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)
Susan S. Newton
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, 2006
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This Form N-CSR is being filed for the purpose of amending and restating the
Form N-CSR filed on December 6, 2006 (Accession No. 0000950156-06-000623).
ITEM 1. REPORTS TO STOCKHOLDERS.
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
9/30/06 SEMIANNUAL REPORT
MFS(R) MUNICIPAL SERIES TRUST FOR THE STATES OF: ALABAMA, ARKANSAS, CALIFORNIA,
FLORIDA, GEORGIA, MARYLAND, AND MASSACHUSETTS
MSTA-SEM
MFS(R) Municipal Series Trust
(As Restated)
Alabama, Arkansas, California, Florida,
Georgia, Maryland, and Massachusetts
LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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EXPENSE TABLES 5
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PORTFOLIO OF INVESTMENTS 8
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STATEMENTS OF ASSETS AND LIABILITIES 37
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STATEMENTS OF OPERATIONS 41
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STATEMENTS OF CHANGES IN NET ASSETS 43
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FINANCIAL HIGHLIGHTS 45
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NOTES TO FINANCIAL STATEMENTS 60
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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 75
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PROXY VOTING POLICIES AND INFORMATION 79
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QUARTERLY PORTFOLIO DISCLOSURE 79
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CONTACT INFORMATION BACK COVER
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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.
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NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF
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[Photo of Robert J. Manning]
LETTER FROM THE CEO
(Not Restated)
Dear Shareholders:
What a difference a year can make. By the end of 2005, the Dow Jones
Industrial Average had lost value over the course of the year, as stocks were
beaten back by a myriad of investor worries, including a spike in oil prices, a
rise in interest rates, and political uncertainty in the Middle East.
Fast forward to 2006, and we have seen a dramatically different picture.
While there were some fluctuations in the global markets in the first half of
the year, the second half of 2006 has, so far, been good to many investors. Oil
prices retreated, boosting consumer confidence, and interest rates have held
steady. U.S. stock markets responded favorably to this news, as the Dow reached
a record high in October, passing the 12,000 mark.
What does all of this mean for you? If you're focused on a long-term
investment strategy, the high points in the road -- and the bumps -- should not
necessarily dictate portfolio action on your part. Markets are inherently
cyclical, and we firmly believe that investors who remain committed to a
long-term investment strategy are more likely to achieve their goals than those
who consistently chase short-term performance.
At MFS(R), our unique teamwork approach to managing money and our global
research platform support an unwavering focus on helping you realize your
long-term financial goals. We believe in a three-pronged investment strategy of
allocating your holdings across major asset classes, diversifying within each
class, and rebalancing regularly. Of course, these strategies cannot guarantee a
profit or protect against a loss. Investing and planning for the long term
require diligence and patience -- two traits that are essential to capitalizing
on the many opportunities the financial markets can offer.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
November 15, 2006
The opinions expressed in this letter are those of MFS, and no forecasts can be
guaranteed.
PORTFOLIO COMPOSITION (As Restated)
MFS(R) Alabama Municipal Bond Fund
Municipal Bonds 106.0%
Cash & Other Net Assets (6.0)%
TOP FIVE INDUSTRIES (i)
Water & Sewer Utility Revenue 16.2%
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Healthcare Revenue - Hospitals 14.4%
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General Obligations - General Purpose 13.6%
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Utilities - Municipal Owned 10.2%
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State & Local Agencies 8.7%
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CREDIT QUALITY OF BONDS (r)
AAA 68.5%
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AA 13.7%
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A 4.6%
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BBB 10.2%
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B 0.3%
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Not Rated 2.7%
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PORTFOLIO FACTS
Average Duration (d) 5.5
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Average Life (m) 14.4 yrs.
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Average Maturity (m) 16.4 yrs.
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Average Credit Quality of Rated
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Securities (long-term) (a) AA
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Average Credit Quality of Rated
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Securities (short-term) (a) A-1
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MFS(R) Arkansas Municipal Bond Fund
Municipal Bonds 104.5%
Cash & Other Net Assets (4.5)%
TOP FIVE INDUSTRIES (i)
Universities - Colleges 16.9%
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General Obligations - General Purpose 13.1%
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Single Family Housing - State 10.0%
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Water & Sewer Utility Revenue 9.7%
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Healthcare Revenue - Hospitals 9.2%
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CREDIT QUALITY OF BONDS (r)
AAA 72.4%
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AA 8.6%
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A 7.8%
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BBB 9.9%
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BB 0.3%
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B 0.6%
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Not Rated 0.4%
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PORTFOLIO FACTS
Average Duration (d) 7.0
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Average Life (m) 16.3 yrs.
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Average Maturity (m) 17.0 yrs.
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Average Credit Quality of Rated
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Securities (long-term) (a) AA
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Average Credit Quality of Rated
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Securities (short-term) (a) A-1
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MFS(R) California Municipal Bond Fund
Municipal Bonds 105.2%
Cash & Other Net Assets (5.2)%
TOP FIVE INDUSTRIES (i)
General Obligations - Schools 18.9%
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State & Local Agencies 14.8%
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Healthcare Revenue - Hospitals 11.0%
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General Obligations - General Purpose 10.7%
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Universities - Colleges 8.9%
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CREDIT QUALITY OF BONDS (r)
AAA 52.9%
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AA 4.7%
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A 18.5%
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BBB 15.8%
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BB 0.6%
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B 0.7%
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Not Rated 6.8%
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PORTFOLIO FACTS
Average Duration (d) 6.6
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Average Life (m) 15.8 yrs.
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Average Maturity (m) 18.2 yrs.
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Average Credit Quality of Rated
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Securities (long-term) (a) AA-
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Average Credit Quality of Rated
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Securities (short-term) (a) A-1
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MFS(R) Florida Municipal Bond Fund
Municipal Bonds 105.5%
Cash & Other Net Assets (5.5)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 17.3%
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Water & Sewer Utility Revenue 15.0%
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General Obligations - General Purpose 12.2%
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General Obligations - Schools 8.5%
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Tax Assessment 7.8%
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CREDIT QUALITY OF BONDS (r)
AAA 60.4%
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AA 10.3%
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A 8.4%
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BBB 11.2%
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BB 0.7%
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B 0.3%
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Not Rated 8.7%
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PORTFOLIO FACTS
Average Duration (d) 6.3
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Average Life (m) 17.1 yrs.
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Average Maturity (m) 18.1 yrs.
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Average Credit Quality of Rated
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Securities (long-term) (a) AA
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Average Credit Quality of Rated
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Securities (short-term) (a) A-1
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MFS(R) Georgia Municipal Bond Fund
Municipal Bonds 106.6%
Cash & Other Net Assets (6.0)%
TOP FIVE INDUSTRIES (i)
Water & Sewer Utility Revenue 31.3%
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Healthcare Revenue - Hospitals 9.5%
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Universities - Colleges 9.5%
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General Obligations - Schools 7.7%
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General Obligations - General Purpose 6.1%
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CREDIT QUALITY OF BONDS (r)
AAA 45.6%
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AA 29.9%
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A 9.7%
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BBB 10.5%
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BB 0.4%
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B 0.3%
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Not Rated 3.6%
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PORTFOLIO FACTS
Average Duration (d) 6.2
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Average Life (m) 14.2 yrs.
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Average Maturity (m) 16.2 yrs.
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Average Credit Quality of Rated
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Securities (long-term) (a) AA
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Average Credit Quality of Rated
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Securities (short-term) (a) A-1
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MFS(R) Maryland Municipal Bond Fund
(Not Restated)
Bonds 97.2%
Cash & Other Net Assets 2.8%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 19.1%
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General Obligations - Improvement 14.4%
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Universities - Colleges 11.4%
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General Obligations - General Purpose 6.4%
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Water & Sewer Utility Revenue 5.6%
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CREDIT QUALITY OF BONDS (r)
AAA 41.2%
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AA 16.9%
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A 19.2%
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BBB 15.5%
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BB 1.1%
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B 0.3%
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Not Rated 5.8%
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PORTFOLIO FACTS
Average Duration (d) 6.7
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Average Life (m) 16.8 yrs.
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Average Maturity (m) 17.9 yrs.
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Average Credit Quality of Rated
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Securities (long-term) (a) AA-
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Average Credit Quality of Rated
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Securities (short-term) (a) A-1
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MFS(R) Massachusetts Municipal Bond Fund
Municipal Bonds 105.4%
Cash & Other Net Assets (5.4)%
TOP FIVE INDUSTRIES (i)
Universities - Colleges 20.2%
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General Obligations - General Purpose 14.2%
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Healthcare Revenue - Hospitals 11.3%
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Water & Sewer Utility Revenue 7.8%
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General Obligations - Improvement 7.6%
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CREDIT QUALITY OF BONDS (r)
AAA 49.0%
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AA 25.0%
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A 8.5%
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BBB 15.4%
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BB 0.7%
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Not Rated 1.4%
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PORTFOLIO FACTS
Average Duration (d) 6.3
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Average Life (m) 14.7 yrs.
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Average Maturity (m) 17.6 yrs.
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Average Credit Quality of Rated
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Securities (long-term) (a) AA
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Average Credit Quality of Rated
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Securities (short-term) (a) A-1
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(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond's price is likely to fluctuate
with general changes in interest rates, e.g., if rates rise 1.00%, a bond
with a 5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this graphical presentation, the bond component includes
both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
(m) The average maturity shown is calculated using the final stated maturity
on the portfolio's holdings without taking into account any holdings which
have been pre-refunded or pre-paid to an earlier date or which have a
mandatory put date prior to the stated maturity. The average life shown
takes into account these earlier dates.
(r) Each security is assigned a 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. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in the "AAA"-rating
category.
Percentages are based on the total market value of investments as of 09/30/06.
Percentages are based on net assets as of 09/30/06, unless otherwise noted.
The portfolios are actively managed and current holdings may be different.
EXPENSE TABLES (As Restated)
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, APRIL 1, 2006,
THROUGH SEPTEMBER 30, 2006.
As a shareholder of the funds, 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. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the funds and to compare these costs
with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire period April 1, 2006 through September 30,
2006.
ACTUAL EXPENSES
The first line for each share class in the following tables 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 following tables provides
information about hypothetical account values and hypothetical expenses based on
each fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not each 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 each 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) ALABAMA MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value Period (p)
Share Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
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Actual 1.16% $1,000.00 $1,029.80 $5.90
A -----------------------------------------------------------------------
Hypothetical (h) 1.16% $1,000.00 $1,019.25 $5.87
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Actual 1.91% $1,000.00 $1,026.00 $9.70
B -----------------------------------------------------------------------
Hypothetical (h) 1.91% $1,000.00 $1,015.49 $9.65
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(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, 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(R) ARKANSAS MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value Period (p)
Share Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
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Actual 0.91% $1,000.00 $1,031.90 $4.64
A ---------------------------------------------------------------------------------------
Hypothetical (h) 0.91% $1,000.00 $1,020.51 $4.61
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Actual 1.67% $1,000.00 $1,028.00 $8.49
B ---------------------------------------------------------------------------------------
Hypothetical (h) 1.67% $1,000.00 $1,016.70 $8.44
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MFS(R) CALIFORNIA MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value Period (p)
Share Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
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Actual 0.89% $1,000.00 $1,031.90 $4.53
A ---------------------------------------------------------------------------------------
Hypothetical (h) 0.89% $1,000.00 $1,020.61 $4.51
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Actual 1.65% $1,000.00 $1,029.80 $8.40
B ---------------------------------------------------------------------------------------
Hypothetical (h) 1.65% $1,000.00 $1,016.80 $8.34
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Actual 1.79% $1,000.00 $1,027.30 $9.10
C ---------------------------------------------------------------------------------------
Hypothetical (h) 1.79% $1,000.00 $1,016.09 $9.05
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MFS(R) FLORIDA MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value Period (p)
Share Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
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Actual 0.94% $1,000.00 $1,031.60 $4.79
A ---------------------------------------------------------------------------------------
Hypothetical (h) 0.94% $1,000.00 $1,020.36 $4.76
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Actual 1.70% $1,000.00 $1,027.70 $8.64
B ---------------------------------------------------------------------------------------
Hypothetical (h) 1.70% $1,000.00 $1,016.55 $8.59
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MFS(R) GEORGIA MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value Period (p)
Share Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
- ----------------------------------------------------------------------------------------------------------
Actual 1.23% $1,000.00 $1,032.70 $ 6.27
A ---------------------------------------------------------------------------------------
Hypothetical (h) 1.23% $1,000.00 $1,018.90 $ 6.23
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Actual 1.98% $1,000.00 $1,028.80 $10.07
B ----------------------------------------------------------------------------------------
Hypothetical (h) 1.98% $1,000.00 $1,015.14 $10.00
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MFS(R) MARYLAND MUNICIPAL BOND FUND (Not Restated)
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Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value Period (p)
Share Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
- ----------------------------------------------------------------------------------------------------------
Actual 0.93% $1,000.00 $1,030.90 $4.73
A ---------------------------------------------------------------------------------------
Hypothetical (h) 0.93% $1,000.00 $1,020.41 $4.71
- ----------------------------------------------------------------------------------------------------------
Actual 1.58% $1,000.00 $1,028.50 $8.03
B ---------------------------------------------------------------------------------------
Hypothetical (h) 1.58% $1,000.00 $1,017.15 $7.99
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MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Expense Account Value Account Value Period (p)
Share Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
- ----------------------------------------------------------------------------------------------------------
Actual 1.15% $1,000.00 $1,031.30 $5.86
A ----------------------------------------------------------------------------------------
Hypothetical (h) 1.15% $1,000.00 $1,019.30 $5.82
- ----------------------------------------------------------------------------------------------------------
Actual 1.80% $1,000.00 $1,028.00 $9.15
B ---------------------------------------------------------------------------------------
Hypothetical (h) 1.80% $1,000.00 $1,016.04 $9.10
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(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
MFS(R) ALABAMA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.7%
ISSUER SHARES/PAR VALUE ($)
- ------ ---------- ---------
Airport & Port Revenue - 2.4%
Alabama Docks Department Facilities Rev.,
MBIA, 5.5%, 2022 $ 1,000,000 $ 1,049,880
Alabama Port Authority Docks Facility, MBIA,
5.25%, 2026 1,000,000 1,046,840
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$ 2,096,720
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 13.5%
Boaz, AL, School Warrants, "A ", XLCA,
5%, 2025 $ 1,000,000 $ 1,050,990
Boaz, AL, School Warrants, "A ", XLCA,
5%, 2029 650,000 680,089
Fairfield, AL, Refunding Warrants, AMBAC,
5.25%, 2025 1,030,000 1,102,213
Gadsden, AL, Warrants, "B ", AMBAC,
5.125%, 2028 1,500,000 1,603,860
Hoover, AL, "B ", 6%, 2010 (c) 500,000 541,790
Houston County, AL, AMBAC, 6.25%, 2009 (c) 750,000 821,850
Jefferson County, AL, School Warrants, FSA,
5.5%, 2020 1,750,000 1,846,985
Mobile County, AL, 6%, 2009 (c) 1,345,000 1,432,008
Morgan County, AL, Warrants, AMBAC,
5%, 2028 1,380,000 1,448,517
Puerto Rico Commonwealth, Public
Improvement, "A ", 5.25%, 2030 1,000,000 1,067,500
- ----------------------------------------------------------------------------------------------------------
$ 11,595,802
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 6.2%
Birmingham, AL, "A ", 5.75%, 2017 $ 1,000,000 $ 1,080,010
Birmingham, AL, "B ", 5.75%, 2009 (c) 1,820,000 1,936,243
Birmingham, AL, "B ", 5.75%, 2019 180,000 190,836
Montgomery, AL, Warrants, MBIA, 5.1%, 2021 1,005,000 1,060,838
Puerto Rico Municipal Finance Agency,
FSA, 5.25%, 2009 (c)(u) 1,000,000 1,063,200
- ----------------------------------------------------------------------------------------------------------
$ 5,331,127
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.7%
Bessemer, AL, School Warrants, AMBAC,
5.5%, 2020 $ 2,015,000 $ 2,161,087
Phenix City, AL, AMBAC, 5.65%, 2010 (c) 1,500,000 1,635,615
Tuscaloosa, AL, Warrants, 5.7%, 2010 (c) 1,000,000 1,074,470
- ----------------------------------------------------------------------------------------------------------
$ 4,871,172
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 14.2%
Alabama Special Care Facilities Financing
Authority (Daughters of Charity), AMBAC,
ETM, 5%, 2025 (c) $ 1,500,000 $ 1,508,565
Alexander City, AL, Special Care Facilities
Financing Authority Medical Facilities Rev.
(Russell Hospital Corp.), "A ", 5.75%, 2036 500,000 524,635
Birmingham Medical Center, East Alabama,
Special Health Care Facilities, Eastern Health
Systems, "B ", 5%, 2018 $ 500,000 $ 504,520
Birmingham, AL, Baptist Health Systems, "A"
(Baptist Medical Center), 5.625%, 2015 300,000 319,620
Birmingham, AL, Baptist Medical Center,
Special Care Facilities Rev. (Baptist Health
Systems, Inc.), "A ", 5%, 2030 200,000 204,546
Health Care Authority For Baptist Health, "D ",
5%, 2021 400,000 417,840
Houston County, AL, Health Care Authority,
AMBAC, 6.125%, 2009 (c) 1,000,000 1,082,360
Huntsville, AL, Health Care Authority Rev.,
5.625%, 2026 950,000 999,258
Huntsville, AL, Health Care Authority Rev.,
"A ", MBIA, 5%, 2023 1,000,000 1,026,390
Lauderdale County & Florence, AL, Health Care
Authority Rev. (Eliza Coffee Memorial
Hospital), MBIA, 5.75%, 2008 (c) 1,000,000 1,037,810
Lauderdale County & Florence, AL, Health Care
Authority Rev., "A" (Coffee Health Group),
MBIA, 5.75%, 2014 1,000,000 1,060,620
Marshall County, AL, Health Care Authority
Rev., "A ", 5.75%, 2032 1,065,000 1,128,240
Montgomery, AL, Medical Clinic Board Rev.
(Jackson Hospital & Clinic), AMBAC,
5.875%, 2016 1,000,000 1,018,730
Montgomery, AL, Special Care Facilities,
Financing Authority Rev. (Baptist Health),
"A-2 ", MBIA, 0% to 2007, 5% to 2014 (c) 1,135,000 1,161,480
Valley, AL, Special Care Facilities Financing
Authority, "A" (Lanier Memorial Hospital),
5.65%, 2022 225,000 226,906
- ----------------------------------------------------------------------------------------------------------
$ 12,221,520
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Metals - 0.6%
Mobile County, AL, Industrial Development
Authority Rev. (Ipsco, Inc.), 6.875%, 2030 $ 500,000 $ 532,170
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.5%
Fairfield, AL, Environment Improvement Rev.
(USX Corp.), 5.4%, 2016 $ 400,000 $ 431,152
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 3.7%
Butler, AL, Industrial Development Board, Solid
Waste Disposal Rev. (Georgia Pacific Corp.),
5.75%, 2028 $ 200,000 $ 204,722
Camden, AL, Industrial Development Board
Exempt Rev., "B" (Weyerhaeuser),
6.375%, 2024 500,000 549,415
Mobile, AL, Industrial Development Board
Improvement Rev., "A" (International Paper
Co.), 6.35%, 2016 650,000 690,781
Mobile, AL, Industrial Development Board
Improvement Rev., "B" (International Paper
Co.), 6.45%, 2019 350,000 371,812
Phenix City, AL, Environmental Improvement
Rev., "A" (MeadWestvaco), 6.35%, 2035 750,000 819,667
Selma, AL, Industrial Development Board, "A"
(International Paper Co.), 6.7%, 2018 500,000 537,250
- ----------------------------------------------------------------------------------------------------------
$ 3,173,647
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.8%
Birmingham, AL, Downtown Redevelopment
Authority Rev. (Social Security Administrative
Building), ETM, 12.5%, 2010 (c) $ 1,290,000 $ 1,516,227
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.5%
Alabama Housing Finance Authority, Multi-
Family Residential Development Rev., "K"
(South Bay Apartments), FNMA, 5.875%, 2021 $ 960,000 $ 1,012,973
Alabama Housing Finance Authority, Multi-
Family Residential Development Rev., FHA,
7.25%, 2023 1,080,000 1,088,716
Birmingham, AL, Multi-Family Housing Rev.,
"C" (Beaconview Apartments), 8%, 2030 (d) 395,000 19,750
- ----------------------------------------------------------------------------------------------------------
$ 2,121,439
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 1.3%
Alabama Housing Finance Authority, Collateral
Home Mortgage Bond Program II, "B ",
5.15%, 2019 $ 55,000 $ 56,337
Alabama Housing Finance Authority, Single
Family Mortgage Rev., Collateral Home
Mortgage Bond Program I, "B-1 ", 5.7%, 2015 375,000 383,809
Alabama Housing Finance Authority, Single
Family Mortgage Rev., Collateral Home
Mortgage Bond Program II, "A-2 ", GNMA,
5.4%, 2022 605,000 618,044
Alabama Housing Finance Authority, Single
Family Mortgage Rev., Collateral Home
Mortgage Bond Program II, "B ", 5.15%, 2019 60,000 61,459
- ----------------------------------------------------------------------------------------------------------
$ 1,119,649
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 9.9%
Alabama Building Renovation Authority,
AMBAC, 6%, 2014 $ 1,515,000 $ 1,640,487
Alabama Building Renovation Finance
Authority, FSA, 4.5%, 2031 500,000 500,760
Alabama Public School & College, Capital
Improvement, "A ", 5%, 2019 500,000 523,085
Alabama Public School & College, Capital
Improvement, "C ", 5.75%, 2017 1,000,000 1,066,210
Alabama Public School & College, Capital
Improvement, "C ", 5.75%, 2018 1,035,000 1,103,527
Jefferson County, AL, Board of Education, "A ",
FSA, 5.8%, 2007 (c) $ 865,000 $ 889,246
Montgomery County, AL, Public Building
Authority Rev., MBIA, 5%, 2031 500,000 525,645
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2013 (u) 1,000,000 1,104,830
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2016 (u) 1,000,000 1,131,470
- ----------------------------------------------------------------------------------------------------------
$ 8,485,260
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 1.2%
Virgin Islands Public Finance Authority, "A ",
5.5%, 2018 $ 1,000,000 $ 1,036,320
- ----------------------------------------------------------------------------------------------------------
Tobacco - 0.5%
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 450,000 $ 464,247
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 7.2%
Alabama Board of Education Rev., Refunding
& Improvement (Southern Union State
Community College), MBIA, 5%, 2022 $ 1,000,000 $ 1,049,620
Alabama Private Colleges & Universities,
Facilities Authority Rev. (Tuskegee University),
ASST GTY, 4.75%, 2026 1,000,000 1,023,590
Auburn University, General Fee Rev., AMBAC,
5%, 2029 1,000,000 1,049,200
Mobile, AL, Spring Hill College, Educational
Building Authority Rev., "A ", 5.25%, 2034 1,360,000 1,448,604
University of Alabama, General Rev., "A ",
MBIA, 5%, 2029 1,000,000 1,050,990
University of Alabama, University Rev., General
Fee, FGIC, 5%, 2021 525,000 555,697
- ----------------------------------------------------------------------------------------------------------
$ 6,177,701
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 16.2%
Alabama Municipal Electric Power Authority,
"A ", MBIA, 5%, 2023 $ 1,000,000 $ 1,058,150
Guam Power Authority Rev., AMBAC,
5.25%, 2013 (u) 1,000,000 1,061,530
Guam Power Authority Rev., AMBAC,
5%, 2018 (u) 9,000,000 9,383,040
Puerto Rico Electric Power Authority Rev., "II ",
5.25%, 2031 875,000 922,617
Southeastern Alabama Gas District Systems
Rev., "A ", AMBAC, 5.5%, 2020 1,000,000 1,077,420
Tuskegee, AL, Utilities Board, AMBAC,
5.5%, 2022 400,000 409,944
- ----------------------------------------------------------------------------------------------------------
$ 13,912,701
- ----------------------------------------------------------------------------------------------------------
Utilities - Other - 1.2%
Foley, AL, Utilities Board Utilities Rev., FSA,
5%, 2025 $ 1,000,000 $ 1,058,270
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 16.1%
Alabama Drinking Water Finance Authority,
Revolving Fund Loan, "A ", AMBAC, 6%, 2021 $ 725,000 $ 783,674
Alabama Drinking Water Finance Authority,
Revolving Fund Loan, "C ", AMBAC,
5.75%, 2018 1,000,000 1,075,600
Alabama Water Pollution Control Authority,
Revolving Fund Loan, "B ", AMBAC,
5.5%, 2016 1,000,000 1,006,800
Alabama Water Pollution Control Authority,
Revolving Fund Loan, "B ", AMBAC,
5.5%, 2020 1,380,000 1,389,384
Alabama Water Pollution Control Authority,
Revolving Fund Loan, AMBAC, 5.75%, 2019 1,000,000 1,056,560
Alabaster, AL, Sewer Rev., AMBAC, 5%, 2029 750,000 786,255
Bessemer, AL, Water Rev., Warrants, "A ",
AMBAC, 5.75%, 2026 1,000,000 1,021,300
Birmingham, AL, Waterworks & Sewer Board
Rev., "A ", FGIC, 5%, 2034 1,365,000 1,432,117
Birmingham, AL, Waterworks & Sewer Board
Rev., "B ", MBIA, 5%, 2043 525,000 540,839
Jasper, AL, Waterworks & Sewer Board, "A ",
AMBAC, 5.2%, 2020 750,000 796,073
Limestone County, AL, Water Authority, FGIC,
5.5%, 2009 (c) 2,650,000 2,769,568
Madison, AL, Water & Wastewater Board,
MBIA, 5.5%, 2019 1,000,000 1,022,850
Ozark, AL, Utilities Board Water & Sewer Rev.,
AMBAC, 5%, 2031 100,000 104,783
- ----------------------------------------------------------------------------------------------------------
$ 13,785,803
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $85,399,756) $ 89,930,927
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.2%
Jefferson County, AL, Sewer Rev., Capital
Improvement Warrants, "A ",
3.78%, due 10/05/06 $ 100,000 $ 100,000
Jefferson County, AL, Sewer Rev., Warrants,
"B-4 ", 3.78%, due 10/05/06 900,000 900,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $1,000,000) $ 1,000,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $86,399,756) (K) $ 90,930,927
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.9)% (5,073,258)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 85,857,669
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ---------- -------- ------------- ------------------ ------------- ---------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 17,215
1/11/22 USD 1,000,000 Merrill Lynch 5.7628%(fixed rate) 3-Month LIBOR 52,106
11/09/26 USD 750,000 Goldman Sachs 5.787%(fixed rate) 3-Month LIBOR 46,093
11/16/26 USD 1,000,000 Merrill Lynch 5.856%(fixed rate) 3-Month LIBOR 69,467
-----------
$ 184,881
-----------
At September 30, 2006, the fund had sufficient cash and/or securities to cover
any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 103.3%
- ----------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 0.6%
- ----------------------------------------------------------------------------------------------------------
Little Rock, AR, Airport Rev., "A ", FSA,
5.25%, 2019 $ 800,000 $ 834,520
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 13.0%
- ----------------------------------------------------------------------------------------------------------
Arkansas College Savings, "A ", 0%, 2017 $ 1,840,000 $ 1,183,930
Commonwealth of Puerto Rico, Infrastructure,
ETM, 5.5%, 2019 (u)(c) 2,500,000 2,686,200
Commonwealth of Puerto Rico, Public
Improvement, "A ", CIFG, 5%, 2034 1,000,000 1,046,960
Commonwealth of Puerto Rico, Public
Improvement, "A', 5.25%, 2027 2,000,000 2,146,480
Commonwealth of Puerto Rico, MBIA,
5.75%, 2010 (c)(u) 6,000,000 6,449,640
Puerto Rico Public Buildings Authority Rev.
(State Office Building), "F ", XLCA,
5.25%, 2025 2,000,000 2,295,820
Sebastian County, AR, Community Refunding
& Improvement, AMBAC, 5.6%, 2007 (c) 1,500,000 1,530,180
- ----------------------------------------------------------------------------------------------------------
$ 17,339,210
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 6.4%
- ----------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency,
FSA, 5.5%, 2009 (c)(u) $ 1,470,000 $ 1,562,903
Puerto Rico Municipal Finance Agency,
FSA, 5.5%, 2009 (c)(u) 6,500,000 6,910,800
- ----------------------------------------------------------------------------------------------------------
$ 8,473,703
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 6.3%
- ----------------------------------------------------------------------------------------------------------
Arkansas, Capital Appreciation, College
Savings, "B ", 0%, 2012 $ 1,200,000 $ 958,548
Arkansas, Capital Appreciation, College
Savings, "B ", 0%, 2013 1,000,000 765,700
Arkansas, Capital Appreciation, College
Savings, "B ", 0%, 2014 1,150,000 843,410
Arkansas, Capital Appreciation, College
Savings, "B ", 0%, 2015 1,100,000 774,730
Little Rock, AR, School District Construction,
"C ", FSA, 5%, 2017 1,000,000 1,046,990
Little Rock, AR, School District, "A ", FSA,
5.4%, 2017 1,000,000 1,053,950
Northwest Arkansas Community College
District, Capital Improvement, AMBAC,
5%, 2028 1,380,000 1,461,089
Pine Bluff, AR, School District Construction,
MBIA, 4.75%, 2033 1,500,000 1,515,675
- ----------------------------------------------------------------------------------------------------------
$ 8,420,092
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 9.1%
- ----------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev.
(Washington Regional Medical Center),
7.25%, 2010 (c) $ 500,000 $ 556,010
Arkansas Development Finance Authority,
Health Refunding Rev. (Sister of Mercy), "A ",
MBIA, 5%, 2013 4,200,000 4,355,862
Batesville, AR, Medical District Rev. (White
River Medical Center), 5.5%, 2024 750,000 784,672
Baxter County, AR, Hospital Rev., Refunding
& Improvement, "B ", 5.6%, 2021 1,500,000 1,552,290
Crittenden County, AR, Hospital Rev.,
Refunding & Improvement, 7.15%, 2025 750,000 759,712
Jefferson County, AR, Hospital Rev.,
Refunding & Improvement (Regional Medical
Center), 5.8%, 2021 1,000,000 1,070,050
Little Rock, AR, Health Facilities Hospital
Board Rev. (Baptist Medical Center),
6.9%, 2009 400,000 431,792
North Little Rock, AR, Health Facilities Board
Rev. (Baptist Health Facilities), 5.7%, 2022 500,000 520,490
Sebastian County, AR, Health Facilities
Improvement Rev. (Sparks Regional Medical
Center), "A ", 5.25%, 2021 1,000,000 1,039,980
Washington County, AR, Hospital Rev.
(Regional Medical Center), "A ", 5%, 2035 1,000,000 1,021,100
- ----------------------------------------------------------------------------------------------------------
$ 12,091,958
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.0%
- ----------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev.
