------------------------------------------------------------------------------------------------------------
$2,802,427
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Other - 1.1% California Infrastruture & Economic Development Rev., MBIA, 5.5%, 2019 $1,000,000 $1,103,850
- -------------------------------------------------------------------------------------------------------------------------------
South Coast Air Quality Management District Building Corp., California
Rev., "B" AMBAC, 0%, 2005 3,480,000 3,433,298
- -------------------------------------------------------------------------------------------------------------------------------
$4,537,148
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing California Housing Finance Agency Rev., Multi-Unit Rental Housing, "B
Revenue - 3.2% II", 6.7%, 2015 $2,750,000 $2,757,233
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev. (Irvine
Apartments), 5.25%, 2025 6,000,000 6,253,860
- -------------------------------------------------------------------------------------------------------------------------------
Palmdale, CA, Multi-Family Housing Rev., "A", FNMA, 7.375%, 2024 1,000,000 1,010,480
- -------------------------------------------------------------------------------------------------------------------------------
San Bernardino County, CA (Equity Residential/Redlands), "A",
5.2%, 2028 3,000,000 3,177,540
- -------------------------------------------------------------------------------------------------------------------------------
$13,199,113
- -------------------------------------------------------------------------------------------------------------------------------
Parking - 0.3% San Francisco, CA, Union Square, MBIA, 6%, 2020 $1,000,000 $1,135,580
- -------------------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Contra Costa, CA, Transportation & Sales Tax Rev., "A", ETM,
Revenue - 0.3% 6.875%, 2007(++) $1,350,000 $1,430,784
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
Local - 1.2% California Rural Home Mortgage Finance Authority Rev., GNMA, 7.3%, 2031 $115,000 $125,043
- -------------------------------------------------------------------------------------------------------------------------------
California Rural Home Mortgage Finance Authority Rev., Mortgage Backed
Securities Program, "B4", GNMA, 6.35%, 2029 145,000 147,205
- -------------------------------------------------------------------------------------------------------------------------------
Pomona, CA, Single Family Mortgage Rev., GNMA, ETM, 7.375%, 2010(++) 1,600,000 1,842,672
- -------------------------------------------------------------------------------------------------------------------------------
Pomona, CA, Single Family Mortgage Rev., GNMA, ETM, 7.5%, 2023(++) 2,000,000 2,792,000
- -------------------------------------------------------------------------------------------------------------------------------
San Bernardino County, CA, Single Family Mortgage Rev., GNMA,
7.375%, 2020 15,000 15,370
- -------------------------------------------------------------------------------------------------------------------------------
San Bernardino County, CA, Single Family Mortgage Rev., GNMA,
7.65%, 2023 5,000 5,029
- -------------------------------------------------------------------------------------------------------------------------------
$4,927,319
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
State - 1.0% California Housing Finance Agency Rev., Home Mortgage, FSA, 0%, 2019 $4,320,000 $1,847,059
- -------------------------------------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2028 7,175,000 2,131,262
- -------------------------------------------------------------------------------------------------------------------------------
$3,978,321
- -------------------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.8% California Pollution Control Financing Authority, Solid Waste Disposal
Rev. (West County Resource Recovery), "A", 5.125%, 2014 $1,000,000 $1,028,000
- -------------------------------------------------------------------------------------------------------------------------------
South Bayside Waste Management Authority, California Solid Waste System
Rev., AMBAC, 5.75%, 2020 2,100,000 2,354,079
- -------------------------------------------------------------------------------------------------------------------------------
$3,382,079
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 14.8% Anaheim, CA, Public Financing Authority Lease Rev., "A", FSA, 6%, 2024 $1,000,000 $1,188,160
- -------------------------------------------------------------------------------------------------------------------------------
Banning, CA, Certificate Participants, Water Systems Improvement
Project, AMBAC, 8%, 2019 1,000,000 1,315,640
- -------------------------------------------------------------------------------------------------------------------------------
California Public Works Board Lease Rev., Department of Corrections
State Prison, "A", 7.4%, 2010 5,000,000 6,070,400
- -------------------------------------------------------------------------------------------------------------------------------
California Public Works Board, Department of Justice, "D", 5.25%, 2020 1,565,000 1,666,756
- -------------------------------------------------------------------------------------------------------------------------------
Fortuna, Parlier, & Susanville, CA, Certificate of Participants, "B",
7.375%, 2017 690,000 706,457
- -------------------------------------------------------------------------------------------------------------------------------
Golden State Tobacco Securitization, "B", 5.625%, 2038 5,000,000 5,210,750
- -------------------------------------------------------------------------------------------------------------------------------
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement
Rev., Enhanced, "B", 5.5%, 2043 7,000,000 7,204,470
- -------------------------------------------------------------------------------------------------------------------------------
Grossmont, CA, Union High School District, MBIA, 0%, 2006 6,000,000 5,765,160
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Certificate Participants, Antelope Valley Courthouse,
"A", AMBAC, 5.25%, 2027 3,000,000 3,125,880
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Certificate Participants, Real Property Program,
AMBAC, 5.3%, 2027 3,000,000 3,170,850
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Convention & Exhibition Center Authority, Certificate
Participants, 9%, 2005(++) 1,900,000 2,058,669
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Convention & Exhibition Center Authority, Certificate
Participants, AMBAC, 0%, 2005 2,400,000 2,366,280
- -------------------------------------------------------------------------------------------------------------------------------
Pasadena CA, Certificate Participants, Old Pasadena Parking Facilities
Project, 6.25%, 2018 3,315,000 3,843,544
- -------------------------------------------------------------------------------------------------------------------------------
Pomona, CA, Public Financing Authority Rev., "P", 6.25%, 2010 4,020,000 4,526,600
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento County, CA, Certificate Participants, Capital Projects,
AMBAC, 5.75%, 2018 1,500,000 1,702,170
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA, City Financing Authority Rev., Capital Improvement,
5.5%, 2021 1,635,000 1,775,888
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA, City Financing Authority Rev., City Hall &
Redevelopment Projects, "A", FSA, 5%, 2032 2,000,000 2,036,280
- -------------------------------------------------------------------------------------------------------------------------------
Salinas CA, Certificate Participants, Capital Improvement Projects,
"A", 5.7%, 2028 2,200,000 2,323,618
- -------------------------------------------------------------------------------------------------------------------------------
San Francisco, CA, City & County Certificate Participants (San Bruno
Jail No 3), AMBAC, 5.25%, 2033 3,930,000 4,076,196
- -------------------------------------------------------------------------------------------------------------------------------
Shasta, CA, Joint Powers Financing Authority, County Administration
Building Project, "A", MBIA, 5.25%, 2023 1,000,000 1,065,710
- -------------------------------------------------------------------------------------------------------------------------------
$61,199,478
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 2.2% Irvine, CA, School District Special Tax Rev., Community Facilities
District No. 86-1, AMBAC, 5.8%, 2020 $3,500,000 $3,922,065
- -------------------------------------------------------------------------------------------------------------------------------
Santa Cruz County, CA, Redevelopment Agency Tax Allocation (Oak/Soquel
Community), 5.6%, 2017 1,455,000 1,570,032
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 2,000,000 2,061,680
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,600,000 1,660,848
- -------------------------------------------------------------------------------------------------------------------------------
$9,214,625
- -------------------------------------------------------------------------------------------------------------------------------
Tax Assessment - 7.1% Brea, CA, Public Finance Authority Rev., MBIA, 0%, 2005 - 2006 $4,650,000 $4,526,038
- -------------------------------------------------------------------------------------------------------------------------------
Duarte, CA, Redevelopment Agency Tax Allocation, Davis Addition Project
Area, 6.7%, 2014 650,000 705,874
- -------------------------------------------------------------------------------------------------------------------------------
Fontana, CA, Redevelopment Agency Tax Allocation, Jurupa Hills
Redevelopment Project, "A", 5.5%, 2027 3,350,000 3,429,328
- -------------------------------------------------------------------------------------------------------------------------------
Huntington Park, CA, Public Financing Rev. Wastewater Systems Project,
"A", 6.2%, 2025 2,000,000 2,055,960
- -------------------------------------------------------------------------------------------------------------------------------
La Mirada, CA, Redevelopment Agency, Special Tax Rev., Community
Facilities District No. 89-1, 5.7%, 2020 1,500,000 1,513,680
- -------------------------------------------------------------------------------------------------------------------------------
Modesto, CA, Irrigation District, Certificate Participants, Refunding &
Capital Improvements, "B", 5.3%, 2022 1,785,000 1,791,248
- -------------------------------------------------------------------------------------------------------------------------------
Modesto, CA, Public Financing Authority (John Thurman Field
Renovation), 6.125%, 2016 1,405,000 1,498,952
- -------------------------------------------------------------------------------------------------------------------------------
Orange County, CA, Community Facilities District, Special Tax (Rancho
Santa Margarita), "A", 5.55%, 2017 1,000,000 1,066,620
- -------------------------------------------------------------------------------------------------------------------------------
Poway, CA, Community Facilities District, Special Tax (Parkway Business
Center), 6.5%, 2010 715,000 796,317
- -------------------------------------------------------------------------------------------------------------------------------
Poway, CA, Community Facilities District, Special Tax (Parkway Business
Center), 6.75%, 2015 775,000 861,738
- -------------------------------------------------------------------------------------------------------------------------------
Riverside County, CA, Public Financing Authority, Tax Allocation Rev.,
Redevelopment Projects, "A", 5.25%, 2016 3,120,000 3,240,526
- -------------------------------------------------------------------------------------------------------------------------------
San Diego, CA, Redevelopment Agency, Tax Allocation (Centre City), "B",
AMBAC, 5.3%, 2020 1,250,000 1,358,138
- -------------------------------------------------------------------------------------------------------------------------------
Torrance, CA, Redevelopment Agency, Tax Allocation, "C", MBIA,
5.45%, 2018 5,740,000 6,410,145
- -------------------------------------------------------------------------------------------------------------------------------
$29,254,564
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.8% Golden State Tobacco Securitization, Asset Backed, "A1", 6.25%, 2033 $800,000 $756,224
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco Securitization Authority, "B", 5%, 2028 1,500,000 1,235,895
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco Securitization Authority, Northern California Tobacco
Settlement Rev., Asset Backed Bonds, "A", 5.25%, 2031 1,500,000 1,198,095
- -------------------------------------------------------------------------------------------------------------------------------
$3,190,214
- -------------------------------------------------------------------------------------------------------------------------------
Toll Roads - 0.7% Foothill/Eastern Corridor Agency, California Toll Road Rev., Capital
Appreciation, "A", 1%, 2010(++) $2,500,000 $2,982,050
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Alameda Corridor Transportaion Authority, California Rev., Capital
Tax - 0.5% Appreciation, "A", AMBAC, 0%, 2030 $8,000,000 $1,962,800
- -------------------------------------------------------------------------------------------------------------------------------
Universities - California Educational Facilities Authority Rev. (Fresno Pacific
Colleges - 7.0% University), "A", 6.75%, 2019 $2,000,000 $2,212,720
- -------------------------------------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev. (L.A. College of
Chiropractic), 5.6%, 2017 2,100,000 2,014,698
- -------------------------------------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev. (Pomona College), "B",
5.875%, 2019 2,000,000 2,258,480
- -------------------------------------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev. (Santa Clara
University), "A", MBIA, 5%, 2027 1,340,000 1,368,730
- -------------------------------------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev., Pooled College &
University Projects, "B", 6%, 2012 1,400,000 1,472,520
- -------------------------------------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev., Pooled College &
University Projects, "B", 6.625%, 2020 1,000,000 1,109,930
- -------------------------------------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev., Pooled College &
University Projects, "B", 6.3%, 2021 1,000,000 1,123,970
- -------------------------------------------------------------------------------------------------------------------------------
California Infrastructure & Economic Development Rev. (Claremont
University Consortium), 5.125%, 2024 1,595,000 1,664,717
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities, Notre Dame De Namur University,
6.625%, 2033 1,000,000 1,001,310
- -------------------------------------------------------------------------------------------------------------------------------
Foothill-De Anza, CA, Community College District, Election of 1999,
"B", FGIC, 0%, 2024 - 2025 7,500,000 2,677,710
- -------------------------------------------------------------------------------------------------------------------------------
Long Beach, CA, Industrial Development Rev. (CSU Foundation), "A",
5.25%, 2023 1,450,000 1,478,406
- -------------------------------------------------------------------------------------------------------------------------------
San Diego County, CA, Certificate Participants, (Burnham Institute),
6.25%, 2029 2,300,000 2,393,932
- -------------------------------------------------------------------------------------------------------------------------------
University of California Rev., RITES, MBIA, 8.332%, 2016+(+) 5,705,000 6,500,163
- -------------------------------------------------------------------------------------------------------------------------------
University of California, Certificate Participants, San Diego Campus
Projects, "A", 5.25%, 2032 1,840,000 1,906,314
- -------------------------------------------------------------------------------------------------------------------------------
$29,183,600
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Secondary California Statewide Communities Development Authority Rev. Aspire
Schools - 1.0% Public Schools, (Oakland Project), "A", 7.25%, 2031 $985,000 $1,005,636
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities, Development Authority Rev. (Escondido
Charter High School), 7.5%, 2036 1,000,000 1,012,850
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Certificate Participants, 5.7%, 2018 1,900,000 2,022,322
- -------------------------------------------------------------------------------------------------------------------------------
$4,040,808
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor California Pollution Control Financing Authority, Pollution Control
Owned - 1.5% Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 $3,500,000 $3,792,285
- -------------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Pollution Control
Rev. (Southern California Edison Co.), 6.4%, 2024 500,000 504,015
- -------------------------------------------------------------------------------------------------------------------------------
Chula Vista, CA, Industrial Development Rev. (San Diego Gas & Electric
Co.), "A", 4.9%, 2023 2,000,000 1,968,800
- -------------------------------------------------------------------------------------------------------------------------------
$6,265,100
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 4.8% Glendale, CA, Electric Works Rev., MBIA, 5.75%, 2019 - 2020 $2,580,000 $2,904,160
- -------------------------------------------------------------------------------------------------------------------------------
Northern California Power Agency Public Power Rev., 5.85%, 2010 880,000 975,867
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA, Power Authority, Cogeneration Project Rev., MBIA,
5.875%, 2015 5,500,000 6,005,450
- -------------------------------------------------------------------------------------------------------------------------------
Southern California Public Power Authority, Transmission Project Rev.,
"A", 0%, 2005 4,205,000 4,153,026
- -------------------------------------------------------------------------------------------------------------------------------
Southern California Public Power Authority, Transmission Project Rev.,
"A", ETM, 0%, 2005(++) 3,795,000 3,751,395
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Water & Power Authority Rev., 5.5%, 2017 800,000 832,848
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Water & Power Authority Rev., 5.3%, 2018 250,000 252,748
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Water & Power Authority Rev., "A", 5.125%, 2013 1,000,000 1,028,290
- -------------------------------------------------------------------------------------------------------------------------------
$19,903,784
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility California Department of Water Resources, Central Valley Project Rev.,
Revenue - 7.5% "X", FGIC, 5%, 2029 $2,000,000 $2,041,720
- -------------------------------------------------------------------------------------------------------------------------------
California Department of Water Resources, Water Systems Rev., 7%, 2012 1,090,000 1,357,214
- -------------------------------------------------------------------------------------------------------------------------------
California Department of Water Resources, Water Systems Rev., ETM,
7%, 2012(++) 405,000 515,350
- -------------------------------------------------------------------------------------------------------------------------------
Castalic Lake Water Agency, California Rev., Water Systems Improvement
Project, AMBAC, 5.125%, 2030 1,725,000 1,772,075
- -------------------------------------------------------------------------------------------------------------------------------
Culver City, CA, Wastewater Facilities Rev, "A", FGIC, 5.6%, 2019 1,000,000 1,129,370
- -------------------------------------------------------------------------------------------------------------------------------
El Monte, CA, Water Authority Rev., Water Systems Project, AMBAC,
6%, 2019 1,065,000 1,212,098
- -------------------------------------------------------------------------------------------------------------------------------
Fairfield-Suisun, CA, Sewer District Rev., "A", MBIA, 0%, 2006 2,080,000 2,021,594
- -------------------------------------------------------------------------------------------------------------------------------
Livermore Amador Valley Water Management Rev., "A", AMBAC, 5%, 2031 4,875,000 4,938,911
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles County, CA, Public Works Rev., Multiple Capital Facilities
Project, "A", AMBAC, 5.5%, 2020 2,970,000 3,275,613
- -------------------------------------------------------------------------------------------------------------------------------
Mojave, CA, Water Agency, Improvement District (M Morongo Basin), FGIC,
5.75%, 2015 2,625,000 2,893,748
- -------------------------------------------------------------------------------------------------------------------------------
Southern California Metropolitan Water District Rev., RITES,
9.582%, 2018+(+) 5,000,000 6,950,700
- -------------------------------------------------------------------------------------------------------------------------------
West Sacramento, CA, Financing Authority Rev., Water Systems
Improvement Project, FGIC, 5%, 2032 2,750,000 2,797,685
- -------------------------------------------------------------------------------------------------------------------------------
$30,906,078
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $378,464,205) $404,809,668
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.4%
- -------------------------------------------------------------------------------------------------------------------------------
Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 10/07/04 $1,400,000 $1,400,000
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev. (Adventist
Hospital), "B", due 10/01/04 900,000 900,000
- -------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev. (Sutter
Health Obligations Group), due 10/01/04 500,000 500,000
- -------------------------------------------------------------------------------------------------------------------------------
State of California, Department of Water Resources, Power Supply Rev.,
"C-2", due 10/07/04 3,100,000 3,100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes (Identified Cost, $5,900,000) $5,900,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $384,364,205) $410,709,668
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 0.8% 3,440,313
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $414,149,981
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) FLORIDA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 95.3%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port Florida Capital Projects Finance Authority Rev., (AAAE Airports
Revenue - 5.2% Project), "I", MBIA, 5%, 2020 $500,000 $524,635
- -------------------------------------------------------------------------------------------------------------------------------
Greater Orlando Aviation Authority Rev., "A", FGIC, 5.25%, 2018 1,000,000 1,058,320
- -------------------------------------------------------------------------------------------------------------------------------
Hillsborough County, FL, Aviation Authority Rev. (Tampa International
Airport), "A", FGIC, 5.875%, 2015 750,000 805,920
- -------------------------------------------------------------------------------------------------------------------------------
Lee County, FL, Airport Rev., "A", FSA, 5.875%, 2018 1,000,000 1,119,790
- -------------------------------------------------------------------------------------------------------------------------------
Miami-Dade County, FL, Aviation Rev., "C", MBIA, 5.25%, 2018 500,000 527,860
- -------------------------------------------------------------------------------------------------------------------------------
Pensacola, FL, Airport Rev., "B", MBIA, 5.625%, 2014 500,000 537,730
- -------------------------------------------------------------------------------------------------------------------------------
$4,574,255
- -------------------------------------------------------------------------------------------------------------------------------
Chemicals - 0.4% Red River Authority, TX, Pollution Control Rev. (Celanese Project),
6.7%, 2030 $375,000 $375,248
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 7.1% Commonwealth of Puerto Rico, RITES, MBIA, 9.621%, 2019+(+) $1,000,000 $1,284,240
- -------------------------------------------------------------------------------------------------------------------------------
Maimi-Dade County, FL, Educational Facilities Authority, "A", AMBAC,
5.5%, 2018 1,400,000 1,550,766
- -------------------------------------------------------------------------------------------------------------------------------
State of Florida, RITES, 8.062%, 2017+(+) 3,000,000 3,389,580
- -------------------------------------------------------------------------------------------------------------------------------
$6,224,586
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 8.1% Florida Board of Education, Capital Outlay, 9.125%, 2014 $2,600,000 $3,475,914
- -------------------------------------------------------------------------------------------------------------------------------
Florida Board of Education, Capital Outlay, ETM, 9.125%, 2014(++) 400,000 547,244
- -------------------------------------------------------------------------------------------------------------------------------
Florida Board of Education, Public Education Capital Outlay, "A", 5.25%,
2024 1,000,000 1,067,300
- -------------------------------------------------------------------------------------------------------------------------------
Osceola County, FL, School Board Certificate, "A", AMBAC, 5.25%, 2027 1,950,000 2,067,136
- -------------------------------------------------------------------------------------------------------------------------------
$7,157,594
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Citrus County, FL, Hospital Development Authority Rev. (Citrus Memorial
Hospitals - 15.8% Hospital), 6.25%, 2023 $495,000 $517,013
- -------------------------------------------------------------------------------------------------------------------------------
Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 250,000 255,053
- -------------------------------------------------------------------------------------------------------------------------------
District of Columbia, Health & Hospital Authority Rev. (Medstar
University Hospital), "D", 6.875%, 2007(++) 225,000 250,416
- -------------------------------------------------------------------------------------------------------------------------------
Highlands County, FL, Health Facilities Authority Rev. (Adventist Health
Systems), 5.25%, 2013 500,000 527,860
- -------------------------------------------------------------------------------------------------------------------------------
Hillsborough County, FL, Industrial Development Rev. (University
Community Hospital), MBIA, 6.5%, 2019 1,000,000 1,251,040
- -------------------------------------------------------------------------------------------------------------------------------
Indiana Health Facilities Financing Authority, Hospital Rev. (Munster
Medical Research Foundation, Inc.), 6.375%, 2031 500,000 511,520
- -------------------------------------------------------------------------------------------------------------------------------
Jacksonville, FL, Health Facilities, Ascencion Health, "A", 5.25%, 2032 1,000,000 1,020,480
- -------------------------------------------------------------------------------------------------------------------------------
Lakeland, FL, Hospital Systems Rev. (Lakeland Regional Health Systems),
5.5%, 2032 1,000,000 1,018,060
- -------------------------------------------------------------------------------------------------------------------------------
Leesburg, FL, Hospital Rev. (Leesburg Regional Medical Center), 5.5%,
2032 750,000 763,185
- -------------------------------------------------------------------------------------------------------------------------------
Marion County, FL, Hospital District Rev., Refunding & Improvement,
Health Systems (Monroe Regional Health System), 5.5%, 2014 500,000 532,650
- -------------------------------------------------------------------------------------------------------------------------------
Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500,000 532,075
- -------------------------------------------------------------------------------------------------------------------------------
Martin County, FL, Health Facilities Rev. (Martin Memorial Medical
Center), "B", 5.75%, 2022 500,000 506,775
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Medstar
Health), 5.5%, 2033 200,000 202,470
- -------------------------------------------------------------------------------------------------------------------------------
Miami Beach, FL, Health Facilities Rev. (Mount Sinai Medical Center),
"A", 6.7%, 2019 250,000 258,355
- -------------------------------------------------------------------------------------------------------------------------------
New Hampshire Health & Educational Facilities Authority Rev. (Catholic
Medical Center), "A", 5.75%, 2022 250,000 253,762
- -------------------------------------------------------------------------------------------------------------------------------
New Hampshire Health & Educational Facilities Authority Rev. (Exeter
Hospital), 6%, 2024 $500,000 $538,850
- -------------------------------------------------------------------------------------------------------------------------------
Orange County, FL, Health Facilities Authority Hospital Rev. (Orlando
Regional Healthcare), 5.75%, 2032 1,000,000 1,049,770
- -------------------------------------------------------------------------------------------------------------------------------
Rhode Island Health & Education Building Rev., Hospital Financing
(Lifespan Obligation Group), 6.5%, 2032 500,000 528,935
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority (Bon Secours Health
Systems, Inc.), "A", 5.625%, 2030 500,000 508,955
- -------------------------------------------------------------------------------------------------------------------------------
South Dakota Health & Education Facilities Authority Rev. (Prairie Lakes
Health Care System), 5.625%, 2032 500,000 504,580
- -------------------------------------------------------------------------------------------------------------------------------
Steubenville, OH, Hospital Rev. (Trinity Hospital), 6.375%, 2020 500,000 532,445
- -------------------------------------------------------------------------------------------------------------------------------
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial
Healthcare), 6.25%, 2020 300,000 307,125
- -------------------------------------------------------------------------------------------------------------------------------
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Regional
Medical Center), MBIA, 6.625%, 2013 1,000,000 1,027,190
- -------------------------------------------------------------------------------------------------------------------------------
Wisconsin Health & Educational Facilities (Aurora Health Care, Inc.),
"A", 5.6%, 2029 500,000 502,090
- -------------------------------------------------------------------------------------------------------------------------------
$13,900,654
- -------------------------------------------------------------------------------------------------------------------------------
Human Services - 0.3% Orange County, FL, Health Facilities Authority Rev. (First Mortgage
Healthcare Facilities), 8.875%, 2021 $300,000 $303,261
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Brazos River, TX, Brazoria County Environmental Rev. (Dow Chemical,
Chemicals - 0.8% Co.), "A", 6.625%, 2033 $500,000 $551,280
- -------------------------------------------------------------------------------------------------------------------------------
Sweetwater County, WY, Solid Waste Disposal Rev. (FMC Corp.), "A",
7%, 2024 200,000 203,306
- -------------------------------------------------------------------------------------------------------------------------------
$754,586
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Environmental
Services - 0.4% Nevada Department of Business (Republic Services, Inc.), 5.625%, 2026 $300,000 $318,303
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Other - 1.3% Hernando County, FL, Water & Sewer Rev., MBIA, 5%, 2029 $500,000 $514,405
- -------------------------------------------------------------------------------------------------------------------------------
Park Creek Metropolitan District, CO, Rev., Custodial Receipts, "CR",
7.875%, 2032## 160,000 164,576
- -------------------------------------------------------------------------------------------------------------------------------
Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.),
5.7%, 2026 500,000 506,400
- -------------------------------------------------------------------------------------------------------------------------------
$1,185,381
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Delta County, MI, Economic Development Corp., Environmental Improvements
Paper - 1.5% Rev. (Mead Westvaco Escanaba), 6.25%, 2027 $500,000 $529,810
- -------------------------------------------------------------------------------------------------------------------------------
Escambia County, FL, Industrial Development Rev. (Champion International
Corp.), 6.8%, 2012 750,000 760,740
- -------------------------------------------------------------------------------------------------------------------------------
$1,290,550
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Entertainment & Capital Trust Agency of Florida Rev. (Seminole Tribe Convention),
Tourism - 1.5% 10%, 2033 $200,000 $239,292
- -------------------------------------------------------------------------------------------------------------------------------
Palm Beach County, FL, Industrial Development Rev. (South Florida Fair
Project), MBIA, 5.5%, 2020 1,000,000 1,095,140
- -------------------------------------------------------------------------------------------------------------------------------
$1,334,432
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Other - 1.2% St. Augustine, FL, Capital Improvement Rev, AMBAC, 5%, 2029 $1,000,000 $1,029,680
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Collier County, FL, Housing Finance Authority Rev., (Goodlette Arms
Revenue - 2.8% Housing Project), "A", FNMA, 4.9%, 2032 $500,000 $538,330
- -------------------------------------------------------------------------------------------------------------------------------
Florida Housing Finance Corp., Housing Rev. (Augustine Club Apartments),
"D", MBIA, 5.5%, 2020 500,000 527,745
- -------------------------------------------------------------------------------------------------------------------------------
Florida Housing Finance Corp., Housing Rev. (Crossing At University
Apartments), AMBAC, 5.1%, 2018 1,210,000 1,240,081
- -------------------------------------------------------------------------------------------------------------------------------
Palm Beach County, FL, Housing Finance Rev. (Westlake Apartments
Project), Phase II, FSA, 4.3%, 2012 165,000 169,920
- -------------------------------------------------------------------------------------------------------------------------------
$2,476,076
- -------------------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax
Revenue - 3.2% Escambia County, FL, Sales Tax Rev., AMBAC, 5%, 2022 $1,160,000 $1,231,004
- -------------------------------------------------------------------------------------------------------------------------------
Pasco County, FL, Sales Tax Rev., Half Central, AMBAC, 5%, 2023 1,000,000 1,051,990
- -------------------------------------------------------------------------------------------------------------------------------
Taylor County, FL, Sales Tax Rev., FGIC, 5.5%, 2020 500,000 551,560
- -------------------------------------------------------------------------------------------------------------------------------
$2,834,554
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
Local - 3.8% Brevard County, FL, Housing Finance Authority, "B", GNMA, 6.5%, 2022 $67,000 $68,075
- -------------------------------------------------------------------------------------------------------------------------------
Lee County, FL, Housing Finance Authority Rev., "A", GNMA, 7%, 2031 215,000 219,433
- -------------------------------------------------------------------------------------------------------------------------------
Lee County, FL, Housing Finance Authority, Multi-County Program, "A",
GNMA, 7.2%, 2033 70,000 70,629
- -------------------------------------------------------------------------------------------------------------------------------
Manatee County, FL, Housing Finance Mortgage Rev., Single Family,
Subordinated, "3", GNMA, 5.3%, 2028 155,000 167,113
- -------------------------------------------------------------------------------------------------------------------------------
Miami-Dade County, FL, Housing Finance Authority Rev. (Home Ownership
Mortgage), "A", GNMA, 5.2%, 2031 590,000 609,942
- -------------------------------------------------------------------------------------------------------------------------------
Palm Beach County, FL, Single Family Rev., "B", GNMA, 5.5%, 2022 445,000 445,000
- -------------------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Housing Finance Authority Rev., Multi-County
Program, "A", GNMA, 5.45%, 2034 940,000 1,005,274
- -------------------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Housing Finance Authority Rev., Multi-County
Program, "B", GNMA, 7.25%, 2029 245,000 246,965
- -------------------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Housing Finance Authority Rev., Multi-County
Program, "B", GNMA, 6.2%, 2031 475,000 491,739
- -------------------------------------------------------------------------------------------------------------------------------
$3,324,170
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Florida Housing Finance Corp. Rev., Homeowner Mortgage, "4", FSA, 5.85%,
State - 2.1% 2031 $765,000 $786,366
- -------------------------------------------------------------------------------------------------------------------------------
Florida Housing Finance Corp. Rev., Homeowner Mortgage, "5", 5%, 2034 1,000,000 1,041,290
- -------------------------------------------------------------------------------------------------------------------------------
$1,827,656
- -------------------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.2% Delaware County, PA, Industrial Development Authority Rev., (American
Ref-Fuel Co.), "A", 6.2%, 2019 $200,000 $207,528
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 5.9% Florida Municipal Loan Council Rev., "A", MBIA, 5.625%, 2020 $1,000,000 $1,112,300
- -------------------------------------------------------------------------------------------------------------------------------
Florida Municipal Loan Council Rev., "B", MBIA, 5.625%, 2019 1,000,000 1,114,970
- -------------------------------------------------------------------------------------------------------------------------------
Florida Municipal Loan Council Rev., "C", MBIA, 5.25%, 2022 1,000,000 1,090,050
- -------------------------------------------------------------------------------------------------------------------------------
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev.,
Enhanced, "B", 5.5%, 2043 1,000,000 1,029,210
- -------------------------------------------------------------------------------------------------------------------------------
Palm Beach County, FL, School Board, "A", AMBAC, 5.5%, 2021 750,000 829,860
- -------------------------------------------------------------------------------------------------------------------------------
$5,176,390
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.8% Orange County, FL, Tourist Development Tax Rev., Subordinated, AMBAC,
5.25%, 2027 $1,500,000 $1,584,600
- -------------------------------------------------------------------------------------------------------------------------------
Tax Assessment - 2.8% Arbor Greene, FL, Community Development District, 5.75%, 2006 $81,000 $82,077
- -------------------------------------------------------------------------------------------------------------------------------
Concorde Estates Community Development District, Florida Capital
Improvement Rev., "B", 5%, 2011 350,000 346,409
- -------------------------------------------------------------------------------------------------------------------------------
Fishawk Community Development District II, "B", 5%, 2007 120,000 120,864
- -------------------------------------------------------------------------------------------------------------------------------
Greyhawk Landing Community Development, Florida Special Assessment Rev.,
"B", 6.25%, 2009 145,000 148,974
- -------------------------------------------------------------------------------------------------------------------------------
Heritage Harbour South Community, Development District Florida Rev.,
Capital Improvement, "B", 5.4%, 2008 385,000 386,956
- -------------------------------------------------------------------------------------------------------------------------------
Heritage Isles, FL, Community Development District, "A", 5.75%, 2005 225,000 225,416
- -------------------------------------------------------------------------------------------------------------------------------
Killarney, FL, Community Development District, "B", 5.125%, 2009 250,000 251,848
- -------------------------------------------------------------------------------------------------------------------------------
Lakes By The Bay South Community Development District, Florida Special
Assessment, "B", 5.3%, 2009 200,000 202,080
- -------------------------------------------------------------------------------------------------------------------------------
Middle Village Community Development District, Florida Special
Assessment, "B", 5%, 2009 $200,000 $201,158
- -------------------------------------------------------------------------------------------------------------------------------
Middle Village, FL, Community Development District Rev., "A", 5.8%, 2022 100,000 100,348
- -------------------------------------------------------------------------------------------------------------------------------
Panther Trace, FL, Community Development Distrct Rev., "B", 6.5%, 2009 50,000 51,240
- -------------------------------------------------------------------------------------------------------------------------------
Panther Trace, FL, Community Development District Rev., 5.4%, 2008 135,000 136,030
- -------------------------------------------------------------------------------------------------------------------------------
Parkway Center, FL, Community Development District Rev., "B",
5.625%, 2014 100,000 101,612
- -------------------------------------------------------------------------------------------------------------------------------
Renaissance Community Development of Florida, "B", 6.25%, 2008 145,000 150,137
- -------------------------------------------------------------------------------------------------------------------------------
$2,505,149
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.5% Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset
Backed, "B", 5.3%, 2025 $250,000 $209,590
- -------------------------------------------------------------------------------------------------------------------------------
Louisiana Tobacco Settlement Financing Corp., Asset Backed, "B",
5.875%, 2039 250,000 213,200
- -------------------------------------------------------------------------------------------------------------------------------
$422,790
- -------------------------------------------------------------------------------------------------------------------------------
Toll Roads - 3.9% Florida Turnpike Authority Rev., Department of Transportation, "A",
5.75%, 2018 $2,000,000 $2,267,120
- -------------------------------------------------------------------------------------------------------------------------------
Miami-Dade County, FL, Expressway Authority, FGIC, 6%, 2010(++) 1,000,000 1,170,650
- -------------------------------------------------------------------------------------------------------------------------------
$3,437,770
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation, ROLS, Railroad II
Tax - 3.9% R 227 1, MBIA, 9.226%, 2020+(+) $2,500,000 $3,401,800
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Colleges - Illinois Educational Facilities Authority Rev. (Augustana College), "A",
0.4% 5.625%, 2022 $300,000 $316,497
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Florida Board Regents, Housing Rev. (University of Central Florida),
Dormitories - 3.4% FGIC, 5.25%, 2020 $1,185,000 $1,288,889
- -------------------------------------------------------------------------------------------------------------------------------
Florida Board Regents, Housing Rev., MBIA, 5.3%, 2020 610,000 663,204
- -------------------------------------------------------------------------------------------------------------------------------
Florida Finance Authority, Capital Loan Projects, "F", MBIA,
5.125%, 2021 1,000,000 1,022,290
- -------------------------------------------------------------------------------------------------------------------------------
$2,974,383
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Secondary Michigan Municipal Bond Authority Rev. (YMCA Service Learning Academy),
Schools - 0.1% 7.625%, 2021 $100,000 $101,013
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor Brazos River Authority, TX, Pollution Control Rev. (Texas Utility Co.),
Owned - 0.6% "B", 6.3%, 2032 $120,000 $126,574
- -------------------------------------------------------------------------------------------------------------------------------
Brazos River Authority, TX, Pollution Control Rev. (Texas Utility Co.),
"C", 6.75%, 2038 215,000 227,689
- -------------------------------------------------------------------------------------------------------------------------------
Port Morrow, OR, Pollution Control Rev. (Portland General Electric),
5.2%, 2033 200,000 211,670
- -------------------------------------------------------------------------------------------------------------------------------
$565,933
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 3.0% Palm Coast, FL, Utility Systems Rev., MBIA, 5%, 2024 $250,000 $261,290
- -------------------------------------------------------------------------------------------------------------------------------
Port St. Lucie, FL, Utility Rev., Capital Appreciation, "A", FGIC, 0%,
2006(++) 1,405,000 554,891
- -------------------------------------------------------------------------------------------------------------------------------
Port St. Lucie, FL, Utility Rev., MBIA, 5%, 2022 1,000,000 1,057,640
- -------------------------------------------------------------------------------------------------------------------------------
St. Lucie West, FL, Utility Rev., MBIA, 5.25%, 2034 720,000 759,110
- -------------------------------------------------------------------------------------------------------------------------------
$2,632,931
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 13.3% Bay County, FL, Water Systems Rev., AMBAC, 5.625%, 2019 $1,000,000 $1,123,910
- -------------------------------------------------------------------------------------------------------------------------------
Florida Community Services Corp., AMBAC, 5.5%, 2018 1,125,000 1,253,813
- -------------------------------------------------------------------------------------------------------------------------------
Lee County, FL, Industrial Development Authority (Bonita Springs
Utilities Project), MBIA, 6.05%, 2015 1,000,000 1,079,890
- -------------------------------------------------------------------------------------------------------------------------------
Miami Beach, FL, Stormwater Rev., FGIC, 5.25%, 2020 1,000,000 1,086,650
- -------------------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Sewer Rev., FSA, 5%, 2032 1,500,000 1,530,795
- -------------------------------------------------------------------------------------------------------------------------------
Polk County, FL, Utility Systems Rev., FGIC, 5%, 2023 1,000,000 1,051,240
- -------------------------------------------------------------------------------------------------------------------------------
Seminole County, FL, Water & Sewer Rev., MBIA, 6%, 2019 940,000 1,118,074
- -------------------------------------------------------------------------------------------------------------------------------
Seminole County, FL, Water & Sewer Rev., MBIA, ETM, 6%, 2019(++) 2,060,000 2,467,921
- -------------------------------------------------------------------------------------------------------------------------------
Tohopekaliga Water Authority, Florida Utility System Rev., "A", FSA,
5%, 2024 1,000,000 1,045,160
- -------------------------------------------------------------------------------------------------------------------------------
$11,757,453
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $78,190,813) $83,995,223
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.9%
- -------------------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital
Loan Program, due 10/01/04, at Identified Cost $2,600,000 $2,600,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $80,790,813) $86,595,223
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.8% 1,559,377
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $88,154,600
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) GEORGIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.7%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport and Port
Revenue - 1.5% Atlanta, GA, Airport Rev., "B", FSA, 5.25%, 2033 $1,000,000 $1,047,640
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 6.5% Columbia County, GA (Courthouse Detention Center), 5.625%, 2020 $1,490,000 $1,614,966
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, "A", 5%, 2029 1,000,000 1,010,980
- -------------------------------------------------------------------------------------------------------------------------------
Macon Bibb County, GA, Urban Development Rev., (Bibb County Public
Facilities Project), 5.5%, 2022 1,000,000 1,098,210
- -------------------------------------------------------------------------------------------------------------------------------
Oconee County, GA, Industrial Development Authority (Oiit Project),
XLCA, 5.25%, 2023 750,000 801,585
- -------------------------------------------------------------------------------------------------------------------------------
$4,525,741
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 2.1% Puerto Rico Municipal Finance Agency, RITES, FSA, 10.165%, 2016+(+) $500,000 $650,370
- -------------------------------------------------------------------------------------------------------------------------------
Suwanee, GA, MBIA, 5.25%, 2032 750,000 783,907
- -------------------------------------------------------------------------------------------------------------------------------
$1,434,277
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 6.3% Forsyth County, GA, School District, 6%, 2015 $750,000 $877,140
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, GA, School District, 6.375%, 2010 2,000,000 2,342,560
- -------------------------------------------------------------------------------------------------------------------------------
Wilkes County, GA, School District, 5%, 2024 1,115,000 1,161,741
- -------------------------------------------------------------------------------------------------------------------------------
$4,381,441
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue -
Hospitals - 7.7% Athens Clarke County, GA (United Catholic Health East Issue), 5.5%, 2032 $500,000 $511,830
- -------------------------------------------------------------------------------------------------------------------------------
Chatham County, GA, Hospital Authority Rev. (Memorial Health Medical
Center), "A", 6%, 2017 350,000 380,653
- -------------------------------------------------------------------------------------------------------------------------------
Chatham County, GA, Hospital Authority Rev., Hospital Improvement
(Memorial Health University), "A", 5.375%, 2026 200,000 204,188
- -------------------------------------------------------------------------------------------------------------------------------
Cobb County, GA, Hospital Authority Revolving, Refunding & Improvement
Rev., Anticipation Certificates, AMBAC, 5.25%, 2023 750,000 805,102
- -------------------------------------------------------------------------------------------------------------------------------
Gainsville & Hall County, GA, Hospital Authority Rev. (Northeast Georgia
Health System), 5.5%, 2031 500,000 511,295
- -------------------------------------------------------------------------------------------------------------------------------
Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare System, Inc.),
6.125%, 2009 330,000 333,937
- -------------------------------------------------------------------------------------------------------------------------------
Tift County, GA, Hospital Authority Rev., Anticipation Certificates,
AMBAC, 5%, 2022 2,000,000 2,105,520
- -------------------------------------------------------------------------------------------------------------------------------
Valdosta & Lowdes County, GA, Hospital Authority Rev. (Southern Georgia
Medical Center Project), AMBAC, 5.25%, 2027 500,000 521,955
- -------------------------------------------------------------------------------------------------------------------------------
$5,374,480
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Fulton County, GA, Residential Care Facilities (Canterbury Court), "A",
Term Care - 2.0% 6.125%, 2034 $150,000 $149,896
- -------------------------------------------------------------------------------------------------------------------------------
Richmond County, GA, Development Authority, Nursing Home Rev. (Beverly
Enterprises Georgia, Inc.), 8.75%, 2011 1,190,000 1,206,267
- -------------------------------------------------------------------------------------------------------------------------------
$1,356,163
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Environmental Savannah, GA, Economic Development Authority, Solid Waste Disposal Rev.
Services - 0.7% (Georgia Waste Management Project), "A", 5.5%, 2016 $500,000 $514,425
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Cartersville, GA, Development Authority Waste (Anheuser Busch Project),
Other - 2.2% 5.95%, 2032 $750,000 $794,602
- -------------------------------------------------------------------------------------------------------------------------------
De Kalb County, GA, Development Authority (General Motors Corp.),
6%, 2021 500,000 535,710
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa LLC), 5.875%, 2022 160,000 168,634
- -------------------------------------------------------------------------------------------------------------------------------
$1,498,946
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Effingham County, GA, Development Authority, Solid Waste Disposal Rev.
Paper - 2.3% (Fort James), 5.625%, 2018 $150,000 $149,114
- -------------------------------------------------------------------------------------------------------------------------------
Savannah, GA, Economic Development Authority Rev. (Stone Container
Corp.), 7.4%, 2026 300,000 310,476
- -------------------------------------------------------------------------------------------------------------------------------
Savannah, GA, Economic Development Pollution (Union Camp Corp.),
6.15%, 2017 1,000,000 1,108,950
- -------------------------------------------------------------------------------------------------------------------------------
$1,568,540
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Clayton County, GA, Housing Authority, Multi-family Housing Rev.
Revenue - 4.9% (Vineyard Pointe), "A", GNMA, 5.5%, 2032 $995,000 $1,041,078
- -------------------------------------------------------------------------------------------------------------------------------
De Kalb County, GA, Housing Authority Multi-family Housing Rev.
(Castaways Apartments), "A", GNMA, 5.4%, 2029 595,000 620,353
- -------------------------------------------------------------------------------------------------------------------------------
Hinesville, GA, Leased Housing Corp., "A", FHA, 6.7%, 2017 900,000 908,577
- -------------------------------------------------------------------------------------------------------------------------------
Savannah, GA, Housing Authority (Chatham Gardens Project), FNMA,
5.625%, 2031 745,000 809,025
- -------------------------------------------------------------------------------------------------------------------------------
$3,379,033
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
State - 5.5% Georgia Housing & Finance Authority Rev., 5.5%, 2032 $1,000,000 $1,005,200
- -------------------------------------------------------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev., Single Family Mortgage, 5.2%,
2020 440,000 444,712
- -------------------------------------------------------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev., Single Family Mortgage, "A",
5.6%, 2032 745,000 751,139
- -------------------------------------------------------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev., Single Family Mortgage, "B",
6.05%, 2019 85,000 85,819
- -------------------------------------------------------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev., Single Family Mortgage, "C",
5.8%, 2021 750,000 779,183
- -------------------------------------------------------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev., Single Family Mortgage, "C",
5.1%, 2022 750,000 763,973
- -------------------------------------------------------------------------------------------------------------------------------
$3,830,026
- -------------------------------------------------------------------------------------------------------------------------------
State & Local Athens, GA, Student Housing Authority (University of Georgia East
Agencies - 7.3% Campus), AMBAC, 5.25%, 2022 $1,000,000 $1,082,780
- -------------------------------------------------------------------------------------------------------------------------------
Clayton County, GA, Development Authority Rev., "A", 6.25%, 2020 500,000 581,450
- -------------------------------------------------------------------------------------------------------------------------------
County Commissioners of Georgia Assoc., Leasing Program, Rockdale
County, GA (Public Purpose Project), AMBAC, 5.625%, 2020 500,000 556,870
- -------------------------------------------------------------------------------------------------------------------------------
Fayette County, GA, Public Facilities Authority (Criminal Justice Center
Project), 6.25%, 2010(++) 755,000 892,002
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, GA, Facilities Corp., Fulton County GA (Public Purpose
Project), AMBAC, 5.5%, 2018 695,000 776,398
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, GA, Facilities Corp., Fulton County, GA (Public Purpose
Project), AMBAC, 5.9%, 2019 1,000,000 1,156,100
- -------------------------------------------------------------------------------------------------------------------------------
$5,045,600
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.6% Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 $1,000,000 $1,082,170
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $380,000 $342,429
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Commonwealth of Puerto Rico Highway & Transportation Authority, "Y",
Tax - 0.9% 5.5%, 2036 $610,000 $649,998
- -------------------------------------------------------------------------------------------------------------------------------
Universities -
Colleges - 9.3% Fulton County, GA (Morehouse College), AMBAC, 6.25%, 2021 $980,000 $1,160,438
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation
Funding), "A", 5%, 2031 265,000 270,014
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation),
"A", 5.75%, 2017 1,000,000 1,139,950
- -------------------------------------------------------------------------------------------------------------------------------
Private Colleges & University Authority (Emory University), "A", 5.75%,
2016 - 2018 2,000,000 2,273,530
- -------------------------------------------------------------------------------------------------------------------------------
Private Colleges & University Authority (Mercer University), 5.75%, 2021 500,000 539,745
- -------------------------------------------------------------------------------------------------------------------------------
Private Colleges & University Authority (Spelman College), 5.25%, 2021 500,000 545,460
- -------------------------------------------------------------------------------------------------------------------------------
Savannah, GA, Economic Development Authority Rev. (College of Art &
Design, Inc.), 6.2%, 2009 500,000 556,510
- -------------------------------------------------------------------------------------------------------------------------------
$6,485,647
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Georgia Private College & University Authority Rev. (Mercer Housing
Dormitories - 2.4% Corp.), "A", 6%, 2021 $500,000 $522,330
- -------------------------------------------------------------------------------------------------------------------------------
Marietta, GA, Development Authority Rev., Student Housing (Southern
Polytech University), "A", 6.25%, 2027 1,000,000 1,137,710
- -------------------------------------------------------------------------------------------------------------------------------
$1,660,040
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 6.8% Georgia Municipal Electric Authority Power Rev., "A", MBIA, 6.5%, 2020 $1,250,000 $1,579,275
- -------------------------------------------------------------------------------------------------------------------------------
Griffin, GA, Combined Public Utility Rev., Refunding & Improvement,
AMBAC, 5%, 2025 500,000 511,010
- -------------------------------------------------------------------------------------------------------------------------------
Griffin, GA, Combined Public Utility, Refunding & Improvement, AMBAC,
5%, 2021 1,000,000 1,063,850
- -------------------------------------------------------------------------------------------------------------------------------
Monroe County, GA, Pollution Control Rev. (Oglethorpe Power Corp.), "A",
6.8%, 2012 1,000,000 1,206,670
- -------------------------------------------------------------------------------------------------------------------------------
Summerville, GA, Public Utility Rev., Refunding & Improvement,
5.75%, 2026 350,000 369,502
- -------------------------------------------------------------------------------------------------------------------------------
$4,730,307
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 27.2% Alanta, GA, Water & Wastewater Rev., RITES, FGIC, 9.052%, 2016+(+) $4,000,000 $5,330,560
- -------------------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., "A", MBIA, 5%, 2033 500,000 508,185
- -------------------------------------------------------------------------------------------------------------------------------
Clayton County, GA, Water Authority, Water & Sewer Rev., 6.25%, 2017 1,000,000 1,164,980
- -------------------------------------------------------------------------------------------------------------------------------
Cobb County & Marietta, GA, Water Authority Rev., 5.25%, 2021 1,000,000 1,103,880
- -------------------------------------------------------------------------------------------------------------------------------
Columbia County, GA, Water & Sewer Rev., FGIC, 6.25%, 2010(++) 470,000 551,296
- -------------------------------------------------------------------------------------------------------------------------------
Coweta County, GA, Development Authority Rev. (Newnan Water Sewer &
Light Commission Project), AMBAC, 5.75%, 2016 1,000,000 1,127,710
- -------------------------------------------------------------------------------------------------------------------------------
De Kalb County, GA, Water & Sewer Rev., 5.125%, 2031 1,200,000 1,237,236
- -------------------------------------------------------------------------------------------------------------------------------
Fairburn, GA, Utility Rev., 5.75%, 2020 500,000 548,385
- -------------------------------------------------------------------------------------------------------------------------------
Forsyth County, GA, Water & Sewer Authority, 6.25%, 2010(++) 1,105,000 1,301,635
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, GA, Water & Sewer Rev., FGIC, 6.375%, 2014 100,000 118,599
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, GA, Water & Sewer Rev., FGIC, ETM, 6.375%, 2014(++) 2,150,000 2,554,480
- -------------------------------------------------------------------------------------------------------------------------------
Gainesville, GA, Water & Sew Rev., FGIC, 5.625%, 2019 1,000,000 1,116,700
- -------------------------------------------------------------------------------------------------------------------------------
Jackson County, GA, Water & Sewer Authority, "A", AMBAC, 5.75%, 2017 1,000,000 1,147,440
- -------------------------------------------------------------------------------------------------------------------------------
Monroe County, GA, Development Authority Rev. (Refunding & Improvement
Water & Sewer Project), "A", MBIA, 5%, 2023 1,000,000 1,043,950
- -------------------------------------------------------------------------------------------------------------------------------
$18,855,036
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $62,074,725) $67,761,939
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.8%
- -------------------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., "C", due 10/01/04 $100,000 $100,000
- -------------------------------------------------------------------------------------------------------------------------------
Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 10/07/04 900,000 900,000
- -------------------------------------------------------------------------------------------------------------------------------
East Baton Rouge, LA, Pollution Control Rev. (Exxon), due 10/01/04 400,000 400,000
- -------------------------------------------------------------------------------------------------------------------------------
Georgia Municipal Electric Authority, due 10/06/04 500,000 500,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes (Identified Cost, $1,900,000) $1,900,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $63,974,725) $69,661,939
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (0.5)% (320,927)
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $69,341,012
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) MARYLAND MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 98.6%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport and Port Maryland Transportation Authority (Baltimore/Washington International
Revenue - 0.6% Airport), "A", AMBAC, 5%, 2027 $1,000,000 $1,026,660
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 7.3% Baltimore, MD, "B", 7.15%, 2009 $2,120,000 $2,519,323
- -------------------------------------------------------------------------------------------------------------------------------
Baltimore, MD, UT, Public Improvement, "A", MBIA, 7%, 2009 1,000,000 1,198,600
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, "A", 5%, 2029 2,000,000 2,021,960
- -------------------------------------------------------------------------------------------------------------------------------
Frederick County, MD, Public Facilities, 5.25%, 2016 2,000,000 2,182,480
- -------------------------------------------------------------------------------------------------------------------------------
Frederick County, MD, Public Facilities, 5.2%, 2019 1,700,000 1,856,485
- -------------------------------------------------------------------------------------------------------------------------------
Maryland, State & Local Facilities Loan, First Series, 5.75%, 2014 1,550,000 1,772,875
- -------------------------------------------------------------------------------------------------------------------------------
$11,551,723
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 15.1% Anne Arundel County, MD, 5%, 2015 $2,000,000 $2,133,260
- -------------------------------------------------------------------------------------------------------------------------------
Howard County, MD, "B", 0%, 2008 1,000,000 905,070
- -------------------------------------------------------------------------------------------------------------------------------
Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2019 -
2020 3,000,000 3,340,620
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery County, MD, Consolidated Public Improvement, 5%, 2020 - 2021 1,500,000 1,602,330
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery County, MD, Consolidated Public Improvement, "A", 5.75%,
2010(++) 1,000,000 1,149,300
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, 0%, 2007 5,110,000 4,789,348
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Consolidated Public Improvement, "A", 5%,
2023 2,000,000 2,108,580
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Consolidated Public Improvement, FSA,
5.375%, 2015 1,500,000 1,660,260
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA, 9.157%, 2019+(+) 1,000,000 1,208,220
- -------------------------------------------------------------------------------------------------------------------------------
Washington, MD, Suburban Sanitation District, General Construction,
"A", 5.25%, 2005(++) 865,000 885,950
- -------------------------------------------------------------------------------------------------------------------------------
Worcester County, MD, Public Improvement, 5.625%, 2013 - 2015 3,650,000 4,102,796
- -------------------------------------------------------------------------------------------------------------------------------
$23,885,734
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Maryland Health & Higher Educational Facilities Authority Rev. (Howard
Hospitals - 21.9% General Hospital), ETM, 5.5%, 2021(++) $4,000,000 $4,080,680
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(Adventist Healthcare), "A", 5.75%, 2025 1,000,000 1,040,840
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Anne
Arundel Health Systems), "A", FSA, 5%, 2023 - 2034 2,585,000 2,674,447
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Calvert
Health Systems), 5.5%, 2039 1,000,000 1,029,070
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Carroll
County General Hospital), 6%, 2037 1,000,000 1,050,390
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(Catholic Health Initiatives), "A", 6%, 2020 1,000,000 1,129,780
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Doctors
Community Hospital), 5.5%, 2024 1,000,000 990,270
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(Frederick Memorial Hospital), 5.125%, 2035 1,000,000 1,011,730
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(Frederick Memorial Hospital), FGIC, 5.25%, 2013 1,850,000 2,064,415
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Good
Samaritan Hospital), ETM, 5.7%, 2009(++) 1,085,000 1,203,395
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins University), 5%, 2021 750,000 772,860
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(Lifebridge Health), "A", 5.125%, 2034 1,000,000 1,006,030
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(Medalantic/Helix Issue), "B", AMBAC, 5.25%, 2038 1,500,000 1,602,555
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Medstar
Health), 5.5%, 2033 800,000 809,880
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Mercy
Medical Center), FSA, 5.625%, 2017 1,800,000 1,928,574
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (North
Arundel Hospital), 6.5%, 2026 500,000 553,555
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(Suburban Hospital), "A", 5.5%, 2016 1,000,000 1,095,010
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Union
Hospital of Cecil County Issue), 5.625%, 2032 1,000,000 1,031,890
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(University of Maryland Medical Systems), 6.625%, 2020 1,000,000 1,134,550
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev.
(University of Maryland Medical Systems), "B", AMBAC, 5%, 2024 1,000,000 1,050,720
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Upper
Chesapeake Hospital), "A", FSA, 5.5%, 2020 2,000,000 2,138,600
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Rev. (Helix Health
Issue), AMBAC, ETM, 5%, 2027(++) 2,500,000 2,647,425
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Industrial Development Authority, Economic Development Rev.,
RIBS, FSA, 10.073%, 2022(+) 1,400,000 2,014,040
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery County, MD, Economic Development (Trinity Healthcare Group),
5.125%, 2022 500,000 521,080
- -------------------------------------------------------------------------------------------------------------------------------
$34,581,786
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Maryland Health & Higher Educational Facilities Authority Rev.
Term Care - 1.0% (Bradford Oaks Nursing & Rehabilitation Center), 6.375%, 2027 $1,000,000 $999,580
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Mercy
Ridge), "A", 6%, 2035 150,000 149,624
- -------------------------------------------------------------------------------------------------------------------------------
Westminster, MD, Economic Development Rev. (Carroll Lutheran Village),
"A", 6.25%, 2034 400,000 406,472
- -------------------------------------------------------------------------------------------------------------------------------
$1,555,676
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Baltimore, MD, Port Facilities Rev., Consolidated Coal Sales, "B",
Chemicals - 1.0% 6.5%, 2011 $1,500,000 $1,577,910
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Environmental Northeast Maryland Waste Disposal Authority, Resources Recovery Rev.
Services - 0.4% (Baltimore Resco Retrofit Project), 5%, 2012 $690,000 $706,760
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev.
Other - 0.2% (Hovensa Refinery), 5.875%, 2022 $375,000 $395,235
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Entertainment & Maryland Industrial Authority, Economic Development (Baltimore Aquarium
Tourism - 0.7% Project), 5.2%, 2026 $1,000,000 $1,031,980
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Harford County MD, Economic Development Rev. (Battelle Memorial
Other - 3.0% Institute Project), 5.25%, 2034 $1,600,000 $1,643,744
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Industrial Authority, Economic Development Rev., 8%, 2012(++) 2,825,000 3,183,916
- -------------------------------------------------------------------------------------------------------------------------------
$4,827,660
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing
Revenue - 5.7% Baltimore, MD, City Housing Corp. Rev., "A", FHA, 7.25%, 2023 $1,080,000 $1,083,067
- -------------------------------------------------------------------------------------------------------------------------------
Baltimore, MD, City Housing Corp. Rev., FHA, 7.75%, 2009 505,000 505,091
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration (Waters Landing II
Apartments), "A", GNMA, 5.875%, 2033 1,500,000 1,586,685
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration, "A", 5%, 2034 940,000 946,843
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration, "A", 5.1%, 2044 1,000,000 1,010,940
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration, Housing, "D", 5%, 2032 1,000,000 1,004,140
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration, Multi-Family Housing
Insured Mortgage, "B", 5.6%, 2032 1,250,000 1,299,325
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Housing Authority (Fairview & Hillside
Projects), "A", GNMA, 4.85%, 2032 1,500,000 1,510,935
- -------------------------------------------------------------------------------------------------------------------------------
$8,947,026
- -------------------------------------------------------------------------------------------------------------------------------
Parking - 1.0% Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins Medical Institutions), AMBAC, 5%, 2034 $1,500,000 $1,544,700
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Prince George's County, MD, Housing, Single Family Collateral, "A",
Local - 0.5% 7.4%, 2032 $155,000 $155,584
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Housing, Single Family Collateral, "A",
GNMA, 5.6%, 2034 195,000 208,326
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Housing, Single Family Step Coupon, "A",
GNMA, 5.375%, 2018 340,000 351,128
- -------------------------------------------------------------------------------------------------------------------------------
$715,038
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Maryland Community Development Administration, Housing, "A",
State - 4.0% 5.875%, 2016 $1,280,000 $1,337,587
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration, Residential, "B",
4.75%, 2019 1,500,000 1,522,800
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration, Single Family Program,
First Series, 5.15%, 2018 2,000,000 2,053,200
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration, Single Family Program,
Second Series, 4.5%, 2024 920,000 937,176
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Finance Authority, Home Mortgage Rev., Mortgage
Backed Securities, "A", 4.75%, 2023 200,000 200,410
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Finance Authority, Mortgage Backed Securities, "A",
4.375%, 2017 340,000 345,872
- -------------------------------------------------------------------------------------------------------------------------------
$6,397,045
- -------------------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 1.4% Northeast Maryland Waste Disposal Authority Rev. (Southwest County
Resource Recovery), MBIA, 7.2%, 2005 $1,000,000 $1,014,240
- -------------------------------------------------------------------------------------------------------------------------------
Northeast Maryland Waste Disposal Authority, Solid Waste Rev., 6%, 2006 1,100,000 1,167,199
- -------------------------------------------------------------------------------------------------------------------------------
$2,181,439
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 9.2% Howard County, MD, Certificates of Participation, 8%, 2019 $1,870,000 $2,702,094
- -------------------------------------------------------------------------------------------------------------------------------
Howard County, MD, Certificates of Participation, 8.15%, 2021 450,000 657,536
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Stadium Authority, Lease Rev. (Convention Center Expansion),
AMBAC, 5.875%, 2012 1,000,000 1,028,190
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Certificates of Participation, "A", MBIA,
0%, 2005 - 2006 4,985,000 4,866,761
- -------------------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Lease Development Authority Rev., MBIA,
0%, 2009 1,500,000 1,300,215
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., Commonwealth Appropriation, "E",
5.7%, 2010(++) 1,235,000 1,405,010
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.852%, 2013 - 2016+(+) 2,020,000 2,672,735
- -------------------------------------------------------------------------------------------------------------------------------
$14,632,541
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.3% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $1,000,000 $1,030,840
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,000,000 1,038,030
- -------------------------------------------------------------------------------------------------------------------------------
$2,068,870
- -------------------------------------------------------------------------------------------------------------------------------
Tax Assessment - 1.7% Anne Arundel County, MD, Special Obligations (Arundel Mills Project),
5.125%, 2029 $1,555,000 $1,618,926
- -------------------------------------------------------------------------------------------------------------------------------
Anne Arundel County, MD, Special Obligations (National Business Park
Project), "B", 5.125%, 2028 1,000,000 1,042,710
- -------------------------------------------------------------------------------------------------------------------------------
$2,661,636
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $240,000 $216,271
- -------------------------------------------------------------------------------------------------------------------------------
Guam Economic Development Authority, Tobacco Settlement, Asset Backed,
"B", 5.5%, 2041 400,000 354,952
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corp., 5%, 2021 250,000 231,243
- -------------------------------------------------------------------------------------------------------------------------------
$802,466
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Annapolis, MD, Economic Development Rev. (St. John's College),
Colleges - 10.6% 5.5%, 2018 $750,000 $789,968
- -------------------------------------------------------------------------------------------------------------------------------
Anne Arundel County, MD, Economic Development (Community College
Project), 5.25%, 2028 1,600,000 1,663,120
- -------------------------------------------------------------------------------------------------------------------------------
Frederick County, MD, Educational Facilities Rev. (Mount St. Mary's
College), "A", 5.7%, 2020 850,000 892,084
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Goucher
College), 5.375%, 2025 500,000 525,470
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins University), 5.625%, 2027 1,400,000 1,488,004
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins University), "A", 5%, 2032 2,000,000 2,050,260
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Loyola
College), "A", MBIA, 5.5%, 2016 3,000,000 3,252,750
- -------------------------------------------------------------------------------------------------------------------------------
Morgan State University, MD, Academic, "A", MBIA, ETM,
0%, 2006 - 2008(++) 2,535,000 2,370,512
- -------------------------------------------------------------------------------------------------------------------------------
Morgan State University, MD, Academic, MBIA, 6.05%, 2015 1,500,000 1,762,155
- -------------------------------------------------------------------------------------------------------------------------------
University of Maryland, Auxillary Facilities & Tuition Rev., "B",
0%, 2004 1,000,000 1,000,000
- -------------------------------------------------------------------------------------------------------------------------------
Westminster, MD, Educational Facilities Rev. (McDaniel College),
5.5%, 2032 1,000,000 1,024,060
- -------------------------------------------------------------------------------------------------------------------------------
$16,818,383
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Maryland Economic Development Corp. (Morgan State University Project),
Dormitories - 3.2% "A", 6%, 2034 $1,000,000 $1,022,830
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Economic Development Corp. (University of Maryland College
Park Project), AMBAC, 5%, 2019 1,850,000 1,972,803
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Economic Development Corp., Collegiate Housing (Salisbury),
"A", 6%, 2019 1,000,000 1,053,060
- -------------------------------------------------------------------------------------------------------------------------------
Maryland Economic Development Corp., Collegiate Housing Rev. (Towson
University), "A", 5.75%, 2029 1,000,000 993,400
- -------------------------------------------------------------------------------------------------------------------------------
$5,042,093
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 3.3% Guam Power Authority Rev., RITES, AMBAC, 8.592%, 2015+(+) $1,680,000 $2,005,080
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,500,000 1,569,555
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., RITES, FSA, 8.560%, 2015+(+) 1,400,000 1,650,614
- -------------------------------------------------------------------------------------------------------------------------------
$5,225,249
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Baltimore, MD, Project Revenue., Refunding Water Projects, "A", FGIC,
Revenue - 5.0% 5.125%, 2032 $1,000,000 $1,037,160
- -------------------------------------------------------------------------------------------------------------------------------
Baltimore, MD, Rev., LEVRRS, MBIA, 9.525%, 2020(+) 3,000,000 4,063,200
- -------------------------------------------------------------------------------------------------------------------------------
Baltimore, MD, Wastewater Rev. Project, "A", MBIA, 5.65%, 2020 2,000,000 2,354,400
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009(++) 315,000 381,424
- -------------------------------------------------------------------------------------------------------------------------------
$7,836,184
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $143,684,768) $156,013,794
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.9%
- -------------------------------------------------------------------------------------------------------------------------------
Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 10/07/04 $1,100,000 $1,100,000
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev. (Adventist
Hospital), "B", due 10/01/04 200,000 200,000
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A",
due 10/07/04 400,000 400,000
- -------------------------------------------------------------------------------------------------------------------------------
State of California, Department of Water Resources, Power Supply Rev.,
"C-2", due 10/07/04 1,200,000 1,200,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes (Identified Cost, $2,900,000) $2,900,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $146,584,768) $158,913,794
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (0.5)% (732,710)
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $158,181,084
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.5%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port
Revenue - 3.2% Massachusetts Port Authority Rev., ETM, 13%, 2013(++) $705,000 $1,047,404
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev., 6.125%, 2017 1,460,000 1,664,298
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev., "A", FSA, 5.125%, 2017 1,275,000 1,353,782
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev., "A", MBIA, 5%, 2033 3,000,000 3,038,460
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev., "C", 6%, 2015 1,000,000 1,136,040
- -------------------------------------------------------------------------------------------------------------------------------
$8,239,984
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 19.6% Boston, MA, "A", 5.75%, 2010(++) $3,645,000 $4,155,701
- -------------------------------------------------------------------------------------------------------------------------------
Brookline, MA, 5.375%, 2019 1,800,000 1,986,480
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Massachusetts, 5.875%, 2009(++) 1,000,000 1,153,200
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Massachusetts, "B", 5.25%, 2028 2,500,000 2,700,050
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Massachusetts, FGIC, 7%, 2009 1,150,000 1,325,869
- -------------------------------------------------------------------------------------------------------------------------------
Greater Lawrence, MA, San District, MBIA, 5.625%, 2020 1,640,000 1,829,830
- -------------------------------------------------------------------------------------------------------------------------------
Lynn, MA, AMBAC, 5.125%, 2018 3,690,000 3,975,458
- -------------------------------------------------------------------------------------------------------------------------------
Mansfield, MA, FSA, 5.375%, 2017 1,170,000 1,276,470
- -------------------------------------------------------------------------------------------------------------------------------
Middleborough, MA, FGIC, 5.6%, 2014 75,000 83,517
- -------------------------------------------------------------------------------------------------------------------------------
Salisbury, MA, MBIA, 5.25%, 2031 2,790,000 2,940,130
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Capital Appreciation Consolidated Loan, "C",
0%, 2004 1,080,000 1,077,051
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Capital Appreciation Consolidated Loan, "C",
ETM, 0%, 2004(++) 8,170,000 8,152,843
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Capital Appreciation Consolidated Loan, "C",
ETM, 1%, 2005(++) 2,000,000 1,955,660
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Consolidated Loan, "A", 6%, 2010(++) 3,000,000 3,482,820
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Consolidated Loan, "B", 5.625%, 2010(++) 2,000,000 2,270,020
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Consolidated Loan, "B", 5.75%, 2010(++) 1,000,000 1,141,470
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Consolidated Loan, "C", 5.75%, 2010(++) 2,000,000 2,286,480
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, Consolidated Loan, "D", MBIA, 5%, 2011(++) 1,380,000 1,524,113
- -------------------------------------------------------------------------------------------------------------------------------
State of Massachusetts, MBIA, 5%, 2022 1,000,000 1,050,200
- -------------------------------------------------------------------------------------------------------------------------------
Sutton, MA, MBIA, 5.5%, 2017 - 2019 2,000,000 2,214,860
- -------------------------------------------------------------------------------------------------------------------------------
Westford, MA, FGIC, 5.25%, 2020 2,250,000 2,440,890
- -------------------------------------------------------------------------------------------------------------------------------
Weymouth, MA, MBIA, 5.375%, 2020 1,250,000 1,357,413
- -------------------------------------------------------------------------------------------------------------------------------
$50,380,525
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 5.7% Massachusetts Bay Transportation Authority, RITES, 10.53%, 2016+(+) $4,835,000 $6,701,794
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority, Unrefunded Balance "A",
5.75%, 2018 320,000 362,054
- -------------------------------------------------------------------------------------------------------------------------------
Maynard, MA, MBIA, 5.5%, 2021 1,000,000 1,125,560
- -------------------------------------------------------------------------------------------------------------------------------
Springfield, MA, FSA, 6.25%, 2019 2,600,000 3,022,448
- -------------------------------------------------------------------------------------------------------------------------------
Worcester, MA, "A", FSA, 6%, 2016 2,955,000 3,396,034
- -------------------------------------------------------------------------------------------------------------------------------
$14,607,890
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 4.7% Belmont, MA, 5%, 2015 $2,165,000 $2,236,575
- -------------------------------------------------------------------------------------------------------------------------------
Dudley-Charlton, MA, Regional School District, RITES, FGIC, 8.759%,
2015 - 2018+(+) 4,360,000 5,607,314
- -------------------------------------------------------------------------------------------------------------------------------
Narragansett, MA, Regional School District, AMBAC, 6%, 2019 1,720,000 1,977,553
- -------------------------------------------------------------------------------------------------------------------------------
Tantasquama, MA, Regional School District, FSA, 5.375%, 2016 2,000,000 2,200,820
- -------------------------------------------------------------------------------------------------------------------------------
$12,022,262
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Massachusetts Development Finance Agency, Massachusetts Biomedical
Hospitals - 9.9% Research, "C", 6.375%, 2016 $50,000 $56,807
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Baystate
Medical Center), "F", 5.75%, 2033 2,000,000 2,084,780
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Berkshire
Health Systems), 6.25%, 2031 1,350,000 1,405,269
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Caritas
Christi Obligation), 6.5%, 2012 500,000 557,155
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Caritas
Christi), "B", 6.25%, 2022 20,000 20,820
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Covenant
Health Systems, Inc.), 6.5%, 2017 75,000 83,005
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Covenant
Health Systems, Inc.), 6%, 2031 1,000,000 1,042,840
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Jordan
Hospital), 5.25%, 2018 1,330,000 1,227,191
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Milford-
Whitinsville Hospital), 6.35%, 2032 50,000 51,699
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Milford-
Whitinsville Regional Hospital), "C", 5.25%, 2018 1,500,000 1,450,845
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Milton
Hospital), "C", 5.5%, 2016 800,000 808,352
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (New
England Medical Center Hospital), "H", FGIC, 5.375%, 2018 - 2019 1,815,000 1,997,792
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Newton
Wellesley Hospital), "G", MBIA, 6.125%, 2015 1,000,000 1,108,650
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (North
Adams Regional Hospital), 6.625%, 2018 1,010,000 1,029,392
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Partners
Healthcare Systems), 5.75%, 2021 100,000 109,392
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Partners
Healthcare Systems), "A", MBIA, 5.375%, 2018 2,000,000 2,156,620
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (South
Shore Hospital), "F", 5.625%, 2019 2,000,000 2,076,480
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev.