(Evangelical Lutheran Project), "B ", AMBAC,
5.375%, 2009 (c) $ 1,315,000 $ 1,402,053
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 $ 335,000 $ 365,110
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.2%
- ----------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority,
Industrial Facilities Rev. (Potlatch Corp.), "A ",
7.75%, 2025 $ 250,000 $ 284,090
Camden, AR, Environmental Improvement
Rev. (International Paper Co.), "A ",
5%, 2018 750,000 65,960
Pine Bluff, AR, Environmental Improvement
(International Paper Co.), "A ", 5.55%, 2022 250,000 256,348
Pine Bluff, AR, Environmental Refunding
(International Paper Co.), "A ", 6.7%, 2020 300,000 324,474
- ----------------------------------------------------------------------------------------------------------
$ 1,630,872
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.8%
- ----------------------------------------------------------------------------------------------------------
Fort Smith, AR, Residential Housing Facilities
Board Rev. (Gorman Towers), "A ", GNMA,
5.45%, 2037 $ 1,000,000 $ 1,034,070
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 7.5%
- ----------------------------------------------------------------------------------------------------------
Harrison, AR, Residential Housing Facilities
Board, Single Family Mortgage Rev., FGIC,
ETM, 7.4%, 2011 (c) $ 4,000,000 $ 4,646,840
Lonoke County, AR, Residential Housing
Facilities Rev., "A-2 ", "FNMA, 7.9%, 2011 76,793 78,342
Pulaski County, AR, Public Facilities Board
Rev., "A ", GNMA, 5.75%, 2034 1,850,000 1,898,600
Pulaski County, AR, Public Facilities Board
Rev., "C ", FNMA, 0%, 2014 2,750,000 1,899,975
Sherwood, AR, Residential Housing Facilities
Board, Single Family Rev., MBIA,
7.5%, 2010 (c) 1,250,000 1,427,250
- ----------------------------------------------------------------------------------------------------------
$ 9,951,007
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 9.8%
- ----------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority
Rev., "1 ", 0%, 2011 $ 175,000 $ 120,111
Arkansas Development Finance Authority
Rev., Mortgage Backed Securities Program,
"B ", GNMA, 5%, 2029 215,000 220,779
Arkansas Development Finance Authority
Rev., Mortgage Backed Securities Program,
"B ", GNMA, 4.45%, 2034 1,105,000 1,105,210
Arkansas Development Finance Authority
Rev., Mortgage Backed Securities Program,
"C ", GNMA, 5.35%, 2027 1,560,000 1,596,317
Arkansas Development Finance Authority
Rev., Mortgage Backed Securities Program,
"E ", GNMA, 5.4%, 2034 790,000 816,678
Arkansas Development Finance Authority
Rev., Single Family Rev., Mortgage Backed
Securities Program, "D", GNMA,
5.85%, 2024 925,000 931,780
Arkansas Development Finance Authority,
Mortgage Backed Securities Program, "C ",
5.625%, 2035 1,740,000 1,851,064
Arkansas Development Finance Authority,
Single Family Mortgage Rev., "B ", GNMA,
5.125%, 2024 445,000 458,377
Arkansas Development Finance Authority,
Single Family Mortgage Rev., "B ", GNMA,
4.85%, 2031 1,000,000 1,009,150
Arkansas Development Finance Authority,
Single Family Mortgage Rev., "B ", GNMA,
5.25%, 2035 2,675,000 2,765,201
Arkansas Development Finance Authority,
Single Family Rev., Mortgage Backed
Securities Program, "C ", 5.3%, 2023 440,000 443,243
Arkansas Development Finance Authority,
Single Family Rev., Mortgage Backed
Securities Program, "I ", GNMA, 5.3%, 2033 430,000 437,701
Arkansas Housing Development Agency,
Single Family Rev., Mortgage Program, ETM,
8.375%, 2011 (c) $ 1,000,000 $ 1,205,870
Puerto Rico Housing Finance Authority Rev.,
Mortgage Backed Securities, "A ",
4.375%, 2017 165,000 166,186
- ----------------------------------------------------------------------------------------------------------
$ 13,127,667
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 2.5%
- ----------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority
Rev., Environmental State Agency Facilities,
"A ", AMBAC, 5%, 2040 $ 2,500,000 $ 2,621,525
Arkansas Development Finance Authority,
Economic Development Rev. (Agritecsorbents
LLC) "B ", 5%, 2018 175,000 181,270
Arkansas Development Finance Authority,
Economic Development Rev. (Madison
Industrial), "B ", AMBAC, 5.8%, 2020 500,000 515,465
- ----------------------------------------------------------------------------------------------------------
$ 3,318,260
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 3.2%
- ----------------------------------------------------------------------------------------------------------
Little Rock, AR, Hotel & Restaurant Gross
Receipts Tax Rev., 7.375%, 2015 $ 2,790,000 $ 3,299,510
Virgin Islands Public Finance Authority Rev.,
"A ", 5.5%, 2022 1,000,000 1,035,150
- ----------------------------------------------------------------------------------------------------------
$ 4,334,660
- ----------------------------------------------------------------------------------------------------------
Tobacco - 1.8%
- ----------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority,
Tobacco Settlement Rev. (Cancer Research
Center Project), AMBAC, 0%, 2026 $ 2,000,000 $ 815,560
Arkansas Development Finance Authority,
Tobacco Settlement Rev. (Cancer Research
Center Project), AMBAC, 0%, 2036 1,200,000 294,672
Arkansas Development Finance Authority,
Tobacco Settlement Rev. (Cancer Research
Center Project), AMBAC, 0%, 2027 1,940,000 748,316
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 230,000 237,282
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.5%, 2039 290,000 300,228
- ----------------------------------------------------------------------------------------------------------
$ 2,396,058
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 2.6%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway &
Transportation Authority, "B ", MBIA,
5.875%, 2010 (c) $ 2,000,000 $ 2,183,400
Commonwealth of Puerto Rico Highway &
Transportation Authority, "G ", 5%, 2023 750,000 779,505
Commonwealth of Puerto Rico Highway &
Transportation Authority, "G ", FGIC,
5%, 2022 500,000 531,690
- ----------------------------------------------------------------------------------------------------------
$ 3,494,595
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 16.6%
- ----------------------------------------------------------------------------------------------------------
Arkansas State University, Student Fee-ASU
(Newport Campus), AMBAC, 5%, 2028 $ 700,000 $ 713,244
Conway, AR, Public Facilities Board, Capital
Improvement Rev. (Hendrix College), "B ",
5%, 2035 1,000,000 1,021,790
Pulaski, AR, Student Tuition & Fee Rev.
(Technical College), FGIC, 5%, 2029 1,820,000 1,895,421
Siloam Springs, AR, Public Education
Facilities, Capital Improvement Rev. (John
Brown University), AMBAC, 5.35%, 2020 500,000 528,340
University of Arkansas, University
Construction Rev. (Monticello), AMBAC,
5%, 2025 1,525,000 1,606,420
University of Arkansas, University
Construction Rev. (UAMS Campus), "B ",
MBIA, 5%, 2026 1,405,000 1,486,181
University of Arkansas, University
Construction Rev. (UAMS Campus), "B ",
MBIA, 5%, 2027 1,000,000 1,057,080
University of Arkansas, University
Construction Rev. (UAMS Campus), "B ",
MBIA, 5%, 2034 3,290,000 3,447,887
University of Arkansas, University Facilities
Rev. (Fayetteville Campus), FGIC, 5%, 2027 3,155,000 3,297,511
University of Arkansas, University Facilities
Rev. (Fayetteville Campus), FGIC, 5%, 2032 2,500,000 2,597,775
University of Arkansas, University Facilities
Rev. (Pine Bluff Campus), "A ", AMBAC,
5%, 2030 1,000,000 1,058,690
University of Arkansas, University Facilities
Rev. (UAMS Campus), FGIC, 5%, 2028 2,000,000 2,118,440
University of Central Arkansas Rev., "A ",
AMBAC, 5%, 2023 1,100,000 1,116,544
University of Central Arkansas, Student
Housing Rev., "C ", FGIC, 5%, 2034 250,000 255,777
- ----------------------------------------------------------------------------------------------------------
$ 22,201,100
- ----------------------------------------------------------------------------------------------------------
Universities - Dormitories - 2.6%
- ----------------------------------------------------------------------------------------------------------
Arkansas State University, Housing Systems
Rev., AMBAC, 5.15%, 2021 $ 1,240,000 $ 1,301,157
Arkansas Technical University, Housing
Systems Rev., AMBAC, 5.2%, 2026 1,000,000 1,081,140
Pope County, AR, Residential Housing,
Facilities Board Rev. (Arkansas Technical
University Project), "A ", 6%, 2027 500,000 506,680
University of Central Arkansas, Student
Housing Rev., "C ", FGIC, 5.25%, 2029 500,000 518,045
- ----------------------------------------------------------------------------------------------------------
$ 3,407,022
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.6%
- ----------------------------------------------------------------------------------------------------------
Jefferson County, AR, Pollution Control Rev.
(Entergy Arkansas, Inc., Project), 4.6%, 2017 $ 750,000 $ 759,428
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 7.7%
- ----------------------------------------------------------------------------------------------------------
Benton, AR, Utilities Rev., AMBAC, 5%, 2030 $ 470,000 $ 488,979
North Little Rock, AR, Electric Rev., "A ",
MBIA, 6.5%, 2010 1,650,000 1,743,390
North Little Rock, AR, Electric Rev., "A ",
MBIA, 6.5%, 2015 6,000,000 6,955,320
Puerto Rico Electric Power Authority Rev.,
"NN ", 5.125%, 2024 1,000,000 1,056,160
- ----------------------------------------------------------------------------------------------------------
$ 10,243,849
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.7%
- ----------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority,
Economic Development Rev., "I ", AMBAC,
5.65%, 2014 $ 375,000 $ 379,208
Fort Smith, AR, Water & Sewer Rev., "C ",
FSA, 5.25%, 2020 1,315,000 1,408,312
Fort Smith, AR, Water & Sewer Rev., AMBAC,
5.65%, 2009 (c) 1,000,000 1,059,980
Fort Smith, AR, Water & Sewer Rev.,
Refunding & Construction, "A ", FSA,
5%, 2019 2,125,000 2,230,081
Fort Smith, AR, Water & Sewer Rev.,
Refunding & Construction, "A ", FSA,
5%, 2021 2,750,000 2,870,780
Little Rock, AR, Sewer Rev., Refunding &
Construction, 5%, 2022 1,750,000 1,823,658
Paragould, AR, Water Sewer & Electric Rev.,
AMBAC, 5.6%, 2010 (c) 765,000 825,397
South Sebastian County, AR, Water Refunding
Rev., MBIA, 5%, 2038 1,000,000 1,018,580
Virgin Islands Water & Power Authority Rev.,
ASST GTY, 5.3%, 2018 1,250,000 1,300,688
- ----------------------------------------------------------------------------------------------------------
$ 12,916,684
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $129,731,959) $137,741,918
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- ----------------------------------------------------------------------------------------------------------
Chicago, IL, Midway Airport Rev., Second
Lien, "B ", 3.95%, due 10/12/06 $ 700,000 $ 700,000
Georgia Municipal Electric Authority Rev.,
3.76%, due 10/11/06 300,000 300,000
State of Oregon, "73G ", 3.8%, due 10/11/06 100,000 100,000
TOTAL FLOATING RATE DEMAND NOTES
- ----------------------------------------------------------------------------------------------------------
(IDENTIFIED COST, $1,100,000) $ 1,100,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $130,831,959) (k) $138,841,918
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.1)% (5,454,978)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $133,386,940
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day LIBOR 2.795% (fixed rate) $ 25,825
11/09/26 USD 1,500,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 92,186
11/16/26 USD 1,500,000 Merrill Lynch 5.856% (fixed rate) 3-Month LIBOR 104,200
- ----------------------------------------------------------------------------------------------------------
$ 222,211
- ----------------------------------------------------------------------------------------------------------
At September 30, 2006, the fund had sufficient cash and/or securities to cover
any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 104.2%
- ----------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 4.0%
- ----------------------------------------------------------------------------------------------------------
Long Beach, CA, Harbor Rev., "A" FGIC,
5.25%, 2018 $ 3,500,000 $ 3,695,400
Los Angeles, CA, Department of Airports Rev.
(Ontario International Airport), "A ", FGIC,
6%, 2017 4,100,000 4,150,389
Los Angeles, CA, Harbor Department Rev.,
"B ", 5.375%, 2023 3,000,000 3,034,080
Palm Springs, CA, Palm Springs International
Airport, 5.55%, 2028 530,000 542,667
Port Oakland, CA, "K ", FGIC, 5.75%, 2020 4,000,000 4,259,680
- ----------------------------------------------------------------------------------------------------------
$ 15,682,216
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 10.6%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Series
II R 124B, XLCA, 5.5%, 2017 (u) $ 3,000,000 $ 3,434,790
Commonwealth of Puerto Rico, Series
II R 184C, FGIC, 5.5%, 2016 (u) 6,600,000 7,540,698
Los Angeles, CA, 5.25%, 2014 (u) 10,810,000 12,027,747
State of California, 10%, 2007 1,055,000 1,118,279
State of California, 5.125%, 2025 2,000,000 2,109,040
State of California, 5.25%, 2029 2,000,000 2,110,920
State of California, AMBAC, 7.2%, 2008 1,600,000 1,688,896
State of California, AMBAC, 6.3%, 2010 3,000,000 3,303,090
State of California, AMBAC, 7%, 2010 2,000,000 2,257,860
State of California, "B ",
5.75, 2009 (c)(u) 2,500,000 2,691,425
State of California, Various Purposes, "91 ",
AMBAC, 5%, 2028 3,000,000 3,158,610
- ----------------------------------------------------------------------------------------------------------
$ 41,441,355
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 18.8%
- ----------------------------------------------------------------------------------------------------------
Antelope Valley, CA (Union High School),
"A ", MBIA, 5%, 2027 $ 1,500,000 $ 1,575,930
Butte Glenn Community College District, "A ",
MBIA, 5%, 2026 1,885,000 1,982,718
Campbell, CA, Union High School District,
Election of 2002, "B ", FGIC, 5.5%, 2033 2,270,000 2,493,754
Campbell, CA, Union High School District,
FSA, 5%, 2021 1,280,000 1,342,669
Capistrano, CA, Union High School District,
"A ", FGIC, 5.875%, 2020 1,185,000 1,295,691
Chaffey, CA, Union High School District, "C ",
FSA, 5%, 2027 1,000,000 1,051,970
Coast Community College District CA, Capital
Appreciation, Election of 2002, "C ", FSA,
0%, 2033 5,000,000 1,232,100
Colton, CA, Joint Union School District, "A ",
FGIC, 5.375%, 2026 1,200,000 1,312,512
Colton, CA, Joint Union School District,
Election of 2001, "C ", FGIC, 0%, 2032 1,000,000 273,950
Colton, CA, Joint Union School District,
Election of 2001, "C ", FGIC, 0%, 2033 $ 3,000,000 $ 777,750
Coronad, CA, Union School District, "A ",
5.7%, 2020 1,285,000 1,397,527
Escondido, CA, Union School District, "A ",
FSA, 5%, 2026 1,000,000 1,047,740
Folsom Cordova, CA, Union School District,
Facilities Improvement, "A ", MBIA, 0%, 2025 1,505,000 645,178
Gilroy Cauni School District, Election of 2002,
"N ", FGIC, 5%, 2027 1,190,000 1,264,851
Glendale, CA, Union School District, "B ",
FSA, 5.5%, 2018 4,275,000 4,474,600
Hillsborough, CA, School District, Capital
Appreciation, Election of 2002, "B ",
0%, 2023 2,285,000 1,083,867
Hillsborough, CA, School District, Capital
Appreciation, Election of 2002, "B ",
0%, 2024 2,640,000 1,191,934
Inglewood, CA, Union School District, "A ",
FGIC, 6%, 2019 1,695,000 1,828,634
Little Lake, CA, City School District, "A ", FSA,
6.125%, 2010 (c) 1,035,000 1,140,829
Live Oak, CA, School District, Santa Cruz
County, Election of 2004, "A ", MBIA,
5%, 2033 1,410,000 1,487,057
Los Angeles, CA, Union School District,
Election of 1997, "E ", MBIA, 5.125%, 2027 5,000,000 5,275,200
Los Angeles, CA, Union School District,
FSA, 5.25%, 2013 (c)(u) 10,000,000 10,829,900
Moreland, CA, School District, Election of
2002, "B ", FGIC, 0%, 2028 1,440,000 537,120
Moreno Valley, CA, Union School District,
Election of 2004, "A ", FSA, 5%, 2025 1,075,000 1,139,145
Moreno Valley, CA, Union School District,
Election of 2004, "A ", FSA, 5%, 2026 1,715,000 1,814,985
Morgan Hill, CA, Union School District, FGIC,
5.5%, 2010 (c) 2,545,000 2,753,614
Mount Diablo, CA, Unified School District,
Election of 2002, "N ", MBIA, 5%, 2028 2,000,000 2,119,800
Natomas Unified School District CA, Election
of 2006, FGIC, 4.5%, 2029 2,065,000 2,074,148
Natomas Union School District, Election of
2002 "B ", FGIC, 5%, 2028 1,430,000 1,509,308
Oceanside, CA, Union School District, Election
of 2000, "C ", MBIA, 5.25%, 2032 1,940,000 2,054,887
Palos Verdes Peninsula, CA, Capital
Appreciation, "N ", FSA, 0%, 2029 4,405,000 1,554,084
Perris, CA, Union School District, "A ", FGIC,
0%, 2027 3,100,000 1,210,147
San Gabriel, CA, Union School District, "A ",
FSA, 5%, 2024 2,000,000 2,099,720
San Ysidro, CA, School District, AMBAC,
6.125%, 2021 960,000 1,109,184
Santa Clara, CA, Union School District, FGIC,
5.5%, 2019 2,210,000 2,374,159
Santa Maria, CA, Joint Union High School
District, "A ", FSA, 5.375%, 2015 (c) 1,120,000 1,285,458
Santa Maria, CA, Joint Union High School
District, "A ", FSA, 5.375%, 2015 (c) 1,210,000 1,388,753
Sausalito Marin City, CA, School District,
Capital Appreciation, Election of 2004, "B ",
MBIA, 0%, 2039 1,315,000 248,233
Sausalito Marin City, CA, School District,
Capital Appreciation, Election of 2004, "B ",
MBIA, 0%, 2040 1,400,000 250,278
Tehachapi, CA, Union School District, "A ",
FGIC, 5.625%, 2009 (c) 1,100,000 1,174,723
Walnut Valley, CA, Union School District,
Election of 2000, "E ", FSA, 0%, 2028 1,535,000 572,555
Washington, CA, Union School District,
Election of 1999, "A ", FGIC, 5.625%, 2021 1,000,000 1,101,530
- ----------------------------------------------------------------------------------------------------------
$ 73,378,192
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 10.9%
- ----------------------------------------------------------------------------------------------------------
Abag Finance Authority Rev. (San Diego
Hospital), "C ", 5.375%, 2020 $ 2,000,000 $ 2,097,580
California Health Facilities Financing Authority
Rev., Catholic Healthcare West, "G ",
5.25%, 2023 2,000,000 2,110,380
California Health Facilities Financing Authority
Rev., Cedars Sinai Medical Center, 5%, 2027 1,000,000 1,043,080
California Health Facilities Financing Authority
Rev., Health Facilities (Adventist Health
Systems), "A ", 5%, 2033 1,750,000 1,792,298
California Statewide Communities
Development Authority Rev. (Henry Mayo
Newhall Memorial Hospital), "A ", CHFC,
5%, 2018 2,000,000 2,079,200
California Statewide Communities
Development Authority Rev. (Kaiser
Permanente), "A ", 5.5%, 2032 2,000,000 2,121,560
California Statewide Communities
Development Authority Rev. (Los Angeles
Children's Hospital), 5.125%, 2019 4,000,000 4,144,040
California Statewide Communities
Development Authority Rev., CHFC, ETM,
0%, 2007 (c) 3,645,000 3,540,133
California Statewide Communities
Development Authority Rev., CHFC, ETM,
0%, 2008 (c) 6,345,000 5,928,007
California Statewide Communities
Development Authority Rev., Health Facilities
(Memorial Health Services), "A ", 6%, 2023 1,500,000 1,659,195
California Statewide Communities
Development, "B ", 5.625%, 2042 4,000,000 4,269,760
California Valley Health Systems, COP,
6.875%, 2023 470,000 470,738
Central California Joint Powers Health
Financing (Community Hospitals of Central
California), 5.625%, 2021 1,000,000 1,040,670
Kaweah Delta Health Care District Rev.,
6%, 2034 2,000,000 2,179,720
Rancho Mirage, CA, Joint Powers
(Eisenhower Medical Center), 5.625%, 2029 3,000,000 3,290,220
Tahoe Forest California Hospital District, "A ",
5.85%, 2009 (c) 795,000 857,408
Tahoe Forest California Hospital District, "A ",
5.85%, 2022 205,000 215,840
Turlock, CA, Health Facilities Rev. (Emanuel
Medical Center), 5%, 2024 500,000 509,260
Washington Township, CA, Health Care Rev.,
5% to 2018 1,000,000 1,028,060
West Contra Costa California Healthcare
District, AMBAC, 5.5%, 2029 2,000,000 2,171,560
- ----------------------------------------------------------------------------------------------------------
$ 42,548,709
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.7%
- ----------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority
Rev. (Paradise Valley Estates), 5.125%, 2022 $ $ 1,000,000 $ 1,049,140
La Verne, CA, COP (Brethren Hillcrest
Homes), "B ", 6.625%, 2025 1,000,000 1,082,020
Millbrae, CA, Residential Facilities Rev.
(Magnolia of Millbrae), "A ", 7.375%, 2027 460,000 478,759
- ----------------------------------------------------------------------------------------------------------
$ 2,609,919
- ----------------------------------------------------------------------------------------------------------
Human Services - 0.4%
California Statewide Communities
Development Authority (Prides Industries),
7.125%, 2009 (c) $ 1,640,000 $ 1,794,193
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.4%
- ----------------------------------------------------------------------------------------------------------
California Pollution Control Financing
Authority, Solid Waste Disposal Rev.
(Browning Ferris, Inc.), "A ", 5.8%, 2016 $ 2,000,000 $ 2,003,020
California Pollution Control Financing
Authority, Solid Waste Disposal Rev. (Waste
Management, Inc.), "A ", 5.125%, 2031 2,250,000 2,348,145
California Pollution Control Financing
Authority, Solid Waste Disposal Rev. (Waste
Management, Inc.), "A-2 ", 5.4%, 2025 1,000,000 1,063,340
- ----------------------------------------------------------------------------------------------------------
$ 5,414,505
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 $ 960,000 $ 1,046,285
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.9%
- ----------------------------------------------------------------------------------------------------------
San Diego County, CA, COP (Burnham
Institute for Medical Research), 5%, 2034 $ 1,000,000 $ 1,014,540
San Diego County, CA, COP (Burnham
Institute), 6.25%, 2009 (c) 2,300,000 2,492,832
- ----------------------------------------------------------------------------------------------------------
$ 3,507,372
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.4%
- ----------------------------------------------------------------------------------------------------------
California Statewide Communities
Development Authority Rev. (Irvine
Apartments), 5.25%, 2025 $ 6,000,000 $ 6,156,060
San Bernardino County, CA (Equity
Residential/Redlands), "A ", 5.2%, 2029 3,000,000 3,067,860
- ----------------------------------------------------------------------------------------------------------
$ 9,223,920
- ----------------------------------------------------------------------------------------------------------
Parking - 0.3%
- ----------------------------------------------------------------------------------------------------------
San Francisco, CA, Union Square, MBIA,
6%, 2020 $ 1,000,000 $ 1,097,090
- ----------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.1%
- ----------------------------------------------------------------------------------------------------------
Contra Costa, CA, Transportation & Sales Tax
Rev., "A ", ETM, 6.875%, 2007 (c) $ 480,000 $ 486,734
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 1.3%
- ----------------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev., "A ",
4.95%, 2036 $ 1,000,000 $ 1,012,920
California Rural Home Mortgage Finance
Authority Rev., GNMA, 7.3%, 2031 30,000 30,379
California Rural Home Mortgage Finance
Authority Rev., Mortgage Backed Securities
Program, "B4 ", GNMA, 6.35%, 2029 35,000 35,093
Pomona, CA, Single Family Mortgage Rev.,
GNMA, ETM, 7.375%, 2010 (c) 1,145,000 1,230,520
Pomona, CA, Single Family Mortgage Rev.,
GNMA, ETM, 7.5%, 2023 (c) 2,000,000 2,641,760
- ----------------------------------------------------------------------------------------------------------
$ 4,950,672
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.1%
- ----------------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev.,
Home Mortgage, "I ", 4.75%, 2031 $ 3,000,000 $ 3,020,940
California Housing Finance Agency Rev.,
Home Mortgage, "N ", FGIC, 5.05%, 2026 2,500,000 2,582,450
California Housing Finance Agency Rev.,
Home Mortgage, FSA, 0%, 2019 2,505,000 1,149,570
California Housing Finance Agency Rev.,
Home Mortgage, MBIA, 0%, 2028 5,020,000 1,646,309
- ----------------------------------------------------------------------------------------------------------
$ 8,399,269
- ----------------------------------------------------------------------------------------------------------
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 $ 1,016,100
South Bayside Waste Management Authority,
California Solid Waste System Rev., AMBAC,
5.75%, 2020 2,100,000 2,245,761
- ----------------------------------------------------------------------------------------------------------
$ 3,261,861
- ----------------------------------------------------------------------------------------------------------
State & Agency - Other - 2.8%
- ----------------------------------------------------------------------------------------------------------
Grossmont, CA, Union High School District,
MBIA, ETM, 0%, 2006 (c) $ 6,000,000 $ 5,976,840
Pasadena CA, COP, Old Pasadena Parking
Facilities Project, 6.25%, 2018 2,995,000 3,356,616
Sacramento County, CA, COP, Capital
Projects, AMBAC, 5.75%, 2018 1,500,000 1,622,385
- ----------------------------------------------------------------------------------------------------------
$ 10,955,841
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 14.7%
- ----------------------------------------------------------------------------------------------------------
Banning, CA, COP, Water Systems
Improvement Project, AMBAC, ETM,
8%, 2019 (c) $ 925,000 $ 1,150,904
California Department of Water Resources
Power Supply Rev., "C ", 5.25%, 2028 2,500,000 2,643,275
California Public Works Board Lease Rev.,
Department of Corrections State Prison, "A ",
7.4%, 2010 5,000,000 5,675,000
California Public Works Board, Department of
Justice, "D ", 5.25%, 2020 1,565,000 1,655,394
Fortuna & Susanville, CA, COP, "B ",
7.375%, 2017 625,000 634,256
Golden State, CA, Tobacco Securitization
Corp., Tobacco Settlement Rev., "A ", FSA,
0% to 2010, 4.55% to 2022 3,000,000 2,549,940
Golden State, CA, Tobacco Securitization
Corp., Tobacco Settlement Rev., Enhanced,
"A ", 5%, 2045 5,500,000 5,644,485
Golden State, CA, Tobacco Securitization
Corp., Tobacco Settlement Rev., Enhanced,
"A ", FGIC, 5%, 2035 3,000,000 3,139,260
Golden State, CA, Tobacco Securitization
Corp., Tobacco Settlement Rev., Enhanced,
"B ", 5.5%, 2013 (c) 7,000,000 7,772,100
Golden State, CA, Tobacco Securitization
Corp., Tobacco Settlement Rev., Enhanced,
"B ", 5.625%, 2013 (c) 5,000,000 5,588,200
Los Angeles, CA, COP, Antelope Valley
Courthouse, "A ", AMBAC, 5.25%, 2027 3,000,000 3,158,070
Los Angeles, CA, COP, Real Property
Program, AMBAC, 5.3%, 2027 3,000,000 3,215,010
Pomona, CA, Public Financing Authority Rev.,
"P ", 6.25%, 2010 4,020,000 4,281,943
Sacramento, CA, City Financing Authority
Rev., Capital Improvement, 5.5%, 2010 (c) 1,635,000 1,764,198
Sacramento, CA, City Financing Authority
Rev., City Hall & Redevelopment Projects,
"A ", FSA, 5%, 2032 2,000,000 2,085,920
Salinas, CA, COP, Capital Improvement
Projects, "A ", 5.7%, 2007 (c) 2,200,000 2,291,036
San Francisco, CA, City & County, COP (San
Bruno Jail No 3), AMBAC, 5.25%, 2033 3,930,000 4,115,103
- ----------------------------------------------------------------------------------------------------------
$ 57,364,094
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 2.3%
- ----------------------------------------------------------------------------------------------------------
Irvine, CA, School District Special Tax Rev.,
Community Facilities District No. 86-1,
AMBAC, 5.8%, 2020 $ 3,500,000 $ 3,654,210
Santa Cruz County, CA, Redevelopment
Agency Tax Allocation (Oak/Soquel
Community), 5.6%, 2017 1,455,000 1,509,301
Virgin Islands Public Finance Authority Rev.,
"A ", 5.5%, 2022 2,000,000 2,070,300
Virgin Islands Public Finance Authority Rev.,
"E ", 5.875%, 2018 1,600,000 1,677,632
- ----------------------------------------------------------------------------------------------------------
$ 8,911,443
- ----------------------------------------------------------------------------------------------------------
Tax Assessment - 5.6%
- ----------------------------------------------------------------------------------------------------------
Duarte, CA, Redevelopment Agency Tax
Allocation, Davis Addition Project Area,
6.7%, 2014 $ 555,000 $ 579,581
Fontana, CA, Redevelopment Agency Tax
Allocation, Jurupa Hills Redevelopment
Project, "A ", 5.5%, 2027 3,350,000 3,449,864
Huntington Park, CA, Public Financing Rev.
Wastewater Systems Project, "A ",
6.2%, 2025 2,000,000 2,053,080
La Mirada, CA, Redevelopment Agency,
Special Tax Rev., Community Facilities District
No. 89-1, 5.7%, 2020 1,500,000 1,537,560
Modesto, CA, Irrigation District, COP,
Refunding & Capital Improvements, "B ",
5.3%, 2022 1,655,000 1,656,010
Modesto, CA, Public Financing Authority
(John Thurman Field Renovation),
6.125%, 2016 1,255,000 1,282,259
Norco, CA, Special Tax Community Facilities
(District No. 2001), "N ", AMBAC,
4.75%, 2026 1,700,000 1,747,311
Orange County, CA, Community Facilities
District, Special Tax (Rancho Santa
Margarita), "A ", 5.55%, 2017 1,000,000 1,035,870
Poway, CA, Community Facilities District,
Special Tax (Parkway Business Center),
6.5%, 2010 715,000 758,572
Poway, CA, Community Facilities District,
Special Tax (Parkway Business Center),
6.75%, 2015 775,000 824,957
Riverside County, CA, Public Financing
Authority, Tax Allocation Rev., "A ",
5.25%, 2016 572,500 584,626
Riverside County, CA, Public Financing
Authority, Tax Allocation Rev., XLCA,
5%, 2037 3,000,000 3,118,110
Riverside County, CA, Redevelopment Agency,
Tax Allocation, "A ", XLCA, 5%, 2037 2,000,000 2,078,740
San Diego, CA, Redevelopment Agency, Tax
Allocation (Centre City), "B ", AMBAC,
5.3%, 2020 1,250,000 1,343,350
- ----------------------------------------------------------------------------------------------------------
$ 22,049,890
- ----------------------------------------------------------------------------------------------------------
Tobacco - 2.4%
- ----------------------------------------------------------------------------------------------------------
California County, CA, Tobacco Securitization
Agency, Capital Appreciation Asset Backed
(Gold Country), 0%, 2033 $ 4,000,000 $ 872,680
California County, CA, Tobacco Securitization
Corp., Tobacco Settlement, L.A. County, "A ",
0%, 2041 2,500,000 2,073,950
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "A ", 0%, 2050 2,000,000 133,340
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "B ", 0%, 2055 2,000,000 70,340
Golden State, CA, Tobacco Securitization
Corp., Tobacco Settlement, "A-1 ",
6.25%, 2033 2,935,000 3,229,116
Golden State, CA, Tobacco Securitization
Corp., Tobacco Settlement, "A-1 ",
6.75%, 2039 $ 2,645,000 $ 2,985,491
- ----------------------------------------------------------------------------------------------------------
$ 9,364,917
- ----------------------------------------------------------------------------------------------------------
Toll Roads - 0.7%
- ----------------------------------------------------------------------------------------------------------
Foothill/Eastern Corridor Agency, California
Toll Road Rev., Capital Appreciation, "A ",
7.1%, 2010 (c) $ 2,500,000 $ 2,823,000
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 0.7%
- ----------------------------------------------------------------------------------------------------------
Alameda Corridor Transportation Authority,
California Rev., Capital Appreciation, "A ",
AMBAC, 0%, 2030 $ 8,000,000 $ 2,674,160
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 8.8%
- ----------------------------------------------------------------------------------------------------------
Cabrillo, CA, Community College District
Capital Appreciation, "A ", MBIA, 0%, 2028 $ 1,000,000 $ 373,000
California Educational Facilities Authority Rev.
(Dominican University), 5%, 2036 1,150,000 1,181,280
California Educational Facilities Authority Rev.
(Fresno Pacific University), "A ", 6.75%, 2019 2,000,000 2,182,320
California Educational Facilities Authority Rev.
(L.A. College of Chiropractic), 5.6%, 2017 2,100,000 2,069,949
California Educational Facilities Authority Rev.
(Lutheran University), "C ", 5%, 2029 2,500,000 2,559,525
California Educational Facilities Authority Rev.
(Pomona College), "B ", 5.875%, 2009 (c) 2,000,000 2,145,560
California Educational Facilities Authority Rev.
(Santa Clara University), "A ", MBIA, 5%,
2027 1,340,000 1,394,484
California Educational Facilities Authority Rev.
(University of La Verne), "A ", 5%, 2029 1,500,000 1,538,055
California Educational Facilities Authority
Rev., Pooled College & University Projects,
"B ", 6.3%, 2007 (c) 1,000,000 1,033,340
California Educational Facilities Authority
Rev., Pooled College & University Projects,
"B ", 6.625%, 2020 1,000,000 1,109,390
California Statewide Communities, Notre
Dame De Namur University, 6.625%, 2033 1,000,000 1,058,500
Foothill-De Anza, CA, Community College
District, Election of 1999, "B ", FGIC,
0%, 2025 1,500,000 647,835
Long Beach, CA, Industrial Development Rev.
(CSU Foundation), "A ", 5.25%, 2023 1,450,000 1,476,419
San Mateo County, CA (Community College
District, 2005 Election), "A ", MBIA, 0%, 2026 3,000,000 1,229,760
Santa Monica, CA (Community College
District, 2002 Election), "C ", MBIA, 0%, 2027 2,000,000 730,420
University of California Rev., MBIA,
5.125%, 2016 (u) 11,410,000 11,693,881
University of California, COP, San Diego
Campus Projects, "A ", 5.25%, 2032 1,840,000 1,925,339
- ----------------------------------------------------------------------------------------------------------
$ 34,349,057
- ----------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 1.1%
- ----------------------------------------------------------------------------------------------------------
California Statewide Communities
Development Authority Rev., Aspire Public
Schools (Oakland Project), "A ", 7.25%, 2031 $ 960,000 $ 990,144
California Statewide Communities,
Development Authority Rev. (Escondido
Charter High School), 7.5%, 2011 (c) 1,000,000 1,190,060
Los Angeles, CA, COP, 5.7%, 2018 1,900,000 1,983,771
- ----------------------------------------------------------------------------------------------------------
$ 4,163,975
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 1.6%
- ----------------------------------------------------------------------------------------------------------
California Pollution Control Financing
Authority, Pollution Control Rev. (Pacific Gas
& Electric Co.), MBIA, 5.35%, 2016 $ 3,500,000 $ 3,772,125
Chula Vista, CA, Industrial Development Rev.
(San Diego Gas), "B ", 5%, 2027 2,500,000 2,606,325
- ----------------------------------------------------------------------------------------------------------
$ 6,378,450
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 1.5%
- ----------------------------------------------------------------------------------------------------------
Glendale, CA, Electric Works Rev., MBIA,
5.75%, 2010 (c) $ 1,420,000 $ 1,534,835
Glendale, CA, Electric Works Rev., MBIA,
5.75%, 2010 (c) 1,160,000 1,253,809
Northern California Power Agency Public
Power Rev., 5.85%, 2010 880,000 932,853
Virgin Islands Water & Power Authority Rev.,
5.5%, 2017 800,000 819,184
Virgin Islands Water & Power Authority Rev.,
5.3%, 2018 250,000 251,410
Virgin Islands Water & Power Authority Rev.,
"A ", 5.125%, 2013 1,000,000 1,007,190
- ----------------------------------------------------------------------------------------------------------
$ 5,799,281
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 7.0%
- ----------------------------------------------------------------------------------------------------------
California Department of Water Resources,
Central Valley Project Rev., "X ", FGIC,
5%, 2029 $ 2,000,000 $ 2,087,020
California Department of Water Resources,
Water Systems Rev., 7%, 2012 1,090,000 1,289,699
California Department of Water Resources,
Water Systems Rev., ETM, 7%, 2012 (c) $ 405,000 $ 481,905
Castaic Lake Water Agency, California Rev.,
Water Systems Improvement Project, AMBAC,
5.125%, 2030 1,725,000 1,802,504
Culver City, CA, Wastewater Facilities Rev,
"A ", FGIC, 5.6%, 2019 1,000,000 1,075,060
El Monte, CA, Water Authority Rev., Water
Systems Project, AMBAC, 6%, 2010 (c) 1,065,000 1,182,512
Livermore Amador Valley Water Management
Rev., "A ", AMBAC, 5%, 2031 4,875,000 5,026,271
Southern California Metropolitan Water
District Rev., 5.75%, 2018 (u) 10,000,000 11,534,700
West Sacramento, CA, Financing Authority
Rev., Water Systems Improvement Project,
FGIC, 5%, 2032 2,750,000 2,867,315
- ----------------------------------------------------------------------------------------------------------
$ 27,346,986
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $383,040,854) $407,023,386
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.1%
- ----------------------------------------------------------------------------------------------------------
Bay Area Toll Authority, California Toll Bridge
Rev., "A ", 3.58%, due 10/05/06 $ 1,000,000 $ 1,000,000
California Department of Water Resources,
Power Supply Rev., "C-2 ",
3.73%, due 10/05/06 800,000 800,000
California Department of Water Resources,
Power Supply Rev., "C-3 ",
3.73%, due 10/05/06 1,100,000 1,100,000
California Health Facilities Financing Authority
Rev., "A ", 3.79%, due 10/02/06 900,000 900,000
Triborough Bridge & Tunnel Authority, NY,
Rev., "F ", 3.74%, due 10/05/06 300,000 300,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES (IDENTIFIED COST, $4,100,000) $ 4,100,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $387,140,854) (K) $411,123,386
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.3)% (20,573,802)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $390,549,584
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 9,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 77,468
1/04/19 USD 3,000,000 Citigroup 7-Day BMA 4.307% (fixed rate) (130,269)
11/09/26 USD 3,750,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 230,463
- ----------------------------------------------------------------------------------------------------------
$ 177,662
- ----------------------------------------------------------------------------------------------------------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 104.6%
- ----------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 4.5%
- ----------------------------------------------------------------------------------------------------------
Greater Orlando Aviation Authority Rev., "A ",
FGIC, 5.25%, 2018 $ 1,000,000 $ 1,044,370
Lee County, FL, Airport Rev., "A ", FSA,
5.875%, 2018 1,000,000 1,084,010
Miami-Dade County, FL, Aviation Rev., "A ",
CIFG, 5%, 2038 500,000 520,945
Miami-Dade County, FL, Aviation Rev., "C ",
MBIA, 5.25%, 2018 500,000 517,250
Pensacola, FL, Airport Rev., "B ", MBIA,
5.625%, 2014 500,000 517,585
- ----------------------------------------------------------------------------------------------------------
$ 3,684,160
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 12.1%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, MBIA,
5.75%, 2010 (c)(u) $ 2,000,000 $ 2,149,880
Miami-Dade County, FL, Educational Facilities
Authority Rev. (University of Miami), "A ",
AMBAC, 5.5%, 2018 1,400,000 1,492,722
State of Florida, 5.0%, 2017 (u) 6,000,000 6,261,900
- ----------------------------------------------------------------------------------------------------------
$ 9,904,502
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 8.3%
- ----------------------------------------------------------------------------------------------------------
Florida Board of Education, Capital Outlay,
9.125%, 2014 $ 2,600,000 $ 3,153,800
Florida Board of Education, Capital Outlay,
ETM, 9.125%, 2014 (c) 400,000 533,628
Florida Board of Education, Public Education,
"J ", 5%, 2032 1,000,000 1,049,200
Osceola County, FL, School Board Certificate,
"A ", AMBAC, 5.25%, 2027 1,950,000 2,090,888
- ----------------------------------------------------------------------------------------------------------
$ 6,827,516
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 17.1%
- ----------------------------------------------------------------------------------------------------------
Birmingham, AL, Baptist Medical Center,
Special Care Facilities Rev. (Baptist Health
Systems, Inc.), "A ", 5%, 2030 $ 500,000 $ 511,365
Brevard County, FL, Health Facilities Rev.
(Health First Inc.), 5%, 2034 500,000 518,355
Citrus County, FL, Hospital Development
Authority Rev. (Citrus Memorial Hospital),
6.25%, 2023 465,000 503,204
Coral Gables, FL, Health Facilities Authority,
Hospital Rev. (Baptist Health South Florida),
FSA, 5%, 2029 535,000 561,921
Denver, CO, Health & Hospital Authority Rev.,
"A ", 6%, 2023 250,000 266,955
Highlands County, FL, Health Facilities
Authority Rev. (Adventist Health Systems),
5.25%, 2013 500,000 516,715
Hillsborough County, FL, Industrial
Development Authority Rev. (University
Community Hospital), MBIA, 6.5%, 2019 1,000,000 1,219,240
Indiana Health Facilities Financing Authority,
Hospital Rev. (Munster Medical Research
Foundation, Inc.), 6.375%, 2031 500,000 533,570
Jacksonville, FL, Health Facilities Rev.
(Ascencion Health), "A ", 5.25%, 2032 1,000,000 1,056,390
Lakeland, FL, Hospital Systems Rev. (Lakeland
Regional Health Systems), 5.5%, 2032 1,000,000 1,070,460
Leesburg, FL, Hospital Rev. (Leesburg Regional
Medical Center), 5.5%, 2032 750,000 782,130
Marion County, FL, Hospital District Rev.,
Refunding & Improvement, Health Systems
(Munroe Regional Health System), 5.5%, 2014 500,000 523,945
Marshall County, AL, Health Care Authority
Rev., "A ", 6.25%, 2022 500,000 552,005
Martin County, FL, Health Facilities Authority
Rev. (Martin Memorial Medical Center), "A ",
5.75%, 2022 500,000 536,310
Miami Beach, FL, Health Facilities Authority
Rev. (Mount Sinai Medical Center), "A ",
6.7%, 2019 250,000 276,228
New Hampshire Health & Educational Facilities
Authority Rev. (Exeter Hospital), 6%, 2024 500,000 549,900
Orange County, FL, Health Facilities Authority
Hospital Rev. (Orlando Regional Healthcare),
5.75%, 2012 (c) 1,000,000 1,115,420
Rhode Island Health & Education Building
Rev., Hospital Financing (Lifespan Obligated
Group), 6.5%, 2012 (c) 500,000 574,870
South Dakota Health & Education Facilities
Authority Rev. (Prairie Lakes Health Care
System), 5.625%, 2032 500,000 523,055
Tallahassee, FL, Health Facilities Rev.
(Tallahassee Memorial Healthcare),
6.25%, 2020 300,000 318,402
Tallahassee, FL, Health Facilities Rev.
(Tallahassee Memorial Regional Medical
Center), MBIA, 6.625%, 2013 1,000,000 1,004,550
Wisconsin Health & Educational Facilities
Authority Rev. (Marshfield Clinic), "A ",
5.375%, 2034 500,000 527,235
- ----------------------------------------------------------------------------------------------------------
$ 14,042,225
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.3%
- ----------------------------------------------------------------------------------------------------------
Orange County, FL, Health Facilities Authority
Rev. (Orlando Lutheran Towers), 5.7%, 2026 $ 250,000 $ 253,843
- ----------------------------------------------------------------------------------------------------------
Human Services - 0.4%
- ----------------------------------------------------------------------------------------------------------
Orange County, FL, Health Facilities Authority
Rev. (GF/Orlando Healthcare Facilities),
8.875%, 2021 $ 300,000 $ 333,762
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.9%
- ----------------------------------------------------------------------------------------------------------
Brazos River, TX, Brazoria County
Environmental Rev. (Dow Chemical, Co.),
"A-7 ", 6.625%, 2033 $ 500,000 $ 561,080
Red River Authority, TX, Pollution Control Rev.
(Celanese Project), "B ", 6.7%, 2030 200,000 219,524
- ----------------------------------------------------------------------------------------------------------
$ 780,604
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.0%
- ----------------------------------------------------------------------------------------------------------
California Pollution Control Financing
Authority, Solid Waste Disposal Rev. (Waste
Management, Inc.), "B ", 5%, 2027 $ 500,000 $ 515,925
Nevada Department of Business & Industry
Rev. (Republic Services, Inc.), 5.625%, 2026 300,000 328,056
- ----------------------------------------------------------------------------------------------------------
$ 843,981
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.0%
- ----------------------------------------------------------------------------------------------------------
Madison County, FL, Rev. (Twin Oaks Project),
"A ", 6%, 2025 $ 140,000 $ 145,191
Park Creek Metropolitan District, CO.
(Custodial Receipts), "CR-2 ", 7.875%, 2032 (n) 160,000 177,984
Tooele County, UT, Hazardous Waste
Treatment Rev. (Union Pacific Corp.),
5.7%, 2026 500,000 522,870
- ----------------------------------------------------------------------------------------------------------
$ 846,045
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.7%
- ----------------------------------------------------------------------------------------------------------
Delta County, MI, Economic Development
Corp., Environmental Improvements Rev.
(Mead Westvaco Escanaba), "A ",
6.25%, 2012 (c) $ 500,000 $ 566,170
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.3%
- ----------------------------------------------------------------------------------------------------------
Palm Beach County, FL, Industrial Development
Rev. (South Florida Fair Project), MBIA,
5.5%, 2020 $ 1,000,000 $ 1,059,250
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.9%
- ----------------------------------------------------------------------------------------------------------
Summit County, OH, Port Authority Building
Rev. (Seville Project), "A ", 5.1%, 2025 $ 200,000 $ 206,318
Tamarac, FL, Capital Improvement Rev., MBIA,
5%, 2030 500,000 525,870
- ----------------------------------------------------------------------------------------------------------
$ 732,188
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.7%
- ----------------------------------------------------------------------------------------------------------
Bay County, FL, Housing Finance Authority,
Multi-Family Rev. (Andrews Place II
Apartments), FSA, 5%, 2035 $ 500,000 $ 511,345
Collier County, FL, Housing Finance Authority
Rev. (Goodlette Arms Housing Project), "A ",
FNMA, 4.9%, 2032 500,000 522,245
Florida Housing Finance Corp., Housing Rev.
(Augustine Club Apartments), "D-1 ", MBIA,
5.5%, 2020 500,000 526,270
Florida Housing Finance Corp., Housing Rev.
(Crossing at University Apartments), "Q-1"
AMBAC, 5.1%, 2018 1,085,000 1,110,205
Palm Beach County, FL, Housing Finance
Authority Rev. (Westlake Apartments Project,
Phase II), FSA, 4.3%, 2012 $ 130,000 $ 132,847
Tampa, FL, Housing Finance Authority, Multi-
Family Rev. (Meridian River Development
Corp.), 4.75%, 2026 200,000 203,422
- ----------------------------------------------------------------------------------------------------------
$ 3,006,334
- ----------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 4.8%
- ----------------------------------------------------------------------------------------------------------
Escambia County, FL, Sales Tax Rev., AMBAC,
5%, 2022 $ 1,160,000 $ 1,230,134
Miami-Dade County, FL, Special Obligations,
Capital Appreciation, "A ", MBIA, 0%, 2032 2,000,000 545,980
Pasco County, FL, Sales Tax Rev. (Half
Central), AMBAC, 5%, 2023 1,000,000 1,058,470
Volusia County, FL, Tourist Development Tax
Rev., FSA, 5%, 2034 815,000 855,579
Wyandotte County-Kansas City, KS, Unified
Government Rev. (Sales Tax Second Lien Area
B), 5%, 2020 250,000 259,383
- ----------------------------------------------------------------------------------------------------------
$ 3,949,546
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 3.3%
- ----------------------------------------------------------------------------------------------------------
Brevard County, FL, Housing Finance Authority
Rev., "B ", GNMA, 6.5%, 2022 $ 34,000 $ 34,149
Lee County, FL, Housing Finance Authority Rev.
(Multi-County Program), "A-1 ", GNMA,
7.2%, 2033 30,000 30,308
Lee County, FL, Housing Finance Authority Rev.
(Multi-County Program), "A-4 ", GNMA,
7%, 2031 55,000 55,276
Manatee County, FL, Housing Finance
Authority Rev. (Single Family, Subordinated),
"3 ", GNMA, 5.3%, 2028 65,000 65,380
Miami-Dade County, FL, Housing Finance
Authority Rev. (Home Ownership Mortgage),
"A-1 ", GNMA, 5.2%, 2031 450,000 457,745
Palm Beach County, FL, Housing Finance
Authority Rev., "B ", GNMA, 5.5%, 2022 170,000 171,071
Pinellas County, FL, Housing Finance Authority
Rev. (Multi-County Program), "A-1 ", GNMA,
5.5%, 2035 595,000 624,667
Pinellas County, FL, Housing Finance Authority
Rev. (Multi-County Program), "B-1 ", GNMA,
6.2%, 2031 270,000 273,040
Pinellas County, FL, Housing Finance Authority
Rev., "A-1 ", GNMA, 4.85%, 2037 1,000,000 1,010,280
- ----------------------------------------------------------------------------------------------------------
$ 2,721,916
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 1.6%
- ----------------------------------------------------------------------------------------------------------
Florida Housing Finance Corp. Rev.
(Homeowner Mortgage), "1 ", GNMA,
4.8%, 2031 $ 1,000,000 $ 1,006,320
Florida Housing Finance Corp. Rev.
(Homeowner Mortgage), "4 ", FSA,
5.85%, 2031 275,000 278,319
- ----------------------------------------------------------------------------------------------------------
$ 1,284,639
- ----------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.3%
- ----------------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development
Authority, Resource Recovery Facilities Rev.
(American Ref-Fuel Co.), "A ", 6.2%, 2019 $ 200,000 $ 208,574
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 3.9%
- ----------------------------------------------------------------------------------------------------------
Florida Municipal Loan Council Rev., "B ",
MBIA, 5.625%, 2009 (c) $ 1,000,000 $ 1,069,790
Florida Municipal Loan Council Rev., "C ",
MBIA, 5.25%, 2022 1,000,000 1,079,710
St. Augustine, FL, Capital Improvement Rev.,
AMBAC, 5%, 2029 1,000,000 1,058,010
- ----------------------------------------------------------------------------------------------------------
$ 3,207,510
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 2.1%
- ----------------------------------------------------------------------------------------------------------
Orange County, FL, Tourist Development Tax
Rev., Subordinated, AMBAC, 5.25%, 2027 $ 1,500,000 $ 1,601,520
Virgin Islands Public Finance Authority Rev.,
"A ", 5.25%, 2024 130,000 137,019
- ----------------------------------------------------------------------------------------------------------
$ 1,738,539
- ----------------------------------------------------------------------------------------------------------
Tax Assessment - 4.9%
- ----------------------------------------------------------------------------------------------------------
Amelia Walk Community Development District,
FL, Special Assessment, "B ", 5.2%, 2014 $ 200,000 $ 204,140
Arborwood Community Development District,
FL, Special Assessment (Master Infrastructure
Projects), "B ", 5.1%, 2014 200,000 203,508
Concord Station Community Development
District, FL, Special Assessment, 5%, 2015 185,000 186,471
Concorde Estates Community Development
District, FL, Special Assessment, "B ",
5%, 2011 205,000 206,222
Durbin Crossing Community Development
District, FL, Special Assessment, "B-1 ",
4.875%, 2010 250,000 249,833
Fishawk Community Development District II,
FL, Tax Allocation, "B ", 5%, 2007 45,000 45,104
Greyhawk Landing Community Development,
FL, Special Assessment, "B ", 6.25%, 2009 100,000 101,318
Heritage Harbour South Community
Development District, FL, Special Assessment,
"B ", 5.4%, 2008 25,000 25,139
Killarney, FL, Community Development District,
Special Assessment, "B ", 5.125%, 2009 165,000 165,272
Lakes by the Bay South Community
Development District, FL, Rev., "B ",
5.3%, 2009 180,000 180,464
Middle Village Community Development
District, FL, Special Assessment, "A ",
5.8%, 2022 95,000 98,595
Middle Village Community Development
District, FL, Special Assessment, "B ",
5%, 2009 95,000 95,308
New Port Tampa Bay Community Development
District, FL, Special Assessment, "B ",
5.3%, 2012 200,000 202,090
North Springs Improvement District, FL, Special
Assessment (Parkland Golf Country Club),
"B-2 ", 5.125%, 2015 $ 250,000 $ 252,723
Old Palm Community Development District, FL,
Special Assessment (Palm Beach Gardens),
"B ", 5.375%, 2014 145,000 148,319
Palm Glades Community Development District,
FL, Special Assessment, "A ", 5.3%, 2036 200,000 203,250
Panther Trace II, Community Development
District, FL, Special Assessment, "B ",
5%, 2010 200,000 200,018
Parkway Center, Community Development
District, FL, Special Assessment, "B ",
5.625%, 2014 100,000 102,121
Renaissance Community Development District,
FL, Special Assessment, "B ", 6.25%, 2008 100,000 100,737
Sterling Hill Community Development District,
FL, Special Assessment, 5.5%, 2010 200,000 202,144
Tuscany Reserve Community Development
District, FL, Special Assessment, "B ",
5.25%, 2016 250,000 255,913
Villa Portofino West Community Development
District, FL, Special Assessment, "A ",
5.35%, 2036 200,000 204,828
Watergrass Community Development District,
FL, Special Assessment, "B ", 4.875%, 2010 200,000 201,072
Wentworth Estates Community Development
District, FL, Special Assessment, "B ",
5.125%, 2012 200,000 202,420
- ----------------------------------------------------------------------------------------------------------
$ 4,037,009
- ----------------------------------------------------------------------------------------------------------
Tobacco - 0.7%
- ----------------------------------------------------------------------------------------------------------
Louisiana Tobacco Settlement Authority Rev.,
"2001B ", 5.875%, 2039 $ 250,000 $ 263,855
South Carolina Tobacco Settlement Authority
Rev., "B ", 6.375%, 2030 250,000 286,743
- ----------------------------------------------------------------------------------------------------------
$ 550,598
- ----------------------------------------------------------------------------------------------------------
Toll Roads - 1.3%
- ----------------------------------------------------------------------------------------------------------
Lee County, FL, Transportation Facilities Rev.,
"A ", AMBAC, 5%, 2027 $ 1,000,000 $ 1,060,800
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 7.7%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Highway &
Transportation (Railroad II R 227-1),
MBIA, 5.5%, 2020 (u) $ 5,000,000 $ 5,792,400
St. Johns County, FL, Transportation
Improvement Rev., AMBAC, 5%, 2027 500,000 527,730
- ----------------------------------------------------------------------------------------------------------
$ 6,320,130
- ----------------------------------------------------------------------------------------------------------
Universities - Dormitories - 3.6%
- ----------------------------------------------------------------------------------------------------------
Florida Board Regents, Housing Rev.
(University of Central Florida), FGIC,
5.25%, 2020 $ 1,185,000 $ 1,260,093
Florida Board Regents, Housing Rev., MBIA,
5.3%, 2020 610,000 647,771
Florida Finance Authority, Capital Loan Projects
Rev., "F ", MBIA, 5.125%, 2021 1,000,000 1,039,890
- ----------------------------------------------------------------------------------------------------------
$ 2,947,754
- ----------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.2%
- ----------------------------------------------------------------------------------------------------------
Deerfield, IL, Educational Facilities Authority
Rev. (Chicagoland Jewish High School Project),
6%, 2041 $ 200,000 $ 204,820
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.5%
- ----------------------------------------------------------------------------------------------------------
Brazos River Authority, TX, Pollution Control
Rev. (Texas Utility Co.), "C ", 6.75%, 2038 $ 215,000 $ 240,114
Port Morrow, OR, Pollution Control Rev.