(University of Massachusetts Memorial Hospital), 6.5%, 2021 1,000,000 1,069,410
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Revenue (New
England Medical Center Hospital), "H", FGIC, 5%, 2025 1,135,000 1,168,278
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Higher Educational Facilities Authority Rev.,
Catholic Health East Issue, 5.5%, 2032 1,575,000 1,599,712
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev., Capital Appreciation
(Mass Biomedical Research), "A", 0%, 2010 5,300,000 4,267,348
- -------------------------------------------------------------------------------------------------------------------------------
$25,371,837
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Boston, MA, Industrial Development Finance Authority, Alzheimers Center
Term Care - 1.0% Project, FHA, 5.5%, 2012 $310,000 $331,074
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., First Mortgage Loomis
Communities Project, "A", 6.9%, 2032 530,000 550,559
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Beverly Enterprises),
8.375%, 2009 1,725,000 1,739,042
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Evanswood 1st Mortgage),
"A", 7.625%, 2015* 496,655 50
- -------------------------------------------------------------------------------------------------------------------------------
$2,620,725
- -------------------------------------------------------------------------------------------------------------------------------
Human Services - 0.4% Massachusetts Health & Educational Facilities Authority Rev. (Learning
Center for Deaf Children), 6.1%, 2019 $1,000,000 $1,007,270
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Massachusetts Port Authority Rev. (Delta Air Lines, Inc.), "A", AMBAC,
Airlines - 2.1% 5.5%, 2019 $2,000,000 $2,100,820
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev. (U.S. Airways), MBIA, 5.875%, 2016 1,900,000 2,029,257
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev., Special Facilities (U.S. Airways),
"A", MBIA, 5.625%, 2023 1,140,000 1,209,950
- -------------------------------------------------------------------------------------------------------------------------------
$5,340,027
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Environmental Massachusetts Development Finance Agency Rev. (Waste Management, Inc.),
Services - 0.8% 5.5%, 2027 $750,000 $802,290
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Resource Recovery Rev.
(Waste Management, Inc.), 6.9%, 2029 1,000,000 1,139,330
- -------------------------------------------------------------------------------------------------------------------------------
$1,941,620
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Massachusetts Development Finance Agency Rev., Resource Recovery Rev.
Other - 1.8% (Flour Corp.), 5.625%, 2019 $1,675,000 $1,754,613
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%,
2017 2,100,000 2,257,563
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 595,000 627,106
- -------------------------------------------------------------------------------------------------------------------------------
$4,639,282
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Other - 1.5% Martha's Vineyard, MA, Ld Bk Rev., AMBAC, 5%, 2029 $785,000 $805,025
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., (WHGH Educational
Foundation), "A", AMBAC, 5.375%, 2042 3,000,000 3,166,980
- -------------------------------------------------------------------------------------------------------------------------------
$3,972,005
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Massachusetts Development Finance Agency (Morville House Apartments),
Revenue - 3.2% "A" LOC, 4.95%, 2023 $2,500,000 $2,502,750
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency Rev., "P", 5%, 2023 1,240,000 1,252,946
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency Rev., "P", 5.1%, 2033 1,565,000 1,580,165
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency Rev., "P", 5.2%, 2045 1,445,000 1,448,887
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency, Housing Rev., Rental Mortgage,
"A", AMBAC, 5.7%, 2020 1,515,000 1,563,738
- -------------------------------------------------------------------------------------------------------------------------------
$8,348,486
- -------------------------------------------------------------------------------------------------------------------------------
Parking - 0.5% Rail Connections, Inc., Massachusetts Rev. (Rte 128 Parking Garage),
"A", 6%, 2009(++) $1,200,000 $1,398,469
- -------------------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Route 3 North Transportation Improvement Associates, MBIA,
Revenue - 0.7% 5.625%, 2010(++) $1,500,000 $1,708,005
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Massachusetts Housing Finance Agency, Single Family Housing Rev.,
State - 2.1% "102", 5%, 2029 $1,500,000 $1,512,900
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency, Single Family Housing Rev., "32",
6.6%, 2026 245,000 250,270
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency, Single Family Housing Rev., "51",
MBIA, 6.35%, 2022 765,000 791,308
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency, Single Family Housing Rev., "79",
FSA, 5.85%, 2021 210,000 218,782
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency, Single Family Housing Rev., "91",
5.5%, 2031 1,750,000 1,759,468
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency, Single Family Housing Rev., "93",
5.05%, 2020 860,000 874,955
- -------------------------------------------------------------------------------------------------------------------------------
$5,407,683
- -------------------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 1.5% Massachusetts Development Finance Agency Rev. (Ogden Haverhill
Associates), 6.7%, 2014 $600,000 $638,898
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Semass Systems, "B",
MBIA, 5.625%, 2016 1,125,000 1,267,819
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev.
(Ogden Haverhill Associates), 5.5%, 2013 25,000 25,235
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev., Resource Recovery Rev.
(Ogden Haverhill Associates), 5.6%, 2019 1,925,000 1,925,193
- -------------------------------------------------------------------------------------------------------------------------------
$3,857,145
- -------------------------------------------------------------------------------------------------------------------------------
State & Local Massachusetts Development Finance Agency Rev., Visual & Performing Arts
Agencies - 3.1% Project, 6%, 2015 $1,235,000 $1,482,358
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 9.028%, 2016+(+) 2,500,000 3,321,900
- -------------------------------------------------------------------------------------------------------------------------------
Univeristy of Massachusetts, Building Authority Project, "B", AMBAC,
5.5%, 2018 1,400,000 1,555,036
- -------------------------------------------------------------------------------------------------------------------------------
University of Massachusetts, Building Authority Project, "1", AMBAC,
5.25%, 2023 1,500,000 1,603,020
- -------------------------------------------------------------------------------------------------------------------------------
$7,962,314
- -------------------------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 1.1% Massachusetts Educational Financing Authority, Education Loan Rev.,
"E", AMBAC, 5%, 2013 - 2015 $1,070,000 $1,121,718
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Educational Financing Authority, Education Loan Rev.,
Issue E, AMBAC, 5.3%, 2016 1,645,000 1,710,421
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Educational Financing Authority, Education Loan Rev.,
Issue G, "A", MBIA, 6.05%, 2017 75,000 78,326
- -------------------------------------------------------------------------------------------------------------------------------
$2,910,465
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.8% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $2,950,000 $3,040,978
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,420,000 1,474,003
- -------------------------------------------------------------------------------------------------------------------------------
$4,514,981
- -------------------------------------------------------------------------------------------------------------------------------
Tax Assessment - 4.9% Massachusetts Bay Transportation Authority Prerefunded Assessment, "A",
5.75%, 2010(++) $3,460,000 $3,965,886
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority, "A", 5%, 2034 1,500,000 1,534,035
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority, Assessment, "A", 5.25%,
2030 2,930,000 3,081,598
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Special Obligations, Dedicated Tax Rev., FGIC, 5%, 2034 4,000,000 4,086,840
- -------------------------------------------------------------------------------------------------------------------------------
$12,668,359
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.3% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $705,000 $635,296
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Massachusetts College Building Authority Project Rev., "A", MBIA,
Colleges - 17.8% 5.625%, 2009(++) $1,650,000 $1,880,026
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts College Building Authority Project Rev., Xl Capital
Assurance, "A", XLCA, 5.25%, 2023 1,000,000 1,065,490
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Massachusetts College of
Pharmacy), "C", 5.75%, 2033 1,000,000 1,027,180
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Boston University),
XLCA, 6%, 2059 1,500,000 1,746,615
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Deerfield Academy), "A",
5%, 2028 1,000,000 1,024,470
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Eastern Nazarene
College), 5.625%, 2019 1,000,000 903,960
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Hampshire College),
5.7%, 2034 1,000,000 1,038,110
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Massachusetts College of
Pharmacy), 6.625%, 2020 50,000 54,993
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Mount Holyoke College),
5.125%, 2021 1,000,000 1,067,000
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Suffolk University),
5.75%, 2019 1,000,000 1,065,760
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Suffolk University),
5.85%, 2029 1,000,000 1,040,760
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Western New England
College), 6.125%, 2032 1,115,000 1,143,309
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Higher Education (Smith
College), 5.5%, 2010(++) 1,210,000 1,381,287
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Olin College, "B", XLCA,
5.25%, 2033 3,000,000 3,115,350
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Authority Rev. (University of
Massachusetts), "A", FGIC, 5.625%, 2018 2,170,000 2,442,140
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Boston
College), "K", 5.25%, 2023 4,350,000 4,379,276
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Simmons
College), "D", AMBAC, 6.05%, 2010(++) 1,745,000 2,053,568
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Simmons
College), "F", FGIC, 5%, 2023 500,000 524,860
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Umass
Worcester Campus), "B", FGIC, 5.125%, 2019 1,780,000 1,933,863
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev.
(University of Massachusetts), "A", FGIC, 5.75%, 2019 2,395,000 2,721,199
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev.
(University of Massachusetts), "A", FGIC, 5.85%, 2020 1,200,000 1,373,412
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev.
(University of Massachusetts), "C", MBIA, 5.25%, 2031 3,000,000 3,139,680
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Wellseley
College), "H", 5%, 2033 1,000,000 1,020,700
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Wheelock
College), "B", MBIA, 5.5%, 2021 3,275,000 3,601,583
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Brandeis University),
"C", MBIA, 0%, 2004 - 2011 3,500,000 3,055,665
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Lesley College), "A",
CNIE LEE, 6.3%, 2025 2,000,000 2,103,940
- -------------------------------------------------------------------------------------------------------------------------------
$45,904,196
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Secondary Massachusetts Development Finance Agency Rev. (Williston Northampton
Schools - 5.1% School), 6.5%, 2028 $1,300,000 $1,362,309
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Xaverian Brothers High
School), 5.55%, 2019 1,000,000 1,064,360
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Xaverian Brothers High
School), 5.65%, 2029 1,000,000 1,030,290
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Middlesex School
Education Project, 5.125%, 2023 500,000 529,230
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Belmont Hill School),
5.625%, 2020 1,150,000 1,233,226
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Concord Academy),
5.5%, 2027 2,000,000 2,050,920
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Dana Hall School),
5.9%, 2027 1,340,000 1,495,896
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Groton School), "A",
5%, 2008(++) 2,960,000 3,246,646
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Tabor Academy),
5.4%, 2018 1,000,000 1,060,450
- -------------------------------------------------------------------------------------------------------------------------------
$13,073,327
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Massachusetts Development Finance Agency Rev. (Devens Electric
Owned - 0.3% Systems), 5.625%, 2016 $725,000 $787,922
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Massachusetts Water Pollution Abatement Trust, Series "5",
Revenue - 4.4% 5.75%, 2009(++) $975,000 $1,119,047
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Pollution Abatement Trust, Unrefunded Balance,
Series "5", 5.75%, 2017 25,000 28,082
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, "A", FGIC, 6%, 2021 1,000,000 1,150,640
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, "C", MBIA, 5.25%, 2004(++) 50,000 51,311
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, General, "J", FSA, 5%, 2023 500,000 523,740
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, MBIA, 5.25%, 2020 1,535,000 1,575,248
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, RITES, FGIC, 11.053%, 2019+(+) 4,010,000 5,889,728
- -------------------------------------------------------------------------------------------------------------------------------
Springfield, MA, Street & Sewer Commission, General, "A", AMBAC,
5%, 2021 1,000,000 1,065,440
- -------------------------------------------------------------------------------------------------------------------------------
$11,403,236
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $231,154,053) $250,723,311
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.2%
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Higher Educational Facilities Authority Rev.,
Capital Assets Program, "D", due 10/01/04 $2,695,000 $2,695,000
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, due 10/06/04 200,000 200,000
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority Rev., due 10/06/04 200,000 200,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes (Identified Cost, $3,095,000) $3,095,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $234,249,053) $253,818,311
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.3% 3,436,045
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $257,254,356
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Footnotes:
(+) Inverse floating rate security.
(++) Refunded bond.
+ Restricted security.
## SEC Rule 144A restriction.
* Non-income producing security.
The following abbreviations are used in the Portfolio of Investments and are
defined:
ETM -- Escrowed-to-maturity
Insurers: Inverse Floaters:
- -------------------------------------------------------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corp. LEVRRS -- Leveraged Reverse Rate Securities
ASST GTY -- Asset Guaranty Insurance Co. RIBS -- Residential Interest Bonds
CHFC -- California Health Facilities Construction Program RITES -- Residual Interest Tax-Exempt Securities
CNIE LEE -- Connie Lee ROLS -- Residual Option Longs
FGIC -- Financial Guaranty Insurance Co.
FHA -- Federal Housing Administration
FNMA -- Federal National Mortgage Assn.
FSA -- Financial Security Assurance, Inc.
GNMA -- Government National Mortgage Assn.
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Corp.
XLCA -- XL Capital Insurance Co.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
This is your fund's balance sheet. It shows the value of what the fund owns,
how much it owes, and its resulting net assets.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
At 9/30/04 FUND FUND FUND FUND
ASSETS
Investments -
Identified cost $86,585,324 $131,012,328 $384,364,205 $80,790,813
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 6,977,662 11,562,523 26,345,463 5,804,410
- ---------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $93,562,986 $142,574,851 $410,709,668 $86,595,223
- ---------------------------------------------------------------------------------------------------------------------------------
Cash 11,268 93,034 49,270 63,525
- ---------------------------------------------------------------------------------------------------------------------------------
Receivable for investments sold 1,205,000 2,477 15,399 1,175,350
- ---------------------------------------------------------------------------------------------------------------------------------
Receivable for fund shares sold 53,693 152,923 124,187 315,083
- ---------------------------------------------------------------------------------------------------------------------------------
Interest receivable 1,426,598 2,017,426 4,992,500 1,581,176
- ---------------------------------------------------------------------------------------------------------------------------------
Other assets 553 -- 1,779 679
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $96,260,098 $144,840,711 $415,892,803 $89,731,036
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $139,225 $199,020 $719,880 $178,264
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 1,016,890 -- -- 1,024,458
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares reacquired 65,892 176,867 398,683 26,864
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on interest rate swaps 320,972 771,499 444,566 288,807
- ---------------------------------------------------------------------------------------------------------------------------------
Payable to affiliates -
Management fee 778 1,181 3,411 726
- ---------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 4,640 1,378 22,945 5,526
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee 992 5,530 38,488 1,473
- ---------------------------------------------------------------------------------------------------------------------------------
Administrative fee 13 18 55 11
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 57,877 65,049 114,794 50,307
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities $1,607,279 $1,220,542 $1,742,822 $1,576,436
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $94,652,819 $143,620,169 $414,149,981 $88,154,600
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $87,770,765 $133,351,912 $389,578,134 $84,201,311
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments 6,656,690 10,791,024 25,900,895 5,515,604
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) on investments 422,891 (358,646) (200,038) (1,429,205)
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (197,527) (164,121) (1,129,010) (133,110)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $94,652,819 $143,620,169 $414,149,981 $88,154,600
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Class A $78,111,989 $131,758,897 $303,560,990 $68,643,039
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 16,540,830 11,861,272 76,332,348 19,511,561
- ---------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 34,256,643 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total net assets $94,652,819 $143,620,169 $414,149,981 $88,154,600
- ---------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (Unaudited) - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
Shares of beneficial interest outstanding
Class A 7,250,494 12,800,400 51,126,870 6,766,607
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 1,535,453 1,151,039 12,851,031 1,923,522
- ---------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 5,750,339 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 8,785,947 13,951,439 69,728,240 8,690,129
- ---------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $10.77 $10.29 $5.94 $10.14
- ---------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25 of net asset value per share) $11.31 $10.80 $6.24 $10.65
- ---------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $10.77 $10.30 $5.94 $10.14
- ---------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $-- $-- $5.96 $--
- ---------------------------------------------------------------------------------------------------------------------------------
On sales of $100,000 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
Statements of Assets and Liabilities (Unaudited) - continued
GEORGIA MARYLAND MASSACHUSETTS
At 9/30/04 FUND FUND FUND
ASSETS
Investments -
Identified cost $63,974,725 $146,584,768 $234,249,053
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 5,687,214 12,329,026 19,569,258
- --------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $69,661,939 $158,913,794 $253,818,311
- --------------------------------------------------------------------------------------------------------------------------------
Cash 71,944 72,009 69,696
- --------------------------------------------------------------------------------------------------------------------------------
Receivable for investments sold -- 90,134 685,000
- --------------------------------------------------------------------------------------------------------------------------------
Receivable for fund shares sold 13,378 65,728 250,848
- --------------------------------------------------------------------------------------------------------------------------------
Interest receivable 1,217,391 2,129,835 3,755,756
- --------------------------------------------------------------------------------------------------------------------------------
Other assets 472 974 1,672
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $70,965,124 $161,272,474 $258,581,283
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $86,058 $216,710 $475,340
- --------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 1,016,890 2,033,780 --
- --------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares reacquired 72,584 200,048 373,379
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on interest rate swaps 387,208 561,725 374,252
- --------------------------------------------------------------------------------------------------------------------------------
Payable to affiliates -
Management fee 570 1,302 2,118
- --------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 3,913 8,088 12,236
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee 788 2,051 3,229
- --------------------------------------------------------------------------------------------------------------------------------
Administrative fee 8 22 34
- --------------------------------------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 56,093 67,664 86,339
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities $1,624,112 $3,091,390 $1,326,927
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $69,341,012 $158,181,084 $257,254,356
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $64,389,539 $147,601,486 $238,891,525
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments 5,300,006 11,767,301 19,195,006
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (146,270) (886,803) (363,508)
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (202,263) (300,900) (468,667)
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $69,341,012 $158,181,084 $257,254,356
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Class A $54,082,973 $128,338,655 $214,634,372
- --------------------------------------------------------------------------------------------------------------------------------
Class B 15,258,039 29,842,429 42,619,984
- --------------------------------------------------------------------------------------------------------------------------------
Total net assets $69,341,012 $158,181,084 $257,254,356
- --------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (Unaudited) - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
Shares of beneficial interest outstanding
Class A 4,867,766 11,055,543 18,779,567
- --------------------------------------------------------------------------------------------------------------------------------
Class B 1,372,025 2,572,267 3,723,212
- --------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 6,239,791 13,627,810 22,502,779
- --------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $11.11 $11.61 $11.43
- --------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25 of net asset value per share) $11.66 $12.19 $12.00
- --------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $11.12 $11.60 $11.45
- --------------------------------------------------------------------------------------------------------------------------------
On sales of $100,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A and Class B shares.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
This is a summary of the investment income your fund earned as well as gains
and (losses) for the period. Fund expenses are spelled out.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
For six months ended 9/30/04
NET INVESTMENT INCOME
Interest income $2,551,477 $3,663,958 $11,480,725 $2,452,780
- --------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $260,686 $395,807 $1,144,539 $251,895
- --------------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 2,324 3,465 6,836 3,414
- --------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 55,543 70,016 217,118 50,886
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class A) 97,733 66,052 151,371 --
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 82,999 50,998 335,792 78,586
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class C) -- -- 172,090 --
- --------------------------------------------------------------------------------------------------------------------------------
Administrative fee 4,023 6,113 17,693 3,923
- --------------------------------------------------------------------------------------------------------------------------------
Custodian fee 18,297 26,917 75,985 16,626
- --------------------------------------------------------------------------------------------------------------------------------
Printing 3,854 7,044 23,475 4,964
- --------------------------------------------------------------------------------------------------------------------------------
Postage 185 195 880 193
- --------------------------------------------------------------------------------------------------------------------------------
Auditing fees 17,720 19,931 22,086 17,720
- --------------------------------------------------------------------------------------------------------------------------------
Legal fees 4,605 2,330 8,682 1,180
- --------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 21,697 17,208 2,544 10,405
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses $569,666 $666,076 $2,179,091 $439,792
- --------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (531) (808) (2,382) (722)
- --------------------------------------------------------------------------------------------------------------------------------
Reduction of expenses by investment adviser (118,776) (180,298) (521,335) (114,768)
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses $450,359 $484,970 $1,655,374 $324,302
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income $2,101,118 $3,178,988 $9,825,351 $2,128,478
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) (identified cost basis) -
Investment transactions $460,209 $472,584 $1,630,214 $252,379
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions 19,729 (122,178) (23,219) (151,497)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $479,938 $350,406 $1,606,995 $100,882
- --------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(1,604,398) $(1,939,071) $(5,731,839) $(1,518,692)
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions 46,884 (297,339) 420,789 202,866
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(1,557,514) $(2,236,410) $(5,311,050) $(1,315,826)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(1,077,576) $(1,886,004) $(3,704,055) $(1,214,944)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,023,542 $1,292,984 $6,121,296 $913,534
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations (Unaudited) - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
For six months ended 9/30/04
NET INVESTMENT INCOME
Interest income $1,808,040 $4,373,286 $7,007,316
- --------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $189,797 $444,750 $710,477
- --------------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 2,201 3,094 6,634
- --------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 38,299 85,206 139,324
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class A) 66,606 229,124 376,159
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 78,641 151,884 216,872
- --------------------------------------------------------------------------------------------------------------------------------
Administrative fee 2,931 6,880 10,982
- --------------------------------------------------------------------------------------------------------------------------------
Custodian fee 12,434 29,613 47,757
- --------------------------------------------------------------------------------------------------------------------------------
Printing 4,533 9,867 13,343
- --------------------------------------------------------------------------------------------------------------------------------
Postage 102 378 557
- --------------------------------------------------------------------------------------------------------------------------------
Auditing fees 22,064 21,686 17,720
- --------------------------------------------------------------------------------------------------------------------------------
Legal fees 5,034 5,022 4,320
- --------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 20,488 4,654 42,340
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses $443,130 $992,158 $1,586,485
- --------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (572) (476) (1,519)
- --------------------------------------------------------------------------------------------------------------------------------
Reduction of expenses by investment adviser (86,453) (203,185) (404,858)
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses $356,105 $788,497 $1,180,108
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,451,935 $3,584,789 $5,827,208
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) (identified cost basis) -
Investment transactions $183,282 $517,495 $635,882
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions (24,876) (76,278) (197,996)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $158,406 $441,217 $437,886
- --------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(908,231) $(2,473,184) $(3,460,153)
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions (30,524) (160,016) 390,072
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(938,755) $(2,633,200) $(3,070,081)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(780,349) $(2,191,983) $(2,632,195)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $671,586 $1,392,806 $3,195,013
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
This Statement gives you a summary of income and gains (losses) separated by share class.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
For six months ended 9/30/04
OPERATIONS
Net investment income $2,101,118 $3,178,988 $9,825,351 $2,128,478
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 479,938 350,406 1,606,995 100,882
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments (1,557,514) (2,236,410) (5,311,050) (1,315,826)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,023,542 $1,292,984 $6,121,296 $913,534
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(1,730,198) $(2,921,381) $(7,295,150) $(1,677,257)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (305,210) (215,304) (1,599,549) (400,931)
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- -- (674,969) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(2,035,408) $(3,136,685) $(9,569,668) $(2,078,188)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $3,797,830 $4,143,851 $13,630,666 $4,249,152
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 1,417,670 2,256,572 6,051,059 1,125,883
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (7,593,676) (12,823,808) (37,661,119) (17,522,838)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,378,176) $(6,423,385) $(17,979,394) $(12,147,803)
- --------------------------------------------------------------------------------------------------------------------------------
Redemption fees $-- $91 $122 $--
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(3,390,042) $(8,266,995) $(21,427,644) $(13,312,457)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 98,042,861 151,887,164 435,577,625 101,467,057
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $94,652,819 $143,620,169 $414,149,981 $88,154,600
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included
in net assets at end of period $(197,527) $(164,121) $(1,129,010) $(133,110)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets (Unaudited) - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
For six months ended 9/30/04
OPERATIONS
Net investment income $1,451,935 $3,584,789 $5,827,208
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 158,406 441,217 437,886
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments (938,755) (2,633,200) (3,070,081)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $671,586 $1,392,806 $3,195,013
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(1,151,794) $(2,914,534) $(4,822,647)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (281,278) (577,666) (832,066)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1,433,072) $(3,492,200) $(5,654,713)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $2,070,633 $4,152,748 $7,852,070
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 1,059,188 2,468,035 3,250,760
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (5,445,731) (16,237,756) (22,565,230)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,315,910) $(9,616,973) $(11,462,400)
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(3,077,396) $(11,716,367) $(13,922,100)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 72,418,408 169,897,451 271,176,456
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $69,341,012 $158,181,084 $257,254,356
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included in net assets
at end of period $(202,263) $(300,900) $(468,667)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
For year ended 3/31/04
OPERATIONS
Net investment income $4,248,070 $6,406,257 $20,397,638 $4,788,100
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (5,519) (590,789) 662,825 748,424
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments 567,467 743,287 411,418 (322,009)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $4,810,018 $6,558,755 $21,471,881 $5,214,515
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(3,664,883) $(5,995,855) $(15,390,933) $(3,890,452)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (634,171) (445,106) (3,690,150) (900,216)
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- -- (1,506,159) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(4,299,054) $(6,440,961) $(20,587,242) $(4,790,668)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $11,705,214 $16,469,633 $56,968,858 $15,037,651
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 2,586,798 3,872,170 11,441,724 2,205,319
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (17,397,541) (15,142,702) (106,758,985) (27,420,465)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(3,105,529) $5,199,101 $(38,348,403) $(10,177,495)
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(2,594,565) $5,316,895 $(37,463,764) $(9,753,648)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 100,637,426 146,570,269 473,041,389 111,220,705
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $98,042,861 $151,887,164 $435,577,625 $101,467,057
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included
in
net assets at end of period $(209,810) $(173,336) $(1,276,148) $(167,166)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
For year ended 3/31/04
OPERATIONS
Net investment income $3,053,920 $7,304,054 $11,933,918
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 130,924 647,406 757,334
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments 196,883 233,396 223,258
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $3,381,727 $8,184,856 $12,914,510
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(2,441,199) $(6,165,774) $(10,281,251)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (630,108) (1,264,155) (1,818,366)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,071,307) $(7,429,929) $(12,099,617)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $8,749,566 $12,128,709 $26,173,301
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 1,959,911 4,597,281 6,120,108
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (14,314,317) (20,282,205) (43,043,815)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(3,604,840) $(3,556,215) $(10,750,406)
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(3,294,420) $(2,801,288) $(9,935,513)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 75,712,828 172,698,739 281,111,969
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $72,418,408 $169,897,451 $271,176,456
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included in
net assets at end of period $(203,084) $(367,330) $(578,947)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period and
the past 5 fiscal years (or, if shorter, the period of the fund's operation). Certain information reflects financial results for
a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an
investment in the fund (assuming reinvestment of all distributions) held for the entire year.
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $10.88 $10.82 $10.31 $10.53 $10.00 $10.76
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.24 $0.48 $0.48 $0.51 $0.54 $0.54
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.11) 0.06 0.54 (0.19) 0.53 (0.64)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.54 $1.02 $0.32 $1.07 $(0.10)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.24) $(0.48) $(0.50) $(0.54) $(0.54) $(0.54)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- (0.01) -- -- (0.12)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ -- --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- -- -- -- (0.00)+++
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.24) $(0.48) $(0.51) $(0.54) $(0.54) $(0.66)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.77 $10.88 $10.82 $10.31 $10.53 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.21++ 5.11 10.06 3.05 11.00 (0.82)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA(S):
Expenses## 0.82+ 0.88 0.88 0.88 0.86 0.89
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.56+ 4.38 4.49 4.87 5.25 5.28
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 13 10 21 20 17 44
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $78,112 $80,704 $84,474 $83,146 $81,615 $72,736
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.23 $0.45 $0.46 $0.49 $0.52 $0.52
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.07+ 1.09 1.08 1.08 1.06 1.07
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.31+ 4.17 4.29 4.67 5.05 5.10
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ALABAMA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $10.88 $10.82 $10.31 $10.53 $10.00 $10.76
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.20 $0.39 $0.40 $0.43 $0.46 $0.46
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.11) 0.07 0.54 (0.19) 0.53 (0.64)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.09 $0.46 $0.94 $0.24 $0.99 $(0.18)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.20) $(0.40) $(0.42) $(0.46) $(0.46) $(0.46)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- (0.01) -- -- (0.12)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ -- --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- -- -- -- (0.00)+++
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.20) $(0.40) $(0.43) $(0.46) $(0.46) $(0.58)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.77 $10.88 $10.82 $10.31 $10.53 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.83++ 4.32 9.14 2.38 10.17 (1.56)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.57+ 1.63 1.63 1.63 1.61 1.64
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.81+ 3.63 3.74 4.09 4.50 4.53
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 13 10 21 20 17 44
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $16,541 $17,339 $16,163 $13,579 $12,531 $10,926
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.19 $0.37 $0.38 $0.41 $0.46 $0.44
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.82+ 1.83 1.83 1.83 1.81 1.82
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.56+ 3.43 3.54 3.89 4.30 4.35
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ARKANSAS MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -------------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $10.41 $10.40 $9.97 $10.08 $9.61 $10.14
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.23 $0.45 $0.47 $0.51 $0.51 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.12) 0.01 0.46 (0.11) 0.47 (0.53)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.11 $0.46 $0.93 $0.40 $0.98 $(0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.23) $(0.45) $(0.50) $(0.51) $(0.51) $(0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.29 $10.41 $10.40 $9.97 $10.08 $9.61
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.06++ 4.53 9.51 4.06 10.45 (0.24)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.61+ 0.72 0.73 0.72 0.70 0.72
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.48+ 4.31 4.59 5.05 5.25 5.14
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 19 15 15 12 28
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $131,759 $139,333 $134,521 $119,328 $113,928 $107,111
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.22 $0.43 $0.45 $0.49 $0.49 $0.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 0.86+ 0.92 0.93 0.92 0.90 0.90
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.23+ 4.11 4.39 4.85 5.05 4.96
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) ARKANSAS MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $10.42 $10.41 $9.98 $10.09 $9.62 $10.14
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.19 $0.37 $0.39 $0.43 $0.44 $0.42
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.12) 0.01 0.46 (0.11) 0.46 (0.53)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.07 $0.38 $0.85 $0.32 $0.90 $(0.11)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.19) $(0.37) $(0.42) $(0.43) $(0.43) $(0.41)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.30 $10.42 $10.41 $9.98 $10.09 $9.62
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.67++ 3.68 8.62 3.24 9.59 (1.02)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.38+ 1.53 1.54 1.50 1.47 1.62
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.71+ 3.50 3.77 4.26 4.49 4.33
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 19 15 15 12 28
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $11,861 $12,554 $12,049 $8,700 $9,822 $9,227
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.18 $0.34 $0.37 $0.41 $0.42 $0.40
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.63+ 1.73 1.74 1.70 1.67 1.80
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.46+ 3.30 3.57 4.06 4.29 4.15
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -------------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $5.98 $5.96 $5.70 $5.81 $5.52 $5.89
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.14 $0.28 $0.28 $0.28 $0.28 $0.29
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments and foreign currency (0.04) 0.02 0.27 (0.10) 0.30 (0.38)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.30 $0.55 $0.18 $0.58 $(0.09)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.14) $(0.28) $(0.29) $(0.28) $(0.29) $(0.28)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.14) $(0.28) $(0.29) $(0.29) $(0.29) $(0.28)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.94 $5.98 $5.96 $5.70 $5.81 $5.52
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.75++ 5.22 9.79 3.11 10.78 (1.41)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.58+ 0.67 0.67 0.67 0.62 0.51
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.94+ 4.71 4.73 4.87 5.08 5.21
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 8 8 22 12 21 40
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $303,561 $314,108 $333,350 $305,699 $293,137 $196,828
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.14* $0.27 $0.27 $0.27 $0.27 $0.27
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 0.83+ 0.87 0.87 0.87 0.87 0.86
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.69+ 4.51 4.53 4.67 4.83 4.86
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
* The impact per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $5.98 $5.96 $5.70 $5.81 $5.52 $5.89
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.12 $0.23 $0.23 $0.24 $0.24 $0.25
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency (0.04) 0.03 0.27 (0.11) 0.30 (0.38)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.08 $0.26 $0.50 $0.13 $0.54 $(0.13)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.12) $(0.24) $(0.24) $(0.23) $(0.25) $(0.24)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.12) $(0.24) $(0.24) $(0.24) $(0.25) $(0.24)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.94 $5.98 $5.96 $5.70 $5.81 $5.52
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.37++ 4.38 8.93 2.30 9.93 (2.21)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.33+ 1.47 1.46 1.45 1.39 1.31
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.19+ 3.91 3.94 4.09 4.31 4.38
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 8 8 22 12 21 40
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $76,332 $85,106 $98,888 $84,123 $80,473 $60,367
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.12* $0.22 $0.22 $0.23 $0.23 $0.23
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.58+ 1.67 1.66 1.65 1.64 1.66
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.94+ 3.71 3.74 3.89 4.06 4.03
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
* The impact per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) CALIFORNIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS C (unaudited)
Net asset value, beginning of period $6.00 $5.98 $5.72 $5.83 $5.53 $5.90
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.12 $0.23 $0.23 $0.23 $0.23 $0.24
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and
foreign currency (0.04) 0.02 0.27 (0.10) 0.31 (0.38)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.08 $0.25 $0.50 $0.13 $0.54 $(0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.12) $(0.23) $(0.24) $(0.23) $(0.24) $(0.23)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.12) $(0.23) $(0.24) $(0.24) $(0.24) $(0.23)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.96 $6.00 $5.98 $5.72 $5.83 $5.53
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.30++ 4.27 8.78 2.17 9.97 (2.29)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.48+ 1.56 1.57 1.57 1.52 1.41
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.04+ 3.81 3.83 3.97 4.21 4.32
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 8 8 22 12 21 40
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $34,257 $36,363 $40,804 $35,022 $33,056 $10,482
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.11 $0.22 $0.22 $0.22 $0.22 $0.22
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.73+ 1.77 1.77 1.77 1.77 1.76
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.79+ 3.60 3.63 3.77 3.96 3.97
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The total return previously reported for the year ended March 31, 2001 has been revised, from 9.96% to 9.97%.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) FLORIDA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $10.24 $10.19 $9.78 $9.95 $9.47 $10.12
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.24 $0.47 $0.48 $0.50 $0.50 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.10) 0.05 0.44 (0.16) 0.49 (0.65)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.14 $0.52 $0.92 $0.34 $0.99 $(0.15)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.24) $(0.47) $(0.51) $(0.51) $(0.51) $(0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.14 $10.24 $10.19 $9.78 $9.95 $9.47
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.38++ 5.20 9.40 3.52^ 10.72 (1.38)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.54+ 0.64 0.62 0.63 0.63 0.66
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.82+ 4.58 4.78 5.09 5.23 5.21
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 7 31 27 16 18 52
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $68,643 $79,155 $86,045 $69,959 $66,807 $64,107
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.23 $0.45 $0.46 $0.48 $0.48 $0.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 0.79+ 0.85 0.82 0.83 0.83 0.84
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.57+ 4.37 4.58 4.89 5.03 5.03
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
^ The total return previously reported for the year ended March 31, 2002 has been revised, from 3.41% to 3.52%.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) FLORIDA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $10.24 $10.19 $9.78 $9.95 $9.47 $10.11
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.20 $0.39 $0.40 $0.43 $0.42 $0.43
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.10) 0.05 0.43 (0.17) 0.49 (0.64)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.44 $0.83 $0.26 $0.91 $(0.21)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.20) $(0.39) $(0.42) $(0.43) $(0.43) $(0.43)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.14 $10.24 $10.19 $9.78 $9.95 $9.47
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.99++ 4.36 8.64 2.58 9.84 (2.07)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA(S):
Expenses## 1.31+ 1.44 1.42 1.43 1.43 1.45
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.05+ 3.76 3.97 4.29 4.43 4.42
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 7 31 27 16 18 52
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $19,511 $22,312 $25,175 $22,151 $23,820 $19,999
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.19 $0.37 $0.38 $0.41 $0.41 $0.41
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.56+ 1.64 1.62 1.63 1.63 1.63
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.80+ 3.58 3.77 4.09 4.23 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) GEORGIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $11.22 $11.17 $10.63 $10.82 $10.26 $10.93
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.24 $0.49 $0.49 $0.50 $0.52 $0.52
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.11) 0.05 0.55 (0.17) 0.56 (0.67)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.54 $1.04 $0.33 $1.08 $(0.15)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.24) $(0.49) $(0.50) $(0.51) $(0.52) $(0.52)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.24) $(0.49) $(0.50) $(0.52) $(0.52) $(0.52)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.11 $11.22 $11.17 $10.63 $10.82 $10.26
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.18++ 4.93 9.97 3.03 10.80 (1.32)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.87+ 0.91 0.92 0.93 0.90 0.93
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.38+ 4.35 4.43 4.67 4.95 4.98
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 10 12 25 19 24 39
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $54,083 $55,659 $57,636 $54,179 $52,236 $48,054
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.23 $0.46 $0.47 $0.48 $0.50 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.12+ 1.12 1.12 1.13 1.10 1.11
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.13+ 4.14 4.23 4.47 4.75 4.80
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to decrease net investment income per share and increase net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets decreased by 0.03%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) GEORGIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $11.23 $11.18 $10.64 $10.83 $10.27 $10.93
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.20 $0.40 $0.40 $0.42 $0.45 $0.44
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.11) 0.06 0.56 (0.18) 0.55 (0.66)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.09 $0.46 $0.96 $0.24 $1.00 $(0.22)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.20) $(0.41) $(0.42) $(0.42) $(0.44) $(0.44)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.20) $(0.41) $(0.42) $(0.43) $(0.44) $(0.44)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.12 $11.23 $11.18 $10.64 $10.83 $10.27
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.81++ 4.15 9.15 2.26 9.97 (2.06)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.62+ 1.66 1.67 1.68 1.65 1.68
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.63+ 3.60 3.68 3.91 4.25 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 10 12 25 19 24 39
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $15,258 $16,759 $18,077 $16,031 $17,376 $14,777
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.19 $0.38 $0.38 $0.40 $0.43 $0.42
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.87+ 1.86 1.87 1.88 1.85 1.86
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.38+ 3.40 3.48 3.71 4.05 4.06
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to decrease net investment income per share and increase net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets decreased by 0.03%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -------------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $11.74 $11.69 $11.21 $11.35 $10.81 $11.49
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.26 $0.51 $0.52 $0.54 $0.54 $0.53
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.13) 0.06 0.50 (0.14) 0.54 (0.68)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.57 $1.02 $0.40 $1.08 $(0.15)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.26) $(0.52) $(0.54) $(0.54) $(0.54) $(0.53)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.61 $11.74 $11.69 $11.21 $11.35 $10.81
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.12++ 4.96 9.21 3.59 10.26 (1.27)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.86+ 0.96 0.95 0.95 0.95 0.96
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.57+ 4.35 4.51 4.73 4.96 4.85
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 6 21 12 8 14 24
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $128,339 $138,201 $138,666 $128,750 $125,316 $114,957
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.25 $0.49 $0.50 $0.52 $0.52 $0.51
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.11+ 1.17 1.15 1.15 1.15 1.14
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.32+ 4.14 4.31 4.53 4.76 4.67
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MARYLAND MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $11.74 $11.68 $11.20 $11.34 $10.81 $11.48
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.23 $0.43 $0.45 $0.46 $0.47 $0.46
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.15) 0.07 0.49 (0.13) 0.53 (0.67)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.08 $0.50 $0.94 $0.33 $1.00 $(0.21)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.22) $(0.44) $(0.46) $(0.47) $(0.47) $(0.46)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.60 $11.74 $11.68 $11.20 $11.34 $10.81
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.71++ 4.37 8.52 2.92 9.46 (1.82)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.51+ 1.61 1.60 1.60 1.60 1.61
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.92+ 3.70 3.86 4.08 4.30 4.21
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 6 21 12 8 14 24
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $29,842 $31,697 $34,033 $31,542 $28,859 $26,845
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.21 $0.41 $0.42 $0.44 $0.47 $0.44
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.76+ 1.81 1.80 1.80 1.80 1.79
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.67+ 3.50 3.66 3.88 4.10 4.03
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -------------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $11.52 $11.49 $10.90 $11.11 $10.60 $11.35
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.26* $0.51 $0.52 $0.53 $0.55 $0.57
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.10) 0.03 0.60 (0.21) 0.52 (0.76)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.16 $0.54 $1.12 $0.32 $1.07 $(0.19)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.25) $(0.51) $(0.53) $(0.52) $(0.56) $(0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.25) $(0.51) $(0.53) $(0.53) $(0.56) $(0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.43* $11.52 $11.49 $10.90 $11.11 $10.60
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.47++ 4.82 10.42 2.93 10.44 (1.57)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.81+* 0.95 0.92 0.92 0.92 0.92
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.62+* 4.39 4.56 4.73 5.10 5.29
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 4 14 15 13 22 35
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $214,634 $224,923 $233,500 $210,269 $216,272 $207,228
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.25 $0.48 $0.49 $0.51 $0.53 $0.55
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.06+* 1.16 1.12 1.12 1.12 1.10
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.37+* 4.18 4.36 4.53 4.90 5.11
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include applicable sales charge. If the charge had been included, the results would have been lower.
* Includes a non-recurring reimbursement of prior period out-of-pocket expenses to certain third party shareholder servicing
costs, recorded on April 28, 2004. Had the reimbursement not occurred, the expense ratio would have increased by 0.06%, and
the net investment income ratio would have decreased by (0.06)%. The impact of this reimbursement on the net investment
income and net asset value calculated to less than $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $11.54 $11.51 $10.92 $11.12 $10.60 $11.35
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.22* $0.43 $0.44 $0.46 $0.48 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.09) 0.04 0.60 (0.20) 0.53 (0.76)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.47 $1.04 $0.26 $1.01 $(0.26)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.22) $(0.44) $(0.45) $(0.45) $(0.49) $(0.49)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.22) $(0.44) $(0.45) $(0.46) $(0.49) $(0.49)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.45* $11.54 $11.51 $10.92 $11.12 $10.60
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.14++ 4.14 9.69 2.35 9.82^ (2.30)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.46+* 1.60 1.57 1.57 1.57 1.57
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.97+* 3.74 3.91 4.13 4.45 4.64
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 4 14 15 13 22 35
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $42,620 $46,253 $47,612 $37,487 $30,057 $25,743
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for certain of the periods indicated. In addition, for the
period ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional
share of Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund,
the net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.21 $0.41 $0.42 $0.44 $0.46 $0.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
Expenses## 1.71+* 1.80 1.77 1.77 1.77 1.75
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.72+* 3.54 3.71 3.93 4.25 4.46
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The total return previously reported for the year ended March 31, 2001 has been revised, from (9.82)% to 9.82%.
* Includes a non-recurring reimbursement of prior period out-of-pocket expenses to certain third party shareholder servicing
costs, recorded on April 38, 2004. Had the reimbursement not occurred, the expense ratio would have increased by 0.06%, and
the net investment income ratio would have decreased by (0.06%). The impact of this reimbursement on the net investment
income and net assets value calculated to less than $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENT (Unaudited)
- -------------------------------------------------------------------------------
(1) BUSINESS AND ORGANIZATION
MFS Alabama Municipal Bond Fund (Alabama Fund), MFS Arkansas Municipal Bond
Fund (Arkansas Fund), MFS California Municipal Bond Fund (California Fund), MFS
Florida Municipal Bond Fund (Florida Fund), MFS Georgia Municipal Bond Fund
(Georgia Fund), MFS Maryland Municipal Bond Fund (Maryland Fund), and MFS
Massachusetts Municipal Bond Fund (Massachusetts Fund) are each a non-
diversified series of MFS Municipal Series Trust (the trust). The trust is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
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. Because
each fund invests primarily in the securities of a single state and its
political subdivisions, each fund is vulnerable to the effects of changes in
the legal and economic environment of the particular state. Municipal
securities backed by current or anticipated revenues from a specific project or
specific assets can be negatively affected by the discontinuance of the
taxation supporting the projects or assets or the inability to collect revenues
for the project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, interest from the security could become taxable and the security
could decline in value.
INVESTMENT VALUATIONS - Bonds and other fixed income securities (other than
short-term obligations) in each fund's portfolio are valued at an evaluated bid
price as reported by an independent pricing service, or to the extent a
valuation is not reported by a pricing service, such securities are valued on
the basis of quotes from brokers and dealers. Prices obtained from pricing
services utilize both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate 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 quoted prices or exchange or over-the-
counter prices, since such valuations are believed to reflect more accurately
the fair value of such securities. Short-term obligations with a remaining
maturity in excess of 60 days will be valued upon dealer-supplied valuations.
All other short-term obligations in each of the fund's portfolio are valued at
amortized cost, which constitutes market value as determined by the Board of
Trustees. When pricing service information or market quotations are not readily
available, securities are priced at fair value as determined under the
direction of the Board of Trustees.
SWAP AGREEMENTS - Each fund may enter into swap agreements. A swap is an
exchange of cash payments between the fund and another party, which is based on
a specific financial index. Cash payments are exchanged at specified intervals
and the expected income or expense is recorded on the accrual basis. The value
of the swap is adjusted daily and the change in value is recorded as unrealized
appreciation or depreciation. Risks may arise upon entering into these
agreements from the potential inability of counterparties to meet the terms of
their contract and from unanticipated changes in the value of the financial
index on which the swap agreement is based. The funds may use swaps for both
hedging and non-hedging purposes. For hedging purposes, each fund may use swaps
to reduce its exposure to interest and foreign exchange rate fluctuations. For
non-hedging purposes, each fund may use swaps to take a position on anticipated
changes in the underlying financial index.
INTEREST RATE SWAP AGREEMENTS - Interest rate swap agreements are agreements to
exchange cash flows periodically based on a notional principal amount, for
example the exchange of fixed rate interest payments for floating rate interest
payments which are based on a specific financial index, or the exchange of two
distinct floating rate payments. The net receivable or payable associated with
these payments is accrued daily and is recorded as net interest income or
expense. For financial statement purposes, the net interest income or expense
periodically recognized for an interest rate swap is recorded in the same line
item as any unrealized and realized gains or losses recognized for that
instrument. The primary risk associated with interest rate swap agreements is
that unfavorable changes in the fluctuation of interest rates could adversely
impact the funds.
RATE LOCK SWAPS - Each fund may enter into rate lock swaps, which are used to
reduce the interest rate risk of the portfolio. A rate lock swap is a payment
or receipt of cash on a specified future date, calculated as the difference
between the strike rate and a specific index yield on that date. The payment
received or made at the end of the measurement period is recorded as a realized
gain or loss in the Statement of Operations. The value of the swap is adjusted
daily and the change in value is recorded as unrealized appreciation or
depreciation.
SHORT TERM FEES - For purchases made on or after July 1, 2004, each fund will
charge a 2% redemption fee (which is retained by each fund) on proceeds from
Class A, Class B, and Class C shares redeemed or exchanged within 5 business
days following their acquisition (either by purchase or exchange). The funds
may change the redemption fee period in the future, including changes in
connection with pending Securities and Exchange Commission rules. See the
funds' prospectus for details. These fees are accounted for as an addition to
paid-in capital.
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 purposes in
accordance with U.S. generally accepted accounting principles. All premium and
original issue discount is amortized or accreted for tax reporting purposes as
required by federal income tax regulations. Interest payments received in
additional securities are recorded on the ex-dividend or ex-interest date in an
amount equal to the value of the security on such date.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions made directly to the security issuer,
which are generally non-recurring, incurred to protect or enhance the value of
high-yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
FEES PAID INDIRECTLY - Each fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount, for the six months ended September 30, 2004, is shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - Each fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net tax-
exempt and taxable net income, including any net realized gain on investments.
Accordingly, no provision for federal income or excise tax is provided.
Distributions paid by each fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for federal
income tax purposes because each fund intends to meet certain requirements of
the Code applicable to regulated investment companies, which will enable each
fund to pay exempt-interest dividends. The portion of such interest, if any,
earned on private activity bonds issued after August 7, 1986 may be considered
a tax-preference item to shareholders.
Distributions to shareholders are recorded on the ex-dividend date. Each fund
distinguishes between distributions on a tax basis and a financial reporting
basis and only distributions in excess of tax basis earnings and profits are
reported in the financial statements as distributions from paid-in capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. Common
types of book and tax differences that could occur include differences in
accounting for derivatives, defaulted bonds, capital losses, and amortization
and accretion on debt securities.
The tax character of distributions paid for the years ended March 31, 2004 and
March 31, 2003 was as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
YEAR ENDED 3/31/04 FUND FUND FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions declared from:
Tax-exempt income $4,299,054 $6,440,961 $20,587,242 $4,790,668 $3,071,307 $7,429,929 $12,099,617
- ------------------------------------------------------------------------------------------------------------------------------------
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
YEAR ENDED 3/31/03 FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions declared from:
Tax-exempt income $4,493,757 $6,651,032 $21,427,690 $4,888,336 $3,242,913 $7,569,470 $12,206,827
- ------------------------------------------------------------------------------------------------------------------------------------
Ordinary income 59,140 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term capital gain 43,388 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared $4,596,285 $6,651,032 $21,427,690 $4,888,336 $3,242,913 $7,569,470 $12,206,827
- ------------------------------------------------------------------------------------------------------------------------------------
As of March 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed tax-exempt income $152,373 $369,349 $452,093 $218,278 $57,013 $248,158 $408,532
- ------------------------------------------------------------------------------------------------------------------------------------
Capital loss carryforward (134,683) (815,441) (1,968,114) (1,591,545) (316,767) (1,455,666) (937,774)
- ------------------------------------------------------------------------------------------------------------------------------------
Unrealized gain 8,238,413 13,143,642 31,264,481 6,876,654 6,232,810 14,501,988 22,339,252
- ------------------------------------------------------------------------------------------------------------------------------------
Other temporary differences (362,183) (585,592) (1,728,241) (385,444) (260,097) (615,488) (987,479)
- ------------------------------------------------------------------------------------------------------------------------------------
At March 31, 2004, the following funds, for federal income tax purposes, had a capital loss carryforward which may be applied
against any net taxable realized gains of each succeeding year until the earlier of its utilization or expiration on:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
EXPIRATION DATE FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2005 $-- $(215,971) $-- $(524,124) $-- $(1,055,172) $(405,183)
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2006 -- -- -- (781,761) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2007 -- -- -- -- -- -- (242,062)
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2008 -- (15,757) (87,023) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2009 -- -- (1,881,091) -- (316,767) (400,494) --
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2010 -- -- -- (164,025) -- -- (290,529)
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2011 -- -- -- (121,635) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 2012 (134,683) (583,713) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total $(134,683) $(815,441) $(1,968,114) $(1,591,545) $(316,767) $(1,455,666) $(937,774)
- ------------------------------------------------------------------------------------------------------------------------------------
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - Each fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. Differences in per
share dividend rates are generally due to differences in separate class
expenses. Class B shares will convert to Class A shares approximately eight
years after purchase.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
each fund's average daily net assets. The investment adviser has contractually
agreed to waive a portion of its fee, which is shown as a reduction of total
expenses in the Statement of Operations. In the case of the Massachusetts Fund
the reduction of expenses by the investment adviser includes a non-recurring
reimbursement of prior period out-of-pocket shareholder servicing costs in the
amount of $81,135. As part of a settlement agreement with the New York Attorney
General concerning market timing and related matters (See Legal Proceedings
footnote), MFS has agreed to reduce each fund's management fee to 0.30% of
average daily net assets for the period March 1, 2004 through February 28,
2009. During this time period, the Board of Trustees will continue to review
the appropriateness of all advisory fees in accordance with their oversight
responsibilities. After February 28, 2009 the management fee will be determined
in accordance with then existing review policies approved by the Board of
Trustees overseeing each fund. Management fees incurred for the six months
ended September 30, 2004 were charged at an effective rate of 0.30% of average
daily net assets on an annualized basis for each fund.
Each fund pays compensation to its Independent Trustees in the form of a
retainer, attendance fees, and additional compensation to Board and Committee
chairpersons, and pays no compensation directly to its Trustees who are
officers of the investment adviser, or to officers of the funds, all of whom
receive remuneration for their services to the funds from MFS. Certain officers
and Trustees of the funds are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD), and MFS Service Center, Inc. (MFSC). Each fund has an
unfunded defined benefit plan for retired Independent Trustees. Included in
Trustees' compensation is a pension expense for retired Independent Trustees
for the six months ended September 30, 2004:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Pension Expense $521 $488 $599 $486 $492 $687 $702
- ------------------------------------------------------------------------------------------------------------------------------------
These funds and certain other MFS funds (the "funds") have entered into a
services agreement (the Agreement) which provides for payment of fees by the
funds to Tarantino LLC in return for the provision of services of an
Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an
officer of the funds and the sole member of Tarantino LLC. MFS has agreed to
reimburse each of the funds for a proportional share of substantially all of
the payments made by the funds to Tarantino LLC and also to provide office
space and other administrative support and supplies to the ICCO. The funds can
terminate the Agreement with Tarantino LLC at any time under the terms of the
Agreement.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment adviser. Under an administrative services
agreement between the funds and MFS, MFS is entitled to partial reimbursement
of the costs MFS incurs to provide these services, subject to review and
approval by the Board of Trustees. Each fund is allocated a portion of these
administrative costs based on its size and relative average net assets.
Effective April 1, 2004, each fund paid MFS an administrative fee up to the
following annual percentage rates of each fund's average daily net assets:
First $2 billion 0.01120%
- -------------------------------------------------------------------------------
Next $2.5 billion 0.00832%
- -------------------------------------------------------------------------------
Next $2.5 billion 0.00032%
- -------------------------------------------------------------------------------
In excess of $7 billion 0.00000%
- -------------------------------------------------------------------------------
For the six months ended September 30, 2004, each fund paid MFS the following
amounts to partially reimburse MFS for the costs of providing administrative
services:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses Paid $4,023 $6,113 $17,693 $3,923 $2,931 $6,880 $10,982
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage of average daily net
assets 0.0085% 0.0085% 0.0085% 0.0086% 0.0085% 0.0085% 0.0085%
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTOR - MFD, a wholly owned subsidiary of MFS, as distributor, received
the following amounts as its portion of the sales charge on sales of Class A
shares for the six months ended September 30, 2004:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------
$12,071 $16,780 $28,713 $5,543 $5,130 $13,611 $23,132
- -------------------------------------------------------------------------------
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:
Each fund's distribution plan provides that each fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFS may pay expenses on behalf of the fund related to the
distribution and servicing of its shares. These expenses include a service fee
paid to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum of each 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 each fund's average daily
net assets attributable to Class A shares. For the six months ended September
30, 2004, MFD retained the following service fees for accounts not attributable
to a securities dealer:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------
$630 $643 $1,931 $-- $424 $1,951 $23,917
- -------------------------------------------------------------------------------
During the six month ended September 30, 2004, fees incurred under the
distribution plan as a percentage of each fund's average daily net assets
attributable to Class A shares on an annualized basis were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------
0.25% 0.10% 0.10% 0.00% 0.25% 0.35% 0.35%
- -------------------------------------------------------------------------------
Payments of the 0.10% per annum Class A distribution fee will be implemented on
such a date as the Trustees of the trust may determine for the Alabama,
Arkansas, California, Florida, and Georgia funds. Payment of the 0.25% per
annum Class A service fee by the Florida Fund will commence on such date as the
Trustees of the trust may determine. In the case of the Arkansas and California
Funds, a portion of the service fee is currently being paid by each fund;
payment of the remaining portion for the Class A service fee will become
payable on such date as the Trustees of the trust may determine.
Each fund's distribution plan provides that the fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the fund's average daily net assets attributable to Class B and Class
C shares. MFD will pay to securities dealers that enter into a sales agreement
with MFD all or a portion of the service fee attributable to Class B and Class
C shares, and will pay to such securities dealers all of the distribution fee
attributable to Class C shares. The service fee is intended to be consideration
for services rendered by the dealer with respect to Class B and Class C shares.
MFD retains the service fee for accounts not attributable to securities
dealers. Class B and Class C service fees during the six months ended September
30, 2004 were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class B $43 $-- $16 $-- $10 $93 $112
- ------------------------------------------------------------------------------------------------------------------------------------
Class C N/A N/A $719 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
During the six months ended September 30, 2004, fees incurred under the distribution plan as a percentage of average daily net
assets attributable to Class B and Class C shares on an annualized basis were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 1.00% 0.86% 0.85% 0.77% 1.00% 1.00% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C N/A N/A 1.00% N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Except in the case of the 0.25% per annum first year Class B shares service fee, payments by the Florida Fund will be suspended
until such date as the Trustees of the trust may determine. In the case of the Arkansas and California funds, the 0.25% per annum
Class B service fee for the sale of Class B shares in the first year is currently 0.10%.
Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption
within, for Class A shares, 12 months following the purchase, and, for Class C shares, the first year from the end of the calendar
month of 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 from the end of the calendar month of purchase. MFD receives all contingent deferred sales
charges. Contingent deferred sales charges (CDSC) imposed during the six months ended September 30, 2004 were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------------
Class A $-- $9,620 $-- $-- $-- $-- $--
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 33,202 18,647 103,249 31,586 19,253 21,613 46,622
- ---------------------------------------------------------------------------------------------------------------------------------
Class C N/A N/A 5,197 N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT - Included in shareholder servicing costs is a fee paid to MFSC, a wholly owned subsidiary of MFS, for
its services as shareholder servicing agent. The fee, which is calculated as a percentage of each fund's average daily net assets
is set periodically under the supervision of the fund's Trustees. For the period April 1, 2004 through June 30, 2004, the fee was
set at 0.10% of each fund's average daily net assets. Effective July 1, 2004, each fund is charged up to 0.0861% of its average
daily net assets. For the six months ended September 30, 2004, each fund paid MFSC the following fee for shareholder services:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Expense paid $43,349 $65,830 $190,408 $41,989 $31,568 $72,987 $118,193
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of average
daily net assets 0.0915% 0.0917% 0.0915% 0.0917% 0.0917% 0.0905% 0.0915%
- -----------------------------------------------------------------------------------------------------------------------------------
Also included in shareholder servicing costs are out-of-pocket expenses
(credit), paid to/by MFSC, which amounted to the following for the six months
ended September 30, 2004, as well as other expenses paid to unaffiliated
vendors:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------
$1,033 $(5,950) $1,232 $1,176 $432 $613 $5,467
- --------------------------------------------------------------------------------
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Purchases $11,670,035 $6,952,251 $33,052,128 $6,233,429 $6,890,201 $9,423,000 $11,000,607
- ---------------------------------------------------------------------------------------------------------------------------------
Sales 13,785,517 10,095,657 68,132,612 21,214,565 7,907,666 19,575,514 22,940,664
- ---------------------------------------------------------------------------------------------------------------------------------
The cost and unrealized appreciation and depreciation in the value of the investments owned by each fund, as computed on a federal
income tax basis, are as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Aggregate cost $86,557,889 $130,980,433 $384,307,150 $80,794,751 $63,978,063 $146,482,066 $234,168,242
- ----------------------------------------------------------------------------------------------------------------------------------
Gross unrealized
appreciation $7,432,448 $11,671,743 $29,679,092 $5,942,613 $5,754,452 $12,871,591 $20,483,902
- ----------------------------------------------------------------------------------------------------------------------------------
Gross unrealized
depreciation (427,351) (77,325) (3,276,574) (142,141) (70,576) (439,863) (833,833)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $7,005,097 $11,594,418 $26,402,518 $5,800,472 $5,683,876 $12,431,728 $19,650,069
- ----------------------------------------------------------------------------------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST
The Trust's Declaration permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest. Transactions in fund shares
were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended 9/30/04
(000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Shares sold 262 $2,772 346 $3,527 1,723 $10,067 351 $3,527
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 114 1,221 206 2,105 765 4,486 92 926
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (541) (5,756) (1,133) (11,514) (3,902) (22,700) (1,409) (14,052)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change (165) $(1,763) (581) $(5,882) (1,414) $(8,147) (966) $(9,599)
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 726 $7,893 1,380 $14,370 6,490 $38,645 1,178 $12,024
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 207 2,241 348 3,618 1,394 8,298 179 1,822
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (1,322) (14,349) (1,283) (13,287) (11,257) (66,990) (2,067) (21,072)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change (389) $(4,215) 445 $4,701 (3,373) $(20,047) (710) $(7,226)
- ------------------------------------------------------------------------------------------------------------------------------------
ALABAMA ARKANSAS CALIFORNIA FLORIDA
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended 9/30/04 (000
Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
CLASS B SHARES
Shares sold 97 $1,026 61 $618 235 $1,372 72 $722
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 18 197 15 151 186 1,092 20 200
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (173) (1,838) (129) (1,310) (1,801) (10,487) (348) (3,471)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change (58) $(615) (53) $(541) (1,380) $(8,023) (256) $(2,549)
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 350 $3,812 200 $2,100 1,820 $10,917 295 $3,014
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 32 346 25 254 368 2,189 38 383
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (282) (3,048) (178) (1,856) (4,539) (26,957) (624) (6,349)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change 100 $1,110 47 $498 (2,351) $(13,851) (291) $(2,952)
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended 9/30/04
(000 Omitted) SHARES AMOUNT
CLASS C
Shares sold 376 $2,191
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 80 473
- ----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (768) (4,473)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change (312) $(1,809)
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 2,792 $16,538
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 170 1,004
- ----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (2,264) (13,435)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change 698 $4,107
- ----------------------------------------------------------------------------------------------------------------------------------
GEORGIA MARYLAND MASSACHUSETTS
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended 9/30/04
(000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Shares sold 167 $1,836 284 $3,264 594 $6,701
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 80 876 182 2,090 234 2,642
- ----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (340) (3,711) (1,179) (13,508) (1,569) (17,607)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change (93) $(999) (713) $(8,154) (741) $(8,264)
- ----------------------------------------------------------------------------------------------------------------------------------
Year ending 3/31/04 (000 Omitted)
Shares sold 568 $6,339 759 $8,889 1,640 $18,843
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 145 1,614 332 3,885 435 4,994
- ----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (911) (10,174) (1,186) (13,849) (2,878) (33,079)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change (198) $(2,221) (95) $(1,075) (803) $(9,242)
- ----------------------------------------------------------------------------------------------------------------------------------
GEORGIA MARYLAND MASSACHUSETTS
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended 9/30/04
(000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
CLASS B
Shares sold 21 $235 78 $889 101 $1,151
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 17 183 33 378 54 609
- ----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (158) (1,734) (239) (2,730) (440) (4,958)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change (120) $(1,316) (128) $(1,463) (285) $(3,198)
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 214 $2,410 276 $3,240 635 $7,331
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 31 346 61 712 98 1,126
- ----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (369) (4,140) (550) (6,433) (863) (9,965)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change (124) $(1,384) (213) $(2,481) (130) $(1,508)
- ----------------------------------------------------------------------------------------------------------------------------------
(6) LINE OF CREDIT
The trust and other affiliated funds participate in an $800 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each fund, based on its borrowings, at a rate equal to the Federal
Reserve funds rate plus 0.50%. 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 calendar quarter. The commitment fee
allocated to each fund for the six months ended September 30, 2004 ranged from
$123 to $950, and is included in miscellaneous expense. None of the funds had
significant borrowings during the six months ended September 30, 2004.
(7) FINANCIAL INSTRUMENTS
The trust trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to market
risks such as interest rates and foreign currency exchange rates. These
financial instruments include swap agreements. The notional or contractual
amounts of these instruments represent the investment the fund has in
particular classes of financial instruments and does not necessarily represent
the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered.
Swap Agreements
Interest Rate Swaps
NOTIONAL PRINCIPAL CASH FLOWS UNREALIZED
AMOUNT OF RECEIVED BY CASH FLOWS PAID APPRECIATION
FUND EXPIRATION CONTRACT (000 OMITTED) THE FUND BY THE FUND (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------------------------
Alabama Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 2,500 BMA Swap Index (1.945%) $(3,227)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 1,900 BMA Swap Index (3.444%) 11,545
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 1,900 BMA Swap Index (3.73%) (32,354)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 1,900 BMA Swap Index (3.576%) (8,504)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/17/14 1,500 BMA Swap Index (4.1125%) (69,751)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/23/16 2,000 BMA Swap Index (4.33%) (116,300)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 2,000 BMA Swap Index (4.043%) (59,822)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 1,500 BMA Swap Index (3.995%) (39,552)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 1,000 BMA Swap Index (3.937%) (18,080)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,000 (4.132%) BMA Swap Index (7,261)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/9/34 1,000 (4.322%) BMA Swap Index 20,524
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,000 (4.2%) BMA Swap Index 1,810
- -----------------------------------------------------------------------------------------------------------------------------------
Total Alabama Fund $(320,972)
- -----------------------------------------------------------------------------------------------------------------------------------
Arkansas Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 3,200 BMA Swap Index (1.945%) $(4,131)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 2,850 BMA Swap Index (3.444%) 17,317
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 2,850 BMA Swap Index (3.73%) (48,532)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 2,850 BMA Swap Index (3.576%) (12,755)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/17/14 2,750 BMA Swap Index (4.1125%) (127,878)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/23/16 2,000 BMA Swap Index (4.33%) (116,300)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/1/16 3,000 BMA Swap Index (4.361%) (180,952)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 3,000 BMA Swap Index (4.043%) (89,732)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 2,500 BMA Swap Index (3.995%) (65,920)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 2,000 BMA Swap Index (3.937%) (36,160)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/6/19 1,500 BMA Swap Index (4.128%) (47,869)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/20/19 2,000 BMA Swap Index (4.24%) (81,198)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,500 (4.132%) BMA Swap Index (10,891)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/9/34 1,500 (4.322%) BMA Swap Index 30,786
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,500 (4.2%) BMA Swap Index 2,716
- -----------------------------------------------------------------------------------------------------------------------------------
Total Arkansas Fund $(771,499)
- -----------------------------------------------------------------------------------------------------------------------------------
California Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 10,500 BMA Swap Index (1.945%) $(13,555)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 9,000 BMA Swap Index (3.444%) 54,685
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 9,000 BMA Swap Index (3.73%) (153,258)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 8,550 BMA Swap Index (3.576%) (38,266)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 5,000 BMA Swap Index (4.043%) (149,554)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 6,000 BMA Swap Index (3.995%) (158,209)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 3,000 BMA Swap Index (3.937%) (54,240)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 4,500 (4.132%) BMA Swap Index (32,674)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/9/34 4,500 (4.322%) BMA Swap Index 92,358
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 4,500 (4.2%) BMA Swap Index 8,147
- -----------------------------------------------------------------------------------------------------------------------------------
Total California Fund $(444,566)
- -----------------------------------------------------------------------------------------------------------------------------------
Florida Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 1,500 BMA Swap Index (1.945%) $(1,936)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 1,900 BMA Swap Index (3.444%) 11,545
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 1,900 BMA Swap Index (3.73%) (32,354)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 1,900 BMA Swap Index (3.576%) (8,504)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/23/16 1,000 BMA Swap Index (4.33%) (58,150)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 1,500 BMA Swap Index (4.043%) (44,866)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/15/16 1,000 BMA Swap Index (4.071%) (33,464)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 2,000 BMA Swap Index (3.995%) $(52,736)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 2,000 BMA Swap Index (3.937%) (36,160)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
3/22/17 2,500 BMA Swap Index (3.666%) 25,256
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/6/19 1,000 BMA Swap Index (4.128%) (31,912)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/20/19 1,000 BMA Swap Index (4.24%) (40,599)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,000 (4.132%) BMA Swap Index (7,261)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/9/34 1,000 (4.322%) BMA Swap Index 20,524
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,000 (4.2%) BMA Swap Index 1,810
- -----------------------------------------------------------------------------------------------------------------------------------
Total Florida Fund $(288,807)
- -----------------------------------------------------------------------------------------------------------------------------------
Georgia Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 1,750 BMA Swap Index (1.945%) $(2,259)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 1,425 BMA Swap Index (3.444%) 8,659
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 1,425 BMA Swap Index (3.73%) (24,266)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 1,520 BMA Swap Index (3.576%) (6,803)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/16/16 2,500 BMA Swap Index (4.371%) (161,365)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/1/16 1,000 BMA Swap Index (4.361%) (60,317)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 1,500 BMA Swap Index (4.043%) (44,866)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 1,000 BMA Swap Index (3.995%) (26,368)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 1,000 BMA Swap Index (3.937%) (18,080)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/6/19 700 BMA Swap Index (4.128%) $(22,339)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/20/19 1,000 BMA Swap Index (4.24%) (40,599)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 750 (4.132%) BMA Swap Index (5,446)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/9/34 750 (4.322%) BMA Swap Index 15,393
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 800 (4.2%) BMA Swap Index 1,448
- -----------------------------------------------------------------------------------------------------------------------------------
Total Georgia Fund $(387,208)
- -----------------------------------------------------------------------------------------------------------------------------------
Maryland Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 2,400 BMA Swap Index (1.945%) $(3,098)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 3,325 BMA Swap Index (3.444%) 20,203
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 3,325 BMA Swap Index (3.73%) (56,620)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 3,420 BMA Swap Index (3.576%) (15,307)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/17/14 3,000 BMA Swap Index (4.1125%) (139,503)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/1/16 2,000 BMA Swap Index (4.361%) (120,635)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 3,000 BMA Swap Index (4.043%) (89,732)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 3,000 BMA Swap Index (3.995%) (79,104)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 3,500 BMA Swap Index (3.937%) (63,280)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
3/22/17 1,300 BMA Swap Index (3.666%) 13,133
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/6/19 1,700 BMA Swap Index (4.128%) (54,251)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,750 (4.132%) BMA Swap Index (12,707)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/9/34 1,750 (4.322%) BMA Swap Index $35,917
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,800 (4.2%) BMA Swap Index 3,259
- -----------------------------------------------------------------------------------------------------------------------------------
Total Maryland Fund $(561,725)
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 6,000 BMA Swap Index (1.945%) $(7,746)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 5,225 BMA Swap Index (3.444%) 31,748
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 5,225 BMA Swap Index (3.73%) (88,975)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 5,225 BMA Swap Index (3.576%) (23,385)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 5,000 BMA Swap Index (4.043%) (149,554)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 4,000 BMA Swap Index (3.995%) (105,472)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 4,000 BMA Swap Index (3.937%) (72,320)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 2,750 (4.132%) BMA Swap Index (19,968)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/9/34 2,750 (4.322%) BMA Swap Index 56,441
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 2,750 (4.2%) BMA Swap Index 4,979
- -----------------------------------------------------------------------------------------------------------------------------------
Total Massachusetts Fund $(374,252)
- -----------------------------------------------------------------------------------------------------------------------------------
At September 30, 2004, each fund had sufficient cash and/or securities to
cover any commitments under these contracts.