(Portland General Electric), 5.2%, 2033 200,000 206,156
- ----------------------------------------------------------------------------------------------------------
$ 446,270
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 2.6%
- ----------------------------------------------------------------------------------------------------------
Palm Coast, FL, Utility Systems Rev., MBIA,
5%, 2024 $ 250,000 $ 264,490
Port St. Lucie, FL, Utility Rev., MBIA, 5%, 2022 1,000,000 1,056,710
St. Lucie West, FL, Utility Rev., MBIA,
5.25%, 2034 720,000 781,142
- ----------------------------------------------------------------------------------------------------------
$ 2,102,342
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 14.9%
- ----------------------------------------------------------------------------------------------------------
Florida Community Services Corp., Utility Rev.,
AMBAC, 5.5%, 2018 $ 1,125,000 $ 1,211,940
Lee County, FL, Industrial Development
Authority Rev. (Bonita Springs Utilities Project),
MBIA, 6.05%, 2015 1,000,000 1,011,780
Miami Beach, FL, Stormwater Rev., FGIC,
5.25%, 2020 1,000,000 1,063,050
Miami-Dade County, FL, Stormwater Utility
Rev., MBIA, 5%, 2028 2,000,000 2,119,140
Orlando, FL, Utilities Commission, Water &
Electric Rev. "C ", 5%, 2027 1,000,000 1,049,550
Pinellas County, FL, Sewer Rev., FSA,
5%, 2032 1,500,000 1,572,045
Polk County, FL, Utility Systems Rev., "A ",
FGIC, 5%, 2030 1,000,000 1,056,610
Polk County, FL, Utility Systems Rev., FGIC,
5%, 2023 1,000,000 1,057,340
Seminole County, FL, Water & Sewer Rev.,
Unrefunded Balance, MBIA, 6%, 2019 940,000 1,085,822
Tohopekaliga Water Authority, Florida Utility
System Rev., "A ", FSA, 5%, 2024 1,000,000 1,057,960
- ----------------------------------------------------------------------------------------------------------
$ 12,285,237
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $81,583,807) $ 85,946,264
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- ----------------------------------------------------------------------------------------------------------
Pinellas County, FL, Health Facilities Authority
Rev. (Pooled Hospital Loan Program),
3.85%, due 10/02/06, at Identified Cost $ 650,000 $ 650,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $82,233,807) (K) $ 86,596,264
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.4)% (4,408,073)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 82,188,191
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 17,216
12/13/16 USD 1,000,000 Merrill Lynch 7-Day BMA 3.848% (fixed rate) (9,063)
12/15/16 USD 1,000,000 Merrill Lynch 7-Day BMA 4.108% (fixed rate) (28,968)
3/26/17 USD 1,000,000 Goldman Sachs 7-Day BMA 3.710% (fixed rate) 2,993
1/04/19 USD 1,000,000 Citigroup 7-Day BMA 4.307% (fixed rate) (43,423)
3/01/19 USD 1,500,000 Merrill Lynch 7-Day BMA 3.976% (fixed rate) (20,911)
- ----------------------------------------------------------------------------------------------------------
$ (82,156)
- ----------------------------------------------------------------------------------------------------------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 104.6%
- --------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- --------------------------------------------------------------------------------------
Airport & Port Revenue - 4.9%
- --------------------------------------------------------------------------------------
Atlanta, GA, Airport Passenger Facilities Rev.,
"J", FSA, 5%, 2029 $ 750,000 $ 787,658
Atlanta, GA, Airport Passenger Facilities Rev.,
"J", FSA, 5%, 2034 750,000 784,470
Atlanta, GA, Airport Rev., "B", FSA,
5.25%, 2033 1,000,000 1,070,770
Augusta, GA, Airport Rev., "B", 5.35%, 2028 350,000 361,505
- --------------------------------------------------------------------------------------
$ 3,004,403
- --------------------------------------------------------------------------------------
General Obligations - General Purpose - 6.1%
- --------------------------------------------------------------------------------------
Atlanta & Fulton County, GA, Park
Improvement, "A", MBIA, 5%, 2030 $ 500,000 $ 527,010
Columbia County, GA (Courthouse Detention
Center), 5.625%, 2020 1,490,000 1,556,245
Gilmer County, GA, Building Authority Rev.,
Courthouse Project, "A", XLCA, 5%, 2029 500,000 527,955
Macon Bibb County, GA, Urban Development
Rev. (Bibb County Public Facilities Project),
5.5%, 2022 1,000,000 1,078,850
- --------------------------------------------------------------------------------------
$ 3,690,060
- --------------------------------------------------------------------------------------
General Obligations - Improvement - 3.1%
- --------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency,
FSA, 6%, 2009 (c)(u) $ 1,000,000 $ 1,076,540
Suwanee, GA, MBIA, 5.25%, 2032 750,000 792,435
- --------------------------------------------------------------------------------------
$ 1,868,975
- --------------------------------------------------------------------------------------
General Obligations - Schools - 7.6%
- --------------------------------------------------------------------------------------
Fayette County, GA, School District Rev., FSA,
0% to 2010, 4.9% to 2024 $ 575,000 $ 488,733
Forsyth County, GA, School District,
6%, 2010 (c) 750,000 819,458
Fulton County, GA, School District,
6.375%, 2010 2,000,000 2,111,520
Wilkes County, GA, School District, 5%, 2024 1,115,000 1,182,614
- --------------------------------------------------------------------------------------
$ 4,602,325
- --------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 9.3%
- --------------------------------------------------------------------------------------
Athens Clarke County, GA (United Catholic
Health East Issue), 5.5%, 2032 $ 500,000 $ 530,830
Chatham County, GA, Hospital Authority Rev
(Memorial Health Medical Center), "A ",
6%, 2017 350,000 377,955
Chatham County, GA, Hospital Authority Rev.,
Hospital Improvement (Memorial Health
University), "A", 5.375%, 2026 200,000 212,476
Cobb County, GA, Hospital Authority
Revolving, Refunding & Improvement Rev.,
Anticipation Certificates, AMBAC, 5.25%, 2023 750,000 809,550
Healthcare Revenue - Hospitals - continued
Coffee County, GA, Hospital Authority Rev
(Coffee Regional Medical Center, Inc.),
5%, 2026 $ 350,000 $ 355,604
Gainesville & Hall County, GA, Hospital
Authority Rev. (Northeast Georgia Health
System, Inc.), 5.5%, 2031 500,000 521,865
Royston, GA, Hospital Authority Rev. (Ty Cobb
Healthcare System, Inc.), 6.125%, 2009 220,000 222,660
Tift County, GA, Hospital Authority Rev.,
Anticipation Certificates, AMBAC, 5%, 2022 2,000,000 2,110,580
Valdosta & Lowndes County, GA, Hospital
Authority Rev. (Southern Georgia Medical
Center Project), AMBAC, 5.25%, 2027 500,000 533,370
- --------------------------------------------------------------------------------------
$ 5,674,890
- --------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.3%
- --------------------------------------------------------------------------------------
Fulton County, GA, Residential Care Facilities
(Canterbury Court), "A", 6.125%, 2034 $ 150,000 $ 157,887
- --------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.9%
- --------------------------------------------------------------------------------------
Savannah, GA, Economic Development
Authority, Solid Waste Disposal Rev. (Georgia
Waste Management Project), "A", 5.5%, 2016 $ 500,000 $ 538,640
- --------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.6%
- --------------------------------------------------------------------------------------
Cartersville, GA, Development Authority Waste
(Anheuser Busch Project), 5.95%, 2032 $ 750,000 $ 821,730
Virgin Islands Public Finance Authority,
Refinery Facilities Rev.(Hovensa Refinery),
5.875%, 2022 160,000 174,381
- --------------------------------------------------------------------------------------
$ 996,111
- --------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.1%
- --------------------------------------------------------------------------------------
Effingham County, GA, Development Authority,
Solid Waste Disposal Rev. (Fort James),
5.625%, 2018 $ 150,000 $ 150,411
Savannah, GA, Economic Development
Pollution (Union Camp Corp.), 6.15%, 2017 1,000,000 1,133,210
- --------------------------------------------------------------------------------------
$ 1,283,621
- --------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.8%
- --------------------------------------------------------------------------------------
De Kalb County, GA, Housing Authority Multi-
Family Housing Rev. (Castaways Apartments),
"A", GNMA, 5.4%, 2029 $ 595,000 $ 625,684
Hinesville, GA, Leased Housing Corp., "A",
FHA, 6.7%, 2017 900,000 903,519
Savannah, GA, Housing Authority (Chatham
Gardens Project), FNMA, 5.625%, 2031 750,000 808,935
- --------------------------------------------------------------------------------------
$ 2,338,138
- --------------------------------------------------------------------------------------
Single Family Housing - State - 5.3%
- --------------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev.,
5.5%, 2032 $ 1,000,000 $ 1,008,850
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "A", 5.6%, 2032 665,000 685,941
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "A-2", 4.85%, 2037 500,000 503,150
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "B", 5%, 2026 250,000 254,768
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "C-2", 5.1%, 2022 750,000 766,635
- --------------------------------------------------------------------------------------
$ 3,219,344
- --------------------------------------------------------------------------------------
State & Agency - Other - 2.7%
- --------------------------------------------------------------------------------------
County Commissioners of Georgia Assn.,
Leasing Program, Rockdale County, GA (Public
Purpose Project), AMBAC, 5.625%, 2010 (c) $ 335,000 $ 362,195
County Commissioners of Georgia Assn.,
Leasing Program, Rockdale County, GA (Public
Purpose Project), AMBAC, 5.625%, 2020 165,000 177,731
Fulton County, GA, Facilities Corp. (Fulton
County, GA Public Purpose Project), AMBAC,
5.9%, 2019 1,000,000 1,092,220
- --------------------------------------------------------------------------------------
$ 1,632,146
- --------------------------------------------------------------------------------------
State & Local Agencies - 3.8%
- --------------------------------------------------------------------------------------
Clayton County, GA, Development Authority
Rev., "A", 6.25%, 2009 (c) $ 500,000 $ 545,430
College Park, GA, Bus & Industrial
Development Civic Center Project, "N",
AMBAC, 5.25%, 2025 500,000 545,990
De Kalb County, GA, Public Safety & Judicial
Facilities Authority Rev., 5%, 2029 400,000 421,324
Fayette County, GA, Public Facilities Authority
(Criminal Justice Center Project),
6.25%, 2010 (c) 755,000 831,225
- --------------------------------------------------------------------------------------
$ 2,343,969
- --------------------------------------------------------------------------------------
Tax - Other - 3.0%
- --------------------------------------------------------------------------------------
Puerto Rico Convention Center, District
Authority Hotel Occupancy Tax Rev., "A",
CIFG, 4.5%, 2036 $ 750,000 $ 757,620
Virgin Islands Public Finance Authority Rev.,
ASST GTY, 5.5%, 2018 1,000,000 1,048,670
- --------------------------------------------------------------------------------------
$ 1,806,290
- --------------------------------------------------------------------------------------
Tax Assessment - 0.5%
- --------------------------------------------------------------------------------------
Atlanta, GA, Tax Allocation (Eastside Project),
"B", 5.6%, 2030 $ 150,000 $ 155,600
Atlanta, GA, Tax Allocation (Princeton Lakes
Project), 5.5%, 2031 150,000 152,991
- --------------------------------------------------------------------------------------
$ 308,591
- --------------------------------------------------------------------------------------
Tobacco - 0.6%
- --------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 360,000 $ 371,398
Transportation - Special Tax - 1.1%
Commonwealth of Puerto Rico Highway &
Transportation Authority, "Y", 5.5%, 2036 $ 610,000 $ 665,687
Universities - Colleges - 9.4%
Fulton County, GA (Morehouse College),
AMBAC, 6.25%, 2021 $ 980,000 $ 1,085,027
Fulton County, GA, Development Authority
Rev. (Georgia Tech Foundation Funding), "A",
5%, 2031 265,000 275,298
Fulton County, GA, Development Authority
Rev. (Georgia Tech Foundation), "A",
5.75%, 2017 1,000,000 1,091,130
Private Colleges & University Authority (Emory
University), "A", 5.75%, 2009 (c) 1,000,000 1,071,890
Private Colleges & University Authority (Emory
University), "A", 5.75%, 2010 (c) 1,000,000 1,089,830
Private Colleges & University Authority (Mercer
University), 5.75%, 2011 (c) 500,000 555,625
Savannah, GA, Economic Development
Authority Rev. (College of Art & Design, Inc.),
ETM, 6.2%, 2009 (c) 500,000 516,040
- --------------------------------------------------------------------------------------
$ 5,684,840
- --------------------------------------------------------------------------------------
Universities - Dormitories - 2.6%
- --------------------------------------------------------------------------------------
Georgia Private College & University Authority
Rev. (Mercer Housing Corp.), "A", 6%, 2021 $ 500,000 $ 532,895
Marietta, GA, Development Authority Rev.,
Student Housing (Southern Polytech University),
"A", 6.25%, 2007 (c) 1,000,000 1,047,240
- --------------------------------------------------------------------------------------
$ 1,580,135
- --------------------------------------------------------------------------------------
Utilities - Municipal Owned - 5.1%
- --------------------------------------------------------------------------------------
Georgia Municipal Electric Authority Power
Rev., "A ", MBIA, 6.5%, 2020 $ 1,250,000 $ 1,573,163
Monroe County, GA, Pollution Control Rev
(Oglethorpe Power Corp.), "A ", 6.8%, 2012 1,000,000 1,137,220
Summerville, GA, Public Utility Rev., Refunding
& Improvement, 5.75%, 2026 350,000 376,366
- --------------------------------------------------------------------------------------
$ 3,086,749
- --------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 30.8%
- --------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., "A",
MBIA, 5%, 2033 $ 500,000 $ 519,180
Atlanta, GA, Water & Wastewater Rev.,
FGIC, 5.5%, 2016 (u) 8,000,000 9,050,640
Augusta, GA, Water & Sewer Rev., FSA,
5.25%, 2034 1,000,000 1,082,650
Clayton County, GA, Water Authority, Water &
Sewer Rev., 6.25%, 2010 (c) 1,000,000 1,097,270
Columbia County, GA, Water & Sewer Rev.,
FGIC, 6.25%, 2010 (c) 470,000 513,320
Fairburn, GA, Utility Rev., 5.75%, 2020 500,000 530,740
Forsyth County, GA, Water & Sewer Authority,
6.25%, 2010 (c) 1,105,000 1,210,406
Fulton County, GA, Water & Sewer Rev., FGIC,
6.375%, 2014 100,000 112,104
Fulton County, GA, Water & Sewer Rev., FGIC,
ETM, 6.375%, 2014 (c) 2,150,000 2,412,451
Gainesville, GA, Water & Sew Rev., FGIC,
5.625%, 2009 (c) 1,000,000 1,070,500
Jackson County, GA, Water & Sewer Authority,
"A", AMBAC, 5.75%, 2017 1,000,000 1,094,704
- --------------------------------------------------------------------------------------
$ 18,693,965
- --------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $59,550,512) $ 63,548,164
- --------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.0%
- --------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., "C",
3.85%, due 10/02/06 $ 100,000 $ 100,000
Georgia Municipal Electric Authority,
3.76%, due 10/04/06 500,000 500,000
- --------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $600,000) $ 600,000
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $60,150,512) (K) $ 64,148,164
- --------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.6)% (3,406,440)
- --------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 60,741,724
- --------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/1/2007 USD 1,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 8,608
12/13/2016 USD 500,000 Merrill Lynch 7-Day BMA 3.848% (fixed rate) (4,532)
12/15/2016 USD 500,000 Merrill Lynch 7-Day BMA 4.108% (fixed rate) 14,484
3/26/2017 USD 1,000,000 Goldman Sachs 7-Day BMA 3.710% (fixed rate) 2,993
1/4/2019 USD 1,000,000 Citigroup 7-Day BMA 4.307% (fixed rate) 43,423
3/1/2019 USD 500,000 Merrill Lynch 7-Day BMA 3.976% (fixed rate) (6,970)
11/9/2026 USD 600,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 36,874
- ----------------------------------------------------------------------------------------------------------------------
($ 20,934)
- ----------------------------------------------------------------------------------------------------------------------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (Not Restated)
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 - 96.2%
- --------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- --------------------------------------------------------------------------------------
Airport and Port Revenue - 0.8%
- --------------------------------------------------------------------------------------
Maryland Transportation Authority Rev.
(Baltimore/Washington International Airport),
"A", AMBAC, 5%, 2027 $ 1,000,000 $ 1,048,770
General Obligations - General Purpose - 6.3%
Anne Arundel County, MD, General
Improvement, 4.2%, 2025 $ 520,000 $ 513,417
Baltimore, MD, "B", 7.15%, 2009 2,120,000 2,329,096
Baltimore, MD, UT, Public Improvement, "A",
MBIA, 7%, 2009 1,000,000 1,101,000
Frederick County, MD, Public Facilities,
5.25%, 2009 (c) 2,000,000 2,109,360
Puerto Rico Commonwealth Public
Improvement, "A", 5.25%, 2026 2,330,000 2,504,494
- --------------------------------------------------------------------------------------
$ 8,557,367
- --------------------------------------------------------------------------------------
General Obligations - Improvement - 14.3%
- --------------------------------------------------------------------------------------
Howard County, MD, "B", 0%, 2008 $ 1,000,000 $ 936,520
Howard County, MD, Consolidated Public
Improvement, "A", 5.5%, 2008 (c) 1,000,000 1,036,450
Howard County, MD, Consolidated Public
Improvement, "A", 5.5%, 2008 (c) 2,000,000 2,072,900
Prince George's County, MD, 0%, 2007 5,110,000 4,977,651
Prince George's County, MD, Consolidated
Public Improvement, "A", 5%, 2023 2,000,000 2,132,240
Prince George's County, MD, Unrefunded
Balance, Public Improvement, FSA,
5.375%, 2015 80,000 84,666
Puerto Rico Municipal Finance Agency,
RITES, FSA, 7.099%, 2019 (v)(z) 1,000,000 1,126,400
Washington Suburban Sanitation District,
General Construction Rev., 5%, 2027 930,000 993,231
Washington Suburban Sanitation District,
General Construction Rev., 5%, 2028 980,000 1,045,160
Washington Suburban Sanitation District,
General Construction Rev., 5%, 2029 1,025,000 1,091,615
Worcester County, MD, Public Improvement,
5.625%, 2010 (c) 1,620,000 1,743,493
Worcester County, MD, Public Improvement,
5.625%, 2010 (c) 2,030,000 2,184,747
- --------------------------------------------------------------------------------------
$ 19,425,073
- --------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 18.9%
- --------------------------------------------------------------------------------------
Maryland Health & Higher Education
(Peninsula Regional Medical Center),
5%, 2036 $ 1,000,000 $ 1,039,820
Maryland Health & Higher Educational
Facilities Authority Rev. (Adventist
Healthcare), "A", 5.75%, 2025 1,000,000 1,068,110
Healthcare Revenue - Hospitals - continued
Maryland Health & Higher Educational
Facilities Authority Rev. (Anne Arundel Health
Systems), "A", FSA, 5%, 2023 1,000,000 1,059,120
Maryland Health & Higher Educational
Facilities Authority Rev. (Calvert Health
Systems), 5.5%, 2039 1,000,000 1,069,410
Maryland Health & Higher Educational
Facilities Authority Rev. (Carroll County
General Hospital), 6%, 2037 1,000,000 1,072,460
Maryland Health & Higher Educational
Facilities Authority Rev. (Catholic Health),
"A", 6%, 2020 245,000 267,388
Maryland Health & Higher Educational
Facilities Authority Rev. (Catholic Health),
"A", ETM, 6%, 2020 (c) 755,000 817,499
Maryland Health & Higher Educational
Facilities Authority Rev. (Doctors Community
Hospital), 5.5%, 2024 1,000,000 1,002,550
Maryland Health & Higher Educational
Facilities Authority Rev. (Frederick Memorial
Hospital), 5.125%, 2035 1,000,000 1,024,640
Maryland Health & Higher Educational
Facilities Authority Rev. (Good Samaritan
Hospital), ETM, 5.7%, 2009 (c) 1,085,000 1,129,322
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
Hospital), 5%, 2021 750,000 778,718
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
Medical Institutions), "A", 5%, 2037 750,000 788,528
Maryland Health & Higher Educational
Facilities Authority Rev. (Lifebridge Health),
"A", 5.125%, 2034 1,000,000 1,034,460
Maryland Health & Higher Educational
Facilities Authority Rev. (Medlantic/Helix
Issue), "B", AMBAC, 5.25%, 2038 1,500,000 1,748,775
Maryland Health & Higher Educational
Facilities Authority Rev. (Medstar Health),
5.5%, 2033 800,000 848,096
Maryland Health & Higher Educational
Facilities Authority Rev. (North Arundel
Hospital), 6.5%, 2010 (c) 500,000 555,420
Maryland Health & Higher Educational
Facilities Authority Rev. (Suburban Hospital),
"A", 5.5%, 2016 1,000,000 1,092,000
Maryland Health & Higher Educational
Facilities Authority Rev. (Union Hospital of
Cecil County Issue), 5.625%, 2032 1,000,000 1,060,440
Maryland Health & Higher Educational
Facilities Authority Rev. (Union Hospital of
Cecil County Issue), 5%, 2035 500,000 519,335
Maryland Health & Higher Educational
Facilities Authority Rev. (University of
Maryland Medical Systems), 6.625%, 2010 (c) 1,000,000 1,100,030
Maryland Health & Higher Educational
Facilities Authority Rev. (University of
Maryland Medical Systems), "B", AMBAC,
5%, 2024 1,000,000 1,060,950
Maryland Health & Higher Educational
Facilities Authority Rev. (Upper Chesapeake
Hospital), "A", FSA, 5.5%, 2020 2,000,000 2,066,480
Maryland Health & Higher Educational
Facilities Rev. (Helix Health Issue), AMBAC,
ETM, 5%, 2027 (c) 1,000,000 1,100,970
Maryland Industrial Development Authority,
Economic Development Rev., RIBS, FSA,
8.177%, 2022 (p) 1,400,000 1,827,728
Montgomery County, MD, Economic
Development (Trinity Healthcare Group),
5.125%, 2022 500,000 523,110
- --------------------------------------------------------------------------------------
$ 25,655,359
- --------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.3%
- --------------------------------------------------------------------------------------
Maryland Health & Higher & Higher
Educational Facilities Authority Rev
(Edenwald), "A", 5.4%, 2037 $ 200,000 $ 204,724
Maryland Health & Higher Educational
Facilities Authority Rev. (Bradford Oaks
Nursing & Rehabilitation Center),
6.375%, 2027 1,000,000 1,009,720
Maryland Health & Higher Educational
Facilities Authority Rev. (Mercy Ridge), "A",
6%, 2035 150,000 159,456
Westminster, MD, Economic Development
Rev. (Carroll Lutheran Village), "A",
6.25%, 2034 400,000 420,904
- --------------------------------------------------------------------------------------
$ 1,794,804
- --------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 1.1%
- --------------------------------------------------------------------------------------
Baltimore, MD, Port Facilities Rev.,
Consolidated Coal Sales, "B", 6.5%, 2011 $ 1,500,000 $ 1,564,260
Industrial Revenue - Environmental Services - 0.7%
Maryland Economic Development Corp., "A ",
5%, 2031 $ 300,000 $ 295,842
Northeast Maryland Waste Disposal Authority
Resources Recovery Rev. (Baltimore Resco
Retrofit Project), 5%, 2012 690,000 702,123
- --------------------------------------------------------------------------------------
$ 997,965
- --------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- --------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 $ 375,000 $ 408,705
Miscellaneous Revenue - Entertainment & Tourism - 0.8%
Maryland Industrial Development Authority
Economic Development (Baltimore Aquarium
Project), 5.2%, 2026 $ 1,000,000 $ 1,055,840
Miscellaneous Revenue - Other - 3.0%
Baltimore, MD, Convention Center Hotel Rev.,
"B", 5.875%, 2039 $ 300,000 $ 319,212
Harford County MD, Economic Development
Rev. (Battelle Memorial Institute Project),
5.25%, 2034 1,600,000 1,693,312
Puerto Rico Commonwealth Infrastructure
Financing Authority, Special Tax Rev., "B",
5%, 2031 2,000,000 2,076,440
- --------------------------------------------------------------------------------------
$ 4,088,964
- --------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.7%
- --------------------------------------------------------------------------------------
Baltimore, MD, City Housing Corp. Rev., FHA,
7.75%, 2009 $ 320,000 $ 320,045
Maryland Community Development
Administration (Waters Landing II
Apartments), "A", GNMA, 5.875%, 2033 1,500,000 1,580,715
Maryland Community Development
Administration, "A", 5%, 2034 910,000 925,971
Maryland Community Development
Administration, "A", 5.1%, 2044 970,000 986,956
Maryland Community Development
Administration, "A", 5.05%, 2047 1,000,000 1,019,160
Maryland Community Development
Administration, "B", 5%, 2039 500,000 509,900
Maryland Community Development
Administration, "D", 5%, 2032 1,000,000 1,013,630
- --------------------------------------------------------------------------------------
$ 6,356,377
- --------------------------------------------------------------------------------------
Parking - 1.2%
- --------------------------------------------------------------------------------------
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
Medical Institutions), AMBAC, 5%, 2034 $ 1,500,000 $ 1,577,505
- --------------------------------------------------------------------------------------
Single Family Housing - Local - 0.1%
- --------------------------------------------------------------------------------------
Prince George's County, MD, Housing Single
Family Collateral, "A", 7.4%, 2032 $ 30,000 $ 30,584
Prince George's County, MD, Housing Single
Family Collateral, "A", GNMA, 5.6%, 2034 60,000 60,130
- --------------------------------------------------------------------------------------
$ 90,714
- --------------------------------------------------------------------------------------
Single Family Housing - State - 4.4%
- --------------------------------------------------------------------------------------
Maryland Community Development
Administration Housing, "A", 5.875%, 2016 $ 1,155,000 $ 1,181,230
Maryland Community Development
Administration Residential, "B", 4.75%, 2019 680,000 692,002
Maryland Community Development
Administration, "I", 6%, 2041 1,000,000 1,082,100
Maryland Community Development
Administration, Department of Housing &
Community Development, "L", 4.95%, 2038 1,000,000 1,009,320
Montgomery County, MD, Housing
Opportunities Commission (Single Family
Mortgage Rev.), "B", 4.55%, 2026 1,505,000 1,499,070
Puerto Rico Housing Finance Authority Home
Mortgage Rev., Mortgage Backed Securities,
"A", 4.75%, 2023 180,000 180,031
Puerto Rico Housing Finance Authority
Mortgage Backed Securities, "A",
4.375%, 2017 300,000 302,157
- --------------------------------------------------------------------------------------
$ 5,945,910
- --------------------------------------------------------------------------------------
State & Agency - Other - 2.4%
- --------------------------------------------------------------------------------------
Howard County, MD, COP, 8%, 2019 $ 805,000 $ 1,135,308
Howard County, MD, COP, 8%, 2019 385,000 542,973
Howard County, MD, COP, 8%, 2019 680,000 959,018
Howard County, MD, COP, 8.15%, 2021 450,000 653,139
- --------------------------------------------------------------------------------------
$ 3,290,438
- --------------------------------------------------------------------------------------
State & Local Agencies - 4.6%
- --------------------------------------------------------------------------------------
Maryland Stadium Authority, Lease Rev
(Convention Center Expansion), AMBAC,
5.875%, 2012 $ 1,000,000 $ 1,004,230
Prince George's County, MD, Lease
Development Authority Rev., MBIA, 0%, 2009 1,500,000 1,351,230
Puerto Rico Public Finance Corp.,
Commonwealth Appropriation, "E",
5.7%, 2010 (c) 1,235,000 1,317,918
Puerto Rico Public Finance Corp.,
RITES, AMBAC, 6.825%, 2013 (v)(z) 500,000 604,830
Puerto Rico Public Finance Corp.,
RITES, AMBAC, 6.825%, 2016 (v)(z) 1,520,000 1,919,669
- --------------------------------------------------------------------------------------
$ 6,197,877
- --------------------------------------------------------------------------------------
Tax - Other - 1.5%
- --------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev.,
"A", 5.5%, 2022 $ 1,000,000 $ 1,035,150
Virgin Islands Public Finance Authority Rev.,
"E", 5.875%, 2018 1,000,000 1,048,520
- --------------------------------------------------------------------------------------
$ 2,083,670
- --------------------------------------------------------------------------------------
Tax Assessment - 1.8%
- --------------------------------------------------------------------------------------
Anne Arundel County, MD, Special
Obligations (Arundel Mills Project),
5.125%, 2029 $ 1,555,000 $ 1,668,251
Brunswick, MD, Special Obligation (Brunswick
Crossing Special Taxing), 5.5%, 2036 250,000 254,243
Prince George's County, MD, Special
Obligations (National Harbor Project),
5.2%, 2034 500,000 509,985
- --------------------------------------------------------------------------------------
$ 2,432,479
- --------------------------------------------------------------------------------------
Tobacco - 0.6%
- --------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 230,000 $ 237,282
Guam Economic Development Authority
Tobacco Settlement, "B", 5.5%, 2041 400,000 410,276
Virgin Islands Tobacco Settlement Financing
Corp., 5%, 2021 225,000 227,367
- --------------------------------------------------------------------------------------
$ 874,925
- --------------------------------------------------------------------------------------
Transportation - Special Tax - 1.4%
- --------------------------------------------------------------------------------------
Maryland Department of Transportation, Port
Administration Facilities Project, AMBAC,
5.25%, 2020 $ 1,690,000 $ 1,837,064
- --------------------------------------------------------------------------------------
Universities - Colleges - 11.3%
- --------------------------------------------------------------------------------------
Annapolis, MD, Economic Development Rev
(St. John's College), 5.5%, 2018 750,000 771,908
Anne Arundel County, MD, Economic
Development (Community College Project),
5.25%, 2028 1,600,000 1,717,296
Frederick County, MD, Educational Facilities
Rev. (Mount St. Mary's College), "A",
5.7%, 2020 850,000 886,695
Maryland Health & Higher Education (College
Of Art), 5%, 2030 750,000 774,908
Maryland Health & Higher Education (Loyola
College), "A", 5%, 2040 1,000,000 1,029,920
Maryland Health & Higher Educational
Facilities Authority Rev. (Goucher College),
5.375%, 2025 500,000 537,770
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
University), 5.625%, 2027 1,400,000 1,439,592
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
University), "A", 5%, 2032 2,000,000 2,069,400
Montgomery County, MD, Rev. Authority
(College Arts Center Project), "A", 5%, 2027 1,950,000 2,067,059
Morgan State University, MD, Academic, "A",
MBIA, ETM, 0%, 2008 (c) 1,400,000 1,316,546
Morgan State University, MD, Academic,
MBIA, 6.05%, 2015 1,500,000 1,691,730
Westminster, MD, Educational Facilities Rev
(McDaniel College), 5.5%, 2032 1,000,000 1,050,930
- --------------------------------------------------------------------------------------
$ 15,353,754
- --------------------------------------------------------------------------------------
Universities - Dormitories - 5.3%
- --------------------------------------------------------------------------------------
Maryland Economic Development Corp.
(Morgan State University Project), "A",
6%, 2034 $ 1,000,000 $ 1,020,480
Maryland Economic Development Corp.
(University of Maryland College Park Project),
AMBAC, 5%, 2019 1,850,000 1,945,386
Maryland Economic Development Corp.,
Collegiate Housing (Salisbury), "A",
6%, 2019 1,000,000 1,048,960
Maryland Economic Development Corp.,
Collegiate Housing Rev. (Towson University),
"A", 5.75%, 2029 1,000,000 1,018,670
Maryland Economic Development Corp.,
Student Housing Rev. (University of Maryland
College Park Projects), CIFG, 5%, 2033 2,120,000 2,237,872
- --------------------------------------------------------------------------------------
$ 7,271,368
- --------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.3%
- --------------------------------------------------------------------------------------
Maryland Industrial Development Financing
Authority, Economic Development Authority
Rev. (Our Lady of Good Council), "A",
6%, 2035 $ 400,000 $ 429,200
- --------------------------------------------------------------------------------------
Utilities - Municipal Owned - 3.6%
- --------------------------------------------------------------------------------------
Guam Power Authority Rev., RITES,
AMBAC, 6.565%, 2015 (v)(z) $ 1,680,000 $ 1,886,741
Puerto Rico Electric Power Authority Rev.,
"NN", 5.125%, 2024 1,500,000 1,584,240
Puerto Rico Electric Power Authority Rev.,
RITES, FSA, 6.558%, 2015 (v)(z) 1,400,000 1,478,008
- --------------------------------------------------------------------------------------
$ 4,948,989
- --------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 5.5%
- --------------------------------------------------------------------------------------
Baltimore, MD, Project Rev., Refunding Water
Projects, "A", FGIC, 5.125%, 2032 $ 1,000,000 $ 1,055,570
Baltimore, MD, Rev., LEVRRS, MBIA,
7.72%, 2020 (p) 3,000,000 3,874,140
Baltimore, MD, Wastewater Rev. Project,
"A", MBIA, 5.65%, 2020 2,000,000 2,291,372
Puerto Rico Aqueduct & Sewer Authority
Rev., ETM, 10.25%, 2009 (c) 230,000 251,268
- --------------------------------------------------------------------------------------
$ 7,472,350
- --------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $122,576,913) $130,759,727
- --------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.8%
- --------------------------------------------------------------------------------------
Bell County, TX, Health Facility Development
Corp. Rev. (Scott & White Memorial
Hospital), 3.89%, due 10/02/06 $ 300,000 $ 300,000
Jefferson County, AL, Sewer Rev., Warrants,
"B-4", 3.78%, due 10/05/06 300,000 300,000
Lincoln County, WY, Pollution Control Rev
(Exxon Mobil Corp.), 3.75%, due 10/02/06 500,000 500,000
Lincoln County, WY, Pollution Control Rev
(Exxon Mobil Corp.), 3.81%, due 10/02/06 800,000 800,000
Lincoln County, WY, Pollution Control Rev
(Exxon Mobil Corp.), "B",
3.81%, due 10/02/06 200,000 200,000
Triborough Bridge & Tunnel Authority, NY,
Rev., "F", 3.74%, due 10/05/06 400,000 400,000
- --------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $2,500,000) $ 2,500,000
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $125,076,913) (K) $133,259,727
- --------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 2.0% 2,724,945
- --------------------------------------------------------------------------------------
NET ASSETS - 100.0% $135,984,672
- --------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/1/2007 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 25,824
12/13/2016 USD 2,000,000 Merrill Lynch 7-Day BMA 3.848% (fixed rate) (18,126)
3/26/2017 USD 2,000,000 Goldman Sachs 7-Day BMA 3.710% (fixed rate) 5,986
3/1/2019 USD 1,500,000 Merrill Lynch 7-Day BMA 3.976% (fixed rate) (20,911)
11/9/2026 USD 1,250,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 76,821
- ----------------------------------------------------------------------------------------------------------------------
$ 69,594
- ----------------------------------------------------------------------------------------------------------------------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 104.2%
- --------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- --------------------------------------------------------------------------------------
Airport & Port Revenue - 4.3%
- --------------------------------------------------------------------------------------
Massachusetts Port Authority Rev., "A",
AMBAC, 5%, 2035 $ 2,000,000 $ 2,102,480
Massachusetts Port Authority Rev., "A", FSA,
5.125%, 2017 1,275,000 1,339,209
Massachusetts Port Authority Rev., "A",
MBIA, 5%, 2033 3,000,000 3,135,870
Massachusetts Port Authority Rev., "C",
6%, 2010 (c) 1,000,000 1,081,980
Massachusetts Port Authority Rev., "C",
6.125%, 2010 (c) 1,460,000 1,585,224
Massachusetts Port Authority Rev., ETM,
13%, 2013 (c) 610,000 820,871
- --------------------------------------------------------------------------------------
$ 10,065,634
- --------------------------------------------------------------------------------------
General Obligations - General Purpose - 14.1%
- --------------------------------------------------------------------------------------
Boston, MA, "A ", 5.75%, 2010 (c) $ 3,645,000 $ 3,895,375
Brookline, MA, 5.375%, 2019 1,800,000 1,922,292
Commonwealth of Massachusetts, "B",
5.25%, 2028 2,500,000 2,872,550
Commonwealth of Massachusetts, "B", FGIC,
ETM, 7%, 2009 (c) 1,150,000 1,213,158
Greater Lawrence, MA, Sanitation District,
MBIA, 5.625%, 2010 (c) 1,640,000 1,771,840
Lynn, MA, AMBAC, 5.125%, 2018 3,690,000 3,859,076
Massachusetts Consolidated Loan, "A",
6%, 2010 (c) 3,000,000 3,246,270
Massachusetts Consolidated Loan, "B",
5.75%, 2010 (c) 1,000,000 1,075,160
Massachusetts Consolidated Loan, "C",
5.875%, 2009 (c) 1,000,000 1,070,690
Massachusetts Consolidated Loan, "C",
5.75%, 2010 (c) 1,500,000 1,619,490
Middleborough, MA, FGIC, 5.6%, 2010 (c) 75,000 80,410
Puerto Rico Commonwealth, Public
Improvement, "A", 5.25%, 2030 1,000,000 1,067,500
Salisbury, MA, MBIA, 5.25%, 2031 2,790,000 3,004,328
Sutton, MA, MBIA, 5.5%, 2017 1,000,000 1,066,910
Sutton, MA, MBIA, 5.5%, 2019 1,000,000 1,064,200
Westford, MA, FGIC, 5.25%, 2020 2,250,000 2,401,358
Weymouth, MA, MBIA, 5.375%, 2020 1,250,000 1,337,025
- --------------------------------------------------------------------------------------
$ 32,567,632
- --------------------------------------------------------------------------------------
General Obligations - Improvement - 7.6%
- --------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority,
6.2%, 2016 (u) $ 9,670,000 $ 11,120,113
Massachusetts Bay Transportation Authority,
Unrefunded Balance, "A", 5.75%, 2018 320,000 342,938
Maynard, MA, MBIA, 5.5%, 2021 1,000,000 1,102,010
General Obligations - Improvement - continued
Springfield, MA, FSA, 6.25%, 2009 (c) $ 1,600,000 $ 1,737,408
Worcester, MA, "A", FSA, 6%, 2010 2,955,000 3,217,936
- --------------------------------------------------------------------------------------
$ 17,520,405
- --------------------------------------------------------------------------------------
General Obligations - Schools - 6.9%
- --------------------------------------------------------------------------------------
Belmont, MA, 5%, 2015 $ 2,165,000 $ 2,184,442
Dudley-Charlton, MA, Regional School
District, FGIC, 5.25%, 2011 (u) 2,730,000 3,039,937
Dudley-Charlton, MA, Regional School
District, FGIC, 5.25%, 2012 (u) 2,860,000 3,203,457
Dudley-Charlton, MA, Regional School
District, FGIC, 5.25%, 2014 (u) 3,130,000 3,529,951
Narragansett, MA, Regional School District,
AMBAC, 6%, 2019 1,720,000 1,870,380
Tantasquama, MA, Regional School District,
FSA, 5.375%, 2010 (c) 2,000,000 2,148,820
- --------------------------------------------------------------------------------------
$ 15,976,987
- --------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 11.2%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Massachusetts Biomedical Research),
"C", 6.375%, 2016 $ 50,000 $ 54,562
Massachusetts Health & Educational Facilities
Authority Rev. (Baystate Medical Center),
"F", 5.75%, 2033 2,000,000 2,131,360
Massachusetts Health & Educational Facilities
Authority Rev. (Berkshire Health Systems),
"E", 6.25%, 2031 1,350,000 1,447,861
Massachusetts Health & Educational Facilities
Authority Rev. (Caritas Christi), "B",
6.5%, 2012 500,000 543,695
Massachusetts Health & Educational Facilities
Authority Rev. (Caritas Christi), "B",
6.25%, 2022 20,000 21,696
Massachusetts Health & Educational Facilities
Authority Rev. (Catholic Health East Issue),
5.5%, 2032 1,575,000 1,672,114
Massachusetts Health & Educational Facilities
Authority Rev. (Covenant Health Systems,
Inc.), 6.5%, 2017 75,000 83,750
Massachusetts Health & Educational Facilities
Authority Rev. (Covenant Health Systems,
Inc.), 6%, 2031 1,000,000 1,092,360
Massachusetts Health & Educational Facilities
Authority Rev. (Jordan Hospital), "D",
5.25%, 2018 1,330,000 1,345,960
Massachusetts Health & Educational Facilities
Authority Rev. (Milford-Whitinsville Hospital),
"D", 6.35%, 2032 50,000 53,697
Massachusetts Health & Educational Facilities
Authority Rev. (Milford-Whitinsville Regional
Hospital), "C", 5.25%, 2018 1,500,000 1,516,770
Massachusetts Health & Educational Facilities
Authority Rev. (Milton Hospital), "C",
5.5%, 2016 800,000 826,232
Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center
Hospital), "H", FGIC, 5.375%, 2018 1,000,000 1,082,590
Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center
Hospital), "H", FGIC, 5.375%, 2019 815,000 881,447
Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center
Hospital), "H", FGIC, 5%, 2025 1,135,000 1,187,448
Massachusetts Health & Educational Facilities
Authority Rev. (Newton Wellesley Hospital),
"G", MBIA, 6.125%, 2015 1,000,000 1,037,120
Massachusetts Health & Educational Facilities
Authority Rev. (North Adams Regional
Hospital), "C", 6.625%, 2018 475,000 486,462
Massachusetts Health & Educational Facilities
Authority Rev. (Partners Healthcare Systems),
"A", MBIA, 5.375%, 2018 2,000,000 2,043,180
Massachusetts Health & Educational Facilities
Authority Rev. (Partners Healthcare Systems),
"C", 5.75%, 2021 100,000 108,719
Massachusetts Health & Educational Facilities
Authority Rev. (South Shore Hospital), "F ",
5.625%, 2019 2,000,000 2,110,480
Massachusetts Health & Educational Facilities
Authority Rev. (University of Massachusetts
Memorial Hospital), "C", 6.5%, 2021 1,000,000 1,098,780
Massachusetts Health & Educational Facilities
Authority Rev. (University of Massachusetts
Memorial Hospital), "D", 5%, 2033 500,000 507,035
Massachusetts Industrial Finance Agency
Rev., Capital Appreciation (Massachusetts
Biomedical Research), "A", 0%, 2010 5,300,000 4,531,129
- --------------------------------------------------------------------------------------
$ 25,864,447
- --------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.3%
- --------------------------------------------------------------------------------------
Boston, MA, Industrial Development Finance
Authority Rev. (Alzheimer's Center Project),
FHA, 5.5%, 2012 $ 85,000 $ 85,114
Massachusetts Development Finance Agency
Rev., First Mortgage (Loomis Communities
Project), "A", 6.9%, 2032 530,000 582,905
- --------------------------------------------------------------------------------------
$ 668,019
- --------------------------------------------------------------------------------------
Human Services - 0.4%
- --------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities
Authority Rev. (Learning Center for Deaf
Children), "C", 6.1%, 2019 $ 1,000,000 $ 1,023,850
Industrial Revenue - Airlines - 1.4%
Massachusetts Port Authority Rev. (U.S
Airways Project), MBIA, 5.875%, 2016 $ 1,900,000 $ 2,006,229
Massachusetts Port Authority Rev., Special
Facilities (U.S. Airways Project), "A", MBIA,
5.625%, 2011 1,140,000 1,164,316
- --------------------------------------------------------------------------------------
$ 3,170,545
- --------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.8%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Waste Management, Inc. Project),
5.5%, 2027 $ 750,000 $ 800,640
Massachusetts Development Finance Agency
Rev. (Waste Management, Inc.), "B",
6.9%, 2029 1,000,000 1,080,550
- --------------------------------------------------------------------------------------
$ 1,881,190
- --------------------------------------------------------------------------------------
Industrial Revenue - Other - 2.0%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev., Resource Recovery (Fluor Corp.),
5.625%, 2019 $ 1,675,000 $ 1,755,249
Massachusetts Industrial Finance Agency Rev
(Welch Foods, Inc.), 5.6%, 2017 2,100,000 2,175,474
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 595,000 648,479
- --------------------------------------------------------------------------------------
$ 4,579,202
- --------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 2.4%
- --------------------------------------------------------------------------------------
Martha's Vineyard, MA, Land Bank Rev.,
AMBAC, 5%, 2029 $ 785,000 $ 826,927
Martha's Vineyard, MA, Land Bank Rev.,
AMBAC, 5%, 2034 1,365,000 1,430,670
Massachusetts Development Finance Agency
Rev. (WGBH Educational Foundation), "A",
AMBAC, 5.375%, 2012 (c) 3,000,000 3,278,520
- --------------------------------------------------------------------------------------
$ 5,536,117
- --------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.3%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Credit Housing-Chelsea Homes), "I-A",
LOC, 5%, 2024 $ 1,185,000 $ 1,200,026
Massachusetts Development Finance Agency
Rev. (Morville House Apartments), "A", LOC,
4.95%, 2023 2,500,000 2,527,875
Massachusetts Housing Finance Agency Rev.,
"A", 5%, 2028 1,000,000 1,022,150
Massachusetts Housing Finance Agency Rev.,
"E", 5%, 2028 1,000,000 1,026,960
Massachusetts Housing Finance Agency Rev.,
"F", 5.125%, 2034 720,000 740,844
Massachusetts Housing Finance Agency Rev.,
"P", 5%, 2023 1,240,000 1,274,534
Massachusetts Housing Finance Agency Rev.,
"P", 5.1%, 2033 1,565,000 1,600,791
Massachusetts Housing Finance Agency Rev.,
"P", 5.2%, 2045 1,445,000 1,476,689
Massachusetts Housing Finance Agency Rev.,
Rental Mortgage, "A", AMBAC, 5.7%, 2020 1,475,000 1,514,456
- --------------------------------------------------------------------------------------
$ 12,384,325
- --------------------------------------------------------------------------------------
Parking - 0.6%
- --------------------------------------------------------------------------------------
Rail Connections, Inc., Massachusetts Rev
(Route 128 Parking Garage), "A",
6%, 2009 (c) $ 450,000 $ 487,075
Rail Connections, Inc., Massachusetts Rev
(Route 128 Parking Garage), "A",
6%, 2009 (c) 500,000 541,195
Rail Connections, Inc., Massachusetts Rev
(Route 128 Parking Garage), "A",
6%, 2009 (c) 250,000 270,597
- --------------------------------------------------------------------------------------
$ 1,298,867
- --------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.7%
- --------------------------------------------------------------------------------------
Route 3 North Transit Improvement
Associates Rev., MBIA, 5.625%, 2010 (c) $ 1,500,000 $ 1,607,400
Single Family Housing - State - 2.4%
Massachusetts Housing Finance Agency,
Single Family Housing Rev., "102", 5%, 2029 1,500,000 1,524,525
Massachusetts Housing Finance Agency,
Single Family Housing Rev., "118",
4.75%, 2030 1,500,000 1,508,985
Massachusetts Housing Finance Agency,
Single Family Housing Rev., "122",
4.85%, 2031 2,000,000 2,035,840
Massachusetts Housing Finance Agency,
Single Family Housing Rev., "91",
5.5%, 2031 565,000 566,458
- --------------------------------------------------------------------------------------
$ 5,635,808
- --------------------------------------------------------------------------------------
Solid Waste Revenue - 1.2%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Ogden Haverhill Associates), "A",
6.7%, 2014 $ 600,000 $ 654,978
Massachusetts Industrial Finance Agency,
Resource Recovery Rev. (Ogden Haverhill
Associates), "A", 5.5%, 2013 25,000 26,136
Massachusetts Industrial Finance Agency,
Resource Recovery Rev. (Ogden Haverhill
Associates), "A", 5.6%, 2019 1,925,000 2,003,752
- --------------------------------------------------------------------------------------
$ 2,684,866
- --------------------------------------------------------------------------------------
State & Agency - Other - 0.6%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Visual & Performing Arts Project),
6%, 2015 $ 1,235,000 $ 1,428,994
- --------------------------------------------------------------------------------------
State & Local Agencies - 3.1%
- --------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp.,
AMBAC, 5.375%, 2016 (u) $ 5,000,000 $ 5,657,350
University of Massachusetts, Building
Authority Project Rev., "2", AMBAC,
5.5%, 2010 1,400,000 1,503,236
- --------------------------------------------------------------------------------------
$ 7,160,586
- --------------------------------------------------------------------------------------
Student Loan Revenue - 0.7%
- --------------------------------------------------------------------------------------
Massachusetts Educational Financing
Authority, Education Loan Rev., "E", AMBAC,
5%, 2015 $ 90,000 $ 92,370
Massachusetts Educational Financing
Authority, Education Loan Rev., "Issue E",
AMBAC, 5.3%, 2016 1,490,000 1,523,823
Massachusetts Educational Financing
Authority, Education Loan Rev., "Issue G",
"A", MBIA, 6.05%, 2017 50,000 51,365
- --------------------------------------------------------------------------------------
$ 1,667,558
- --------------------------------------------------------------------------------------
Tax - Other - 2.0%
- --------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev.,
"A", 5.5%, 2022 $ 2,950,000 $ 3,053,693
Virgin Islands Public Finance Authority Rev.,
"E", 5.875%, 2018 1,420,000 1,488,898
- --------------------------------------------------------------------------------------
$ 4,542,591
- --------------------------------------------------------------------------------------
Tax Assessment - 1.9%
- --------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority
Rev., "A", 5%, 2014 (c) $ 3,500,000 $ 3,813,495
Massachusetts Bay Transportation Authority,
Unfunded Balance, "A", 5.25%, 2030 615,000 645,356
- --------------------------------------------------------------------------------------
$ 4,458,851
- --------------------------------------------------------------------------------------
Tobacco - 0.5%
- --------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 665,000 $ 686,054
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.5%, 2039 400,000 414,108
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "A", 0%, 2050 2,000,000 133,340
- --------------------------------------------------------------------------------------
$ 1,233,502
- --------------------------------------------------------------------------------------
Universities - Colleges - 20.1%
- --------------------------------------------------------------------------------------
Massachusetts College Building Authority
Project Rev., "A", XLCA, 5.25%, 2023 $ 1,000,000 $ 1,069,820
Massachusetts College Building Authority
Project Rev., "A", XLCA, 5%, 2043 2,110,000 2,183,977
Massachusetts Development Finance Agency
Rev. (Boston University), XLCA, 6%, 2059 1,500,000 1,847,025
Massachusetts Development Finance Agency
Rev. (Clark University), XLCA, 5.125%, 2025 1,500,000 1,605,330
Massachusetts Development Finance Agency
Rev. (Curry College), "A", ACA, 5%, 2036 1,000,000 1,024,850
Massachusetts Development Finance Agency
Rev. (Hampshire College), 5.7%, 2034 1,000,000 1,063,930
Massachusetts Development Finance Agency
Rev. (Massachusetts College of Pharmacy),
"B", 6.625%, 2010 (c) 50,000 55,127
Massachusetts Development Finance Agency
Rev. (Massachusetts College of Pharmacy),
"C", 5.75%, 2033 1,000,000 1,070,290
Massachusetts Development Finance Agency
Rev. (Mount Holyoke College), 5.125%, 2021 1,000,000 1,052,950
Massachusetts Development Finance Agency
Rev. (Olin College), "B", XLCA, 5.25%, 2033 3,000,000 3,197,580
Massachusetts Development Finance Agency
Rev. (Suffolk University), 5.75%, 2009 (c) 1,000,000 1,064,120
Massachusetts Development Finance Agency
Rev. (Suffolk University), 5.85%, 2009 (c) 1,000,000 1,066,710
Massachusetts Development Finance Agency
Rev. (Western New England College),
6.125%, 2012 (c) 1,115,000 1,272,182
Massachusetts Development Finance Agency
Rev. Higher Education (Smith College),
5.5%, 2010 (c) 1,210,000 1,302,964
Massachusetts Health & Educational Facilities
Authority Rev. (Boston College), "K",
5.25%, 2023 4,350,000 4,352,305
Massachusetts Health & Educational Facilities
Authority Rev. (Simmons College), "D",
AMBAC, 6.05%, 2010 (c) 1,745,000 1,921,873
Massachusetts Health & Educational Facilities
Authority Rev. (Simmons College), "F", FGIC,
5%, 2023 500,000 529,920
Massachusetts Health & Educational Facilities
Authority Rev. (University of Massachusetts
Worcester Campus), "B", FGIC,
5.125%, 2019 1,780,000 1,893,813
Massachusetts Health & Educational Facilities
Authority Rev. (University of Massachusetts),
"A", FGIC, 5.75%, 2010 (c) 2,395,000 2,611,245
Massachusetts Health & Educational Facilities
Authority Rev. (University of Massachusetts),
"A", FGIC, 5.85%, 2010 (c) 1,200,000 1,312,776
Massachusetts Health & Educational Facilities
Authority Rev. (University of Massachusetts),
"C", MBIA, 5.25%, 2031 3,000,000 3,211,230
Massachusetts Health & Educational Facilities
Authority Rev. (University of Massachusetts),
"D", FGIC, 5%, 2029 1,500,000 1,581,795
Massachusetts Health & Educational Facilities
Authority Rev. (Wellesley College), 5%, 2033 1,000,000 1,045,290
Massachusetts Health & Educational Facilities
Authority Rev. (Wheelock College), "B",
MBIA, 5.5%, 2021 3,275,000 3,486,892
Massachusetts Health & Educational Facilities
Authority Rev. (Williams College), "H",
5%, 2028 1,000,000 1,052,480
Massachusetts Health & Educational
Facilitites Authority Rev. (University of
Massachusetts), "A", FGIC, 5.625%, 2010 (c) 2,170,000 2,355,904
Massachusetts Industrial Finance Agency Rev
(Brandeis University), "C", MBIA, 0%, 2009 1,000,000 890,870
Massachusetts Industrial Finance Agency Rev
(Brandeis University), "C", MBIA, 0%, 2010 1,000,000 855,110
Massachusetts Industrial Finance Agency Rev
(Brandeis University), "C", MBIA, 0%, 2011 500,000 410,710
- --------------------------------------------------------------------------------------
$ 46,389,068
- --------------------------------------------------------------------------------------
Universities - Secondary Schools - 4.7%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Deerfield Academy), "A", 5%, 2028 $ 1,000,000 $ 1,050,840
Massachusetts Development Finance Agency
Rev. (Williston Northampton School),
6.5%, 2008 (c) 1,300,000 1,396,304
Massachusetts Development Finance Agency
Rev. (Xaverian Brothers High School),
5.55%, 2019 1,000,000 1,047,180
Massachusetts Development Finance Agency
Rev. (Xaverian Brothers High School),
5.65%, 2029 1,000,000 1,039,700
Massachusetts Development Finance Agency
Rev. (Middlesex School), 5.125%, 2023 500,000 533,955
Massachusetts Industrial Finance Agency Rev
(Belmont Hill School), 5.625%, 2020 1,150,000 1,202,624
Massachusetts Industrial Finance Agency Rev
(Concord Academy), 5.5%, 2027 2,000,000 2,070,300
Massachusetts Industrial Finance Agency Rev
(Dana Hall School), 5.9%, 2007 (c) 1,340,000 1,388,669
Massachusetts Industrial Finance Agency Rev
(Tabor Academy), 5.4%, 2018 1,000,000 1,052,950
- --------------------------------------------------------------------------------------
$ 10,782,522
- --------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.9%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Dominion Energy Brayton Point),
5%, 2036 $ 2,000,000 $ 2,072,260
- --------------------------------------------------------------------------------------
Utilities - Municipal Owned - 0.3%
- --------------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Devens Electric Systems), 5.625%, 2016 $ 725,000 $ 773,640
Water & Sewer Utility Revenue - 7.8%
Massachusetts Water Pollution Abatement
Trust Rev. (MWRA Program), "A", 5%, 2032 $ 1,510,000 $ 1,575,730
Massachusetts Water Pollution Abatement
Trust Rev. (Pool Program Bonds), "10",
5%, 2029 1,000,000 1,052,830
Massachusetts Water Pollution Abatement
Trust Rev. (Pool Program Bonds), "10",
5%, 2034 1,000,000 1,046,711
Massachusetts Water Pollution Abatement
Trust Rev., Series "5", 5.75%, 2009 (c) 975,000 1,041,758
Massachusetts Water Pollution Abatement
Trust Rev., Unrefunded Balance, "5",
5.75%, 2017 25,000 26,649
Massachusetts Water Resources Authority,
General, Rev, "A", MBIA, 5%, 2028 800,000 858,768
Massachusetts Water Resources Authority,
General, Rev., "A", FGIC, 6%, 2010 (c) 1,000,000 1,094,090
Massachusetts Water Resources Authority,
General, Rev., "J", FSA, 5%, 2023 500,000 524,665
Massachusetts Water Resources Authority,
FGIC, 6.5%, 2019 (u) 8,020,000 9,663,298
Springfield, MA, Water & Sewer Commission,
General, Rev., "A", AMBAC, 5%, 2021 1,000,000 1,059,340
- --------------------------------------------------------------------------------------
$ 17,943,839
- --------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $224,756,407) $240,918,705
- --------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.1%
Bell County, TX, Health Facility Development
Corp. Rev. (Scott & White Memorial
Hospital), 3.55%, due 10/11/06 $ 200,000 $ 200,000
Jefferson County, AL, Sewer Rev., Capital
Improvement Warrants Rev., "A",
3.38%, due 10/05/06 100,000 100,000
Jefferson County, AL, Sewer Rev., Warrants
Rev., "B-4", 3.38%, due 10/05/06 100,000 100,000
Philadelphia, PA, Hospitals & Higher
Educational Facilities Authority Rev
(Children's Hospital Project), "C",
3.54%, due 10/11/06 1,000,000 1,000,000
Pinellas County, FL, Health Facilities Authority
Rev. (Pooled Hospital Loan Program),
3.5%, due 10/11/06 800,000 800,000
Triborough Bridge & Tunnel Authority, NY,
Rev., "F", 3.32%, due 10/05/06 300,000 300,000
- --------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $2,500,000) $ 2,500,000
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $227,256,407) (K) $243,418,705
- --------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.3)% (12,313,394)
- --------------------------------------------------------------------------------------
NET ASSETS - 100.0% $231,105,311
- --------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/1/2007 USD 5,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 43,041
12/15/2016 USD 2,500,000 Merrill Lynch 7-Day BMA 4.108% (fixed rate) (72,420)
11/9/2026 USD 2,250,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 138,278
11/16/2026 USD 2,500,000 Merrill Lynch 5.856% (fixed rate) 3-Month LIBOR 173,667
- ----------------------------------------------------------------------------------------------------------------------
$282,566
- ----------------------------------------------------------------------------------------------------------------------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts.
The following abbreviations are used in this report and are defined:
BMA Bond Market Assn.
COP Certificate of Participation
ETM Escrowed to Maturity
LIBOR London Interbank Offered Rate
LOC Letter of Credit
Insurers Inverse Floaters
- -------------------------------------------------------------- -------------------------------------------------
ACA ACA Financial Guaranty Corp. LEVRRS Leveraged Reverse Rate Security
AMBAC AMBAC Indemnity Corp. RIBS. Residual Interest Bonds
ASST GTY Assured Guaranty Insurance Co. RITES Residual Interest Tax-Exempt Security
CHFC California Health Facilities Construction Program
CIFG CIFG IXIS Financial Guaranty
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Assn.
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Assn.
MBIA MBIA Insurance Corp.
XLCA XL Capital Insurance Co.
Portfolio Footnotes:
(c) Refunded bond.
(d) Non-income producing security - in default.
(k) As of September 30, 2006, the following funds held securities fair valued in accordance with the policies adopted by the Board
of Trustees. All of these security values were provided by an independent pricing service using an evaluated bid.
FUND MARKET VALUE % OF MARKET VALUE
------------------ ------------- -----------------
Alabama Fund $ 89,930,927 98.90%
Arkansas Fund 137,741,918 99.21%
California Fund 407,023,386 99.00%
Florida Fund 85,946,264 99.25%
Georgia Fund 63,548,164 99.06%
Maryland Fund 130,759,712 98.12%
Massachusetts Fund 240,918,705 98.97%
(n) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the
ordinary course of business in transactions exempt from registration, normally to qualified institutional bthese.securities
was,$177,984,erepresentingf0.2%, of net assets for the Florida Fund.
(p) Primary inverse floater.
(u) As restated (See Note 8). Underlying security deposited into special purpose trust ("the trust") by investment banker upon
creation of self-deposited inverse floaters (See Note 7).
(v) Secondary market inverse floater.
(z) Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale.
These securities generally may be resold in transactions exempt from registration or to the public if the securities are
subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable
price may be difficult. Maryland Fund holds the following restricted securities:
TOTAL %
ACQUISITION ACQUISITION CURRENT OF NET
FUND DESCRIPTION DATE COST MARKET VALUE ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
Maryland Fund GUAM Power Authority Rev., RITES, AMBAC, 6.565%, 2015 5/20/1999 $1,760,909 $1,886,741
Puerto Rico Electric Power Authority Rev., RITES, FSA, 6.558%, 2015 9/16/1999 1,367,100 1,478,008
Puerto Rico Municipal Finance Agency, RITES, FSA, 7.099% 1/6/2000 905,080 1,126,400
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.825% 9/30/1999 509,110 604,830
Puerto Rico Public Finance Corp., RITES, AMBAC, 6.825% 3/31/1999 1,729,851 1,919,669
- ----------------------------------------------------------------------------------------------------------------------------------
Total Restricted Securities $7,015,648 5.20%
========== ====
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
At 9/30/06 (unaudited) (As Restated - See Note 8)
These statements represent each fund's balance sheet, which details the assets and liabilities comprising the total value
of each fund.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments -
Identified cost $ 86,399,756 $ 130,831,959 $ 387,140,854 $ 82,233,807
Unrealized appreciation (depreciation) 4,531,171 8,009,959 23,982,532 4,362,457
- -----------------------------------------------------------------------------------------------------------------------------
Total investments, at value $ 90,930,927 $ 138,841,918 $ 411,123,386 $ 86,596,264
Cash 96,016 68,572 80,188 15,427
Receivable for investments sold 120,000 1,001,927 2,598,450 935,233
Receivable for fund shares sold 24,147 5,143 329,464 5,942
Interest receivable 1,340,613 1,904,795 5,074,214 1,576,303
Unrealized appreciation on interest rate swaps 184,881 222,211 307,931 20,209
Other assets 354 482 1,082 322
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 92,696,938 $ 142,045,048 $ 419,514,715 $ 89,149,700
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 126,115 $ 213,547 $ 627,048 $ 144,565
Payable to the holder of the floating rate certificate
from trust assets 6,500,000 8,235,000 27,160,000 6,500,000
Payable for fund shares reacquired 44,660 64,949 741,046 90,552
Unrealized depreciation on interest rate swaps -- -- 130,269 102,365
Payable to affiliates -
Management fee 2,115 3,286 9,635 2,026
Shareholder servicing costs 1,895 4,260 8,954 3,224
Distribution and service fees 2,508 4,694 6,874 1,183
Administrative services fee 195 264 634 190
Payable for independent trustees' compensation 11,082 10,660 21,590 10,456
Payable for interest expense and fees 111,653 79,097 173,041 62,154
Accrued expenses and other liabilities 39,046 42,351 86,040 44,794
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 6,839,269 $ 8,658,108 $ 28,965,131 $ 6,961,509
- -----------------------------------------------------------------------------------------------------------------------------
Net assets $ 85,857,669 $ 133,386,940 $ 390,549,584 $ 82,188,191
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 80,881,936 $ 125,415,940 $ 368,942,948 $ 78,275,882
Unrealized appreciation (depreciation) on investments 4,716,052 8,232,170 24,160,194 4,280,301
Accumulated net realized gain (loss) on investments 407,003 (337,567) (2,100,423) (271,595)
Accumulated undistributed (distributions in excess of)
net investment (147,322) 76,397 (453,135) (96,397)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets $ 85,857,669 $ 133,386,940 $ 390,549,584 $ 82,188,191
- -----------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) (As Restated - See Note 8) - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
Net assets
Class A $ 73,745,069 $ 123,330,196 $ 308,469,408 $ 69,627,374
Class B 12,112,600 10,056,744 52,891,594 12,560,817
Class C -- -- 29,188,582 --
- -----------------------------------------------------------------------------------------------------------------------------
Total net assets $ 85,857,669 $ 133,386,940 $ 390,549,584 $ 82,188,191
- -----------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 6,986,765 12,175,327 52,330,012 6,865,724
Class B 1,147,783 991,770 8,968,783 1,238,567
Class C -- -- 4,934,712 --
- -----------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 8,134,548 13,167,097 66,233,507 8,104,291
- -----------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $ 10.55 $ 10.13 $ 5.89 $ 10.14
- -----------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25_net asset value per share) $ 11.08 $ 10.64 $ 6.18 $ 10.65
- -----------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $ 10.55 $ 10.14 $ 5.90 $ 10.14
- -----------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $ -- $ -- $ 5.91 $ --
- -----------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed
on redemptions of Class A, Class B and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Assets and Liabilities (unaudited) (As Restated - See Note 8) - continued
MARYLAND
GEORGIA FUND MASSACHUSETTS
FUND (NOT RESTATED) FUND
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $ 60,150,512 $ 125,076,913 $ 227,256,407
Unrealized appreciation (depreciation) 3,997,652 8,182,814 16,162,298
- -----------------------------------------------------------------------------------------------------------------------------
Total investments, at value $ 64,148,164 $ 133,259,727 $ 243,418,705
Cash 40,071 21,859 59,505
Receivable for investments sold -- 1,365,425 --
Receivable for fund shares sold 209,880 17,106 267,109
Interest receivable 1,081,765 1,769,931 3,578,679
Unrealized appreciation on interest rate swaps 48,475 108,631 354,986
Other assets 260 502 763
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 65,528,615 $ 136,543,181 $ 247,679,747
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 67,996 $ 185,306 $ 376,879
Payable to the holder of the floating rate certificate from trust assets 4,500,000 -- 15,705,000
Payable for fund shares reacquired 19,828 252,409 187,030
Unrealized depreciation on interest rate swaps 69,409 39,037 72,420
Payable to affiliates -
Management fee 1,491 3,354 5,692
Shareholder servicing costs 1,422 2,584 17,740
Distribution and service fees 1,797 4,963 8,486
Administrative services fee 159 268 404
Payable for independent trustees' compensation 12,564 15,408 16,040
Payable for interest expense and fees 68,013 -- 132,063
Accrued expenses and other liabilities 44,212 55,180 52,682
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 4,786,891 $ 558,509 $ 16,574,436
- -----------------------------------------------------------------------------------------------------------------------------
Net assets $ 60,741,724 $ 135,984,672 $ 231,105,311
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 56,916,495 $ 127,554,834 $ 215,079,369
Unrealized appreciation (depreciation) on investments 3,976,718 8,252,408 16,444,864
Accumulated net realized gain (loss) on investments (19,052) 400,377 (134,135)
Accumulated distributions in excess of net investment income (132,437) (222,947) (284,787)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets $ 60,741,724 $ 135,984,672 $ 231,105,311
- -----------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) (As Restated - See Note 8) - continued
MARYLAND
GEORGIA FUND MASSACHUSETTS
FUND (NOT RESTATED) FUND
- -----------------------------------------------------------------------------------------------------------------
Net assets
Class A $ 51,723,083 $ 116,351,280 $ 196,529,812
Class B 9,018,641 19,633,392 34,575,499
- -----------------------------------------------------------------------------------------------------------------
Total net assets $ 60,741,724 $ 135,984,672 $ 231,105,311
- -----------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 4,735,036 10,229,926 17,339,429
Class B 822,645 1,727,153 3,045,673
- -----------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 5,557,681 11,957,079 20,385,102
- -----------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $ 10.92 $ 11.37 $ 11.33
- -----------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25_net asset value per share) $ 11.46 $ 11.94 $ 11.90
- -----------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $ 10.96 $ 11.37 $ 11.35
- -----------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed
on redemptions of Class A and Class B shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF OPERATIONS
Six months ended 9/30/06 (unaudited) (As Restated - See Note 8)
These statements describe how much each fund earned in investment income and
accrued in expenses. They also describe any gains or losses generated by each
fund's operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Interest $ 2,369,976 $ 3,576,456 $ 10,591,354 $ 2,234,219
- -------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $ 235,874 $ 364,091 $ 1,052,255 $ 228,398
Distribution and service fees 155,224 106,654 532,805 51,845