(8) RESTRICTED SECURITIES
Each fund may invest not more than 15% of its total assets in securities that
are subject to legal or contractual restrictions on resale. At September 30,
2004, the funds owned the following restricted securities, excluding
securities issued under Rule 144A, which may not be publicly sold without
registration under the Securities Act of 1933. Each fund does not have the
right to demand that such securities be registered. The value of these
securities is determined by valuations furnished by dealers or by a pricing
service, or if not available, in good faith at the direction of the Trustees.
DATE OF SHARE/PAR
FUND DESCRIPTION ACQUISITION AMOUNT COST VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
Alabama Fund Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2013 5/20/99 500,000 $521,978 $607,950
- -----------------------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES, AMBAC, 8.0918%, 2018 5/20/99 4,500,000 4,384,869 5,007,870
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA,
9.1574%, 2017 1/6/00 500,000 470,423 609,780
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.8516%, 2013 3/31/99 500,000 506,497 653,020
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.8516%, 2016 9/30/99 500,000 569,030 664,380
- -----------------------------------------------------------------------------------------------------------------------------------
$7,543,000
- -----------------------------------------------------------------------------------------------------------------------------------
Arkansas Fund Commonwealth of Puerto Rico, Infrastructure, RITES, ETM,
9.121%, 2019 10/5/00 1,250,000 $1,282,225 $1,546,725
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, MBIA, 9.621%, 2020 3/30/00 3,000,000 3,067,320 3,852,720
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA, 9.157%, 2017 1/6/00 735,000 692,046 896,377
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA, 9.157%, 2018 1/6/00 3,250,000 3,020,238 3,938,935
- -----------------------------------------------------------------------------------------------------------------------------------
$10,234,757
- --------------------------------------------------------------------------------
California Fund Los Angeles, CA, RITES, 8.582%, 2014 7/20/99 5,405,000 $5,601,471 $6,895,159
- -----------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Union School District, RITES, FSA,
8.582%, 2020 3/4/03 5,000,000 5,735,068 5,955,200
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLS, Series II R 124B, XLCA,
9.136%, 2017 10/22/01 1,500,000 1,769,948 2,004,000
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLS, Series II R 184C, FGIC,
9.236%, 2016 8/5/02 3,300,000 4,205,292 4,469,454
- -----------------------------------------------------------------------------------------------------------------------------------
Southern California Metropolitan Water District, Rev., RITES,
9.582%, 2018 5/7/01 5,000,000 5,716,218 6,950,700
- -----------------------------------------------------------------------------------------------------------------------------------
State of California, RITES, "B", 9.563%, 2017 1/3/00 1,250,000 1,269,176 1,589,200
- -----------------------------------------------------------------------------------------------------------------------------------
University of California Rev., RITES, MBIA, 8.332%, 2016 5/21/99 5,705,000 5,770,564 6,500,163
- -----------------------------------------------------------------------------------------------------------------------------------
$34,363,876
- -----------------------------------------------------------------------------------------------------------------------------------
Florida Fund Commonwealth of Puerto Rico, Highway & Transportation, ROLS,
Railroad II R 227 1, MBIA, 9.226%, 2020 4/25/03 2,500,000 $3,282,600 $3,401,800
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, MBIA, 9.621%, 2019 3/30/00 1,000,000 1,030,240 1,284,240
- -----------------------------------------------------------------------------------------------------------------------------------
State of Florida, RITES, 8.062%, 2017 4/9/99 3,000,000 3,042,840 3,389,580
- -----------------------------------------------------------------------------------------------------------------------------------
$8,075,620
- -----------------------------------------------------------------------------------------------------------------------------------
Georgia Fund Atlanta, GA, Water & Wastewater Rev., RITES, FGIC,
9.052%, 2016 4/20/99 4,000,000 $4,668,400 $5,330,560
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA,
10.165%, 2016 1/6/00 500,000 519,760 650,370
- -----------------------------------------------------------------------------------------------------------------------------------
$5,980,930
- -----------------------------------------------------------------------------------------------------------------------------------
Maryland Fund Guam Power Authority Rev., RITES, AMBAC, 8.592%, 2015 5/20/99 1,680,000 $1,760,909 $2,005,080
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Rev., RITES, FSA, 8.560%, 2015 9/16/99 1,400,000 1,367,100 1,650,614
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA, 9.157%, 2019 1/6/00 1,000,000 905,080 1,208,220
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.852%, 2013 9/30/99 500,000 509,110 653,020
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.852%, 2016 3/31/99 1,520,000 1,729,851 2,019,715
- -----------------------------------------------------------------------------------------------------------------------------------
$7,536,649
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Fund Dudley-Charlton, MA, Regional School District, RITES, FGIC,
8.759%, 2015 5/5/99 1,365,000 $1,465,952 $1,753,124
- -----------------------------------------------------------------------------------------------------------------------------------
Dudley-Charlton, MA, Regional School District, RITES, FGIC,
8.759%, 2016 5/5/99 1,430,000 1,527,981 1,841,068
- -----------------------------------------------------------------------------------------------------------------------------------
Dudley-Charlton, MA, Regional School District, RITES, FGIC,
8.759%, 2018 5/5/99 1,565,000 1,663,348 2,013,122
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority, RITES, 10.530%,
2016 4/19/00 4,835,000 5,350,820 6,701,794
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, RITES, FGIC, 11.053%,
2019 3/16/00 4,010,000 4,627,761 5,889,728
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 9.028%, 2016 3/31/99 2,500,000 2,760,554 3,321,900
- -----------------------------------------------------------------------------------------------------------------------------------
$21,520,736
- -----------------------------------------------------------------------------------------------------------------------------------
At September 31, 2004, restricted securities constituted the following
percentages of each fund's net assets:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------
7.97% 7.13% 8.30% 9.16% 8.63% 4.76% 8.37%
- ------------------------------------------------------------------------------
(9) CONCENTRATION OF CREDIT RISK
Since each fund invests a substantial portion of its assets in issuers located
in one state, it will be more susceptible to factors adversely affecting
issuers of that state than would be a comparable tax-exempt mutual fund that
invests nationally. The risk associated with such factors is mitigated by the
fact that a percentage of securities in a portfolio of investments are backed
by letters of credit or bond insurance of various financial institutions and
financial guaranty assurance agencies. At September 30, 2004, the percentage of
holdings that carried such enhancements were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------
69.18% 68.01% 52.25% 59.53% 47.90% 38.08% 47.67%
- ------------------------------------------------------------------------------
For each fund, the greatest exposure to any one institution or agency did not
exceed the following percentages of total investments as of September 30,
2004:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------
38.83% 17.46% 14.96% 25.98% 17.63% 14.17% 15.30%
- ------------------------------------------------------------------------------
(10) LEGAL PROCEEDINGS
On March 31, 2004, MFS settled an administrative proceeding with the Securities
and Exchange Commission ("SEC") regarding disclosure of brokerage allocation
practices in connection with MFS fund sales (the term "MFS funds" means the
open-end registered management investment companies sponsored by MFS). Under
the terms of the settlement, in which MFS neither admitted nor denied any
wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50
million in penalty to certain MFS funds, pursuant to a plan developed by an
independent distribution consultant. The brokerage allocation practices which
were the subject of this proceeding were discontinued by MFS in November 2003.
The agreement with the SEC is reflected in an order of the SEC. Pursuant to the
SEC order, on July 28, 2004, MFS transferred these settlement amounts to the
SEC, and those MFS funds entitled to these settlement amounts accrued an
estimate of their pro rata portion of these amounts. Once the final
distribution plan is approved by the SEC, these amounts will be distributed by
the SEC to the affected MFS funds. The SEC settlement order states that MFS
failed to adequately disclose to the Boards of Trustees and to shareholders of
the MFS funds the specifics of its preferred arrangements with certain
brokerage firms selling MFS fund shares. The SEC settlement order states that
MFS had in place policies designed to obtain best execution of all MFS fund
trades. As part of the settlement, MFS retained an independent compliance
consultant to review the completeness of its current policies and practices
regarding disclosure to MFS fund trustees and to MFS fund shareholders of
strategic alliances between MFS or its affiliates and broker-dealers and other
financial advisers who support the sale of MFS fund shares.
In addition, in February, 2004, MFS reached agreement with the SEC, the New
York Attorney General ("NYAG") and the Bureau of Securities Regulation of the
State of New Hampshire ("NH") to settle administrative proceedings alleging
false and misleading information in certain MFS retail fund prospectuses
regarding market timing and related matters (the "February Settlements"). These
regulators alleged that prospectus language for certain MFS retail funds was
false and misleading because, although the prospectuses for those funds in the
regulators' view indicated that the MFS funds prohibited market timing, MFS did
not limit trading activity in 11 domestic large cap stock, high grade bond and
money market funds. MFS' former Chief Executive Officer, John W. Ballen, and
former President, Kevin R. Parke, also reached agreement with the SEC in which
they agreed to, among other terms, monetary fines and temporary suspensions
from association with any investment adviser or registered investment company.
Messrs. Ballen and Parke have resigned their positions with, and will not be
returning to, MFS and the MFS funds. Under the terms of the February
Settlements, MFS and the executives neither admit nor deny wrongdoing.
Under the terms of the February Settlements, a $225 million pool has been
established for distribution to shareholders in certain MFS retail funds, which
has been funded by MFS and of which $50 million is characterized as a penalty.
This pool will be distributed in accordance with a methodology developed by an
independent distribution consultant in consultation with MFS and the Board of
Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further
agreed with NYAG to reduce its management fees in the aggregate amount of
approximately $25 million annually over the next five years, and not to
increase certain management fees during this period. MFS has also paid an
administrative fine to NH in the amount of $1 million, which will be used for
investor education purposes (NH retained $250,000 and $750,000 was contributed
to the North American Securities Administrators Association's Investor
Protection Trust). In addition, under the terms of the February Settlements,
MFS is in the process of adopting certain governance changes and reviewing its
policies and procedures.
Since December 2003, MFS, Sun Life Financial Inc., various MFS funds, the
Trustees of these MFS funds, and certain officers of MFS have been named as
defendants in multiple lawsuits filed in federal and state courts. The lawsuits
variously have been commenced as class actions or individual actions on behalf
of investors who purchased, held or redeemed shares of the MFS funds during
specified periods, as class actions on behalf of participants in certain
retirement plan accounts, or as derivative actions on behalf of the MFS funds.
The lawsuits relating to market timing and related matters have been
transferred to, and consolidated before, the United States District Court for
the District of Maryland, as part of a multi-district litigation of market
timing and related claims involving several other fund complexes (In re Mutual
Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam,
PIMCO), No. 1:04-md-15863 (transfer began March 19, 2004)). Four lawsuits
alleging improper brokerage allocation practices and excessive compensation are
pending in the United States District Court for the District of Massachusetts
(Forsythe v. Sun Life Financial Inc., et al., No. 04cv10584 (GAO) (March 25,
2004); Eddings v. Sun Life Financial Inc., et al., No. 04cv10764 (GAO) (April
15, 2004); Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al.,
No. 04cv11458 (GAO) (May 4, 2004); and Koslow v. Sun Life Financial Inc., et
al., No. 04cv11019 (GAO) (May 20, 2004)). The lawsuits generally allege that
some or all of the defendants (i) permitted or acquiesced in market timing
and/or late trading in some of the MFS funds, inadequately disclosed MFS'
internal policies concerning market timing and such matters, and received
excessive compensation as fiduciaries to the MFS funds, or (ii) permitted or
acquiesced in the improper use of fund assets by MFS to support the
distribution of MFS fund shares and inadequately disclosed MFS' use of fund
assets in this manner. The actions assert that some or all of the defendants
violated the federal securities laws, including the Securities Act of 1933 and
the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, the Employee Retirement Income Security Act of
1974, as well as fiduciary duties and other violations of common law. The
lawsuits seek unspecified damages. Insofar as any of the actions is
appropriately brought derivatively on behalf of any of the MFS funds, any
recovery will inure to the benefit of the MFS funds. The defendants are
reviewing the allegations of the multiple complaints and will respond
appropriately. Additional lawsuits based on similar allegations may be filed in
the future.
Any potential resolution of these matters may include, but not be limited to,
judgments or settlements for damages against MFS, the MFS funds, or any other
named defendant. As noted above, as part of the regulatory settlements, MFS has
established a restitution pool in the amount of $225 million to compensate
certain shareholders of the MFS retail funds for damages that they allegedly
sustained as a result of market timing or late trading in certain of the MFS
retail funds, and transferred $50 million for distribution to affected MFS
funds to compensate those funds based upon the amount of brokerage commissions
allocated in recognition of MFS fund sales. It is not clear whether these
amounts will be sufficient to compensate shareholders for all of the damage
they allegedly sustained, whether certain shareholders or putative class
members may have additional claims to compensation, or whether the damages that
may be awarded in any of the actions will exceed these amounts. In the event
the MFS funds incur any losses, costs or expenses in connection with such
lawsuits, the Boards of Trustees of the affected MFS funds may pursue claims on
behalf of such funds against any party that may have liability to the funds in
respect thereof.
Review of these matters by the independent Trustees of the MFS funds and their
counsel is continuing. There can be no assurance that these regulatory actions
and lawsuits, or the adverse publicity associated with these developments, will
not result in increased fund redemptions, reduced sales of fund shares, or
other adverse consequences to the MFS funds.
- --------------------------------------------------------------------------------------------------------------------------------
TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
- -------------------------------------------------------------------------------------------------------------------------------
The Trustees and officers of the Trust, as of November 10, 2004, are listed below, together with their principal occupations
during the past five years. (Their titles may have varied during that period.) The address of each Trustee and officer is 500
Boylston Street, Boston, Massachusetts 02116.
POSITION(s) HELD TRUSTEE/OFFICER PRINCIPAL OCCUPATIONS & OTHER DIRECTORSHIPS(2)
NAME, DATE OF BIRTH WITH FUND SINCE(1) DURING THE PAST FIVE YEARS
- ------------------- ---------------- --------------- ---------------------------------------------
INTERESTED TRUSTEES
Robert J. Manning(3) Trustee and President February 2004 Massachusetts Financial Services Company, Chief
(born 10/20/63) Executive Officer, President, Chief Investment Officer
and Director
Robert C. Pozen(3) Trustee February 2004 Massachusetts Financial Services Company, Chairman
(born 08/08/46) (since February 2004); Harvard Law School (education),
John Olin Visiting Professor (since July 2002);
Secretary of Economic Affairs, The Commonwealth of
Massachusetts (January 2002 to December 2002); Fidelity
Investments, Vice Chairman (June 2000 to December 2001);
Fidelity Management & Research Company (investment
adviser), President (March 1997 to July 2001); The Bank
of New York (financial services), Director; Bell Canada
Enterprises (telecommunications), Director; Telesat
(satellite communications), Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern Enterprises (diversified
(born 05/01/36) Trustees services company), Chairman, Trustee and Chief Executive
Officer (until November 2000)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Chief of Cardiac Surgery;
(born 03/11/37) Harvard Medical School, Professor of Surgery
David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining products and service
(born 05/30/42) provider), Vice Chairman/Director (since April 2001);
Encinitos Ventures (private investment company),
Principal (1997 to April 2001); Lincoln Electric
Holdings, Inc. (welding equipment manufacturer),
Director; Southwest Gas Corporation (natural gas
distribution company), Director
William R. Gutow Trustee December 1993 Private investor and real estate consultant; Capitol
(born 09/27/41) Entertainment Management Company (video franchise), Vice
Chairman
Amy B. Lane Trustee January 2004 Retired; Merrill Lynch & Co., Inc., Managing Director,
(born 02/08/53) Investment Banking Group (1997 to February 2001);
Borders Group, Inc. (book and music retailer), Director;
Federal Realty Investment Trust (real estate investment
trust), Trustee
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys), Partner
(born 06/23/35)
William J. Poorvu Trustee August 1982 Private investor; Harvard University Graduate School of
(born 04/10/35) Business Administration, Class of 1961 Adjunct Professor
in Entrepreneurship Emeritus; CBL & Associates
Properties, Inc. (real estate investment trust),
Director
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (acquisition planning
(born 09/23/38) specialists), President; Wellfleet Investments (investor
in health care companies), Managing General Partner
(since 1993); Cambridge Nutraceuticals (professional
nutritional products), Chief Executive Officer (until
May 2001)
Elaine R. Smith Trustee February 1992 Independent health care industry consultant
(born 04/25/46)
OFFICERS
Robert J. Manning(3) President and Trustee February 2004 Massachusetts Financial Services Company, Chief
(born 10/20/63) Executive Officer, President, Chief Investment Officer
and Director
James R. Bordewick, Jr.(3) Assistant Secretary and September 1990 Massachusetts Financial Services Company, Senior Vice
(born 03/06/59) Assistant Clerk President and Associate General Counsel
Jeffrey N. Carp(3) Secretary and Clerk September 2004 Massachusetts Financial Services Company, Senior Vice
(born 12/01/56) President, General Counsel and Secretary (since April
2004); Hale and Dorr LLP (law firm) (prior to April
2004)
James F. DesMarais(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Assistant
(born 03/09/61) Assistant Clerk General Counsel
Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial Services Company, Vice President
(born 10/01/53) (since April 2003); Brown Brothers Harriman & Co.,
Senior Vice President (November 2002 to April 2003); ING
Groep N.V./Aeltus Investment Management, Senior Vice
President (prior to November 2002)
Robert R. Flaherty(3) Assistant Treasurer August 2000 Massachusetts Financial Services Company, Vice President
(born 09/18/63) (since August 2000); UAM Fund Services, Senior Vice
President (prior to August 2000)
Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services Company, Senior Vice
(born 08/29/58) President (since July 2002); The Bank of New York,
Senior Vice President (September 2000 to July 2002);
Lexington Global Asset Managers, Inc., Executive Vice
President and Chief Financial Officer (prior to
September 2000); Lexington Funds, Chief Financial
Officer (prior to September 2000)
Brian T. Hourihan(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Vice
(born 11/11/64) Assistant Clerk President, Senior Counsel and Assistant Secretary (since
June 2004); Affiliated Managers Group, Inc., Chief Legal
Officer/Centralized Compliance Program (January to April
2004); Fidelity Research & Management Company, Assistant
General Counsel (prior to January 2004)
Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services Company, Vice President
(born 11/13/57)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance services),
(born 03/07/44) Compliance Officer Principal (since June 2004); CRA Business Strategies
Group (consulting services), Executive Vice President
(April 2003 to June 2004); David L. Babson & Co.
(investment adviser), Managing Director, Chief
Administrative Officer and Director (February 1997 to
March 2003)
James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services Company, Senior Vice
(born 06/12/60) President
- ----------------
(1) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously since appointment
unless indicated otherwise.
(2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public
companies").
(3) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which
is the principle federal law governing investment companies like the fund. The address of MFS is 500 Boylston Street,
Boston, Massachusetts 02116.
The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are not elected for
fixed terms. The Trust will hold a shareholders' meeting in 2005 and at least once every five years thereafter to elect
Trustees. Each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier
death, resignation, retirement or removal.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is
the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. Each Trustee serves
as a board member of 99 funds within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available without charge upon
request by calling 1-800-225-2606.
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 225 Franklin Street, Boston, MA 02110
02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA
02116-3741
PORTFOLIO MANAGERS
Michael L. Dawson
Geoffrey L. Schechter
QUARTERLY PORTFOLIO DISCLOSURE
Beginning with the fund's first and third fiscal quarters following this report, the fund will file a complete schedule of
portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal
year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The
fund's Form N-Q is available on the EDGAR database on the Commission's Internet website at http://www.sec.gov, and copies of
this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at mfs.com.
- -------------------------------------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS
- -------------------------------------------------------------------------------
YOUR GOALS ARE IMPORTANT
MFS offers a complete range of investments and investment services to address
specific financial needs over time. When your investing goals change, you can
easily stay with MFS for the products you need, when you need them. Whether
you're investing for college or retirement expenses or for tax management or
estate planning, MFS will be there.
Ask your investment professional how MFS can help you move toward the goals
you've set.
MFS FAMILY OF FUNDS(R)
More than 50 portfolios offer domestic and international equity and fixed-
income investments across the full risk spectrum
VARIABLE ANNUITIES
A selection of annuity products with advantages for building and preserving
wealth
MFS 401(k) AND IRA SUITES
Retirement plans for businesses and individuals
MFS COLLEGE SAVINGS PLANS
Investment products to help meet education expenses
MFS PRIVATE PORTFOLIO SERVICES
Investment advisory services that provide custom products for high-net-worth
individuals
Variable annuities are offered through MFS/Sun Life Financial Distributors,
Inc.
A PROSPECTUS FOR ANY MFS PRODUCT CAN BE OBTAINED FROM YOUR INVESTMENT
PROFESSIONAL. YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING AS IT
CONTAINS COMPLETE INFORMATION ON THE FUND'S INVESTMENT OBJECTIVE(s), THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THE FUND, AND THE FEES, CHARGES, AND EXPENSES
INVOLVED. THESE ELEMENTS, AS WELL AS OTHER INFORMATION CONTAINED IN THE
PROSPECTUS, SHOULD BE CONSIDERED CAREFULLY BEFORE INVESTING.
CONTACT INFORMATION
INVESTOR INFORMATION
For information on MFS mutual funds, call your investment professional or, for
an information kit, call toll free: 1-800-225-2606 any business day from 8 a.m.
to 8 p.m. Eastern time.
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available without charge, upon request, by calling 1-800-225-2606, by visiting
the About MFS section of mfs.com or by visiting the SEC's Web site at
http://www.sec. gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Type of Information Phone number Hours, Eastern Time
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[logo] M F S(R)
INVESTMENT MANAGEMENT
(C) 2004 MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MST-A-SEM-11/04 29M
MFS(R) Mutual Funds
SEMIANNUAL REPORT 9/30/04
MFS(R) MUNICIPAL SERIES TRUST
For the States of: Mississippi,
New York, North Carolina,
Pennsylvania, South Carolina,
Tennessee, Virginia, and West Virginia
A path for pursuing opportunity
[graphic omitted]
[logo] M F S(R)
INVESTMENT MANAGEMENT
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MFS(R) PRIVACY POLICY: A COMMITMENT TO YOU
- -------------------------------------------------------------------------------
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about every MFS investment product and service that we
offer and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information;
we maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone except as permitted by law. We may share information
with companies or financial institutions that perform marketing services on our
behalf or to other financial institutions with which we have joint marketing
arrangements.
Access to your nonpublic personal information is limited to appropriate
personnel who provide products, services, or information to you. We maintain
physical, electronic, and procedural safeguards that comply with applicable
federal regulations.
If you have any questions about MFS' privacy policy, please call 1-800-225-2606
any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK OR CREDIT UNION GUARANTEE NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUIF
- ----------------------------------------------------------------------------------------
MFS(R) MUNICIPAL SERIES TRUST
The investment objective of each fund is to provide current income exempt from
federal income tax and personal income tax, if any, of the state to which its
name refers.
THE 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.
TABLE OF CONTENTS
- ----------------------------------------------------
MFS PRIVACY POLICY
- ----------------------------------------------------
LETTER FROM THE CEO 1
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MFS ORIGINAL RESEARCH(R) 3
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MANAGEMENT REVIEW 4
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PORTFOLIO COMPOSITION 7
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PERFORMANCE SUMMARY 7
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EXPENSE TABLES 16
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PORTFOLIO OF INVESTMENTS 19
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FINANCIAL STATEMENTS 56
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NOTES TO FINANCIAL STATEMENTS 85
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TRUSTEES AND OFFICERS 103
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MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS 106
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CONTACT INFORMATION BACK COVER
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LETTER FROM THE CEO
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Dear Contract Owners,
[Photo of Robert J. Manning]
Dear Shareholders,
For most investors, the main factor in determining long-term success is asset
allocation - how they spread their money among stocks, bonds, and cash. In
fact, the total returns of investors may be more influenced by their asset
allocation strategy than by their security selection within each asset class.
The principle behind asset allocation is simple: by diversifying across a
variety of types of securities, investors reduce the overall risk of their
portfolio because gains in one area are likely to offset losses in another.
One of the dangers of not having an asset allocation plan is the temptation to
simply chase performance, by moving money into whichever asset class appears to
be outperforming at the moment. The problem with this approach is that by the
time a particular area of the market comes into favor, investors may have
already missed some of the best performance. We would suggest that one way to
benefit from swings in the market is to acquire a diversified portfolio so that
investors hold a range of asset classes before the market swings in their
direction.
UNDERSTAND YOUR EMOTIONS
It usually takes a bear market for people to appreciate the benefits of
diversification. At MFS, we believe proper asset allocation is important in all
market environments. But we understand that there are emotional components of
investment decisions that sometimes keep investors from achieving their long
term goals. The three common behaviors that negatively impact investment
decisions are overconfidence, looking backwards, and loss aversion.
o Overconfidence. After experiencing gains in the market, particularly during
a bull market, investors have a natural tendency to overestimate their own
abilities. During the global bull market of the late 1990s, for example, a
large number of investors traded their own stocks and made significant
profits. However, most of these same investors later handed back those
profits - and then some - because they focused more on short-term blips in
the market and less on the fundamental factors that affect a company's
long-term prospects.
o Looking backwards. Although security prices are determined by expectations
about the future, many investors make choices based on the recent past.
Investors who have achieved momentary success in the market tend to take on
too much risk, believing that better- than-average returns can be easily
duplicated. On the other hand, those who have had negative experiences tend
to become overly cautious and take on too little risk. Recent historical
experience tends to dictate an investor's frame of reference and may lead
to irrational decisions.
o Loss aversion. Simply put, investors would rather avoid the immediate pain
of losses than enjoy the future pleasure of gains. As a result, some
investors tend to overreact to short-term downturns in the market by
seeking to mitigate their losses, rather than remaining invested to benefit
from the long-term growth potential of the stock and bond markets.
THINK LIKE A PROFESSIONAL INVESTOR
Asset allocation helps reduce the emotional factors that tend to affect the
long-term returns of investors. Professional investors - those who manage
assets for money management firms, pension funds, and endowments - have tended
to outperform the average retirement investor because they focus on asset
allocation. For example, the investment performance of the average 401(k)
participant in the United States has lagged these professional investors by
more than two percentage points a year, on average, over the past 10 years.(1)
We think asset allocation is one of the most important decisions for investors.
A study of the performance of 91 large U.S. corporate pension plans with assets
of more than $100 million over a 10-year period beginning in 1974 concluded
that asset allocation policies accounted for 93.6% of their returns, while
individual security selection and the timing of their investments accounted for
only 6.4% for their overall performance.(2)
Professional investors target a realistic level of return based on the amount
of risk they are willing to take, then set allocations to meet their goals. On
average, U.S. professional investors allocate 35% to 40% of their assets to
U.S. equity stocks; 20% to 30% to fixed income issues; 10% to non-U.S. stocks;
and between 10% and 20% to other investment classes such as real estate.(3) And
within those categories, they hold a broad range of styles and asset classes.
In contrast, U.S. 401(k) participants who held company stock in their
retirement plans at the end of 2002 had roughly 42% of their retirement assets
in company stock while the rest was allocated to either growth or value stock
funds.(4) These participants virtually ignored the broad range of equity,
fixed-income, and non-U.S. offerings provided by their retirement plans.
ALLOCATE, DIVERSIFY, REBALANCE
We recommend working with a professional adviser to find an optimal mix of
investments based on your individual goals. In our view, a disciplined asset
allocation strategy is composed of three simple steps: allocate, diversify and
rebalance.
o Allocate. Investors should work with their financial adviser to specify
their long-term goals and tolerance for risk. Then investors should
allocate their assets across the major asset classes - stocks, bonds, and
cash - to help them pursue an investment return that is consistent with
their risk tolerance level.
o Diversify. By diversifying their assets, investors trade some performance
in the top performing categories for a more predictable and stable
portfolio. At the same time, investors should include different investment
styles and market capitalizations of stocks as well as a range of fixed
income investments. Because security subclasses tend to move in and out of
favor during various market and economic environments, a broad portfolio
increases the benefits of diversification.
o Rebalance. We suggest that investors consult with their professional
advisers periodically to rebalance their portfolios to maintain the
percentages that they have dedicated to each asset class. Allocations can
shift as markets rise and fall, making for a riskier or more conservative
portfolio than an investor originally intended. For example, a portfolio of
50% U.S. stocks and 50% U.S. bonds at the start of 2000 would have shifted
to 32% U.S. stocks and 68% U.S. bonds at the end of 2002 because of the
weak stock market.(5)
In short, these three simple concepts - allocate, diversify and rebalance -
help take emotion out of the investment process and help prevent investors from
trying to outguess the market. An asset allocation strategy cannot turn a down
market cycle into a good one, but it is an invaluable tool to manage risk and
keep investors on track toward reaching their long-term investment goals.
A DISCIPLINED INVESTMENT PROCESS IS PARAMOUNT
Disciplined diversification has helped investors pursue long-term, above-
average results through the years. Since 1924, when we invented the mutual
fund, MFS(R) has strived to give investors the products and tools they need to
maintain well-diversified portfolios in part by providing a variety of products
in each asset class. We recommend developing a comprehensive financial plan
with an investment advisor who is familiar with your risk tolerance, your
individual goals, and your financial situation.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
October 15, 2004
Asset allocation and diversification can not guarantee a profit.
The opinions expressed in this letter are those of MFS, and no forecasts can
be guaranteed.
(1) Source: Watson Wyatt
(2) "Determinants of Portfolio Performance," in Financial Analysts Journal,
January/February 1995, by Gary P. Brinson, L. Randolph Hood, and
Gilbert L. Beebower
(3) Source: Greenwich Associates
(4) Source: Hewitt Associates
(5) Source: Lipper Inc.
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MFS ORIGINAL RESEARCH(R)
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THE MFS(R) DIFFERENCE
For 80 years MFS has been offering investors clear paths to pursuing specific
investment objectives. Today, millions of individuals and thousands of
institutions all over the world look to MFS to manage their assets with
insight and care.
Our success, we believe, has to do with the fact that we see investors as
people with plans, not just dollars to invest.
When you invest with MFS, you invest with a company dedicated to helping you
realize your long-term financial goals.
INVESTORS CHOOSE MFS FOR OUR
o global asset management expertise across all asset classes
o time-tested money management process for pursuing consistent results
o full spectrum of investment products backed by MFS Original Research(R)
o resources and services that match real-life needs
TURNING INFORMATION INTO OPPORTUNITY
Sound investments begin with sound information. MFS has been doing its own
research and analyzing findings in-house for decades. The process we use to
uncover opportunity is called MFS Original Research(R).
MFS ORIGINAL RESEARCH INVOLVES
o meeting with the management of 3,000 companies each year to assess their
business plans and the managers' ability to execute those plans
o making onsite visits to more than 2,000 companies annually to gain
first-hand knowledge of their operations and products
o analyzing financial statements and balance sheets
o talking extensively with companies' customers and competitors
o developing our own proprietary estimates of companies' earnings
- -------------------------------------------------------------------------------
MANAGEMENT REVIEW
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MARKET ENVIRONMENT
In late 2003 and early 2004, before the period began, weakness in both
corporate spending and job creation had increased the perceived risk that the
economic recovery could falter. This had caused investors to push up long-term
bond prices because high-quality bonds have been seen as a refuge in times of
economic concern. Interest rates, which move in the opposite direction of bond
prices, had retreated as economists pushed off the day when they believed the
U.S. Federal Reserve Board (the Fed) would have to raise short-term rates.
In early April, however, just as the period began, the U.S. government reported
that job growth in March had been significantly higher than it had been for
years. Job reports for the next few months also came in strong. Driven in part
by rocketing oil prices, inflation began to creep up as well, after having been
dormant for some time. These factors, in our view, led investors to conclude
that a Fed rate increase could be imminent; interest rates across the yield
curve headed upward. And in fact the Fed raised rates for the first time in
four years on June 30 and hiked them again on August 10 and September 21.
But while the Fed seemed committed to a course of slowly raising short-term
rates, in the second half of the period we believe several factors caused
long-term rates to retreat. Job growth faltered. Economic growth, as measured
by gross domestic product (GDP) growth, slowed in the second quarter. Excess
production capacity, which we feel has held back investments in new plants and
equipment for some years, did not come down as quickly as many observers had
hoped. In addition, we feel geopolitical concerns about the Iraq situation and
potential terrorist attacks sparked a "flight to quality" by some investors
seeking the safety of U.S. Treasuries and other high-quality issues. (Principal
and interest of U.S. Treasury securities are guaranteed by the U.S. government
if held to maturity.)
For the period as a whole, the net effect was that interest rates on the short
end of the yield curve moved up significantly more than rates on the long end,
causing the yield curve to flatten. From March 31 through September 30, the
yield on the two-year Treasury bond rose 1.04%; five-year Treasury yields
climbed 0.59%; 10-year Treasury yields went up 0.28%; and 30-year Treasury
yields increased just 0.12%. Municipal bond rates, as measured by "AAA"-rated
general obligation bonds tracked by Thomson Municipal Market Data, followed a
similar path with one exception. Municipal rates in the so-called "belly" of
the yield curve - the 15- to 20-year area - declined slightly, causing bonds in
that area to rise modestly in price.
HOW WE MANAGE THE FUNDS
All of the MFS state municipal bond funds are managed with a common investment
strategy. There are four key elements to our management strategy: duration,
yield curve positioning, credit quality, and sector allocation.
Duration is a measure of a fund's sensitivity to changes in interest rates. In
most market environments, we strive to be neutral in duration relative to our
Lipper peers (other single-state mutual funds), as we believe that trying to
predict the direction of interest rates is a relatively risky investment
tactic. Our strategy, however, may sometimes result in individual state funds
being longer or shorter in duration relative to the funds' benchmark, the
Lehman Brothers Municipal Bond Index (the Lehman Index). This may occur because
the Lehman Index is a national index composed of over 40,000 individual bonds,
while each state fund invests primarily in bonds issued within its state. For
that reason, the characteristics of individual state funds will not always
match those of the national index.
A yield curve for bonds shows the relationship between yield and time to
maturity. In a majority of market environments, longer-maturity bonds offer
higher yields but are more exposed to duration risk - the risk that a change in
interest rates may adversely affect a bond's price. In managing the funds, we
try to pick what we believe is the optimal spot on the yield curve - a time to
maturity that optimizes the combination of yield and risk. Our research for
some time has indicated that the 15- to 20-year part of the yield curve is that
optimal spot. For example, in our experience a 20-year bond typically has paid
98% of the yield of a similar 30-year bond but carried only 75% to 80% of the
duration risk of that 30-year bond. For that reason, the funds have tended to
be overweighted in bonds with maturities in the 15- to 20-year range.
Credit quality refers to the perceived ability of a bond issuer to make
interest payments and repay a bond's principal. Major credit-rating agencies
rate bonds on a scale that usually runs from "AAA" down to "BBB" for
investment-grade bonds, and "BB" and below for lower-quality,
noninvestment-grade or so-called "junk" bonds. In general, lower-rated bonds
pay higher rates of interest to compensate investors for taking on additional
risk. The funds historically have focused on using our bottom-up research to
seek out bonds that offer higher yields than average "AAA"-rated insured bonds,
yet also offer what we believe is reasonable safety of principal and interest
payments to maturity.
Sector allocation refers to a fund's weightings in various types of municipal
bond issues, including bonds from sectors such as health care and housing. Our
research analysts constantly seek out sectors, and individual bonds within
those sectors, that we believe will benefit in a given market environment.
FACTORS THAT AFFECTED PERFORMANCE
The table on page 6 indicates the effects of those factors on individual fund
performance relative to the funds' benchmark, the Lehman Brothers Municipal
Bond Index (the Lehman Index).
The DURATION STRATEGY column indicates that our duration strategy had a
positive effect ("pos"), a negative effect ("neg"), or no meaningful
contribution to relative performance ("neutral"). As mentioned earlier, we try
to manage the funds to be neutral in duration relative to their Lipper peer
groups, which consist of municipal funds in the same state.
However, during the period this strategy resulted in many of the funds being
long in duration - i.e., more sensitive to interest rate changes - relative to
the national Lehman Index. In a period when rates rose and prices fell, funds
with a long duration stance relative to the Lehman Index - the Mississippi,
North Carolina, Pennsylvania, South Carolina, and West Virginia funds - thus
suffered a material negative effect on relative performance. Conversely, the
New York and Tennessee funds were both short on duration relative to the Lehman
Index and thus experienced a positive effect from duration; i.e., rising rates
hurt those funds less than they hurt the benchmark.
YIELD CURVE indicates the effect of the fund's yield curve positioning on
performance. Compared with the Lehman Index, all funds, except the Virginia
fund, were more heavily weighted in bonds on the long end of the yield curve -
bonds with 10 to 30 years remaining to maturity - and underweighted in bonds on
the short end of the curve. On a relative basis, an overweighting in
longer-maturity bonds helped during the period because long-term municipal
rates either rose less than short-term rates or, in the 15- to 20-year part of
the curve, declined slightly. Longer-term bonds in the belly of the curve
therefore went up in price, while other longer-term bonds experienced smaller
price declines than short-term bonds. Meanwhile, bonds on the short end of the
curve experienced the worst price declines as they experienced the largest
yield increases, so it helped to be underweighted in that area. Yield curve
positioning therefore helped relative performance of all funds except the
Virginia fund over the period.
The average CREDIT QUALITY of most of the funds was similar to that of the
Lehman Index over the period. The effect of credit quality on relative
performance was therefore neutral for those funds.
Funds for which SECTOR ALLOCATION was a positive factor were generally
overweighted in one or more sectors that outperformed over the period. Here
again, we would note that the table depicts performance relative to a national
index, and the investment universe in a particular state may differ from the
national spectrum of municipal bonds; for example, some states may offer large
opportunities to invest in certain sectors while other states may have few
available bonds in those same sectors.
On a sector basis, the South Carolina fund benefited from an overweighting in
pre-refunded bonds. (A bond is pre-refunded when the issuer decides to pay off
the bond before its first legal call date. In that situation, the issuer
replaces the original bond with high-quality U.S. government securities that
are held in an escrow account. This is good for bond holders because they
receive their original rate of interest up to the first call date but now own
a higher-quality issue. The price of a bond goes up significantly when it
is pre-refunded.)
KEY FACTORS IN FUND PERFORMANCE RELATIVE TO BENCHMARK
(THE LEHMAN BROTHERS MUNICIPAL BOND INDEX)
3/31/04 - 9/30/04
- ------------------------------------------------------------------------------
DURATION YIELD CREDIT SECTOR
STATE FUND STRATEGY CURVE QUALITY ALLOCATION
- ------------------------------------------------------------------------------
MISSISSIPPI neg pos neutral neutral
- ------------------------------------------------------------------------------
NEW YORK pos pos neutral neutral
- ------------------------------------------------------------------------------
NORTH CAROLINA neg pos neutral pos
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PENNSYLVANIA neg pos neutral neutral
- ------------------------------------------------------------------------------
SOUTH CAROLINA neg pos neutral pos
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TENNESSEE pos pos neutral neutral
- ------------------------------------------------------------------------------
VIRGINIA neutral neutral neutral pos
- ------------------------------------------------------------------------------
WEST VIRGINIA neg pos neutral neutral
- ------------------------------------------------------------------------------
Respectfully,
/s/ Michael L. Dawson /s/ Geoffrey L. Schechter
Michael L. Dawson Geoffrey L. Schechter
Portfolio Manager Portfolio Manager
The views expressed in this report are those of the portfolio managers only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market and
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or as an indication of
trading intent on behalf of any MFS fund. References to specific securities are
not recommendations of such securities and may not be representative of any MFS
fund's current or future investments.
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Visit mfs.com for our latest economic and investment outlook.
o Under Updates & Announcements, click Week in Review for a summary of recent
investment-related news.
o From Week in Review, link to MFS Global Perspective for our current view of
the world.
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PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
each fund over the applicable time periods. Performance results reflect the
percentage change in net asset value, including the reinvestment of dividends
and capital gains distributions. Each fund's results have been compared to the
average relevant state municipal debt fund tracked by Lipper Inc., an
independent firm that reports mutual fund performance. For those states where
Lipper does not track state-specific fund performance, we have provided the
average "other state" municipal debt fund returns. Each fund's results have
also been compared to the Lehman Brothers Municipal Bond Index, a broad measure
of the municipal bond market. However, while this index is considered the
benchmark for the performance of municipal bond funds, it is comprised of
municipal bonds issued nationwide, while each of the funds is limited to
investing in the bonds of a particular state. (See Notes to Performance
Summary.)
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PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE*
Bonds 98.1%
Cash & Other Net Assets 1.9%
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
AAA 67.5%
-----------------------------------------------
AA 6.9%
-----------------------------------------------
A 8.8%
-----------------------------------------------
BBB 10.8%
-----------------------------------------------
Not Rated 4.6%
-----------------------------------------------
Other 1.4%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Healthcare/Hospitals 18.9%
-----------------------------------------------
Municipal General Obligations/GP 14.7%
-----------------------------------------------
Universities/Colleges 10.4%
-----------------------------------------------
State and Local Agencies 9.4%
-----------------------------------------------
Single Family Housing Revenue State 9.0%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 6.8
-----------------------------------------------
Average Life 15.5 Yrs.
-----------------------------------------------
Average Maturity 16.4 Yrs.
-----------------------------------------------
Average Quality AA
-----------------------------------------------
Average Quality Short Term Bonds A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 8/6/1992 1.39% 3.47% 5.16% 6.04% 6.22%
- ------------------------------------------------------------------------------
B 9/7/1993 1.00% 2.68% 4.30% 5.18% 5.37%
- ------------------------------------------------------------------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average other
state municipal
debt fund+ 1.06% 3.37% 4.44% 5.44% 5.44%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
- ------------------------------------------------------------------------------
A -3.42% -1.44% 3.47% 5.01% 5.70%
- ------------------------------------------------------------------------------
B -2.96% -1.27% 3.38% 4.86% 5.37%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
with sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.39% 3.47% 16.31% 34.08% 82.80%
- ------------------------------------------------------------------------------
B 1.00% 2.68% 13.48% 28.76% 68.65%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) NEW YORK MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.0%
Cash & Other Net Assets 2.0%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 46.7%
-----------------------------------------------
AA 17.8%
-----------------------------------------------
A 14.6%
-----------------------------------------------
BBB 7.0%
-----------------------------------------------
BB 1.6%
-----------------------------------------------
Not Rated 10.6%
-----------------------------------------------
Other 1.7%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
State and Local Agencies 19.4%
-----------------------------------------------
Water and Sewer Revenue 11.2%
-----------------------------------------------
Transportation/Special Tax 10.9%
-----------------------------------------------
Toll Roads 9.5%
-----------------------------------------------
Healthcare/Hospitals 8.1%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.5
-----------------------------------------------
Average Life 15.4 Yrs.
-----------------------------------------------
Average Maturity 16.9 Yrs.
-----------------------------------------------
Average Quality AA
-----------------------------------------------
Average Quality Short Term Bonds A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual without
sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 6/6/1988 1.48% 4.10% 5.49% 6.43% 6.17%
- ------------------------------------------------------------------------------
B 9/7/1993 1.19% 3.32% 4.64% 5.58% 5.34%
- ------------------------------------------------------------------------------
C 12/11/2000 1.10% 3.23% 4.67% 5.60% 5.35%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average New York municipal
debt fund+ 1.06% 3.94% 4.91% 5.91% 5.97%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.34% -0.84% 3.79% 5.40% 5.66%
- ------------------------------------------------------------------------------
B -2.78% -0.66% 3.72% 5.26% 5.34%
- ------------------------------------------------------------------------------
C 0.11% 2.24% 4.67% 5.60% 5.35%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.48% 4.10% 17.38% 36.56% 82.02%
- ------------------------------------------------------------------------------
B 1.19% 3.32% 14.58% 31.21% 68.26%
- ------------------------------------------------------------------------------
C 1.10% 3.23% 14.68% 31.33% 68.42%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
Performance for C shares includes the performance of the fund's Class B shares
prior to their offering. This blended class performance has been adjusted to
take into account differences in sales loads, if any, applicable to these share
classes, but has not been adjusted to take into account differences in class
specific operating expenses (such as Rule 12b-1 fees). Compared to performance
these share classes would have experienced had they been offered for the entire
period, the use of blended performance generally results in higher performance
for share classes with higher operating expenses than the initial share class
to which it is blended, and lower performance for share classes with lower
operating expenses than the initial share class to which it is blended.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 99.0%
Cash & Other Net Assets 1.0%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 39.5%
-----------------------------------------------
AA 30.2%
-----------------------------------------------
A 7.4%
-----------------------------------------------
BBB 16.0%
-----------------------------------------------
Not Rated 6.1%
-----------------------------------------------
Other 0.8%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Healthcare/Hospitals 23.5%
-----------------------------------------------
State and Local Agencies 16.5%
-----------------------------------------------
Municipal Owned Utilities 14.2%
-----------------------------------------------
Universities/Colleges 8.7%
-----------------------------------------------
Water and Sewer Revenue 8.2%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.6
-----------------------------------------------
Average Life 14.9 Yrs.
-----------------------------------------------
Average Maturity 15.4 Yrs.
-----------------------------------------------
Average Quality AA
-----------------------------------------------
Average Quality Short Term Bonds A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 10/31/1984 1.29% 3.74% 5.29% 6.11% 5.83%
- ------------------------------------------------------------------------------
B 9/7/1993 0.88% 2.99% 4.58% 5.39% 5.12%
- ------------------------------------------------------------------------------
C 1/3/1994 0.97% 3.07% 4.61% 5.41% 5.15%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average North Carolina
municipal debt fund+ 0.90% 3.51% 4.84% 5.71% 5.71%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.52% -1.18% 3.60% 5.08% 5.31%
- ------------------------------------------------------------------------------
B -3.08% -0.98% 3.66% 5.07% 5.12%
- ------------------------------------------------------------------------------
C -0.03% 2.08% 4.61% 5.41% 5.15%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.29% 3.74% 16.73% 34.53% 76.16%
- ------------------------------------------------------------------------------
B 0.88% 2.99% 14.40% 30.04% 64.76%
- ------------------------------------------------------------------------------
C 0.97% 3.07% 14.49% 30.14% 65.16%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.2%
Cash & Other Net Assets 1.8%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA65.0%
-----------------------------------------------
AA12.1%
-----------------------------------------------
A5.2%
-----------------------------------------------
BBB12.0%
-----------------------------------------------
BB0.1%
-----------------------------------------------
B0.7%
-----------------------------------------------
Not Rated3.8%
-----------------------------------------------
Other1.1%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Municipal General Obligations/Schools21.6%
-----------------------------------------------
Healthcare/Hospitals11.1%
-----------------------------------------------
Universities/Colleges9.4%
-----------------------------------------------
Municipal General Obligations/GP8.9%
-----------------------------------------------
Water and Sewer Revenue8.8%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration7.6
-----------------------------------------------
Average Life16.0 Yrs.
-----------------------------------------------
Average Maturity16.9 Yrs.
-----------------------------------------------
Average QualityAA
-----------------------------------------------
Average Quality Short Term BondsA-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 2/1/1993 1.37% 4.11% 5.57% 6.67% 6.41%
- ------------------------------------------------------------------------------
B 9/7/1993 0.89% 3.22% 4.67% 5.78% 5.56%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average Pennsylvania
municipal debt fund+ 0.86% 3.71% 4.78% 5.61% 5.73%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.44% -0.83% 3.87% 5.64% 5.90%
- ------------------------------------------------------------------------------
B -3.08% -0.77% 3.75% 5.46% 5.56%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.37% 4.11% 17.64% 38.11% 86.20%
- ------------------------------------------------------------------------------
B 0.89% 3.22% 14.69% 32.42% 71.75%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.6%
Cash & Other Net Assets 1.4%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 65.3%
-----------------------------------------------
AA 14.4%
-----------------------------------------------
A 5.5%
-----------------------------------------------
BBB 3.8%
-----------------------------------------------
B 0.5%
-----------------------------------------------
Not Rated 9.4%
-----------------------------------------------
Other 1.1%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Water and Sewer Revenue 21.8%
-----------------------------------------------
Healthcare/Hospitals 16.9%
-----------------------------------------------
Municipal Owned Utilities 10.8%
-----------------------------------------------
Municipal General Obligations/Schools 10.4%
-----------------------------------------------
Municipal General Obligations/GP 7.7%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.6
-----------------------------------------------
Average Life 16.0 Yrs.
-----------------------------------------------
Average Maturity 16.7 Yrs.
-----------------------------------------------
Average Quality AA+
-----------------------------------------------
Average Quality Short Term Bonds A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 10/31/1984 0.99% 3.52% 5.31% 6.15% 5.73%
- ------------------------------------------------------------------------------
B 9/7/1993 0.66% 2.85% 4.63% 5.45% 5.03%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average South Carolina
municipal debt fund+ 0.91% 3.75% 4.80% 5.75% 5.79%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.81% -1.40% 3.62% 5.12% 5.21%
- ------------------------------------------------------------------------------
B -3.29% -1.11% 3.71% 5.12% 5.03%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 0.99% 3.52% 16.79% 34.76% 74.50%
- ------------------------------------------------------------------------------
B 0.66% 2.85% 14.55% 30.36% 63.32%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) TENNESSEE MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.8%
Cash & Other Net Assets 1.2%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 55.8%
-----------------------------------------------
AA 27.0%
-----------------------------------------------
A 3.7%
-----------------------------------------------
BBB 7.8%
-----------------------------------------------
BB 0.7%
-----------------------------------------------
Not Rated 3.9%
-----------------------------------------------
Other 1.1%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
Municipal General Obligations/Schools 17.5%
-----------------------------------------------
Water and Sewer Revenue 14.4%
-----------------------------------------------
Healthcare/Hospitals 11.8%
-----------------------------------------------
Municipal Owned Utilities 11.1%
-----------------------------------------------
Single Family Housing Revenue State 10.5%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.7
-----------------------------------------------
Average Life 14.5 Yrs.
-----------------------------------------------
Average Maturity 16.9 Yrs.
-----------------------------------------------
Average Quality AA+
-----------------------------------------------
Average Quality Short Term Bonds A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 8/12/1988 1.50% 3.68% 5.19% 6.04% 5.75%
- ------------------------------------------------------------------------------
B 9/7/1993 1.17% 3.01% 4.52% 5.35% 5.04%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average Tennessee municipal
debt fund+ 1.17% 3.65% 4.91% 5.71% 5.89%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.33% -1.24% 3.50% 5.01% 5.23%
- ------------------------------------------------------------------------------
B -2.81% -0.97% 3.59% 5.03% 5.04%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.50% 3.68% 16.40% 34.05% 74.86%
- ------------------------------------------------------------------------------
B 1.17% 3.01% 14.17% 29.79% 63.52%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) VIRGINIA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 99.1%
Cash & Other Net Assets 0.9%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 44.1%
-----------------------------------------------
AA 28.1%
-----------------------------------------------
A 11.6%
-----------------------------------------------
BBB 5.3%
-----------------------------------------------
BB 1.2%
-----------------------------------------------
B 1.2%
-----------------------------------------------
Not Rated 7.7%
-----------------------------------------------
Other 0.8%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
State and Local Agencies 24.3%
-----------------------------------------------
Healthcare/Hospitals 15.5%
-----------------------------------------------
Municipal General Obligations/IMPT 15.3%
-----------------------------------------------
Water and Sewer Revenue 8.7%
-----------------------------------------------
Airports 7.5%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.6
-----------------------------------------------
Average Life 14.5 Yrs.
-----------------------------------------------
Average Maturity 15.1 Yrs.
-----------------------------------------------
Average Quality AA
-----------------------------------------------
Average Quality Short Term Bonds A-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 10/31/1984 1.46% 4.22% 5.43% 6.04% 5.72%
- ------------------------------------------------------------------------------
B 9/7/1993 1.13% 3.54% 4.75% 5.34% 5.02%
- ------------------------------------------------------------------------------
C 1/3/1994 1.13% 3.54% 4.72% 5.32% 5.04%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average Virginia municipal
debt fund+ 1.09% 3.75% 4.80% 5.64% 5.91%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.36% -0.73% 3.73% 5.02% 5.20%
- ------------------------------------------------------------------------------
B -2.83% -0.44% 3.83% 5.02% 5.02%
- ------------------------------------------------------------------------------
C 0.14% 2.55% 4.72% 5.32% 5.04%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.46% 4.22% 17.18% 34.10% 74.33%
- ------------------------------------------------------------------------------
B 1.13% 3.54% 14.93% 29.73% 63.19%
- ------------------------------------------------------------------------------
C 1.13% 3.54% 14.83% 29.60% 63.52%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AND PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
PORTFOLIO COMPOSITION
-----------------------------------------------
PORTFOLIO STRUCTURE*
-----------------------------------------------
Bonds 98.7%
Cash & Other Net Assets 1.3%
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA73.5%
-----------------------------------------------
AA0.1%
-----------------------------------------------
A7.7%
-----------------------------------------------
BBB6.8%
-----------------------------------------------
BB0.2%
-----------------------------------------------
B0.5%
-----------------------------------------------
Not Rated10.2%
-----------------------------------------------
Other1.0%
-----------------------------------------------
-----------------------------------------------
TOP FIVE BOND INDUSTRIES*
-----------------------------------------------
State and Local Agencies25.2%
-----------------------------------------------
Municipal General Obligations/GP16.4%
-----------------------------------------------
Universities/Colleges16.0%
-----------------------------------------------
Water and Sewer Revenue11.5%
-----------------------------------------------
Healthcare/Hospitals9.1%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration7.0
-----------------------------------------------
Average Life15.6 Yrs.
-----------------------------------------------
Average Maturity16.1 Yrs.
-----------------------------------------------
Average QualityAA+
-----------------------------------------------
Average Quality Short Term BondsA-1
-----------------------------------------------
TOTAL RETURNS
- -----------------------
Average annual
without sales charge
- -----------------------
Share class Inception date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 10/31/1984 1.14% 3.55% 5.07% 5.98% 5.67%
- ------------------------------------------------------------------------------
B 9/7/1993 0.72% 2.79% 4.36% 5.27% 4.96%
- ------------------------------------------------------------------------------
- -----------------------
Average annual
- -----------------------
Comparative Benchmarks
- ------------------------------------------------------------------------------
Average other state
municipal debt fund+ 1.06% 3.37% 4.44% 5.44% 5.44%
- ------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
- -----------------------
Average annual with
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A -3.67% -1.37% 3.38% 4.95% 5.16%
- ------------------------------------------------------------------------------
B -3.23% -1.18% 3.44% 4.95% 4.96%
- ------------------------------------------------------------------------------
- -----------------------
Cumulative without
sales charge
- -----------------------
- ------------------------------------------------------------------------------
A 1.14% 3.55% 16.00% 33.67% 73.56%
- ------------------------------------------------------------------------------
B 0.72% 2.79% 13.66% 29.30% 62.28%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITION
LEHMAN BROTHERS MUNICIPAL BOND INDEX - a broad measure of the municipal bond
market.
It is not possible to invest directly in an index.
Percentages are based on net assets as of 9/30/04.
* For purposes of this graphical presentation, the bond component includes
both the accrued interest on bonds and the equivalent exposure from any
derivative holdings if applicable.
** Credit quality ratings are based on a weighted average of each security's
rating from Moody's Investors Service. If not rated by Moody's, the rating
will be that assigned by Standard & Poor's. Likewise, if not assigned a
rating by Standard & Poor's, it will be based on the rating assigned by
Fitch, Inc. If not rated by any of the three agencies, the security is
considered not rated, except for U.S. Treasuries and mortgage-backed
securities, which are included in the "AAA"-rating category.
The portfolio is actively managed, and current holdings may be different.
- -------------------------------------------------------------------------------
NOTES TO PERFORMANCE SUMMARY AND RISK CONSIDERATIONS
- -------------------------------------------------------------------------------
NOTES TO PERFORMANCE SUMMARY
Class A results, including sales charge, reflect the deduction of the maximum
4.75% sales charge. Class B results, including sales charge, reflect the
deduction of the applicable contingent deferred sales charge (CDSC), which
declines over six years from 4% to 0%. For those funds listed above that offer
Class C shares, Class C results, including sales charge (assuming redemption
within one year from the end of the calendar month of purchase), reflect the
deduction of the 1% CDSC.
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
VISIT MFS.COM FOR THE MOST RECENT MONTH-END PERFORMANCE RESULTS. MARKET
VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE
OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. ANY
HIGH, SHORT-TERM RETURNS MAY BE AND LIKELY WERE ATTRIBUTABLE TO RECENT
FAVORABLE MARKET CONDITIONS, WHICH MAY NOT BE REPEATED. THE PERFORMANCE SHOWN
DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY
ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
RISK CONSIDERATIONS
The portfolio may invest in high yield or lower-rated securities, which may
provide greater returns but are subject to greater-than-average risk.
The portfolio may invest a relatively high percentage of its assets in a small
number of issuers or even in a single issuer. This makes the fund's value more
sensitive to developments associated with the issuer and the overall market.
A portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax.
If you are not a resident of the state to which the fund is targeted, the state
tax exemption will not apply.
The portfolio may concentrate its investments in one state. By doing so, the
portfolio is more susceptible to adverse economic, political or regulatory
developments affecting that state than is a portfolio that invests more
broadly.
The fund may invest in municipal bonds that are general obligations backed by
the full faith and credit of the municipal issuer. The fund may also invest in
municipal bonds called revenue obligations which are subject to a higher degree
of credit risk than general obligations. Revenue obligations finance specific
projects, such as building a hospital, and are not backed by the full faith and
credit of the municipal issuer. The fund may invest in assets in revenue bonds
relating to any one specific industry (e.g., housing, health care, water and
sewer, etc.). Because revenue obligations are repaid from the revenues from a
facility, they are subject to a risk of default in payments of principal and
interest if the facility does not generate enough income. Municipal securities
backed by current or and revenues from a specific project or specific assets
can be negatively affected by the discontinuance of the taxation supporting the
project or assets or the inability to collect revenues for the project or from
the assets. If the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest from the
security could become taxable and the security could decline significantly in
value.
The fund's investment in municipal securities may include municipal lease
obligations. Municipal lease obligations are undivided interests issued by a
state or municipality in a lease or installment purchase which generally
relates to equipment or facilities. When a fund invests in municipal lease
obligations, it may have limited recourse in the event of default or
termination. In some cases, payments under municipal leases do not have to be
made unless the appropriate legislative body specifically approves money for
that purposes.
The portfolio's value will fluctuate in response to market conditions and
issuer, regulatory, economic, or political developments. In general, fixed
income securities will decline when interest rates rise and will increase when
interest rates fall. Many fixed income securities also involve credit risk,
which is the risk that issuers may fail to make timely principal or interest
payments. In addition, fixed income securities with longer maturity dates will
be subject to greater price fluctuations than those with shorter maturity
periods. Please see the prospectus for further information regarding these and
other risk considerations.
- -------------------------------------------------------------------------------
FUND EXPENSE TABLES
- -------------------------------------------------------------------------------
FUND EXPENSES BORNE BY SHAREHOLDERS DURING THE PERIOD FROM
APRIL 1, 2004, THROUGH SEPTEMBER 30, 2004.
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1)
fees; and other fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period April 1, 2004 through September 30,
2004.
ACTUAL EXPENSES
The first line for each share class in the tables below provides information
about actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the tables below provides information
about hypothetical account values and hypothetical expenses based on the fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the tables is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have
been higher.
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.56% $1,000 $1,014 $2.83
A ------------------------------------------------------------------------
Hypothetical 0.56% $1,000 $1,022 $2.84
- --------------------------------------------------------------------------------
Actual 1.34% $1,000 $1,010 $6.75
B -------------------------------------------------------------------------
Hypothetical 1.34% $1,000 $1,018 $6.78
- --------------------------------------------------------------------------------
MFS(R) NEW YORK MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.80% $1,000 $1,015 $4.04
A ------------------------------------------------------------------------
Hypothetical 0.80% $1,000 $1,021 $4.05
- --------------------------------------------------------------------------------
Actual 1.55% $1,000 $1,012 $7.82
B -------------------------------------------------------------------------
Hypothetical 1.55% $1,000 $1,017 $7.84
- --------------------------------------------------------------------------------
Actual 1.55% $1,000 $1,011 $7.81
C -------------------------------------------------------------------------
Hypothetical 1.55% $1,000 $1,017 $7.84
- --------------------------------------------------------------------------------
Share Class
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.83% $1,000 $1,013 $4.19
A ------------------------------------------------------------------------
Hypothetical 0.83% $1,000 $1,021 $4.20
- --------------------------------------------------------------------------------
Actual 1.48% $1,000 $1,009 $7.45
B -------------------------------------------------------------------------
Hypothetical 1.48% $1,000 $1,018 $7.49
- --------------------------------------------------------------------------------
Actual 1.49% $1,000 $1,010 $7.51
C -------------------------------------------------------------------------
Hypothetical 1.49% $1,000 $1,018 $7.54
- --------------------------------------------------------------------------------
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.60% $1,000 $1,014 $3.03
A ------------------------------------------------------------------------
Hypothetical 0.60% $1,000 $1,022 $3.04
- --------------------------------------------------------------------------------
Actual 1.37% $1,000 $1,009 $6.90
B -------------------------------------------------------------------------
Hypothetical 1.37% $1,000 $1,018 $6.93
- --------------------------------------------------------------------------------
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.86% $1,000 $1,010 $4.33
A ------------------------------------------------------------------------
Hypothetical 0.86% $1,000 $1,021 $4.36
- --------------------------------------------------------------------------------
Actual 1.51% $1,000 $1,007 $7.60
B -------------------------------------------------------------------------
Hypothetical 1.51% $1,000 $1,017 $7.64
- --------------------------------------------------------------------------------
MFS(R) TENNESSEE MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.90% $1,000 $1,015 $4.55
A ------------------------------------------------------------------------
Hypothetical 0.90% $1,000 $1,020 $4.56
- --------------------------------------------------------------------------------
Actual 1.55% $1,000 $1,012 $7.82
B -------------------------------------------------------------------------
Hypothetical 1.55% $1,000 $1,017 $7.84
- --------------------------------------------------------------------------------
MFS(R) VIRGINIA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.85% $1,000 $1,015 $4.29
A ------------------------------------------------------------------------
Hypothetical 0.85% $1,000 $1,021 $4.31
- --------------------------------------------------------------------------------
Actual 1.50% $1,000 $1,011 $7.56
B -------------------------------------------------------------------------
Hypothetical 1.50% $1,000 $1,017 $7.59
- --------------------------------------------------------------------------------
Actual 1.50% $1,000 $1,011 $7.56
C -------------------------------------------------------------------------
Hypothetical 1.50% $1,000 $1,017 $7.59
- --------------------------------------------------------------------------------
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
- --------------
Share Class
- --------------
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period**
Expense Account Value Account Value* 4/01/04-
Ratio 4/01/04 9/30/04 9/30/04
- --------------------------------------------------------------------------------
Actual 0.89% $1,000 $1,011 $4.49
A ------------------------------------------------------------------------
Hypothetical 0.89% $1,000 $1,021 $4.51
- --------------------------------------------------------------------------------
Actual 1.54% $1,000 $1,007 $7.75
B -------------------------------------------------------------------------
Hypothetical 1.54% $1,000 $1,017 $7.79
- --------------------------------------------------------------------------------
* Ending account value reflects each class" ending account value assuming the
actual class return per year before expenses (Actual) and a hypothetical 5%
class return per year before expenses (Hypothetical).
** Expenses paid is equal to each class" annualized expense ratio for the most
recent six month period, as shown above, multiplied by the average account
value over the period, multiplied by the number of days in the period,
divided by the number of days in the year. Expenses paid do not include any
applicable sales charges (loads) or redemption fees. If these transaction
costs had been included, your costs would have been higher.
- -----------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.1%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 14.6% Commonwealth of Puerto Rico, Public Improvement, 5.25%, 2023 $1,000,000 $1,053,120
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, "A", 5%, 2029 2,000,000 2,021,960
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLs, FGIC, 9.23%, 2016+(+) 3,110,000 4,212,116
- -------------------------------------------------------------------------------------------------------------------------------
Hinds County, MS, MBIA, 6.25%, 2010 - 2011 2,945,000 3,435,747
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Jackson, Mississippi)
FSA, 5.25%, 2018 - 2020 2,480,000 2,808,844
- -------------------------------------------------------------------------------------------------------------------------------
$13,531,787
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 7.5% Puerto Rico Municipal Finance Agency, RITES, FSA, 9.1574%, 2017+(+) $750,000 $914,670
- -------------------------------------------------------------------------------------------------------------------------------
State of Mississippi, "B", 6.75%, 2014(++) 1,800,000 1,815,426
- -------------------------------------------------------------------------------------------------------------------------------
State of Mississippi, Capital Improvement, 5.5%, 2015(++) 750,000 855,150
- -------------------------------------------------------------------------------------------------------------------------------
State of Mississippi, Capital Improvement, 5.25%, 2017(++) 2,000,000 2,252,800
- -------------------------------------------------------------------------------------------------------------------------------
State of Mississippi, Capital Improvement, "I", 6%, 2018(++) 1,000,000 1,155,940
- -------------------------------------------------------------------------------------------------------------------------------
$6,993,986
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 5.4% Biloxi, MS, Public School District, MBIA, 5%, 2021 $1,000,000 $1,042,040
- -------------------------------------------------------------------------------------------------------------------------------
Jackson, MS, Public School District, "B", AMBAC, 5.75%, 2017 1,000,000 1,132,060
- -------------------------------------------------------------------------------------------------------------------------------
Jackson, MS, Public School District, "B", AMBAC, 0%, 2022 - 2023 3,000,000 1,154,180
- -------------------------------------------------------------------------------------------------------------------------------
Madison County, MS, School District, "A", MBIA, 5.875%, 2016 1,500,000 1,696,365
- -------------------------------------------------------------------------------------------------------------------------------
$5,024,645
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Alcorn County, MS, Corinth Hospital Rev. (Magnolia Regional Health
Hospitals - 18.5% Center), AMBAC, 5.75%, 2013 $1,000,000 $1,053,600
- -------------------------------------------------------------------------------------------------------------------------------
Corinth & Alcorn County, MS, Hospital Rev. (Magnolia Regional Health
Center), 5.5%, 2021 400,000 399,496
- -------------------------------------------------------------------------------------------------------------------------------
Gulfport, MS, Healthcare Authority Rev. (Memorial Hospital), 5.75%, 2031 1,000,000 1,033,610
- -------------------------------------------------------------------------------------------------------------------------------
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), MBIA,
6.125%, 2015 2,250,000 2,308,253
- -------------------------------------------------------------------------------------------------------------------------------
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), MBIA,
6.2%, 2018 1,000,000 1,025,950
- -------------------------------------------------------------------------------------------------------------------------------
Hinds County, MS, Rev. (Methodist Hospital & Rehabilitation), AMBAC,
5.6%, 2012 2,335,000 2,563,573
- -------------------------------------------------------------------------------------------------------------------------------
Jones County, MS, Hospital Rev. (South Central Regional Medical Center),
5.5%, 2017 1,000,000 1,006,240
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Adams County Hospital)
FSA, 5.75%, 2016 1,000,000 1,065,740
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist
Medical Center), MBIA, 6.5%, 2010 1,190,000 1,242,765
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist
Medical Center), MBIA, 6%, 2013 750,000 781,140
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist
Memorial Heathcare), "B-1", 5%, 2024 1,000,000 999,480
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Authority Rev. (Forrest
County General Hospital), FSA, 5.625%, 2020 1,000,000 1,097,760
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Authority Rev., Refunding &
Improvement, 5.5%, 2019 250,000 257,515
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Authority, Refunding &
Improvement, 5.75%, 2023 250,000 256,303
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Rev. (Rush Medical
Foundation) CONNIE LEE, 6.7%, 2018 2,000,000 2,008,300
- -------------------------------------------------------------------------------------------------------------------------------
$17,099,725
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev.
Other - 0.2% (Hovensa Refinery), 5.875%, 2022 $210,000 $221,332
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Jones County, MS, Solid Waste Disposal Rev. (International Paper Co.)
Paper - 3.3% "A", 5.8%, 2021 $500,000 $511,965
- -------------------------------------------------------------------------------------------------------------------------------
Lowndes County, MS, Solid Waste Disposal & Pollution Control Rev.