Shareholder servicing costs 57,572 82,882 235,222 53,564
Administrative services fee 12,071 16,383 39,456 11,821
Independent trustees' compensation 1,998 3,188 6,440 2,077
Custodian fee 17,106 20,724 51,815 20,976
Shareholder communications 3,911 6,809 19,420 4,482
Auditing fees 20,883 20,883 21,085 20,883
Legal fees 1,883 2,473 4,538 1,997
Interest expense and fees 124,688 156,980 518,568 123,542
Miscellaneous 20,754 23,230 37,230 25,396
- -------------------------------------------------------------------------------------------------------------------------
Total expenses $ 651,964 $ 804,297 $ 2,518,834 $ 544,981
- -------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (3,964) (5,925) (14,309) (4,409)
Reduction of expenses by investment adviser (107,435) (165,834) (479,274) (104,030)
- -------------------------------------------------------------------------------------------------------------------------
Net expenses $ 540,565 $ 632,538 $ 2,025,251 $ 436,542
- -------------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,829,411 $ 2,943,918 $ 8,566,103 $ 1,797,677
- -------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------
Realized gain (loss)
(identified cost basis) -
Investment transactions $ 191,546 ($ 103,176) $ 359,647 $ 60,712
Swap transactions 676 151,156 (92,032) (53,468)
- -------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $ 192,222 $ 47,980 $ 267,615 $ 114,180
- -------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $ 345,507 $ 1,033,268 $ 3,276,003 $ 747,021
Swap transactions 139,909 129,805 178,709 (162,037)
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $ 485,416 $ 1,163,073 $ 3,454,712 $ 584,984
- -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $ 677,638 $ 1,211,053 $ 3,722,327 $ 699,164
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 2,507,049 $ 4,154,971 $ 12,288,430 $ 2,496,841
- -------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations (unaudited) (As Restated - See Note 8) - continued
MARYLAND
GEORGIA FUND MASSACHUSETTS
FUND (NOT RESTATED) FUND
- -------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------------------
Interest $ 1,691,926 $ 3,596,311 $ 6,380,653
- -------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $ 166,864 $ 371,814 $ 635,569
Distribution and service fees 110,905 303,215 520,782
Shareholder servicing costs 39,880 89,025 141,618
Administrative services fee 9,751 16,643 25,517
Independent trustees' compensation 1,960 3,456 6,127
Custodian fee 16,088 24,670 35,147
Shareholder communications 3,805 9,296 13,172
Auditing fees 20,918 20,883 21,085
Legal fees 1,645 2,368 3,347
Interest expense and fees 86,824 -- 301,161
Miscellaneous 22,980 24,702 29,092
- -------------------------------------------------------------------------------------------------------------------------
Total expenses $ 481,620 $ 866,072 $ 1,732,617
- -------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (3,297) (4,911) (8,472)
Reduction of expenses by investment adviser (76,002) (169,352) (289,487)
- -------------------------------------------------------------------------------------------------------------------------
Net expenses $ 402,321 $ 691,809 $ 1,434,658
- -------------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,289,605 $ 2,904,502 $ 4,945,995
- -------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss)
- -------------------------------------------------------------------------------------------------------------------------
(identified cost basis) -
Investment transactions $ 47,599 $ 201,841 $ 440,811
Swap transactions 35,225 123,128 61,644
- -------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $ 82,824 $ 324,969 $ 502,455
- -------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $ 617,388 $ 896,397 $ 1,425,886
Swap transactions (87,415) (42,686) 151,130
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $ 529,973 $ 853,711 $ 1,577,016
- -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $ 612,797 $ 1,178,680 $ 2,079,471
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 1,902,402 $ 4,083,182 $ 7,025,466
- -------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited) (Not Restated)
These statements describe the increases and/or decreases in net assets resulting
from operations, any distributions, and any shareholder transactions.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
SIX MONTHS ENDED 9/30/06 FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $ 1,829,411 $ 2,943,918 $ 8,566,103 $ 1,797,677
Net realized gain (loss) on investments 192,222 47,980 267,615 114,180
Net unrealized gain (loss) on investments 485,416 1,163,073 3,454,712 584,984
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 2,507,049 $ 4,154,971 $ 12,288,430 $ 2,496,841
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A ($ 1,587,622) ($ 2,742,674) ($ 6,818,133) ($ 1,542,182)
Class B (230,929) (196,790) (1,060,605) (250,427)
Class C -- -- (538,760) --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders ($ 1,818,551) ($ 2,939,464) ($ 8,417,498) ($ 1,792,609)
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions ($ 2,477,711) ($ 544,014) $ 6,804,363 ($ 3,888,160)
- -----------------------------------------------------------------------------------------------------------------------------
Total change in net assets ($ 1,789,213) $ 671,493 $ 10,675,295 ($ 3,183,928)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
At beginning of period 87,646,882 132,715,447 379,874,289 85,372,119
At end of period $ 85,857,669 $ 133,386,940 $ 390,549,584 $ 82,188,191
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of)
net investment income ($ 147,322) $ 76,397 ($ 453,135) ($ 96,397)
- -----------------------------------------------------------------------------------------------------------------------------
GEORGIA MARYLAND MASSACHUSETTS
SIX MONTHS ENDED 9/30/06 FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $ 1,289,605 $ 2,904,502 $ 4,945,995
Net realized gain (loss) on investments 82,824 324,969 502,455
Net unrealized gain (loss) on investments 529,973 853,711 1,577,016
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 1,902,402 $ 4,083,182 $ 7,025,466
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A ($ 1,085,057) ($ 2,480,447) ($ 4,115,425)
Class B (162,780) (376,653) (638,098)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders ($ 1,247,837) ($ 2,857,100) ($ 4,753,523)
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions ($ 1,409,254) ($ 1,558,670) ($ 5,082,261)
- -----------------------------------------------------------------------------------------------------------------------------
Total change in net assets ($ 754,689) ($ 332,588) ($ 2,810,318)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
At beginning of period 61,496,413 136,317,260 233,915,629
At end of period $ 60,741,724 $ 135,984,672 $ 231,105,311
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income ($ 132,437) ($ 222,947) ($ 284,787)
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (NOT RESTATED) - CONTINUED
ALABAMA ARKANSAS CALIFORNIA FLORIDA
YEAR ENDED 3/31/06 FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $ 3,884,000 $ 6,060,009 $ 17,491,686 $ 3,752,067
Net realized gain (loss) on investments 232,548 517,963 (1,179,180) 799,247
Net unrealized gain (loss) on investments (1,578,587) (2,311,453) (1,069,351) (1,123,082)
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 2,537,961 $ 4,266,519 $ 15,243,155 $ 3,428,232
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A ($ 3,354,087) ($ 5,605,194) ($ 13,643,612) ($ 3,110,488)
Class B (517,644) (401,413) (2,512,572) (644,130)
Class C -- -- (1,210,439) --
From net realized gain on investments
Class A -- -- (498,302) --
Class B -- -- (106,987) --
Class C -- -- (52,867) --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders ($ 3,871,731) ($ 6,006,607) ($ 18,024,779) ($ 3,754,618)
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions ($ 3,636,892) ($ 3,878,943) ($ 14,978,975) ($ 1,765,570)
- -----------------------------------------------------------------------------------------------------------------------------
Total change in net assets ($ 4,970,662) ($ 5,619,031) ($ 17,760,599) ($ 2,091,956)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
At beginning of period 92,617,544 138,334,478 397,634,888 87,464,075
At end of period $ 87,646,882 $ 132,715,447 $ 379,874,289 $ 85,372,119
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of)
net investment income ($ 158,182) $ 71,943 ($ 601,740) ($ 101,465)
- -----------------------------------------------------------------------------------------------------------------------------
GEORGIA MARYLAND MASSACHUSETTS
YEAR ENDED 3/31/06 FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS
OPERATIONS
Net investment income $ 2,710,686 $ 6,200,729 $ 10,103,339
Net realized gain (loss) on investments 104,934 639,411 1,768,389
- -----------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments (1,168,516) (2,628,342) (2,752,976
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 1,647,104 $ 4,211,798 $ 9,118,752
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A ($ 2,297,243) ($ 5,277,930) ($ 8,657,757)
Class B (404,404) (856,271) (1,391,165)
From net realized gain on investments
Class A -- (725,708) (709,997)
Class B -- (137,622) (137,074)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders ($ 2,701,647) ($ 6,997,531) ($ 10,895,993)
- -----------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions ($ 3,918,543) ($ 10,873,307) ($ 15,175,916)
- -----------------------------------------------------------------------------------------------------------------------------
Total change in net assets ($ 4,973,086) ($ 13,659,040) ($ 16,953,157)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
At beginning of period 66,469,499 149,976,300 250,868,786
At end of period $ 61,496,413 $ 136,317,260 $ 233,915,629
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income ($ 174,205) ($ 270,349) ($ 477,259)
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
MFS(R) ALABAMA MUNICIPAL BOND FUND
(As Restated - See Note 8)
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. Certain information reflects financial results for a single fund share. The total returns in the table
represent theinvestor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/2006 -----------------------------------------------------------
Class A (UNAUDITED) 2006 2005 2004 2003 2002
Net asset value, beginning of period $ 10.47 $ 10.62 $ 10.88 $ 10.82 $ 10.31 $ 10.53
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.23 $ 0.46 $ 0.48 $ 0.48 $ 0.48 $ 0.51
Net realized and unrealized gain (loss) on investments 0.08 (0.15 (0.22 0.06 0.54 (0.19)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.31 $ 0.31 $ 0.26 $ 0.54 $ 1.02 $ 0.32
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income ($ 0.23) ($ 0.46 ($ 0.48 ($ 0.48 ($ 0.50 ($ 0.54)
From net realized gain on investments -- -- (0.04) -- (0.01) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders ($ 0.23) ($ 0.46 ($ 0.52 ($ 0.48 ($ 0.51 ($ 0.54)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.55 $ 10.47 $ 10.62 $ 10.88 $ 10.82 $ 10.31
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.98(n) 2.97 2.4 5.11 10.06 3.05
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.41(a) 1.33 1.21 1.17 1.18 1.23
Expenses after expense reductions (f) 1.16(a) 1.08 0.96 0.96 0.98 1.03
Expenses after expense reductions and excluding interest
and fees (f)(l) 0.87(a) 0.87 0.84 0.88 0.88 0.88
Net investment income 4.38(a) 4.37 4.46 4.38 4.49 4.87
Portfolio turnover 5 9 17 10 21 20
Net assets at end of period (000 Omitted) $ 73,745 $ 74,204 $ 77,499 $ 80,704 $ 84,474 $ 83,146
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) ALABAMA MUNICIPAL BOND FUND - CONTINUED
(As Restated - See Note 8)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/2006 -----------------------------------------------------------
Class B (UNAUDITED) 2006 2005 2004 2003 2002
Net asset value, beginning of period $ 10.47 $ 10.62 $ 10.88 $ 10.82$ 10.31 $ 10.53
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.19 $ 0.38 $ 0.40 $ 0.39 $ 0.40 $ 0.43
Net realized and unrealized gain (loss) on investments 0.08 (0.15) (0.23) 0.07 0.54 (0.19)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.27 $ 0.23 $ 0.17 $ 0.46 $ 0.94 $ 0.24
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income ($ 0.19) ($ 0.38 ($ 0.39 ($ 0.40 ($ 0.42 ($ 0.46)
From net realized gain on investments -- -- (0.04) -- (0.01) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders ($ 0.19) ($ 0.38 ($ 0.43 ($ 0.40 ($ 0.43 ($ 0.46)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.55 $ 10.47 $ 10.62 $ 10.88 $ 10.82 $ 10.31
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.60(n) 2.2 1.63 4.32 9.14 2.38
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.16(a) 2.08 1.96 1.91 1.93 1.98
Expenses after expense reductions (f) 1.91(a) 1.83 1.71 1.71 1.73 1.78
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.62(a) 1.62 1.59 1.63 1.63 1.63
Net investment income 3.63(a) 3.61 3.71 3.63 3.74 4.09
Portfolio turnover 5 9 17 10 21 20
Net assets at end of period (000 Omitted) $ 12,113 $ 13,443 $ 15,118 $ 17,339 $ 16,163 $ 13,579
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) ARKANSAS MUNICIPAL BOND FUND
(As Restated - See Note 8)
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. Certain information reflects financial results for a single fund share. The total returns in the table
represent theinvestor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/2006 -----------------------------------------------------------
Class A (UNAUDITED) 2006 2005 2004 2003 2002
Net asset value, beginning of period $ 10.04 $ 10.17 $ 10.41 $ 10.40 $ 9.97 $ 10.08
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.23 $ 0.45 $ 0.45 $ 0.45 $ 0.47 $ 0.51
Net realized and unrealized gain (loss) on investments 0.09 (0.13) (0.23) 0.01 0.46 (0.11)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.32 $ 0.22 $ 0.46 $ 0.93 $ 0.40
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income ($ 0.23) ($ 0.45) ($ 0.46) ($ 0.45) ($ 0.50) ($ 0.51)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.13 $ 10.04 $ 10.17 $ 10.41 $ 10.40 $ 9.97
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.19(n) 3.17 2.14 4.53 9.51 4.06
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.16(a) 1.10 1.00 0.99 1.02 1.06
Expenses after expense reductions (f) 0.91(a) 0.85 0.75 0.79 0.82 0.86
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.67(a) 0.67 0.65 0.72 0.73 0.72
Net investment income 4.51(a) 4.45 4.47 4.31 4.59 5.05
Portfolio turnover 7 10 13 19 15 15
Net assets at end of period (000 Omitted) $ 123,330 $ 122,067 $ 127,075 $ 139,333 $ 134,521 $ 119,328
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) ARKANSAS MUNICIPAL BOND FUND - CONTINUED
(As Restated - See Note 8)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS B
Net asset value, beginning of period $ 10.05 $ 10.18 $ 10.42 $ 10.41 $ 9.98 $10.09
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.19 $ 0.38 $ 0.38 $ 0.37 $ 0.39 $ 0.43
Net realized and unrealized gain (loss) on
investments 0.09 (0.14) (0.24) 0.01 0.46 (0.11)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.28 $ 0.24 $ 0.14 $ 0.38 $ 0.85 $ 0.32
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $ (0.19) $ (0.37) $ (0.38) $ (0.37) $ (0.42) $(0.43)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.14 $ 10.05 $ 10.18 $ 10.42 $ 10.41 $ 9.98
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.80(n) 2.39 1.37 3.68 8.62 3.24
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.93(a) 1.87 1.76 1.80 1.83 1.84
Expenses after expense reductions (f) 1.67(a) 1.62 1.51 1.60 1.63 1.64
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.43(a) 1.44 1.41 1.53 1.54 1.50
Net investment income 3.74(a) 3.68 3.71 3.50 3.77 4.26
Portfolio turnover 7 10 13 19 15 15
Net assets at end of period (000 Omitted) $10,057 $10,648 $11,259 $12,554 $12,049 $8,700
- -----------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
(As Restated - See Note 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS A
Net asset value, beginning of period $ 5.84 $ 5.88 $ 5.98 $ 5.96 $ 5.70 $ 5.81
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.14 $ 0.28 $ 0.29 $ 0.28 $ 0.28 $ 0.28
Net realized and unrealized gain (loss) on
investments 0.04 (0.03) (0.11) 0.02 0.27 (0.10
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.18 $ 0.25 $ 0.18 $ 0.30 $ 0.55 $ 0.18
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.13) $ (0.28) $ (0.28) $ (0.28) $ (0.29) $ (0.29
From net realized gain on investments -- (0.01) -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.13) $ (0.29) $ (0.28) $ (0.28) $ (0.29) $ (0.29
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.89 $ 5.84 $ 5.88 $ 5.98 $ 5.96 $ 5.70
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.19(n) 4.22 3.14 5.22 9.79 3.11
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
Expenses before expense reductions (f) 1.14(a) 1.09 0.97 0.96 0.96 0.99
Expenses after expense reductions (f) 0.89(a) 0.84 0.72 0.76 0.76 0.79
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.62(a) 0.63 0.61 0.67 0.67 0.67
Net investment income 4.65(a) 4.69 4.91 4.71 4.73 4.87
Portfolio turnover 8 9 12 8 22 12
Net assets at end of period (000 Omitted) $308,469 $291,656 $295,332 $314,108 $333,350 $305,699
- --------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) CALIFORNIA MUNICIPAL BOND FUND - CONTINUED
(As Restated - See Note 8)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ----------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS B
Net asset value, beginning of period $ 5.84 $ 5.88 $ 5.98 $ 5.96 $ 5.70 $ 5.81
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.11 $ 0.23 $ 0.25 $ 0.23 $ 0.23 $ 0.24
Net realized and unrealized gain (loss) on
investments 0.06 (0.03) (0.11) 0.03 0.27 (0.11)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.17 $ 0.20 $ 0.14 $ 0.26 $ 0.50 $ 0.13
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.11) $ (0.23) $ (0.24) $ (0.24) $ (0.24) $ (0.24)
From net realized gain on investments -- (0.01) -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.11) $ (0.24) $ (0.24) $ (0.24) $ (0.24) $ (0.24)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.90 $ 5.84 $ 5.88 $ 5.98 $ 5.96 $ 5.70
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.98(n) 3.44 2.38 4.38 8.93 2.30
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
Expenses before expense reductions (f) 1.90(a) 1.85 1.70 1.76 1.75 1.77
Expenses after expense reductions (f) 1.65(a) 1.60 1.45 1.56 1.55 1.57
Expenses after expense reductions and excluding
interest
and fees (f)(l) 1.38(a) 1.39 1.34 1.47 1.46 1.45
Net investment income 3.91(a) 3.94 4.17 3.91 3.94 4.09
Portfolio turnover 8 9 12 8 22 12
Net assets at end of period (000 Omitted) $52,892 $58,338 $69,142 $85,106 $98,888 $84,123
- --------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) CALIFORNIA MUNICIPAL BOND FUND - CONTINUED
(As Restated - See Note 8)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ----------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS C
Net asset value, beginning of period $ 5.86 $ 5.90 $ 6.00 $ 5.98 $ 5.72 $ 5.83
- ------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.11 $ 0.23 $ 0.24 $ 0.23 $ 0.23 $ 0.23
Net realized and unrealized gain (loss) on
investments 0.05 (0.04) (0.11) 0.02 0.27 (0.10)
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.16 $ 0.19 $ 0.13 $ 0.25 $ 0.50 $ 0.13
- ------------------------------------------------------------------------------------------------------------------------
ESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.11) $ (0.22) $ (0.23) $ (0.23) $ (0.24) $ (0.24)
From net realized gain on investments -- (0.01) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.11) $ (0.23) $ (0.23) $ (0.23) $ (0.24) $ (0.24)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.91 $ 5.86 $ 5.90 $ 6.00 $ 5.98 $ 5.72
- ------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.73(n) 3.29 2.22 4.27 8.78 2.17
- ------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.04(a) 1.99 1.87 1.86 1.86 1.89
Expenses after expense reductions (f) 1.79(a) 1.74 1.62 1.65 1.66 1.69
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.52(a) 1.53 1.51 1.56 1.57 1.57
Net investment income 3.76(a) 3.79 4.01 3.81 3.83 3.97
Portfolio turnover 8 9 12 8 22 12
Net assets at end of period (000 Omitted) $29,189 $29,880 $33,162 $36,363 $40,804 $35,022
- ------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) FLORIDA MUNICIPAL BOND FUND
(As Restated - See Note 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ----------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS A
Net asset value, beginning of period $ 10.05 $ 10.09 $ 10.24 $ 10.19 $ 9.78 $ 9.95
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.22 $ 0.45 $ 0.47 $ 0.47 $ 0.48 $ 0.50
Net realized and unrealized gain (loss) on
investments 0.09 (0.04) (0.15) 0.05 0.44 (0.16)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.31 $ 0.41 $ 0.32 $ 0.52 $ 0.92 $ 0.34
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.22) $ (0.45) $ (0.47) $ (0.47) $ (0.51) $ (0.51)
Net asset value, end of period $ 10.14 $ 10.05 $ 10.09 $ 10.24 $ 10.19 $ 9.78
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.16(n) 4.14 3.25 5.20 9.40 3.52
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.19(a) 1.11 0.94 0.98 0.88 0.93
Expenses after expense reductions (f) 0.94(a) 0.86 0.69 0.77 0.68 0.73
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.64(a) 0.64 0.57 0.64 0.62 0.63
Net investment income 4.45(a) 4.46 4.68 4.58 4.78 5.09
Portfolio turnover 4 17 18 31 27 16
Net assets at end of period (000 Omitted) $69,627 $70,402 $69,082 $79,155 $86,045 $69,959
- --------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) FLORIDA MUNICIPAL BOND FUND - CONTINUED
(As Restated - See Note 8)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ----------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS B
Net asset value, beginning of period $ 10.05 $ 10.09 $ 10.24 $ 10.19 $ 9.78 $ 9.95
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.19 $ 0.38 $ 0.40 $ 0.39 $ 0.40 $ 0.43
Net realized and unrealized gain (loss) on
investments 0.09 (0.04) (0.16) 0.05 0.43 (0.17)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.28 $ 0.34 $ 0.24 $ 0.44 $ 0.83 $ 0.26
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.19) $ (0.38) $ (0.39) $ (0.39) $ (0.42) $ (0.43)
Net asset value, end of period $ 10.14 $ 10.05 $ 10.09 $ 10.24 $ 10.19 $ 9.78
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.77(n) 3.35 2.45 4.36 8.64 2.58
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.95(a) 1.87 1.71 1.77 1.68 1.73
Expenses after expense reductions (f) 1.70(a) 1.62 1.46 1.57 1.48 1.53
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.40(a) 1.40 1.34 1.44 1.42 1.43
Net investment income 3.70(a) 3.70 3.92 3.78 3.97 4.29
Portfolio turnover 4 17 18 31 27 16
Net assets at end of period (000 Omitted) $ 12,561 $14,970 $18,382 $22,312 $25,175 $22,151
- --------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) GEORGIA MUNICIPAL BOND FUND
(As Restated - See Note 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS A
Net asset value, beginning of period $ 10.80 $ 10.99 $ 11.22 $ 11.17 $ 10.63 $ 10.82
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.24 $ 0.46 $ 0.48 $ 0.49 $ 0.49 $ 0.50
Net realized and unrealized gain (loss) on
investments 0.11 (0.18) (0.23) 0.05 0.55 (0.17)
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.35 $ 0.28 $ 0.25 $ 0.54 $ 1.04 $ 0.33
- ----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.23) $ (0.47) $ (0.48) $ (0.49) $ (0.50) $ (0.52)
Net asset value, end of period $ 10.92 $ 10.80 $ 10.99 $ 11.22 $ 11.17 $ 10.63
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.27(n) 2.53 2.27 4.93 9.97 3.03
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.48(a) 1.39 1.24 1.20 1.22 1.29
Expenses after expense reductions (f) 1.23(a) 1.14 0.99 0.99 1.02 1.09
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.94(a) 0.93 0.88 0.91 0.92 0.93
Net investment income 4.37(a) 4.22 4.35 4.35 4.43 4.67
Portfolio turnover 2 5 18 12 25 19
Net assets at end of period (000 Omitted) $ 51,723 $ 51,681 $53,190 $55,659 $57,636 $54,179
- ----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) GEORGIA MUNICIPAL BOND FUND - CONTINUED
(As Restated - See Note 8)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS B
Net asset value, beginning of period $ 10.84 $ 11.00 $ 11.23 $ 11.18 $ 10.64 $ 10.83
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.20 $ 0.41 $ 0.40 $ 0.40 $ 0.40 $ 0.42
Net realized and unrealized gain (loss) on
investments 0.11 (0.18) (0.24) 0.06 0.56 (0.18)
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.31 $ 0.23 $ 0.16 $ 0.46 $ 0.96 $ 0.24
- ----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.19) $ (0.39) $ (0.39) $ (0.41) $ (0.42) $ (0.43)
Net asset value, end of period $ 10.96 $ 10.84 $ 11.00 $ 11.23 $ 11.18 $ 10.64
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.88(n) 2.05 1.51 4.15 9.15 2.26
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.23(a) 2.14 1.99 1.94 1.97 2.04
Expenses after expense reductions (f) 1.98(a) 1.89 1.74 1.74 1.77 1.84
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.69(a) 1.68 1.63 1.66 1.67 1.68
Net investment income 3.62(a) 3.72 3.60 3.60 3.68 3.91
Portfolio turnover 2 5 18 12 25 19
Net assets at end of period (000 Omitted) $ 9,019 $ 9,816 $13,280 $16,759 $18,077 $16,031
- ----------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) MARYLAND MUNICIPAL BOND FUND
(Not Restated)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS A
Net asset value, beginning of period $ 11.27 $ 11.49 $ 11.74 $ 11.69 $ 11.21 $ 11.35
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.25 $ 0.50 $ 0.52 $ 0.51 $ 0.52 $ 0.54
Net realized and unrealized gain (loss) on
investments 0.09 (0.15) (0.25) 0.06 0.50 (0.14)
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.34 $ 0.35 $ 0.27 $ 0.57 $ 1.02 $ 0.40
- ----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.24) $ (0.50) $ (0.51) $ (0.52) $ (0.54) $ (0.54)
From net realized gain on investments -- (0.07) (0.01) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.24) $ (0.57) $ (0.52) $ (0.52) $ (0.54) $ (0.54)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.37 $ 11.27 $ 11.49 $ 11.74 $ 11.69 $11.21
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.09(n) 3.06 2.36 4.96 9.21 3.59
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.18(a) 1.19 1.14 1.17 1.15 1.15
Expenses after expense reductions (f) 0.93(a) 0.94 0.89 0.96 0.95 0.95
Net investment income 4.39(a) 4.38 4.48 4.35 4.51 4.73
Portfolio turnover 11 9 12 21 12 8
Net assets at end of period (000 Omitted) $116,351 $115,307 $124,261 $138,201 $138,666 $128,750
- ----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) MARYLAND MUNICIPAL BOND FUND - CONTINUED
(Not Restated)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 -------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS B
Net asset value, beginning of period $ 11.26 $ 11.49 $ 11.74 $ 11.68 $ 11.20 $ 11.34
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.21 $ 0.43 $ 0.44 $ 0.43 $ 0.45 $ 0.46
Net realized and unrealized gain (loss) on
investments 0.11 (0.17) (0.25) 0.07 0.49 (0.13)
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.26 $ 0.19 $ 0.50 $ 0.94 $ 0.33
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.42) $ (0.44) $ (0.44) $ (0.46) $ (0.47)
From net realized gain on investments -- (0.07) (0.00)(w) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.21) $ (0.49) $ (0.44) $ (0.44) $ (0.46) $ (0.47)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.37 $ 11.26 $ 11.49 $ 11.74 $ 11.68 $ 11.20
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.85(n) 2.30 1.69 4.37 8.52 2.92
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.83(a) 1.84 1.79 1.81 1.80 1.80
Expenses after expense reductions (f) 1.58(a) 1.59 1.54 1.61 1.60 1.60
Net investment income 3.75(a) 3.72 3.83 3.70 3.86 4.08
Portfolio turnover 11 9 12 21 12 8
Net assets at end of period (000 Omitted) $ 19,633 $21,011 $25,716 $31,697 $34,033 $31,542
- ------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
(As Restated - See Note 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 ---------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS A
Net asset value, beginning of period $ 11.22 $ 11.31 $ 11.52 $ 11.49 $ 10.90 $ 11.11
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.25 $ 0.48 $ 0.51 $ 0.51 $ 0.52 $ 0.53
Net realized and unrealized gain (loss) on
investments 0.10 (0.05) (0.22) 0.03 0.60 (0.21)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.35 $ 0.43 $ 0.29 $ 0.54 $ 1.12 $ 0.32
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.24) $ (0.48) $ (0.50) $ (0.51) $ (0.53) $ (0.53)
From net realized gain on investments -- (0.04) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.24) $ (0.52) $ (0.50) $ (0.51) $ (0.53) $ (0.53)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.33 $ 11.22 $ 11.31 $ 11.52 $ 11.49 $ 10.90
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.13(n) 3.83 2.63 4.82 10.42 2.93
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.40(a) 1.34 1.19 1.23 1.21 1.26
Expenses after expense reductions (f) 1.15(a) 1.09 0.94 1.02 1.01 1.06
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.89(a) 0.90 0.84 0.95 0.92 0.92
Net investment income 4.38(a) 4.23 4.48 4.39 4.56 4.73
Portfolio turnover 2 10 11 14 15 13
Net assets at end of period (000 Omitted) $196,530 $196,992 $210,103 $224,923 $233,500 $210,269
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS - CONTINUED
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - CONTINUED
(As Restated - See Note 8)
SIX MONTHS
ENDED YEARS ENDED 3/31
9/30/06 --------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
CLASS B
Net asset value, beginning of period $ 11.24 $ 11.33 $ 11.54 $ 11.51 $ 10.92 $ 11.12
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.21 $ 0.41 $ 0.43 $ 0.43 $ 0.44 $ 0.46
Net realized and unrealized gain (loss) on
investments 0.10 (0.05) (0.21) 0.04 0.60 (0.20)
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.31 $ 0.36 $ 0.22 $ 0.47 $ 1.04 $ 0.26
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.20) $ (0.41) $ (0.43) $ (0.44) $ (0.45) $ (0.46)
From net realized gain on investments -- (0.04) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.20) $ (0.45) $ (0.43) $ (0.44) $ (0.45) $ (0.46)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.35 $ 11.24 $ 11.33 $ 11.54 $ 11.51 $ 10.92
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.80(n) 3.16 1.97 4.14 9.69 2.35
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.05(a) 1.99 1.84 1.87 1.86 1.91
Expenses after expense reductions (f) 1.80(a) 1.74 1.59 1.67 1.66 1.71
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.54(a) 1.55 1.49 1.60 1.57 1.57
Net investment income 3.73(a) 3.58 3.83 3.74 3.91 4.13
Portfolio turnover 2 10 11 14 15 13
Net assets at end of period (000 Omitted) $ 34,575 $36,924 $40,766 $46,253 $47,612 $37,487
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(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 series of MFS
Municipal Series Trust which 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, the security could
decline in value, interest from the security could become taxable and the fund
may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. Values of debt
instruments obtained from pricing services can utilize both dealer-supplied
valuations and electronic data processing techniques, which take into account
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. Short-term instruments with a maturity at issuance of 60
days or less may be valued at amortized cost, which approximates market value.
Swaps are generally valued at a broker-dealer bid quotation. Securities and
other assets generally valued on the basis of information from an independent
pricing service may also be valued at a broker-dealer bid quotation. The Board
of Trustees has delegated primary responsibility for determining or causing to
be determined the value of the fund's investments valuation policies and
procedures approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as
determined in good faith by the adviser in accordance with such procedures under
the oversight of the Board of Trustees. Under each fund's quotations are not
considered to be readily available for many types of debt instruments. These
investments are generally valued at fair value based on information from
independent pricing services. The adviser may rely on independent pricing
services or other information (such as the correlation with price movements of
similar securities in the same or other markets; the type, cost and investment
characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to
fair value and at what value to fair value an investment. The value of an
investment for purposes of calculating each fund's net asset value determine
value. When fair valuation is used, the value of investments used to determine
each fund's net asset value may differ from quoted or published prices for the
same investments. In September 2006, FASB Statement No. 157, Fair Value
Measurements (the "Statement") interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for measuring
fair value and expanded disclosures about fair value measurements. Management is
evaluating the application of the Statement to each fund, and believes the
impact will be limited to expanded disclosures resulting from the adoption of
this Statement on each fund's financial statements.
DERIVATIVE RISK - Each fund may invest in derivatives for hedging or non-hedging
purposes. While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. When the funds use derivatives as an investment to gain market
exposure, or for hedging purposes, gains and losses from derivative instruments
may be substantially greater than the derivative's original cost. Derivative
instruments include swap agreements.
SWAP AGREEMENTS - Each fund may enter into swap agreements. A swap is an
exchange of cash payments between the fund and another party. Net cash payments
are exchanged at specified intervals and are 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, including accruals of periodic amounts of interest to
be paid or received, is recorded as unrealized appreciation or depreciation in
the Statement of Operations. A liquidation payment received or made upon early
termination is recorded as a realized gain or loss in the Statement of
Operations. Collateral, in the form of cash or securities, may be required to
be held in segregated accounts with the fund's custodian in connection with
these agreements. Risk of Assets and Liabilities. These risks include the
possible lack of a liquid market, failure of the counterparty to perform under
the terms of the agreements, and unfavorable market movement of the underlying
instrument. All swap agreements entered into by each fund with the same
counterparty are generally governed by a single master agreement, which
provides for the netting of all amounts owed by the parties under the agreement
upon the occurrence of an event of default, thereby reducing the credit risk to
which such party is exposed.
INTEREST RATE SWAP AGREEMENTS - Interest rate swap agreements involve the
periodic exchange of cash flows, such as the exchange of fixed rate interest
payments for floating rate interest payments based on a notional principal
amount. The interest rates may be based on a specific financial index or the
exchange of two distinct floating rate payments. Each fund may enter into an
interest rate swap in order to manage its exposure to interest fluctuations.
INDEMNIFICATIONS - Under each fund's organizational documents, liabilities and
expenses arising out of the performance of their duties to each fund.
Additionally, in the normal course of business, each fund enters into agreements
with service providers that may contain indemnification clauses. Each fund's
maximum exposure under these agreements is unknown as this would involve future
claims that may be made against each fund that have not yet occurred.
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 and 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.
Each fund may receive proceeds from litigation settlements involving its
portfolio holdings. Any proceeds received are reflected in realized gain/loss in
the Statement of Operations, or in unrealized gain/loss if the security is still
held by the fund.
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 nonrecurring, 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.
INTEREST EXPENSE AND FEES - Interest expense and fees relate to payments made to
the holder of the floating rate certificate from trust assets in connection with
self-deposited inverse floater transactions. Interest expense and fees are
recorded as incurred.
FEES PAID INDIRECTLY - Each fund's custody fee is reduced deposited with the
custodian by each fund. This amount, for the six months ended September 30,
2006, is shown as a reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - Each fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue Code,
and to distribute all of its taxable and tax-exempt income, including realized
capital gains. Accordingly, no provision for federal income tax is required in
the financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These
adjustments have no impact on net assets or net asset value per share. Temporary
differences which arise from recognizing certain items of income, expense, gain
or loss in different periods for financial statement and tax purposes will
reverse at some time in the future. Distributions in excess of net investment
income or net realized gains are temporary overdistributions for financial
statement purposes resulting from differences in the recognition or
classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to expiration of capital loss
carryforwards, amortization and accretion of debt securities, defaulted bonds,
secured borrowings, and treating a portion of the proceeds from redemptions as a
distribution for tax purposes.
The tax character of distributions made during the current period will be
determined at fiscal year end. The tax character of distributions declared to
shareholders is as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
YEAR ENDED 3/31/06
Ordinary income (including any
short-term capital gains) $-- $ -- $ -- $ 49,709 $ -- $ -- $ --
Tax-exempt income 3,871,731 6,006,607 17,366,623 3,704,909 2,701,647 6,134,201 10,048,922
Long-term capital gain -- -- 658,156 -- -- 863,330 847,071
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $3,871,731 $6,006,607 $18,024,779 $3,754,618 $2,701,647 $6,997,531 $ 10,895,993
YEAR ENDED 3/31/05
Ordinary income (including any
short-term
capital gains) $ 63,872 $ 214,789 $ 55,853 $ -- $ -- $ 70,072 $ 252,507
Tax-exempt income 4,028,102 5,977,001 18,783,159 4,058,369 2,840,491 6,753,147 10,888,037
Long-term capital gain 326,164 -- -- -- -- 60,248 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $4,418,138 $6,191,790 $18,839,012 $4,058,369 $2,840,491 $6,883,467 $ 11,140,544
The federal tax cost and the tax basis components of distributable earnings were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
AS OF 9/30/06
Cost of investments $79,819,746 $122,473,557 $360,916,083 $75,857,137 $55,652,424 $124,986,211 $212,450,907
- ----------------------------------------------------------------------------------------------------------------------------------
Gross appreciation $ 4,986,431 $ 8,135,792 $ 23,076,117 $ 4,356,117 $ 3,995,740 $ 8,287,532 $ 15,335,218
Gross depreciation (375,250) (2,431) (28,814) (116,990) -- (14,016) (72,420)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $ 4,611,181 $ 8,133,361 $ 23,047,303 $ 4,239,127 $ 3,995,740 $ 8,273,516 $ 15,262,798
AS OF 3/31/06
Undistributed ordinary income -- -- -- -- -- -- 372,024
Undistributed tax-exempt income 282,450 570,738 818,897 214,900 53,805 227,456 339,371
Undistributed long-term capital gain 140,902 -- -- -- -- -- --
Capital loss carryforwards -- (501,285) (1,402,103) (264,149) (66,666) -- --
Post-October capital loss deferral -- -- -- -- -- -- (18,421)
Other temporary differences (396,268) (407,289) (1,424,420) (237,092) (161,833) (386,437) (686,714)
Net unrealized appreciation
(depreciation) 4,260,151 7,093,329 19,743,330 3,494,418 3,345,358 7,362,737 13,747,739
The aggregate cost above includes prior fiscal year end tax adjustments.
As of March 31, 2006, certain funds had capital loss carryforwards available to offset future realized gains. Such losses expire
as follows:
ARKANSAS CALIFORNIA FLORIDA GEORGIA
EXPIRATION DATE FUND FUND FUND FUND
3/31/08 $ -- $ (229,685) $ -- $ --
3/31/09 -- -- -- (66,666)
3/31/10 -- -- (142,514) --
3/31/11 -- -- (121,635) --
3/31/12 (501,285) -- -- --
3/31/14 -- (1,172,418) -- --
- ----------------------------------------------------------------------------------------------------------------------
Total $(501,285) $(1,402,103) $(264,149) $ (66,666)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the "Interpretation") was issues, and is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years as
of the effective date. This Interpretation prescribes a minimum threshold for
financial statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return, and requires certain expanded disclosures.
Management is evaluating the application of the Interpretation to each fund, and
has not at this time determined the impact, if any, resulting from the adoption
of this Interpretation on each fund's financial statements.
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 - Each fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
management and related administrative services and facilities to each fund. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
each fund's average daily net assets.
As part of a settlement agreement with the New York Attorney General concerning
market timing and related matters, MFS has agreed to reduce the management fee
to 0.30% of each fund's through February 28, 2009. For the six months ended
September 30, 2006, this waiver amounted to the following for each fund and is
reflected as a reduction of total expenses in the Statement of Operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$107,215 $165,496 $478,298 $103,817 $75,847 $169,006 $88,895
The management fee incurred for the six months ended September 30, 2006 was equivalent to an annual effective rate of 0.30%
of each fund's average daily net assets.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received the following
amounts for the six months ended September 30, 2006, as its portion of the initial sales charge on sales of Class A shares
of the funds.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$9,825 $31,373 $44,191 $8,071 $5,604 $14,288 $18,651
The Board of Trustees has adopted a distribution plan for certain class shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940.
Each fund's distribution plan provides that the fund will pay MFD in connection
with the distribution and servicing of certain share classes. One component of
the plan is a distribution fee paid to MFD and another component of the plan is
a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the
distribution and/or service fees to financial intermediaries.
DISTRIBUTION FEE PLAN TABLE:
CLASS A
-----------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(D) RATE(E) FEE
Alabama Fund 0.10% 0.25% 0.35% 0.25% $ 91,213
Arkansas Fund 0.10% 0.25% 0.35% 0.10% 60,930
California Fund 0.10% 0.25% 0.35% 0.10% 148,985
Florida Fund 0.10% 0.25% 0.35% 0.00% --
Georgia Fund 0.10% 0.25% 0.35% 0.25% 64,162
Maryland Fund 0.10% 0.25% 0.35% 0.35% 200,744
Massachusetts Fund 0.10% 0.25% 0.35% 0.35% 341,814
CLASS B
-----------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(D) RATE(E) FEE
Alabama Fund 0.75% 0.25% 1.00% 1.00% $64,011
Arkansas Fund 0.75% 0.25% 1.00% 0.87% 45,724
California Fund 0.75% 0.25% 1.00% 0.86% 237,504
Florida Fund 0.75% 0.25% 1.00% 0.76% 51,845
Georgia Fund 0.75% 0.25% 1.00% 1.00% 46,743
Maryland Fund 0.75% 0.25% 1.00% 1.00% 102,471
Massachusetts Fund 0.75% 0.25% 1.00% 1.00% 178,968
CLASS C
------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(D) RATE(E) FEE
California Fund 0.75% 0.25% 1.00% 1.00% $146,316
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Total Distribution and Service Fees $155,224 $106,654 $532,805 $51,845 $110,905 $303,215 $520,782
(d) In accordance with the distribution plan for certain classes, each fund pays distribution and/or service fees up to these
annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended September 30,
2006 based on each class' average daily net assets. Payment of Florida Fund's 0.25% annual Class A service fee is not yet in
effect and will be implemented on such date as the fund's Board of Trustees may determine. Payment of Arkansas Fund's and
California Fund's 0.10% of the Class A service fee is currently being paid by each fund. Payment of the remaining 0.15% of the
Class A service fee is not yet in effect and will be implemented on such date as the Board of Trustees may determine. For one
year from the date of sale of Florida Fund's Class B shares, assets attributable to such Class B shares are subject to the
0.25% annual Class B service fee. On assets attributable to all other Class B shares, the service fee is not currently in
effect, but may be implemented on such date as the fund's Board of Trustees may determine. For one year from the date of sale
of Arkansas Fund's and California Fund's Class B shares, assets attributable to such Class B shares are subject to the 0.25%
annual Class B service fee. On assets attributable to all other Class B shares, 0.10% of the Class B service fee is currently
in effect and the remaining portion of the Class B service fee is not in effect but may be implemented on such date as the
fund's Board of Trustees may determine. Payment of the Alabama Fund's, Arkansas Fund's, California Fund's, Florida Fund's, and
Georgia Fund's 0.10% annual Class A distribution fee is not yet in effect and will be implemented on such date as the Board of
Trustees 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 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event of a shareholder
redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended
September 30, 2006, were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND
Class A $ -- $ -- $ 20,000 $ -- $ -- $ -- $ 42
Class B 16,919 10,876 51,328 21,702 8,430 9,542 35,248
Class C N/A N/A 1,748 N/A N/A N/A N/A
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the funds,
for its services as shareholder servicing agent calculated as a percentage of the average net assets of each fund as
determined periodically under the supervision of the funds' Board the fees were as follows, which equated to the following
annual percentage of each fund's average daily net assets.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Expenses paid $41,342 $63,815 $184,432 $40,032 $29,247 $65,169 $111,398
Percentage of average daily net assets 0.0964% 0.0964% 0.0964% 0.0964% 0.0964% 0.0964% 0.0964%
MFSC also receives payment from the funds for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the funds. For
the six months ended September 30, 2006, these costs amounted to the following:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$1,871 $4,678 $9,826 $3,476 $1,539 $3,691 $19,102
The fund may also pay shareholder servicing related costs to non-related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services
to the funds. Under an administrative services agreement, the funds partially reimburse MFS the costs incurred to provide
these services. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. Each fund's annual
fixed amount is $17,500. The administrative services fee incurred for the six months ended September 30, 2006 was equivalent
to the following annual effective rates of each fund's average daily net assets.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Percentage of average daily net assets 0.0282% 0.0247% 0.0206% 0.0285% 0.0321% 0.0246% 0.0221%
TRUSTEES' - Each fund pays compensation to Independent Trustees in the form of a retainer, AND attendance fees, and additional
compensation to Board and Committee chairpersons. The funds do not pay compensation directly to Trustees or officers of the fund
who are also officers of the investment adviser, 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, MFD, and MFSC.
Each fund has an unfunded, defined benefit plan for certain retired Independent Trustees which resulted in the following pension
expense for the funds. These amounts are included in Independent trustees' compensation for the six months ended September 30,
2006.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$399 $388 $899 $386 $388 $789 $802
The deferred liability for retirement benefits payable to certain retired Trustees amounted to the following for each fund at
September 30, 2006, and is included in payable for independent trustees' compensation.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$10,609 $10,177 $20,173 $10,163 $12,076 $14,656 $14,585
OTHER - 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. The funds can terminate
the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the six months ended September 30, 2006, the
fee paid to Tarantino LLC amounted to the following:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$220 $338 $976 $213 $155 $346 $592
MFS has agreed to reimburse the funds for a portion of the payments made by each fund to Tarantino LLC in the following amounts,
which are shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses
associated with office space, other administrative support, and supplies provided to the ICCO.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$220 $338 $976 $213 $155 $346 $592
(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 $4,167,303 $8,866,318 $32,794,356 $3,218,605 $1,247,529 $14,767,816 $ 4,456,821
Sales $6,753,348 $10,110,438 $28,664,516 $7,444,675 $3,231,781 $17,129,859 $10,491,250
(5) SHARES OF BENEFICIAL INTEREST
Each fund's Declaration permits the Trustees to issue an unlimited Transactions in each funds' shares were as follows:
ALABAMA FUND ARKANSAS FUND
--------------------------------------------- -----------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06 9/30/06 3/31/06
----------------- ----------------------- ------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 313,951 $ 3,284,820 453,164 $ 4,807,670 621,818 $ 6,232,096 1,098,066 $ 11,184,396
Class B 20,141 210,372 47,894 508,335 38,286 382,846 127,141 1,292,625
------- ----------- ----------- ------------ --------- ----------- ---------- ------------
334,092 $ 3,495,192 501,058 $ 5,316,005 660,104 $ 6,614,942 1,225,207 $ 12,477,021
Shares issued to
shareholders in
reinvestment of distributions
Class A 87,029 $ 909,508 183,725 $ 1,948,887 153,862 $ 1,541,296 306,870 $ 3,122,224
Class B 12,535 130,952 27,249 289,073 11,612 116,468 24,788 252,510
------- ----------- ----------- ------------ --------- ----------- ---------- ------------
99,564 $ 1,040,460 210,974 $ 2,237,960 165,474 $ 1,657,764 331,658 $ 3,374,734
Shares reacquired
Class A (502,533) $(5,247,901) (842,942) $ (8,923,169) (762,426) $(7,632,526) (1,743,455) $(17,710,230)
Class B (169,279) (1,765,462) (213,823) (2,267,688) (117,948) (1,184,194) (198,441) (2,020,468)
------- ----------- ----------- ------------ --------- ----------- ---------- ------------
(671,812) $(7,013,363) (1,056,765) $(11,190,857) (880,374) $(8,816,720) (1,941,896) $(19,730,698)
Net change
Class A (101,553) $(1,053,573) (206,053) $ (2,166,612) 13,254 $ 140,866 (338,519) $ (3,403,610)
Class B (136,603) (1,424,138) (138,680) (1,470,280) (68,050) (684,880) (46,512) (475,333)
------- ----------- ----------- ------------ --------- ----------- ---------- ------------
(238,156) $(2,477,711) (344,733) $ (3,636,892) (54,796) $ (544,014) (385,031) $ (3,878,943)
CALIFORNIA FUND FLORIDA FUND
------------------------------------------------ ------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06 9/30/06 3/31/06
------------------------ ------------------------- ----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 5,348,536 $ 31,179,249 5,540,422 $ 32,768,817 429,511 $ 4,302,453 1,343,743 $ 13,639,634
Class B 208,805 1,217,297 341,572 2,022,416 35,097 351,654 116,876 1,188,551
Class C 197,488 1,155,780 501,717 2,981,705 -- -- -- --
---------- ------------- ------------ ------------- --------- ------------ ----------- ------------
5,754,829 $ 33,552,326 6,383,711 $ 37,772,938 464,608 $ 4,654,107 1,460,619 $ 14,828,185
Shares issued to
shareholders in
reinvestment of
distributions
Class A 613,604 $ 3,575,164 1,269,372 $ 7,511,470 76,448 $ 767,536 142,752 $ 1,450,063
Class B 111,251 648,539 262,673 1,555,229 11,452 114,949 27,817 282,641
Class C 55,175 322,503 129,873 771,330 -- -- -- --
---------- ------------- ------------ ------------- --------- ------------ ----------- ------------
780,030 $ 4,546,206 1,661,918 $ 9,838,029 87,900 $ 882,485 170,569 $ 1,732,704
Shares reacquired
Class A (3,604,464) $(21,019,461) (7,053,114) $(41,766,637) (642,782) $(6,448,118) (1,327,818) $(13,490,043)
Class B (1,342,401) (7,819,295) (2,363,896) (14,014,351) (296,996) (2,976,634) (476,733) (4,836,416)
Class C (420,022) (2,455,413) (1,149,084) (6,808,954) -- -- -- --
---------- ------------- ------------ ------------- --------- ------------ ----------- ------------
(5,366,887) $(31,294,169 (10,566,094) $(62,589,942) (939,778) $(9,424,752) (1,804,551) $(18,326,459)
Net change
Class A 2,357,676 $ 13,734,952 (243,320) $ (1,486,350) (136,823) $(1,378,129) 158,677 $ 1,599,654
Class B (1,022,345) (5,953,459) (1,759,651) (10,436,706) (250,447) (2,510,031) (332,040) (3,365,224)
Class C (167,359) (977,130) (517,494) (3,055,919) -- -- -- --
---------- ------------- ------------ ------------- --------- ------------ ----------- ------------
1,167,972 $ 6,804,363 (2,520,465) $(14,978,975) (387,270) $(3,888,160) (173,363) $ (1,765,570)
GEORGIA FUND MARYLAND FUND
----------------------------------------------- --------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06 9/30/06 3/31/06
--------------------- ------------------------ --------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------ -------- ----------- ---------- -------------
Shares sold
Class A 170,269 $ 1,844,244 460,892 $ 5,066,357 397,097 $ 4,470,960 730,679 $ 8,394,007
Class B 12,305 133,540 28,232 312,944 43,482 487,684 83,527 958,062
-------- ----------- ---------- ------------ -------- ----------- ---------- ------------
182,574 $ 1,977,784 489,124 $ 5,379,301 440,579 $ 4,958,644 814,206 $ 9,352,069
Shares issued to
shareholders in
reinvestment of distributions
Class A 66,922 $ 723,083 137,577 $ 1,511,329 131,868 $ 1,483,563 299,543 $ 3,427,995
Class B 8,530 92,471 20,316 223,644 18,748 210,805 48,765 557,986
-------- ----------- ---------- ------------ -------- ----------- ---------- ------------
75,452 $ 815,554 157,893 $ 1,734,973 150,616 $ 1,694,368 348,308 $ 3,985,981
Shares reacquired
Class A (285,738) $(3,083,819) (655,008) $ (7,177,983) (529,852) $(5,958,339) (1,610,274) $(18,401,179)
Class B (103,495) (1,118,773) (350,537) (3,854,834) (200,296) (2,253,343) (505,608) (5,810,178)
-------- ----------- ---------- ------------ -------- ----------- ---------- ------------
(389,233) $(4,202,592) (1,005,545) $(11,032,817) (730,148) $(8,211,682) (2,115,882) $(24,211,357)
Net change
Class A (48,547) $ (516,492) (56,539) $ (600,297) (887) $ (3,816) (580,052) $ (6,579,177)
Class B (82,660) (892,762) (301,989) (3,318,246) (138,066) (1,554,854) (373,316) (4,294,130)
-------- ----------- ---------- ------------ -------- ----------- ---------- ------------
(131,207) $(1,409,254) (358,528) $ (3,918,543) (138,953) $(1,558,670) (953,368) $(10,873,307)
MASSACHUSETTS FUND
------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 693,000 $ 7,773,612 1,762,892 $ 20,057,220
Class B 51,764 580,672 181,196 2,072,498
---------- ------------ ---------- ------------
744,764 $ 8,354,284 1,944,088 $ 22,129,718
Shares issued to shareholders in
reinvestment of distributions
Class A 184,338 $ 2,067,220 405,376 $ 4,607,951
Class B 33,135 372,232 81,697 930,076
---------- ------------ ---------- ------------
217,473 $ 2,439,452 487,073 $ 5,538,027
Shares reacquired
Class A (1,092,691) $(12,236,563) (3,187,918) $(36,274,707)
Class B (324,427) (3,639,434) (575,954) (6,568,954)
---------- ------------ ---------- ------------
(1,417,118) $(15,875,997) (3,763,872) $(42,843,661)
Net change
Class A (215,353) $ (2,395,731) (1,019,650) $(11,609,536)
Class B (239,528) (2,686,530) (313,061) (3,566,380)
---------- ------------ ---------- ------------
(454,881) $ (5,082,261) (1,332,711) $(15,175,916)
(6) LINE OF CREDIT
Each fund and other affiliated funds participate in a $1 billion unsecured
committed line of credit provided by a syndication of banks under a credit
agreement. In addition, these funds and other affiliated funds have established
uncommitted borrowing arrangements with certain brokers. Borrowings may be made
for temporary financing needs. Interest is charged to each fund, based on its
borrowings, generally at a rate equal to the Federal Reserve funds rate plus
0.35%. In addition, a commitment fee, based on the average daily, unused portion
of the committed line of credit, is allocated among the participating funds at
the end of each calendar quarter. The interest expense incurred and commitment
fee allocated to each fund for the six months ended September 30, 2006 is
included in miscellaneous expense on the Statement of Operations as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Commitment Fee $263 $404 $1,162 $254 $186 $413 $707
Interest Expense -- -- -- -- -- -- --
(7) INVERSE FLOATERS
The funds invest in municipal inverse floating rate securities which are
structured by the issuer (known as primary market inverse floating rate
securities) or by an investment banker utilizing municipal bonds which have
already been issued (known as secondary market inverse floating rate securities)
to have variable rates of interest which typically move in the opposite
direction of short term interest rates. A secondary market inverse floating rate
security is created when an investment banker transfers a fixed rate municipal
bond to a special purpose trust, and causes the trust to (a) issue floating rate
certificates to third parties, in an amount equal to a fraction of the par
amount of the deposited bonds (these certificates usually pay tax-exempt
interest at short-term interest rates that typically reset weekly; and the
certificate holders typically, on seven days notice, have the option to tender
their certificates to the investment banker or another party for redemption at
par plus accrued interest), and (b) issue inverse floating rate certificates
(sometimes referred to as "inverse floaters"). If the holder of the inverse
floater transfers the municipal bonds to an investment banker for the purpose of
depositing the municipal bonds into the special purpose trust, the inverse
floating rate certificates that are issued by the trust are referred to as
"self-deposited inverse floaters." someone other than the purchasers of the
inverse floaters, the inverse floating rate certificates that are issued by the
trust are referred to as "externally deposited inverse floaters. Certain
self-deposited inverse floaters held by the funds are accounted for as secured
borrowings, with the municipal bonds reflected in the investments of the funds
and amounts owed to the holder of the floating rate certificate under the
provisions of the trust, which amounts are paid solely from the assets of the
trust, reflected as liabilities of the funds in the Statements of Assets and
Liabilities under the caption, "Payable to the holder of the floating rate
certificate from trust assets". As September 30, 2006, the funds' Statements of
Assets and Liabilities impacts were as follows:
PAYABLE TO THE WEIGHTED AVERAGE
HOLDER OF THE INTEREST RATE ON
FLOATING RATE FLOATING RATE VALUE OF BONDS
CERTIFICATE FROM CERTIFICATES ISSUED TRANSFERRED TO
FUND TRUST ASSETS BY THE TRUST THE TRUST
Alabama Fund $ 6,500,000 3.68% $13,744,070
Arkansas Fund $ 8,235,000 3.66% $17,609,543
California Fund $27,160,000 3.68% $59,753,141
Florida Fund $ 6,500,000 3.53% $14,204,180
Georgia Fund $ 4,500,000 3.72% $10,127,180
Maryland Fund $ 0 -- $ 0
Massachusetts Fund $15,705,000 3.75% $36,214,106
Primary and certain secondary market inverse floaters held by the funds are not
accounted for as secured borrowings.
(8) RESTATEMENT INFORMATION
After the funds issued their September 30, 2006 financial statements, certain of
the funds determined that the criteria for sale accounting in FASB Statement No.
140 had not been met for certain transfers of municipal bonds during the period
ended September 30, 2006 and that its transfers of municipal bonds in connection
with self-deposited inverse floaters should have been accounted for as secured
borrowings rather than as sales. Accordingly, certain of the funds have restated
the Statements of Assets and Liabilities, including the Portfolios of
Investments, as of September 30, 2006, the related Statements of Operations for
the period then ended, and certain Financial Highlights for each of the
applicable periods in the five years then ended, to give effect to this change,
including recording interest on the bonds as interest income and interest paid
to the holder of the floating rate certificate from trust assets as interest
expense in the Statements of Operations. The funds' Statements of Changes in Net
Assets were not restated. The restatement did not affect the funds' reported net
investment income, annual total return or net asset value.
ALABAMA FUND ARKANSAS FUND CALIFORNIA FUND FLORIDA FUND
- -----------------------------------------------------------------------------------------------------------------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
STATEMENT OF ASSETS AND
LIABILITIES AT 9/30/06 (UNAUDITED)
Investments, identified
cost $79,844,401 $86,399,756 $122,523,961 $130,831,959 $361,008,594 $387,140,854 $75,854,847 $82,233,807
Unrealized appreciation $ 4,586,526 $ 4,531,171 $ 8,082,957 $ 8,009,959 $ 22,954,792 $ 23,982,532 $ 4,241,417 $ 4,362,457
Investments, at value $84,430,927 $90,930,927 $130,606,918 $138,841,918 $383,963,386 $411,123,386 $80,096,264 $86,596,264
Interest receivable $ 1,228,960 $ 1,340,613 $ 1,825,698 $ 1,904,795 $ 4,901,173 $ 5,074,214 $ 1,514,149 $ 1,576,303
Total assets $86,085,285 $92,696,938 $133,730,951 $142,045,048 $392,181,674 $419,514,715 $82,587,546 $89,149,700
Payable to the holder of
the floating rate
certificate from trust
assets $ -- $ 6,500,000 $ -- $ 8,235,000 $ -- $ 27,160,000 $ -- $ 6,500,000
Payable for interest
expense
and fees $ -- $ 111,653 $ -- $ 79,097 $ -- $ 173,041 $ -- $ 62,154
Total liabilities $ 227,616 $ 6,839,269 $ 344,011 $ 8,658,108 $ 1,632,090 $ 28,965,131 $ 399,355 $ 6,961,509
Unrealized appreciation
(depreciation) on
investments $ 4,771,407 $ 4,716,052 $ 8,305,168 $ 8,232,170 $ 23,132,454 $ 24,160,194 $ 4,159,261 $ 4,280,301
Accumulated net realized
gain (loss) on investments $ 351,648 $ 407,003 $ (410,565) $ (337,567) $ (1,072,683) $ (2,100,423)$ (150,555)$ (271,595)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED
9/30/06 (UNAUDITED)
Interest income $ 2,245,288 $ 2,369,976 $ 3,419,476 $ 3,576,456 $ 10,072,786 $ 10,591,354 $ 2,110,677 $ 2,234,219
Interest expense and fees $ -- $ 124,688 $ -- $ 156,980 $ -- $ 518,568 $ -- $ 123,542
Total expenses $ 527,276 $ 651,964 $ 647,317 $ 804,297 $ 2,000,266 $ 2,518,834 $ 421,439 $ 544,981
Net expenses $ 415,877 $ 540,565 $ 475,558 $ 632,538 $ 1,506,683 $ 2,025,251 $ 313,000 $ 436,542
GEORGIA FUND MASSACHUSETTS FUND
----------------------------- -----------------------------
PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED
-------- -------- -------- --------
STATEMENT OF ASSETS AND
LIABILITIES AT 9/30/96 (UNAUDITED)
Investments, identified cost $ 55,684,892 $ 60,150,512 $ 212,634,064 $ 227,256,407
Unrealized appreciation $ 3,963,272 $ 3,997,652 $ 15,079,641 $ 16,162,298
Investments, at value $ 59,648,164 $ 64,148,164 $ 227,713,705 $ 243,418,705
Interest receivable $ 1,013,752 $ 1,081,765 $ 3,446,616 $ 3,578,679
Total assets $ 60,960,602 $ 65,528,615 $ 231,842,684 $ 247,679,747
Payable to the holder of the floating rate certificate $ -- $ 4,500,000 $ -- $ 15,705,000
from trust assets
Payable for interest expense and fees $ -- $ 68,013 $ -- $ 132,063
Total liabilities $ 218,878 $ 4,786,891 $ 737,373 $ 16,574,436
Unrealized appreciation (depreciation) on investments $ 3,942,338 $ 3,976,718 $ 15,362,207 $ 16,444,864
Accumulated net realized gain (loss) on investments $ 15,328 $ (19,052) $ 948,522 $ (134,135)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED
9/30/06 (UNAUDITED)
Interest income $ 1,605,102 $ 1,691,926 $ 6,079,492 $ 6,380,653
Interest expense and fees $ -- $ 86,824 $ -- $ 301,161
Total expenses $ 394,796 $ 481,620 $ 1,431,456 $ 1,732,617
Net expenses $ 315,497 $ 402,321 $ 1,133,497 $ 1,434,658
FINANCIAL HIGHLIGHTS
ALABAMA FUND
SIX MONTHS ENDED
9/30/06 (UNAUDITED) YEARS ENDED 3/31
-------------------------- ---------------------------------------------
2006 2005
--------------------- ----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.12(a) 1.41(a) 1.12 1.33 1.09 1.21
Expenses after expense reductions 0.87(a) 1.16(a) 0.87 1.08 0.84 0.96
CLASS B
Expenses before expense reductions 1.87(a) 2.16(a) 1.87 2.08 1.84 1.96
Expenses after expense reductions 1.62(a) 1.91(a) 1.62 1.83 1.59 1.71
YEARS ENDED 3/31
----------------------------------------------------------------------
2004 2003 2002
-------------------------- ------------------- ---------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.09 1.17 1.08 1.18 1.08 1.23
Expenses after expense reductions 0.88 0.96 0.88 0.98 0.88 1.03
CLASS B
Expenses before expense reductions 1.83 1.91 1.83 1.93 1.83 1.98
Expenses after expense reductions 1.63 1.71 1.63 1.73 1.63 1.78
ARKANSAS FUND
SIX MONTHS ENDED
9/30/06 (UNAUDITED) YEARS ENDED 3/31
-------------------------- ---------------------------------------------
2006 2005
--------------------- ----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.92(a) 1.16(a) 0.92 1.10 0.90 1.00
Expenses after expense reductions 0.67(a) 0.91(a) 0.67 0.85 0.65 0.75
CLASS B
Expenses before expense reductions 1.69(a) 1.93(a) 1.69 1.87 1.66 1.76
Expenses after expense reductions 1.43(a) 1.67(a) 1.44 1.62 1.41 1.51
YEARS ENDED 3/31
----------------------------------------------------------------------
2004 2003 2002
-------------------------- ------------------- ---------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.92 0.99 0.93 1.02 0.92 1.06
Expenses after expense reductions 0.72 0.79 0.73 0.82 0.72 0.86
CLASS B
Expenses before expense reductions 1.73 1.80 1.74 1.83 1.70 1.84
Expenses after expense reductions 1.53 1.60 1.54 1.63 1.50 1.64
FINANCIAL HIGHLIGHTS
CALIFORNIA FUND
SIX MONTHS ENDED
9/30/06 (UNAUDITED) YEARS ENDED 3/31
------------------- ----------------
2006 2005
-------------------- ----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.87(a) 1.14(a) 0.88 1.09 0.86 0.97
Expenses after expense reductions 0.62(a) 0.89(a) 0.63 0.84 0.61 0.72
CLASS B
Expenses before expense reductions 1.63(a) 1.90(a) 1.64 1.85 1.59 1.70
Expenses after expense reductions 1.38(a) 1.65(a) 1.39 1.60 1.34 1.45
CLASS C
Expenses before expense reductions 1.77(a) 2.04(a) 1.78 1.99 1.76 1.87
Expenses after expense reductions 1.52(a) 1.79(a) 1.53 1.74 1.51 1.62
YEARS ENDED 3/31
-------------------------------------------------------------------------
2004 2003 2002
---------------------- -------------------- ----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.87 0.96 0.87 0.96 0.87 0.99
Expenses after expense reductions 0.67 0.76 0.67 0.76 0.67 0.79
CLASS B
Expenses before expense reductions 1.67 1.76 1.66 1.75 1.65 1.77
Expenses after expense reductions 1.47 1.56 1.46 1.55 1.45 1.57
CLASS C
Expenses before expense reductions 1.77 1.86 1.77 1.86 1.77 1.89
Expenses after expense reductions 1.56 1.65 1.57 1.66 1.57 1.69
FINANCIAL HIGHLIGHTS
FLORIDA FUND
SIX MONTHS ENDED
9/30/06 (UNAUDITED) YEARS ENDED 3/31
----------------------------- -----------------------------------------------
2006 2005
-------------------- ----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.89(a) 1.19(a) 0.89 1.11 0.82 0.94
Expenses after expense reductions 0.64(a) 0.94(a) 0.64 0.86 0.57 0.69
CLASS B
Expenses before expense reductions 1.65(a) 1.95(a) 1.65 1.87 1.59 1.71
Expenses after expense reductions 1.40(a) 1.70(a) 1.40 1.62 1.34 1.46
YEARS ENDED 3/31
------------------------------------------------------------------------
2004 2003 2002
---------------------- --------------------- -----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.85 0.98 0.82 0.88 0.83 0.93
Expenses after expense reductions 0.64 0.77 0.62 0.68 0.63 0.73
CLASS B
Expenses before expense reductions 1.64 1.77 1.62 1.68 1.63 1.73
Expenses after expense reductions 1.44 1.57 1.42 1.48 1.43 1.53
GEORGIA FUND
SIX MONTHS ENDED
9/30/06 (UNAUDITED) YEARS ENDED 3/31
----------------------------- -----------------------------------------------
2006 2005
-------------------- ----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.19(a) 1.48(a) 1.18 1.39 1.13 1.24
Expenses after expense reductions 0.94(a) 1.23(a) 0.93 1.14 0.88 0.99
CLASS B
Expenses before expense reductions 1.94(a) 2.23(a) 1.93 2.14 1.88 1.99
Expenses after expense reductions 1.69(a) 1.98(a) 1.68 1.89 1.63 1.74
YEARS ENDED 3/31
------------------------------------------------------------------------
2004 2003 2002
---------------------- --------------------- -----------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.12 1.20 1.12 1.22 1.13 1.29
Expenses after expense reductions 0.91 0.99 0.92 1.02 0.93 1.09
CLASS B
Expenses before expense reductions 1.86 1.94 1.87 1.97 1.88 2.04
Expenses after expense reductions 1.66 1.74 1.67 1.77 1.68 1.84
FINANCIAL HIGHLIGHTS
MASSACHUSETTS FUND
SIX MONTHS ENDED
9/30/06 (UNAUDITED) YEARS ENDED 3/31
----------------------- --------------------------------------------------------
2006 2005
-------------------------- ---------------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.14(a) 1.40(a) 1.15 1.34 1.09 1.19
Expenses after expense reductions 0.89(a) 1.15(a) 0.90 1.09 0.84 0.94
CLASS B
Expenses before expense reductions 1.79(a) 2.05(a) 1.80 1.99 1.74 1.84
Expenses after expense reductions 1.54(a) 1.80(a) 1.55 1.74 1.49 1.59
YEARS ENDED 3/31
------------------------------------------------------------------------------------
2004 2003 2002
----------------------- -------------------------- ---------------------------
RATIOS (%) TO AVERAGE NET ASSETS PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.16 1.23 1.12 1.21 1.12 1.26
Expenses after expense reductions 0.95 1.02 0.92 1.01 0.92 1.06
CLASS B
Expenses before expense reductions 1.80 1.87 1.77 1.86 1.77 1.91
Expenses after expense reductions 1.60 1.67 1.57 1.66 1.57 1.71
(a) Annualized.