(Weyerhaeuser Co.), 6.8%, 2022 1,250,000 1,482,725
- -------------------------------------------------------------------------------------------------------------------------------
Warren County, MS, Solid Waste Disposal (International Paper Co.), "A",
6.6%, 2019 1,000,000 1,032,280
- -------------------------------------------------------------------------------------------------------------------------------
$3,026,970
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Entertainment & Mississippi Development Bank, Special Obligation (Diamond Lakes
Tourism - 1.4% Utilities), 6.25%, 2017 $1,250,000 $1,278,775
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Gulfport, MS, Community Development Urban Renewal Rev. (Oakview
Revenue - 2.1% Apartments) FNMA, 7.4%, 2025 $1,755,000 $1,763,231
- -------------------------------------------------------------------------------------------------------------------------------
Ridgeland, MS, Urban Renewal (Northbrook I & II Apartments), 6.15%,
2019** 300,000 144,177
- -------------------------------------------------------------------------------------------------------------------------------
$1,907,408
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
State - 8.8% Mississippi Home Corp. Rev., "A-2", GNMA, 6.5%, 2032 $495,000 $550,717
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., "F", GNMA, 7.55%, 2027 284,000 293,761
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "B-2", GNMA, 6.375%,
2032 725,000 777,055
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "A", GNMA, 6.3%, 2031 260,000 276,601
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 5.3%, 2023 985,000 994,466
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.95%,
2031 595,000 633,889
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 6.625%, 2027 535,000 548,327
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 5.3%, 2035 1,000,000 1,030,650
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "B-2", 6.45%, 2033 855,000 891,560
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "C", GNMA, 4.95%, 2025 1,000,000 1,013,910
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., GNMA, 6.5%, 2024 1,175,000 1,188,818
- -------------------------------------------------------------------------------------------------------------------------------
$8,199,754
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 9.2% Lamar County, MS, (Jail Project) MBIA, 5.1%, 2021 $430,000 $452,708
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Correctional
Facilities), "A", 5.125%, 2025 1,000,000 1,041,800
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Mississippi, Ltd. Tax
Hospital Rev.), 5.1%, 2020 1,000,000 1,058,690
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Natchez Mississippi
Convention Center) AMBAC, 6%, 2021 750,000 859,238
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Public Improvement
Board), 5%, 2023 750,000 735,413
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Southaven, MS,
Recreation Facilities), 5.875%, 2014 375,000 412,196
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Southaven, MS,
Recreation Facilities), 6.2%, 2020 400,000 451,588
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Tupelo Fairgrounds),
"A", AMBAC, 5%, 2017 785,000 832,320
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.8516%, 2013+(+) 500,000 653,020
- -------------------------------------------------------------------------------------------------------------------------------
Walnut Grove, MS, Correctional Authority, AMBAC, 6%, 2019 1,750,000 2,039,800
- -------------------------------------------------------------------------------------------------------------------------------
$8,536,773
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.6% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $240,000 $216,271
- -------------------------------------------------------------------------------------------------------------------------------
Guam Economic Development Authority, Tobacco Settlement, Asset Backed,
"B", 5.5%, 2041 350,000 310,583
- -------------------------------------------------------------------------------------------------------------------------------
$526,854
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Mississippi Development Bank Special Obligations, Madison County (Road &
Tax - 1.4% Bridge) AMBAC, 5.1%, 2019 $1,175,000 $1,261,022
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Jackson State University, Educational Building Corp. Rev., (Campus
Colleges - 10.3% Facilities), "A", FGIC, 5%, 2029 $3,100,000 $3,153,475
- -------------------------------------------------------------------------------------------------------------------------------
Jackson State University, Educational Building Corp. Rev., (Student
Recreation Center), AMBAC, 5.125%, 2027 750,000 770,595
- -------------------------------------------------------------------------------------------------------------------------------
Medical Center, Educational Building Corp. Rev. (University of
Mississippi Medical Center), "B", AMBAC, 5.5%, 2023 1,000,000 1,133,090
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi State University Educational Building Corp. Rev. (Athletic
Facilities), "A", 6.2%, 2016(++) 1,000,000 1,091,010
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi State University Educational Building Corp. Rev., AMBAC,
5.5%, 2016 1,000,000 1,114,000
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi State University Educational Building Corp. Rev., AMBAC,
5%, 2021 250,000 260,978
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Valley State University, Educational Building Corp., MBIA,
5.5%, 2021 890,000 971,729
- -------------------------------------------------------------------------------------------------------------------------------
University of Mississippi, Educational Building Corp. (Performing Arts
Center) AMBAC, 5.25%, 2018 1,000,000 1,062,490
- -------------------------------------------------------------------------------------------------------------------------------
$9,557,367
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor Warren County, MS, Pollution Control Rev. (Mississippi Power & Light
Owned - 2.5% Co.), 7%, 2022 $1,000,000 $1,021,580
- -------------------------------------------------------------------------------------------------------------------------------
Washington County, MS, Pollution Control Rev. (Mississippi Power & Light
Co.), 7%, 2022 1,230,000 1,256,543
- -------------------------------------------------------------------------------------------------------------------------------
$2,278,123
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 3.5% Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2013+(+) $1,000,000 $1,215,900
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Okolona Electric
System), 5.2%, 2016 1,010,000 1,091,426
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 905,468
- -------------------------------------------------------------------------------------------------------------------------------
$3,212,794
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 7.8% Jackson, MS, Water & Sewer Systems Rev., FGIC, 5.25%, 2017 $420,000 $449,392
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Combined Water Sewer &
Solid Waste Management) FSA, 5.25%, 2021 1,270,000 1,385,380
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Combined Water Sewer &
Solid Waste Management) FSA, 5.05%, 2027 1,610,000 1,673,128
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Gulfport Water & Sewer
Project) FSA, 5.625%, 2024 500,000 552,200
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Gulfport Water & Sewer
Project), "A", FGIC, 5.25%, 2027 2,000,000 2,085,160
- -------------------------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations (Wastewater & Solid
Waste Management), "A", FSA, 5.375%, 2017 1,000,000 1,106,400
- -------------------------------------------------------------------------------------------------------------------------------
$7,251,660
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $84,596,125) $89,908,975
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 4.1%
- -------------------------------------------------------------------------------------------------------------------------------
Bay Area Toll Authority, CA, Toll Bridge Rev. "A", due 10/01/04 $1,700,000 $1,700,000
- -------------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (University of Chicago
Hospital), due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Jackson County, MS, Pollution Control Rev. (Chevron USA, Inc.),
due 10/01/04 1,255,000 1,255,000
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A",
due 10/01/04 300,000 300,000
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Warrants, "B-4", due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev. (Exxon Mobile Corp.),
due 10/01/04 400,000 400,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $3,855,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $88,451,125) $93,763,975
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (1.2)% (1,141,425)
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $92,622,550
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) NEW YORK MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.7%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port
Revenue - 3.4% Port Authority NY & NJ, (131st Street Service), 5%, 2020 $1,500,000 $1,576,070
- -------------------------------------------------------------------------------------------------------------------------------
Port Authority NY & NJ, (132nd Street Service), 5%, 2033 2,000,000 2,036,180
- -------------------------------------------------------------------------------------------------------------------------------
Port Authority NY & NJ, MBIA, 5.5%, 2018 1,500,000 1,597,185
- -------------------------------------------------------------------------------------------------------------------------------
Port Authority NY & NJ, Special Obligation Rev. (JFK International),
MBIA, 6.25%, 2015 1,000,000 1,168,100
- -------------------------------------------------------------------------------------------------------------------------------
$6,377,535
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 4.6% Commonwealth of Puerto Rico, ROLs, XLCA, 9.14%, 2017+(+) $1,350,000 $1,803,600
- -------------------------------------------------------------------------------------------------------------------------------
New York, NY, 5.375%, 2017 1,250,000 1,356,963
- -------------------------------------------------------------------------------------------------------------------------------
New York, NY, "A", 6%, 2019 295,000 344,374
- -------------------------------------------------------------------------------------------------------------------------------
New York, NY, "C-1", 5.25%, 2025 1,000,000 1,048,950
- -------------------------------------------------------------------------------------------------------------------------------
New York, NY, FGIC, 5.5%, 2026 2,100,000 2,201,703
- -------------------------------------------------------------------------------------------------------------------------------
New York, NY, Unrefunded, "A", 6%, 2019 705,000 792,075
- -------------------------------------------------------------------------------------------------------------------------------
State of New York, 5.7%, 2011(++) 1,000,000 1,029,280
- -------------------------------------------------------------------------------------------------------------------------------
$8,576,945
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 0.1% Erie County, NY, Public Improvement, FGIC, 5%, 2019 $140,000 $148,901
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 5.7% Arlington, NY, Central School District, FSA, 5%, 2021 $1,000,000 $1,060,080
- -------------------------------------------------------------------------------------------------------------------------------
Genesee Valley, NY, Central School District (Angelica Belmont), FGIC,
5.25%, 2028 1,720,000 1,823,441
- -------------------------------------------------------------------------------------------------------------------------------
North Babylon, NY, Union Free School District, FGIC, 5.5%, 2018 2,415,000 2,669,903
- -------------------------------------------------------------------------------------------------------------------------------
Port Byron, NY, Central School District, AMBAC, 7.4%, 2012 - 2015 2,000,000 2,631,265
- -------------------------------------------------------------------------------------------------------------------------------
Rome, NY, City School District, FSA, 5.5%, 2019 1,000,000 1,100,850
- -------------------------------------------------------------------------------------------------------------------------------
Washingtonville, NY, Central School Central District, FGIC,
7.35%, 2008 - 2009 1,100,000 1,303,644
- -------------------------------------------------------------------------------------------------------------------------------
$10,589,183
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Chautauqua County, NY, Civic Facilities Rev. (Women's Christian Assn.),
Hospitals - 7.7% 6.35%, 2017 $180,000 $180,967
- -------------------------------------------------------------------------------------------------------------------------------
Chautauqua County, NY, Civic Facilities Rev. (Women's Christian Assn.),
6.4%, 2029 490,000 469,837
- -------------------------------------------------------------------------------------------------------------------------------
Chemung County, NY, Industrial Development Agency, Civic Facility Rev.
(Arnot Ogden Medical Center), 5%, 2029 1,750,000 1,726,010
- -------------------------------------------------------------------------------------------------------------------------------
Fulton County, NY, Industrial Development Agency, Civic Facility Rev.
(Nathan Littauer Hospital), 5.75%, 2009 750,000 748,088
- -------------------------------------------------------------------------------------------------------------------------------
Nassau County, NY, Industrial Development Agency, Civic Facility Rev.
(North Shore Health Systems), 5.625%, 2010 500,000 546,725
- -------------------------------------------------------------------------------------------------------------------------------
Nassua County, NY, Health Systems Rev. (Nassua County), FSA, 6%, 2014 1,000,000 1,148,320
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Industrial Development Agency, Civic Facilities Rev.
(Staten Island University Hospital), 6.375%, 2031 500,000 473,250
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Health & Hospital Corp. Rev., 5.25%, 2017 760,000 790,666
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (St. Vincent's Hospital), FHA,
7.375%, 2011 1,055,000 1,059,357
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority Rev. (Montefiore Medical Center), AMBAC,
5.25%, 2019 935,000 1,004,658
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority Rev. (North Shore Long Island Jewish
Group), 5.5%, 2033 250,000 260,253
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority Rev. (White Plains Hospital), FHA,
5.375%, 2043 1,500,000 1,552,635
- -------------------------------------------------------------------------------------------------------------------------------
New York Medical Care Facilities Finance Agency Rev., Mental Health
Services (Huntington Hospital Mortgage), 6.5%, 2004(++) $1,250,000 $1,279,688
- -------------------------------------------------------------------------------------------------------------------------------
New York Medical Facilities Finance Agency Rev. (Montefiore Medical
Center), AMBAC, 6.5%, 2005(++) 1,550,000 1,609,644
- -------------------------------------------------------------------------------------------------------------------------------
Suffolk County, NY, Industrial Development Agency Rev. (Huntington
Hospital), 5.875%, 2032 1,000,000 1,029,450
- -------------------------------------------------------------------------------------------------------------------------------
Yonkers, NY, Industrial Development Agency, Civic Facilities Rev. (St.
John's Riverside Hospital), 7.125%, 2031 500,000 510,440
- -------------------------------------------------------------------------------------------------------------------------------
$14,389,988
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Suffolk County, NY, Industrial Development Agency, Civic Facilities
Term Care - 0.4% Rev. (Gurwin Jewish Phase II), 6.7%, 2039 $385,000 $388,958
- -------------------------------------------------------------------------------------------------------------------------------
Westchester County, NY, Industrial Development Rev., Continuing Care
Retirement (Kendal On Hudson), 6.5%, 2034 300,000 307,284
- -------------------------------------------------------------------------------------------------------------------------------
$696,242
- -------------------------------------------------------------------------------------------------------------------------------
Human Services - 0.8% Nassau County, NY, Industrial Development Agency, Civic Facility Rev.
(Special Needs Facility), 6.5%, 2017 $205,000 $212,548
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Jewish Board of Families & Children),
AMBAC, 5%, 2023 695,000 727,151
- -------------------------------------------------------------------------------------------------------------------------------
New York, NY, Industrial Development Agency (PSCH, Inc.), 6.375%, 2033 500,000 516,985
- -------------------------------------------------------------------------------------------------------------------------------
$1,456,684
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Onondaga County, NY, Industrial Development Agency Sewer Facilities
Other - 0.8% Rev. (Bristol-Meyers Squibb Co.), 5.75%, 2024 $1,000,000 $1,100,380
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 430,000 453,203
- -------------------------------------------------------------------------------------------------------------------------------
$1,553,583
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Essex County, NY, Industrial Development Agency, Pollution Control Rev.
Paper - 1.4% (International Paper Corp.), 5.55%, 2014 $750,000 $815,693
- -------------------------------------------------------------------------------------------------------------------------------
Essex County, NY, Industrial Development Agency, Pollution Control Rev.
(International Paper Corp.), 6.15%, 2021 1,000,000 1,039,990
- -------------------------------------------------------------------------------------------------------------------------------
Essex County, NY, Industrial Development Agency, Pollution Control Rev.
(International Paper Corp.), 6.45%, 2023 700,000 737,814
- -------------------------------------------------------------------------------------------------------------------------------
$2,593,497
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - New York City Industrial Development Agency, Civic Facilities Rev
Other - 0.5% (United Jewish Appeal), "A", 5%, 2027 $1,000,000 $1,030,590
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing New York City, NY, Housing Development Corp., Multi-Family Housing
Revenue - 1.3% Rev., 5.6%, 2019 $400,000 $419,024
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Housing Development Corp., Multi-Family Housing
Rev., 5.5%, 2034 2,000,000 2,057,240
- -------------------------------------------------------------------------------------------------------------------------------
$2,476,264
- -------------------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Schenectady NY, Metroplex Development Authority Rev., MBIA,
Revenue - 0.3% 5.375%, 2021 $475,000 $521,716
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
State - 4.2% New York Mortgage Agency Rev., 4.6%, 2015 $2,865,000 $2,918,117
- -------------------------------------------------------------------------------------------------------------------------------
New York Mortgage Agency Rev., 5.85%, 2018 1,140,000 1,192,896
- -------------------------------------------------------------------------------------------------------------------------------
New York Mortgage Agency Rev., 5.8%, 2020 1,555,000 1,625,442
- -------------------------------------------------------------------------------------------------------------------------------
New York Mortgage Agency Rev., 5.1%, 2024 2,000,000 2,046,820
- -------------------------------------------------------------------------------------------------------------------------------
$7,783,275
- -------------------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.5% Niagara County, NY, Industrial Developement Agency, Solid Waste
Disposal Rev., "C", 5.625%, 2024 $850,000 $906,134
- -------------------------------------------------------------------------------------------------------------------------------
Oneida Herkimer, NY, Solid Waste Management Systems Rev., 6.75%, 2014 60,000 60,799
- -------------------------------------------------------------------------------------------------------------------------------
Rockland County, NY, Solid Waste Management Systems Rev., 4.8%, 2005 20,000 20,674
- -------------------------------------------------------------------------------------------------------------------------------
$987,607
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 19.2% New York Dormitory Authority (City University), 5.625%, 2016 $2,450,000 $2,836,806
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (City University), AMBAC, 5.75%, 2018 800,000 957,104
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Judicial Institute at Pace), AMBAC,
5.5%, 2020 2,500,000 2,768,250
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Master Boces Program), FSA, 5.25%, 2019 1,000,000 1,081,790
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Pace University), MBIA, 6%, 2019 1,700,000 1,954,864
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Personal Income Tax Education),
5.375%, 2022 1,000,000 1,080,060
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (School Program), 6.25%, 2020 1,690,000 1,964,355
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (State University), 5.375%, 2010(++) 1,500,000 1,707,030
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (State University), 5.875%, 2017 1,130,000 1,340,485
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Upstate Community Colleges), FSA,
6%, 2018 1,010,000 1,161,995
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority, FGIC, 5%, 2024 1,935,000 2,015,922
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority, Mental Health Services Facilites
Improvement, FSA, 5.25%, 2010(++) 895,000 1,009,641
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority, Mental Health Services Facilites
Improvement, FSA, 5.25%, 2030 105,000 108,171
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority, Mental Health Services Facilites
Improvement, MBIA, 5.25%, 2011(++) 785,000 891,156
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority, Mental Health Services Facilites
Improvement, MBIA, 5.25%, 2031 1,215,000 1,256,541
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority, Mental Health Services Facilities
Improvement, MBIA, 5.75%, 2020 5,000 5,578
- -------------------------------------------------------------------------------------------------------------------------------
New York Medical Care Facilities Finance Agency, MBIA, 6%, 2005(++) 20,000 20,734
- -------------------------------------------------------------------------------------------------------------------------------
New York Municipal Bond Bank Special Program, AMBAC, 5.25%, 2015 715,000 784,262
- -------------------------------------------------------------------------------------------------------------------------------
New York Municipal Bond Bank Special School Purpose Rev., 5.25%, 2022 1,000,000 1,061,550
- -------------------------------------------------------------------------------------------------------------------------------
New York State Housing Finance Agency, Income Tax Rev., 5%, 2022 - 2023 2,000,000 2,087,810
- -------------------------------------------------------------------------------------------------------------------------------
New York Urban Development Corp. (Correctional Facilities) AMBAC,
0%, 2009 5,000,000 4,411,900
- -------------------------------------------------------------------------------------------------------------------------------
New York Urban Development Corp. (State Facilities), AMBAC, 5.6%, 2015 2,750,000 3,218,243
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corp., 5.5%, 2018 2,000,000 2,199,080
- -------------------------------------------------------------------------------------------------------------------------------
$35,923,327
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 3.0% New York City, NY, Transitional Finance Authority Rev., 5.75%, 2009(++) $2,730,000 $3,149,710
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Transitional Finance Authority Rev., 5%, 2026 1,000,000 1,028,890
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Transitional Finance Authority Rev., MBIA, 5%, 2022 1,400,000 1,474,130
- -------------------------------------------------------------------------------------------------------------------------------
$5,652,730
- -------------------------------------------------------------------------------------------------------------------------------
Tax Assessment - 0.3% Grand Central, NY, Special Assessment Rev., District Management Assn.,
Inc., 5%, 2022 $500,000 $523,850
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.6% Guam Economic Development Authority, Tobacco Settlement, Asset Backed,
"B", 5.5%, 2041 $400,000 $354,952
- -------------------------------------------------------------------------------------------------------------------------------
New York County Tobacco Trust, 5.625%, 2035 800,000 722,016
- -------------------------------------------------------------------------------------------------------------------------------
$1,076,968
- -------------------------------------------------------------------------------------------------------------------------------
Toll Roads - 9.3% New York City, NY, Dedicated Tax Fund Rev., AMBAC, 5.25%, 2029 $1,335,000 $1,505,520
- -------------------------------------------------------------------------------------------------------------------------------
New York Thruway Authority, General Rev., Highway & Bridges,
5.25%, 2015 1,500,000 1,624,245
- -------------------------------------------------------------------------------------------------------------------------------
Niagara Falls, NY, Bridge Commission Toll Rev., RITES, FGIC,
8.5721%, 2015+(+) 3,500,000 4,518,150
- -------------------------------------------------------------------------------------------------------------------------------
Triborough Bridge & Tunnel Authority Rev., NY, ETM, 6%, 2012(++) 1,000,000 1,154,980
- -------------------------------------------------------------------------------------------------------------------------------
Triborough Bridge & Tunnel Authority Rev., NY, "A", MBIA, 5%, 2032 2,000,000 2,036,280
- -------------------------------------------------------------------------------------------------------------------------------
Triborough Bridge & Tunnel Authority Rev., NY, RITES, ETM, 9.0623%,
2017+(+),(++) 5,000,000 6,586,200
- -------------------------------------------------------------------------------------------------------------------------------
$17,425,375
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special
Tax - 9.8% Metropolitan Transportation Authority Rev., NY, ETM, 7.375%, 2008(++) $1,425,000 $1,585,526
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority Rev., NY, AMBAC, 5.75%, 2013 825,000 947,331
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund
Rev., 5.5%, 2015(++) 750,000 878,138
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund
Rev., FGIC, 5.25%, 2014 500,000 542,025
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority Rev., NY, FGIC, 5.875%, 2010(++) 2,000,000 2,311,980
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority Rev., NY, FGIC, 5%, 2025 2,500,000 2,582,575
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, NY, Commuter Facilities Rev.,
FGIC, 5.25%, 2011(++) 1,000,000 1,136,310
- -------------------------------------------------------------------------------------------------------------------------------
New York Thruway Authority, General Rev., Highway & Bridges, 5%, 2018 1,000,000 1,049,300
- -------------------------------------------------------------------------------------------------------------------------------
New York Thruway Authority, General Rev., Highway & Bridges, AMBAC,
5.375%, 2010(++) 2,000,000 2,278,600
- -------------------------------------------------------------------------------------------------------------------------------
New York Thruway Authority, General Rev., Highway & Bridges, FGIC,
5.4%, 2017 2,000,000 2,180,300
- -------------------------------------------------------------------------------------------------------------------------------
New York Thruway Authority, General Rev., Highway & Bridges, FSA,
5.8%, 2018 20,000 22,644
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Highway & Transportation Authority Rev., 6.25%, 2013 1,000,000 1,195,040
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Highway & Transportation Authority Rev., 5%, 2036 1,700,000 1,712,784
- -------------------------------------------------------------------------------------------------------------------------------
$18,422,553
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Amherst, NY, Industrial Development Agency Rev. (Daemen College),
Colleges - 4.2% 6%, 2021 $1,000,000 $1,065,960
- -------------------------------------------------------------------------------------------------------------------------------
Cattaraugus County, NY, Industrial Development Agency Rev. (Jamestown
Community College), 6.4%, 2019 500,000 561,975
- -------------------------------------------------------------------------------------------------------------------------------
Hempstead Town, NY, Civic Facility Rev. (Hofstra University), MBIA,
5.8%, 2015 1,500,000 1,624,785
- -------------------------------------------------------------------------------------------------------------------------------
Islip, NY, Community Development Agency Rev. (New York Institute of
Technology), 7.5%, 2006(++) 2,000,000 2,196,780
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Fordham University), AMBAC, 7.2%, 2015 40,000 40,176
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (Yeshiva University), AMBAC, 5.125%, 2034 1,000,000 1,034,750
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority Rev. (St. John's University), MBIA,
5%, 2017 300,000 322,977
- -------------------------------------------------------------------------------------------------------------------------------
Onondaga County, NY, Industrial Development Agency Rev. (Le Moyne
College), 5.625%, 2021 750,000 812,303
- -------------------------------------------------------------------------------------------------------------------------------
Utica, NY, Industrial Development Agency (Utica College), 5.3%, 2008 140,000 147,721
- -------------------------------------------------------------------------------------------------------------------------------
$7,807,427
- -------------------------------------------------------------------------------------------------------------------------------
Universities -
Dormitories - 1.1% New York Dormitory Authority Rev. (Columbia University), 5%, 2022 $1,000,000 $1,062,720
- -------------------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority Rev. (Nyu), "A", FGIC, 5%, 2029 1,000,000 1,027,420
- -------------------------------------------------------------------------------------------------------------------------------
$2,090,140
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Secondary New York City, NY, Industrial Development Agency, Civic Facility Rev.
Schools - 0.8% (Nightingale-Bamford School), AMBAC, 5.25%, 2020 $1,440,000 $1,569,197
- -------------------------------------------------------------------------------------------------------------------------------
Utilities -
Cogeneration - 0.6% Port Authority NY & NJ, Special Obligation, 6.75%, 2011 $1,000,000 $1,055,550
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor
Owned - 2.7% New York Energy Research & Development Rev., 6.1%, 2020 $2,400,000 $2,505,336
- -------------------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Water Facilities Rev., 8.85%, 2015 2,500,000 2,557,600
- -------------------------------------------------------------------------------------------------------------------------------
$5,062,936
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 2.9% Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2014+(+) $500,000 $600,140
- -------------------------------------------------------------------------------------------------------------------------------
Long Island Power Authority, Electrical Systems Rev., 5.5%, 2021 400,000 434,376
- -------------------------------------------------------------------------------------------------------------------------------
New York Power Authority Rev., 5%, 2021 1,000,000 1,059,570
- -------------------------------------------------------------------------------------------------------------------------------
New York Power Authority Rev., 5.25%, 2040 3,000,000 3,103,800
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Water & Power Authority Rev., 5.5%, 2017 200,000 208,212
- -------------------------------------------------------------------------------------------------------------------------------
$5,406,098
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 10.5% Erie County, NY, Water Authority Rev., AMBAC, ETM, 6.75%, 2014(++) $1,000,000 $1,221,600
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water & Sewer Finance Authority Rev.,
6%, 2010 620,000 721,606
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water & Sewer Finance Authority Rev.,
5%, 2027 1,500,000 1,536,300
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water & Sewer Finance Authority Rev.,
5.5%, 2033 1,850,000 1,974,117
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water & Sewer Finance Authority Rev.,
FGIC, 5.25%, 2033 2,000,000 2,070,360
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water & Sewer Finance Authority Rev.,
MBIA, 5.5%, 2027 1,250,000 1,351,938
- -------------------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Clean Water & Drinking Rev., 5%,
2023 - 2025 4,005,000 4,186,902
- -------------------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Pollution Control Rev., ETM, 5.75%,
2010(++) 2,235,000 2,572,083
- -------------------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Pollution Control Rev., 6.875%, 2010 220,000 228,602
- -------------------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Pollution Control Rev., 7.25%, 2010 70,000 70,473
- -------------------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Water Facilities Rev., 6%, 2031 1,005,000 1,049,612
- -------------------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Water Facilities Rev. (Spring Valley
Water Co.), AMBAC, 6.15%, 2024 1,500,000 1,536,675
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 150,000 158,150
- -------------------------------------------------------------------------------------------------------------------------------
Suffolk County, NY, Water Authority Rev., MBIA, 5.1%, 2012 895,000 1,002,686
- -------------------------------------------------------------------------------------------------------------------------------
$19,681,104
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $165,220,596) $180,879,265
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.0%
- -------------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (University of Chicago
Hospital), due 10/01/04 $500,000 $500,000
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, due 10/01/04 1,700,000 1,700,000
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, due 10/01/04 300,000 300,000
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Job Development Authority Rev., due 10/01/04 75,000 75,000
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water & Sewer Finance Authority Rev.,
due 10/01/04 1,050,000 1,050,000
- -------------------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital
Loan Program, due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $3,725,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $168,945,596) $184,604,265
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.3% 2,355,525
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $186,959,790
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.7%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port
Revenue - 2.8% Charlotte, NC, "B", MBIA, 5.875%, 2019 - 2020 $4,775,000 $5,219,156
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2029 2,000,000 2,043,820
- -------------------------------------------------------------------------------------------------------------------------------
Raleigh Durham, NC, Airport Authority Rev., "A", FGIC, 5.25%, 2018 2,700,000 2,956,635
- -------------------------------------------------------------------------------------------------------------------------------
$10,219,611
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 1.2% Charlotte, NC, 5.5%, 2016 $3,100,000 $3,484,741
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, "A", 5%, 2029 1,000,000 1,010,980
- -------------------------------------------------------------------------------------------------------------------------------
$4,495,721
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 2.3% Durham, NC, 5.9%, 2014 $2,400,000 $2,482,560
- -------------------------------------------------------------------------------------------------------------------------------
Mecklenburg County, NC, Public Improvement, "A", 5%, 2017 1,000,000 1,093,150
- -------------------------------------------------------------------------------------------------------------------------------
New Hanover County, NC, Public Improvement, 5.8%, 2019 4,200,000 4,928,658
- -------------------------------------------------------------------------------------------------------------------------------
$8,504,368
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 3.6% Brunswick County, NC, FGIC, 5%, 2020 $2,800,000 $3,006,752
- -------------------------------------------------------------------------------------------------------------------------------
Cumberland County, NC, 5.8%, 2019 4,400,000 4,996,860
- -------------------------------------------------------------------------------------------------------------------------------
Johnston County, NC, FGIC, 5.6%, 2018 2,000,000 2,237,920
- -------------------------------------------------------------------------------------------------------------------------------
New Hanover County, NC, Public Improvement, 5%, 2021 1,435,000 1,513,394
- -------------------------------------------------------------------------------------------------------------------------------
New Hanover County, NC, School Improvement, 5%, 2019 1,255,000 1,348,410
- -------------------------------------------------------------------------------------------------------------------------------
$13,103,336
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Catawba County, NC, Hospital Rev. (Catawba Memorial Hospital), AMBAC,
Hospitals - 23.1% 5%, 2017 $1,200,000 $1,269,948
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas
Healthcare), "A", 5.75%, 2021 1,500,000 1,555,635
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas
Healthcare), "A", 5.125%, 2022 1,000,000 1,017,690
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte-Mecklenberg, NC, Healthcare Systems Rev. (Carolinas
Healthcare), "A", 5%, 2031 3,500,000 3,510,815
- -------------------------------------------------------------------------------------------------------------------------------
Cumberland County, NC, Hospital Facilities Rev. (Cumberland Hospital),
MBIA, 0%, 2009 1,800,000 1,536,354
- -------------------------------------------------------------------------------------------------------------------------------
New Hanover County, NC, Hospital Rev. (New Hanover Regional Medical
Center), MBIA, 5%, 2019 6,225,000 6,570,425
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission (Cleveland County Healthcare),
"A", AMBAC, 5%, 2035 1,000,000 1,015,650
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission (Northeast Medical Center),
5.25%, 2029 2,000,000 2,039,780
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission (Novant Health), "A", MBIA,
5%, 2018 1,975,000 2,078,944
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission (Novant Health), Obligations
Group A, 5%, 2020 500,000 514,055
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Health Care Facilities Rev.
(Wakemed), AMBAC, 5%, 2021 3,500,000 3,713,255
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Betsy Johnson
Health Care System), FSA, 5.125%, 2032 1,500,000 1,542,195
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Duke
University), "C", 5.25%, 2021 5,975,000 6,068,270
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial
Hospital), 5.5%, 2015 - 2019 12,290,000 12,726,226
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Maria Parham
Medical Center), 6.5%, 2026 $1,000,000 $1,066,940
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Mission-St.
Joseph Health Systems), 5.25%, 2015 2,210,000 2,381,142
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Mission-St.
Joseph Health Systems), 5.5%, 2021 2,825,000 2,980,177
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Mission-St.
Joseph Health Systems), MBIA, 5.1%, 2018 1,500,000 1,582,170
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Pitt County
Memorial Hospital), "B", 5%, 2018 3,000,000 3,069,450
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Rex Healthcare),
AMBAC, 5%, 2017 5,000,000 5,269,100
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Southeastern
Regional Medical Center), 5.375%, 2032 3,330,000 3,384,379
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial
Hospital), AMBAC, 0%, 2013 - 2015 2,140,000 1,419,048
- -------------------------------------------------------------------------------------------------------------------------------
Northern Hospital District Surry County, NC, Health Care Facilities
Rev., ASST GTY, 5.5%, 2019 1,250,000 1,353,588
- -------------------------------------------------------------------------------------------------------------------------------
Northern Hospital District Surry County, NC, Health Care Facilities
Rev., ASST GTY, 5.1%, 2021 1,000,000 1,050,280
- -------------------------------------------------------------------------------------------------------------------------------
Pitt County, NC, Rev., (Pitt County Memorial Hospital), ETM,
5.25%, 2021(++) 10,135,000 10,433,780
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, Hospital Rev. (Chapel Hill Hospital),
5.25%, 2006(++) 4,800,000 5,119,296
- -------------------------------------------------------------------------------------------------------------------------------
$84,268,592
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long
Term Care - 1.0% Mocksville, NC (North Carolina Housing Foundation, Inc.), 7.25%, 2029 $960,000 $828,778
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Health Care Commission, Health
Care Facilities Rev. (Givens Estates), 6.5%, 2032 800,000 819,368
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Health Care Facilities Rev.
(Arbor Acres Community), 6.375%, 2032 1,000,000 1,030,560
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Health Care Facilities Rev.
(Deerfield), "A", 5%, 2023 1,000,000 1,001,070
- -------------------------------------------------------------------------------------------------------------------------------
$3,679,776
- -------------------------------------------------------------------------------------------------------------------------------
Human Services - 0.9% Cumberland County, NC, Finance Corp., Installment Payment Rev.
(Detention Center & Mental Health), AMBAC, 5.625%, 2019 $2,125,000 $2,344,343
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission, Health Care Facilities Rev.
"A", 5.8%, 2034 1,000,000 999,550
- -------------------------------------------------------------------------------------------------------------------------------
$3,343,893
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev.
Other - 0.3% (Hovensa Refinery), 5.875%, 2022 $860,000 $906,406
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Columbus County, NC, Industrial Facilities & Pollution Control
Paper - 3.0% Financing Authority (International Paper Co.), "A", 5.8%, 2016 $2,000,000 $2,106,680
- -------------------------------------------------------------------------------------------------------------------------------
Haywood County, NC, Industrial Facilities & Pollution Control Financing
Authority (Champion International Corp.), "A", 5.75%, 2025 5,400,000 5,424,246
- -------------------------------------------------------------------------------------------------------------------------------
Martin County, NC, Industrial Facilities & Pollution Control Financing
Authority Rev. (Solid Waste Disposal Weyerhaeuser), 6.8%, 2024 3,500,000 3,584,000
- -------------------------------------------------------------------------------------------------------------------------------
$11,114,926
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Charlotte, NC, Housing Authority, Mortgage Rocky Branch II, GNMA,
Revenue - 2.1% 4.65%, 2035 $2,000,000 $1,945,500
- -------------------------------------------------------------------------------------------------------------------------------
Mecklenburg County, NC (Little Rock Apartments), FNMA, 5.15%, 2022 1,000,000 1,035,860
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency, "H", FHA, 6.05%, 2028 4,460,000 4,600,713
- -------------------------------------------------------------------------------------------------------------------------------
$7,582,073
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
State - 5.9% North Carolina Housing Finance Agency Rev., "13-A", 4.25%, 2028 $2,630,000 $2,684,757
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "14-A", AMBAC, 4.35%, 2028 4,495,000 4,620,725
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "15-A", FSA, 4.95%, 2032 500,000 504,440
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "19-A", 5.1%, 2030 2,500,000 2,542,175
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "5-A", 5.55%, 2019 3,530,000 3,625,698
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "7-A", 6.15%, 2020 775,000 804,179
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "A", 5.25%, 2020 1,490,000 1,514,213
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "A", 5.375%, 2023 250,000 257,285
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "PP", FHA, 6.15%, 2017 1,715,000 1,789,946
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "RR", 5.85%, 2028 3,210,000 3,292,304
- -------------------------------------------------------------------------------------------------------------------------------
$21,635,722
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 16.3% Brunswick County, NC, Certificates of Participation, FSA, 5.5%, 2020 $1,000,000 $1,106,020
- -------------------------------------------------------------------------------------------------------------------------------
Cabarrus County, NC, Development Corp., AMBAC, 5.3%, 2019 1,250,000 1,356,588
- -------------------------------------------------------------------------------------------------------------------------------
Cabarrus County, NC, Installment Financing Contract, 5%, 2021 5,500,000 5,796,505
- -------------------------------------------------------------------------------------------------------------------------------
Carteret County, NC, AMBAC, 5.625%, 2020 1,010,000 1,126,251
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Certificates of Participation (Convention Facilities),
5.5%, 2020 3,000,000 3,323,610
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Certificates of Participation (Convention Facilities),
AMBAC, 0%, 2004 - 2008 12,320,000 11,834,319
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Certificates of Participation (Public Saftey
Facilities), "D", 5.5%, 2020 3,000,000 3,309,930
- -------------------------------------------------------------------------------------------------------------------------------
Forsyth County, NC, Certificates of Participation (Forsyth County
Public Facilities Equipment), 5.25%, 2023 1,230,000 1,330,749
- -------------------------------------------------------------------------------------------------------------------------------
Forsyth County, NC, Certificates of Participation (Public Facilities &
Equipment Project), 5.25%, 2019 775,000 859,103
- -------------------------------------------------------------------------------------------------------------------------------
Harnett County, NC, Certificates of Participation, AMBAC,
6.2%, 2004(++) 1,000,000 1,027,770
- -------------------------------------------------------------------------------------------------------------------------------
Harnett County, NC, Certificates of Participation, FSA, 5.25%, 2015 1,020,000 1,162,188
- -------------------------------------------------------------------------------------------------------------------------------
Harnett County, NC, Certificates of Participation, FSA, 5.5%, 2016 1,225,000 1,375,161
- -------------------------------------------------------------------------------------------------------------------------------
Iredell County, NC, Public Facilities (School Projects), AMBAC,
5.5%, 2010(++) 1,000,000 1,142,610
- -------------------------------------------------------------------------------------------------------------------------------
New Hanover County, NC, Certificates of Participation (New Hanover
County Projects), AMBAC, 5.25%, 2018 1,635,000 1,805,661
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Infrastructure Financial Corp., Certificates of
Participation (North Carolina State Correctional Facilities), "A",
5%, 2023 1,345,000 1,404,409
- -------------------------------------------------------------------------------------------------------------------------------
Pitt County, NC, Certificates of Participation (School Facilities
Improvement), "A", FSA, 5.5%, 2020 1,250,000 1,379,338
- -------------------------------------------------------------------------------------------------------------------------------
Pitt County, NC, Certificates of Participation (School Facilities
Improvement), "B", FSA, 5.75%, 2018 - 2019 2,780,000 3,148,127
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Bank & Finance Agency (Kidder), 7.5%, 2006 7,000,000 7,476,560
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.8516%, 2012+(+) 1,500,000 1,993,140
- -------------------------------------------------------------------------------------------------------------------------------
Randolph County, NC, Certificates of Participation, FSA, 5.6%, 2018 3,000,000 3,417,300
- -------------------------------------------------------------------------------------------------------------------------------
Rockingham, NC, Certificates of Participation, AMBAC, 5.125%, 2024 350,000 370,426
- -------------------------------------------------------------------------------------------------------------------------------
Rutherford County, NC, Certificates of Participation (Rutherford County
School), AMBAC, 5%, 2023 840,000 880,698
- -------------------------------------------------------------------------------------------------------------------------------
Winston Salem, NC, Certificates of Participation, "C", 5%, 2018 2,575,000 2,742,504
- -------------------------------------------------------------------------------------------------------------------------------
$59,368,967
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.1% Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $1,650,000 $1,700,886
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 1,000,000 1,082,170
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., FSA, 5%, 2022 1,315,000 1,397,358
- -------------------------------------------------------------------------------------------------------------------------------
$4,180,414
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.5% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $1,890,000 $1,703,136
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation Authority Rev.,
Tax - 2.2% RITES, FSA, 10.1016%, 2018+(+) $5,425,000 $7,842,489
- -------------------------------------------------------------------------------------------------------------------------------
Universities -
Colleges - 8.6% Appalachian State University, NC, "A", FGIC, 5.125%, 2022 $1,260,000 $1,345,302
- -------------------------------------------------------------------------------------------------------------------------------
Appalachian State University, NC, Rev. (Package Systems), FSA,
5.6%, 2020 2,285,000 2,543,411
- -------------------------------------------------------------------------------------------------------------------------------
East Carolina University, NC, Rev., "A", AMBAC, 5.25%, 2021 1,375,000 1,496,454
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Capital Facilities Finance (Duke University), "A",
5.125%, 2041 4,915,000 5,023,228
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Capital Facilities Finance (Duke University), "A",
5.25%, 2042 2,000,000 2,072,740
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Capital Facilities Finance (High Point University),
5.125%, 2018 - 2021 810,000 871,272
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Capital Facilities Finance (Johnson & Wales University),
"A", XLCA, 5.25%, 2021 - 2022 2,645,000 2,870,447
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Capital Facilities Finance (Johnson & Wales University),
"A", XLCA, 5%, 2033 2,000,000 2,027,900
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Industrial Tourist Authority (University Plaza), "A", MBIA,
5%, 2020 2,180,000 2,312,064
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, Greensboro Rev., "A", FSA, 5%, 2020 2,835,000 3,020,693
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, Greensboro Rev., "B", FSA, 5.375%, 2017 325,000 362,086
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, University Rev., 5%, 2028 2,000,000 2,053,600
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, Ashville Rev., Refunding General, "A",
AMBAC, 5%, 2019 530,000 566,851
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, Greensboro Rev., "B", FSA, 5.375%, 2016 1,085,000 1,214,853
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, Systems Pool Rev., "C", AMBAC, 5%, 2029 2,000,000 2,041,460
- -------------------------------------------------------------------------------------------------------------------------------
University of North Carolina, Wilmington Rev., "A", AMBAC, 5%, 2019 1,375,000 1,471,896
- -------------------------------------------------------------------------------------------------------------------------------
$31,294,257
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor Wake County, NC, Industrial Facilities & Pollution Control Rev.
Owned - 0.7% (Carolina Power & Light Co.), 5.375%, 2017 $2,500,000 $2,711,850
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 14.0% North Carolina Eastern Municipal Power Agency, "A", ETM, 7.5%, 2010(++) $2,595,000 $3,179,628
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, "A", ETM, 5%, 2017(++) 3,120,000 3,466,882
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, "A", MBIA, 7.5%, 2010 3,005,000 3,663,516
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, "B", MBIA, 7.25%, 2007 5,000,000 5,553,100
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, AMBAC, 6%, 2018 1,245,000 1,508,828
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, RITES, AMBAC,
10.0721%, 2018+(+) 6,500,000 9,254,830
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, Catawba Electric Rev.,
6.375%, 2013 1,000,000 1,125,630
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA,
7%, 2007 5,000,000 5,525,900
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA,
6%, 2011 5,000,000 5,810,250
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, ROLS, 8.868%, 2020+(+) 3,000,000 3,487,860
- -------------------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, ROLS, MBIA, 8.868%, 2019+(+) 5,000,000 5,878,900
- -------------------------------------------------------------------------------------------------------------------------------
Raleigh, NC, Combined Enterprise Systems Rev., 5.125%, 2022 2,000,000 2,093,540
- -------------------------------------------------------------------------------------------------------------------------------
Raleigh, NC, Combined Enterprise Systems Rev., 5%, 2024 385,000 402,745
- -------------------------------------------------------------------------------------------------------------------------------
$50,951,609
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 8.1% Broad River, NC, Water Authority Rev., MBIA, 5.75%, 2019 $1,490,000 $1,689,854
- -------------------------------------------------------------------------------------------------------------------------------
Cary, NC, Combined Enterprise Systems Rev., 5%, 2026 1,000,000 1,023,460
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Storm Water Fee, 6%, 2010(++) 3,180,000 3,715,862
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2009 - 2010(++) 5,075,000 5,844,627
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Water & Sewer Systems Rev., 5.5%, 2017 1,650,000 1,843,892
- -------------------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Water & Sewer Systems Rev., 5.25%, 2021 4,000,000 4,223,320
- -------------------------------------------------------------------------------------------------------------------------------
Durham County, NC, Enterprise Systems Rev., MBIA, 5%, 2023 1,675,000 1,763,005
- -------------------------------------------------------------------------------------------------------------------------------
Fayetteville, NC, Public Works Commission Rev., FSA, 5.25%, 2016 1,500,000 1,662,285
- -------------------------------------------------------------------------------------------------------------------------------
Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2018 - 2019 3,240,000 3,501,722
- -------------------------------------------------------------------------------------------------------------------------------
Greenville, NC, Combined Enterprise Systems Rev., FSA, 5%, 2016 1,005,000 1,093,701
- -------------------------------------------------------------------------------------------------------------------------------
Greenville, NC, Combined Enterprise Systems Rev., FSA, 5.25%, 2019 1,170,000 1,285,701
- -------------------------------------------------------------------------------------------------------------------------------
Harnett County, NC, Water & Sewer Systems Rev., AMBAC, 5%, 2028 700,000 716,870
- -------------------------------------------------------------------------------------------------------------------------------
Kannapolis, NC, Water & Sewer Rev., "B", FSA, 5.25%, 2021 1,000,000 1,072,970
- -------------------------------------------------------------------------------------------------------------------------------
$29,437,269
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $328,511,035) $356,344,415
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.5%
- -------------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (University of Chicago
Hospital), due 10/01/04 $200,000 $200,000
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Higher Educational Facilities Authority Rev.,
Capital Assets Program, "D", due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
San Francisco, CA, City & County Financial Corp. Lease Rev., Moscone
Center Expansion, due 10/07/04 8,810,000 8,810,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $9,110,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $337,621,035) $365,454,415
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (0.2)% (600,122)
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $364,854,293
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.3%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port Allegheny County, PA, Airport Rev. (Pittsburgh International Airport),
Revenue - 2.2% FGIC, 6.125%, 2017 $500,000 $543,035
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Airport Rev. (Pittsburgh International Airport),
MBIA, 5.75%, 2014 1,000,000 1,105,060
- -------------------------------------------------------------------------------------------------------------------------------
Susquehanna Area Regional Airport, 5.375%, 2018 200,000 207,760
- -------------------------------------------------------------------------------------------------------------------------------
Susquehanna Area Regional Airport, AMBAC, 5.375%, 2023 500,000 528,120
- -------------------------------------------------------------------------------------------------------------------------------
$2,383,975
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 8.7% Allegheny County, PA, FGIC, 5.3%, 2018 $500,000 $542,010
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, FGIC, 5.4%, 2019 500,000 543,985
- -------------------------------------------------------------------------------------------------------------------------------
Allentown, PA, FGIC, 5%, 2022 1,350,000 1,422,266
- -------------------------------------------------------------------------------------------------------------------------------
Beaver County, PA, MBIA, 5.75%, 2006(++) 250,000 269,208
- -------------------------------------------------------------------------------------------------------------------------------
Centre County, PA, MBIA, 5.25%, 2018 1,000,000 1,096,300
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLS, FGIC, 9.23%, 2015+(+) 1,000,000 1,348,960
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLS, XLCA, 9.14%, 2017+(+) 1,000,000 1,336,000
- -------------------------------------------------------------------------------------------------------------------------------
Luzerne County, PA, MBIA, 5.25%, 2025 500,000 527,730
- -------------------------------------------------------------------------------------------------------------------------------
North Huntingdon Township, PA, AMBAC, 5.25%, 2019 500,000 548,250
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Finance Rev. (Pennsylvania Hills), FGIC, 5.45%, 2019 500,000 541,395
- -------------------------------------------------------------------------------------------------------------------------------
State of Pennsylvania, 6.25%, 2010 300,000 350,832
- -------------------------------------------------------------------------------------------------------------------------------
State of Pennsylvania, 6%, 2019(++) 1,000,000 1,162,440
- -------------------------------------------------------------------------------------------------------------------------------
$9,689,376
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 0.5% Pittsburgh, PA, FGIC, 5.75%, 2009(++) $500,000 $569,365
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 21.3% Butler, PA, School District, FGIC, 5.375%, 2018 $500,000 $540,810
- -------------------------------------------------------------------------------------------------------------------------------
Chambersburg, PA, School District, FSA, 5%, 2016 500,000 536,045
- -------------------------------------------------------------------------------------------------------------------------------
Downingtown, PA, School District, AMBAC, 5.65%, 2019 500,000 550,995
- -------------------------------------------------------------------------------------------------------------------------------
Exeter Township, PA, School District, FGIC, 5%, 2025 1,000,000 1,034,980
- -------------------------------------------------------------------------------------------------------------------------------
Garnet Valley, PA, School District, FGIC, 5.5%, 2015 750,000 846,600
- -------------------------------------------------------------------------------------------------------------------------------
Gateway, PA, Alleghany School District, FGIC, 5.2%, 2023 1,000,000 1,061,640
- -------------------------------------------------------------------------------------------------------------------------------
Mt. Lebanon PA, School District, MBIA, 5%, 2020 1,000,000 1,062,590
- -------------------------------------------------------------------------------------------------------------------------------
Norristown, PA, School District, FGIC, 5%, 2021 500,000 528,165
- -------------------------------------------------------------------------------------------------------------------------------
North Allegheny, PA, School District, FGIC, 5.05%, 2022 590,000 617,447
- -------------------------------------------------------------------------------------------------------------------------------
North Pocono, PA, School District, FGIC, 5%, 2023 500,000 522,121
- -------------------------------------------------------------------------------------------------------------------------------
Palmyra, PA, School District, FGIC, 5.375%, 2016 820,000 914,665
- -------------------------------------------------------------------------------------------------------------------------------
Pennridge, PA, School District, MBIA, 5%, 2020 - 2021 1,000,000 1,059,321
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Public School Building (Garnet Valley School Disctrict),
AMBAC, 5.5%, 2018 1,005,000 1,110,806
- -------------------------------------------------------------------------------------------------------------------------------
Perkiomen Valley, PA, School District, "A", FSA, 5.25%, 2028 1,000,000 1,050,220
- -------------------------------------------------------------------------------------------------------------------------------
Perkiomen Valley, PA, School District, FSA, 5%, 2019 - 2025 3,760,000 3,908,512
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, School District, AMBAC, 5.375%, 2007(++) 500,000 541,280
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, School District, FSA, 5.75%, 2011(++) 500,000 575,520
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, School District, MBIA, 6%, 2010(++) 500,000 577,290
- -------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA, School District, 5.5%, 2009(++) 1,320,000 1,494,557
- -------------------------------------------------------------------------------------------------------------------------------
Riverside, PA, School District, FGIC, 5.45%, 2010(++) 500,000 566,790
- -------------------------------------------------------------------------------------------------------------------------------
Riverside, PA, School District, FGIC, 5.5%, 2010(++) 500,000 568,160
- -------------------------------------------------------------------------------------------------------------------------------
South Park, PA, School District, FGIC, 5%, 2019 750,000 793,418
- -------------------------------------------------------------------------------------------------------------------------------
Southeastern Area, PA, Special Schools Authority Rev., 0%, 2007 360,000 331,484
- -------------------------------------------------------------------------------------------------------------------------------
State Public School Building Authority, Pennsylvania School (Lease
Philadelphia School District), FSA, 5.25%, 2024 1,000,000 1,064,510
- -------------------------------------------------------------------------------------------------------------------------------
State Public School Building Authority, Pennsylvania School (Tuscarora
School District), FSA, 5%, 2024 1,000,000 1,079,460
- -------------------------------------------------------------------------------------------------------------------------------
State Public School Building Authority, Pennsylvania School (Wattsburg
School District), MBIA, 0%, 2027 2,150,000 636,121
- -------------------------------------------------------------------------------------------------------------------------------
$23,573,507
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Allegheny County, PA, Hospital Development Authority Rev. (South Hills
Hospitals - 11.1% Health System), MBIA, 5.8%, 2016 $500,000 $535,780
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (South Hills
Health Systems), 6.75%, 2025 555,000 564,812
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (UPMC Health
Systems), MBIA, 5%, 2018 500,000 526,670
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (West Penn
Allegheny Health), 9.25%, 2022 - 2030 200,000 229,635
- -------------------------------------------------------------------------------------------------------------------------------
Blair County, PA, Hospital Authority Rev. (Altoona), AMBAC, 5.5%, 2008 470,000 519,303
- -------------------------------------------------------------------------------------------------------------------------------
Cumberland County PA, Municipal Authority Rev. (Carlisle Hospital &
Health Centers), 6.8%, 2004(++) 250,000 256,523
- -------------------------------------------------------------------------------------------------------------------------------
Erie County, PA, Hospital Authority Rev. (Hamot Health Foundation),
AMBAC, 5.25%, 2017 675,000 742,122
- -------------------------------------------------------------------------------------------------------------------------------
Lancaster County, PA, Hospital Authority Rev., 5.5%, 2026 500,000 508,905
- -------------------------------------------------------------------------------------------------------------------------------
Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan
Hospital), 5%, 2018 200,000 202,960
- -------------------------------------------------------------------------------------------------------------------------------
Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan
Hospital), 6%, 2035 350,000 357,417
- -------------------------------------------------------------------------------------------------------------------------------
Lehigh County, PA, General Purpose Authority (Good Shepherd Group),
"A", 5.625%, 2034 350,000 360,542
- -------------------------------------------------------------------------------------------------------------------------------
Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital),
5.25%, 2032 600,000 606,078
- -------------------------------------------------------------------------------------------------------------------------------
Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital),
MBIA, 7%, 2016 250,000 320,468
- -------------------------------------------------------------------------------------------------------------------------------
Lehigh County, PA, General Purpose Authority (St. Lukes Bethlehem
Hospital), 5.375%, 2033 600,000 594,426
- -------------------------------------------------------------------------------------------------------------------------------
Lehigh County, PA, Hospital Rev. (Lehigh Valley Hospital), FSA,
5.25%, 2019 500,000 541,315
- -------------------------------------------------------------------------------------------------------------------------------
Lycoming County, PA, Authority Hospital Rev. (Williamsport Hospital
Obligation Group), CONNIE LEE, 5.375%, 2010 750,000 790,103
- -------------------------------------------------------------------------------------------------------------------------------
Monroe County, PA, Hospital Authority Rev. (Pocono Medical Center),
6%, 2043 750,000 774,218
- -------------------------------------------------------------------------------------------------------------------------------
Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial
Hospital), 5.625%, 2032 400,000 409,416
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev., 6.25%, 2018 100,000 110,390
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev., 6%, 2031 650,000 689,598
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Health & Educational Facilities Rev. (Jeane Health),
6.6%, 2010 160,000 172,834
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Health & Educational Facilities Rev. (Temple
Universty), 6.625%, 2023 250,000 252,955
- -------------------------------------------------------------------------------------------------------------------------------
Sayre, PA, Health Care Facilities Authority Rev., 5.875%, 2031 500,000 518,510
- -------------------------------------------------------------------------------------------------------------------------------
Sayre, PA, Health Care Facilities Authority Rev. (Latrobe Hospital),
AMBAC, 5.25%, 2015 585,000 646,431
- -------------------------------------------------------------------------------------------------------------------------------
Scranton-Lackawanna, PA, Health & Welfare Authority Rev. (Allied Rehab
Hospital), 7.125%, 2005 55,000 55,394
- -------------------------------------------------------------------------------------------------------------------------------
Southcentral Pennsylvania General Authority Rev. (York Hospital),
5.625%, 2026 600,000 626,964
- -------------------------------------------------------------------------------------------------------------------------------
West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 350,000 361,232
- -------------------------------------------------------------------------------------------------------------------------------
$12,275,001
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Blair County, PA, Industrial Development Authority Rev. (Village of
Term Care - 0.9% Penn St.), 7%, 2034 $150,000 $153,497
- -------------------------------------------------------------------------------------------------------------------------------
Clarion, PA, Industrial Development Authority Rev. (Beverly
Enterprises, Inc.), 7.5%, 2012 150,000 153,188
- -------------------------------------------------------------------------------------------------------------------------------
Cumberland County, PA, Retirement Community Rev. (Wesley Affiliated
Services), 7.25%, 2035 150,000 153,557
- -------------------------------------------------------------------------------------------------------------------------------
Lancaster County, PA, Hospital Authority Rev. (Willow Valley Retirement
Project), 5.875%, 2031 500,000 515,070
- -------------------------------------------------------------------------------------------------------------------------------
$975,312
- -------------------------------------------------------------------------------------------------------------------------------
Human Services - 0.1% Montgomery County, PA, Industrial Development Authority (Wordsworth
Academy), 8%, 2024 $150,000 $150,332
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Environmental New Morgan, PA, Industrial Development Authority, Solid Waste Disposal
Services - 0.9% Rev. (New Morgan Landfill Co, Inc./Browning Ferris, Inc.), 6.5%, 2019 $530,000 $527,684
- -------------------------------------------------------------------------------------------------------------------------------
Westmoreland County, PA, Industrial Development Corp. (Waste
Management), LOC, 5.1%, 2018 500,000 523,000
- -------------------------------------------------------------------------------------------------------------------------------
$1,050,684
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Bucks County, PA, Industrial Development Authority Rev. (USX Corp.),
Other - 1.9% 5.4%, 2017 $300,000 $334,968
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing Authority Rev. (Amtrak),
6.125%, 2021 150,000 156,113
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing Authority, Solid Waste
Disposal Rev. (Proctor & Gamble), 5.375%, 2031 1,000,000 1,056,380
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing Authority, Wastewater
Treatment Rev. (Sunoco Co.), 7.6%, 2024 250,000 257,020
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 270,000 284,569
- -------------------------------------------------------------------------------------------------------------------------------
$2,089,050
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Erie County, PA, Industrial Development Authority (International Paper
Paper - 0.9% Co.), 5.3%, 2012 $650,000 $699,043
- -------------------------------------------------------------------------------------------------------------------------------
Erie County, PA, Industrial Development Authority (International Paper
Co.), 7.625%, 2018 250,000 256,003
- -------------------------------------------------------------------------------------------------------------------------------
$955,046
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Other - 0.2% Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013## $185,000 $185,426
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Philadelphia, PA, Housing Authority Capital Program Rev., FSA, 5.25%,
Revenue - 1.0% 2014 $1,000,000 $1,130,230
- -------------------------------------------------------------------------------------------------------------------------------
Parking - 1.5% Philadelphia, PA, Public Parking Authority Rev., FSA, 5.625%, 2015 $1,000,000 $1,111,740
- -------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA, Public Parking Authority Rev., AMBAC, 6%, 2020 500,000 573,760
- -------------------------------------------------------------------------------------------------------------------------------
$1,685,500
- -------------------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium
Revenue - 0.5% Hotel Room), AMBAC, 5.25%, 2017 $500,000 $540,015
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Philadelphia, PA, Redevelopment Authority Home Improvement Loan Rev.,
Local - 0.3% FHA, 6.1%, 2010 $60,000 $61,998
- -------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA, Urban Development Authority Mortgage Rev., 5.5%, 2010 305,000 309,212
- -------------------------------------------------------------------------------------------------------------------------------
$371,210
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Pennsylvania Housing Finance Agency, Single Family Mortgage Rev.,
State - 4.7% 4.25%, 2012 $500,000 $508,340
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev.,
5.75%, 2013 205,000 214,055
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev.,
5%, 2014 - 2034 1,490,000 1,561,828
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.1%,
2020 1,405,000 1,434,646
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev.,
5.25%, 2021 - 2033 1,485,000 1,534,343
- -------------------------------------------------------------------------------------------------------------------------------
$5,253,212
- -------------------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.3% Delaware County, PA, Industrial Development Authority Rev. (American
Ref-Fuel Co.), "A", 6.2%, 2019 $300,000 $311,292
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 7.6% Delaware Valley, PA, Regional Finance Authority, 5.5%, 2012 $1,000,000 $1,121,720
- -------------------------------------------------------------------------------------------------------------------------------
Delaware Valley, PA, Regional Finance Authority, RITES, AMBAC, 9.275%,
2018(+) 500,000 663,560
- -------------------------------------------------------------------------------------------------------------------------------
Northumberland County, PA (Country Careers and Arts Center), 6.65%,
2020 255,000 264,665
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Convention Center Rev., 6.75%, 2019 250,000 256,475
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Industrial Development Authority, Economic Development,
AMBAC, 7%, 2007 300,000 331,206
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Industrial Development Authority, FSA, 5.125%, 2026 1,000,000 1,034,190
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Industrial Development Authority, FSA, 5.25%, 2030 750,000 773,745
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Industrial Development Authority, MBIA, 5.35%, 2012 500,000 543,705
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Buildings Authority, 5%, 2007 1,585,000 1,695,728
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., Commonwealth Appropriation, "E",
5.7%, 2010(++) 1,000,000 1,137,660
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC, 8.8516%, 2013+(+) 500,000 653,020
- -------------------------------------------------------------------------------------------------------------------------------
$8,475,674
- -------------------------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 1.4% Pennsylvania Higher Education, Capital Acquisition Rev., MBIA, 5%, 2026 $1,500,000 $1,534,860
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.5% Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium
Hotel Room), AMBAC, 5.25%, 2013 $500,000 $552,420
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.4% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $335,000 $301,879
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corp., 5%, 2021 160,000 147,995
- -------------------------------------------------------------------------------------------------------------------------------
$449,874
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Allegheny County, PA, Port Authority Special Rev., MBIA, 6.25%, 2009
Tax - 6.8% (++) $500,000 $581,540
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority, 5.5%,
2013 500,000 569,630
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority, "Y",
5.5%, 2036 1,020,000 1,086,881
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority, ROLS,
MBIA, 9.23%, 2020+(+) 1,500,000 2,041,080
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Turnpike Commission, 5.5%, 2015 250,000 279,853
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Turnpike Commission, MBIA, 5%, 2024 1,775,000 1,848,148
- -------------------------------------------------------------------------------------------------------------------------------
Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC,
5.25%, 2013 500,000 550,720
- -------------------------------------------------------------------------------------------------------------------------------
Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC,
5.375%, 2017 500,000 543,750
- -------------------------------------------------------------------------------------------------------------------------------
$7,501,602
- -------------------------------------------------------------------------------------------------------------------------------
Universities -
Colleges - 9.3% Allegheny County, PA, (Chatham College), 5.95%, 2032 $335,000 $349,425
- -------------------------------------------------------------------------------------------------------------------------------
Cumberland County, PA, Municipal Authority (Dickinson College), AMBAC,
5.55%, 2017 535,000 588,008
- -------------------------------------------------------------------------------------------------------------------------------
Delaware County, PA, Authority University Rev. (Villanova University),
FGIC, 5.25%, 2020 - 2021 2,000,000 2,176,270
- -------------------------------------------------------------------------------------------------------------------------------
Lycoming County, PA, (College of Technology), AMBAC, 5.25%, 2032 750,000 776,513
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev. (Clarion
University Foundation), XLCA, 5%, 2023 1,000,000 1,045,520
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev. (Drexel
University), 5.2%, 2032 500,000 515,310
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev. (Indepedent
Colleges & University), FGIC, 5%, 2024 1,000,000 1,042,790
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev. (Marywood
University), MBIA, 5.5%, 2018 300,000 331,452
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev. (Mercyhurst
College), "B", 5%, 2023 500,000 496,975
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Educational Facilities Authority Rev. (Widener
University), 5.375%, 2029 300,000 306,873
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Public School Building Authority (Delaware County
College), MBIA, 5.75%, 2016 500,000 568,360
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania State University, 5%, 2029 1,000,000 1,023,840
- -------------------------------------------------------------------------------------------------------------------------------
Union County, PA, Higher Educational Facilities Financing Authority,
University Rev. (Bucknell University), 5.25%, 2021 1,000,000 1,087,220
- -------------------------------------------------------------------------------------------------------------------------------
$10,308,556
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Pennsylvania Economic Development Financing Authority (Germantown
Dormatories - 0.6% Friends School Project), 5.35%, 2031 $600,000 $623,286
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Carbon County, PA, Industrial Development Authority Rev. (Panther Creek
Cogeneration - 0.3% Partners), 6.65%, 2010 $135,000 $146,069
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing Authority Rev., Resources
Recovery Rev. (Northampton Generating), 6.4%, 2009 150,000 152,373
- -------------------------------------------------------------------------------------------------------------------------------
$298,442
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 4.8% Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2014+(+) $2,170,000 $2,604,608
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Gas Works Rev. (1998 General Ordinance), FSA, 5.25%,
2020 1,000,000 1,083,880
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2016 - 2018 1,500,000 1,651,845
- -------------------------------------------------------------------------------------------------------------------------------
$5,340,333
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 8.6% Allegheny County, PA, Sewer Rev., MBIA, 5.75%, 2017 $750,000 $853,613
- -------------------------------------------------------------------------------------------------------------------------------
Bucks County, PA, (Suburban Water Co.), FGIC, 5.55%, 2032 1,000,000 1,046,890
- -------------------------------------------------------------------------------------------------------------------------------
Delaware County, PA, Water Quality Control Authority, Sewer Rev., FGIC,
5%, 2018 750,000 793,898
- -------------------------------------------------------------------------------------------------------------------------------
Fairview Township, PA, Sewer Rev., FGIC, 5.05%, 2018 750,000 798,563
- -------------------------------------------------------------------------------------------------------------------------------
Lancaster County, PA, Water & Sewer Authority Rev., MBIA, 5%, 2023 -
2028 1,890,000 1,971,294
- -------------------------------------------------------------------------------------------------------------------------------
Luzerne County, PA, Industrial Development Authority, 6.05%, 2019 300,000 306,798
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Water Rev., MBIA, 6.25%, 2012 550,000 656,986
- -------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Water Rev., MBIA, 5.5%, 2014 1,000,000 1,048,890
- -------------------------------------------------------------------------------------------------------------------------------
University Area Joint Authority, Sewer rev., MBIA, 5%, 2023 1,500,000 1,556,880
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 500,000 535,465
- -------------------------------------------------------------------------------------------------------------------------------
$9,569,277
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $101,699,341) $107,842,857
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.0%
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), "A", 1.10%, due 10/07/04 $600,000 $600,000
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), "D", 1.08%, due 10/07/04 400,000 400,000
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), 1.07%, due 10/07/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $1,100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $102,799,341) $108,942,857
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.7% 1,935,369
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $110,878,226
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.4%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port
Revenue - 3.3% Horry County, SC, "A", FSA, 5.7%, 2027 $2,250,000 $2,335,787
- -------------------------------------------------------------------------------------------------------------------------------
Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", AMBAC,
5.7%, 2026 1,000,000 1,033,990
- -------------------------------------------------------------------------------------------------------------------------------
Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", FSA,
5%, 2026 1,000,000 1,020,600
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina State Ports Authority Rev., FSA, 5%, 2016 1,000,000 1,056,540
- -------------------------------------------------------------------------------------------------------------------------------
$5,446,917
- -------------------------------------------------------------------------------------------------------------------------------
Chemicals - 0.5% York County, SC, Industrial Rev., Exempt Facilities Hoechst Celanese,
5.7%, 2024 $850,000 $758,302
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 7.4% Commonwealth of Puerto Rico, RITES, ETM, 9.1213%, 2018+(+),(++) $2,000,000 $2,486,320
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, ETM, 9.1213%, 2019(+)+,(++) 1,750,000 2,165,415
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, MBIA, 9.6213%, 2020+(+) 2,000,000 2,568,480
- -------------------------------------------------------------------------------------------------------------------------------
Hilton Head Island, SC, Public Facilities Corp., AMBAC, 5.75%, 2014 1,750,000 1,812,650
- -------------------------------------------------------------------------------------------------------------------------------
Hilton Head Island, SC, Rev., MBIA, 5.125%, 2022 1,000,000 1,065,570
- -------------------------------------------------------------------------------------------------------------------------------
Horry County, SC, Hospital Fee Special Obligation, 6%, 2015 915,000 1,037,207
- -------------------------------------------------------------------------------------------------------------------------------
Richard Lexington Riverbanks, SC, Parks District, FGIC, 5.8%, 2018 1,000,000 1,124,440
- -------------------------------------------------------------------------------------------------------------------------------
$12,260,082
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 1.3% Beaufort County, SC, FGIC, 5.25%, 2018 $1,000,000 $1,073,190
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, FSA, 10.1651%, 2016+(+) 850,000 1,105,629
- -------------------------------------------------------------------------------------------------------------------------------
$2,178,819
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 10.3% Anderson County, SC, School District, "B", 5.5%, 2018 $1,465,000 $1,624,539
- -------------------------------------------------------------------------------------------------------------------------------
Beaufort County, SC, School District, "B", 5.625%, 2018 2,000,000 2,197,840
- -------------------------------------------------------------------------------------------------------------------------------
Berkeley County, SC, School District, 5%, 2020 2,000,000 2,108,080
- -------------------------------------------------------------------------------------------------------------------------------
Chesterfield County, SC, School District, FSA, 5%, 2023 3,000,000 3,128,100
- -------------------------------------------------------------------------------------------------------------------------------
Georgetown County, SC, School District, 5.25%, 2018 - 2019 2,500,000 2,716,585
- -------------------------------------------------------------------------------------------------------------------------------
Orangeburg County, SC, Consolidated School District, FSA, 5.25%, 2020 1,065,000 1,154,620
- -------------------------------------------------------------------------------------------------------------------------------
Orangeburg County, SC, Consolidated School District, FSA, 5.375%, 2022 2,050,000 2,230,093
- -------------------------------------------------------------------------------------------------------------------------------
Richland County, SC, School District, 5.1%, 2021 1,750,000 1,851,518
- -------------------------------------------------------------------------------------------------------------------------------
$17,011,375
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Charleston County, SC (Care Alliance Health Services), "A", FSA,
Hospitals - 16.9% 5%, 2019 $1,000,000 $1,058,920
- -------------------------------------------------------------------------------------------------------------------------------
Charleston County, SC, Hospital Facilities Rev. (Medical Society
Health), MBIA, ETM, 5%, ETM, 2022(++) 2,450,000 2,453,945
- -------------------------------------------------------------------------------------------------------------------------------
Florence County, SC, Hospital Rev. (McLeod Regional Medical Center),
"A", FSA, 5.25%, 2034 2,000,000 2,071,880
- -------------------------------------------------------------------------------------------------------------------------------
Greenville, SC, Hospital Systems, Hospital Facilities Rev., 6%, 2020 3,400,000 3,953,860
- -------------------------------------------------------------------------------------------------------------------------------
Greenwood County, SC, Hospital Facilities Rev. (Self Memorial
Hospital), 5.5%, 2021 1,000,000 1,032,700
- -------------------------------------------------------------------------------------------------------------------------------
Greenwood County, SC, Hospital Facilities Rev. (Self Regional
Heathcare), "A", FSA, 5%, 2017 550,000 592,647
- -------------------------------------------------------------------------------------------------------------------------------
Lexington County, SC, Health Services District, Inc., 5.5%, 2032 - 2037 500,000 510,743
- -------------------------------------------------------------------------------------------------------------------------------
Lexington County, SC, Health Services District, Inc., Hospital Rev.,
Refunding & Improvement, 5.5%, 2032 1,000,000 1,024,550
- -------------------------------------------------------------------------------------------------------------------------------
Lexington County, SC, Health Services District, Inc., Hospital Rev.,
Refunding & Improvement, FSA, 5.125%, 2021 1,500,000 1,577,520
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority, Hospital
Facilities Rev. (Anderson Area Medical Center, Inc.), MBIA, 5.25%, 2015 1,750,000 1,848,613
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority, Hospital
Facilities Rev. (Georgetown Memorial Hospital), ASST GTY, 5.25%, 2021 1,500,000 1,581,510
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority, Hospital
Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 750,000 787,890
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority (Bon Secours
Health Systems, Inc.), "A", 5.625%, 2030 1,250,000 1,272,388
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority, Hospital
Facilities Rev. (Georgetown Memorial Hospital), AMBAC, 5%, 2023 1,000,000 1,027,830
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority, Hospital
Facilties Rev. (Georgetown Memorial Hospital), AMBAC, 6%, 2014 1,000,000 1,152,610
- -------------------------------------------------------------------------------------------------------------------------------
Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2020 - 2025 3,500,000 3,627,120
- -------------------------------------------------------------------------------------------------------------------------------
Spartanburg County, SC, Health Service Rev., FSA, 5.25%, 2032 2,250,000 2,329,178
- -------------------------------------------------------------------------------------------------------------------------------
$27,903,904
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long
Term Care - 1.1% Greenville County, SC, Hospital Rev. (Chestnut Hill) "A", 8%, 2015 $1,545,000 $1,378,279
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority, Residential Care
Facilities (Episcopal Home), "A", 6.375%, 2032 400,000 405,136
- -------------------------------------------------------------------------------------------------------------------------------
$1,783,415
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Calhoun County, SC, Solid Waste Disposal Facilities Rev. (Carolina
Other - 1.0% Eastman Co.), ETM, 6.75%, 2017(++) $1,000,000 $1,264,370
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 385,000 405,775
- -------------------------------------------------------------------------------------------------------------------------------
$1,670,145
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Darlington County, SC, Industrial Development Rev. (Sonoco Products
Paper - 2.0% Co.), 6.125%, 2025 $1,500,000 $1,544,700
- -------------------------------------------------------------------------------------------------------------------------------
Florence County, SC, Industrial Development Rev. (Stone Container
Corp.), 7.375%, 2007 225,000 228,224
- -------------------------------------------------------------------------------------------------------------------------------
Georgetown County, SC, Environmental Improvement Rev., International
Paper, "A", 5.3%, 2028 500,000 466,985
- -------------------------------------------------------------------------------------------------------------------------------
Richland County, SC, Environmental Improvement Rev., International
Paper, "A", 6.1%, 2023 1,000,000 1,044,900
- -------------------------------------------------------------------------------------------------------------------------------
$3,284,809
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Entertainment &
Tourism - 1.5% Myrtle Beach, SC, Hospitality Fee Rev., "A", FGIC, 5%, 2036 $510,000 $519,904
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority (Myrtle Beach
Convention), "B", MBIA, 5.125%, 2018 - 2020 1,795,000 1,909,931
- -------------------------------------------------------------------------------------------------------------------------------
$2,429,835
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing South Carolina Housing, Finance & Development Authority (Hunting Ridge
Revenue - 1.4% Apartments), 6.75%, 2025 $1,000,000 $1,026,560
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Housing, Finance & Development Authority (Runaway Bay
Apartments), 6.125%, 2015 1,300,000 1,347,086
- -------------------------------------------------------------------------------------------------------------------------------
$2,373,646
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - South Carolina Housing, Finance & Development Amt, "A-2", FSA,
State - 2.7% 5.2%, 2035 $1,000,000 $1,022,470
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Housing, Finance & Development Authority Rev., "A",
AMBAC, 4.85%, 2023 935,000 933,813
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Housing, Finance & Development Authority Rev., "A-2",
FSA, 6%, 2020 505,000 507,202
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Housing, Finance & Development Authority Rev., "A-2",
FSA, 5.35%, 2024 2,000,000 2,051,760
- -------------------------------------------------------------------------------------------------------------------------------
$4,515,245
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 6.4% Greenville County, SC (University Center), "A", AMBAC, 5.25%, 2019 $1,000,000 $1,074,230
- -------------------------------------------------------------------------------------------------------------------------------
North Charleston, SC, Municipal Golf Course Mortgage Rev.,
5.5%, 2009(++) 1,000,000 1,136,370
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., 5.75%, 2007(++) 1,000,000 1,084,410
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2013 - 2019+(+) 2,675,000 3,520,619
- -------------------------------------------------------------------------------------------------------------------------------
Richland County, SC, Certificates of Participation, FGIC, ETM,
0%, 2005 - 2006(++) 2,320,000 2,285,119
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Water Resources Authority Rev. (Local Government
Program), "A", 7.25%, 2020 685,000 688,083
- -------------------------------------------------------------------------------------------------------------------------------
Spartanburg, SC, Public Facilities Corp. (Renaissance Park), AMBAC,
5.125%, 2025 685,000 712,873
- -------------------------------------------------------------------------------------------------------------------------------
$10,501,704
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.7% Virgin Islands Public Finance Authority, FSA, 5.25%, 2021 $1,000,000 $1,090,510
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.6% South Carolina Tobacco Settlement Authority, 6.375%, 2028 $1,000,000 $926,960
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special
Tax - 1.0% South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2023 $500,000 $520,310
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Transportation Infrastructure Rev., "A", MBIA,
5.375%, 2018 1,000,000 1,092,790
- -------------------------------------------------------------------------------------------------------------------------------
$1,613,100
- -------------------------------------------------------------------------------------------------------------------------------
Universities -
Colleges - 7.1% Clemson University, University Rev., AMBAC, 6.25%, 2015 $1,250,000 $1,439,213
- -------------------------------------------------------------------------------------------------------------------------------
College Charleston, SC, Higher Education Facility Rev., "A", FGIC,
5.25%, 2028 2,435,000 2,543,820
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Educational Facilities Authority (Furman University),
AMBAC, 5.375%, 2020 1,245,000 1,360,324
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Educational Facilities Authority (Furman University),
AMBAC, 5.5%, 2030 2,000,000 2,138,520
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority, Student Housing
Rev. (FMU Francis Marion University), "A", MBIA, 5%, 2034 1,945,000 1,975,673
- -------------------------------------------------------------------------------------------------------------------------------
University of South Carolina, University Rev., "A", FGIC, 5.625%, 2020 1,555,000 1,725,412
- -------------------------------------------------------------------------------------------------------------------------------
University of South Carolina, University Rev., MBIA, 5.75%, 2026 515,000 550,298
- -------------------------------------------------------------------------------------------------------------------------------
$11,733,260
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Camden, SC, Public Utility Rev., Refunding & Improvement, MBIA,
Owned - 10.6% 5.5%, 2017 $1,500,000 $1,635,615
- -------------------------------------------------------------------------------------------------------------------------------
Easley, SC, Utility Rev., FSA, 5.25%, 2019 1,315,000 1,444,002
- -------------------------------------------------------------------------------------------------------------------------------
Easley, SC, Utility Rev., FSA, 5%, 2021 - 2027 2,000,000 2,093,240
- -------------------------------------------------------------------------------------------------------------------------------
Greenwood, SC, Combined Public Utility, Refunding & Improvement
Systems, MBIA, 5%, 2021 - 2023 475,000 499,801
- -------------------------------------------------------------------------------------------------------------------------------
Orangeburg County, SC, Solid Waste Disposal Facilities Rev., Electric &
Gas, AMBAC, 5.7%, 2024 2,000,000 2,006,460
- -------------------------------------------------------------------------------------------------------------------------------
Piedmont, SC, Municipal Power Agency, FGIC, 6.25%, 2021 2,600,000 3,243,994
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority, RITES, FSA, 8.5596%, 2015+(+) 1,000,000 1,179,010
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Public Service Authority, "A", AMBAC, 5%, 2034 2,000,000 2,037,400
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Public Service Authority, "A", MBIA, 5.5%, 2018 200,000 220,704
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Public Service Authority, "B", AMBAC, 5.5%, 2023 1,000,000 1,061,840
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Public Service Authority, "B", FGIC, 5.875%, 2023 500,000 533,200
- -------------------------------------------------------------------------------------------------------------------------------
South Carolina Public Service Authority, "B", FSA, 5.125%, 2037 1,500,000 1,532,130
- -------------------------------------------------------------------------------------------------------------------------------
$17,487,396
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 21.6% Anderson County, SC, Joint Municipal Water, FSA, 5%, 2032 $1,000,000 $1,020,000
- -------------------------------------------------------------------------------------------------------------------------------
Anderson, SC, Water & Sewer Systems Rev., FGIC, 5.125%, 2032 2,000,000 2,062,040
- -------------------------------------------------------------------------------------------------------------------------------
Anderson, SC, Water & Sewer Systems Rev., MBIA, 5%, 2021 1,690,000 1,794,729
- -------------------------------------------------------------------------------------------------------------------------------
Charleston, SC, Waterworks & Sewer Rev., Capital Improvement, "B",
5%, 2028 1,000,000 1,022,410
- -------------------------------------------------------------------------------------------------------------------------------
Columbia, SC, Waterworks & Sewer Systems Rev., 0%, 2005 - 2006 11,575,000 11,319,252
- -------------------------------------------------------------------------------------------------------------------------------
Columbia, SC, Waterworks & Sewer Systems Rev., 6%, 2010(++) 2,000,000 2,310,040
- -------------------------------------------------------------------------------------------------------------------------------
Greenville, SC, Stormwater Systems, FSA, 5%, 2022 595,000 628,094
- -------------------------------------------------------------------------------------------------------------------------------
Greenville, SC, Waterworks Rev., 5.25%, 2020 860,000 943,274
- -------------------------------------------------------------------------------------------------------------------------------
Greenville, SC, Waterworks Rev., 5.5%, 2022 1,000,000 1,072,650
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 445,000 469,177
- -------------------------------------------------------------------------------------------------------------------------------
Rock Hill, SC, Utility Systems Rev., Refunding & Improvement, "A", FSA,
5.375%, 2023 500,000 539,900
- -------------------------------------------------------------------------------------------------------------------------------
Spartanburg, SC, San Sewer District, Sewer Systems Rev., "B", MBIA,
5%, 2034 3,000,000 3,057,030
- -------------------------------------------------------------------------------------------------------------------------------
Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA, 5.25%, 2030 1,000,000 1,051,790
- -------------------------------------------------------------------------------------------------------------------------------
Spartanburg, SC, Waterworks Rev., FGIC, 6.05%, 2006(++) 2,750,000 2,942,527
- -------------------------------------------------------------------------------------------------------------------------------
Western Carolina Regional Sewer Authority Rev., AMBAC, 0%, 2007 4,000,000 3,785,000
- -------------------------------------------------------------------------------------------------------------------------------
York County, SC, Water & Sewer Rev., Refunding & Capital Improvement,
MBIA, 5%, 2027 1,490,000 1,535,549
- -------------------------------------------------------------------------------------------------------------------------------
$35,553,462
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $148,108,313) $160,522,886
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.3%
- -------------------------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Corp. Rev. (Scott &
White Memorial Hospital), due 10/01/04 $200,000 $200,000
- -------------------------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Corp. Rev. (Scott &
White Memorial Hospital), "B-1", due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev. (Adventist
Hospital), "B", due 10/01/04 400,000 400,000
- -------------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (University of Chicago
Hospital), due 10/01/04 1,200,000 1,200,000
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A",
due 10/05/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
San Francisco, CA, City & County Financial Corp. Lease Rev., Moscone
Center Expansion, due 10/05/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $2,100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $150,208,313) $162,622,886
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.3% 2,193,746
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $164,816,632
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) TENNESSEE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.5%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port Memphis-Shelby County, TN, Airport Authority Facilities Rev., AMBAC,
Revenue - 2.1% 6%, 2024 $1,165,000 $1,289,352
- -------------------------------------------------------------------------------------------------------------------------------
Memphis-Shelby County, TN, Airport Authority Facilities Rev., FSA,
5.125%, 2021 1,500,000 1,549,725
- -------------------------------------------------------------------------------------------------------------------------------
$2,839,077
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations - Commonwealth of Puerto Rico, Prerefunded, Public Improvement, FSA,
General Purpose - 5.6% 5%, 2011(++) $1,230,000 $1,371,081
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Unrefunded, Public Improvement, FSA,
5%, 2024 770,000 802,063
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln County, TN, School Improvement, FGIC, 5.8%, 2007(++) 2,000,000 2,204,720
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Commonwealth, 5.4%, 2006(++) 3,000,000 3,230,850
- -------------------------------------------------------------------------------------------------------------------------------
$7,608,714
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 5.0% Chattanooga, TN, Public Improvement, 5%, 2021 $2,570,000 $2,689,017
- -------------------------------------------------------------------------------------------------------------------------------
Knoxville, TN, Public Improvement, 5%, 2024 350,000 362,040
- -------------------------------------------------------------------------------------------------------------------------------
Knoxville, TN, Recreational Facilities Improvement, 5.5%, 2017 645,000 711,816
- -------------------------------------------------------------------------------------------------------------------------------
State of Tennessee, FSA, 5%, 2018 1,000,000 1,070,910
- -------------------------------------------------------------------------------------------------------------------------------
Williamson County, TN, Public Improvement, 5%, 2018 1,760,000 1,886,016
- -------------------------------------------------------------------------------------------------------------------------------
$6,719,799
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 17.2% Fayette County, TN, School District, MBIA, 5.6%, 2008(++) $1,215,000 $1,344,141
- -------------------------------------------------------------------------------------------------------------------------------
Gibson County, TN, School District, MBIA, 5.75%, 2009(++) 455,000 516,797
- -------------------------------------------------------------------------------------------------------------------------------
Gibson County, TN, School District, MBIA, 5.75%, 2016 190,000 213,249
- -------------------------------------------------------------------------------------------------------------------------------
Giles County, TN, School Improvement, FGIC, 5.75%, 2010(++) 1,980,000 2,262,664
- -------------------------------------------------------------------------------------------------------------------------------
Greene County, TN, Rural School, FGIC, 5%, 2020 - 2021 2,540,000 2,667,789
- -------------------------------------------------------------------------------------------------------------------------------
Milan, TN, Special School District, MBIA, 5%, 2021 1,000,000 1,047,250
- -------------------------------------------------------------------------------------------------------------------------------
Roane County, TN, Rural School, FGIC, 5.6%, 2008(++) 1,890,000 2,090,586
- -------------------------------------------------------------------------------------------------------------------------------
Rutherford County, TN, School & Public Improvement, 5%, 2022 1,510,000 1,578,750
- -------------------------------------------------------------------------------------------------------------------------------
Rutherford County, TN, School District, 5.875%, 2010(++) 1,100,000 1,268,575
- -------------------------------------------------------------------------------------------------------------------------------
Rutherford County, TN, School Improvement, 0%, 2007(++) 1,500,000 898,200
- -------------------------------------------------------------------------------------------------------------------------------
Rutherford County, TN, School Improvement, 5.875%, 2010(++) 2,000,000 2,306,500
- -------------------------------------------------------------------------------------------------------------------------------
Rutherford County, TN, School Improvement, 5%, 2020 1,000,000 1,048,990
- -------------------------------------------------------------------------------------------------------------------------------
State of Tennessee, School Bond Authority (Higher Education
Facilities), FSA, 5%, 2017 1,000,000 1,074,320
- -------------------------------------------------------------------------------------------------------------------------------
State of Tennessee, School Bond Authority (Higher Education
Facilities), FSA, 5.25%, 2029 3,000,000 3,133,290
- -------------------------------------------------------------------------------------------------------------------------------
Williamson County, TN, Rural School, 6.125%, 2010(++) 1,575,000 1,828,244
- -------------------------------------------------------------------------------------------------------------------------------
$23,279,345
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Jackson, TN, Hospital Rev. (Jackson-Madison County General Hospital),
Hospitals - 11.7% AMBAC, 5%, 2018 $1,000,000 $1,054,530
- -------------------------------------------------------------------------------------------------------------------------------
Johnson City, TN, Health & Education Financing Authority Rev. (Johnson
City Medical Center Hospital), MBIA, 5.25%, 2016 1,375,000 1,409,595
- -------------------------------------------------------------------------------------------------------------------------------
Johnson City, TN, Health & Education Financing Authority Rev. (Johnson
City Medical Center Hospital), MBIA, ETM, 5%, 2018(++) 1,500,000 1,571,070
- -------------------------------------------------------------------------------------------------------------------------------
Knox County, TN, Health Educational Housing Facilities Board, Hospital
Facilities Rev. (Baptist Health Systems), 6.5%, 2031 300,000 294,036
- -------------------------------------------------------------------------------------------------------------------------------
Knox County, TN, Health, Education & Housing Facilities Board Rev.
(Catholic Healthcare Partners), 5.25%, 2030 1,000,000 1,026,310
- -------------------------------------------------------------------------------------------------------------------------------
Knox County, TN, Health, Education & Housing Facilities Board Rev.
(East Tennessee Children's Hospital), 5.75%, 2033 450,000 458,370
- -------------------------------------------------------------------------------------------------------------------------------
Knox County, TN, Health, Education & Housing Facilities Board Rev.
(Fort Sanders), MBIA, 5.75%, 2014 3,250,000 3,779,685
- -------------------------------------------------------------------------------------------------------------------------------
Knox County, TN, Health, Education & Housing Facilities Board Rev.,
FSA, 5%, 2022 1,000,000 1,042,580
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Health,
Educational & Housing Facilities Board Rev. (Adventist Health System),
5.25%, 2020 1,000,000 1,027,680
- -------------------------------------------------------------------------------------------------------------------------------
Shelby County, TN, Health Educational & Housing Facilities Board Rev.
(St. Judes Children's Research), 5.5%, 2020 1,750,000 1,840,125
- -------------------------------------------------------------------------------------------------------------------------------
Shelby County, TN, Health Educational & Housing Facilities Hospital
Rev., Prerefunded (Methodist Healthcare), ETM, 6.5%, 2021(++) 375,000 449,903
- -------------------------------------------------------------------------------------------------------------------------------
Shelby County, TN, Health Educational & Housing Facilities Hospital
Rev., Unrefunded (Methodist Healthcare), 6.5%, 2021 625,000 761,688
- -------------------------------------------------------------------------------------------------------------------------------
Springfield, TN, Health & Higher Educational Facilities Hospital Rev.
(Northcrest Medical Center), 5.25%, 2013 1,000,000 1,021,300
- -------------------------------------------------------------------------------------------------------------------------------
$15,736,872
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Shelby County, TN, Health Educational Rev. (Germantown Village),
Term Care - 0.6% 7.25%, 2034 $500,000 $513,835
- -------------------------------------------------------------------------------------------------------------------------------
Shelby County, TN, Nursing Home Rev. (Beverly Enterprises, Inc.),
7.4%, 2011 270,000 300,931
- -------------------------------------------------------------------------------------------------------------------------------
$814,766
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Other - 2.4% Hardeman County, TN, Correctional Facilities Rev., 7.75%, 2017 $1,000,000 $1,044,890
- -------------------------------------------------------------------------------------------------------------------------------
Humphreys County, TN, Industrial Rev. (Board Inland Container Corp.),
6.7%, 2024 1,750,000 1,791,878
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 320,000 337,267
- -------------------------------------------------------------------------------------------------------------------------------
$3,174,035
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - McMinn County, TN, Industrial Development Board, Pollution Control Rev.
Paper - 0.7% (Bowater, Inc.), 7.625%, 2016 $1,000,000 $1,001,670
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Bristol, TN, Industrial Development Authority Rev. (Kmart Corp.),
Retail - 0.6% 7.5%, 2004(++) $795,000 $820,456
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue -
Entertainment &
Tourism - 2.8% Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.125%, 2028 $2,000,000 $2,064,840
- -------------------------------------------------------------------------------------------------------------------------------
Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.35%, 2029 1,665,000 1,762,386
- -------------------------------------------------------------------------------------------------------------------------------
$3,827,226
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Chattanooga, TN, Health, Educational & Housing Facilities (Rainbow
Revenue - 3.4% Creek), GNMA, 6.125%, 2019 $455,000 $486,632
- -------------------------------------------------------------------------------------------------------------------------------
Franklin, TN, Industrial Development Rev. (Landings Apartments), FSA,
6%, 2026 1,000,000 1,040,120
- -------------------------------------------------------------------------------------------------------------------------------
Memphis, TN, Health & Educational Facilities Board Rev. (Hickory Point
Apartments), MBIA, 5.85%, 2020 1,000,000 1,048,480
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Health &
Educational & Housing Facilities Board Rev. (Berkshire Place), GNMA,
6%, 2023 500,000 523,195
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Health,
Educational & Housing Facilities Board Rev. (Herman Street), FHA,
7.25%, 2032 495,000 498,574
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Finance Authority, 5%, 2020 1,000,000 1,050,140
- -------------------------------------------------------------------------------------------------------------------------------
$4,647,141
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
State - 10.4% Tennessee Housing Development Agency Mortgage Finance, 5.2%, 2023 $1,500,000 $1,549,875
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Mortgage Finance, 5.35%, 2034 2,000,000 2,060,320
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program,
5.45%, 2014 2,535,000 2,642,408
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program,
4.45%, 2017 1,305,000 1,303,675
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program,
4.55%, 2018 1,265,000 1,265,823
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program,
6%, 2020 535,000 555,624
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program,
5.05%, 2027 990,000 1,000,662
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program,
5.25%, 2034 1,500,000 1,595,085
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program, FSA,
5.4%, 2032 900,000 915,669
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program, FSA,
4.15%, 2033 835,000 851,450
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Rev., Homeownership Program, MBIA,
6.125%, 2020 315,000 327,024
- -------------------------------------------------------------------------------------------------------------------------------
$14,067,615
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 4.0% Chattanooga,TN, Industrial Development Board, AMBAC, 5.75%, 2018 $1,000,000 $1,130,900
- -------------------------------------------------------------------------------------------------------------------------------
Knoxville, TN, Community Development Corp., 5%, 2024 1,000,000 1,029,000
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., 5.75%, 2007(++) 2,000,000 2,168,820
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., 5.5%, 2021 1,000,000 1,131,850
- -------------------------------------------------------------------------------------------------------------------------------
$5,460,570
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.6% Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 $730,000 $757,762
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.7% Guam Economic Development Authority, Tobacco Settlement, Asset Backed,
"B", 5.5%, 2041 $350,000 $310,583
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corp., 5%, 2031 750,000 634,155
- -------------------------------------------------------------------------------------------------------------------------------
$944,738
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Metropolitan Government of Nashville & Davidson County, TN, Health,
Colleges - 4.4% Educational & Housing Facilities Board Rev. (McKendree Village, Inc.),
5.125%, 2020 $1,000,000 $1,035,290
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Health,
Educational & Housing Facilities Board Rev. (Meharry Medical College),
AMBAC, 5%, 2024 3,750,000 3,850,013
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Health,
Educational & Housing Facilities Board Rev. (Vanderbilt University),
5%, 2019 1,000,000 1,057,160
- -------------------------------------------------------------------------------------------------------------------------------
$5,942,463
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 11.0% Jackson, TN, Electrical Systems Rev., MBIA, 5%, 2018 $1,000,000 $1,035,840
- -------------------------------------------------------------------------------------------------------------------------------
Lawrenceburg, TN, Electrical Rev., MBIA, 5.5%, 2009(++) 1,255,000 1,415,640
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Electrical
Rev., 5.125%, 2021 1,500,000 1,595,250
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Electrical
Rev., "A", AMBAC, 5%, 2029 1,500,000 1,534,860
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Electrical
Rev., MBIA, 0%, 2012 3,305,000 2,471,975
- -------------------------------------------------------------------------------------------------------------------------------
West Knox County Utility District, Ref & Improvement (Hallsdale-
Powell), "A", FGIC, 5%, 2024 1,500,000 1,558,065
- -------------------------------------------------------------------------------------------------------------------------------
West Knox County Utility District, TN, Water & Sewer Rev. (Hallsdale-
Powell), FGIC, 5%, 2027 3,000,000 3,075,540
- -------------------------------------------------------------------------------------------------------------------------------
West Wilson Utility District, TN, Waterworks Rev., MBIA, 5.25%, 2030 2,000,000 2,097,820
- -------------------------------------------------------------------------------------------------------------------------------
$14,784,990
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 14.3% Clarksville, TN, Water, Sewer & Gas Rev., FSA, 5%, 2022 $445,000 $463,503
- -------------------------------------------------------------------------------------------------------------------------------
Harpeth Valley, TN, Utilities Improvements Rev., MBIA, 5.05%, 2020 1,925,000 2,023,637
- -------------------------------------------------------------------------------------------------------------------------------
Hendersonville, TN, Utilities Improvement Rev., FGIC, 5.5%, 2010(++) 1,125,000 1,271,801
- -------------------------------------------------------------------------------------------------------------------------------
Madison, TN, Utility Waterworks Rev., MBIA, 5%, 2019 2,750,000 2,875,538
- -------------------------------------------------------------------------------------------------------------------------------
Memphis, TN, Sewage Systems Rev., 5.75%, 2016 - 2020 2,520,000 2,793,040
- -------------------------------------------------------------------------------------------------------------------------------
Rutherford County, TN, Water Rev., MBIA, 5%, 2027 770,000 801,462
- -------------------------------------------------------------------------------------------------------------------------------
West Knox Utility District, TN, Water & Sewer Rev., MBIA, ETM,
0%, 2004 - 2007(++) 5,760,000 5,531,232
- -------------------------------------------------------------------------------------------------------------------------------
White House Utility District, TN, Water & Sewer Rev. (Robertson &
Sumner Counties Waterworks), FSA, 6%, 2010(++) 1,000,000 1,152,770
- -------------------------------------------------------------------------------------------------------------------------------
White House Utility District, TN, Water & Sewer Rev. (Robertson &
Sumner Counties Waterworks), FSA, 5%, 2021 - 2032 2,300,000 2,365,495
- -------------------------------------------------------------------------------------------------------------------------------
$19,278,478
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $122,818,877) $131,705,717
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.2%
- -------------------------------------------------------------------------------------------------------------------------------
Sevier County, TN, Public Building Authority, due 10/01/04 $200,000 $200,000
- -------------------------------------------------------------------------------------------------------------------------------
Sevier County, TN, Public Building Authority, due 10/06/04 895,000 895,000
- -------------------------------------------------------------------------------------------------------------------------------
Sevier County, TN, Public Building Authority, due 10/06/04 500,000 500,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $1,595,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $124,413,877) $133,300,717
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.3% 1,823,170
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $135,123,887
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) VIRGINIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.6%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
Airport & Port Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC,
Revenue - 7.3% 5.125%, 2024 $1,000,000 $1,031,090
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC,
5%, 2025 705,000 715,342
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Washington, DC, Airport Authority Rev., "B", 5.5%, 2016 2,465,000 2,595,074
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Washington, DC, Airport Authority Rev., "B", 5.75%, 2020 11,000,000 11,549,230
- -------------------------------------------------------------------------------------------------------------------------------
Metropolitan Washington, DC, Airport Authority Rev., "B", MBIA,
5%, 2018 2,000,000 2,070,660
- -------------------------------------------------------------------------------------------------------------------------------
Norfolk, VA, Airport Authority Rev., "A", FGIC, 5.375%, 2017 1,755,000 1,931,009
- -------------------------------------------------------------------------------------------------------------------------------
Norfolk, VA, Airport Authority Rev., "A", FGIC, 5%, 2022 3,000,000 3,101,820
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority, Airport Rev., "B", 5.125%, 2027 720,000 734,162
- -------------------------------------------------------------------------------------------------------------------------------
$23,728,387
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 1.0% Bristol, VA, MBIA, 5.3%, 2018 $1,250,000 $1,356,213
- -------------------------------------------------------------------------------------------------------------------------------
Lebanon, VA, 6.375%, 2006(++) 1,625,000 1,784,185
- -------------------------------------------------------------------------------------------------------------------------------
$3,140,398
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 15.2% Alexandria, VA, Public Improvement, 5.5%, 2018 $2,980,000 $3,318,945
- -------------------------------------------------------------------------------------------------------------------------------
Chesterfield County, VA, 6%, 2010(++) 1,900,000 2,192,258
- -------------------------------------------------------------------------------------------------------------------------------
Chesterfield County, VA, 5%, 2020 2,015,000 2,132,434
- -------------------------------------------------------------------------------------------------------------------------------
Hampton, VA, Public Improvement, 6%, 2018 - 2019 6,760,000 7,782,966
- -------------------------------------------------------------------------------------------------------------------------------
Loudoun County, VA, Public Improvement, "B", 5.375%, 2016 2,650,000 2,928,330
- -------------------------------------------------------------------------------------------------------------------------------
Lynchburg, VA, Public Improvement, 5.6%, 2020 1,765,000 1,956,308
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA, 10.1651%, 2016+(+) 1,105,000 1,437,318
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA, 9.1574%, 2017+(+) 615,000 750,029
- -------------------------------------------------------------------------------------------------------------------------------
Richmond, VA, 0%, 2006 - 2008 5,500,000 5,248,040
- -------------------------------------------------------------------------------------------------------------------------------
Richmond, VA, "A", FSA, 5.125%, 2024 5,000,000 5,209,900
- -------------------------------------------------------------------------------------------------------------------------------
Richmond, VA, "B", 0%, 2007 - 2009 15,725,000 14,354,639
- -------------------------------------------------------------------------------------------------------------------------------
Suffolk, VA, Public Improvement, 5.5%, 2020 1,880,000 2,059,728
- -------------------------------------------------------------------------------------------------------------------------------
$49,370,895
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 1.0% Puerto Rico Public Buildings Authority Rev., "B", 5.25%, 2021 $3,075,000 $3,378,441
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Albemarle County, VA, Industrial Development Authority, Hospital Rev.
Hospitals - 14.5% (Martha Jefferson Hospital), 5.25%, 2023 $3,000,000 $3,043,170
- -------------------------------------------------------------------------------------------------------------------------------
Arlington County, VA, Industrial Development Authority Rev. (Virginia,
Hospital Center Arlington Health Systems), 5.25%, 2021 2,600,000 2,681,146
- -------------------------------------------------------------------------------------------------------------------------------
Augusta County, VA, Industrial Development Authority Rev., Augusta
Health Care, Inc., 5.25%, 2020 1,325,000 1,435,306
- -------------------------------------------------------------------------------------------------------------------------------
Fredericksburg, VA, Industrial Development Rev. (Medicorp Health
Systems), "B", 5.125%, 2033 750,000 757,800
- -------------------------------------------------------------------------------------------------------------------------------
Fredericksburg, VA, Industrial Development Rev. (Medicorp Health
Systems), AMBAC, 5.25%, 2023 11,000,000 11,466,950
- -------------------------------------------------------------------------------------------------------------------------------
Henrico County, VA, Economic Development Authority Rev. (Bon Secours
Health Systems, Inc.), "A", 5.6%, 2030 2,000,000 2,077,940
- -------------------------------------------------------------------------------------------------------------------------------
Henrico County, VA, Industrial Development Authority Rev. (Bon Secours
Health Systems, Inc.), MBIA, 6.25%, 2020 1,500,000 1,863,405
- -------------------------------------------------------------------------------------------------------------------------------
Loudoun County, VA, Industrial Development Authority, Hospital Rev.
(Loudoun Hospital Center), "A", 6.1%, 2032 1,000,000 1,044,600
- -------------------------------------------------------------------------------------------------------------------------------
Lynchburg, VA, Industrial Development Authority Rev., 5.2%, 2018 1,000,000 1,030,380
- -------------------------------------------------------------------------------------------------------------------------------
Medical College of Virginia, Hospital Authority Rev., MBIA,
5.125%, 2018 3,000,000 3,167,670
- -------------------------------------------------------------------------------------------------------------------------------
Peninsula Ports Authority Rev. (Whittaker Memorial), FHA, 8.7%, 2023 2,060,000 2,512,376
- -------------------------------------------------------------------------------------------------------------------------------
Peninsula Ports Authority, VA, Health Care Rev. (Riverside Health
System), 5%, 2018 3,580,000 3,690,085
- -------------------------------------------------------------------------------------------------------------------------------
Prince William County, VA, Industrial Development Authority, Hospital
Rev. (Potomac Hospital Corp.), 5.2%, 2026 1,000,000 1,020,590
- -------------------------------------------------------------------------------------------------------------------------------
Roanoke, VA, Industrial Development Authority, Hospital Rev. (Roanoke
Memorial Hospital), "B", MBIA, 6.125%, 2017 6,000,000 7,288,560
- -------------------------------------------------------------------------------------------------------------------------------
Winchester, VA, Industrial Development Authority Rev. (Winchester
Medical Center), RIBS, AMBAC, 11.436%, 2014(+) 3,900,000 4,270,032
- -------------------------------------------------------------------------------------------------------------------------------
$47,350,010
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Henrico County, VA, Economic Development Authority, Residential Care
Term Care - 0.2% Facilities (United Methodist Homes), "A", 6.7%, 2027 $750,000 $766,958
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue -
Environmental Charles City County, VA, Industrial Development Authority, Solid Waste
Services - 1.0% Disposal Facility Rev. (Waste Management, Inc.), 6.25%, 2027 $1,500,000 $1,669,635
- -------------------------------------------------------------------------------------------------------------------------------
Henrico County, VA, Industrial Development Authority Rev. (Browning
Ferris, Inc.), 5.45%, 2014 1,750,000 1,635,463
- -------------------------------------------------------------------------------------------------------------------------------
$3,305,098
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Loudoun County, VA, Industrial Development Authority Rev. (Dulles
Other - 1.2% Airport Marriot Hotel), 7.125%, 2015 $2,000,000 $2,016,820
- -------------------------------------------------------------------------------------------------------------------------------
Peninsula Ports Authority, Virginia Coal (Dominion Terminal
Associates), 6%, 2033 1,000,000 1,050,420
- -------------------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 750,000 790,470
- -------------------------------------------------------------------------------------------------------------------------------
$3,857,710
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Bedford County, VA, Industrial Development Authority Rev. (Nekooska
Paper - 3.3% Packaging Corp.), 5.6%, 2025 $1,000,000 $969,070
- -------------------------------------------------------------------------------------------------------------------------------
Hopewell, VA, Industrial Development Authority, Resources Recovery Rev.
(Stone Container Corp.), 8.25%, 2016 1,250,000 1,269,088
- -------------------------------------------------------------------------------------------------------------------------------
Isle Wight County, VA, Industrial Development Authority, Solid Waste
Disposal Facilities Rev. (Union Camp Corp.), 6.55%, 2024 4,000,000 4,092,840
- -------------------------------------------------------------------------------------------------------------------------------
Isle Wight County, VA, Industrial Development Authority, Solid Waste
Disposal Facilities Rev. (Union Camp Corp.), 6.1%, 2027 2,750,000 2,823,508
- -------------------------------------------------------------------------------------------------------------------------------
West Point, VA, Industrial Development Authority, Solid Waste Disposal
Rev. (Chesapeake Corp.), "A", 6.375%, 2019 1,750,000 1,659,385
- -------------------------------------------------------------------------------------------------------------------------------
$10,813,891
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Rockbridge County, VA, Industrial Development Authority Rev. (Virginia
Other - 0.2% Horse Center), 6.85%, 2021 $500,000 $471,575
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Alexandria, VA, Redevelopment & Housing Finance Authority Rev.
Revenue - 4.9% (Jefferson Village Apartments), "B", 9%, 2018 $3,740,000 $3,737,644
- -------------------------------------------------------------------------------------------------------------------------------
Arlington County, VA, Industrial Development Authority Rev. (Colonial
Village), FNMA, 5.15%, 2031 3,000,000 3,107,640
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Housing Development Authority Rev., "B", 5.95%, 2016 1,905,000 1,991,963
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Housing Development Authority Rev., "G", 5.625%, 2020 2,000,000 2,088,160
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Housing Development Authority Rev., "I", 5.15%, 2017 3,000,000 3,088,590
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Housing Development Authority Rev., "Z", 4.85%, 2033 2,000,000 2,020,160
- -------------------------------------------------------------------------------------------------------------------------------
$16,034,157
- -------------------------------------------------------------------------------------------------------------------------------
Parking - 0.5% Norfolk, VA, Parking Systems Rev., MBIA, 5%, 2020 $1,630,000 $1,715,021
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 23.9% Blue Ridge, VA, Regional Jail Authority, MBIA, 5.2%, 2021 $1,830,000 $1,930,046
- -------------------------------------------------------------------------------------------------------------------------------
Caroline County, VA, Industrial Development Authority, Lease Rev.,
AMBAC, 5.125%, 2034 1,000,000 1,029,110
- -------------------------------------------------------------------------------------------------------------------------------
Chesapeake, VA, Industrial Development Authority (Chesapeake Court
House), MBIA, 6.25%, 2011 3,985,000 4,456,505
- -------------------------------------------------------------------------------------------------------------------------------
Chesapeake, VA, Industrial Development Authority (Chesapeake Court
House), MBIA, 5.25%, 2017 2,000,000 2,180,020
- -------------------------------------------------------------------------------------------------------------------------------
Chesterfield County, VA, Industrial Development Authority, Public
Facilities Lease Rev., 7.5%, 2008 1,450,000 1,453,335
- -------------------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, Certificates of Participation, 6.1%, 2017 3,090,000 3,636,528
- -------------------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, Economic Development (Laurel Hill Public
Facilities), 5%, 2023 1,690,000 1,780,466
- -------------------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, Economic Development Authority (Vienna II
Metrorail), 6%, 2017 1,750,000 2,014,968
- -------------------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, Economic Development Authority Rev. (U.S. Route
28), MBIA, 5%, 2029 1,000,000 1,026,900
- -------------------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, Economic Development Authority, Parking Rev.
(Vienna II Metrorail), 6%, 2016 1,650,000 1,901,460
- -------------------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, Redevelopment & Housing Authority Rev. (Mott & Gum
Springs Community Centers), 5.5%, 2017 2,225,000 2,304,566
- -------------------------------------------------------------------------------------------------------------------------------
Henrico County, VA, Industrial Development Authority, Public Lease
Rev., 6.5%, 2005(++) 5,000,000 5,301,300
- -------------------------------------------------------------------------------------------------------------------------------
Middlesex County, VA, Industrial Development Authority Rev., AMBAC,
5.125%, 2027 1,000,000 1,045,230
- -------------------------------------------------------------------------------------------------------------------------------
Middlesex County, VA, Industrial Development Authority Rev., AMBAC,
5.25%, 2032 2,000,000 2,100,020
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery County, VA, Industrial Development, "B", AMBAC, 6%, 2017 1,000,000 1,161,890
- -------------------------------------------------------------------------------------------------------------------------------
Montgomery County, VA, Industrial Development, "C", AMBAC, 6%, 2017 1,120,000 1,301,317
- -------------------------------------------------------------------------------------------------------------------------------
New River Valley, VA, Regional Jail Authority, MBIA, 5.125%, 2019 6,405,000 6,770,149
- -------------------------------------------------------------------------------------------------------------------------------
Orange County, VA, Industrial Development Authority (Orange County
Project), AMBAC, 5%, 2034 1,000,000 1,018,850
- -------------------------------------------------------------------------------------------------------------------------------
Pamunkey, VA, Regional Jail Authority, MBIA, 5.75%, 2006(++) 2,500,000 2,719,425
- -------------------------------------------------------------------------------------------------------------------------------
Powhatan County, VA, Economic Development Authority Lease Rev.
(Virginia Capital Projects), AMBAC, 5.25%, 2033 1,000,000 1,049,140
- -------------------------------------------------------------------------------------------------------------------------------
Prince William County, VA, Lease Partnerships, 5%, 2021 1,500,000 1,580,940
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2013 - 2016+(+) 2,500,000 3,276,460
- -------------------------------------------------------------------------------------------------------------------------------
Richmond, VA, Public Facilities, Certificates of Participation
(Megahertz Project), "A", AMBAC, 5%, 2022 1,600,000 1,672,192
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Biotechnology Research Park (Biotech Two), 5.25%, 2018 8,800,000 9,391,008
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Biotechnology Research Park Lease Rev. (Consolidated
Laboratories), 5%, 2021 1,500,000 1,583,160
- -------------------------------------------------------------------------------------------------------------------------------
Virginia College Building Authority (21st Century College Program),
6%, 2018 2,000,000 2,266,980
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Public Building Authority Rev., "B", MBIA, 0%, 2007 3,750,000 3,496,050
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority Rev., "B", FSA, 5.5%, 2019 1,070,000 1,181,505
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority Rev., ROLS, 8.18%, 2021 - 2033+(+) 5,420,000 5,882,305
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority, Infrastructure Rev., "A", 5%, 2017 1,360,000 1,451,256
- -------------------------------------------------------------------------------------------------------------------------------
$77,963,081
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.5% Greater Richmond Convention Center Authority, Hotel Tax Rev.
(Convention Center Expansion), 6.125%, 2020 $3,500,000 $3,954,090
- -------------------------------------------------------------------------------------------------------------------------------
Territory of Virgin Islands, Public Finance Authority Rev., "A",
5.625%, 2025 1,000,000 1,031,290
- -------------------------------------------------------------------------------------------------------------------------------
$4,985,380
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.3% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $470,000 $423,531
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corp., 5%, 2021 610,000 564,232
- -------------------------------------------------------------------------------------------------------------------------------
$987,763
- -------------------------------------------------------------------------------------------------------------------------------
Toll Roads - 1.6% Chesapeake Bay, Bridge & Tunnel Commission, Virginia District Rev.,
FGIC, 0%, 2005 $4,535,000 $4,477,632
- -------------------------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA, Toll Road Rev., 0%, 2013 1,500,000 785,325
- -------------------------------------------------------------------------------------------------------------------------------
$5,262,957
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation Authority Rev.,
Tax - 2.1% "J", MBIA, 5%, 2029 $1,210,000 $1,255,690
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Transportation Board Rev. (U.S. Route 58), "B", 5.125%, 2021 4,000,000 4,144,400
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Commonwealth Board Program (Oak Grove Connector), "A",
5.25%, 2022 1,500,000 1,572,465
- -------------------------------------------------------------------------------------------------------------------------------
$6,972,555
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Danville, VA, Industrial Development Authority, Educational Facilities
Colleges - 2.0% Rev. (Averett University), 6%, 2022 $500,000 $511,365
- -------------------------------------------------------------------------------------------------------------------------------
Loudoun County, VA, Industrial Development Authority, University
Facilities Rev. (George Washington University), 6.25%, 2012 2,710,000 2,786,639
- -------------------------------------------------------------------------------------------------------------------------------
Virginia College Building Authority, Educational Facilities Rev.
(Washington & Lee University), MBIA, 5.25%, 2031 1,000,000 1,095,520
- -------------------------------------------------------------------------------------------------------------------------------
Virginia College Building Authority, Educational Facilities Rev.
(Hampton University), 6%, 2020 1,000,000 1,130,340
- -------------------------------------------------------------------------------------------------------------------------------
Virginia College Building Authority, Educational Facilities Rev.
(Regent University), MBIA, 5.125%, 2031 1,000,000 1,026,210
- -------------------------------------------------------------------------------------------------------------------------------
$6,550,074
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Mecklenburg County, VA, Industrial Development Authority Rev. (UAE
Cogeneration - 0.9% Mecklenburg, LP), 6.5%, 2017 $700,000 $718,480
- -------------------------------------------------------------------------------------------------------------------------------
Pittsylvania County, VA, Industrial Development Authority Rev. (Multi-
trade of Pittsylvania), 7.5%, 2014 2,000,000 2,060,140
- -------------------------------------------------------------------------------------------------------------------------------
$2,778,620
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor Chesapeake, VA, Industrial Development Authority Rev. (VEPCO),
Owned - 1.2% 5.25%, 2008 $750,000 $778,268
- -------------------------------------------------------------------------------------------------------------------------------
Halifax County, VA, Industrial Development Authority (Old Dominion
Electric Cooperative), AMBAC, 5.625%, 2028 3,000,000 3,168,870
- -------------------------------------------------------------------------------------------------------------------------------
$3,947,138
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal
Owned - 5.3% Bristol VA, Utility Systems Rev., ETM, FSA, 5.75%, 2016(++) $240,000 $286,613
- -------------------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2015+(+) 1,010,000 1,205,435
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., RITES, FSA,
9.6213%, 2017+(+) 2,500,000 3,295,800
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., "X", 6%, 2005(++) 3,000,000 3,158,790
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., RITES, FSA,
9.3713%, 2019+(+) 1,270,000 1,578,610
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Rev., RITES, FSA,
8.7213%, 2020+(+) 1,250,000 1,500,725
- -------------------------------------------------------------------------------------------------------------------------------
Richmond, VA, Public Utilities Rev., FSA, 5%, 2033 - 2035 6,000,000 6,111,560
- -------------------------------------------------------------------------------------------------------------------------------
$17,137,533
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 8.5% Fairfax County, VA, Water Authority Rev., 5%, 2026 - 2032 $8,000,000 $8,206,760
- -------------------------------------------------------------------------------------------------------------------------------
Hanover County, VA, Water & Sewer Systems Rev., MBIA, 5.25%, 2026 2,000,000 2,078,340
- -------------------------------------------------------------------------------------------------------------------------------
Prince William County, VA, Water & Sewer Rev., FGIC, 5.5%, 2019 2,000,000 2,207,940
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Aqueduct & Sewer Authority Rev., 9%, 2005(++) 2,455,000 2,588,380
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009(++) 255,000 308,772
- -------------------------------------------------------------------------------------------------------------------------------
Spotsylvania County, VA, Water & Sewer Rev., FSA, 5%, 2022 1,450,000 1,514,003
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Beach, VA, Storm Water Utilities Rev., 6%, 2020 1,000,000 1,156,010
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority Sewer Systems Rev. (Hopewell Regional
Wastewater), 5.75%, 2021 1,335,000 1,483,011
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority, Clean Water Rev., 6%, 2017 2,750,000 3,179,413
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority, Clean Water Rev., 5.4%, 2018 1,135,000 1,260,191
- -------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority, Infrastructure Rev., "A", MBIA, 5.5%,
2019 - 2020 3,290,000 3,648,082
- -------------------------------------------------------------------------------------------------------------------------------
$27,630,902
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $294,796,014) $318,148,544
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.1%
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), "A", 1.10%, due 10/07/04 $600,000 $600,000
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), "D", 1.08%, due 10/07/04 1,300,000 1,300,000
- -------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), 1.07%, due 10/07/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev. (Adventist
Hospital), "B", due 10/01/04 200,000 200,000
- -------------------------------------------------------------------------------------------------------------------------------
Chicago, IL, Midway Airport Rev., Second Lien, "A", due 10/01/04 500,000 500,000
- -------------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (University of Chicago
Hospital), due 10/01/04 300,000 300,000
- -------------------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants, "A",
due 10/01/04 150,000 150,000
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev. (Exxon Mobile Corp.),
due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Health Facilities Authority Rev., Pooled Hospital
Loan Program, due 10/01/04 200,000 200,000
- -------------------------------------------------------------------------------------------------------------------------------
West Baton Rouge Parish, LA, Industrial District (Dow Chemical Co.),
"B", due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $3,550,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $298,346,014) $321,698,544
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.3% 4,082,247
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $325,780,791
- -------------------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) - 9/30/04 MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 97.5%
- -------------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
General Purpose - 16.1% Charleston, WV, Public Improvements, 7.2%, 2009 $1,140,000 $1,360,647
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, 5.25%, 2023 1,500,000 1,579,680
- -------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, RITES, MBIA,
9.6213%, 2019+(+) 3,000,000 3,852,720
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Highway Improvements, FGIC, 5.625%, 2019 2,000,000 2,226,920
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Public Improvements, FGIC, 5%, 2021 4,000,000 4,170,040
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Sewer Improvements, FGIC, 5.5%, 2017 2,565,000 2,802,160
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Water Utility Improvements, FGIC, 5.25%, 2026 8,000,000 8,319,760
- -------------------------------------------------------------------------------------------------------------------------------
$24,311,927
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Improvement - 1.7% Brooke County, WV, Board of Education, FGIC, 5%, 2016 $1,390,000 $1,487,773
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico, Municipal Finance Agency, RITES, FSA, 9.1574%, 2017+(+) 900,000 1,097,604
- -------------------------------------------------------------------------------------------------------------------------------
$2,585,377
- -------------------------------------------------------------------------------------------------------------------------------
General Obligations -
Schools - 5.5% Jefferson County, WV, Board of Education, FGIC, 6.85%, 2009 $1,680,000 $1,995,504
- -------------------------------------------------------------------------------------------------------------------------------
Monongalia County WV, Board of Education, MBIA, 5%, 2027 2,350,000 2,411,100
- -------------------------------------------------------------------------------------------------------------------------------
Monongalia County, WV, Board of Education, MBIA, ETM, 7%, 2005(++) 500,000 513,670
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Buildings Authority Rev., "B", ETM, 5.25%, 2007(++) 3,115,000 3,422,388
- -------------------------------------------------------------------------------------------------------------------------------
$8,342,662
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue -
Hospitals - 8.6% Berkeley County, WV, Hospital Rev. (City Hospital, Inc.), 6.5%, 2022 $840,000 $840,445
- -------------------------------------------------------------------------------------------------------------------------------
Kanawha County, WV, Building Commission Rev. (St. Francis Hospital),
ETM, 7.5%, 2007(++) 110,000 119,523
- -------------------------------------------------------------------------------------------------------------------------------
Ohio County, WV, County Commission Health System Rev. (Ohio Valley
Medical Center), 5.75%, 2013 750,000 698,978
- -------------------------------------------------------------------------------------------------------------------------------
Randolph County, WV, Community Health Systems Rev. (Davis Health
Systems, Inc.), FSA, 5.2%, 2021 1,000,000 1,067,290
- -------------------------------------------------------------------------------------------------------------------------------
Weirton, WV, Municipal Hospital Building, Commission Rev. (Weirton
Hospital Medical Center), 6.375%, 2031 600,000 585,936
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Hospital Finance Authority, Hospital Rev. (Cabell
Huntington Hospital), AMBAC, 6.25%, 2019 5,000,000 5,109,750
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Hospital Finance Authority, Hospital Rev. (Charleston
Area Medical Center), ETM, 6.5%, 2023(++) 2,000,000 2,466,200
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Hospital Finance Authority, Hospital Rev. (Fairmont
General Hospital), 6.625%, 2019 300,000 298,866
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Hospital Finance Authority, Hospital Rev. (General
Division Medical Office Building), 7.25%, 2014 1,770,000 1,793,966
- -------------------------------------------------------------------------------------------------------------------------------
$12,980,954
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Harrison County, WV, Building Commission Rev. (Maplewood Retirement),
Term Care - 2.1% AMBAC, 5.25%, 2021 $2,625,000 $2,759,873
- -------------------------------------------------------------------------------------------------------------------------------
Monongalia County, WV, Health Facilities Rev. (Beverly Enterprises,
Inc.), 5.875%, 2007 410,000 405,293
- -------------------------------------------------------------------------------------------------------------------------------
$3,165,166
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Virgin Islands Public Finance Authority, Refinery Facilities Rev.
Other - 0.2% (Hovensa Refinery), 5.875%, 2022 $350,000 $368,886
- -------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Braxton County, WV, Solid Waste Disposal Rev. (Weyerhaeuser Co.),
Paper - 1.4% 6.5%, 2025 $2,000,000 $2,065,060
- -------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing
Revenue - 0.7% Huntington, WV, Housing Corp. Rev., FNMA, 7.5%, 2024 $800,000 $801,368
- -------------------------------------------------------------------------------------------------------------------------------
Webster County, WV, Housing Development Rev. (Circlebrook), FHA,
6.35%, 2008 215,000 217,685
- -------------------------------------------------------------------------------------------------------------------------------
$1,019,053
- -------------------------------------------------------------------------------------------------------------------------------
Parking - 0.9% West Virginia Economic Development Authority, Auto Lease Rev. (Capitol
Parking Garage), AMBAC, 5.8%, 2020 $1,260,000 $1,417,248
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing -
Local - 1.0% Charlestown, WV, Residential Mortgage Rev., 6.2%, 2011 $360,000 $361,555
- -------------------------------------------------------------------------------------------------------------------------------
Kanawha County, WV, 0%, 2014(++) 1,920,000 1,168,742
- -------------------------------------------------------------------------------------------------------------------------------
$1,530,297
- -------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Puerto Rico Housing Finance Authority, Home Mortgage Rev., Mortgage
State - 1.9% Backed Securities, "A", 4.75%, 2023 $780,000 $781,599
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Housing Development Fund Rev., 5.25%, 2018 1,000,000 1,021,250
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Housing Development Fund Rev., 5.3%, 2023 1,000,000 1,017,550
- -------------------------------------------------------------------------------------------------------------------------------
$2,820,399
- -------------------------------------------------------------------------------------------------------------------------------
State & Local
Agencies - 23.0% Huntington, WV, Municipal Development Authority, Rev., MBIA, 5.1%, 2018 $1,740,000 $1,838,658
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Buildings Authority Rev. (State Office Building),
XCLA, 5.25%, 2025 2,000,000 2,262,300
- -------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Buildings Authority, Rev., 5.25%, 2019 2,000,000 2,217,080
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Building Commission, "A", RITES, AMBAC, 8.7926%, 2018+(+) 4,520,000 5,791,566
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Building Commission, "B", RITES, AMBAC, 8.7926%, 2018+(+) 1,250,000 1,601,650
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Building Commission, Lease Rev., MBIA, ETM,
0%, 2007 - 2009(++) 7,200,000 6,597,238
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority (Correctional Juvenile &
Public), 5%, 2020 1,000,000 1,047,720
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority (Correctional Juvenile &
Public), MBIA, 5.5%, 2013 1,000,000 1,144,740
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority (Correctional Juvenile &
Public), MBIA, 5%, 2026 2,100,000 2,150,631
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority State Office Building,
"B", MBIA, 5.25%, 2030 1,355,000 1,413,699
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority, Auto Lease Rev.,
5.2%, 2033 1,000,000 1,001,130
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority, Department of
Enviromental Protection, 5.5%, 2022 2,000,000 2,209,740
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority, Lease Rev. (State Office
Building), "B", MBIA, 5.25%, 2025 645,000 682,384
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Hospital Finance Authority, Hospital Rev. (Veterans
Nursing Home), 5.5%, 2034 1,000,000 1,001,090
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Hospital Finance Authority, Hospital Rev. (West Virginia
University Hospital), AMBAC, 5%, 2018 1,000,000 1,037,410
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia School Building Authority, Miscellaneous Tax Rev., FSA,
5.25%, 2021 2,550,000 2,760,503
- -------------------------------------------------------------------------------------------------------------------------------
$34,757,539
- -------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.3% Territory of Virgin Islands, Public Finance Authority Rev., "A",
5.625%, 2025 $500,000 $515,645
- -------------------------------------------------------------------------------------------------------------------------------
Tobacco - 0.4% Childrens Trust Fund, Settlement Rev., PR, 5.375%, 2033 $705,000 $635,297
- -------------------------------------------------------------------------------------------------------------------------------
Toll Roads - 4.7% West Virginia Parkways, Economic Development & Tourism Authority, Rev.,
FGIC, ETM, 0%, 2007(++) $2,000,000 $1,875,520
- -------------------------------------------------------------------------------------------------------------------------------
West Viriginia Parkways, Economic Development & Tourism Authority,
Rev., FGIC, ETM, 0%, 2005 - 2008(++) 5,360,000 5,194,658
- -------------------------------------------------------------------------------------------------------------------------------
$7,070,178
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Commonwealth of Puerto Rico, Highway & Transportation Authority Rev.,
Tax - 1.2% "J", MBIA, 5%, 2029 $1,820,000 $1,888,723
- -------------------------------------------------------------------------------------------------------------------------------
Universities - Colleges - Commonwealth of Puerto Rico, Industrial Tourist Education (University
15.7% Plaza), MBIA, 5%, 2021 $1,270,000 $1,338,212
- -------------------------------------------------------------------------------------------------------------------------------
Fairmont State College, West Virginia, College Rev., FGIC, 5.25%, 2022 5,130,000 5,487,715
- -------------------------------------------------------------------------------------------------------------------------------
Fairmont State College, West Virginia, College Rev., FGIC, 5.375%, 2027 1,500,000 1,588,500
- -------------------------------------------------------------------------------------------------------------------------------
Fairmont State College, West Virginia, College Rev., FGIC, 5%, 2032 2,250,000 2,291,400
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Department of Higher Education (Marshall
University), FGIC, 5.25%, 2019 1,680,000 1,805,194
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Department of Higher Education (Student Union
James C. Wilson College), 5.125%, 2022 1,500,000 1,583,835
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Department of Higher Education, "B", FGIC,
5%, 2029 1,000,000 1,023,040
- -------------------------------------------------------------------------------------------------------------------------------
State of West Virginia, Department of Higher Education, MBIA, 5%, 2010 1,345,000 1,479,944
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia University, Dormatory Rev., AMBAC, 5%, 2022 2,000,000 2,062,040
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia University, University Systems Rev. (Marshall
University), FGIC, 6%, 2020 2,705,000 3,108,721
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia University, University Systems Rev. (West Virginia
University), MBIA, 5.5%, 2020 1,700,000 1,970,895
- -------------------------------------------------------------------------------------------------------------------------------
$23,739,496
- -------------------------------------------------------------------------------------------------------------------------------
Universities -
Dormatories - 0.3% West Liberty State College, Capital Improvement, 6%, 2028 $500,000 $521,265
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor Mason County, WV, Pollution Control Rev. (Appalachian Power Co.),
Owned - 0.5% 5.5%, 2022 $750,000 $761,663
- -------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility
Revenue - 11.3% Clarksburg, WV, Water Rev., FGIC, 5.25%, 2019 $2,725,000 $2,983,930
- -------------------------------------------------------------------------------------------------------------------------------
Fairmont, WV, Waterworks Rev., AMBAC, 5.25%, 2022 200,000 224,210
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Water Development Authority Rev., ETM, 7.1%, 2009(++) 150,000 167,856
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Water Development Authority Rev., AMBAC, 6.25%, 2020 1,000,000 1,144,810
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Water Development Authority Rev., AMBAC, 5.25%, 2023 3,545,000 3,828,458
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Water Development Authority Rev., AMBAC, 5%, 2026 2,100,000 2,157,582
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Water Development Authority Rev., FSA, 6.2%, 2004(++) 3,000,000 3,070,830
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Water Development Authority Rev., FSA, 5.25%, 2035 2,000,000 2,062,320
- -------------------------------------------------------------------------------------------------------------------------------
West Virginia Water Development Authority, Infrastructure Rev., FSA,
5.5%, 2018 - 2019 1,285,000 1,416,651
- -------------------------------------------------------------------------------------------------------------------------------
$17,056,647
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $136,663,530) $147,553,478
- -------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev. (Exxon Mobile Corp.), due
10/01/04 $500,000 $500,000
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Higher Educational Facilities Authority Rev.,
Capital Assets Program, "D", due 10/01/04 600,000 600,000
- -------------------------------------------------------------------------------------------------------------------------------
New York City, NY, Municipal Water & Sewer Finance Authority Rev., due
10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $1,200,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $137,863,530) $148,753,478
- -------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.7% 2,646,222
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $151,399,700
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Footnotes:
+ Restricted security.
(+) Inverse floating rate security.
(++) Refunded bond.
** Interest received was less than stated coupon rate.
## SEC Rule 144A restriction.
The following abbreviations are used in the Portfolio of Investments and are defined:
ETM -- Escrowed to maturity.
Insurers: Inverse Floaters:
- -----------------------------------------------------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corp. INFLOS -- Inverse Floating Security
ASST GTY -- Asset Guaranty Insurance Co. RIBS -- Residual Interest Bonds
CONNIE LEE -- Connie Lee Insurance Co. RITES -- Residual Interest Tax-Exempt Security
FGIC -- Financial Guaranty Insurance Co. ROLS -- Residual Options Longs
FHA -- Federal Housing Administration
FNMA -- Federal National Mortgage Assn.
FSA -- Financial Security Assurance Inc.
GNMA -- Government National Mortgage Assn.
MBIA -- Municipal Bond Investors Corp.
XLCA -- XL Capital Insurance Co.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
This statement represents your fund's balance sheet, which details the assets
and liabilities composing the total value of your fund.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
At 9/30/04 FUND FUND FUND FUND
ASSETS
Investments -
Identified cost $88,451,125 $168,945,596 $337,621,035 $102,799,341
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 5,312,850 15,658,669 27,833,380 6,143,516
- --------------------------------------------------------------------------------------------------------------------------------
Total, at value $93,763,975 $184,604,265 $365,454,415 $108,942,857
- --------------------------------------------------------------------------------------------------------------------------------
Cash 10,913 78,192 51,054 85,498
- --------------------------------------------------------------------------------------------------------------------------------
Receivable for investments sold 125,609 135,132 -- 1,494,647
- --------------------------------------------------------------------------------------------------------------------------------
Receivable for fund shares sold 116,008 252,376 136,763 40,011
- --------------------------------------------------------------------------------------------------------------------------------
Interest receivable 1,404,329 2,768,683 5,515,448 1,786,351
- --------------------------------------------------------------------------------------------------------------------------------
Receivable from investment adviser -- -- -- 3,424
- --------------------------------------------------------------------------------------------------------------------------------
Other assets 505 969 2,823 263
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $95,421,339 $187,839,617 $371,160,503 $112,353,051
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $184,258 $247,510 $442,534 $135,606
- --------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 2,033,780 -- 4,066,990 493,946
- --------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares reacquired 53,706 102,274 997,838 77,392
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on interest rate swap agreements 471,300 418,918 689,886 685,685
- --------------------------------------------------------------------------------------------------------------------------------
Payable to affiliates -
Management fee 762 1,537 3,006 912
- --------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 4,711 17,825 3,455 11,752
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee 1,037 2,490 4,869 14,637
- --------------------------------------------------------------------------------------------------------------------------------
Administrative fee 12 24 48 18
- --------------------------------------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 49,223 89,249 97,584 54,877
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities $2,798,789 $879,827 $6,306,210 $1,474,825
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $92,622,550 $186,959,790 $364,854,293 $110,878,226
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $88,371,319 $172,036,932 $336,931,672 $106,370,411
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments 4,841,550 15,239,751 27,143,494 5,457,831
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) on investments (440,573) 302,723 1,803,193 (696,068)
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (149,746) (619,616) (1,024,066) (253,948)
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $92,622,550 $186,959,790 $364,854,293 $110,878,226
- --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
Shares of beneficial interest outstanding
Class A 8,093,658 11,199,942 23,657,270 6,588,062
- --------------------------------------------------------------------------------------------------------------------------------
Class B 1,245,068 3,345,566 3,636,032 4,243,593
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- 1,809,581 2,654,274 --
- --------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 9,338,726 16,355,089 29,947,576 10,831,655
- --------------------------------------------------------------------------------------------------------------------------------
Net assets
Class A $80,260,613 $128,127,977 $288,286,195 $67,371,463
- --------------------------------------------------------------------------------------------------------------------------------
Class B 12,361,937 38,160,383 44,247,611 43,506,763
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- 20,671,430 32,320,487 --
- --------------------------------------------------------------------------------------------------------------------------------
Total net assets $92,622,550 $186,959,790 $364,854,293 $110,878,226
- --------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $9.92 $11.44 $12.19 $10.23
- --------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25 of net asset value per share) $10.41 $12.01 $12.80 $10.74
- --------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $9.93 $11.41 $12.17 $10.25
- --------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) N/A $11.42 $12.18 N/A
- --------------------------------------------------------------------------------------------------------------------------------
On sales of $100,000 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
Statement of Assets and Liabilities (unaudited) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
At 9/30/04 FUND FUND FUND FUND
ASSETS
Investments -
Identified cost $150,208,313 $124,413,877 $298,346,014 $137,863,530
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 12,414,573 8,886,840 23,352,530 10,889,948
- --------------------------------------------------------------------------------------------------------------------------------
Total, at value $162,622,886 $133,300,717 $321,698,544 $148,753,478
- --------------------------------------------------------------------------------------------------------------------------------
Cash 79,892 9,230 61,603 40,857
- --------------------------------------------------------------------------------------------------------------------------------
Receivable for investments sold 445,000 1,175,442 -- 1,150,000
- --------------------------------------------------------------------------------------------------------------------------------
Receivable for fund shares sold 33,632 154,828 139,450 56,086
- --------------------------------------------------------------------------------------------------------------------------------
Interest receivable 2,381,627 1,871,440 4,908,519 2,483,491
- --------------------------------------------------------------------------------------------------------------------------------
Other assets 1,168 837 2,694 962
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $165,564,205 $136,512,494 $326,810,810 $152,484,874
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $217,053 $174,509 $525,101 $182,440
- --------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased -- 998,056 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares reacquired 82,193 109,424 178,990 188,601
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on interest rate swap agreements 374,658 25,921 178,034 630,560
- --------------------------------------------------------------------------------------------------------------------------------
Payable to affiliates -
Management fee 1,355 1,109 2,681 1,248
- --------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 1,632 307 24,765 9,529
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee 2,171 1,692 3,744 1,731
- --------------------------------------------------------------------------------------------------------------------------------
Administrative fee 22 18 43 21
- --------------------------------------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 68,489 77,571 116,661 71,044
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities $747,573 $1,388,607 $1,030,019 $1,085,174
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $164,816,632 $135,123,887 $325,780,791 $151,399,700
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $154,268,902 $125,760,290 $306,740,590 $142,627,539
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments 12,039,915 8,860,919 23,174,496 10,259,388
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (1,417,240) 834,406 (3,259,742) (1,155,763)
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (74,945) (331,728) (874,553) (331,464)
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $164,816,632 $135,123,887 $325,780,791 $151,399,700
- --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
At 9/30/04 FUND FUND FUND FUND
Shares of beneficial interest outstanding
Class A 10,568,954 10,357,188 25,041,855 11,635,203
- --------------------------------------------------------------------------------------------------------------------------------
Class B 2,668,651 2,041,069 1,895,978 1,307,760
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,084,149 --
- --------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 13,237,605 12,398,257 28,021,982 12,942,963
- --------------------------------------------------------------------------------------------------------------------------------
Net assets
Class A $131,607,296 $112,891,712 $291,151,996 $136,108,860
- --------------------------------------------------------------------------------------------------------------------------------
Class B 33,209,336 22,232,175 22,026,835 15,290,840
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 12,601,960 --
- --------------------------------------------------------------------------------------------------------------------------------
Total net assets $164,816,632 $135,123,887 $325,780,791 $151,399,700
- --------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $12.45 $10.90 $11.63 $11.70
- --------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25 of net asset value per share) $13.07 $11.44 $12.21 $12.28
- --------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $12.44 $10.89 $11.62 $11.69
- --------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) N/A N/A $11.62 N/A
- --------------------------------------------------------------------------------------------------------------------------------
On sales of $100,000 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
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
This statement describes how much your fund received in investment income and
paid in expenses. It also describes any gains or losses generated by fund operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
For six months ended 9/30/04
NET INVESTMENT INCOME
Interest income $2,486,088 $4,980,581 $9,830,077 $2,830,036
- --------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $255,632 $514,302 $1,021,645 $313,813
- --------------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 2,153 3,522 6,804 3,361
- --------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 55,287 120,855 186,680 69,454
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class A) -- 159,101 511,015 34,359
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 48,798 195,723 231,088 196,937
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class C) -- 102,869 166,093 --
- --------------------------------------------------------------------------------------------------------------------------------
Administrative fee 3,947 7,942 15,808 4,862
- --------------------------------------------------------------------------------------------------------------------------------
Custodian fee 17,374 33,391 67,797 21,338
- --------------------------------------------------------------------------------------------------------------------------------
Printing 3,313 14,677 18,744 6,520
- --------------------------------------------------------------------------------------------------------------------------------
Postage 146 385 469 393
- --------------------------------------------------------------------------------------------------------------------------------
Auditing fees 17,720 17,720 19,120 17,720
- --------------------------------------------------------------------------------------------------------------------------------
Legal fees 4,119 3,320 4,609 11,811
- --------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 18,085 30,034 9,606 14,936
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses $426,574 $1,203,841 $2,259,478 $695,504
- --------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (686) (802) (1,462) (522)
- --------------------------------------------------------------------------------------------------------------------------------
Reduction of expenses by investment adviser (116,436) (234,260) (465,383) (179,790)
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses $309,452 $968,779 $1,792,633 $515,192
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income $2,176,636 $4,011,802 $8,037,444 $2,314,844
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) (identified cost basis) -
Investment transactions $(136,006) $882,391 $2,011,504 $357,597
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions (105,031) (108,498) (52,809) (56,534)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $(241,037) $773,893 $1,958,695 $301,063
- --------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(809,758) $(2,710,285) $(6,404,120) $(1,519,825)
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions (12,058) 286,595 253,169 (101,619)
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(821,816) $(2,423,690) $(6,150,951) $(1,621,444)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(1,062,853) $(1,649,797) $(4,192,256) $(1,320,381)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,113,783 $2,362,005 $3,845,188 $994,463
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statement of Operations (unaudited) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
For six months ended 9/30/04
NET INVESTMENT INCOME
Interest income $4,519,877 $3,452,560 $9,032,987 $4,062,618
- --------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $459,109 $375,926 $898,586 $420,234
- --------------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 3,701 3,416 6,719 3,671
- --------------------------------------------------------------------------------------------------------------------------------
Shareholder servicing costs 86,920 66,550 190,015 87,156
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class A) 230,934 198,652 510,622 238,444
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 172,761 114,143 111,841 82,715
- --------------------------------------------------------------------------------------------------------------------------------
Distribution and service fee (Class C) -- -- 62,869 --
- --------------------------------------------------------------------------------------------------------------------------------
Administrative fee 7,079 5,810 13,881 6,485
- --------------------------------------------------------------------------------------------------------------------------------
Custodian fee 31,077 23,630 56,895 28,560
- --------------------------------------------------------------------------------------------------------------------------------
Printing 6,514 6,228 20,634 8,195
- --------------------------------------------------------------------------------------------------------------------------------
Postage 702 150 511 204
- --------------------------------------------------------------------------------------------------------------------------------
Auditing fees 19,520 19,450 17,720 19,800
- --------------------------------------------------------------------------------------------------------------------------------
Legal fees 5,244 7,248 5,506 4,374
- --------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 12,476 38,021 10,618 20,176
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses $1,036,037 $859,224 $1,906,417 $920,014
- --------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (346) (442) (895) (578)
- --------------------------------------------------------------------------------------------------------------------------------
Reduction of expenses by investment adviser (209,745) (171,743) (409,296) (191,414)
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses $825,946 $687,039 $1,496,226 $728,022
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,693,931 $2,765,521 $7,536,761 $3,334,596
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) (identified cost basis) -
Investment transactions $532,586 $381,562 $546,559 $102,418
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions 127,593 276,031 468,082 (67,198)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $660,179 $657,593 $1,014,641 $35,220
- --------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(3,069,203) $(1,802,101) $(4,611,278) $(1,665,349)
- --------------------------------------------------------------------------------------------------------------------------------
Swap transactions 43,024 133,196 368,212 (249,345)
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(3,026,179) $(1,668,905) $(4,243,066) $(1,914,694)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(2,366,000) $(1,011,312) $(3,228,425) $(1,879,474)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,327,931 $1,754,209 $4,308,336 $1,455,122
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS (unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
This statement describes the increases and or decreases in net assets
resulting from operations, any distributions, and any shareholder transactions.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
For the six months ended 9/30/04
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $2,176,636 $4,011,802 $8,037,444 $2,314,844
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (241,037) 773,893 1,958,695 301,063
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments (821,816) (2,423,690) (6,150,951) (1,621,444)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,113,783 $2,362,005 $3,845,188 $994,463
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(1,918,730) $(2,868,578) $(6,376,987) $(1,470,231)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (250,566) (735,433) (859,036) (790,891)
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- (386,551) (617,765) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(2,169,296) $(3,990,562) $(7,853,788) $(2,261,122)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $4,458,113 $7,639,420 $9,497,160 $5,502,829
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 1,235,652 2,917,480 6,004,386 1,679,641
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (7,699,705) (17,026,358) (37,445,184) (18,600,766)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,005,940) $(6,469,458) $(21,943,638) $(11,418,296)
- --------------------------------------------------------------------------------------------------------------------------------
Redemption fees $29 $-- $2,620 $--
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(3,061,424) $(8,098,015) $(25,949,618) $(12,684,955)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 95,683,974 195,057,805 390,803,911 123,563,181
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $92,622,550 $186,959,790 $364,854,293 $110,878,226
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included
in net assets at end of period $(149,746) $(619,616) $(1,024,066) $(253,948)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets (unaudited) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
For six months ended 9/30/04
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $3,693,931 $2,765,521 $7,536,761 $3,334,596
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 660,179 657,593 1,014,641 35,220
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments (3,026,179) (1,668,905) (4,243,066) (1,914,694)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,327,931 $1,754,209 $4,308,336 $1,455,122
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(2,984,767) $(2,308,511) $(6,723,304) $(2,931,274)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (669,098) (390,150) (442,757) (302,162)
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- -- (248,882) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,653,865) $(2,698,661) $(7,414,943) $(3,233,436)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $7,253,847 $6,303,417 $9,317,553 $3,220,306
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 2,704,333 1,868,119 4,899,658 2,477,924
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (17,543,700) (15,399,179) (23,450,129) (10,863,228)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(7,585,520) $(7,227,643) $(9,232,918) $(5,164,998)
- --------------------------------------------------------------------------------------------------------------------------------
Redemption fees $-- $-- $46 $--
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(9,911,454) $(8,172,095) $(12,339,479) $(6,943,312)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 174,728,086 143,295,982 338,120,270 158,343,012
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $164,816,632 $135,123,887 $325,780,791 $151,399,700
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included
in net assets at end of period $(74,945) $(331,728) $(874,553) $(331,464)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
For year ended 3/31/04
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $4,536,917 $8,118,946 $16,709,421 $4,676,356
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 250,984 (406,762) (564,448) (170,429)
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments (212,246) 1,101,692 2,584,639 1,295,688
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $4,575,655 $8,813,876 $18,729,612 $5,801,615
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(4,064,652) $(5,975,204) $(13,419,746) $(3,030,603)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (520,819) (1,566,640) (2,043,344) (1,629,792)
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- (682,101) (1,263,628) --
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A -- -- (280,664) --
- --------------------------------------------------------------------------------------------------------------------------------
Class B -- -- (49,717) --
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- -- (31,261) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(4,585,471) $(8,223,945) $(17,088,360) $(4,660,395)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $10,655,498 $41,425,831 $37,294,299 $30,601,516
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 2,272,543 5,293,059 11,195,687 2,819,570
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (17,857,814) (39,966,408) (66,966,662) (26,644,762)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(4,929,773) $6,752,482 $(18,476,676) $6,776,324
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(4,939,589) $7,342,413 $(16,835,424) $7,917,544
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 100,623,563 187,715,392 407,639,335 115,645,637
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $95,683,974 $195,057,805 $390,803,911 $123,563,181
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income
included in net assets at end of period $(136,159) $(599,596) $(1,147,712) $(288,620)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statement of Changes in Net Assets - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
For year ended 3/31/04
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $7,294,658 $5,758,424 $15,383,364 $6,683,101
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (18,766) 289,274 (443,681) (104,224)
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments 1,270,567 461,119 3,861,843 808,352
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $8,546,459 $6,508,817 $18,801,526 $7,387,229
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(6,047,323) $(4,946,524) $(13,869,373) $(5,969,940)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (1,491,730) (903,219) (960,093) (679,583)
- --------------------------------------------------------------------------------------------------------------------------------
Class C -- -- (522,406) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(7,539,053) $(5,849,743) $(15,351,872) $(6,649,523)
- --------------------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS
Net proceeds from sale of shares $29,350,138 $15,937,341 $20,320,016 $14,857,638
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment
of distributions 4,689,230 3,214,136 8,573,893 4,326,299
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (27,765,798) (19,879,059) (40,615,202) (20,585,229)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $6,273,570 $(727,582) $(11,721,293) $(1,401,292)
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $7,280,976 $(68,508) $(8,271,639) $(663,586)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 167,447,110 143,364,490 346,391,909 159,006,598
- --------------------------------------------------------------------------------------------------------------------------------
At end of period $174,728,086 $143,295,982 $338,120,270 $158,343,012
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment
income included in net assets at end of period $(76,278) $(395,581) $(951,430) $(394,194)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period and
the past 5 fiscal years (or, if shorter, the period of the fund's operation). Certain information reflects financial results for
a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an
investment in the fund (assuming reinvestment of all distributions) held for the entire period.
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $10.02 $10.02 $9.61 $9.78 $9.37 $9.93
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.24 $0.46 $0.46 $0.49 $0.50 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.11) 0.01 0.44 (0.16) 0.41 (0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.47 $0.90 $0.33 $0.91 $(0.06)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.23) $(0.47) $(0.49) $(0.50) $(0.50) $(0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.92 $10.02 $10.02 $9.61 $9.78 $9.37
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.39++ 4.77 9.48 3.45 10.02 (0.58)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.56+ 0.62 0.64 0.65 0.65 0.66
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.80+ 4.61 4.70 5.05 5.28 5.22
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 12 12 22 6 19 18
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $80,261 $82,507 $87,724 $76,004 $67,458 $66,173
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer service fees paid to Tarantino LLC. If these fees had been incurred by the fund, the
net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.22 $0.44 $0.44 $0.47 $0.48 $0.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 0.81+ 0.82 0.84 0.85 0.85 0.84
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.55+ 4.41 4.50 4.85 5.08 5.04
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by less than 0.01%. Per share, ratios, and supplemental data for periods prior to
April 1, 2001, have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been lower.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $10.03 $10.04 $9.62 $9.79 $9.38 $9.94
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.20 $0.38 $0.38 $0.42 $0.43 $0.42
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.10) (0.01)^ 0.44 (0.17) 0.41 (0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.37 $0.82 $0.25 $0.84 $(0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.20) $(0.38) $(0.40) $(0.42) $(0.43) $(0.42)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.93 $10.03 $10.04 $9.62 $9.79 $9.38
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.00++ 3.80 8.67 2.62 9.17 (1.37)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.34+ 1.44 1.47 1.45 1.43 1.46
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.02+ 3.79 3.86 4.23 4.50 4.41
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 12 12 22 6 19 18
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $12,362 $13,177 $12,900 $10,177 $10,986 $10,786
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer service fees paid to Tarantino LLC. If these fees had been incurred by the fund, the
net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.19 $0.36 $0.36 $0.40 $0.41 $0.40
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.59+ 1.64 1.67 1.65 1.63 1.64
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.77+ 3.59 3.66 4.03 4.30 4.23
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by less than 0.01%. Per share, ratios, and supplemental data for periods prior to
April 1, 2001, have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The per share amount is not in accordance with the net realized and unrealized gain/loss for the period because of the
timing of sales of the fund shares and the amount of per share realized and unrealized gains and losses at such time.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended ----------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $11.53 $11.49 $10.94 $11.14 $10.58 $11.27
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.26 $0.51 $0.52 $0.53 $0.55 $0.55
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.10) 0.04 0.56 (0.18) 0.57 (0.69)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.16 $0.55 $1.08 $0.35 $1.12 $(0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.25) $(0.51) $(0.53) $(0.54) $(0.55) $(0.55)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.25) $(0.51) $(0.53) $(0.55) $(0.56) $(0.55)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.44 $11.53 $11.49 $10.94 $11.14 $10.58
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.48++ 4.90 10.05 3.16 10.75 (1.06)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.80+ 0.86 0.87 0.88 0.86 0.85
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.54+ 4.39 4.56 4.80 5.10 5.14
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 9 13 17 18 35 38
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $128,128 $131,642 $132,843 $121,717 $125,917 $101,403
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.24 $0.48 $0.49 $0.51 $0.52 $0.53
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.05+ 1.06 1.07 1.08 1.06 1.03
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.29+ 4.19 4.36 4.60 4.90 4.96
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001, have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended ----------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $11.49 $11.45 $10.93 $11.13 $10.58 $11.27
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.21 $0.42 $0.43 $0.45 $0.46 $0.47
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.08) 0.04 0.54 (0.19) 0.57 (0.69)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.46 $0.97 $0.26 $1.03 $(0.22)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.21) $(0.42) $(0.45) $(0.45) $(0.47) $(0.47)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.21) $(0.42) $(0.45) $(0.46) $(0.48) $(0.47)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.41 $11.49 $11.45 $10.93 $11.13 $10.58
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.19++ 4.12 8.96 2.39 9.94 (1.89)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.55+ 1.60 1.62 1.63 1.61 1.60
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.79+ 3.62 3.80 4.05 4.33 4.38
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 9 13 17 18 35 38
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $38,160 $41,509 $40,867 $29,903 $25,928 $20,224
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.20 $0.39 $0.41 $0.43 $0.44 $0.45
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.80+ 1.80 1.82 1.83 1.81 1.78
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.54+ 3.42 3.60 3.85 4.13 4.20
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001, have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NEW YORK MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended --------------------------------- Period ended
9/30/04 2004 2003 2002 3/31/01*
(unaudited)
CLASS C
Net asset value, beginning of period $11.51 $11.47 $10.93 $11.13 $10.91
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.21 $0.42 $0.43 $0.45 $0.14
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.09) 0.04 0.56 (0.18) 0.23
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.12 $0.46 $0.99 $0.27 $0.37
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.21) $(0.42) $(0.45) $(0.46) $(0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.21) $(0.42) $(0.45) $(0.47) $(0.15)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.42 $11.51 $11.47 $10.93 $11.13
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.10++ 4.12 9.14 2.39 3.36++
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.55+ 1.60 1.62 1.63 1.61+
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.79+ 3.63 3.81 4.05 4.20+
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 9 13 17 18 35
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $20,671 $21,907 $14,005 $10,178 $8,578
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.20 $0.39 $0.41 $0.43 $0.14
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.80+ 1.80 1.82 1.83 1.81+
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.54+ 3.43 3.61 3.85 4.00+
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001, have not been restated to reflect this change in presentation.
* For the period from the inception of Class C shares, December 11, 2000, through March 31, 2001.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended ---------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $12.30 $12.24 $11.68 $11.89 $11.35 $12.14
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.27 $0.53 $0.54 $0.57 $0.58 $0.59
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.12) 0.07 0.58 (0.21) 0.55 (0.80)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.15 $0.60 $1.12 $0.36 $1.13 $(0.21)
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.26) $(0.53) $(0.56) $(0.57) $(0.58) $(0.58)
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ (0.01) --
- -----------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (0.01) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.26) $(0.54) $(0.56) $(0.57) $(0.59) $(0.58)
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.19 $12.30 $12.24 $11.68 $11.89 $11.35
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.29++ 5.01 9.71 3.08 10.20 (1.67)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.83+ 0.92 0.91 0.92 0.91 0.91
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.46+ 4.30 4.50 4.78 5.03 5.07
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 9 20 13 27 9
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $288,286 $305,185 $316,687 $303,250 $308,447 $310,624
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.25 $0.50 $0.52 $0.54 $0.56 $0.57
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.08+ 1.12 1.11 1.12 1.11 1.09
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.21+ 4.10 4.30 4.58 4.83 4.89
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001, have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $12.29 $12.23 $11.67 $11.89 $11.35 $12.13
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.23 $0.45 $0.47 $0.48 $0.50 $0.51
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.13) 0.07 0.57 (0.20) 0.55 (0.78)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.52 $1.04 $0.28 $1.05 $(0.27)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.22) $(0.45) $(0.48) $(0.49) $(0.50) $(0.51)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (0.01) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.22) $(0.46) $(0.48) $(0.50) $(0.51) $(0.51)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.17 $12.29 $12.23 $11.67 $11.89 $11.35
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.88++ 4.33 9.01 2.33 9.49 (2.22)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.48+ 1.56 1.56 1.57 1.56 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.79+ 3.64 3.85 4.07 4.37 4.42
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 9 20 13 27 9
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $44,248 $50,363 $59,116 $57,534 $60,449 $48,794
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.21 $0.42 $0.44 $0.46 $0.48 $0.49
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.73+ 1.76 1.76 1.77 1.76 1.74
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.54+ 3.44 3.65 3.87 4.17 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001, have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS C (unaudited)
Net asset value, beginning of period $12.29 $12.23 $11.67 $11.89 $11.35 $12.13
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.23 $0.45 $0.46 $0.48 $0.50 $0.51
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.12) 0.07 0.58 (0.20) 0.55 (0.78)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.11 $0.52 $1.04 $0.28 $1.05 $(0.27)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.22) $(0.45) $(0.48) $(0.49) $(0.50) $(0.51)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.01) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (0.01) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.22) $(0.46) $(0.48) $(0.50) $(0.51) $(0.51)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.18 $12.29 $12.23 $11.67 $11.89 $11.35
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.97++ 4.33 9.01 2.33 9.49 (2.22)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.49+ 1.57 1.56 1.57 1.56 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.88+ 3.67 3.84 4.07 4.37 4.42
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 9 20 13 27 9
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $32,320 $35,256 $31,836 $23,741 $19,099 $14,206
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.22 $0.43 $0.44 $0.46 $0.48 $0.49
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.74+ 1.77 1.76 1.77 1.76 1.74
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.63+ 3.47 3.64 3.87 4.17 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001, have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSLYVANIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $10.31 $10.21 $9.73 $9.85 $9.36 $9.90
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.22 $0.42 $0.45 $0.48 $0.49 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.08) 0.10 0.51 (0.11) 0.49 (0.55)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.14 $0.52 $0.96 $0.37 $0.98 $(0.05)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.22) $(0.42) $(0.48) $(0.49) $(0.49) $(0.49)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.22) $(0.42) $(0.48) $(0.49) $(0.49) $(0.49)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.23 $10.31 $10.21 $9.73 $9.85 $9.36
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.37++ 5.12 10.12 3.85 10.85 (0.45)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.60+ 0.64 0.48 0.36 0.37 0.38
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.38+ 4.12 4.47 4.90 5.17 5.19
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 4 24 19 19 10 48
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $67,371 $75,083 $68,705 $47,661 $33,842 $25,494
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually agreed under a temporary expense agreement to pay all of the fund's operating expenses,
exclusive of management, distribution and service fees in excess of 0.20% of average daily net assets. Prior to January 1,
2003, MFS had contractually agreed, subject to reimbursement, to bear a portion of the fund's "Other Expenses", which are
defined as the fund's operating expenses, exclusive of management, distribution and service fees such that "Other Expenses"
did not exceed 0.40% annually. This arrangement was effected by MFS bearing all of the fund's "Other Expenses" during the
fund's fiscal year and the fund paying MFS an expense reimbursement fee not greater than 0.40% of average daily net assets.
The investment adviser had agreed to waive 0.40% of the reimbursement fee for an indefinite period of time. This agreement
terminated on December 31, 2002. In addition, for the period ended September 30, 2004, the investment adviser has
voluntarily agreed to reimburse the fund for its proportional share of Independent Chief Compliance Officer services paid to
Tarantino LLC. To the extent actual expenses were over these limitations, the net investment income per share and the ratios
would have been:
Net investment income(S)(S) $0.20 $0.39 $0.40 $0.43 $0.44 $0.44
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 0.91+ 0.94 0.96 0.89 0.93 0.91
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.07+ 3.82 3.99 4.37 4.61 4.66
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charges had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) PENNSLYVANIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $10.34 $10.24 $9.75 $9.88 $9.38 $9.92
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.18 $0.34 $0.36 $0.40 $0.42 $0.42
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.09) 0.10 0.53 (0.12) 0.50 (0.55)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.09 $0.44 $0.89 $0.28 $0.92 $(0.13)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.18) $(0.34) $(0.40) $(0.41) $(0.42) $(0.41)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.18) $(0.34) $(0.40) $(0.41) $(0.42) $(0.41)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.25 $10.34 $10.24 $9.75 $9.88 $9.38
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.89++ 4.38 9.21 2.86 10.06 (1.25)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.37+ 1.44 1.30 1.20 1.17 1.19
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.60+ 3.32 3.62 4.06 4.38 4.38
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 4 24 19 19 10 48
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $43,507 $48,480 $46,941 $28,286 $20,827 $17,496
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually agreed under a temporary expense agreement to pay all of the fund's operating expenses,
exclusive of management, distribution and service fees in excess of 0.20% of average daily net assets. Prior to January 1,
2003, MFS had contractually agreed, subject to reimbursement, to bear a portion of the fund's "Other Expenses", which are
defined as the fund's operating expenses, exclusive of management, distribution and service fees such that "Other Expenses"
did not exceed 0.40% annually. This arrangement was effected by MFS bearing all of the fund's "Other Expenses" during the
fund's fiscal year and the fund paying MFS an expense reimbursement fee not greater than 0.40% of average daily net assets.
The investment adviser had agreed to waive 0.40% of the reimbursement fee for an indefinite period of time. This agreement
terminated on December 31, 2002. In addition, for the period ended September 30, 2004, the investment adviser has
voluntarily agreed to reimburse the fund for its proportional share of Independent Chief Compliance Officer services paid to
Tarantino LLC. To the extent actual expenses were over these limitations, the net investment income per share and the ratios
would have been:
Net investment income(S)(S) $0.17 $0.31 $0.32 $0.35 $0.36 $0.37
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.68+ 1.74 1.78 1.73 1.73 1.72
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.29+ 3.02 3.14 3.53 3.82 3.85
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended ---------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $12.61 $12.53 $12.00 $12.15 $11.58 $12.48
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.28 $0.55 $0.58 $0.60 $0.60 $0.58
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.16) 0.10 0.54 (0.16) 0.56 (0.86)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.12 $0.65 $1.12 $0.44 $1.16 $(0.28)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.28) $(0.57) $(0.59) $(0.59) $(0.59) $(0.58)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- -- -- -- (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- -- -- -- (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.28) $(0.57) $(0.59) $(0.59) $(0.59) $(0.62)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.45 $12.61 $12.53 $12.00 $12.15 $11.58
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 0.99++ 5.30 9.51 3.68 10.26 (2.27)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.86+ 0.94 0.95 0.94 0.96 0.94
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.57+ 4.39 4.68 4.91 5.13 4.91
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 16 21 10 33 18
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $131,607 $137,911 $129,844 $121,438 $120,529 $121,064
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.27 $0.53 $0.55 $0.57 $0.58 $0.56
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.11+ 1.14 1.15 1.14 1.16 1.12
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.32+ 4.19 4.48 4.71 4.93 4.73
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share, and decrease net realized and unrealized gains and
losses per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net
investment income to average net assets increased by 0.03%. Per share, ratios, and supplemental data for periods prior to
April 1, 2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charges had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $12.60 $12.52 $11.99 $12.14 $11.58 $12.47
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.24 $0.47 $0.50 $0.52 $0.52 $0.51
- -----------------------------------------------------------------------------------------------------------------------------------
- -----
Net realized and unrealized gain (loss) on investments (0.16) 0.10 0.54 (0.16) 0.55 (0.86)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.08 $0.57 $1.04 $0.36 $1.07 $(0.35)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.24) $(0.49) $(0.51) $(0.51) $(0.51) $(0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- -- -- -- (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- -- -- (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.24) $(0.49) $(0.51) $(0.51) $(0.51) $(0.54)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.44 $12.60 $12.52 $11.99 $12.14 $11.58
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.66++ 4.62 8.81 3.01 9.46 (2.82)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.51+ 1.59 1.60 1.59 1.61 1.59
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.92+ 3.74 4.03 4.25 4.47 4.26
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 16 21 10 33 18
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $33,209 $36,817 $37,603 $34,139 $33,302 $31,532
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.23 $0.45 $0.47 $0.49 $0.50 $0.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.76+ 1.79 1.80 1.79 1.81 1.77
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.67+ 3.54 3.83 4.05 4.27 4.08
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.03%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended ------------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $10.96 $10.90 $10.43 $10.58 $10.11 $10.87
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.22 $0.45 $0.47 $0.49 $0.50 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.06) 0.06 0.49 (0.14) 0.47 (0.69)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.16 $0.51 $0.96 $0.35 $0.97 $(0.19)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.22) $(0.45) $(0.49) $(0.50) $(0.50) $(0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- -- -- -- (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ -- --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- -- -- -- (0.00)+++
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.22) $(0.45) $(0.49) $(0.50) $(0.50) $(0.57)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.90 $10.96 $10.90 $10.43 $10.58 $10.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.50++ 4.80 9.34 3.36 9.87 (1.75)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.90+ 0.94 0.97 0.94 0.95 0.96
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.17+ 4.08 4.35 4.66 4.87 4.80
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 10 19 16 12 19 20
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $112,892 $118,990 $115,819 $101,294 $99,097 $100,251
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.21 $0.42 $0.45 $0.47 $0.48 $0.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.15+ 1.14 1.17 1.14 1.15 1.14
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.92+ 3.88 4.15 4.46 4.67 4.62
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from certain offset arrangements.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) TENNESSEE MUNICIPAL FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $10.95 $10.89 $10.42 $10.57 $10.10 $10.86
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.19 $0.38 $0.40 $0.42 $0.43 $0.43
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.07) 0.06 0.49 (0.14) 0.47 (0.69)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.12 $0.44 $0.89 $0.28 $0.90 $(0.26)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.18) $(0.38) $(0.42) $(0.43) $(0.43) $(0.43)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- -- -- -- (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ -- --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- -- -- -- (0.00)+++
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.18) $(0.38) $(0.42) $(0.43) $(0.43) $(0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.89 $10.95 $10.89 $10.42 $10.57 $10.10
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.17++ 4.12 8.64 2.69 9.17 (2.39)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.55+ 1.59 1.62 1.59 1.60 1.61
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.51+ 3.43 3.70 4.00 4.22 4.15
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 10 19 16 12 19 20
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $22,232 $24,306 $27,546 $26,183 $23,656 $21,321
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.18 $0.35 $0.38 $0.40 $0.41 $0.41
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.80+ 1.79 1.82 1.79 1.80 1.79
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.26+ 3.23 3.50 3.80 4.02 3.97
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended ---------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $11.73 $11.61 $11.14 $11.36 $10.91 $11.60
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.27 $0.53 $0.53 $0.54 $0.56 $0.57
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.10) 0.12 0.47 (0.22) 0.45 (0.70)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.17 $0.65 $1.00 $0.32 $1.01 $(0.13)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.27) $(0.53) $(0.53) $(0.54) $(0.56) $(0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ (0.00)+++ --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.27) $(0.53) $(0.53) $(0.54) $(0.56) $(0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.63 $11.73 $11.61 $11.14 $11.36 $10.91
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.46++ 5.70 9.10 2.87 9.55 (1.09)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.85+ 0.93 0.93 0.92 0.91 0.91
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.68+ 4.53 4.62 4.77 5.06 5.07
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 2 11 13 14 24 13
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $291,152 $301,218 $308,164 $299,088 $304,581 $311,934
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.26 $0.51 $0.51 $0.52 $0.54 $0.54
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.10+ 1.13 1.13 1.12 1.11 1.09
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.43+ 4.33 4.42 4.57 4.86 4.89
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charges had been included, the results would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $11.72 $11.60 $11.13 $11.35 $10.91 $11.60
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.23 $0.45 $0.46 $0.47 $0.48 $0.49
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.10) 0.12 0.46 (0.22) 0.44 (0.70)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.57 $0.92 $0.25 $0.92 $(0.21)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.23) $(0.45) $(0.45) $(0.47) $(0.48) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ (0.00)+++ --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.23) $(0.45) $(0.45) $(0.47) $(0.48) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.62 $11.72 $11.60 $11.13 $11.35 $10.91
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.13++ 5.02 8.40 2.20 8.76 (1.73)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.50+ 1.57 1.58 1.58 1.56 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.03+ 3.88 3.97 4.12 4.39 4.42
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 2 11 13 14 24 13
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $22,027 $23,564 $25,470 $26,970 $29,872 $29,316
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.22 $0.43 $0.43 $0.45 $0.46 $0.47
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.75+ 1.77 1.78 1.78 1.76 1.74
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.78+ 3.68 3.77 3.92 4.19 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) VIRGINIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS C (unaudited)
Net asset value, beginning of period $11.72 $11.61 $11.13 $11.36 $10.91 $11.60
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.23 $0.45 $0.45 $0.47 $0.48 $0.49
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.10) 0.11 0.48 (0.23) 0.45 (0.70)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.56 $0.93 $0.24 $0.93 $(0.21)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.23) $(0.45) $(0.45) $(0.47) $(0.48) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (0.00)+++ (0.00)+++ --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.23) $(0.45) $(0.45) $(0.47) $(0.48) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.62 $11.72 $11.61 $11.13 $11.36 $10.91
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.13++ 4.93 8.49 2.10 8.85 (1.73)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.50+ 1.57 1.58 1.57 1.56 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.03+ 3.88 3.97 4.10 4.37 4.42
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 2 11 13 14 24 13
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $12,602 $13,338 $12,758 $10,619 $6,965 $5,171
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.22 $0.43 $0.43 $0.44 $0.46 $0.47
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.75+ 1.77 1.78 1.77 1.76 1.74
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.78+ 3.68 3.77 3.90 4.17 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended ---------------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS A (unaudited)
Net asset value, beginning of period $11.82 $11.77 $11.32 $11.45 $10.95 $11.75
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.26 $0.51 $0.55 $0.57 $0.57 $0.57
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.13) 0.05 0.46 (0.14) 0.50 (0.80)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.56 $1.01 $0.43 $1.07 $(0.23)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.25) $(0.51) $(0.56) $(0.56) $(0.57) $(0.57)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.70 $11.82 $11.77 $11.32 $11.45 $10.95
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+) 1.14++ 4.84 9.04 3.79 10.04 (1.89)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.89+ 0.93 0.96 0.93 0.95 0.95
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.43+ 4.33 4.71 4.97 5.14 5.13
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 17 13 2 9 30
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $136,109 $140,599 $139,564 $121,860 $118,862 $117,174
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.24 $0.49 $0.53 $0.55 $0.55 $0.55
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.14+ 1.13 1.16 1.13 1.15 1.13
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.18+ 4.13 4.51 4.77 4.94 4.95
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charges had been included, the results would have been lower
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS, MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months Years ended 3/31
ended -----------------------------------------------------------
9/30/04 2004 2003 2002 2001 2000
CLASS B (unaudited)
Net asset value, beginning of period $11.82 $11.76 $11.31 $11.44 $10.94 $11.74
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)(S)
Net investment income(S) $0.22 $0.43 $0.47 $0.50 $0.50 $0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.14) 0.06 0.46 (0.15) 0.50 (0.80)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.08 $0.49 $0.93 $0.35 $1.00 $(0.30)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(0.21) $(0.43) $(0.48) $(0.48) $(0.50) $(0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.69 $11.82 $11.76 $11.31 $11.44 $10.94
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 0.72++ 4.25 8.34 3.12 9.34 (2.53)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.54+ 1.58 1.61 1.59 1.60 1.60
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.79+ 3.68 4.06 4.31 4.48 4.48
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 5 17 13 2 9 30
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $15,291 $17,744 $19,443 $16,248 $16,170 $14,727
- ------------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If these fees had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income(S)(S) $0.21 $0.41 $0.45 $0.47 $0.48 $0.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS:
Expenses## 1.79+ 1.78 1.81 1.79 1.80 1.78
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.54+ 3.48 3.86 4.11 4.28 4.30
- ------------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002, was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.01%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENT (Unaudited)
- -------------------------------------------------------------------------------
(1) BUSINESS AND ORGANIZATION
MFS Mississippi Municipal Bond Fund (Mississippi Fund), MFS New York Municipal
Bond Fund (New York Fund), MFS North Carolina Municipal Bond Fund (North
Carolina Fund), MFS Pennsylvania Municipal Bond Fund (Pennsylvania Fund), MFS
South Carolina Municipal Bond Fund (South Carolina Fund), MFS Tennessee
Municipal Bond Fund (Tennessee Fund), MFS Virginia Municipal Bond Fund
(Virginia Fund), MFS West Virginia Municipal Bond Fund (West Virginia Fund) are
each a non-diversified series of MFS Municipal Series Trust (the trust). The
trust is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
General - The preparation of financial statements in conformity with U.S.
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. Because
each fund invests primarily in the securities of a single state and its
political subdivisions, each fund is vulnerable to the effects of changes in
the legal and economic environment of the particular state. Municipal
securities backed by current or anticipated revenues from a specific project or
specific assets can be negatively affected by the discontinuance of the
taxation supporting the projects or assets or the inability to collect revenues
for the project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, interest from the security could become taxable and the security
could decline in value.
Investment Valuations - Bonds and other fixed income securities (other than
short-term obligations) in the fund's portfolio are valued at an evaluated bid
price as reported by an independent pricing service, or to the extent a
valuation is not reported by a pricing service, such securities are valued on
the basis of quotes from brokers and dealers. Prices obtained from pricing
services utilize both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate 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 quoted prices or exchange or over-the-
counter prices, since such valuations are believed to reflect more accurately
the fair value of such securities. Short-term obligations with a remaining
maturity in excess of 60 days will be valued upon dealer-supplied valuations.
All other short-term obligations in each of the fund's portfolio are valued at
amortized cost, which constitutes market value as determined by the Board of
Trustees. When pricing service information or market quotations are not readily
available, securities are priced at fair value as determined under the
direction of the Board of Trustees.
Swap Agreements - Each fund may enter into swap agreements. A swap is an
exchange of cash payments between the fund and another party, which is based on
a specific financial index. Cash payments are exchanged at specified intervals
and the expected income or expense is recorded on the accrual basis. The value
of the swap is adjusted daily and the change in value is recorded as unrealized
appreciation or depreciation. Risks may arise upon entering into these
agreements from the potential inability of counterparties to meet the terms of
their contract and from unanticipated changes in the value of the financial
index on which the swap agreement is based. Each fund may use swaps for both
hedging and non-hedging purposes. For hedging purposes, each fund may use swaps
to reduce its exposure to interest and foreign exchange rate fluctuations. For
non-hedging purposes, each fund may use swaps to take a position on anticipated
changes in the underlying financial index.
Interest Rate Swap Agreements - Interest rate swap agreements are agreements to
exchange cash flows periodically based on a notional principal amount, for
example the exchange of fixed rate interest payments for floating rate interest
payments which are based on a specific financial index, or the exchange of two
distinct floating rate payments. The net receivable or payable associated with
these payments is accrued daily and is recorded as net interest income or
expense. For financial statement purposes, the net interest income or expense
periodically recognized for an interest rate swap is recorded in the same line
item as any unrealized and realized gains or losses recognized for that
instrument. The primary risk associated with interest rate swap agreements is
that unfavorable changes in the fluctuation of interest rates could adversely
impact the funds.
Rate Lock Swaps - Each fund may enter into rate lock swaps, which are used to
reduce the interest rate risk of the portfolio. A rate lock swap is a payment
or receipt of cash on a specified future date, calculated as the difference
between the strike rate and a specific index yield on that date. The payment
received or made at the end of the measurement period is recorded as a realized
gain or loss in the Statement of Operations. The value of the swap is adjusted
daily and the change in value is recorded as unrealized appreciation or
depreciation.
Short Term Fees - For purchases made on or after July 1, 2004, each fund will
charge a 2% redemption fee (which is retained by the fund) on proceeds from
Class A, Class B, and Class C shares redeemed or exchanged within 5 business
days following their acquisition (either by purchase or exchange). The funds
may change the redemption fee period in the future, including changes in
connection with pending Securities and Exchange Commission rules. See the
funds' prospectus for details. These fees are accounted for as an addition to
paid-in capital.
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 purposes in
accordance with U.S. generally accepted accounting principles. All premium and
original issue discount is amortized or accreted for tax reporting purposes as
required by federal income tax regulations. Interest payments received in
additional securities are recorded on the ex-dividend or ex-interest date in an
amount equal to the value of the security on such date.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions made directly to the security issuer,
which are generally non-recurring, incurred to protect or enhance the value of
high-yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
Fees Paid Indirectly - Each fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount, for the six months ended September 30, 2004, is shown as a
reduction of total expenses on the Statement of Operations.
Tax Matters and Distributions - Each fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net tax-
exempt and taxable net income, including any net realized gain on investments.
Accordingly, no provision for federal income or excise tax is provided.
Distributions paid by each fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for federal
income tax purposes because the each fund intends to meet certain requirements
of the Code applicable to regulated investment companies, which will enable
each fund to pay exempt-interest dividends. The portion of such interest, if
any, earned on private activity bonds issued after August 7, 1986 may be
considered a tax-preference item to shareholders.
Distributions to shareholders are recorded on the ex-dividend date. Each fund
distinguishes between distributions on a tax basis and a financial reporting
basis and only distributions in excess of tax basis earnings and profits are
reported in the financial statements as distributions from paid-in capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. Common
types of book and tax differences that could occur include differences in
accounting for derivatives, defaulted bonds, capital losses, and amortization
and accretion on debt securities.
The tax character of distributions declared for the year ended March 31, 2004
was as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions declared from:
Tax-exempt income $4,585,471 $8,223,945 $16,726,718 $4,660,395 $7,539,053 $5,849,743 $15,351,872 $6,649,523
- -----------------------------------------------------------------------------------------------------------------------------------
Long-term capital gain -- -- 361,642 -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $4,585,471 $8,223,945 $17,088,360 $4,660,395 $7,539,053 $5,849,743 $15,351,872 $6,649,523
- -----------------------------------------------------------------------------------------------------------------------------------
The tax character of distributions declared for the year ended March 31, 2003 was as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions declared from:
Tax-exempt income $4,528,198 $7,901,121 $17,972,739 $4,258,405 $7,590,125 $6,198,081 $15,591,198 $7,105,662
- -----------------------------------------------------------------------------------------------------------------------------------
As of March 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed ordinary
income $-- $-- $-- $-- $-- $-- $-- $35,540
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed tax-
exempt income 276,013 81,738 199,849 113,238 562,102 80,464 315,637 125,061
- -----------------------------------------------------------------------------------------------------------------------------------
Capital loss
carryforward (228,833) (576,318) (437,200) (1,074,365) (2,259,134) -- (4,501,068) (1,077,400)
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed long-term
capital gains -- -- -- -- -- 72,692 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Post-October capital
loss deferred -- -- -- -- -- -- (16,414) (215,607)
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation 5,667,802 17,727,329 33,515,393 7,136,961 15,209,030 10,630,938 27,614,345 12,237,676
- -----------------------------------------------------------------------------------------------------------------------------------
Other temporary
differences (408,238) (681,334) (1,346,821) (401,360) (638,334) (476,045) (1,265,692) (554,795)
- -----------------------------------------------------------------------------------------------------------------------------------
Post October capital loss deferrals represent losses realized during the current fiscal year, but recognized for tax purposes in
the next fiscal year.
At March 31, 2004, the following funds, for federal income tax purposes, had a capital loss carryforward which may be applied
against any net taxable realized gains of each succeeding year until the earlier of its utilization or expiration on:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
EXPIRATION DATE FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
March 31, 2005 $(228,833) $-- $-- $(533,472) $-- $-- $(342,289) $(714,690)
- -----------------------------------------------------------------------------------------------------------------------------------
March 31, 2008 -- (125,530) -- (43,665) -- -- -- (58,823)
- -----------------------------------------------------------------------------------------------------------------------------------
March 31, 2009 -- -- -- (175,279) (2,259,134) -- (1,733,400) (220,540)
- -----------------------------------------------------------------------------------------------------------------------------------
March 31, 2010 -- (97,978) -- -- -- -- (2,059,003) (83,347)
- -----------------------------------------------------------------------------------------------------------------------------------
March 31, 2011 -- -- -- (120,267) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
March 31, 2012 -- (352,810) (437,200) (201,682) -- -- (366,376) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total
$(228,833) $(576,318) $(437,200) $(1,074,365) $(2,259,134) $-- $(4,501,068) $(1,077,400)
- -----------------------------------------------------------------------------------------------------------------------------------
Multiple Classes of Shares of Beneficial Interest - Each fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of each fund based on the value
of settled shares outstanding, without distinction between share classes.
Dividends are declared separately for each class. Differences in per share
dividend rates are generally due to differences in separate class expenses.
Class B shares will convert to Class A shares approximately eight years after
purchase.
(3) TRANSACTIONS WITH AFFILIATES
Investment Adviser - The trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
the fund's average daily net assets. The investment adviser has contractually
agreed to waive a portion of its fee, which is shown as a reduction of total
expenses in each fund's Statement of Operations. As part of a settlement
agreement with the New York Attorney General concerning market timing and
related matters (See Legal Proceedings footnote), MFS has agreed to reduce each
fund's management fee to 0.30% of average daily net assets for the period March
1, 2004 through February 28, 2009. During this time period, the Board of
Trustees will continue to review the appropriateness of all advisory fees in
accordance with their oversight responsibilities. After February 28, 2009 the
management fee will be determined in accordance with then existing review
policies approved by the Board of Trustees overseeing the funds. Management
fees incurred for the six months ended September 30, 2004 were charged at an
effective rate of 0.30% of average daily net assets on an annualized basis for
each fund.
For the Pennsylvania Fund, the investment adviser contractually agreed under a
temporary expense agreement to pay all of the fund's operating expenses,
exclusive of management, distribution and service fees in excess of 0.20% of
average daily net assets.
Each fund pays compensation to its Independent Trustees ("Trustees") in the
form of both retainer and attendance fees, and additional compensation to Board
and Committee chairpersons, and pays no compensation directly to its Trustees
who are officers of the investment adviser, or to officers of each fund, all of
whom receive remuneration for their services to each fund from MFS. Certain
officers and Trustees of each fund are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD), and MFS Service Center, Inc. (MFSC). Each fund has an
unfunded defined benefit plan for retired Independent Trustees. Included in
Trustees' compensation is a pension expense for retired Independent Trustees
for the six months ended September 30, 2004.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Pension Expense $402 $497 $704 $411 $688 $452 $699 $687
- -----------------------------------------------------------------------------------------------------------------------------------
This series and certain other MFS funds, have entered into a services agreement
(the Agreement) which provides for payment of fees by the MFS funds to
Tarantino LLC in return for the provision of services of an Independent Chief
Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds
and the sole member of Tarantino LLC. MFS has agreed to reimburse each of the
funds for a proportional share of substantially all of the payments made by the
funds to Tarantino LLC and also to provide office space and other
administrative support and supplies to the ICCO. The funds can terminate the
Agreement with Tarantino LLC at any time under the terms of the Agreement.
Administrator - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment advisor. Under an administrative services
agreement between the funds and MFS, MFS is entitled to partial reimbursement
of the costs MFS incurs to provide these services, subject to review and
approval by the Board of Trustees. Each fund is allocated a portion of these
administrative costs based on its size and relative average net assets.
Effective April 1, 2004, the funds paid MFS an administrative fee up to the
following annual percentage rates of the funds' average daily net assets:
First $2 billion 0.01120%
- -------------------------------------------------------------------------------
Next $2.5 billion 0.00832%
- -------------------------------------------------------------------------------
Next $2.5 billion 0.00032%
- -------------------------------------------------------------------------------
In excess of $7 billion 0.00000%
- -------------------------------------------------------------------------------
For the six months ended September 30, 2004, each fund paid MFS the following
amounts to partially reimburse MFS for the costs of providing administrative
services.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses Paid $3,947 $7,942 $15,808 $4,862 $7,079 $5,810 $13,881 $6,485
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of average
daily net assets 0.0085% 0.0085% 0.0085% 0.0085% 0.0085% 0.0085% 0.0085% 0.0085%
- -----------------------------------------------------------------------------------------------------------------------------------
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received the following amounts as its portion of the sales
charge on sales of Class A shares for the six months ended September 30, 2004:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
$12,336 $17,206 $7,684 $19,366 $37,990 $21,071 $22,422 $13,191
- -----------------------------------------------------------------------------------------------------------------------------------
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:
Each funds' distribution plan provides that each fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFS may pay expenses on behalf of the fund related to the
distribution and servicing of its shares. These expenses include a service fee
paid to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum of each funds' 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 each fund's average daily
net assets attributable to Class A shares. For the six months ended September
30, 2004, MFD retained the following service fees for accounts not attributable
to a securities dealer:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
$-- $4,462 $4,712 $154 $1,497 $546 $6,952 $2,853
- -----------------------------------------------------------------------------------------------------------------------------------
During the six months ended September 30, 2004, fees incurred under the distribution plan as a percentage of each fund's average
daily net assets attributable to Class A shares on and annualized basis were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
-- 0.25% 0.35% 0.10% 0.35% 0.35% 0.35% 0.35%
- -----------------------------------------------------------------------------------------------------------------------------------
Payments of the Mississippi Fund's 0.35% per annum Class A distribution and
service fee will be implemented on such date as the Trustees of the Trust may
determine. In the case of the New York Fund and the Pennsylvania Fund, payment
of the 0.10% per annum Class A distribution fee will be implemented on such
date as the Trustees of the Trust may determine.
Additionally for the Pennsylvania Fund the remaining portion of the 0.25% Class
A service fee is not yet implemented and will become payable on such date as
the Trustees of the Trust may determine.
Each fund's distribution plan provides that the fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the fund's average daily net assets attributable to Class B and Class
C shares. MFD will pay to securities dealers that enter into a sales agreement
with MFD all or a portion of the service fee attributable to Class B and Class
C shares, and will pay to such securities dealers all of the distribution fee
attributable to Class C shares. The service fee is intended 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 securities
dealers. Class B and Class C service fees during the six months ended September
30, 2004 were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Class B $-- $67 $21 $201 $89 $-- $23 $33
- -----------------------------------------------------------------------------------------------------------------------------------
Class C N/A 2 1 N/A N/A N/A 588 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
During the six months ended September 30, 2004, fees incurred under the distribution plan as a percentage of average daily net
assets attributable to Class B and Class C shares on an annualized basis were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 0.78% 1.00% 1.00% 0.87% 1.00% 1.00% 1.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------------------
Class C N/A 1.00% 1.00% N/A N/A N/A 1.00% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Except in the case of the 0.25% per annum Class B service fee paid by the Mississippi Fund upon sale of Class B shares in the
first year, payment of the Class B service fee will not be implemented until such date as the Trustees of the Trust may determine.
Except in the case of the 0.25% per annum Class B service fee paid by the Pennsylvania Fund upon sale of Class B shares in the
first year, the Class B shares service fee is currently 0.10% until such date as the Trustees of the Trust may determine.
Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption
within, for Class A shares, 12 months following the purchase, and, for Class C shares, the first year from the end of the calendar
month of 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 from the end of the calendar month of purchase. MFD receives all contingent deferred sales
charges. Contingent deferred sales charges (CDSC) imposed during the six months ended September 30, 2004 were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Class A $-- $-- $2,000 $-- $7,343 $10,595 $-- $--
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 5,442 47,422 51,507 65,702 30,647 40,447 13,196 44,846
- -----------------------------------------------------------------------------------------------------------------------------------
Class C N/A 559 4,177 N/A N/A N/A 4,311 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Shareholder Servicing Agent - Included in shareholder servicing costs is a fee paid to MFSC, a wholly owned subsidiary of MFS, for
its services as shareholder servicing agent. The fee, which is calculated as a percentage of the fund's average daily net assets
is set periodically under the supervision of the fund's Trustees. For the period April 1, 2004 through June 30, 2004, the fee was
set at 0.10% of each fund's average daily net assets. Effective July 1, 2004, each fund is charged up to 0.0861% of its average
daily net assets. For the six months ended September 30, 2004, the fund paid MFSC the following fee for shareholder services:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses paid $42,514 $85,535 $170,003 $52,145 $76,189 $62,425 $149,463 $69,875
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of average daily
net assets 0.0915% 0.0915% 0.0918% 0.916% 0.0918% 0.0916% 0.915% 0.0917%
- -----------------------------------------------------------------------------------------------------------------------------------
Also included in shareholder servicing costs are out-of-pocket expenses (credit), paid to/by MFSC, which amounted to the following
for the six months ended September 30, 2004, as well as other expenses paid to unaffiliated vendors:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
$2,319 $12,657 $(6,242) $7,164 $(2,372) $(6,952) $14,937 $5,385
- -----------------------------------------------------------------------------------------------------------------------------------
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Purchases $10,405,326 $16,132,489 $17,083,020 $4,843,596 $8,535,556 $12,662,665 $5,981,041 $7,568,124
- -----------------------------------------------------------------------------------------------------------------------------------
Sales $11,078,752 $23,797,876 $42,680,695 $19,440,660 $15,646,596 $20,666,572 $16,475,419 $10,766,852
- -----------------------------------------------------------------------------------------------------------------------------------
The cost and unrealized appreciation and depreciation in the value of the investments owned by each fund, as computed on a federal
income tax basis, are as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Aggregate
cost $88,449,882 $168,859,646 $337,343,530 $102,746,902 $150,043,076 $124,304,569 $298,221,662 $137,789,082
- -----------------------------------------------------------------------------------------------------------------------------------
Gross
unrealized
appreciation $6,059,800 $16,431,365 $28,493,442 $7,035,601 $12,847,397 $9,224,673 $24,097,519 $11,809,017
- -----------------------------------------------------------------------------------------------------------------------------------
Gross
unrealized
depreciation (745,707) (686,746) (382,557) (839,646) (267,587) (228,525) (620,637) (844,621)
- -----------------------------------------------------------------------------------------------------------------------------------
Net
unrealized
appreciation
(depreciation) $5,314,093 $15,744,619 $28,110,885 $6,195,955 $12,579,810 $8,996,148 $23,476,882 $10,964,396
- -----------------------------------------------------------------------------------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST
The Trust's Declaration permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest. Transactions in fund shares
were as follows:
MISSISSIPPI FUND NEW YORK FUND NORTH CAROLINA FUND PENNSYLVANIA FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Six months ended 9/30/04 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold 404 $3,965 450 $5,077 523 $6,301 417 $4,198
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 110 1,087 189 2,131 408 4,929 108 1,096
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (652) (6,391) (858) (9,661) (2,085) (25,042) (1,219) (12,223)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (138) $(1,339) (219) $(2,453) (1,154) $(13,812) (694) $(6,929)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 835 $8,379 1,733 $19,959 1,903 $23,424 2,013 $20,634
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 199 1,999 336 3,864 742 9,087 177 1,812
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (1,553) (15,577) (2,215) (25,477) (3,698) (45,354) (1,636) (16,776)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (519) $(5,199) (146) $(1,654) (1,053) $(12,843) 554 $5,670
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Six months ended 9/30/04 (000 Omitted)
Shares sold 50 $493 111 $1,231 118 $1,416 129 $1,305
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 15 149 47 531 46 554 58 584
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (133) (1,309) (423) (4,733) (627) (7,515) (633) (6,378)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (68) $(667) (265) $(2,971) (463) $(5,545) (446) $(4,489)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 228 $2,276 900 $10,362 380 $4,673 967 $9,968
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 27 273 86 980 96 1,174 98 1,007
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (227) (2,280) (943) (10,800) (1,210) (14,801) (960) (9,869)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change 28 $269 43 $542 (734) $(8,954) 105 $1,106
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Six months ended 9/30/04 (000 Omitted)
Shares sold 118 $1,331 148 $1,780
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 23 255 43 521
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (234) (2,631) (406) (4,888)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (93) $(1,045) (215) $(2,587)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 965 $11,104 748 $9,197
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 39 449 76 934
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (322) (3,689) (558) (6,811)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change 682 $7,864 266 $3,320
- -----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA FUND TENNESSEE FUND VIRGINIA FUND WEST VIRGINIA FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Six months ended 9/30/04 (000 Omitted) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold 512 $6,284 507 $5,439 627 $7,224 247 $2,844
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 179 2,205 148 1,599 385 4,430 195 2,261
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (1,058) (12,976) (1,159) (12,357) (1,656) (18,978) (697) (8,027)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (367) $(4,487) (504) $(5,319) (644) $(7,324) (255) $(2,922)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 1,835 $23,147 1,281 $14,063 1,257 $14,684 1,027 $12,116
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 296 3,724 245 2,675 662 7,719 331 3,896
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (1,556) (19,575) (1,291) (14,092) (2,781) (32,458) (1,330) (15,638)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change 575 $7,296 235 $2,646 (862) $(10,055) 28 $374
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Six months ended 9/30/04 (000 Omitted)
Shares sold 80 $970 80 $864 120 $1,382 33 $376
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 40 499 25 269 24 278 19 217
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (372) (4,568) (284) (3,042) (259) (2,972) (245) (2,836)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (252) $(3,099) (179) $(1,909) (115) $(1,312) (193) $(2,243)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 492 $6,203 171 $1,874 246 $2,882 234 $2,742
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 77 965 49 539 43 504 36 430
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (650) (8,191) (529) (5,787) (474) (5,531) (422) (4,947)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (81) $(1,023) (309) $(3,374) (185) $(2,145) (152) $(1,775)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Six months ended 9/30/04 (000 Omitted)
Shares sold 61 $711
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 17 192
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (132) (1,500)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change (54) $(597)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended 3/31/04 (000 Omitted)
Shares sold 234 $2,754
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 30 351
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (226) (2,626)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change 38 $479
- -----------------------------------------------------------------------------------------------------------------------------------
(6) LINE OF CREDIT
The trust and other affiliated funds participate in an $800 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each fund, based on its borrowings, at a rate equal to the Federal
Reserve funds rate plus 0.50%. 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 calendar quarter. The commitment fee
allocated to each fund for the six months ended September 30, 2004 ranged from
$101 to $427, and is included in miscellaneous expense. None of the funds had
significant borrowings during six months ended September 30, 2004.
(7) FINANCIAL INSTRUMENTS
The trust trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to market
risks such as interest rates and foreign currency exchange rates. These
financial instruments include swap agreements. The notional or contractual
amounts of these instruments represent the investment the fund has in
particular classes of financial instruments and does not necessarily represent
the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered.
SWAP AGREEMENTS
Interest Rate Swaps
NOTIONAL
PRINCIPAL AMOUNT CASH FLOWS UNREALIZED
OF CONTRACT RECEIVED BY CASH FLOWS PAID APPRECIATION
FUND EXPIRATION (000 OMITTED) THE FUND BY THE FUND (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------------------------
Mississippi Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 2,000 BMA Swap Index (1.945%) $(2,582)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 1,900 BMA Swap Index (3.444%) 11,545
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 1,900 BMA Swap Index (3.73%) (32,354)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 1,900 BMA Swap Index (3.576%) (8,504)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/17/14 1,750 BMA Swap Index (4.1125%) (81,377)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/23/16 2,000 BMA Swap Index (4.33%) (116,300)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/1/16 1,000 BMA Swap Index (4.361%) (60,317)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 2,000 BMA Swap Index (4.043%) (59,822)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/15/16 500 BMA Swap Index (4.071%) (16,732)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 1,500 BMA Swap Index (3.937%) (27,120)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/06/19 1,000 BMA Swap Index (4.128%) (31,912)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/20/19 1,500 BMA Swap Index (4.24%) (60,898)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,000 (4.132%) BMA Swap Index (7,261)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 1,000 (4.322%) BMA Swap Index $20,524
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,000 (4.200%) BMA Swap Index 1,810
- -----------------------------------------------------------------------------------------------------------------------------------
Total Mississippi Fund $(471,300)
- -----------------------------------------------------------------------------------------------------------------------------------
New York Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 4,000 BMA Swap Index (1.945%) $(5,164)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 3,800 BMA Swap Index (3.444%) 23,089
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/9/14 3,800 BMA Swap Index (3.73%) (64,709)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 3,800 BMA Swap Index (3.576%) (17,007)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 3,500 BMA Swap Index (4.043%) (104,688)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 3,000 BMA Swap Index (3.995%) (79,104)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 2,000 BMA Swap Index (3.937%) (36,160)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/06/19 2,000 BMA Swap Index (4.128%) (63,825)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/20/19 2,500 BMA Swap Index (4.24%) (101,497)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 2,000 (4.132%) BMA Swap Index (14,522)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 2,000 (4.322%) BMA Swap Index 41,048
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 2,000 (4.200%) BMA Swap Index 3,621
- -----------------------------------------------------------------------------------------------------------------------------------
Total New York Fund $(418,918)
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 5,200 BMA Swap Index (1.945%) $(6,713)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 7,800 BMA Swap Index (3.444%) 47,393
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/09/14 7,800 BMA Swap Index (3.73%) (132,823)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 7,600 BMA Swap Index (3.576%) (34,014)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/17/14 5,000 BMA Swap Index (4.1125%) (232,505)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 7,000 BMA Swap Index (4.043%) (209,376)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 6,000 BMA Swap Index (3.995%) (158,209)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 3,000 BMA Swap Index (3.937%) (54,240)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
3/22/17 3,000 BMA Swap Index (3.666%) 30,307
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 4,000 (4.132%) BMA Swap Index (29,044)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 4,000 (4.322%) BMA Swap Index 82,096
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 4,000 (4.200%) BMA Swap Index 7,242
- -----------------------------------------------------------------------------------------------------------------------------------
Total North Carolina Fund $(689,886)
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 1,800 BMA Swap Index (1.945%) $(2,324)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 2,375 BMA Swap Index (3.444%) 14,431
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/09/14 2,375 BMA Swap Index (3.73%) (40,443)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 2,470 BMA Swap Index (3.576%) (11,055)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/16/16 2,500 BMA Swap Index (4.371%) $(161,365)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/23/16 2,000 BMA Swap Index (4.33%) (116,300)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/01/16 3,000 BMA Swap Index (4.361%) (180,952)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 2,000 BMA Swap Index (4.043%) (59,822)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 2,000 BMA Swap Index (3.995%) (52,736)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 1,500 BMA Swap Index (3.937%) (27,120)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
3/22/17 1,500 BMA Swap Index (3.666%) 15,154
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/06/19 1,300 BMA Swap Index (4.128%) (41,487)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 15 Year
Floating -- 7 Day BMA Swap Index,
10/20/19 1,000 BMA Swap Index (4.24%) (40,599)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,250 (4.132%) BMA Swap Index (9,076)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 1,250 (4.322%) BMA Swap Index 25,655
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,300 (4.200%) BMA Swap Index 2,354
- -----------------------------------------------------------------------------------------------------------------------------------
Total Pennsylvania Fund $(685,685)
- -----------------------------------------------------------------------------------------------------------------------------------
South Carolina Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 4,000 BMA Swap Index (1.945%) $(5,164)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 3,325 BMA Swap Index (3.444%) 20,203
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/09/14 3,325 BMA Swap Index (3.73%) (56,620)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/17/14 3,000 BMA Swap Index (4.1125%) (139,503)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 3,500 BMA Swap Index (4.043%) $(104,688)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 3,000 BMA Swap Index (3.995%) (79,104)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 2,000 BMA Swap Index (3.937%) (36,160)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,750 (4.132%) BMA Swap Index (12,707)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 1,750 (4.322%) BMA Swap Index 35,917
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,750 (4.200%) BMA Swap Index 3,168
- -----------------------------------------------------------------------------------------------------------------------------------
Total South Carolina Fund $(374,658)
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee Fund Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/09/14 2,850 BMA Swap Index (3.73%) $(48,532)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,500 (4.132%) BMA Swap Index (10,891)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 1,500 (4.322%) BMA Swap Index 30,786
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,500 (4.200%) BMA Swap Index 2,716
- -----------------------------------------------------------------------------------------------------------------------------------
Total Tennessee Fund $(25,921)
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 4,000 BMA Swap Index (1.945%) $(5,164)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/09/14 7,000 BMA Swap Index (3.73%) (119,200)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 5,000 BMA Swap Index (3.995%) (131,841)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 3,500 (4.322%) BMA Swap Index 71,834
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 3,500 (4.200%) BMA Swap Index 6,337
- -----------------------------------------------------------------------------------------------------------------------------------
Total Virginia Fund $(178,034)
- -----------------------------------------------------------------------------------------------------------------------------------
West Virginia Fund Fixed -- 2 Year
Floating -- 7 Day BMA Swap Index,
11/15/04 3,750 BMA Swap Index (1.945%) $(4,841)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
10/27/14 3,040 BMA Swap Index (3.444%) 18,471
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/09/14 3,040 BMA Swap Index (3.73%) (51,767)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/10/14 3,040 BMA Swap Index (3.576%) (13,606)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 10 Year
Floating -- 7 Day BMA Swap Index,
11/17/14 5,000 BMA Swap Index (4.1125%) (232,505)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
11/23/16 2,000 BMA Swap Index (4.33%) (116,300)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/14/16 3,000 BMA Swap Index (4.043%) (89,732)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/15/16 1,500 BMA Swap Index (4.071%) (50,195)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
12/16/16 3,000 BMA Swap Index (3.995%) (79,105)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
1/11/17 2,500 BMA Swap Index (3.937%) (45,200)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 12 Year
Floating -- 7 Day BMA Swap Index,
3/22/17 1,000 BMA Swap Index (3.666%) 10,102
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
10/27/34 1,600 (4.132%) BMA Swap Index (11,618)
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/09/34 1,600 (4.322%) BMA Swap Index 32,839
- -----------------------------------------------------------------------------------------------------------------------------------
Fixed -- 30 Year
BMA Swap Index, Floating -- 7 Day
11/10/34 1,600 (4.200%) BMA Swap Index 2,897
- -----------------------------------------------------------------------------------------------------------------------------------
Total West Virginia Fund $(630,560)
- -----------------------------------------------------------------------------------------------------------------------------------
At September 30, 2004, each fund had sufficient cash and/or securities to
cover any commitments under these contracts.
(8) RESTRICTED SECURITIES
Each fund may invest not more than 15% of its total assets in securities that
are subject to legal or contractual restrictions on resale. At September 30,
2004, the funds owned the following restricted securities, excluding securities
issued under Rule 144A, which may not be publicly sold without registration
under the Securities Act of 1933. Each fund does not have the right to demand
that such securities be registered. The value of these securities is determined
by valuations furnished by dealers or by a pricing service, or if not
available, in good faith at the direction of the Trustees.
DATE OF PAR
FUND DESCRIPTION ACQUISITION AMOUNT COST VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
Mississippi Fund Commonwealth of Puerto Rico, ROLS, FGIC, 9.23%, 2016 8/05/02 3,110,000 $4,023,905 $4,212,116
- -----------------------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2013 5/20/99 1,000,000 1,072,720 1,215,900
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA,
9.1574%, 2017 1/06/00 750,000 703,620 914,670
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2013 9/30/99 500,000 509,110 653,020
- -----------------------------------------------------------------------------------------------------------------------------------
$6,995,706
- -----------------------------------------------------------------------------------------------------------------------------------
New York Fund Commonwealth of Puerto Rico, ROLS, XLCA, 9.14%, 2017 10/22/01 1,350,000 $1,634,526 $1,803,600
- -----------------------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2014 5/20/99 500,000 531,950 600,140
- -----------------------------------------------------------------------------------------------------------------------------------
Niagra Falls, NY, Bridge Commission Toll Rev., RITES,
FGIC, 8.5721%, 2015 5/21/99 3,500,000 3,755,920 4,518,150
- -----------------------------------------------------------------------------------------------------------------------------------
Triborough Bridge & Tunnel Authority Rev., NY, RITES,
9.0623%, 2017 4/18/00 5,000,000 5,018,300 6,586,200
- -----------------------------------------------------------------------------------------------------------------------------------
$13,508,090
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina Fund Commonwealth of Puerto Rico, Highway & Transportation
Authority Rev., RITES, FSA, 10.1016%, 2018 2/26/99 5,425,000 $7,037,418 $7,842,489
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, RITES,
AMBAC, 10.0721%, 2018 5/26/00 6,500,000 6,552,130 9,254,830
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, ROLS, 8.868%, 2020 3/03/03 3,000,000 3,376,680 3,487,860
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, ROLS, MBIA,
8.868%, 2019 3/03/03 5,000,000 5,726,600 5,878,900
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2012 9/30/99 1,500,000 1,471,890 1,993,140
- -----------------------------------------------------------------------------------------------------------------------------------
$28,457,219
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Fund Commonwealth of Puerto Rico, ROLS, FGIC, 9.23%, 2015 8/05/02 1,000,000 $1,292,920 $1,348,960
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLS, XLCA, 9.14%, 2017 10/22/01 1,000,000 1,210,760 1,336,000
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation
Authority, ROLS, MBIA, 9.23%, 2020 4/25/03 1,500,000 1,970,477 2,041,080
- -----------------------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2014 5/20/99 2,170,000 2,308,663 2,604,608
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2013 9/30/99 500,000 509,110 653,020
- -----------------------------------------------------------------------------------------------------------------------------------
$7,983,668
- -----------------------------------------------------------------------------------------------------------------------------------
South Carolina Fund Commonwealth of Puerto Rico, RITES, 9.1213%, 2018 10/05/00 2,000,000 $2,066,433 $2,486,320
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, 9.1213%, 2019 10/05/00 1,750,000 1,794,108 2,165,415
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, MBIA, 9.6213%, 2020 3/30/00 2,000,000 2,043,232 2,568,480
- -----------------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, RITES, FSA,
10.1651%, 2016 1/06/00 850,000 882,124 1,105,629
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority, RITES, FSA,
8.5596%, 2015 9/30/99 1,000,000 976,500 1,179,010
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2013 9/30/99 1,375,000 1,398,793 1,795,805
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2019 3/31/99 1,300,000 1,470,326 1,724,814
- -----------------------------------------------------------------------------------------------------------------------------------
$13,025,473
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia Fund Guam Power Authority Rev., RITES, AMBAC, 8.5918%, 2015 5/20/99 1,010,000 $1,058,642 $1,205,435
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority, RITES, FSA,
9.6213%, 2017 8/28/00 2,500,000 2,770,600 3,295,800
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority, RITES, FSA,
9.3713%, 2019 8/28/00 1,270,000 1,345,006 1,578,610
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority, RITES, FSA,
8.7213%, 2020 8/28/00 1,250,000 1,240,075 1,500,725
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA,
10.1651%, 2016 1/6/00 1,105,000 1,148,670 1,437,318
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, RITES, FSA,
9.1574%, 2017 1/6/00 615,000 576,968 750,029
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2013 9/30/99 2,000,000 2,036,440 2,612,100
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., RITES, AMBAC,
8.8516%, 2016 3/31/99 500,000 560,030 664,360
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority Rev., ROLS, 8.18%, 2021 3/12/01 1,390,000 1,508,372 1,574,397
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority Rev., ROLS, 8.18%, 2023 3/12/01 1,520,000 1,612,568 1,679,235
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia Resources Authority Rev., ROLS, 8.18%, 2033 3/12/01 2,510,000 2,586,057 2,628,673
- -----------------------------------------------------------------------------------------------------------------------------------
$18,926,682
- -----------------------------------------------------------------------------------------------------------------------------------
West Virginia Fund Commonwealth of Puerto Rico, Public Improvement, RITES,
MBIA, 9.6213%, 2019 3/30/00 3,000,000 $3,090,720 $3,852,720
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico, Municipal Finance Agency, RITES, FSA,
9.1574%, 2017 1/6/00 900,000 844,344 1,097,604
- -----------------------------------------------------------------------------------------------------------------------------------
West Virginia Building Commission, "A", RITES, AMBAC,
8.7926%, 2018 5/5/99 4,520,000 4,888,560 5,791,566
- -----------------------------------------------------------------------------------------------------------------------------------
West Virginia Building Commission, "B", RITES, AMBAC,
8.7926%, 2018 5/5/99 1,250,000 1,351,925 1,601,650
- -----------------------------------------------------------------------------------------------------------------------------------
$12,343,540
- -----------------------------------------------------------------------------------------------------------------------------------
At September 30, 2004, restricted securities constituted the following percentages of each fund's net assets:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
7.55% 7.23% 7.80% 7.20% 7.90% 5.81% 8.15%
- -----------------------------------------------------------------------------------------------------------------------------------
(9) CONCENTRATION OF CREDIT RISK
Since each fund invests a substantial portion of its assets in issuers located
in one state, it will be more susceptible to factors adversely affecting
issuers of that state than would be a comparable tax-exempt mutual fund that
invests nationally. The risk associated with such factors is mitigated by the
fact that a percentage of securities in a portfolio of investments are backed
by letters of credit or bond insurance of various financial institutions and
financial guaranty assurance agencies. At September 30, 2004, the percentage of
holdings that carried such enhancements were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
68.60% 43.62% 47.90% 67.90% 64.65% 56.88% 38.13% 77.64%
- -----------------------------------------------------------------------------------------------------------------------------------
For each fund, the greatest exposure to any one institution or agency did not exceed the following percentages of total
investments as of September 30, 2004:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
18.83% 15.68% 16.18% 19.50% 20.17% 22.07% 15.35% 31.13%
- -----------------------------------------------------------------------------------------------------------------------------------
(10) LEGAL PROCEEDINGS
On March 31, 2004, MFS settled an administrative proceeding with the Securities
and Exchange Commission ("SEC") regarding disclosure of brokerage allocation
practices in connection with MFS fund sales (the term "MFS funds" means the
open-end registered management investment companies sponsored by MFS). Under
the terms of the settlement, in which MFS neither admitted nor denied any
wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50
million in penalty to certain MFS funds, pursuant to a plan developed by an
independent distribution consultant. The brokerage allocation practices which
were the subject of this proceeding were discontinued by MFS in November 2003.
The agreement with the SEC is reflected in an order of the SEC. Pursuant to the
SEC order, on July 28, 2004, MFS transferred these settlement amounts to the
SEC, and those MFS funds entitled to these settlement amounts accrued an
estimate of their pro rata portion of these amounts. Once the final
distribution plan is approved by the SEC, these amounts will be distributed by
the SEC to the affected MFS funds. The SEC settlement order states that MFS
failed to adequately disclose to the Boards of Trustees and to shareholders of
the MFS funds the specifics of its preferred arrangements with certain
brokerage firms selling MFS fund shares. The SEC settlement order states that
MFS had in place policies designed to obtain best execution of all MFS fund
trades. As part of the settlement, MFS retained an independent compliance
consultant to review the completeness of its current policies and practices
regarding disclosure to MFS fund trustees and to MFS fund shareholders of
strategic alliances between MFS or its affiliates and broker-dealers and other
financial advisers who support the sale of MFS fund shares.
In addition, in February, 2004, MFS reached agreement with the SEC, the New
York Attorney General ("NYAG") and the Bureau of Securities Regulation of the
State of New Hampshire ("NH") to settle administrative proceedings alleging
false and misleading information in certain MFS retail fund prospectuses
regarding market timing and related matters (the "February Settlements"). These
regulators alleged that prospectus language for certain MFS retail funds was
false and misleading because, although the prospectuses for those funds in the
regulators' view indicated that the MFS funds prohibited market timing, MFS did
not limit trading activity in 11 domestic large cap stock, high grade bond and
money market funds. MFS' former Chief Executive Officer, John W. Ballen, and
former President, Kevin R. Parke, also reached agreement with the SEC in which
they agreed to, among other terms, monetary fines and temporary suspensions
from association with any investment adviser or registered investment company.
Messrs. Ballen and Parke have resigned their positions with, and will not be
returning to, MFS and the MFS funds. Under the terms of the February
Settlements, MFS and the executives neither admit nor deny wrongdoing.
Under the terms of the February Settlements, a $225 million pool has been
established for distribution to shareholders in certain MFS retail funds, which
has been funded by MFS and of which $50 million is characterized as a penalty.
This pool will be distributed in accordance with a methodology developed by an
independent distribution consultant in consultation with MFS and the Board of
Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further
agreed with NYAG to reduce its management fees in the aggregate amount of
approximately $25 million annually over the next five years, and not to
increase certain management fees during this period. MFS has also paid an
administrative fine to NH in the amount of $1 million, which will be used for
investor education purposes (NH retained $250,000 and $750,000 was contributed
to the North American Securities Administrators Association's Investor
Protection Trust). In addition, under the terms of the February Settlements,
MFS is in the process of adopting certain governance changes and reviewing its
policies and procedures.
Since December 2003, MFS, Sun Life Financial Inc., various MFS funds, the
Trustees of these MFS funds, and certain officers of MFS have been named as
defendants in multiple lawsuits filed in federal and state courts. The lawsuits
variously have been commenced as class actions or individual actions on behalf
of investors who purchased, held or redeemed shares of the MFS funds during
specified periods, as class actions on behalf of participants in certain
retirement plan accounts, or as derivative actions on behalf of the MFS funds.
The lawsuits relating to market timing and related matters have been
transferred to and consolidated before the United States District Court for the
District of Maryland, as part of a multi-district litigation of market timing
and related claims involving several other fund complexes (In re Mutual Funds
Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam, PIMCO),
No. 1:04-md-15863 (transfer began March 19, 2004)). Four lawsuits alleging
improper brokerage allocation practices and excessive compensation are pending
in the United States District Court for the District of Massachusetts (Forsythe
v. Sun Life Financial Inc., et al., No. 04cv10584 (GAO) (March 25, 2004);
Eddings v. Sun Life Financial Inc., et al., No. 04cv10764 (GAO) (April 15,
2004); Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No.
04cv11458 (GAO) (May 4, 2004); and Koslow v. Sun Life Financial Inc., et al.,
No. 04cv11019 (GAO) (May 20, 2004)). The lawsuits generally allege that some or
all of the defendants (i) permitted or acquiesced in market timing and/or late
trading in some of the MFS funds, inadequately disclosed MFS' internal policies
concerning market timing and such matters, and received excessive compensation
as fiduciaries to the MFS funds, or (ii) permitted or acquiesced in the
improper use of fund assets by MFS to support the distribution of MFS fund
shares and inadequately disclosed MFS' use of fund assets in this manner. The
actions assert that some or all of the defendants violated the federal
securities laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as
well as fiduciary duties and other violations of common law. The lawsuits seek
unspecified damages. Insofar as any of the actions is appropriately brought
derivatively on behalf of any of the MFS funds, any recovery will inure to the
benefit of the MFS funds. The defendants are reviewing the allegations of the
multiple complaints and will respond appropriately. Additional lawsuits based
on similar allegations may be filed in the future.
Any potential resolution of these matters may include, but not be limited to,
judgments or settlements for damages against MFS, the MFS funds, or any other
named defendant. As noted above, as part of the regulatory settlements, MFS has
established a restitution pool in the amount of $225 million to compensate
certain shareholders of the MFS retail funds for damages that they allegedly
sustained as a result of market timing or late trading in certain of the MFS
retail funds, and transferred $50 million for distribution to affected MFS
funds to compensate those funds based upon the amount of brokerage commissions
allocated in recognition of MFS fund sales. It is not clear whether these
amounts will be sufficient to compensate shareholders for all of the damage
they allegedly sustained, whether certain shareholders or putative class
members may have additional claims to compensation, or whether the damages that
may be awarded in any of the actions will exceed these amounts. In the event
the MFS funds incur any losses, costs or expenses in connection with such
lawsuits, the Boards of Trustees of the affected MFS funds may pursue claims on
behalf of such funds against any party that may have liability to the funds in
respect thereof.
Review of these matters by the independent Trustees of the MFS funds and their
counsel is continuing. There can be no assurance that these regulatory actions
and lawsuits, or the adverse publicity associated with these developments, will
not result in increased fund redemptions, reduced sales of fund shares, or
other adverse consequences to the MFS funds.
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TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
- -----------------------------------------------------------------------------------------------------------------------------------
The Trustees and officers of the Trust, as of November 10, 2004, are listed below, together with their principal occupations
during the past five years. (Their titles may have varied during that period.) The address of each Trustee and officer is 500
Boylston Street, Boston, Massachusetts 02116.
POSITION(s) HELD TRUSTEE/OFFICER PRINCIPAL OCCUPATIONS & OTHER DIRECTORSHIPS(2)
NAME, DATE OF BIRTH WITH FUND SINCE(1) DURING THE PAST FIVE YEARS
- ------------------- ---------------- --------------- -----------------------------------------------
INTERESTED TRUSTEES
Robert J. Manning(3) Trustee and President February 2004 Massachusetts Financial Services Company, Chief
(born 10/20/63) Executive Officer, President, Chief Investment Officer
and Director
Robert C. Pozen(3) Trustee February 2004 Massachusetts Financial Services Company, Chairman
(born 08/08/46) (since February 2004); Harvard Law School (education),
John Olin Visiting Professor (since July 2002);
Secretary of Economic Affairs, The Commonwealth of
Massachusetts (January 2002 to December 2002); Fidelity
Investments, Vice Chairman (June 2000 to December 2001);
Fidelity Management & Research Company (investment
adviser), President (March 1997 to July 2001); The Bank
of New York (financial services), Director; Bell Canada
Enterprises (telecommunications), Director; Telesat
(satellite communications), Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern Enterprises (diversified
(born 05/01/36) Trustees services company), Chairman, Trustee and Chief Executive
Officer (until November 2000)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Chief of Cardiac Surgery;
(born 03/11/37) Harvard Medical School, Professor of Surgery
David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining products and service
(born 05/30/42) provider), Vice Chairman/Director (since April 2001);
Encinitos Ventures (private investment company),
Principal (1997 to April 2001); Lincoln Electric
Holdings, Inc. (welding equipment manufacturer),
Director; Southwest Gas Corporation (natural gas
distribution company), Director
William R. Gutow Trustee December 1993 Private investor and real estate consultant; Capitol
(born 09/27/41) Entertainment Management Company (video franchise), Vice
Chairman
Amy B. Lane Trustee January 2004 Retired; Merrill Lynch & Co., Inc., Managing Director,
(born 02/08/53) Investment Banking Group (1997 to February 2001);
Borders Group, Inc. (book and music retailer), Director;
Federal Realty Investment Trust (real estate investment
trust), Trustee
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys), Partner
(born 06/23/35)
William J. Poorvu Trustee August 1982 Private investor; Harvard University Graduate School of
(born 04/10/35) Business Administration, Class of 1961 Adjunct Professor
in Entrepreneurship Emeritus; CBL & Associates
Properties, Inc. (real estate investment trust),
Director
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (acquisition planning
(born 09/23/38) specialists), President; Wellfleet Investments (investor
in health care companies), Managing General Partner
(since 1993); Cambridge Nutraceuticals (professional
nutritional products), Chief Executive Officer (until
May 2001)
Elaine R. Smith Trustee February 1992 Independent health care industry consultant
(born 04/25/46)
OFFICERS
Robert J. Manning(3) President and Trustee February 2004 Massachusetts Financial Services Company, Chief
(born 10/20/63) Executive Officer, President, Chief Investment Officer
and Director
James R. Bordewick, Jr.(3) Assistant Secretary and September 1990 Massachusetts Financial Services Company, Senior Vice
(born 03/06/59) Assistant Clerk President and Associate General Counsel
Jeffrey N. Carp(3) Secretary and Clerk September 2004 Massachusetts Financial Services Company, Senior Vice
(born 12/01/56) President, General Counsel and Secretary (since April
2004); Hale and Dorr LLP (law firm) (prior to April
2004)
James F. DesMarais(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Assistant
(born 03/09/61) Assistant Clerk General Counsel
Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial Services Company, Vice President
(born 10/01/53) (since April 2003); Brown Brothers Harriman & Co.,
Senior Vice President (November 2002 to April 2003); ING
Groep N.V./Aeltus Investment Management, Senior Vice
President (prior to November 2002)
Robert R. Flaherty(3) Assistant Treasurer August 2000 Massachusetts Financial Services Company, Vice President
(born 09/18/63) (since August 2000); UAM Fund Services, Senior Vice
President (prior to August 2000)
Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial Services Company, Senior Vice
(born 08/29/58) President (since July 2002); The Bank of New York,
Senior Vice President (September 2000 to July 2002);
Lexington Global Asset Managers, Inc., Executive Vice
President and Chief Financial Officer (prior to
September 2000); Lexington Funds, Chief Financial
Officer (prior to September 2000)
Brian T. Hourihan(3) Assistant Secretary and September 2004 Massachusetts Financial Services Company, Vice
(born 11/11/64) Assistant Clerk President, Senior Counsel and Assistant Secretary (since
June 2004); Affiliated Managers Group, Inc., Chief Legal
Officer/Centralized Compliance Program (January to April
2004); Fidelity Research & Management Company, Assistant
General Counsel (prior to January 2004)
Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial Services Company, Vice President
(born 11/13/57)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance services),
(born 03/07/44) Compliance Officer Principal (since June 2004); CRA Business Strategies
Group (consulting services), Executive Vice President
(April 2003 to June 2004); David L. Babson & Co.
(investment adviser), Managing Director, Chief
Administrative Officer and Director (February 1997 to
March 2003)
James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial Services Company, Senior Vice
(born 06/12/60) President
- ----------------
(1) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously since appointment unless
indicated otherwise.
(2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public
companies").
(3) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is
the principle federal law governing investment companies like the fund. The address of MFS is 500 Boylston Street, Boston,
Massachusetts 02116.
The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are not elected for fixed
terms. The Trust will hold a shareholders' meeting in 2005 and at least once every five years thereafter to elect Trustees. Each
Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death,
resignation, retirement or removal.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the
investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. Each Trustee serves as a
board member of 99 funds within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available without charge upon
request by calling 1-800-225-2606.
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 225 Franklin Street, Boston, MA 02110
02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA
02116-3741
PORTFOLIO MANAGERS
Michael L. Dawson
Geoffrey L. Schechter
QUARTERLY PORTFOLIO DISCLOSURE
Beginning with the fund's first and third fiscal quarters following this report, the fund will file a complete schedule of
portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal
year on Form N-Q. The fund's Form N-Q may be reviewed and copied at the:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund's
Form N-Q is available on the EDGAR database on the Commission's Internet website at http://www.sec.gov, and copies of this
information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at mfs.com.
- -------------------------------------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS
- -------------------------------------------------------------------------------
YOUR GOALS ARE IMPORTANT
MFS offers a complete range of investments and investment services to address
specific financial needs over time. When your investing goals change, you can
easily stay with MFS for the products you need, when you need them. Whether
you're investing for college or retirement expenses or for tax management or
estate planning, MFS will be there.
Ask your investment professional how MFS can help you move toward the goals
you've set.
MFS FAMILY OF FUNDS(R)
More than 50 portfolios offer domestic and international equity and fixed-
income investments across the full risk spectrum
VARIABLE ANNUITIES
A selection of annuity products with advantages for building and preserving
wealth
MFS 401(k) AND IRA SUITES
Retirement plans for businesses and individuals
MFS COLLEGE SAVINGS PLANS
Investment products to help meet education expenses
MFS PRIVATE PORTFOLIO SERVICES
Investment advisory services that provide custom products for high-net-worth
individuals
Variable annuities are offered through MFS/Sun Life Financial Distributors,
Inc.
A PROSPECTUS FOR ANY MFS PRODUCT CAN BE OBTAINED FROM YOUR INVESTMENT
PROFESSIONAL. YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING AS IT
CONTAINS COMPLETE INFORMATION ON THE FUND'S INVESTMENT OBJECTIVE(s), THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THE FUND, THE FEES, CHARGES, AND EXPENSES
INVOLVED. THESE ELEMENTS, AS WELL AS OTHER INFORMATION CONTAINED IN THE
PROSPECTUS, SHOULD BE CONSIDERED CAREFULLY BEFORE INVESTING.
CONTACT INFORMATION
INVESTOR INFORMATION
For information on MFS mutual funds, call your investment professional or, for
an information kit, call toll free: 1-800-225-2606 any business day from 8 a.m.
to 8 p.m. Eastern time.
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the About MFS section of mfs.com or by visiting the SEC's Web site at
http://www.sec. gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Type of Information Phone number Hours, Eastern Time
---------------------------------------------------------------------------
General information 1-800-225-2606 8 a.m. to 8 p.m.,
any business day
---------------------------------------------------------------------------
Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m.,
any business day
---------------------------------------------------------------------------
Shares prices, account 1-800-MFS-TALK
balances exchanges (1-800-637-8255) 24 hours a day, 365
or stock and bond outlooks touch-tone required days a year
---------------------------------------------------------------------------
WORLD WIDE WEB
Go to MFS.COM for a clear view of market events, investor education, account
access, and product and performance insights.
Go paperless with EDELIVERY: Join your fellow shareholders who are already
taking advantage of this great new benefit from MFS. With eDelivery, we send
you prospectuses, reports, and proxies electronically. You get timely
information without mailbox clutter (and help your fund save printing and
postage costs).
SIGN-UP instructions: If your account is registered with us, go to mfs.com, log
in to your account via MFS Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or through a
retirement plan, MFS TALK, MFS Access, and eDelivery may not be available to
you.
[logo] M F S(R)
INVESTMENT MANAGEMENT
(C) 2004 MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MST-B-SEM-11/04 38M
MFS(R) Mutual Funds
SEMIANNUAL REPORT 9/30/04
MFS(R) MUNICIPAL INCOME FUND
A path for pursuing opportunity
[graphic omitted]
[logo] M F S(R)
INVESTMENT MANAGEMENT
- -------------------------------------------------------------------------------
MFS(R) PRIVACY POLICY: A COMMITMENT TO YOU
- -------------------------------------------------------------------------------
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about every MFS investment product and service that we
offer and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information;
we maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone except as permitted by law. We may share information
with companies or financial institutions that perform marketing services on our
behalf or to other financial institutions with which we have joint marketing
arrangements.
Access to your nonpublic personal information is limited to appropriate
personnel who provide products, services, or information to you. We maintain
physical, electronic, and procedural safeguards that comply with applicable
federal regulations.
If you have any questions about MFS' privacy policy, please call 1-800-225-2606
any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
- ----------------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK OR CREDIT UNION GUARANTEE NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUIF
- ----------------------------------------------------------------------------------------
MFS(R) MUNICIPAL INCOME FUND
The fund seeks as high a level of current income exempt from federal income tax
as is considered consistent with prudent investing, while seeking protection of
shareholders" capital.
THE 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.
TABLE OF CONTENTS
- ----------------------------------------------------
MFS PRIVACY POLICY
- ----------------------------------------------------
LETTER FROM THE CEO 1
- ----------------------------------------------------
MFS ORIGINAL RESEARCH(R) 5
- ----------------------------------------------------
MANAGEMENT REVIEW 6
- ----------------------------------------------------
PORTFOLIO COMPOSITION 10
- ----------------------------------------------------
PERFORMANCE SUMMARY 11
- ----------------------------------------------------
EXPENSE TABLE 14
- ----------------------------------------------------
PORTFOLIO OF INVESTMENTS 16
- ----------------------------------------------------
FINANCIAL STATEMENTS 36
- ----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 47
- ----------------------------------------------------
TRUSTEES AND OFFICERS 59
- ----------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS 63
- ----------------------------------------------------
CONTACT INFORMATION BACK COVER
- --------------------------------------------------------------------------------
LETTER FROM THE CEO
- --------------------------------------------------------------------------------
Dear Shareholders,
[Photo of Robert J. Manning]
For most investors, the main factor in determining long-term success is asset
allocation - how they spread their money among stocks, bonds, and cash. In
fact, the total returns of investors may be more influenced by their asset
allocation strategy than by their security selection within each asset class.
The principle behind asset allocation is simple: by diversifying across a
variety of types of securities, investors reduce the overall risk of their
portfolio because gains in one area are likely to offset losses in another.
One of the dangers of not having an asset allocation plan is the temptation to
simply chase performance, by moving money into whichever asset class appears
to be outperforming at the moment. The problem with this approach is that by
the time a particular area of the market comes into favor, investors may have
already missed some of the best performance. We would suggest that one way to
benefit from swings in the market is to acquire a diversified portfolio so
that investors hold a range of asset classes before the market swings in their
direction.
UNDERSTAND YOUR EMOTIONS
It usually takes a bear market for people to appreciate the benefits of
diversification. At MFS, we believe proper asset allocation is important in
all market environments. But we understand that there are emotional components
of investment decisions that sometimes keep investors from achieving their
long term goals. The three common behaviors that negatively impact investment
decisions are overconfidence, looking backwards, and loss aversion.
o Overconfidence. After experiencing gains in the market, particularly during
a bull market, investors have a natural tendency to overestimate their own
abilities. During the global bull market of the late 1990s, for example, a
large number of investors traded their own stocks and made significant
profits. However, most of these same investors later handed back those
profits - and then some - because they focused more on short-term blips in
the market and less on the fundamental factors that affect a company's
long-term prospects.
o Looking backwards. Although security prices are determined by expectations
about the future, many investors make choices based on the recent past.
Investors who have achieved momentary success in the market tend to take on
too much risk, believing that better- than-average returns can be easily
duplicated. On the other hand, those who have had negative experiences tend
to become overly cautious and take on too little risk. Recent historical
experience tends to dictate an investor's frame of reference and may lead
to irrational decisions.
o Loss aversion. Simply put, investors would rather avoid the immediate pain
of losses than enjoy the future pleasure of gains. As a result, some
investors tend to overreact to short-term downturns in the market by
seeking to mitigate their losses, rather than remaining invested to benefit
from the long-term growth potential of the stock and bond markets.
THINK LIKE A PROFESSIONAL INVESTOR
Asset allocation helps reduce the emotional factors that tend to affect the
long-term returns of investors. Professional investors - those who manage
assets for money management firms, pension funds, and endowments - have tended
to outperform the average retirement investor because they focus on asset
allocation. For example, the investment performance of the average 401(k)
participant in the United States has lagged these professional investors by
more than two percentage points a year, on average, over the past 10 years.(1)
We think asset allocation is one of the most important decisions for
investors. A study of the performance of 91 large U.S. corporate pension plans
with assets of more than $100 million over a 10-year period beginning in 1974
concluded that asset allocation policies accounted for 93.6% of their returns,
while individual security selection and the timing of their investments
accounted for only 6.4% for their overall performance.(2)
Professional investors target a realistic level of return based on the amount
of risk they are willing to take, then set allocations to meet their goals. On
average, U.S. professional investors allocate 35% to 40% of their assets to
U.S. equity stocks; 20% to 30% to fixed income issues; 10% to non-U.S. stocks;
and between 10% and 20% to other investment classes such as real estate.(3)
And within those categories, they hold a broad range of styles and asset
classes.
In contrast, U.S. 401(k) participants who held company stock in their
retirement plans at the end of 2002 had roughly 42% of their retirement assets
in company stock while the rest was allocated to either growth or value stock
funds.(4) These participants virtually ignored the broad range of equity,
fixed-income, and non-U.S. offerings provided by their retirement plans.
ALLOCATE, DIVERSIFY, REBALANCE
We recommend working with a professional adviser to find an optimal mix of
investments based on your individual goals. In our view, a disciplined asset
allocation strategy is composed of three simple steps: allocate, diversify
and rebalance.
o Allocate. Investors should work with their financial adviser to specify
their long-term goals and tolerance for risk. Then investors should
allocate their assets across the major asset classes - stocks, bonds, and
cash - to help them pursue an investment return that is consistent with
their risk tolerance level.
o Diversify. By diversifying their assets, investors trade some performance
in the top performing categories for a more predictable and stable
portfolio. At the same time, investors should include different investment
styles and market capitalizations of stocks as well as a range of fixed
income investments. Because security subclasses tend to move in and out of
favor during various market and economic environments, a broad portfolio
increases the benefits of diversification.
o Rebalance. We suggest that investors consult with their professional
advisers periodically to rebalance their portfolios to maintain the
percentages that they have dedicated to each asset class. Allocations can
shift as markets rise and fall, making for a riskier or more conservative
portfolio than an investor originally intended. For example, a portfolio of
50% U.S. stocks and 50% U.S. bonds at the start of 2000 would have shifted
to 32% U.S. stocks and 68% U.S. bonds at the end of 2002 because of the
weak stock market.(5)
In short, these three simple concepts - allocate, diversify and rebalance -
help take emotion out of the investment process and help prevent investors
from trying to outguess the market. An asset allocation strategy cannot turn a
down market cycle into a good one, but it is an invaluable tool to manage risk
and keep investors on track toward reaching their long-term investment goals.
A DISCIPLINED INVESTMENT PROCESS IS PARAMOUNT
Disciplined diversification has helped investors pursue long-term, above-
average results through the years. Since 1924, when we invented the mutual
fund, MFS(R) has strived to give investors the products and tools they need to
maintain well-diversified portfolios in part by providing a variety of
products in each asset class. We recommend developing a comprehensive
financial plan with an investment advisor who is familiar with your risk
tolerance, your individual goals, and your financial situation.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
October 15, 2004
Asset allocation and diversification can not guarantee a profit.
The opinions expressed in this letter are those of MFS, and no forecasts can
be guaranteed.
(1) Source: Watson Wyatt
(2) "Determinants of Portfolio Performance," in Financial Analysts Journal,
January/February 1995, by
Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower
(3) Source: Greenwich Associates
(4) Source: Hewitt Associates
(5) Source: Lipper Inc.
- --------------------------------------------------------------------------------
MFS ORIGINAL RESEARCH(R)
- --------------------------------------------------------------------------------
THE MFS(R) DIFFERENCE
For 80 years MFS has been offering investors clear paths to pursuing specific
investment objectives. Today, millions of individuals and thousands of
institutions all over the world look to MFS to manage their assets with
insight and care.
Our success, we believe, has to do with the fact that we see investors as
people with plans, not just dollars to invest.
When you invest with MFS, you invest with a company dedicated to helping you
realize your long-term financial goals.
INVESTORS CHOOSE MFS FOR OUR
o global asset management expertise across all asset classes
o time-tested money management process for pursuing consistent results
o full spectrum of investment products backed by MFS Original Research(R)
o resources and services that match real-life needs
TURNING INFORMATION INTO OPPORTUNITY
Sound investments begin with sound information. MFS has been doing its own
research and analyzing findings in-house for decades. The process we use to
uncover opportunity is called MFS Original Research(R).
MFS ORIGINAL RESEARCH INVOLVES
o meeting with the management of 3,000 companies each year to assess their
business plans and the managers' ability to execute those plans
o making onsite visits to more than 2,000 companies annually to gain
first-hand knowledge of their operations and products
o analyzing financial statements and balance sheets
o talking extensively with companies' customers and competitors
o developing our own proprietary estimates of companies' earnings
- --------------------------------------------------------------------------------
MANAGEMENT REVIEW
- --------------------------------------------------------------------------------
MARKET ENVIRONMENT
In late 2003 and early 2004, before the period began, weakness in both
corporate spending and job creation increased the perceived risk that the
economic recovery could falter. This caused investors to push up long-term
bond prices because high-quality bonds are seen as a refuge in times of
economic concern. Interest rates, which move in the opposite direction of bond
prices, retreated as economists pushed off the day when they believed the U.S.
Federal Reserve Board (the Fed) would have to raise short-term rates.
In early April, however, just as the period began, the U.S. government
reported that job growth in March had been significantly higher than it had
been for years. Jobs reports for the next few months also came in strong.
Driven in part by rocketing oil prices, inflation began to creep up as well,
after having been dormant for some time. These factors, in our view, led
investors to conclude that a Fed rate increase could be imminent; interest
rates across the yield curve headed upward. And in fact the Fed raised rates
for the first time in four years on June 30 and hiked them again on August 10
and September 21.
But while the Fed seemed committed to a course of slowly raising short-term
rates, in the second half of the period we believe several factors caused
long-term rates to retreat. Job growth faltered. Economic growth, as measured
by gross domestic product (GDP) growth, slowed in the second quarter. Excess
production capacity, which we feel has held back investments in new plants and
equipment for some years, did not come down as quickly as many observers had
hoped. In addition, we feel geopolitical concerns about the Iraq situation and
potential terrorist attacks sparked a "flight to quality" by some investors
seeking the safety of U.S. Treasuries and other high-quality issues.
(Principal and interest of U.S. Treasury securities are guaranteed by the U.S.
government if held to maturity.)
For the period as a whole, the net effect was that interest rates on the short
end of the yield curve moved up significantly more than rates on the long end,
causing the yield curve to flatten. (A yield curve for bonds shows the
relationship between yield and time to maturity. In a majority of market
environments, longer-maturity bonds offer higher yields but are more exposed
to duration risk - the risk that a change in interest rates may adversely
affect a bond's price.) From March 31 through September 30, the yield on the
two-year Treasury bond rose 1.04%; five-year Treasury yields climbed 0.59%;
10-year Treasury yields went up 0.28%; and 30-year Treasury yields increased
just 0.12%. Municipal bond rates, as measured by "AAA"-rated general
obligation bonds tracked by Thomson Municipal Market Data, followed a similar
path with one exception. Municipal rates in the so-called "belly" of the yield
curve - the 15- to 20-year area - declined slightly, causing bonds in that
area to rise modestly in price.
CONTRIBUTORS TO PERFORMANCE
The portfolio's positioning on the yield curve was a strong contributor to
relative performance. Compared with our benchmark, the Lehman Brothers
Municipal Bond Index (the Lehman Index), the fund was more heavily weighted in
bonds on the long end of the yield curve - bonds with 10 to 30 years remaining
to maturity - and underweighted in bonds on the short end of the curve.
On a relative basis, our overweighting in longer-maturity bonds helped during
the period because long-term municipal rates either rose less than short-term
rates, or, in the 15- to 20-year part of the curve, declined slightly. Longer-
term bonds in the belly of the curve therefore went up in price, while other
longer-term bonds experienced smaller price declines than short-term bonds.
Conversely, bonds on the short end of the curve suffered the worst price
declines as they experienced the largest yield increases, so it helped to be
underweighted in that area.
In the area of credit quality, performance benefited from the fund's relative
overweighting in high-yield bonds during a period in which high yield bonds
outperformed. The fund had a larger position in "BBB"-rated debt than the
Lehman Index. In addition, the fund had some holdings in below-investment-
grade debt (bonds rated lower than BBB), whereas the index does not contain
bonds rated below BBB.
An overweighting in health care bonds also helped relative results as that
sector outperformed during the period. According to our research, health care
providers in general benefited from strong revenue growth driven by a
combination of higher payments from HMOs, favorable Medicare and Medicaid
reimbursement rates, and the containment of cost pressures from labor and
insurance companies. Within the sector, our specific bond selection also
boosted relative results. One area of opportunity, in our view, has been debt
issued by rural hospitals that have limited competition and a dominant market
share.
Security selection in the utilities sector aided relative performance as well.
As the Enron bankruptcy and its aftermath became more distant memories, we
believe investor confidence in the sector continued to revive. Our focus on
traditional regulated utilities and our tendency to avoid firms with
significant energy trading exposure proved positive for the fund.
DETRACTORS FROM PERFORMANCE
Duration - a measure of the fund's sensitivity to changes in interest rates -
detracted modestly from relative performance during the six-month period. In
most market environments, we strive to be neutral in duration relative to our
Lipper peers (other general municipal debt funds) because we believe that
trying to predict the direction of interest rates is a relatively risky
investment tactic. Our strategy, however, may sometimes result in the fund
being longer or shorter in duration relative to its benchmark, the Lehman
Index. This may occur because the Lehman Index is a national index composed of
over 40,000 individual issues across the municipal bond spectrum, whereas this
fund and the funds in our peer group invest within a smaller investment
universe. For that reason, the characteristics of this fund and our peers will
not always match those of the broader Lehman Index. (We also note that it is
not possible to invest in the Lehman Index.)
During the period, in fact, our strategy of striving to be duration-neutral
relative to our peers led to the fund being long in duration - i.e., more
sensitive to interest rate changes - relative to the Lehman Index. In a period
when rates rose and bond prices retreated, that longer duration stance hurt
performance relative to our benchmark. Most of that negative effect on results
occurred in the first half of the period, as we later shortened duration and
actually ended the period with a lower duration than our benchmark.
Respectfully,
/s/ Michael L. Dawson /s/ Geoffrey L. Schechter
Michael L. Dawson Geoffrey L. Schechter
Portfolio Manager Portfolio Manager
The views expressed in this report are those of the portfolio managers only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market and
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or as an indication of
trading intent on behalf of any MFS fund. References to specific securities are
not recommendations of such securities and may not be representative of any MFS
fund's current or future investments.
- -------------------------------------------------------------------------------
Visit mfs.com for our latest economic and investment outlook.
o Under Updates & Announcements, click Week in Review for a summary of recent
investment-related news.
o From Week in Review, link to MFS Global Perspective for our current view of
the world.
- -------------------------------------------------------------------------------
-----------------------------------------------
PORTFOLIO COMPOSITION
-----------------------------------------------
-----------------------------------------------
PORTFOLIO STRUCTURE
-----------------------------------------------
Bonds 99.1%
Cash & Other Net Assets 0.9%
-----------------------------------------------
TOP 5 BOND MARKET INDUSTRIES*
-----------------------------------------------
Healthcare/Hospitals 19.0%
-----------------------------------------------
Municipal General Obligations/Schools 8.9%
-----------------------------------------------
Municipal General Obligations/GP 6.9%
-----------------------------------------------
Municipal Owned Utilities 6.4%
-----------------------------------------------
State and Local Agencies 6.8%
-----------------------------------------------
-----------------------------------------------
CREDIT QUALITY**
-----------------------------------------------
AAA 36.7%
-----------------------------------------------
AA 10.4%
-----------------------------------------------
A 13.4%
-----------------------------------------------
BBB 19.9%
-----------------------------------------------
BB 3.9%
-----------------------------------------------
B 1.4%
-----------------------------------------------
CCC 0.6%
-----------------------------------------------
Not Rated 13.2%
-----------------------------------------------
Other 0.5%
-----------------------------------------------
-----------------------------------------------
PORTFOLIO FACTS
-----------------------------------------------
Average Duration 7.0
-----------------------------------------------
Average Life 15.3 Yrs.
-----------------------------------------------
Average Maturity 16.7 Yrs.
-----------------------------------------------
Average Quality A+
-----------------------------------------------
Average Quality Short Term Bonds A-1
-----------------------------------------------
Percentages are based on net assets as of 9/30/04.
* For purposes of this graphical presentation, the bond component includes
both accrued interest on bonds and the equivalent exposure from any
derivative holdings, if applicable.
** Credit quality ratings are based on a weighted average of each security's
rating from Moody's Investors Service. If not rated by Moody's, the rating
will be that assigned by Standard & Poor's. Likewise, if not assigned a
rating by Standard & Poor's, it will be based on the rating assigned by
Fitch, Inc. If not rated by any of the three agencies, the security is
considered not rated, except for U.S. Treasuries and mortgage-backed
securities, which are included in the "AAA"-rating category.
The portfolio is actively managed, and current holdings may be different.
- -------------------------------------------------------------------------------
PERFORMANCE SUMMARY THROUGH 9/30/04
- -------------------------------------------------------------------------------
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Performance results reflect the percentage change
in net asset value, including the reinvestment of any dividends and capital
gains distributions. (See Notes to Performance Summary.)
VISIT MFS.COM FOR THE MOST RECENT MONTH-END PERFORMANCE RESULTS. MARKET
VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE
OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. ANY
HIGH SHORT-TERM RETURNS MAY BE AND LIKELY WERE ATTRIBUTABLE TO RECENT
FAVORABLE MARKET CONDITIONS, WHICH MAY NOT BE REPEATED. THE PERFORMANCE SHOWN
DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY
ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
TOTAL RETURNS
- --------------------
Average annual
without sales charge
- --------------------
Class
Share inception
class date 6-mo 1-yr 3-yr 5-yr 10-yr
- ------------------------------------------------------------------------------
A 9/7/1993 1.63% 5.17% 5.25% 5.94% 5.90%
- ------------------------------------------------------------------------------
B 12/29/1986 1.13% 4.26% 4.46% 5.14% 5.09%
- ------------------------------------------------------------------------------
C 1/3/1994 1.13% 4.26% 4.46% 5.13% 5.10%
- ------------------------------------------------------------------------------
- --------------------
Average annual
- --------------------
Comparative benchmarks
- ------------------------------------------------------------------------------
Average general municipal debt
fund+ 1.08% 3.95% 4.79% 5.69% 5.76%
- ------------------------------------------------------------------------------
Lehman Brothers
Municipal Bond Index# 1.43% 4.60% 5.79% 6.77% 6.77%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
- --------------------
Average annual
with sales charge
- --------------------
- ------------------------------------------------------------------------------
A -3.20% 0.17% 3.56% 4.91% 5.39%
- ------------------------------------------------------------------------------
B -2.83% 0.26% 3.54% 4.81% 5.09%
- ------------------------------------------------------------------------------
C 0.14% 3.26% 4.46% 5.13% 5.10%
- ------------------------------------------------------------------------------
- --------------------
Cumulative
without sales charge
- --------------------
- ------------------------------------------------------------------------------
A 1.63% 5.17% 16.60% 33.41% 77.48%
- ------------------------------------------------------------------------------
B 1.13% 4.26% 14.00% 28.48% 64.26%
- ------------------------------------------------------------------------------
C 1.13% 4.26% 13.99% 28.45% 64.44%
- ------------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc., an independent firm that reports mutual fund performance.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITION
LEHMAN BROTHERS MUNICIPAL BOND INDEX - a broad measure of the municipal bond
market.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Class A results, including sales charge, reflect the deduction of the maximum
4.75% sales charge. Class B results, including sales charge, reflect the
deduction of the applicable contingent deferred sales charge (CDSC), which
declines over six years from 4% to 0%. Class C results, including sales charge,
(assuming redemption within one year from the end of the calendar month of
purchase), reflects the deduction of the 1% CDSC.
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers, the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
KEY RISK CONSIDERATIONS
A portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax.
The portfolio may invest in high-yield or lower-rated securities which may
provide greater returns but are subject to greater-than-average risk.
The fund may invest in municipal bonds that are general obligations backed by
the full faith and credit of the municipal issuer. The fund may also invest in
municipal bonds called revenue obligations which are subject to a higher degree
of credit risk than general obligations. Revenue obligations finance specific
projects, such as building a hospital, and are not backed by the full faith and
credit of the municipal issuer. The fund may invest in assets in revenue bonds
relating to any one specific industry (e.g., housing, health care, water and
sewer, etc.). Because revenue obligations are repaid from the revenues from a
facility, they are subject to a risk of default in payments of principal and
interest if the facility does not generate enough income. Municipal securities
backed by current or and revenues from a specific project or specific assets
can be negatively affected by the discontinuance of the taxation supporting the
project or assets or the inability to collect revenues for the project or from
the assets. If the Internal Revenue Service determines an issuer of a muncipal
security has not complied with applicable tax requirements, interest from the
security could become taxable and the security could decline significantly in
value.
The fund's investment in municipal securities may include municipal lease
obligations. Municipal lease obligations are undivided interests issued by a
state or municipality in a lease installment purchase which generally relates
to equipment or facilities. When a fund invests in municipal lease obligations,
it may have limited recourse in the event of default or termination. In some
cases, payments under municipal leases do not have to be made unless the
appropriate legislative body specifically approves money for that purpose.
The portfolio's value will fluctuate in response to market conditions and
issuer, regulatory, economic, or political developments. In general, fixed
income securities will decline when interest rates rise and will increase when
interest rates fall. Many fixed income securities also involve credit risk,
which is the risk that issuers may fail to make timely principal or interest
payments. In addition, fixed income securities with longer maturity dates will
be subject to greater price fluctuations than those with shorter maturity
periods. Please see the prospectus for further information on these and other
risk considerations.
- -------------------------------------------------------------------------------
EXPENSE TABLE
- -------------------------------------------------------------------------------
FUND EXPENSES BORNE BY SHAREHOLDERS DURING THE PERIOD
FROM APRIL 1, 2004, THROUGH SEPTEMBER 30, 2004.
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1)
fees; and other fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period April 1, 2004 through September 30,
2004.
ACTUAL EXPENSES
The first line for each share class in the table on the next page provides
information about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested, to estimate
the expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the table on the next page provides
information about hypothetical account values and hypothetical expenses based
on the fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the fund's actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
Share Class
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value* Period**
Ratio 4/01/04 9/30/04 4/01/04-9/30/04
- --------------------------------------------------------------------------------
Actual 0.78% $1,000 $1,016 $3.94
A ---------------------------------------------------------------------------
Hypothetical 0.78% $1,000 $1,021 $3.95
- --------------------------------------------------------------------------------
Actual 1.53% $1,000 $1,011 $7.71
B ---------------------------------------------------------------------------
Hypothetical 1.53% $1,000 $1,017 $7.74
- --------------------------------------------------------------------------------
Actual 1.53% $1,000 $1,011 $7.71
C ---------------------------------------------------------------------------
Hypothetical 1.53% $1,000 $1,017 $7.74
- --------------------------------------------------------------------------------
* Ending account value reflects each class' ending account value assuming the
actual class return per year before expenses (Actual) and a hypothetical 5%
class return per year before expenses (Hypothetical).
** Expenses paid are equal to each class' annualized expense ratio for the
most recent six month period, as shown above, multiplied by the average
account value over the period, multiplied by the number of days in the
period, divided by the number of days in the year. Expenses paid do not
include any applicable sales charges (loads) or redemption fees. If these
transaction costs had been included, your costs would have been higher.
- -------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - 9/30/04
- -------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your fund.
It is categorized by broad-based asset classes.
Stocks - 97.7%
- -------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
- -------------------------------------------------------------------------------------------------
Airport & Port Revenue - 2.0%
- -------------------------------------------------------------------------------------------------
Chicago, IL (O'Hare International Airport), RITES, FSA,
9.4934%, 2022+(+) $1,500,000 $1,762,740
- -------------------------------------------------------------------------------------------------
Chicago, IL, O'Hare International Airport Rev. (2nd
Lien Passenger Facility D), AMBAC, 5.5%, 2019 350,000 380,804
- -------------------------------------------------------------------------------------------------
Louisville & Jeff County, KY, Regional Airport
Authority, "A", MBIA, 6.5%, 2017 3,000,000 3,335,970
- -------------------------------------------------------------------------------------------------
Oklahoma City, OK, Airport Trust, "B", FSA, 5.75%, 2017 1,080,000 1,176,952
- -------------------------------------------------------------------------------------------------
$6,656,466
- -------------------------------------------------------------------------------------------------
Chemicals - 0.3%
- -------------------------------------------------------------------------------------------------
Red River Authority, TX, Pollution Control Rev.
(Celanese Project), 6.7%, 2030 $1,000,000 $1,000,660
- -------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 6.8%
- -------------------------------------------------------------------------------------------------
Chicago, IL (Lakefront Millennium Package Facilities),
MBIA, 5%, 2018 $4,000,000 $4,266,817
- -------------------------------------------------------------------------------------------------
Commonwealth of Massachusetts, 5.875%, 2009(++) 3,205,000 3,696,006
- -------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLs, FGIC,
9.226%, 2015+(+) 3,000,000 4,046,880
- -------------------------------------------------------------------------------------------------
Cranston, RI, FGIC, 6.375%, 2014 200,000 235,308
- -------------------------------------------------------------------------------------------------
Houston County, AL, AMBAC, 6.25%, 2019 850,000 999,473
- -------------------------------------------------------------------------------------------------
Interlocken Metropolitan District, CO, Improvement,
"C", XLCA, 0%, 2027 510,000 133,824
- -------------------------------------------------------------------------------------------------
Mobile County, AL, 6%, 2009(++) 800,000 922,104
- -------------------------------------------------------------------------------------------------
New York City, NY, "B", 5.75%, 2015 1,650,000 1,863,807
- -------------------------------------------------------------------------------------------------
New York, NY, "J", MBIA, 5%, 2017 2,000,000 2,115,740
- -------------------------------------------------------------------------------------------------
San Antonio, TX, 5%, 2020 700,000 727,916
- -------------------------------------------------------------------------------------------------
Southlake, TX, AMBAC, 0%, 2022 - 2023(++) 6,335,000 2,309,407
- -------------------------------------------------------------------------------------------------
Wisconsin State, "C", 6%, 2010(++) 1,200,000 1,389,432
- -------------------------------------------------------------------------------------------------
$22,706,714
- -------------------------------------------------------------------------------------------------
General Obligations - Improvement - 2.2%
- -------------------------------------------------------------------------------------------------
Birmingham, AL, "A", 5.75%, 2017 $1,000,000 $1,134,070
- -------------------------------------------------------------------------------------------------
Mesa, AZ, FGIC, 5%, 2009(++) 2,000,000 2,211,700
- -------------------------------------------------------------------------------------------------
Worcester, MA, FSA, 6%, 2017 3,475,000 3,986,068
- -------------------------------------------------------------------------------------------------
$7,331,838
- -------------------------------------------------------------------------------------------------
General Obligations - Schools - 8.8%
- -------------------------------------------------------------------------------------------------
Detroit, MI, City School District, "B", FGIC, 5%, 2021 $2,000,000 $2,106,160
- -------------------------------------------------------------------------------------------------
Dudley-Charlton, MA, Regional School District, RITES,
FGIC, 8.582%, 2017+(+) 1,495,000 1,927,773
- -------------------------------------------------------------------------------------------------
Ferris, TX, Independent School District, PSF, 5.5%, 2034 640,000 676,800
- -------------------------------------------------------------------------------------------------
Florida State Board of Education Capital Outlay, Public
Education, "A", 5%, 2019 1,000,000 1,047,520
- -------------------------------------------------------------------------------------------------
Forsyth County, GA, School District, 6%, 2015(++) 400,000 467,808
- -------------------------------------------------------------------------------------------------
Fresno, CA, Unified School District, MBIA, 6.55%, 2020 1,225,000 1,467,146
- -------------------------------------------------------------------------------------------------
Goose Creek, TX, Consolidated School District, PSF,
5%, 2020 2,500,000 2,598,350
- -------------------------------------------------------------------------------------------------
Houston, TX, Independent School District, RITES, PSF,
8.5525%, 2017+(+) 2,325,000 2,694,303
- -------------------------------------------------------------------------------------------------
Keller, TX, Independent School District, PSF,
6%, 2010(++) 1,755,000 2,045,207
- -------------------------------------------------------------------------------------------------
Keller, TX, Independent School District, PSF, 6%, 2017 225,000 257,360
- -------------------------------------------------------------------------------------------------
Knox County, KY, Independent School District, XLCA,
5.5%, 2029 640,000 688,166
- -------------------------------------------------------------------------------------------------
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 0%, 2026 - 2027 915,000 257,692
- -------------------------------------------------------------------------------------------------
Leander, TX, Independent School District, PSF, 0%, 2018 2,500,000 1,186,400
- -------------------------------------------------------------------------------------------------
Manchester, NH, School Facilities Rev., MBIA,
5.5%, 2027 - 2028 430,000 487,025
- -------------------------------------------------------------------------------------------------
Manistee, MI, Area Public Schools, FGIC,
5.75%, 2009(++) 700,000 796,726
- -------------------------------------------------------------------------------------------------
Marshall, MI, Public School District, 5.5%, 2018 500,000 552,980
- -------------------------------------------------------------------------------------------------
Phenix City, AL, AMBAC, 5.65%, 2021 1,500,000 1,664,190
- -------------------------------------------------------------------------------------------------
Philadelphia, PA, School District, MBIA, 6%, 2010(++) 750,000 865,935
- -------------------------------------------------------------------------------------------------
Roma, TX, Independent School District, PSF,
5.875%, 2020 1,705,000 1,935,022
- -------------------------------------------------------------------------------------------------
Wattsburg, PA, Public School Building Authority Rev.,
Capital Appreciation, MBIA, 0%, 2029 2,150,000 561,559
- -------------------------------------------------------------------------------------------------
Williamson County, TN, Rural School, 6.125%, 2010(++) 3,430,000 3,981,509
- -------------------------------------------------------------------------------------------------
Wylie, TX, Independent School District, PSF,
5.25%, 2029 1,080,000 1,120,122
- -------------------------------------------------------------------------------------------------
$29,385,753
- -------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 18.9
- -------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority
Rev. (West Penn Allegheny Health), 9.25%, 2022 - 2030 $1,000,000 $1,148,197
- -------------------------------------------------------------------------------------------------
Baldwin County, AL, Eastern Shore Health Care Authority
Rev. (Thomas Hospital), 5.75%, 2027 600,000 575,106
- -------------------------------------------------------------------------------------------------
Baxter County, AR, Hospital Rev., 5.375%, 2014 1,000,000 1,032,840
- -------------------------------------------------------------------------------------------------
Chemung County, NY, Civic Facilities Rev. (St. Joseph's
Hospital-Elmira), 6%, 2013 730,000 730,496
- -------------------------------------------------------------------------------------------------
Colorado Health Facilities Authority Rev. (Parkview
Medical Center), 6%, 2016 1,000,000 1,052,630
- -------------------------------------------------------------------------------------------------
Colorado Health Facilities Authority Rev. (Portercare
Adventist Health Systems), 6.625%, 2026 500,000 551,615
- -------------------------------------------------------------------------------------------------
Cullman, AL, Cullman Medical Park South, Medical Clinic
Board Rev. (Cullman Regional Medical Center),
6.5%, 2013 360,000 361,624
- -------------------------------------------------------------------------------------------------
Cuyahoga County, OH, Hospital Facilities Rev. (Canton,
Inc.), 7.5%, 2030 900,000 995,256
- -------------------------------------------------------------------------------------------------
Denver, CO, Health & Hospital Authority Rev.,
5.375%, 2018 300,000 305,889
- -------------------------------------------------------------------------------------------------
Denver, CO, Health & Hospital Authority Rev., "A",
6%, 2023 500,000 510,105
- -------------------------------------------------------------------------------------------------
District of Columbia, Health & Hospital Authority Rev.
(Medstar University Hospital), "D", 6.875%, 2007(++) 700,000 779,072
- -------------------------------------------------------------------------------------------------
Farmington, NM, Hospital Rev. (San Juan Regional
Medical Center), "A", 5%, 2023 665,000 661,728
- -------------------------------------------------------------------------------------------------
Fulton County, NY, Industrial Development Agency, Civic
Facility Rev. (Nathan Littauer Hospital), 5.75%, 2009 250,000 249,363
- -------------------------------------------------------------------------------------------------
Gainsville & Hall County, GA, Hospital Authority Rev.
(Northeast Georgia Health System), 5.5%, 2031 445,000 455,053
- -------------------------------------------------------------------------------------------------
Gulfport, MS, Healthcare Authority Rev. (Memorial
Hospital), 5.75%, 2031 500,000 516,805
- -------------------------------------------------------------------------------------------------
Henrico County, VA, Industrial Development Authority
Rev. (Bon Secours),RIBS, FSA, 9.951%, 2027(+) 5,000,000 6,733,050
- -------------------------------------------------------------------------------------------------
Highlands County, FL, Health Facilities Authority Rev.
(Adventist/Sunbelt Hospital), 6%, 2031 350,000 374,469
- -------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (Condell
Medical Center), 6.35%, 2015 1,000,000 1,087,980
- -------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (Decatur
Memorial Hospital), 5.75%, 2024 350,000 361,757
- -------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (Passavant
Memorial Area Hospital Associates), 6%, 2024 335,000 346,152
- -------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (Riverside
Health Systems), 5.75%, 2022 650,000 665,646
- -------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Rev. (Sinai
Health), FHA, 5.15%, 2037 640,000 647,795
- -------------------------------------------------------------------------------------------------
Indiana Health Facilities Financing Authority, Hospital
Rev. (Munster Medical Research Foundation, Inc.),
6.375%, 2031 500,000 511,520
- -------------------------------------------------------------------------------------------------
Indiana Health Facilities Financing Authority, Hospital
Rev. (Munster Medicial Research Foundation, Inc.),
6.375%, 2021 1,700,000 1,743,452
- -------------------------------------------------------------------------------------------------
Indiana Health Facilities Financing Authority, Hospital
Rev. (Riverview Hospital), 5.25%, 2014 400,000 414,520
- -------------------------------------------------------------------------------------------------
Indiana Health Facilities Financing Authority, Hospital
Rev. (Riverview Hospital), 6.125%, 2031 250,000 257,650
- -------------------------------------------------------------------------------------------------
Indiana Health Facilities Hospital Rev. (Deaconess
Hospital),"A", AMBAC, 5.375%, 2034 565,000 595,629
- -------------------------------------------------------------------------------------------------
Kentucky Economic Development Finance Authority, Health
Systems Rev. (Norton Healthcare, Inc.), 6.5%, 2020 1,250,000 1,351,050
- -------------------------------------------------------------------------------------------------
Kentucky Economic Development Finance Authority, Health
Systems Rev. (Norton Healthcare, Inc.), 6.625%, 2028 250,000 265,810
- -------------------------------------------------------------------------------------------------
Kentucky Economic Development Finance Authority,
Refunding & Improvement, "A", MBIA, 5%, 2018 2,400,000 2,535,072
- -------------------------------------------------------------------------------------------------
Knox County, TN, Health Educational Hospital Facility
(Baptist Health Systems, East Tennessee), 6.375%, 2022 1,000,000 980,410
- -------------------------------------------------------------------------------------------------
Lauderdale County & Florence, AL (Coffee Health Group),
"A", MBIA, 5.25%, 2019 1,100,000 1,182,291
- -------------------------------------------------------------------------------------------------
Lufkin, TX, Health Facilities Rev. (Memorial Health
System of East Texas), 6.875%, 2026 325,000 341,838
- -------------------------------------------------------------------------------------------------
Macomb County, MI, Hospital Finance Authority Rev.
(Mount Clemens General Hospital), 5.75%, 2025 1,000,000 937,020
- -------------------------------------------------------------------------------------------------
Marion County, FL, Hospital District Rev. (Monroe
Hospital), 5.625%, 2019 750,000 782,123
- -------------------------------------------------------------------------------------------------
Marshall County, AL, Health Care Rev., "A", 6.25%, 2022 500,000 532,075
- -------------------------------------------------------------------------------------------------
Martin County, FL, Health Facilities Rev. (Martin
Memorial Medical Center), "B", 5.75%, 2022 850,000 861,518
- -------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities
Authority Rev. (Medstar Health), 5.5%, 2033 305,000 308,767
- -------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities
Authority Rev. (University of Maryland Medical System),
6.75%, 2030 1,000,000 1,131,560
- -------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority
Rev. (Caritas Christi), 6.5%, 2012 400,000 445,724
- -------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority
Rev. (Caritas Christi), 5.7%, 2015 1,000,000 1,028,580
- -------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority
Rev. (Partners Healthcare Systems), 5.75%, 2021 400,000 437,568
- -------------------------------------------------------------------------------------------------
Mecosta County, MI, General Hospital Rev., 6%, 2018 300,000 294,576
- -------------------------------------------------------------------------------------------------
Miami Beach, FL, Health Facilities Rev. (Mount Sinai
Medical Center), "A", 6.7%, 2019 750,000 775,065
- -------------------------------------------------------------------------------------------------
Michigan Hospital Finance Authority Rev. (Memorial
Healthcare Center), 5.75%, 2015 800,000 834,144
- -------------------------------------------------------------------------------------------------
Mississippi Hospital Equipment & Facilities Rev. (Rush
Medical Foundation), CONNIE LEE, 6.7%, 2018 1,000,000 1,004,150
- -------------------------------------------------------------------------------------------------
Mount Lebanon, PA, Hospital Authority Rev. (St. Clair
Memorial Hospital), 5.625%, 2032 375,000 383,828
- -------------------------------------------------------------------------------------------------
Nassau County, NY, Industrial Development Agency, Civic
Facilities Rev. (North Shore Health System), 5.875%, 2011 420,000 465,100
- -------------------------------------------------------------------------------------------------
New Hampshire Health & Educational Facilities Authority
Rev. (Covenant Health), 6.5%, 2017 915,000 1,021,579
- -------------------------------------------------------------------------------------------------
New Hampshire Health & Educational Facilities Authority
Rev. (Exeter Hospital), 6%, 2024 500,000 538,850
- -------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities (Palisades Medical
Center), 6.5%, 2021 500,000 529,460
- -------------------------------------------------------------------------------------------------
North Texas Health Facilities Development Corp. Rev.
(United Regional Health Care System, Inc.), 6%, 2023 1,000,000 1,052,230
- -------------------------------------------------------------------------------------------------
Ohio County, WV, County Commission Health System Rev.
(Ohio Valley Medical Center), 5.75%, 2013 900,000 838,773
- -------------------------------------------------------------------------------------------------
Oklahoma Development Finance Authority Rev. (Comanche
County Hospital), 6%, 2014 600,000 640,914
- -------------------------------------------------------------------------------------------------
Oklahoma Development Finance Authority Rev. (Comanche
County Hospital), 6.6%, 2031 405,000 422,273
- -------------------------------------------------------------------------------------------------
Palm Beach County, FL, Health Facilities Rev. (Boca
Raton Hospital), 5.5%, 2021 500,000 518,290
- -------------------------------------------------------------------------------------------------
Rhode Island Health & Education Building Rev., Hospital
Financing (Lifespan Obligated Group), 6.5%, 2032 1,500,000 1,586,805
- -------------------------------------------------------------------------------------------------
Richardson, TX, Hospital Authority Rev. (Baylor-
Richardson), 5.25%, 2013 600,000 619,470
- -------------------------------------------------------------------------------------------------
Royston, GA, Hospital Authority Rev. (Ty Cobb
Healthcare Systems, Inc.), 6.5%, 2027 290,000 276,657
- -------------------------------------------------------------------------------------------------
Shelby County, TN, Health & Educational Facilities
Board Rev., (Methodist Healthcare), ETM, 6%, 2016(++) 800,000 941,998
- -------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority,
Hospital Facilities Rev. (Palmetto Health Alliance),
6.25%, 2031 500,000 525,260
- -------------------------------------------------------------------------------------------------
Steubenville, OH, Hospital Rev. (Trinity Hospital),
6.375%, 2020 300,000 319,467
- -------------------------------------------------------------------------------------------------
Stillwater, OK, Medical Center Authority (Stillwater
Medical Center), 6.5%, 2019 1,000,000 1,050,280
- -------------------------------------------------------------------------------------------------
Suffolk County, NY, Industrial Development Agency Rev.
(Huntington Hospital), 5.875%, 2032 1,000,000 1,029,450
- -------------------------------------------------------------------------------------------------
Suffolk County, NY, Industrial Development Agency Rev.
(Southampton Hospital), 7.25%, 2020 750,000 745,268
- -------------------------------------------------------------------------------------------------
Suffolk County, NY, Industrial Development Agency Rev.
(Southampton Hospital), 7.625%, 2030 250,000 252,163
- -------------------------------------------------------------------------------------------------
Tallahassee, FL, Health Facilities Rev. (Tallahassee
Memorial Healthcare), 6.25%, 2020 1,000,000 1,023,750
- -------------------------------------------------------------------------------------------------
Tom Green County, TX, Health Facilities Rev. (Shannon
Health System), 6.75%, 2021 400,000 424,592
- -------------------------------------------------------------------------------------------------
Upper Illinois River Valley Development, Health
Facilities Rev. (Morris Hospital), 6.625%, 2031 500,000 531,960
- -------------------------------------------------------------------------------------------------
Valley, AL, Special Care Facilities Financing (Lanier
Memorial Hospital), 5.5%, 2007 500,000 506,735
- -------------------------------------------------------------------------------------------------
Wapello County, IA, Hospital Authority Rev. (Ottumwa
Regional Health Center), 6.375%, 2031 750,000 780,698
- -------------------------------------------------------------------------------------------------
Weirton, WV, Municipal Hospital Building, Commission
Rev. (Weirton Hospital Medical Center), 6.375%, 2031 500,000 488,280
- -------------------------------------------------------------------------------------------------
West Plains, MO, Industrial Development Authority Rev.
(Ozarks Medical Center), 6.75%, 2024 195,000 198,395
- -------------------------------------------------------------------------------------------------
West Shore, PA, Hospital Authority (Holy Spirit
Hospital), 6.25%, 2032 1,000,000 1,032,090
- -------------------------------------------------------------------------------------------------
Wichita, KS, Hospital Authority Rev. (Via Christi
Health System), 6.25%, 2019 1,500,000 1,681,800
- -------------------------------------------------------------------------------------------------
Wisconsin Health & Educational Facilities Authority
Rev. (Agenesian Healthcare, Inc.), 6%, 2017 325,000 349,310
- -------------------------------------------------------------------------------------------------
Wisconsin Health & Educational Facilities Authority
Rev. (Aurora Health Care, Inc.), 6.875%, 2030 750,000 852,413
- -------------------------------------------------------------------------------------------------
Wisconsin Health & Educational Facilities Authority
Rev. (Wheaton Franciscan Services), 6.25%, 2022 1,000,000 1,086,330
- -------------------------------------------------------------------------------------------------
Yonkers, NY, Industrial Development Agency, Civic
Facilities Rev. (St. John's Riverside Hospital), 6.8%, 2016 435,000 447,824
- -------------------------------------------------------------------------------------------------
$62,857,032
- -------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 2.5%
- -------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 7.75%, 2006 $90,000 $85,621
- -------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 8.125%, 2016 505,000 408,131
- -------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 8.5%, 2026 1,130,000 881,332
- -------------------------------------------------------------------------------------------------
Colorado Health Facilities Authority Rev. (Evangelical
Lutheran), 6.9%, 2025 500,000 561,620
- -------------------------------------------------------------------------------------------------
Cumberland County, PA, Retirement Community Rev.
(Wesley Affiliated Services), 7.25%, 2035 375,000 383,891
- -------------------------------------------------------------------------------------------------
Eden Prairie, MN, Multi-Family Housing Rev. (Coll-
Rolling Hills), "A", GNMA, 6%, 2021 200,000 217,266
- -------------------------------------------------------------------------------------------------
Goldsboro, NC, Housing Authority Rev. (North Carolina
Housing Foundation, Inc.), 7.25%, 2029 960,000 828,778
- -------------------------------------------------------------------------------------------------
Indiana Health Facilities Financing Authority Rev.
(Hoosier Care), 7.125%, 2034 820,000 674,606
- -------------------------------------------------------------------------------------------------
Iowa Finance Authority, Health Care Facilities Rev.
(Care Initiatives Project), 9.25%, 2025 490,000 592,292
- -------------------------------------------------------------------------------------------------
Jefferson County, KY, Health Care Authority Rev.
(Beverly Enterprises, Inc.), 5.875%, 2007 120,000 118,354
- -------------------------------------------------------------------------------------------------
Luzerne County, PA, Industrial Development Authority
Rev. (Beverly Enterprise, Inc.), 6.75%, 2008 245,000 245,451
- -------------------------------------------------------------------------------------------------
Millbrae, CA, Residential Facilities Rev. (Magnolia of
Millbrae), 7.375%, 2027 960,000 1,001,510
- -------------------------------------------------------------------------------------------------
New Hampshire Business Finance Authority, Health Care
Facilities Rev. (Metro Health Foundation, Inc.),
6.55%, 2028 950,000 901,313
- -------------------------------------------------------------------------------------------------
Shelby County, TN, Health Educational Rev. (Germantown
Village), 7.25%, 2034 385,000 395,653
- -------------------------------------------------------------------------------------------------
Tennessee Veterans Home Board Rev. (Humboldt),
6.75%, 2021(++) 1,000,000 1,084,720
- -------------------------------------------------------------------------------------------------
$8,380,538
- -------------------------------------------------------------------------------------------------
Human Services - 0.4%
- -------------------------------------------------------------------------------------------------
Nassau County, NY, Industrial Development Civic
(Special Needs Facilities), 6.1%, 2012 $295,000 $305,077
- -------------------------------------------------------------------------------------------------
Orange County, FL, Health Facilities Authority Rev.
(GF/Orlando Healthcare Facilities), 9%, 2031 1,000,000 1,019,650
- -------------------------------------------------------------------------------------------------
$1,324,727
- -------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 0.6%
- -------------------------------------------------------------------------------------------------
Cleveland, OH, Airport Special Rev. (Continental
Airlines, Inc.), 5.7%, 2019 $1,000,000 $741,960
- -------------------------------------------------------------------------------------------------
Los Angeles, CA, Regional Airport Lease Rev. (American
Airlines, Inc.), 7%, 2012 300,000 274,926
- -------------------------------------------------------------------------------------------------
Tulsa, OK, Municipal Airport Trust Rev., "B",
5.65%, 2035 1,000,000 903,020
- -------------------------------------------------------------------------------------------------
$1,919,906
- -------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.6%
- -------------------------------------------------------------------------------------------------
Brazos River, TX, Harbor Navigation District (Dow
Chemical Co.), 5.7%, 2033 $1,000,000 $1,092,150
- -------------------------------------------------------------------------------------------------
Sweetwater County, WY, Solid Waste Disposal Rev. (FMC
Corp.), "A", 7%, 2024 1,000,000 1,016,530
- -------------------------------------------------------------------------------------------------
$2,108,680
- -------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.6%
- -------------------------------------------------------------------------------------------------
Carbon County, UT, Solid Waste Disposal Rev. (Laidlaw
Environmental), 7.45%, 2017 $2,500,000 $2,601,325
- -------------------------------------------------------------------------------------------------
Charles City County, VA, Industrial Development
Authority, Solid Waste Disposal Facility Rev. (Waste
Management, Inc.), 6.25%, 2027 500,000 556,545
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority, Solid Waste Rev.
(Waste Management, Inc.), 5.7%, 2018 230,000 237,392
- -------------------------------------------------------------------------------------------------
Gloucester County, NJ, Solid Waste Resource Recovery
Rev. (Waste Management, Inc.), 6.85%, 2029 150,000 169,877
- -------------------------------------------------------------------------------------------------
Henrico County, VA, Industrial Development Authority
Rev. (Browning Ferris, Inc.), 5.3%, 2011 1,000,000 1,008,620
- -------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Resource
Recovery Rev. (Waste Management, Inc.), 6.9%, 2029 300,000 341,799
- -------------------------------------------------------------------------------------------------
Nevada Department of Business (Republic Services,
Inc.), 5.625%, 2026 450,000 477,455
- -------------------------------------------------------------------------------------------------
$5,393,013
- -------------------------------------------------------------------------------------------------
Industrial Revenue - Metals - 0%
- -------------------------------------------------------------------------------------------------
Burns Harbor, IN, Solid Waste Disposal Facilities Rev.
(Bethlehem Steel), 8%, 2024** $3,000,000 $3,750
- -------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 2.6%
- -------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development Authority Rev.
(USX Corp.), 5.4%, 2017 $500,000 $558,280
- -------------------------------------------------------------------------------------------------
Gulf Coast, TX, Industrial Development Authority
(Valero Energy Corp.), 5.6%, 2031 500,000 501,975
- -------------------------------------------------------------------------------------------------
Hardeman County, TN, Correctional Facilities Corp.
(Corrections Corp. of America), 7.375%, 2017 500,000 514,465
- -------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Resource
Recovery Rev. (Flour Corp.), 5.625%, 2019 2,895,000 3,032,599
- -------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev. (Welch
Foods, Inc.), 5.6%, 2017 1,300,000 1,397,539
- -------------------------------------------------------------------------------------------------
Park Creek Metropolitan District, CO, Rev., Custodial
Receipts, "CR", 7.875%, 2032## 400,000 411,440
- -------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing Authority
Rev. (Amtrak), 6.125%, 2021 550,000 572,413
- -------------------------------------------------------------------------------------------------
State of Ohio, Air Quality Development Authority Rev.
(USX Corp.), 5%, 2015 500,000 545,925
- -------------------------------------------------------------------------------------------------
Tooele County, UT, Hazardous Waste Treatment Rev.
(Union Pacific Corp.), 5.7%, 2026 980,000 992,544
- -------------------------------------------------------------------------------------------------
$8,527,180
- -------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.3%
- -------------------------------------------------------------------------------------------------
Beauregard Parish, LA (Boise Cascade Corp.), 6.8%, 2027 $500,000 $516,240
- -------------------------------------------------------------------------------------------------
Butler, AL, Solid Waste Disposal Rev. (James River
Corp.), 8%, 2028 850,000 874,115
- -------------------------------------------------------------------------------------------------
Delta County, MI, Economic Development Corp.,
Environmental Improvements Rev. (Mead Westvaco
Escanaba), 6.25%, 2027 900,000 953,658
- -------------------------------------------------------------------------------------------------
Mobile, AL, Industrial Development Board Improvement
Rev., "B" (International Paper Co.), 6.45%, 2019 2,000,000 2,162,020
- -------------------------------------------------------------------------------------------------
Navajo County, AZ, Industrial Development Authority
(Stone Container Corp.), 7.4%, 2026 1,500,000 1,552,380
- -------------------------------------------------------------------------------------------------
Navajo County, AZ, Industrial Development Authority
(Stone Container Corp.), 7.2%, 2027 500,000 519,055
- -------------------------------------------------------------------------------------------------
Onondaga County, NY, Industrial Development Authority
Rev., Solid Waste Disposal Rev. (Solvay Paperboard
LLC), 6.8%, 2014 1,000,000 1,058,080
- -------------------------------------------------------------------------------------------------
$7,635,548
- -------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.1%
- -------------------------------------------------------------------------------------------------
Capital Trust Agency of Florida Rev. (Seminole Tribe
Convention), 10%, 2033## $1,000,000 $1,196,460
- -------------------------------------------------------------------------------------------------
Hamilton County, OH, Convention Facilities Authority
Rev., FGIC, 5.25%, 2022 1,310,000 1,420,878
- -------------------------------------------------------------------------------------------------
Harris County-Houston, TX, Sports Authority Rev., MBIA,
0%, 2032 1,595,000 318,474
- -------------------------------------------------------------------------------------------------
Nevada Department of Business & Industry Rev. (Las
Vegas Monorail), 7.375%, 2040 530,000 535,417
- -------------------------------------------------------------------------------------------------
Sandoval County, NM (Santa Ana Pueblo),
7.75%, 2015## 320,000 328,323
- -------------------------------------------------------------------------------------------------
$3,799,552
- -------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.6%
- -------------------------------------------------------------------------------------------------
Austin, TX, Convention Center (Convention Enterprises,
Inc.), 6.6%, 2021 $300,000 $323,217
- -------------------------------------------------------------------------------------------------
Austin, TX, Convention Center (Convention Enterprises,
Inc.), 6.7%, 2028 400,000 426,472
- -------------------------------------------------------------------------------------------------
Gallery Certificate Trust, PA, Parking Rev., FSA,
4.5%, 2013## 775,000 776,783
- -------------------------------------------------------------------------------------------------
Rockbridge County, VA, Industrial Development Authority
Rev. (Virginia Horse Center), 6.85%, 2021 500,000 471,575
- -------------------------------------------------------------------------------------------------
$1,998,047
- -------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.0%
- -------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority
Rev. (Irvine Apartments), 5.25%, 2025 $1,000,000 $1,042,310
- -------------------------------------------------------------------------------------------------
Charter Mac Equity Issuer Trust, 6.625%, 2009## 2,000,000 2,208,880
- -------------------------------------------------------------------------------------------------
Eaglebend, CO, Affordable Housing Corp., 6.2%, 2012 1,000,000 990,820
- -------------------------------------------------------------------------------------------------
Newark, NJ, Housing Authority Port Authority (Newark
Marine Terminal), MBIA, 5.5%, 2028 215,000 230,990
- -------------------------------------------------------------------------------------------------
Panhandle, TX, Regional Housing Finance Rev.,
6.625%, 2020 330,000 349,025
- -------------------------------------------------------------------------------------------------
Panhandle, TX, Regional Housing Finance Rev.,
6.75%, 2031 1,245,000 1,318,368
- -------------------------------------------------------------------------------------------------
Ridgeland, MS, Urban Renewal (Northbrook I & II
Apartments), 6.15%, 2019** 1,250,000 600,738
- -------------------------------------------------------------------------------------------------
$6,741,131
- -------------------------------------------------------------------------------------------------
Parking - 0.1%
- -------------------------------------------------------------------------------------------------
Rail Connections, Inc., MA Rev., 0%, 2009(++) $610,000 $317,828
- -------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 1.9%
- -------------------------------------------------------------------------------------------------
Austin, TX, Town Community Events Center Venue, FGIC,
6%, 2019 $1,015,000 $1,160,612
- -------------------------------------------------------------------------------------------------
Metropolitan Pier & Exposition Authority, IL, MBIA,
0%, 2016 8,400,000 5,062,008
- -------------------------------------------------------------------------------------------------
$6,222,620
- -------------------------------------------------------------------------------------------------
Single Family Housing - Local - 2.7%
- -------------------------------------------------------------------------------------------------
Adams County, CO, Single Family Mortgage Rev., ETM,
8.875%, 2011(++) $2,510,000 $3,358,380
- -------------------------------------------------------------------------------------------------
Brevard County, FL, Housing Finance Authority, "B",
GNMA, 6.5%, 2022 265,000 269,253
- -------------------------------------------------------------------------------------------------
Calcasieu Parish, LA, Public Trust Authority, Single
Family Mortgage Rev. "A", GNMA, 6.05%, 2032 540,000 571,655
- -------------------------------------------------------------------------------------------------
California Rural Home Mortgage Finance Authority Rev.,
GNMA, 6.55%, 2030 220,000 232,289
- -------------------------------------------------------------------------------------------------
Chicago, IL, Single Family Mortgage Rev., GNMA, 7.05%, 2030 25,000 25,483
- -------------------------------------------------------------------------------------------------
Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 670,000 205,784
- -------------------------------------------------------------------------------------------------
Jefferson Parish, LA, Single Family Mortgage Rev.,
GNMA, 6.625%, 2023 415,000 455,023
- -------------------------------------------------------------------------------------------------
Jefferson Parish, LA, Single Family Mortgage Rev.,
GNMA, 6.75%, 2030 190,000 204,560
- -------------------------------------------------------------------------------------------------
Lee County, FL, Housing Finance Authority Rev., "A",
GNMA, 7%, 2031 40,000 40,825
- -------------------------------------------------------------------------------------------------
Maricopa County, AZ, Single Family Mortgage Rev. "B",
GNMA, 6.2%, 2034 365,000 398,522
- -------------------------------------------------------------------------------------------------
Phoenix, AZ, Single Family Mortgage Rev., GNMA,
6.1%, 2028 50,000 53,209
- -------------------------------------------------------------------------------------------------
Pima County, AZ, Industrial Development Authority,
GNMA, 7.05%, 2030 465,000 481,628
- -------------------------------------------------------------------------------------------------
Sedgwick & Shawnee Counties, KS, Single Family Housing
Rev., "B", GNMA, 5.45%, 2027 400,000 434,520
- -------------------------------------------------------------------------------------------------
Sedgwick & Shawnee Counties, KS, Single Family Housing
Rev., GNMA, 6.875%, 2026 260,000 267,556
- -------------------------------------------------------------------------------------------------
Sedgwick & Shawnee Counties, KS, Single Family Housing
Rev., GNMA, 6.45%, 2029 - 2033 1,455,000 1,569,914
- -------------------------------------------------------------------------------------------------
Sedgwick & Shawnee Counties, KS, Single Family Housing
Rev., GNMA, 4%, 2035 495,000 534,867
- -------------------------------------------------------------------------------------------------
$9,103,468
- -------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.6%
- -------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev., Home Mortgage,
MBIA, 0%, 2027 - 2028 $2,620,000 $775,845
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 7.15%, 2014 17,000 17,333
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 7.45%, 2016 55,000 55,350
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 6.75%, 2021 85,000 85,934
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 5.9%, 2023 230,000 240,212
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 6.1%, 2023 125,000 129,843
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 7.4%, 2027 45,000 45,428
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 6.875%, 2028 165,000 169,665
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 6.8%, 2030 140,000 144,605
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 6.6%, 2032 245,000 253,416
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 6.375%, 2033 135,000 144,968
- -------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., 6.55%, 2033 140,000 147,081
- -------------------------------------------------------------------------------------------------
Louisiana Housing Finance Agency, Single Family
Mortgage Rev., GNMA, 7.55%, 2031 200,000 214,840
- -------------------------------------------------------------------------------------------------
Louisiana Housing Finance Agency, Single Family
Mortgage Rev., GNMA, 6.4%, 2032 290,000 300,321
- -------------------------------------------------------------------------------------------------
Minnesota Housing Finance Agency Rev., Residential
Housing Finance "B", 4.8%, 2023 275,000 281,372
- -------------------------------------------------------------------------------------------------
Missouri State Housing Development Commission, Single
Family Mortgage Rev. (Home Loan Program),
6.35%, 2032 305,000 320,293
- -------------------------------------------------------------------------------------------------
Missouri State Housing Development Commission, Single
Family Mortgage Rev. (Home Loan Program), GNMA, 6.7%, 2030 320,000 331,315
- -------------------------------------------------------------------------------------------------
Missouri State Housing Development Commission, Single
Family Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 255,000 281,987
- -------------------------------------------------------------------------------------------------
Missouri State Housing Development Commission, Single
Family Mortgage Rev. (Home Loan Program), GNMA, 6.75%, 2034 165,000 177,045
- -------------------------------------------------------------------------------------------------
New Hampshire Housing Finance Authority Rev., 5.875%, 2030 155,000 160,427
- -------------------------------------------------------------------------------------------------
New Hampshire Housing Finance Authority Rev., 6.3%, 2031 145,000 156,409
- -------------------------------------------------------------------------------------------------
New Mexico Mortgage Finance Authority Rev., GNMA, 7.1%, 2030 120,000 128,694
- -------------------------------------------------------------------------------------------------
New Mexico Mortgage Finance Authority Rev., GNMA,
6.25%, 2032 505,000 534,391
- -------------------------------------------------------------------------------------------------
New Mexico Mortgage Finance Authority Rev., GNMA,
6.35%, 2033 240,000 256,879
- -------------------------------------------------------------------------------------------------
North Dakota Housing Finance Agency Rev., Housing
Finance, 5%, 2033 520,000 526,542
- -------------------------------------------------------------------------------------------------
Oklahoma Housing Finance Agency, 6.65%, 2029 1,260,000 1,349,926
- -------------------------------------------------------------------------------------------------
Texas Housing & Community Affairs, Residential Mortgage
Rev., GNMA, 7.1%, 2021 985,000 1,018,293
- -------------------------------------------------------------------------------------------------
Vermont Housing Finance Agency Rev., FSA, 4.95%, 2032 385,000 394,136
- -------------------------------------------------------------------------------------------------
$8,642,550
- -------------------------------------------------------------------------------------------------
Solid Waste Revenue - 1.2%
- -------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority
Rev. (American Ref-Fuel Co.), "A", 6.2%, 2019 $500,000 $518,820
- -------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority
Rev., Resource Recovery Facilities (American Ref-fuel),
"A", 6.1%, 2005 875,000 879,813
- -------------------------------------------------------------------------------------------------
Hudson County, NJ, Solid Waste System Rev., 5.9%, 2015 880,000 877,703
- -------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Ogden
Haverhill Associates), 6.7%, 2014 700,000 745,381
- -------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency Rev., Resource
Recovery Rev. (Ogden Haverhill Associates), 5.6%, 2019 1,000,000 1,000,100
- -------------------------------------------------------------------------------------------------
$4,021,817
- -------------------------------------------------------------------------------------------------
State & Local Agencies - 6.7%
- -------------------------------------------------------------------------------------------------
Alabama Building Renovation Authority, AMBAC,
6%, 2018 $760,000 $874,312
- -------------------------------------------------------------------------------------------------
Alabama State Public School & College, Capital
Improvement, "D", 6%, 2015 2,850,000 3,256,239
- -------------------------------------------------------------------------------------------------
Chicago, IL, Public Building Commission Rev., RITES,
FGIC, 8.8377%, 2016 - 2017+(+) 2,750,000 3,516,230
- -------------------------------------------------------------------------------------------------
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B", 5.375%, 2028 1,500,000 1,531,140
- -------------------------------------------------------------------------------------------------
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B", 5.5%, 2043 1,075,000 1,106,401
- -------------------------------------------------------------------------------------------------
Houston, TX, Certificates of Participation, 6.3%, 2020 1,000,000 1,094,870
- -------------------------------------------------------------------------------------------------
Indianapolis, IN, Public Improvement Bond Bank, "C",
AMBAC, 6%, 2017 500,000 569,575
- -------------------------------------------------------------------------------------------------
Massachusetts State Development Finance Agency (Visual
& Performing Arts), 6%, 2021 1,000,000 1,206,140
- -------------------------------------------------------------------------------------------------
Michigan State Certificates of Participation, AMBAC,
5.5%, 2020 1,250,000 1,368,925
- -------------------------------------------------------------------------------------------------
New Mexico Finance Authority Rev., Court Facilities Fee
Rev., MBIA, 5.5%, 2020 475,000 522,894
- -------------------------------------------------------------------------------------------------
New York State Urban Development Corp., Correctional
Facilities Service Contract C, AMBAC, 5.875%, 2009(++) 1,000,000 1,144,770
- -------------------------------------------------------------------------------------------------
Stafford, TX, Economic Development Corp., FGIC,
6%, 2015 525,000 628,740
- -------------------------------------------------------------------------------------------------
Virginia College Building Authority, VA, Public Higher
Education Financing, "A", 5.75%, 2019 2,295,000 2,580,200
- -------------------------------------------------------------------------------------------------
Warren Township, IN (Vision 2005 School Building
Corp.), FGIC, 5.5%, 2020 2,600,000 2,855,112
- -------------------------------------------------------------------------------------------------
$22,255,548
- -------------------------------------------------------------------------------------------------
Student Loan Revenue - 0.9%
- -------------------------------------------------------------------------------------------------
Access to Loans for Learning, California Student Loan
Rev., 7.95%, 2030 $650,000 $678,789
- -------------------------------------------------------------------------------------------------
Arizona Student Loan Acquisition Authority Rev.,
5.8%, 2016 675,000 724,943
- -------------------------------------------------------------------------------------------------
Arizona Student Loan Acquisition Authority Rev.,
5.85%, 2017 700,000 750,386
- -------------------------------------------------------------------------------------------------
Massachusetts Educational Financing Authority,
Refunding Issue G, "A", MBIA, 6.1%, 2018 750,000 781,485
- -------------------------------------------------------------------------------------------------
$2,935,603
- -------------------------------------------------------------------------------------------------
Tax Assessment - 2.2%
- -------------------------------------------------------------------------------------------------
Broadview, IL, Tax Increment Rev., 5.25%, 2012 $1,000,000 $1,041,260
- -------------------------------------------------------------------------------------------------
Capital Region Community Development District of
Florida, Capital Improvement Rev., 5.95%, 2006 115,000 116,471
- -------------------------------------------------------------------------------------------------
Fishhawk Community Development District of Florida,
5.125%, 2009 280,000 282,778
- -------------------------------------------------------------------------------------------------
Greyhawk Landing Community Development, Florida Special
Assessment Rev., "B", 6.25%, 2009 360,000 369,868
- -------------------------------------------------------------------------------------------------
Katy, TX, Development Authority Rev., 5.8%, 2011 915,000 954,299
- -------------------------------------------------------------------------------------------------
Katy, TX, Development Authority Rev., 6%, 2018 1,500,000 1,533,975
- -------------------------------------------------------------------------------------------------
Killarney, FL, Community Development District, "B",
5.125%, 2009 310,000 312,291
- -------------------------------------------------------------------------------------------------
Lakes By The Bay South Community Development District,
Florida Special Assessment, "B", 5.3%, 2009 285,000 287,964
- -------------------------------------------------------------------------------------------------
Panther Trace, FL, Community Development Distrct Rev.,
"B", 6.5%, 2009 205,000 210,084
- -------------------------------------------------------------------------------------------------
Parkway Center, FL, Community Development District
Rev., "B", 5.625%, 2014 935,000 950,072
- -------------------------------------------------------------------------------------------------
Preserve At Wilderness Lake, FL, Community Development
District, Capital Improvement, "B", 5%, 2009 525,000 523,457
- -------------------------------------------------------------------------------------------------
Renaissance Community Development of Florida, "B",
6.25%, 2008 605,000 626,435
- -------------------------------------------------------------------------------------------------
$7,208,954
- -------------------------------------------------------------------------------------------------
Tax - Other - 0.7%
- -------------------------------------------------------------------------------------------------
New York, NY, Transitional, Future Tax Secured, "A",
6%, 2009(++) $2,000,000 $2,330,200
- -------------------------------------------------------------------------------------------------
Tobacco - 1.1%
- -------------------------------------------------------------------------------------------------
Badger Tobacco, WI (Asset Securitization Corp.),
6.125%, 2027 $1,125,000 $1,073,813
- -------------------------------------------------------------------------------------------------
District of Columbia, Tobacco Settlement, 6.25%, 2024 420,000 403,397
- -------------------------------------------------------------------------------------------------
Guam Economic Development Authority, 5%, 2022 175,000 174,367
- -------------------------------------------------------------------------------------------------
Iowa Tobacco Settlement Authority, Tobacco Settlement
Rev., Asset Backed, "B", 5.3%, 2025 750,000 628,770
- -------------------------------------------------------------------------------------------------
Louisiana Tobacco Settlement Authority, 5.5%, 2030 415,000 364,880
- -------------------------------------------------------------------------------------------------
New Jersey Tobacco Settlement Authority, 5.75%, 2032 710,000 653,001
- -------------------------------------------------------------------------------------------------
South Carolina Tobacco Settlement Authority,
6.375%, 2028 500,000 463,480
- -------------------------------------------------------------------------------------------------
Washington Tobacco Settlement Authority, 6.5%, 2026 70,000 67,927
- -------------------------------------------------------------------------------------------------
$3,829,635
- -------------------------------------------------------------------------------------------------
Toll Roads - 0.9%
- -------------------------------------------------------------------------------------------------
New Jersey Turnpike Authority Rev., MBIA, 6.5%, 2016 $315,000 $385,541
- -------------------------------------------------------------------------------------------------
New Jersey Turnpike Authority Rev., MBIA, ETM,
6.5%, 2016(++) 1,135,000 1,391,589
- -------------------------------------------------------------------------------------------------
Northwest Parkway Public Highway Authority Co. Rev.,
Capital Appreciation "B", AMBAC, 0%, 2018 750,000 379,275
- -------------------------------------------------------------------------------------------------
San Joaquin Hills, CA, Transportation Corridor Agency,
Toll Road Rev., ETM, 0%, 2009(++) 1,000,000 881,640
- -------------------------------------------------------------------------------------------------
$3,038,045
- -------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.1%
- -------------------------------------------------------------------------------------------------
Allegheny County, PA, Port Authority Special Rev.,
MBIA, 6.25%, 2009(++) $1,000,000 $1,163,080
- -------------------------------------------------------------------------------------------------
New Jersey Economic Development Authority Rev.,
Transportation Project Sublease "A", FSA, 6%, 2009(++) 325,000 372,642
- -------------------------------------------------------------------------------------------------
Pennsylvania State Turnpike Commission Oil, "A", AMBAC,
5.25%, 2018 850,000 919,505
- -------------------------------------------------------------------------------------------------
Pennsylvania State Turnpike Commission Oil, "A", AMBAC,
ETM, 5.25%, 2018(++) 1,150,000 1,251,522
- -------------------------------------------------------------------------------------------------
$3,706,749
- -------------------------------------------------------------------------------------------------
Universities - Colleges - 4.6%
- -------------------------------------------------------------------------------------------------
Amherst, NY, Industrial Development Agency Rev. (Daemen
College), 6%, 2021 $1,000,000 $1,065,960
- -------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev. (L.A.
College of Chiropractic), 5.6%, 2017 250,000 239,845
- -------------------------------------------------------------------------------------------------
Houston, TX, Community College Systems, MBIA,
7.875%, 2025 1,650,000 2,119,475
- -------------------------------------------------------------------------------------------------
Islip, NY, Community Development Agency Rev. (New York
Institute of Technology), 7.5%, 2006(++) 2,000,000 2,196,780
- -------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Boston
University), XLCA, 6%, 2059 1,250,000 1,455,513
- -------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev.
(Massachusetts College of Pharmacy), 6.625%, 2020 100,000 109,986
- -------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Olin
College, "B", XLCA, 5.25%, 2033 2,000,000 2,076,900
- -------------------------------------------------------------------------------------------------
Northern Illinois University Rev., Auxiliary Facilities
Systems, AMBAC, 5.875%, 2018 1,370,000 1,532,551
- -------------------------------------------------------------------------------------------------
Savannah, GA, Economic Development Authority Rev.
(College of Art & Design, Inc.), 6.5%, 2013(++) 500,000 588,890
- -------------------------------------------------------------------------------------------------
St. Joseph County, IN, Educational Facilities Rev.
(University of Notre Dame), 6.5%, 2026 1,000,000 1,263,670
- -------------------------------------------------------------------------------------------------
Tulsa, OK, Industrial Authority Rev. (University of
Tulsa), "A", MBIA, 6%, 2016 1,250,000 1,516,663
- -------------------------------------------------------------------------------------------------
Upland, IN, Economic Development Rev. (Taylor
University), 6%, 2018 435,000 491,024
- -------------------------------------------------------------------------------------------------
Upland, IN, Economic Development Rev. (Taylor
University), 6.25%, 2023 520,000 571,610
- -------------------------------------------------------------------------------------------------
$15,228,867
- -------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 1.8%
- -------------------------------------------------------------------------------------------------
California Statewide Communities, Development Authority
Rev. (Escondido Charter High School), 7.5%, 2036 $500,000 $506,425
- -------------------------------------------------------------------------------------------------
Clark County, NV, Economic Development Rev. (Alexander
Dawson School), 5.5%, 2020 1,500,000 1,586,880
- -------------------------------------------------------------------------------------------------
Maine Finance Authority, Educational Rev. (Waynflete
School), 6.4%, 2019 1,000,000 1,089,190
- -------------------------------------------------------------------------------------------------
Maine Finance Authority, Educational Rev. (Waynflete
School), 6.5%, 2029 1,000,000 1,068,780
- -------------------------------------------------------------------------------------------------
Michigan Municipal Bond Authority Rev. (Detroit Academy
of Arts & Sciences), 8%, 2031 300,000 294,363
- -------------------------------------------------------------------------------------------------
Michigan Municipal Bond Authority Rev. (YMCA Service
Learning Academy), 7.625%, 2021 400,000 404,052
- -------------------------------------------------------------------------------------------------
New Hampshire Health & Education (Derryfield School),
6.5%, 2010 360,000 372,002
- -------------------------------------------------------------------------------------------------
Pima County, AZ, Industrial Development Authority
Education Rev. (Arizona Charter Schools), "C",
6.75%, 2031 500,000 514,200
- -------------------------------------------------------------------------------------------------
$5,835,892
- -------------------------------------------------------------------------------------------------
Utilities - Cogeneration - 1.5%
- -------------------------------------------------------------------------------------------------
Carbon County, PA, Industrial Development Authority
Rev. (Panther Creek Partners), 6.65%, 2010 $700,000 $757,393
- -------------------------------------------------------------------------------------------------
Klamath Falls, OR, Electric Rev. (Klamath
Cogeneration), 6%, 2025 1,475,000 1,462,610
- -------------------------------------------------------------------------------------------------
Mecklenburg County, VA, Industrial Development
Authority Rev. (UAE Mecklenburg, LP), 6.5%, 2017 700,000 718,480
- -------------------------------------------------------------------------------------------------
Pittsylvania County, VA, Industrial Development
Authority Rev. (Multi-trade of Pittsylvania), 7.5%, 2014 2,000,000 2,060,140
- -------------------------------------------------------------------------------------------------
$4,998,623
- -------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 4.2%
- -------------------------------------------------------------------------------------------------
Apache County, AZ, Industrial Development Authority,
Pollution Control Rev. (Tuscon Electric Power Co.),
5.875%, 2033 $1,000,000 $999,250
- -------------------------------------------------------------------------------------------------
Brazos River Authority, TX, Pollution Control Rev.
(Texas Utility Co.), "B", 6.3%, 2032 250,000 263,695
- -------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority,
Pollution Control Rev. (Pacific Gas & Electric Co.),
MBIA, 5.35%, 2016 1,600,000 1,733,616
- -------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority,
Pollution Control Rev. (Southern California Edison
Co.), 6.4%, 2024 500,000 504,015
- -------------------------------------------------------------------------------------------------
Connecticut Development Authority, Pollution Control
Rev. (Connecticut Light & Power Co.), 5.85%, 2028 1,000,000 1,052,760
- -------------------------------------------------------------------------------------------------
Farmington, NM, Pollution Control Rev. (New Mexico
Public Service), 5.8%, 2022 500,000 507,390
- -------------------------------------------------------------------------------------------------
Farmington, NM, Pollution Control Rev. (New Mexico
Public Service), "A", 6.3%, 2016 565,000 616,076
- -------------------------------------------------------------------------------------------------
Farmington, NM, Pollution Control Rev. (New Mexico
Public Service), 6.375%, 2022 1,000,000 1,073,110
- -------------------------------------------------------------------------------------------------
Matagorda County, TX, Pollution Control Rev. (Central
Power & Light Co.), 4.55%, 2029 1,000,000 1,038,870
- -------------------------------------------------------------------------------------------------
Matagorda County, TX, Pollution Control Rev. (Reliant
Energy), 5.95%, 2030 750,000 745,155
- -------------------------------------------------------------------------------------------------
New Hampshire Industrial Development Authority,
Pollution Control (CT Light and Power), 5.9%, 2016 500,000 527,325
- -------------------------------------------------------------------------------------------------
Pima County, AZ, Industrial Development Authority Rev.
(Tucson Electric Power Co.), 6.1%, 2025 2,000,000 1,995,180
- -------------------------------------------------------------------------------------------------
Port Morrow, OR, Pollution Control Rev. (Portland
General Electric), 5.2%, 2033 350,000 370,423
- -------------------------------------------------------------------------------------------------
Sabine River Authority, TX, Pollution Control Rev. (TXU
Electric Co.) "A", 5.5%, 2022 500,000 537,515
- -------------------------------------------------------------------------------------------------
West Feliciana Parish, LA, Pollution Control Rev.
(Energy Gulf States), 6.6%, 2028 1,665,000 1,700,764
- -------------------------------------------------------------------------------------------------
West Feliciana Parish, LA, Pollution Control Rev. (Gulf
States Utilities Co.), 7.7%, 2014 450,000 453,659
- -------------------------------------------------------------------------------------------------
$14,118,803
- -------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.3%
- -------------------------------------------------------------------------------------------------
Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2011 $1,500,000 $1,818,390
- -------------------------------------------------------------------------------------------------
California State, Department of Water Resources Power
Supply Rev., "A", 5.125%, 2018 750,000 804,668
- -------------------------------------------------------------------------------------------------
Georgia Municipal Electric Power Authority Rev., MBIA,
6.375%, 2016 2,000,000 2,462,800
- -------------------------------------------------------------------------------------------------
Georgia Municipal Electric Power Authority Rev., MBIA,
6.5%, 2020 7,350,000 9,286,137
- -------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, Catawba Electric
Rev., 6.375%, 2013 750,000 844,223
- -------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, Catawba Electric
Rev., MBIA, 7%, 2007 3,250,000 3,591,835
- -------------------------------------------------------------------------------------------------
North Carolina Municipal Power Agency, ROLs, MBIA,
8.688%, 2019+(+) 1,500,000 1,763,670
- -------------------------------------------------------------------------------------------------
West Wilson Utility District, TN, Waterworks Rev.,
MBIA, 5.25%, 2030 480,000 503,477
- -------------------------------------------------------------------------------------------------
$21,075,200
- -------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 4.4%
- -------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., RITES, FGIC,
9.0525%, 2016+(+) $1,000,000 $1,332,640
- -------------------------------------------------------------------------------------------------
Forsyth County, GA, Water & Sewage Authority,
6.25%, 2010(++) 1,170,000 1,378,202
- -------------------------------------------------------------------------------------------------
Massachusetts Water Resources Authority, 6.5%, 2019 5,965,000 7,350,431
- -------------------------------------------------------------------------------------------------
New York State Environmental Facilities, 5%, 2016 430,000 455,473
- -------------------------------------------------------------------------------------------------
New York State Environmental Facilities, ETM,
5%, 2016(++) 570,000 612,590
- -------------------------------------------------------------------------------------------------
Pittsburgh, PA, Water & Sewer Authority Rev., "C", FSA,
5.25%, 2022 2,000,000 2,080,080
- -------------------------------------------------------------------------------------------------
Pittsburgh, PA, Water & Sewer Authority Rev., FGIC,
0%, 2018 2,300,000 1,230,822
- -------------------------------------------------------------------------------------------------
Spartanburg, SC, Water & Sewer Authority Rev., "B",
MBIA, 5.25%, 2030 255,000 268,206
- -------------------------------------------------------------------------------------------------
$14,708,444
- -------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $302,807,328) $327,349,381
- -------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.7%
- -------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev.
(Adventist Hospital), "B", due 10/01/04 $100,000 $100,000
- -------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev.,
"A", due 10/01/04 900,000 900,000
- -------------------------------------------------------------------------------------------------
Chicago, IL, Midway Airport Rev., Second Lien, "A",
due 10/01/04 200,000 200,000
- -------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement
Warrants, "A", due 10/01/04 100,000 100,000
- -------------------------------------------------------------------------------------------------
Mt. Vernon Industrial Pollution Control Rev. (General
Electric Co. Project), due 10/01/04 1,000,000 1,000,000
- -------------------------------------------------------------------------------------------------
Orange County, FL, School District, "B", due 10/01/04 200,000 200,000
- -------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Identified Cost $2,500,000
- -------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $305,307,328) $329,849,381
- -------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.1% 3,664,531
- -------------------------------------------------------------------------------------------------
Net Assets - 100.0% $333,513,912
- -------------------------------------------------------------------------------------------------
+ Restricted security.
(+) Inverse floating rate security.
## SEC Rule 144A restriction
(++) Refunded bond.
** Interest received was less than stated coupon rate.
The following abbreviations are used in the Portfolio of Investments and are defined:
ETM = Escrowed to maturity
INSURERS: INVERSE FLOATERS:
AMBAC = AMBAC Indemnity Corp. RIBS = Residual Interest Bonds
CONNIE LEE = Connie Lee Insurance Co. RITES = Residual Interest Tax-Exempt Security
FGIC = Financial Guaranty Insurance Co. ROLs = Residual Option Longs
FHA = Federal Housing Administration
FSA = Financial Security Assurance, Inc.
GNMA = Government National Mortgage Assn.
MBIA = Municipal Bond Investors Corp.
PSF = Permanent School Fund
XLCA = XL Capital Insurance Co.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- -----------------------------------------------------------------------------------------------------
This statement represents your fund's balance sheet, which details the assets
and liabilities composing the total value of your fund.
AT 9/30/04
ASSETS
Investments, at value (identified cost, $305,307,328) $329,849,381
- -----------------------------------------------------------------------------------------------------
Cash 81,254
- -----------------------------------------------------------------------------------------------------
Receivable for invesments sold 1,989,802
- -----------------------------------------------------------------------------------------------------
Receivable for fund shares sold 137,807
- -----------------------------------------------------------------------------------------------------
Interest receivable 4,939,183
- -----------------------------------------------------------------------------------------------------
Other assets 2,558
- -----------------------------------------------------------------------------------------------------
Total assets $336,999,985
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $565,973
- -----------------------------------------------------------------------------------------------------
Payable for investments purchased 1,168,387
- -----------------------------------------------------------------------------------------------------
Payable for fund shares reacquired 139,000
- -----------------------------------------------------------------------------------------------------
Unrealized depreciation on interest rate swap agreements 1,452,665
- -----------------------------------------------------------------------------------------------------
Payable to affiliates
- -----------------------------------------------------------------------------------------------------
Management fee 2,738
- -----------------------------------------------------------------------------------------------------
Shareholder servicing costs 17,863
- -----------------------------------------------------------------------------------------------------
Distribution and service fee 3,958
- -----------------------------------------------------------------------------------------------------
Administrative fee 42
- -----------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 135,447
- -----------------------------------------------------------------------------------------------------
Total liabilities $3,486,073
- -----------------------------------------------------------------------------------------------------
Net assets $333,513,912
- -----------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $315,603,345
- -----------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments 23,089,388
- -----------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (4,757,423)
- -----------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment
income (421,398)
- -----------------------------------------------------------------------------------------------------
Net assets $333,513,912
- -----------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 38,634,967
- -----------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class A shares
Net assets $252,223,040
- -----------------------------------------------------------------------------------------------------
Shares outstanding 29,232,055
- -----------------------------------------------------------------------------------------------------
Net asset value per share $8.63
- -----------------------------------------------------------------------------------------------------
Offering price per share (100/95.25X$8.63) $9.06
- -----------------------------------------------------------------------------------------------------
Class B shares
Net assets $46,725,517
- -----------------------------------------------------------------------------------------------------
Shares outstanding 5,407,830
- -----------------------------------------------------------------------------------------------------
Net asset value and offering price per share $8.64
- -----------------------------------------------------------------------------------------------------
Class C shares
Net assets $34,565,355
- -----------------------------------------------------------------------------------------------------
Shares outstanding 3,995,082
- -----------------------------------------------------------------------------------------------------
Net asset value and offering price per share $8.65
- -----------------------------------------------------------------------------------------------------
On sales of $100,000 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
- -----------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (unaudited)
- -----------------------------------------------------------------------------------------------------
This statement describes how much your fund received in investment income and
paid in expenses. It also describes any gains and/or losses generated by fund
operations.
FOR THE SIX MONTHS ENDED 9/30/04
NET INVESTMENT INCOME
Interest income $9,653,859
- -----------------------------------------------------------------------------------------------------
Expenses
- -----------------------------------------------------------------------------------------------------
Management fee $925,427
- -----------------------------------------------------------------------------------------------------
Trustees' compensation 7,484
- -----------------------------------------------------------------------------------------------------
Shareholder servicing costs 184,516
- -----------------------------------------------------------------------------------------------------
Service fee (Class A) 316,539
- -----------------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 242,217
- -----------------------------------------------------------------------------------------------------
Distribution and service fee (Class C) 173,962
- -----------------------------------------------------------------------------------------------------
Administrative fee 14,318
- -----------------------------------------------------------------------------------------------------
Custodian fee 61,252
- -----------------------------------------------------------------------------------------------------
Printing 38,046
- -----------------------------------------------------------------------------------------------------
Postage 2,633
- -----------------------------------------------------------------------------------------------------
Auditing fees 19,258
- -----------------------------------------------------------------------------------------------------
Legal fees 4,772
- -----------------------------------------------------------------------------------------------------
Miscellaneous 52,531
- -----------------------------------------------------------------------------------------------------
Total expenses $2,042,955
- -----------------------------------------------------------------------------------------------------
Fees paid indirectly (1,258)
- -----------------------------------------------------------------------------------------------------
Reduction of expenses by investment adviser (421,552)
- -----------------------------------------------------------------------------------------------------
Net expenses $1,620,145
- -----------------------------------------------------------------------------------------------------
Net investment income $8,033,714
- -----------------------------------------------------------------------------------------------------
Statement of Operations (unaudited) - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) (identified cost basis)
- -----------------------------------------------------------------------------------------------------
Investment transactions $1,669,795
- -----------------------------------------------------------------------------------------------------
Swap transactions (401,518)
- -----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $1,268,277
- -----------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
- -----------------------------------------------------------------------------------------------------
Investments $(4,448,039)
- -----------------------------------------------------------------------------------------------------
Swap transactions (443,686)
- -----------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(4,891,725)
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(3,623,448)
- -----------------------------------------------------------------------------------------------------
Change in net assets from operations $4,410,266
- -----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------
This statement describes the increases and/or decreases in net assets
resulting from operations, any distributions, and any shareholder
transactions.
SIX MONTHS ENDED YEAR ENDED
9/30/04 3/31/04
(UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
Net investment income $8,033,714 $16,994,651
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 1,268,277 (1,682,213)
- -------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments (4,891,725) 8,784,137
- ------------------------------------------------------------ ------------- -------------
Change in net assets from operations $4,410,266 $24,096,575
- ------------------------------------------------------------ ------------- -------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
- -------------------------------------------------------------------------------------------------------
Class A $(6,130,767) $(13,264,818)
- -------------------------------------------------------------------------------------------------------
Class B (990,753) (2,354,471)
- -------------------------------------------------------------------------------------------------------
Class C (711,984) (1,644,710)
- -------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(7,833,504) $(17,263,999)
- ------------------------------------------------------------ ------------- -------------
Net change in net assets from fund
share transactions $(17,963,113) $(25,385,914)
- ------------------------------------------------------------ ------------- -------------
Redemption fees $656 $--
- ------------------------------------------------------------ ------------- -------------
Total change in net assets $(21,385,695) $(18,553,338)
- ------------------------------------------------------------ ------------- -------------
NET ASSETS
At beginning of period $354,899,607 $373,452,945
- -------------------------------------------------------------------------------------------------------
At end of period (including accumulated distributions
in excess of net investment income of $421,398 and
$575,902, respectively) $333,513,912 $354,899,607
- -------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period
and the past 5 fiscal years (or, if shorter, the period of the fund's operation). Certain information reflects financial
results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or
lost) on an investment in the fund (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------------------------
CLASS A 9/30/04 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value, beginning
of period $8.70 $8.54 $8.32 $8.54 $8.33 $8.97
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS(S)(S)#
Net investment income(S) $0.21 $0.41 $0.41 $0.44 $0.46 $0.48
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (0.07) 0.17 0.25 (0.20) 0.27 (0.59)
- --------------------------------- --------- ------ ------ ------ ------ ------
Total from investment
operations $0.14 $0.58 $0.66 $0.24 $0.73 $(0.11)
- --------------------------------- --------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.21) $(0.42) $(0.44) $(0.46) $(0.47) $(0.47)
- -------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments -- -- -- -- (0.02) (0.06)
- -------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (0.03) --
- --------------------------------- --------- ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.21) $(0.42) $(0.44) $(0.46) $(0.52) $(0.53)
- --------------------------------- --------- ------ ------ ------ ------ ------
Redemption fees added to
paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- --------------------------------- --------- ------ ------ ------ ------ ------
Net asset value, end of period $8.63 $8.70 $8.54 $8.32 $8.54 $8.33
- --------------------------------- --------- ------ ------ ------ ------ ------
Total return (%)(+) 1.63++ 6.94 8.00 2.78 9.06 (1.15)
- -------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 3/31
ENDED ------------------------------------------------------------------------
CLASS A (CONTINUED) 9/30/04 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.78+ 0.88 0.90 0.91 0.89 0.88
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.97+ 4.80 4.85 5.12 5.55 5.66
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 4 9 13 15 15 57
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $252,223 $264,797 $274,442 $276,719 $255,799 $217,880
- -------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer service fees paid to Tarantino LLC. If these fees had been incurred by the fund, the
net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.20 $0.40 $0.40 $0.41 $0.44 $0.45
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
Expenses## 1.03+ 1.04 1.05 1.15 1.20 1.20
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.72+ 4.64 4.70 4.88 5.24 5.34
- -------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002 was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount is less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been
included, the results would have been lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 3/21
ENDED -------------------------------------------------------------------------
CLASS B 9/30/04 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value, beginning
of period $8.72 $8.55 $8.33 $8.55 $8.34 $8.98
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS(S)(S)#
Net investment income(S) $0.18 $0.35 $0.35 $0.37 $0.40 $0.42
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (0.09) 0.18 0.24 (0.20) 0.27 (0.59)
- --------------------------------- --------- ------ ------ ------ ------ ------
Total from investment
operations $0.09 $0.53 $0.59 $0.17 $0.67 $(0.17)
- --------------------------------- --------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.17) $(0.36) $(0.37) $(0.39) $(0.41) $(0.41)
- -------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments -- -- -- -- (0.02) (0.06)
- -------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (0.03) --
- --------------------------------- --------- ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.17) $(0.36) $(0.37) $(0.39) $(0.46) $(0.47)
- --------------------------------- --------- ------ ------ ------ ------ ------
Redemption fees added to
paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- --------------------------------- --------- ------ ------ ------ ------ ------
Net asset value, end of period $8.64 $8.72 $8.55 $8.33 $8.55 $8.34
- --------------------------------- --------- ------ ------ ------ ------ ------
Total return (%) 1.13++ 6.27 7.19 2.00 8.24 (1.89)
- -------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 3/31
ENDED ------------------------------------------------------------------------
CLASS B (CONTINUED) 9/30/04 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.53+ 1.63 1.65 1.66 1.64 1.63
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.22+ 4.05 4.10 4.37 4.82 4.89
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 4 9 13 15 15 57
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $46,726 $52,594 $59,591 $61,627 $75,858 $93,656
- -------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer service fees paid to Tarantino LLC. If these fees had been incurred by the fund, the
net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.17 $0.34 $0.34 $0.35 $0.38 $0.39
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
Expenses## 1.78+ 1.79 1.80 1.90 1.95 1.95
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.97+ 3.89 3.95 4.13 4.51 4.57
- -------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002 was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount is less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------------------
CLASS C 9/30/04 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value, beginning
of period $8.73 $8.56 $8.34 $8.56 $8.35 $8.99
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS(S)(S)#
Net investment income(S) $0.18 $0.35 $0.35 $0.37 $0.40 $0.42
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (0.08) 0.18 0.24 (0.20) 0.27 (0.59)
- --------------------------------- --------- ------ ------ ------ ------ ------
Total from investment
operations $0.10 $0.53 $0.59 $0.17 $0.67 $(0.17)
- --------------------------------- --------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.18) $(0.36) $(0.37) $(0.39) $(0.41) $(0.41)
- -------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments -- -- -- -- (0.02) (0.06)
- -------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (0.03) --
- --------------------------------- --------- ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.18) $(0.36) $(0.37) $(0.39) $(0.46) $(0.47)
- --------------------------------- --------- ------ ------ ------ ------ ------
Redemption fees added to
paid-in capital# $0.00+++ $-- $-- $-- $-- $--
- --------------------------------- --------- ------ ------ ------ ------ ------
Net asset value, end of period $8.65 $8.73 $8.56 $8.34 $8.56 $8.35
- --------------------------------- --------- ------ ------ ------ ------ ------
Total return (%) 1.13++ 6.27 7.18 2.00 8.23 (1.89)
- -------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 3/31
ENDED ------------------------------------------------------------------------
CLASS C (CONTINUED) 9/30/04 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.53+ 1.63 1.65 1.66 1.64 1.63
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 4.22+ 4.05 4.10 4.37 4.80 4.89
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 4 9 13 15 15 57
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $34,565 $37,508 $39,420 $36,146 $29,257 $26,037
- -------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser contractually waived a portion of its fee for the periods indicated. In addition, for the period
ended September 30, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer service fees paid to Tarantino LLC. If these fees had been incurred by the fund, the
net investment income per share and the ratios would have been:
Net investment income(S)(S) $0.17 $0.34 $0.34 $0.35 $0.37 $0.39
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
Expenses## 1.78+ 1.79 1.80 1.90 1.95 1.95
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 3.97+ 3.89 3.95 4.13 4.49 4.57
- -------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective April 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended
March 31, 2002 was to increase net investment income per share and decrease net realized and unrealized gains and losses
per share. The impact of this change calculates to less than $0.01 per share. In addition, the ratio of net investment
income to average net assets increased by 0.02%. Per share, ratios, and supplemental data for periods prior to April 1,
2001 have not been restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
+++ Per share amount is less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
SEE NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- -------------------------------------------------------------------------------
(1) BUSINESS AND ORGANIZATION
MFS Municipal Income Fund (the fund) is a diversified series of MFS Municipal
Series Trust (the trust). The trust is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
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.
Municipal securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the discontinuance of
the taxation supporting the projects or assets or the inability to collect
revenues for the project or from the assets. If the Internal Revenue Service
determines an issuer of a municipal security has not complied with applicable
tax requirements, interest from the security could become taxable and the
security could decline in value.
INVESTMENT VALUATIONS - Bonds and other fixed income securities (other than
short-term obligations) in the fund's portfolio are valued at an evaluated bid
price as reported by an independent pricing service, or to the extent a
valuation is not reported by a pricing service, such securities are valued on
the basis of quotes from brokers and dealers. Prices obtained from pricing
services utilize both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate 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 quoted prices or exchange or over-the-
counter prices, since such valuations are believed to reflect more accurately
the fair value of such securities. Short-term obligations with a remaining
maturity in excess of 60 days will be valued upon dealer-supplied valuations.
All other short-term obligations in the fund's portfolio are valued at
amortized cost, which constitutes market value as determined by the Board of
Trustees. When pricing service information or market quotations are not readily
available, securities are priced at fair value as determined under the
direction of the Board of Trustees.
SWAP AGREEMENTS - The fund may enter into swap agreements. A swap is an
exchange of cash payments between the fund and another party, which is based on
a specific financial index. Cash payments are exchanged at specified intervals
and the expected income or expense is recorded on the accrual basis. The value
of the swap is adjusted daily and the change in value is recorded as unrealized
appreciation or depreciation. Risks may arise upon entering into these
agreements from the potential inability of counterparties to meet the terms of
their contract and from unanticipated changes in the value of the financial
index on which the swap agreement is based. The fund uses swaps for both
hedging and non-hedging purposes. For hedging purposes, the fund may use swaps
to reduce its exposure to interest and foreign exchange rate fluctuations. For
non-hedging purposes, the fund may use swaps to take a position on anticipated
changes in the underlying financial index.
INTEREST RATE SWAP AGREEMENTS - Interest rate swap agreements are agreements to
exchange cash flows periodically based on a notional principal amount, for
example the exchange of fixed rate interest payments for floating rate interest
payments which are based on a specific financial index, or the exchange of two
distinct floating rate payments. The net receivable or payable associated with
these payments is accrued daily and is recorded as net interest income or
expense. For financial statement purposes, the net interest income or expense
periodically recognized for an interest rate swap is recorded in the same line
item as any unrealized and realized gains or losses recognized for that
instrument. The primary risk associated with interest rate swap agreements is
that unfavorable changes in the fluctuation of interest rates could adversely
impact the fund.
RATE LOCK SWAPS - The fund may enter into rate lock swaps, which are used to
reduce the interest rate risk of the portfolio. A rate lock swap is a payment
or receipt of cash on a specified future date, calculated as the difference
between the strike rate and a specific index yield on that date. The payment
received or made at the end of the measurement period is recorded as a realized
gain or loss in the Statement of Operations. The value of the swap is adjusted
daily and the change in value is recorded as unrealized appreciation or
depreciation.
SHORT TERM FEES - For purchases made on or after July 1, 2004, the fund will
charge a 2% redemption fee (which is retained by the fund) on proceeds from
shares redeemed or exchanged within 5 business days following their acquisition
(either by purchase or exchange). The fund may change the redemption fee period
in the future, including changes in connection with pending Securities and
Exchange Commission rules. See the fund's prospectus for details. These fees
are accounted for as an addition to paid-in capital.
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 purposes in
accordance with U.S. generally accepted accounting principles. All premium and
original issue discount is amortized or accreted for tax reporting purposes as
required by federal income tax regulations.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions made directly to the security issuer,
which are generally non-recurring, incurred to protect or enhance the value of
high-yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount, for the six months ended September 30, 2004, is shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net tax-
exempt and taxable net income, including any net realized gain on investments.
Accordingly, no provision for federal income or excise tax is provided.
Distributions paid by the fund from net interest received on tax-exempt
municipal bonds are not includable by shareholders as gross income for federal
income tax purposes because the fund intends to meet certain requirements of
the Code applicable to regulated investment companies, which will enable the
fund to pay exempt-interest dividends. The portion of such interest, if any,
earned on private activity bonds issued after August 7, 1986 may be considered
a tax-preference item to shareholders.
Distributions to shareholders are recorded on the ex-dividend date. The fund
distinguishes between distributions on a tax basis and a financial reporting
basis and only distributions in excess of tax basis earnings and profits are
reported in the financial statements as distributions from paid-in capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. Common
types of book and tax differences that could occur include differences in
accounting for derivatives, capital losses, and amortization and accretion on
debt securities.
The tax character of distributions declared for the years ended March 31,
2004, and March 31, 2003 was as follows:
3/31/04 3/31/03
Distributions declared from tax-exempt income $17,263,999 $18,661,666
- --------------------------------------------------------------------------------
As of March 31, 2004, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed tax-exempt income $987,656
----------------------------------------------------------
Capital loss carryforward (6,386,266)
----------------------------------------------------------
Unrealized appreciation 28,233,998
----------------------------------------------------------
Other temporary differences (1,501,583)
----------------------------------------------------------
For federal income tax purposes, the capital loss carryforward may be applied
against any net taxable realized gains of each succeeding year until the
earlier of its utilization or expiration on March 31, 2010, ($1,199,142), March
31, 2011 ($1,101,451), and March 31, 2012 (4,085,673).
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - The fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. Differences in per
share dividend rates are generally due to differences in separate class
expenses. Class B shares will convert to Class A shares approximately eight
years after purchase.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISOR - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
the fund's average daily net assets. The investment adviser has contractually
agreed to waive a portion of its fee, which is shown as a reduction of total
expenses in the Statement of Operations.
As part of a settlement agreement with the New York Attorney General concerning
market timing and related matters (See Legal Proceedings footnote), MFS has
agreed to reduce the fund's management fee to 0.30% of average daily net assets
for the period March 1, 2004 through February 28, 2009. During this time
period, the Board of Trustees will continue to review the appropriateness of
all advisory fees in accordance with their oversight responsibilities. After
February 28, 2009 the management fee will be determined in accordance with then
existing review policies approved by the Board of Trustees overseeing the fund.
Management fees incurred for the six months ended September 30, 2004 were an
effective rate of 0.30% of average daily net assets on an annualized basis.
The fund pays compensation to its Independent Trustees in the form of a
retainer, attendance fees, and additional compensation to Board and Committee
chairpersons, and 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 retired Independent Trustees. Included in
Trustees' compensation is a pension expense of $1,452 for retired Independent
Trustees for the six months ended September 30, 2004.
This fund and certain other MFS funds (the "funds") have entered into a
services agreement (the "Agreement") which provides for payment of fees by the
MFS funds to Tarantino LLC in return for the provision of services of an
Independent Chief Compliance Officer (ICCO) for the MFS funds. The ICCO is an
officer of the MFS funds and the sole member of Tarantino LLC. MFS has agreed
to reimburse each of the MFS funds for a proportional share of substantially
all of the payments made by the MFS funds to Tarantino LLC and also to provide
office space and other administrative support and supplies to the ICCO. The
funds can terminate the Agreement with Tarantino LLC at any time under the
terms of the Agreement.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment advisor. Under an administrative services
agreement between the funds and MFS, MFS is entitled to partial reimbursement
of the costs MFS incurs to provide these services, subject to review and
approval by the Board of Trustees. Each fund is allocated a portion of these
administrative costs based on its size and relative average net assets.
Effective April 1, 2004, the fund paid MFS an administrative fee up to the
following annual percentage rates of the fund's average daily net assets:
First $2 billion 0.01120%
----------------------------------------------------------
Next $2.5 billion 0.00832%
----------------------------------------------------------
Next $2.5 billion 0.00032%
----------------------------------------------------------
In excess of $7 billion 0.00000%
----------------------------------------------------------
For the six months ended September 30, 2004, the fund paid MFS $14,318
equivalent to 0.0085% of average daily net assets, to partially reimburse MFS
for the costs of providing administrative services.
DISTRIBUTOR - MFD, a wholly owned subsidiary of MFS, as distributor, received
$13,931 for the six months ended September 30, 2004, 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 an annual
percentage of its average daily net assets attributable to certain share
classes 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
based on the average daily net assets of accounts attributable to such dealers.
The fees are calculated based on each class' average daily net assets. The
maximum distribution and service fees for each class of shares are as follows:
CLASS A CLASS B CLASS C
Distribution Fee 0.10% 0.75% 0.75%
- --------------------------------------------------------------------------------------------------------
Service Fee 0.25% 0.25% 0.25%
- --------------------------------------------------------------------------------------------------------
Total Distribution Plan 0.35% 1.00% 1.00%
- --------------------------------------------------------------------------------------------------------
MFD retains the service fee for accounts not attributable to a securities dealer, which for the six months
ended September 30, 2004 amounted to:
CLASS A CLASS B CLASS C
Service Fee Retained by MFD $10,506 $192 $68
- --------------------------------------------------------------------------------------------------------
Payment of the 0.10% per annum Class A distribution fee will be implemented on such date as the Trustees of
the Trust may determine.
Fees incurred under the distribution plan during the six months ended September 30, 2004 were as follows:
CLASS A CLASS B CLASS C
Effective Annual Percentage Rates 0.25% 1.00% 1.00%
- --------------------------------------------------------------------------------------------------------
Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a
shareholder redemption within, for Class A shares, 12 months following the purchase, and, for Class C
shares, the first year from the end of the calendar month of 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 from the end of the calendar month of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the six months ended September 30, 2004 were as follows:
CLASS A CLASS B CLASS C
Contingent Deferred Sales Charges Imposed $4 $51,332 $7,523
- --------------------------------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT - Included in shareholder servicing costs is a fee
paid to MFSC, a wholly owned subsidiary of MFS, for its services as shareholder
servicing agent. The fee, which is calculated as a percentage of the fund's
average daily net assets is set periodically under the supervision of the
fund's Trustees. For the period April 1, 2004 through June 30, 2004, the fee
was set at 0.10% of the fund's average daily net assets. Effective July 1,
2004, the fund is charged up to 0.0861% of its average daily net assets. For
the six months ended September 30, 2004, the fund paid MFSC a fee of $153,993
for shareholder services which equated to 0.0915% of the fund's average net
assets. Also included in shareholder servicing costs are out-of- pocket
expenses, paid to MFSC, which amounted to $5,759 for the six months ended
September 30, 2004, as well as other expenses paid to unaffiliated vendors.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$12,477,210 and $33,598,828, respectively.
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $304,949,938
----------------------------------------------------------
Gross unrealized appreciation $31,442,107
----------------------------------------------------------
Gross unrealized depreciation (6,542,664)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $24,899,443
----------------------------------------------------------
(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:
Six months ended 9/30/04 Year ended 3/31/04
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Shares sold 808,981 $6,896,273 3,923,574 $33,678,836
- -----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 468,559 4,001,139 867,292 7,450,143
- -----------------------------------------------------------------------------------------------------------
Shares reacquired (2,469,145) (20,968,831) (6,505,143) (55,872,881)
- -----------------------------------------------------------------------------------------------------------
Net change (1,191,605) $(10,071,419) (1,714,277) $(14,743,902)
- -----------------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 225,482 $1,923,090 534,325 $4,621,956
- -----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 65,458 559,722 133,556 1,149,141
- -----------------------------------------------------------------------------------------------------------
Shares reacquired (917,455) (7,803,768) (1,602,274) (13,788,797)
- -----------------------------------------------------------------------------------------------------------
Net change (626,515) $(5,320,956) (934,393) $(8,017,700)
- -----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 215,122 $1,834,285 1,083,331 $9,355,388
- -----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 65,379 559,887 125,956 1,084,943
- -----------------------------------------------------------------------------------------------------------
Shares reacquired (583,136) (4,964,910) (1,515,353) (13,064,643)
- -----------------------------------------------------------------------------------------------------------
Net change (302,635) $(2,570,738) (306,066) $(2,624,312)
- -----------------------------------------------------------------------------------------------------------
(6) LINE OF CREDIT
The fund and other affiliated funds participate in an $800 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each fund, based on its borrowings, at a rate equal to the Federal
Reserve funds rate plus 0.50%. 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 calendar quarter. The commitment fee
allocated to the fund for the six months ended September 30, 2004 was $305, and
is included in miscellaneous expense. The fund had no significant borrowings
during the six months ended September 30, 2004.
(7) FINANCIAL INSTRUMENTS
The fund trades financial instruments with off-balance-sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include swap agreements. The notional or contractual amounts of
these instruments represent the investment the fund has in particular classes
of financial instruments and does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered.
Swap Agreements
Interest Rate Swap Agreements
NOTIONAL
PRINCIPAL CASH FLOWS CASH FLOWS UNREALIZED
AMOUNT OF PAID BY RECEIVED BY APPRECIATION
EXPIRATION CONTRACT THE FUND THE FUND (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------
11/15/04 Fixed - 2 Year BMA Floating - 7 day BMA
4,000,000 Swap Index, (1.945%) Swap Index $(5,164)
- -----------------------------------------------------------------------------------------------------------------
10/27/14 Fixed - 10 Year BMA Floating - 7 day BMA
5,985,000 Swap Index, (3.444%) Swap Index 36,365
- -----------------------------------------------------------------------------------------------------------------
11/09/14 Fixed - 10 Year BMA Floating - 7 day BMA
5,985,000 Swap Index, (3.73%) Swap Index (101,916)
- -----------------------------------------------------------------------------------------------------------------
11/17/14 Fixed - 10 Year BMA Floating - 7 day BMA
10,000,000 Swap Index, (4.1125%) Swap Index (465,010)
- -----------------------------------------------------------------------------------------------------------------
12/15/16 Fixed - 12 Year BMA Floating - 7 day BMA
5,000,000 Swap Index, (4.071%) Swap Index (167,318)
- -----------------------------------------------------------------------------------------------------------------
12/16/16 Fixed - 12 Year BMA Floating - 7 day BMA
4,000,000 Swap Index, (3.995%) Swap Index (105,472)
- -----------------------------------------------------------------------------------------------------------------
10/06/19 Fixed - 15 Year BMA Floating - 7 day BMA
7,500,000 Swap Index, (4.128%) Swap Index (239,343)
- -----------------------------------------------------------------------------------------------------------------
10/20/19 Fixed - 15 Year BMA Floating - 7 day BMA
11,000,000 Swap Index, (4.240%) Swap Index (446,586)
- -----------------------------------------------------------------------------------------------------------------
10/27/34 Floating - 7 day BMA Fixed - 30 Year BMA
3,150,000 Swap Index Swap Index, (4.132%) (22,872)
- -----------------------------------------------------------------------------------------------------------------
11/09/34 Floating - 7 day BMA Fixed - 30 Year BMA
3,150,000 Swap Index Swap Index, (4.322%) 64,651
- -----------------------------------------------------------------------------------------------------------------
$(1,452,665)
- -----------------------------------------------------------------------------------------------------------------
At September 30, 2004, the fund had sufficient cash and/or securities to cover
any commitments under these contracts.
(8) RESTRICTED SECURITIES
The fund may invest not more than 15% of its total assets in securities that
are subject to legal or contractual restrictions on resale. At September 30,
2004, the fund owned the following restricted securities, excluding securities
issued under Rule 144A, constituting 5.11% of net assets which may not be
publicly sold without registration under the Securities Act of 1933. The fund
does not have the right to demand that such securities be registered. The value
of these securities is determined by valuations furnished by dealers or by a
pricing service, of if not available, in good faith at the direction of the
Trustees.
DATE OF PAR
DESCRIPTION ACQUISITION AMOUNT COST VALUE
- ------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev.,
RITES, FGIC, 9.0525%, 2016 4/20/99 1,000,000 $1,167,100 $1,332,640
- ------------------------------------------------------------------------------------------------------------------
Chicago, IL (O'Hare International
Airport) RITES, FSA, 9.4934%, 2022 8/21/03 1,500,000 1,599,660 1,762,740
- ------------------------------------------------------------------------------------------------------------------
Chicago, IL, Public Building
Commission Rev., RITES, FGIC,
8.8377%, 2016-2017 3/10/99 2,750,000 2,957,100 3,516,230
- ------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ROLs,
FGIC, 9.2260%, 2015 7/15/01 3,000,000 3,878,760 4,046,880
- ------------------------------------------------------------------------------------------------------------------
Dudley-Charlton, MA, Regional School
District, RITES, FGIC, 8.5820%, 2017 5/15/99 1,495,000 1,615,945 1,927,773
- ------------------------------------------------------------------------------------------------------------------
Houston, TX, Independent School
District, RITES, PSF, 8.5525%, 2017 2/26/99 2,325,000 2,440,831 2,694,303
- ------------------------------------------------------------------------------------------------------------------
North Carolina Municipal Power
Agency, ROLs, MBIA, 8.6880%, 2019 10/28/96 1,500,000 1,717,980 1,763,670
- ------------------------------------------------------------------------------------------------------------------
$17,044,236
- ------------------------------------------------------------------------------------------------------------------
(9) CONCENTRATION OF CREDIT RISK
At September 30, 2004, 33.06% of securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments
insured by or supported (backed) by a letter of credit from any one institution
or agency did not exceed 16.7% of total investments.
(10) LEGAL PROCEEDINGS
On March 31, 2004, MFS settled an administrative proceeding with the Securities
and Exchange Commission ("SEC") regarding disclosure of brokerage allocation
practices in connection with MFS fund sales (the term "MFS funds" means the
open-end registered management investment companies sponsored by MFS). Under
the terms of the settlement, in which MFS neither admitted nor denied any
wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50
million in penalty to certain MFS funds, pursuant to a plan developed by an
independent distribution consultant. The brokerage allocation practices which
were the subject of this proceeding were discontinued by MFS in November 2003.
The agreement with the SEC is reflected in an order of the SEC. Pursuant to the
SEC order, on July 28, 2004, MFS transferred these settlement amounts to the
SEC, and those MFS funds entitled to these settlement amounts accrued an
estimate of their pro rata portion of these amounts. Once the final
distribution plan is approved by the SEC, these amounts will be distributed by
the SEC to the affected MFS funds. The SEC settlement order states that MFS
failed to adequately disclose to the Boards of Trustees and to shareholders of
the MFS funds the specifics of its preferred arrangements with certain
brokerage firms selling MFS fund shares. The SEC settlement order states that
MFS had in place policies designed to obtain best execution of all MFS fund
trades. As part of the settlement, MFS retained an independent compliance
consultant to review the completeness of its current policies and practices
regarding disclosure to MFS fund trustees and to MFS fund shareholders of
strategic alliances between MFS or its affiliates and broker-dealers and other
financial advisers who support the sale of MFS fund shares.
In addition, in February, 2004, MFS reached agreement with the SEC, the New
York Attorney General ("NYAG") and the Bureau of Securities Regulation of the
State of New Hampshire ("NH") to settle administrative proceedings alleging
false and misleading information in certain MFS retail fund prospectuses
regarding market timing and related matters (the "February Settlements"). These
regulators alleged that prospectus language for certain MFS retail funds was
false and misleading because, although the prospectuses for those funds in the
regulators' view indicated that the MFS funds prohibited market timing, MFS did
not limit trading activity in 11 domestic large cap stock, high grade bond and
money market funds. MFS' former Chief Executive Officer, John W. Ballen, and
former President, Kevin R. Parke, also reached agreement with the SEC in which
they agreed to, among other terms, monetary fines and temporary suspensions
from association with any investment adviser or registered investment company.
Messrs. Ballen and Parke have resigned their positions with, and will not be
returning to, MFS and the MFS funds. Under the terms of the February
Settlements, MFS and the executives neither admit nor deny wrongdoing.
Under the terms of the February Settlements, a $225 million pool has been
established for distribution to shareholders in certain MFS retail funds, which
has been funded by MFS and of which $50 million is characterized as a penalty.
This pool will be distributed in accordance with a methodology developed by an
independent distribution consultant in consultation with MFS and the Board of
Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further
agreed with NYAG to reduce its management fees in the aggregate amount of
approximately $25 million annually over the next five years, and not to
increase certain management fees during this period. MFS has also paid an
administrative fine to NH in the amount of $1 million, which will be used for
investor education purposes (NH retained $250,000 and $750,000 was contributed
to the North American Securities Administrators Association's Investor
Protection Trust). In addition, under the terms of the February Settlements,
MFS is in the process of adopting certain governance changes and reviewing its
policies and procedures.
Since December 2003, MFS, Sun Life Financial Inc., various MFS funds, the
Trustees of these MFS funds, and certain officers of MFS have been named as
defendants in multiple lawsuits filed in federal and state courts. The lawsuits
variously have been commenced as class actions or individual actions on behalf
of investors who purchased, held or redeemed shares of the MFS funds during
specified periods, as class actions on behalf of participants in certain
retirement plan accounts, or as derivative actions on behalf of the MFS funds.
The lawsuits relating to market timing and related matters have been
transferred to and consolidated before the United States District Court for the
District of Maryland, as part of a multi-district litigation of market timing
and related claims involving several other fund complexes (In re Mutual Funds
Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam, PIMCO),
No. 1:04-md-15863 (transfer began March 19, 2004)). Four lawsuits alleging
improper brokerage allocation practices and excessive compensation are pending
in the United States District Court for the District of Massachusetts (Forsythe
v. Sun Life Financial Inc., et al., No. 04cv10584 (GAO) (March 25, 2004);
Eddings v. Sun Life Financial Inc., et al., No. 04cv10764 (GAO) (April 15,
2004); Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No.
04cv11458 (GAO) (May 4, 2004); and Koslow v. Sun Life Financial Inc., et al.,
No. 04cv11019 (GAO) (May 20, 2004)). The lawsuits generally allege that some or
all of the defendants (i) permitted or acquiesced in market timing and/or late
trading in some of the MFS funds, inadequately disclosed MFS' internal policies
concerning market timing and such matters, and received excessive compensation
as fiduciaries to the MFS funds, or (ii) permitted or acquiesced in the
improper use of fund assets by MFS to support the distribution of MFS fund
shares and inadequately disclosed MFS' use of fund assets in this manner. The
actions assert that some or all of the defendants violated the federal
securities laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as
well as fiduciary duties and other violations of common law. The lawsuits seek
unspecified damages. Insofar as any of the actions is appropriately brought
derivatively on behalf of any of the MFS funds, any recovery will inure to the
benefit of the MFS funds. The defendants are reviewing the allegations of the
multiple complaints and will respond appropriately. Additional lawsuits based
on similar allegations may be filed in the future.
Any potential resolution of these matters may include, but not be limited to,
judgments or settlements for damages against MFS, the MFS funds, or any other
named defendant. As noted above, as part of the regulatory settlements, MFS has
established a restitution pool in the amount of $225 million to compensate
certain shareholders of the MFS retail funds for damages that they allegedly
sustained as a result of market timing or late trading in certain of the MFS
retail funds, and transferred $50 million for distribution to affected MFS
funds to compensate those funds based upon the amount of brokerage commissions
allocated in recognition of MFS fund sales. It is not clear whether these
amounts will be sufficient to compensate shareholders for all of the damage
they allegedly sustained, whether certain shareholders or putative class
members may have additional claims to compensation, or whether the damages that
may be awarded in any of the actions will exceed these amounts. In the event
the MFS funds incur any losses, costs or expenses in connection with such
lawsuits, the Boards of Trustees of the affected MFS funds may pursue claims on
behalf of such funds against any party that may have liability to the funds in
respect thereof.
Review of these matters by the independent Trustees of the MFS funds and their
counsel is continuing. There can be no assurance that these regulatory actions
and lawsuits, or the adverse publicity associated with these developments, will
not result in increased fund redemptions, reduced sales of fund shares, or
other adverse consequences to the MFS funds.
- ------------------------------------------------------------------------------------------------------
TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
- ------------------------------------------------------------------------------------------------------
The Trustees and officers of the Trust, as of November 10, 2004, are listed below, together with
their principal occupations during the past five years. (Their titles may have varied during that
period.) The address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts
02116.
PRINCIPAL OCCUPATIONS & OTHER
POSITION(s) HELD TRUSTEE/OFFICER DIRECTORSHIPS(2) DURING
NAME, DATE OF BIRTH WITH FUND SINCE(1) THE PAST FIVE YEARS
- ------------------- ---------------- --------------- -----------------------------
INTERESTED TRUSTEES
Robert J. Manning(3) Trustee and February 2004 Massachusetts Financial
(born 10/20/63) President Services Company, Chief
Executive Officer, President,
Chief Investment Officer and
Director
Robert C. Pozen(3) Trustee February 2004 Massachusetts Financial
(born 08/08/46) Services Company, Chairman
(since February 2004);
Harvard Law School
(education), John Olin
Visiting Professor (since
July 2002); Secretary of
Economic Affairs, The
Commonwealth of Massachusetts
(January 2002 to December
2002); Fidelity Investments,
Vice Chairman (June 2000 to
December 2001); Fidelity
Management & Research Company
(investment adviser),
President (March 1997 to July
2001); The Bank of New York
(financial services),
Director; Bell Canada
Enterprises (telecommunications),
Director; Telesat (satellite
communications), Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern
(born 05/01/36) Trustees Enterprises (diversified
services company), Chairman,
Trustee and Chief Executive
Officer (until November 2000)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital,
(born 03/11/37) Chief of Cardiac Surgery;
Harvard Medical School,
Professor of Surgery
David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining
(born 05/30/42) products and service
provider), Vice Chairman/
Director (since April 2001);
Encinitos Ventures (private
investment company),
Principal (1997 to April
2001); Lincoln Electric
Holdings, Inc. (welding
equipment manufacturer),
Director; Southwest Gas
Corporation (natural gas
distribution company),
Director
William R. Gutow Trustee December 1993 Private investor and real
(born 09/27/41) estate consultant; Capitol
Entertainment Management
Company (video franchise),
Vice Chairman
Amy B. Lane Trustee January 2004 Retired; Merrill Lynch & Co.,
(born 02/08/53) Inc., Managing Director,
Investment Banking Group
(1997 to February 2001);
Borders Group, Inc. (book and
music retailer), Director;
Federal Realty Investment
Trust (real estate investment
trust), Trustee
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes
(born 06/23/35) (attorneys), Partner
William J. Poorvu Trustee August 1982 Private investor; Harvard
(born 04/10/35) University Graduate School of
Business Administration,
Class of 1961 Adjunct
Professor in Entrepreneurship
Emeritus; CBL & Associates
Properties, Inc. (real estate
investment trust), Director
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc.
(born 09/23/38) (acquisition planning
specialists), President;
Wellfleet Investments
(investor in health care
companies), Managing General
Partner (since 1993);
Cambridge Nutraceuticals
(professional nutritional
products), Chief Executive
Officer (until May 2001)
Elaine R. Smith Trustee February 1992 Independent health care
(born 04/25/46) industry consultant
OFFICERS
Robert J. Manning(3) President and February 2004 Massachusetts Financial
(born 10/20/63) Trustee Services Company, Chief
Executive Officer, President,
Chief Investment Officer and
Director
James R. Bordewick, Jr.(3) Assistant Secretary September 1990 Massachusetts Financial
(born 03/06/59) and Assistant Clerk Services Company, Senior Vice
President and Associate
General Counsel
Jeffrey N. Carp(3) Secretary and Clerk September 2004 Massachusetts Financial
(born 12/01/56) Services Company, Senior Vice
President, General Counsel
and Secretary (since April
2004); Hale and Dorr LLP (law
firm) (prior to April 2004)
James F. DesMarais(3) Assistant Secretary September 2004 Massachusetts Financial
(born 03/09/61) and Assistant Clerk Services Company, Assistant
General Counsel
Stephanie A. DeSisto(3) Assistant Treasurer May 2003 Massachusetts Financial
(born 10/01/53) Services Company, Vice
President (since April 2003);
Brown Brothers Harriman &
Co., Senior Vice President
(November 2002 to April
2003); ING Groep N.V./Aeltus
Investment Management, Senior
Vice President (prior to
November 2002)
Robert R. Flaherty(3) Assistant Treasurer August 2000 Massachusetts Financial
(born 09/18/63) Services Company, Vice
President (since August
2000); UAM Fund Services,
Senior Vice President (prior
to August 2000)
Richard M. Hisey(3) Treasurer August 2002 Massachusetts Financial
(born 08/29/58) Services Company, Senior Vice
President (since July 2002);
The Bank of New York, Senior
Vice President (September
2000 to July 2002); Lexington
Global Asset Managers, Inc.,
Executive Vice President and
Chief Financial Officer
(prior to September 2000);
Lexington Funds, Chief
Financial Officer (prior to
September 2000)
Brian T. Hourihan(3) Assistant Secretary September 2004 Massachusetts Financial
(born 11/11/64) and Assistant Clerk Services Company, Vice
President, Senior Counsel and
Assistant Secretary (since
June 2004); Affiliated
Managers Group, Inc., Chief
Legal Officer/Centralized
Compliance Program (January
to April 2004); Fidelity
Research & Management
Company, Assistant General
Counsel (prior to January 2004)
Ellen Moynihan(3) Assistant Treasurer April 1997 Massachusetts Financial
(born 11/13/57) Services Company, Vice
President
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of
(born 03/07/44) Compliance Officer compliance services),
Principal (since June 2004);
CRA Business Strategies Group
(consulting services),
Executive Vice President
(April 2003 to June 2004);
David L. Babson & Co.
(investment adviser),
Managing Director, Chief
Administrative Officer and
Director (February 1997 to
March 2003)
James O. Yost(3) Assistant Treasurer September 1990 Massachusetts Financial
(born 06/12/60) Services Company, Senior Vice
President
- ----------------
(1) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously
since appointment unless indicated otherwise.
(2) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(3) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the
1940 Act), which is the principle federal law governing investment companies like the fund. The address
of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are
not elected for fixed terms. The Trust will hold a shareholders' meeting in 2005 and at least once every
five years thereafter to elect Trustees. Each Trustee and officer holds office until his or her successor
is chosen and qualified or until his or her earlier death, resignation, retirement or removal.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS
or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain
affiliates of MFS. Each Trustee serves as a board member of 99 funds within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available
without charge upon request by calling 1-800-225-2606.
- ----------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110
DISTRIBUTOR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
MFS Fund Distributors, Inc. Deloitte & Touche LLP
500 Boylston Street, Boston, MA 02116-3741 200 Berkeley Street, Boston, MA 02116
PORTFOLIO MANAGERS
Michael L. Dawson
Geoffrey L. Schechter
QUARTERLY PORTFOLIO DISCLOSURE
Beginning with the fund's first and third fiscal quarters following this report, the fund will file a
complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for
the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and
copied at the:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
Information on the operation of the Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. The fund's Form N-Q is available on the EDGAR database on the Commission's Internet website
at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee,
by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public
Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at mfs.com.
- --------------------------------------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS
- --------------------------------------------------------------------------------
YOUR GOALS ARE IMPORTANT
MFS offers a complete range of investments and investment services to address
specific financial needs over time. When your investing goals change, you can
easily stay with MFS for the products you need, when you need them. Whether
you're investing for college or retirement expenses or for tax management or
estate planning, MFS will be there.
Ask your investment professional how MFS can help you move toward the goals
you've set.
MFS FAMILY OF FUNDS(R)
More than 50 portfolios offer domestic and international
equity and fixed-income investments across the full risk
spectrum
VARIABLE ANNUITIES
A selection of annuity products with advantages for
building and preserving wealth
MFS 401(k) AND IRA SUITES
Retirement plans for businesses and individuals
MFS COLLEGE SAVINGS PLANS
Investment products to help meet education expenses
MFS PRIVATE PORTFOLIO SERVICES
Investment advisory services that provide custom products
for high-net-worth individuals
Variable annuities are offered through MFS/Sun Life Financial Distributors,
Inc.
A PROSPECTUS FOR ANY MFS PRODUCT CAN BE OBTAINED FROM YOUR INVESTMENT
PROFESSIONAL. YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING AS IT
CONTAINS COMPLETE INFORMATION ON THE FUND'S INVESTMENT OBJECTIVE(s), THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THE FUND, AND THE FEES, CHARGES, AND EXPENSES
INVOLVED. THESE ELEMENTS, AS WELL AS OTHER INFORMATION CONTAINED IN THE
PROSPECTUS, SHOULD BE CONSIDERED CAREFULLY BEFORE INVESTING.
CONTACT INFORMATION
INVESTOR INFORMATION
For information on MFS mutual funds, call your investment professional or, for
an information kit, call toll free: 1-800-225-2606 any business day from 8 a.m.
to 8 p.m. Eastern time.
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the About MFS section of mfs.com or by visiting the SEC's Web site at
http://www.sec. gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is available
without charge by visiting the Proxy Voting section of mfs.com or by visiting
the SEC's Web site at http://www.sec.gov.
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Type of Information Phone number Hours, Eastern Time
- --------------------------------------------------------------------------------
General information 1-800-225-2606 8 a.m. to 8 p.m., any
business day
- --------------------------------------------------------------------------------
Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any
business day
- --------------------------------------------------------------------------------
Shares prices, account 1-800-MFS-TALK
balances exchanges (1-800-637-8255) 24 hours a day, 365 days a
or stock and bond outlooks touch-tone required year
- --------------------------------------------------------------------------------
WORLD WIDE WEB
Go to MFS.COM for a clear view of market events, investor education, account
access, and product and performance insights.
Go paperless with EDELIVERY: Join your fellow shareholders who are already
taking advantage of this great new benefit from MFS. With eDelivery, we send
you prospectuses, reports, and proxies electronically. You get timely
information without mailbox clutter (and help your fund save printing and
postage costs).
SIGN-UP instructions: If your account is registered with us, go to mfs.com,
log in to your account via MFS Access, and select the eDelivery sign up
options.
If you own your MFS fund shares through a financial institution or through a
retirement plan, MFS TALK, MFS Access, and eDelivery may not be available to
you.
[logo] M F S(R)
INVESTMENT MANAGEMENT
(C) 2004 MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
LMB-SEM-11/04 12M
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not Applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not Applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
The schedule of investments for each series of the Registrant is included as
part of the report to stockholders of such series under Item 1 of this Form
N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Board of Trustees of the Registrant has adopted procedures by which
shareholders may send communications, including recommendations for nominees to
the Registrant's Board, to the Board. Shareholders may mail written
communications to the Board to the attention of the Board of Trustees, MFS
Municipal Series Trust, Massachusetts Financial Services Company, 500 Boylston
Street, Boston, MA 02116, c/o Frank Tarantino, Independent Chief Compliance
Officer of the Fund. Shareholder communications must (i) be in writing and be
signed by the shareholder, (ii) identify the series of the Registrant to which
they relate, and (iii) identify the class and number of shares held by the
shareholder.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a -3(c) under the Act) as conducted within
90 days of the filing date of this Form N-CSR, the registrant's principal
financial officer and principal executive officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the registrant's last fiscal half-year (the registrant's second fiscal
half-year in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) An amendment to the code of ethics, that is the subject of the
disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an
exhibit: Not applicable.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2): Attached hereto.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17
CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title
18 of the United States Code (18 U.S.C. 1350) as an exhibit. A
certification furnished pursuant to this paragraph will not be deemed
"filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r),
or otherwise subject to the liability of that section. Such certification
will not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act, except to the extent that
the registrant specifically incorporates it by reference: Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS MUNICIPAL SERIES TRUST
---------------------------
By (Signature and Title)* ROBERT J. MANNING
----------------------------------------------
Robert J. Manning, President
Date: November 23, 2004
-----------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* ROBERT J. MANNING
----------------------------------------------
Robert J. Manning, President (Principal
Executive Officer)
Date: November 23, 2004
-----------------
By (Signature and Title)* RICHARD M. HISEY
----------------------------------------------
Richard M. Hisey, Treasurer (Principal Financial
Officer and Accounting Officer)
Date: November 23, 2004
-----------------
* Print name and title of each signing officer under his or her signature.