While the "Statements of Assets and been reissued to give effect to the
restatement, the principal effects of the restatement would be to increase
investments and payable to the holder of the floating rate certificate from
trust assets by corresponding amounts each year end, with no effect on
previously reported net assets. The "Statements of (not presented herein) have
not been reissued to give effect to the restatement, but the principal effects
of the restatement would be to increase interest income and interest expense and
fees by corresponding amounts each year, with no effect on previously reported
net investment income.
74
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT (Not Restated)
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees,
voting separately, annually approve the continuation of each Fund's investment
advisory agreement with MFS. The Trustees consider matters bearing on the Funds
and their advisory arrangements at their meetings throughout the year,
including a review of performance data at each regular meeting. In addition,
the independent Trustees met several times over the course of three months
beginning in May and ending in July, 2006 ("contract review meetings") for
the specific purpose of considering whether to approve the continuation of the
investment advisory agreements for the Funds and the other investment companies
that the Board oversees (the "MFS Funds"). The independent Trustees were
assisted in their evaluation of the Funds' investment advisory agreements by
independent legal counsel, from whom they received separate legal advice and
with whom they met separately from MFS during various contract review meetings.
The independent Trustees were also assisted in this process by the MFS Funds'
Independent Chief Compliance Officer, a full-time senior officer appointed by
and reporting to the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreements, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light of
the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for each Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreements and other arrangements with the Funds.
In connection with their contract review meetings, the Trustees received and
relied upon materials which included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Funds for various
time periods ended December 31, 2005 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a group
of funds identified by objective criteria suggested by MFS ("MFS peer funds"),
(ii) information provided by Lipper Inc. on the Funds' advisory fees and other
expenses and the advisory fees and other expenses of comparable funds identified
by Lipper (the "Lipper expense group"), as well as the advisory fees and other
expenses of MFS peer funds, (iii) information provided by MFS on the advisory
fees of comparable portfolios of other clients of MFS, including institutional
separate accounts and other clients, (iv) information as to whether and to what
extent applicable expense waivers, reimbursements or fee "breakpoints" are
observed for the Funds, (v) information regarding MFS' financial results and
financial condition, including MFS' and certain of its affiliates' estimated
profitability from services performed for the Funds and the MFS Funds as a
whole, (vi) MFS' views regarding the outlook for the mutual fund industry and
the strategic business plans of MFS, (vii) descriptions of various functions
performed by MFS for the Funds, such as compliance monitoring and portfolio
trading practices, and (viii) information regarding the overall organization of
MFS, including information about MFS' senior management and other personnel
providing investment advisory, administrative and other services to the Funds
and other MFS Funds. The comparative performance, fee and expense information
prepared and provided by Lipper Inc. was not independently verified and the
independent Trustees did not independently verify any information provided to
them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreements with the Funds was based on a comprehensive consideration of all
information provided to the Trustees and not the result of any single factor.
Some of the factors that figured particularly in the Trustees' deliberations
are described below, although individual Trustees may have evaluated the
information presented differently from one another, giving different weights to
various factors. It is also important to recognize that the fee arrangements
for the Funds and other MFS Funds are the result of years of review and
discussion between the independent Trustees and MFS, that certain aspects of
such arrangements may receive greater scrutiny in some years than others, and
that the Trustees' conclusions may be based, in part, on their consideration of
these same arrangements during the course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed
each Fund's total return investment performance as well as the performance of
peer groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of each Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2005, which the Trustees believed was
a long enough period to reflect differing market conditions.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Funds' performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of each Fund's advisory fee, the Trustees
considered, among other information, each Fund's advisory fee and the total
expense ratio of each Fund's Class A shares as a percentage of average net
assets and the advisory fee and total expense ratios of peer groups of funds
based on information provided by Lipper Inc. and MFS. The Trustees considered
whether the Funds were subject to any fee waivers or reductions or expense
limitations. The Trustees considered that MFS observes an advisory fee
reduction that will remain in effect for each Fund through February 28, 2009 as
part of MFS's settlement with the New York Attorney General concerning market
timing and related matters.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information provided
by MFS as to the generally broader scope of services provided by MFS to the
Funds in comparison to institutional accounts, the higher demands placed on
MFS' investment personnel and trading infrastructure as a result of the daily
cash in-flows and out-flows of the Funds, and the impact on MFS and expenses
associated with the more extensive regulatory regime to which the Funds are
subject in comparison to institutional accounts.
The Trustees also considered whether each Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that each Fund's advisory fee rate schedule is
not currently subject to any breakpoints. Taking into account the advisory fee
reduction noted above, the Trustees determined not to recommend any advisory
fee breakpoints for the Funds at this time. The Trustees also considered
information prepared by MFS relating to MFS' costs and profits with respect to
each Fund, the MFS Funds considered as a group, and other investment companies
and accounts advised by MFS, as well as MFS' methodologies used to determine
and allocate its costs to the MFS Funds, the Funds and other accounts and
products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreements, that the advisory fees charged to each Fund
represent reasonable compensation in light of the services being provided by
MFS to the Funds.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Funds.
The Trustees also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and
well-capitalized companies which are spending, and appear to be prepared to
continue to spend, substantial sums to engage personnel and to provide services
to competing investment companies. In this regard, the Trustees also considered
the financial resources of MFS and its ultimate parent, Sun Life Financial Inc.
The Trustees also considered the advantages and possible disadvantages to the
Funds of having an adviser which also serves other investment companies as well
as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the
Funds by MFS and its affiliates under agreements and plans other than the
investment advisory agreements, including any 12b-1 fees the Funds pay to MFS
Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Funds' behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Funds'
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various other
factors. Additionally, the Trustees considered so-called "fall-out benefits"
to MFS such as reputational value derived from serving as investment manager to
the Funds.
Based on their evaluation of factors that they deemed to be material, including
those factors described above, the Board of Trustees, including a majority of
the independent Trustees, concluded that each Fund's investment advisory
agreement with MFS should be continued for an additional one-year period,
commencing August 1, 2006.
MFS ALABAMA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 3rd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 3rd quintile for the one-year period and the 2nd quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS ARKANSAS MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 2nd quintile for the one-year period and the 1st quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) and total expense
ratio were each lower than the Lipper expense group median.
MFS CALIFORNIA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 2nd quintile for the one-year period and the 1st quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) and total expense
ratio were each lower than the Lipper expense group median.
MFS FLORIDA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 2nd quintile for the one-year period and the 1st quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) and total expense
ratio were each lower than the Lipper expense group median.
MFS GEORGIA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 3rd quintile for the one-year period and the 2nd quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS MARYLAND MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 2nd quintile for the one-year period and the 1st quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS MASSACHUSETTS MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 1st quintile for the one-year period and the 2nd quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
ACCESS TO DISCLOSURES ON MFS WEBSITE
A discussion regarding the Board's most recent review and renewal of each
Fund's investment advisory agreement will be available on or before November 1,
2006, by clicking on each Fund's name under "Select a fund" on the MFS Web
site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
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 Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how each 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.
QUARTERLY PORTFOLIO DISCLOSURE
The trust 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 trust's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site 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.
CONTACT US
WEB SITE
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
ACCOUNT SERVICE AND
LITERATURE
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
MAILING ADDRESS
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA
02205-5824
OVERNIGHT MAIL
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116-3741
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply 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 a retirement
plan, MFS TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
500 Boylston Street
Boston, MA 02116
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
9/30/06 Semiannual Report
MFS(R) MUNICIPAL SERIES TRUST
For the states of: Mississippi, New York,
North Carolina, Pennsylvania, South Carolina,
Tennessee, Virginia, and West Virginia
MSTB-SEM
MFS(R) Municipal Series Trust
(As Restated)
Mississippi, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Virginia, and West Virginia
LETTER FROM THE CEO 1
- ---------------------------------------------------------------
PORTFOLIO COMPOSITION 2
- ---------------------------------------------------------------
EXPENSE TABLES 5
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 8
- ---------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 40
- ---------------------------------------------------------------
STATEMENTS OF OPERATIONS 44
- ---------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 46
- ---------------------------------------------------------------
FINANCIAL HIGHLIGHTS 49
- ---------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 68
- ---------------------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 83
- ---------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 87
- ---------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 87
- ---------------------------------------------------------------
CONTACT INFORMATION BACK COVER
- ---------------------------------------------------------------
The report is prepared for the general information of shareholders. is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
- --------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE
NO BANK OR CREDIT UNION GUARANTEE NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF
- --------------------------------------------------------------------------------
LETTER FROM THE CEO
(Not Restated)
Dear Shareholders:
What a difference a year can make. By the end of 2005, the Dow Jones
Industrial Average had lost value over the course of the year, as stocks were
beaten back by a myriad of investor worries, including a spike in oil prices, a
rise in interest rates, and political uncertainty in the Middle East.
Fast forward to 2006, and we have seen a dramatically different picture.
While there were some fluctuations in the global markets in the first half of
the year, the second half of 2006 has, so far, been good to many investors. Oil
prices retreated, boosting consumer confidence, and interest rates have held
steady. U.S. stock markets responded favorably to this news, as the Dow reached
a record high in October, passing the 12,000 mark.
What does all of this mean for you? If you're focused on a long-and the
bumps -- should not necessarily dictate portfolio action on your part. Markets
are inherently cyclical, and we firmly believe that investors who remain
committed to a long-term investment strategy are more likely to achieve their
goals than those who consistently chase short-term performance.
At MFS , our unique teamwork approach to managing money and our global
research platform support an unwavering focus on helping you realize your
long-term financial goals. We believe in a three-pronged investment strategy of
allocating your holdings across major asset classes, diversifying within each
class, and rebalancing regularly. Of course, these strategies cannot guarantee a
profit or protect against a loss. Investing and planning for the long term
require diligence and patience -- two traits that are essential to capitalizing
on the many opportunities the financial markets can offer.
Respectfully,
/s/ ROBERT J. MANNING
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
November 15, 2006
The opinions expressed in this letter are those of MFS, and no forecasts can be
guaranteed.
PORTFOLIO COMPOSITION (As Restated)
MFS(R) Mississippi Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Municipal Bonds 105.4%
Cash & Other Net Assets (5.4)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 17.8%
------------------------------------------------
General Obligations - General Purpose 16.0%
------------------------------------------------
State & Local Agencies 15.2%
------------------------------------------------
Water & Sewer Utility Revenue 12.7%
------------------------------------------------
Universities - Colleges 11.4%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 78.5%
------------------------------------------------
AA 2.4%
------------------------------------------------
A 7.0%
------------------------------------------------
BBB 9.9%
------------------------------------------------
Not Rated 2.2%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 6.5
------------------------------------------------
Average Life (m) 14.7 yrs.
------------------------------------------------
Average Maturity (m) 16.2 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA+
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) New York Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Municipal Bonds 105.1%
Cash & Other Net Assets (5.1)%
TOP FIVE INDUSTRIES (i)
Toll Roads 14.1%
------------------------------------------------
State & Local Agencies 12.7%
------------------------------------------------
Water & Sewer Utility Revenue 10.3%
------------------------------------------------
Transportation - Special Tax 8.6%
------------------------------------------------
General Obligations - General Purpose 8.5%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 43.4%
------------------------------------------------
AA 19.7%
------------------------------------------------
A 19.3%
------------------------------------------------
BBB 10.4%
------------------------------------------------
BB 1.4%
------------------------------------------------
B 1.0%
------------------------------------------------
Not Rated 4.8%
PORTFOLIO FACTS
Average Duration (d) 6.6
------------------------------------------------
Average Life (m) 15.1 yrs.
------------------------------------------------
Average Maturity (m) 16.6 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) North Carolina Municipal Bond
PORTFOLIO STRUCTURE (i)
Municipal Bonds 105.4%
Cash & Other Net Assets (5.4)%
TOP FIVE INDUSTRIES (i)
Healthcare Reveunue - Hospitals 21.7%
------------------------------------------------
Utilities - Municipal Owned 18.3%
------------------------------------------------
Universities - Colleges 10.5%
------------------------------------------------
Water & Sewer Utility Revenue 8.7%
------------------------------------------------
State & Agency - Other 8.3%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 41.5%
------------------------------------------------
AA 32.6%
------------------------------------------------
A 8.0%
------------------------------------------------
BBB 16.7%
------------------------------------------------
Not Rated 1.2%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 5.8
------------------------------------------------
Average Life (m) 14.0 yrs.
------------------------------------------------
Average Maturity (m) 15.3 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Pennsylvania Municipal Bond Fund
Portfolio structure (i)
Municipal Bonds 103.0%
Cash & Other Net Assets (3.0)%
TOP FIVE INDUSTRIES (i)
General Obligations - Schools 21.1%
------------------------------------------------
Universities - Colleges 12.4%
------------------------------------------------
Healthcare Revenue - Hospitals 11.4%
------------------------------------------------
Water & Sewer Utility Revenue 9.6%
------------------------------------------------
General Obligations - General Purpose 8.5%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 66.2%
------------------------------------------------
AA 15.1%
------------------------------------------------
A 6.2%
------------------------------------------------
BBB 9.2%
------------------------------------------------
BB 0.6%
------------------------------------------------
B 0.7%
------------------------------------------------
Not Rated 2.0%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 6.5
------------------------------------------------
Average Life (m) 16.8 yrs.
------------------------------------------------
Average Maturity (m) 17.8 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) South Carolina Municipal Bond Fund
Portfolio structure (i)
Municipal Bonds 105.1%
Cash & Other Net Assets (5.1)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 21.4%
------------------------------------------------
Water & Sewer Utility Revenue 12.0%
------------------------------------------------
Universities - Colleges 11.9%
------------------------------------------------
General Obligations - General Purpose 10.8%
------------------------------------------------
Utilities - Municipal Owned 10.5%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 73.9%
------------------------------------------------
AA 12.7%
------------------------------------------------
A 5.9%
------------------------------------------------
BBB 4.8%
------------------------------------------------
B 0.6%
------------------------------------------------
Not Rated 2.1%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 6.6
------------------------------------------------
Average Life (m) 17.9 yrs.
------------------------------------------------
Average Maturity (m) 18.8 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA+
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Tennessee Municipal Bond Fund
(Not Restated)
PORTFOLIO STRUCTURE (i)
Municipal Bonds 98.1%
Cash & Other Net Assets 1.9%
TOP FIVE INDUSTRIES (i)
Water & Sewer Utility Revenue 19.0%
------------------------------------------------
Healthcare Revenue - Hospitals 14.4%
------------------------------------------------
Single Family Housing - State 13.3%
------------------------------------------------
General Obligations - Schools 13.2%
------------------------------------------------
Utilities - Municipal Owned 7.2%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 58.2%
------------------------------------------------
AA 29.8%
------------------------------------------------
A 4.4%
------------------------------------------------
BBB 4.6%
------------------------------------------------
B 0.9%
------------------------------------------------
Not Rated 2.1%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 5.6
------------------------------------------------
Average Life (m) 12.6 yrs.
------------------------------------------------
Average Maturity (m) 15.6 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA+
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Virginia Municipal Bond Fund
Portfolio structure (i)
Municipal Bonds 103.1%
Cash & Other Net Assets (3.1)%
TOP FIVE INDUSTRIES (i)
State & Local Agencies 23.4%
------------------------------------------------
General Obligations - Improvement 13.8%
------------------------------------------------
Healthcare Revenue - Hospitals 12.7%
------------------------------------------------
Water & Sewer Utility Revenue 9.4%
------------------------------------------------
Airport & Port Revenue 8.7%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 49.4%
------------------------------------------------
AA 25.2%
------------------------------------------------
A 12.5%
------------------------------------------------
BBB 6.0%
------------------------------------------------
BB 1.2%
------------------------------------------------
B 1.6%
------------------------------------------------
Not Rated 4.1%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 5.7
------------------------------------------------
Average Life (m) 14.0 yrs.
------------------------------------------------
Average Maturity (m) 16.0 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) West Virginia Municipal Bond Fund
Portfolio structure (i)
Municipal Bonds 105.7%
Cash & Other Net Assets (5.7)%
TOP FIVE INDUSTRIES (i)
State & Local Agencies 25.6%
------------------------------------------------
General Obligations - General Purpose 25.0%
------------------------------------------------
Universities - Colleges 21.1%
------------------------------------------------
Water & Sewer Utility Revenue 9.5%
------------------------------------------------
Healthcare Revenue - Hospitals 5.5%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 78.1%
------------------------------------------------
AA 6.5%
------------------------------------------------
A 9.6%
------------------------------------------------
BBB 4.0%
------------------------------------------------
BB 0.2%
------------------------------------------------
B 0.6%
------------------------------------------------
Not Rated 1.0%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 6.1
------------------------------------------------
Average Life (m) 15.2 yrs.
------------------------------------------------
Average Maturity (m) 16.3 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA+
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond's price is likely to fluctuate
with general changes in interest rates, e.g., if rates rise 1.00%, a bond
with a 5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this graphical presentation, the bond component includes
both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
(m) The average maturity shown is calculated using the final stated maturity on
the portfolio's holdings without taking into account any holdings which
have been pre-refunded or pre-paid to an earlier date or which have a
mandatory put date prior to the stated maturity. The average life shown
takes into account these earlier dates.
(r) Each security is assigned a 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. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in the "AAA"-rating
category. Percentages are based on the total market value of investments as
of 09/30/06.
Percentages are based on net assets as of 09/30/06, unless otherwise noted.
The portfolios are actively managed and current holdings may be different.
EXPENSE TABLES (As Restated)
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, APRIL 1, 2006,
THROUGH SEPTEMBER 30, 2006.
As a shareholder of the funds, 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. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the funds and to compare these costs
with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire period April 1, 2006 through September 30,
2006.
ACTUAL EXPENSES
The first line for each share class in the following tables 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 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 following tables provides
information about hypothetical account values and hypothetical expenses based on
each fund's actual expense ratio and an expenses, which is not each fund's
actual return. The hypothetical 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 each 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 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) MISSISSIPPI MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 0.86% $1,000.00 $1,033.80 $4.38
A ------------------------------------------------------------------------
Hypothetical (h) 0.86% $1,000.00 $1,020.76 $4.36
- --------------------------------------------------------------------------------
Actual 1.62% $1,000.00 $1,029.90 $8.24
B ------------------------------------------------------------------------
Hypothetical (h) 1.62% $1,000.00 $1,016.95 $8.19
MFS(R) NEW YORK MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 1.06% $1,000.00 $1,033.00 $5.40
A ------------------------------------------------------------------------
Hypothetical (h) 1.06% $1,000.00 $1,019.75 $5.37
- --------------------------------------------------------------------------------
Actual 1.81% $1,000.00 $1,029.20 $9.21
B ------------------------------------------------------------------------
Hypothetical (h) 1.81% $1,000.00 $1,015.99 $9.15
- --------------------------------------------------------------------------------
Actual 1.82% $1,000.00 $1,029.10 $9.26
C ------------------------------------------------------------------------
Hypothetical (h) 1.82% $1,000.00 $1,015.94 $9.20
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 1.12% $1,000.00 $1,030.10 $5.70
A ------------------------------------------------------------------------
Hypothetical (h) 1.12% $1,000.00 $1,019.45 $5.67
- --------------------------------------------------------------------------------
Actual 1.78% $1,000.00 $1,027.60 $9.05
B ------------------------------------------------------------------------
Hypothetical (h) 1.78% $1,000.00 $1,016.14 $9.00
- --------------------------------------------------------------------------------
Actual 1.77% $1,000.00 $1,027.60 $9.00
C ------------------------------------------------------------------------
Hypothetical (h) 1.77% $1,000.00 $1,016.19 $8.95
- -------------------------------------------------------------------------
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 0.81% $1,000.00 $1,032.20 $4.13
A ------------------------------------------------------------------------
Hypothetical (h) 0.81% $1,000.00 $1,021.01 $4.10
- --------------------------------------------------------------------------------
Actual 1.57% $1,000.00 $1,028.30 $7.98
B ------------------------------------------------------------------------
Hypothetical (h) 1.57% $1,000.00 $1,017.20 $7.94
- --------------------------------------------------------------------------------
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 1.13% $1,000.00 $1,029.30 $5.75
A ------------------------------------------------------------------------
Hypothetical (h) 1.13% $1,000.00 $1,019.40 $5.72
- --------------------------------------------------------------------------------
Actual 1.79% $1,000.00 $1,026.00 $9.09
B ------------------------------------------------------------------------
Hypothetical (h) 1.79% $1,000.00 $1,016.09 $9.05
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, 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(R) TENNESSEE MUNICIPAL BOND FUND (Not Restated)
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 0.93% $1,000.00 $1,028.80 $4.73
A ------------------------------------------------------------------------
Hypothetical (h) 0.93% $1,000.00 $1,020.41 $4.71
- --------------------------------------------------------------------------------
Actual 1.58% $1,000.00 $1,024.50 $8.02
B ------------------------------------------------------------------------
Hypothetical (h) 1.58% $1,000.00 $1,017.15 $7.99
- --------------------------------------------------------------------------------
MFS(R) VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 1.08% $1,000.00 $1,028.90 $5.49
A ------------------------------------------------------------------------
Hypothetical (h) 1.08% $1,000.00 $1,019.65 $5.47
- --------------------------------------------------------------------------------
Actual 1.74% $1,000.00 $1,025.60 $8.84
B ------------------------------------------------------------------------
Hypothetical (h) 1.74% $1,000.00 $1,016.34 $8.80
- --------------------------------------------------------------------------------
Actual 1.73% $1,000.00 $1,025.60 $8.78
C ------------------------------------------------------------------------
Hypothetical (h) 1.73% $1,000.00 $1,016.39 $8.74
- --------------------------------------------------------------------------------
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 4/01/06-
Class Ratio 4/01/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------
Actual 1.16% $1,000.00 $1,029.70 $5.90
A ------------------------------------------------------------------------
Hypothetical (h) 1.16% $1,000.00 $1,019.25 $5.87
- --------------------------------------------------------------------------------
Actual 1.81% $1,000.00 $1,027.20 $9.20
B ------------------------------------------------------------------------
Hypothetical (h) 1.81% $1,000.00 $1,015.99 $9.15
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.3%
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 1.9%
- ----------------------------------------------------------------------------------------------------------
Jackson, MS, Municipal Airport Authority,
Airport Rev., "A ", AMBAC, 5%, 2031 $ 1,510,000 $ 1,589,290
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 15.9%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public
Improvement, "A ", 5.25%, 2027 $ 800,000 $ 858,592
Commonwealth of Puerto Rico, FGIC, 5.5%, 2016 (u) 6,220,000 7,106,537
Hinds County, MS, MBIA, 6.25%, 2010 1,660,000 1,798,743
Hinds County, MS, MBIA, 6.25%, 2011 1,285,000 1,418,203
Mississippi Development Bank Special
Obligations (Jackson, Mississippi) FSA,
5.25%, 2020 620,000 696,372
Mississippi Development Bank Special
Obligations, Harrison County Mississippi
Highway Construction, "N ", FGIC, 5%, 2026 1,000,000 1,053,640
Puerto Rico Commonwealth Public
Improvement, "A ", CIFG, 5%, 2025 500,000 532,290
- ----------------------------------------------------------------------------------------------------------
$ 13,464,377
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 3.1%
- ----------------------------------------------------------------------------------------------------------
Mississippi Capital Improvement, "I ",
6%, 2009 (c) $ 1,000,000 $ 1,070,140
Puerto Rico Municipal Finance Agency,
FSA, 5.5%, 2009 (c)(u) 1,500,000 1,594,800
- ----------------------------------------------------------------------------------------------------------
$ 2,664,940
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.9%
- ----------------------------------------------------------------------------------------------------------
Biloxi, MS, Public School District, MBIA,
5%, 2021 $ 1,000,000 $ 1,036,580
Jackson, MS, Public School District, "B",
AMBAC, 5.75%, 2010 (c) 1,000,000 1,081,590
Jackson, MS, Public School District, "B",
AMBAC, 0%, 2022 2,000,000 886,580
Jackson, MS, Public School District, "B",
AMBAC, 0%, 2023 1,000,000 415,170
Madison County, MS, School District, "A",
MBIA, 5.875%, 2009 (c) 1,500,000 1,596,795
- ----------------------------------------------------------------------------------------------------------
$ 5,016,715
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 17.6%
- ----------------------------------------------------------------------------------------------------------
Alcorn County, MS, Corinth Hospital Rev.
(Magnolia Regional Health Center), AMBAC,
5.75%, 2013 $ 885,000 $ 894,717
Corinth & Alcorn County, MS, Hospital Rev.
(Magnolia Regional Health Center),
5.5%, 2021 400,000 405,184
Gulfport, MS, Hospital Facilities Rev.
(Memorial
Hospital), 5.75%, 2031 500,000 518,383
Gulfport, MS, Hospital Facilities Rev.
(Memorial
Hospital) MBIA, 6.125%, 2015 2,250,000 2,252,205
Gulfport, MS, Hospital Facilities Rev.
(Memorial
Hospital) MBIA, 6.2%, 2018 1,000,000 1,001,020
Hinds County, MS, Rev. (Methodist Hospital &
Rehabilitation) AMBAC, 5.6%, 2012 2,055,000 2,146,612
Jones County, MS, Hospital Rev. (South Central
Regional Medical Center), 5.5%, 2007 (c) 1,000,000 1,021,660
Mississippi Development Bank Special
Obligations (Adams County Hospital) FSA,
5.75%, 2016 1,000,000 1,011,450
Mississippi Development Bank Special
Obligations (Covington Hospital Nursing
Home), "A", AMBAC, 5%, 2031 500,000 522,720
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist Medical Center) MBIA,
6.5%, 2010 1,190,000 1,198,378
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist Medical Center) MBIA,
6%, 2013 750,000 755,003
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist Memorial Healthcare),
"B-1 ", 5%, 2024 1,000,000 1,030,910
Mississippi Hospital Equipment & Facilities
Authority Rev. (Forrest County General
Hospital) FSA, 5.625%, 2020 1,000,000 1,078,110
Mississippi Hospital Equipment & Facilities
Authority Rev. Refunding & Improvement,
Hospital South Central, 5.25%, 2031 500,000 522,390
Mississippi Hospital Equipment & Facilities
Authority Rev., Refunding & Improvement,
Southwest Regional Medical Center,
5.5%, 2019 250,000 263,798
Mississippi Hospital Equipment & Facilities
Authority, Refunding & Improvement,
Southwest Regional Medical Center,
5.75%, 2023 250,000 265,120
- ----------------------------------------------------------------------------------------------------------
$ 14,887,660
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.3%
- ----------------------------------------------------------------------------------------------------------
Mississippi Business Finance Corp. (Solid
Waste Management, Inc.), 4.4%, 2027 $ 250,000 $ 250,885
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 210,000 228,875
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 3.3%
- ----------------------------------------------------------------------------------------------------------
Jones County, MS, Solid Waste Disposal Rev.
(International Paper Co.) "A", 5.8%, 2021 $ 500,000 $ 514,200
Lowndes County, MS, Solid Waste Disposal &
Pollution Control Rev. (Weyerhaeuser Co.),
6.8%, 2022 1,250,000 1,525,675
Warren County, MS, Environmental
Improvement Rev. (International Paper Co.),
"A", 4.4%, 2015 750,000 737,558
- ----------------------------------------------------------------------------------------------------------
$ 2,777,433
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.4%
- ----------------------------------------------------------------------------------------------------------
Mississippi Development Bank, Special
Obligation (Diamond Lakes Utilities),
6.25%, 2017 $ 1,150,000 $ 1,180,280
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 6.3%
- ----------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family
Rev., "A ", GNMA, 6.3%, 2031 $ 195,000 $ 206,774
Mississippi Home Corp. Rev., Single Family
Rev., "A-2 ", GNMA, 5.3%, 2023 690,000 705,594
Mississippi Home Corp. Rev., Single Family
Rev., "A-2 ", GNMA, 6.95%, 2031 275,000 279,285
Mississippi Home Corp. Rev., Single Family
Rev., "A-2 ", GNMA, 6.5%, 2032 290,000 297,836
Mississippi Home Corp. Rev., Single Family
Rev., "B ", GNMA, 6.625%, 2027 215,000 216,170
Mississippi Home Corp. Rev., Single Family
Rev., "B ", GNMA, 5.3%, 2035 785,000 803,455
Mississippi Home Corp. Rev., Single Family
Rev., "B-2 ", GNMA, 6.375%, 2032 485,000 502,649
Mississippi Home Corp. Rev., Single Family
Rev., "B-2 ", GNMA, 6.45%, 2033 520,000 541,029
Mississippi Home Corp. Rev., Single Family
Rev., "C", GNMA, 4.95%, 2025 825,000 842,391
Mississippi Home Corp. Rev., Single Family
Rev., "F", GNMA, 7.55%, 2027 154,000 162,293
Mississippi Home Corp. Rev., Single Family
Rev., GNMA, 6.5%, 2024 825,000 826,427
- ----------------------------------------------------------------------------------------------------------
$ 5,383,903
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 15.0%
- ----------------------------------------------------------------------------------------------------------
Lamar County, MS, (Jail Project) MBIA,
5.1%, 2021 $ 430,000 $ 450,545
Mississippi Development Bank Special
Obligations (Correctional Facilities), "A",
AMBAC, 5.125%, 2025 1,000,000 1,056,090
Mississippi Development Bank Special
Obligations (DeSoto County Regional Utility
Authority), 5.25%, 2031 905,000 951,427
Mississippi Development Bank Special
Obligations (Hinds County Public
Improvements), FSA, 5.25%, 2030 1,110,000 1,190,519
Mississippi Development Bank Special
Obligations (Mississippi, Ltd. Tax Hospital
Rev.), 5.1%, 2020 1,000,000 1,046,920
Gulfport, MS, Hospital Facilities Rev.
(Memorial
State & Local Agencies - continued
Mississippi Development Bank Special
Obligations (Natchez Mississippi Convention
Center) AMBAC, 6%, 2013 (c) 750,000 861,773
Mississippi Development Bank Special
Obligations (Public Improvement Board),
5%, 2023 750,000 754,365
Mississippi Development Bank Special
Obligations (Southaven, MS, Recreation
Facilities), 5.875%, 2014 375,000 394,500
Mississippi Development Bank Special
Obligations (Southaven, MS, Recreation
Facilities), 6.2%, 2020 400,000 423,392
Mississippi Development Bank Special
Obligations (Tunica County Building Project),
AMBAC, 5%, 2026 1,695,000 1,789,886
Mississippi Development Bank Special
Obligations (Tupelo Fairgrounds), "A", AMBAC,
5%, 2017 785,000 819,587
Puerto Rico Public Finance Corp.,
AMBAC, 5.375%, 2013 (u) 1,000,000 1,104,830
Walnut Grove, MS, Correctional Authority,
AMBAC, 6%, 2009 (c) 1,750,000 1,904,140
- ----------------------------------------------------------------------------------------------------------
$ 12,747,974
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 1.1%
- ----------------------------------------------------------------------------------------------------------
Puerto Rico Convention Center, District
Authority Hotel Occupancy Tax Rev., "A",
CIFG, 4.5%, 2036 $ 750,000 $ 757,620
Virgin Islands Public Finance Authority Rev.,
"A", 5.25%, 2024 135,000 142,289
- ----------------------------------------------------------------------------------------------------------
$ 899,909
- ----------------------------------------------------------------------------------------------------------
Tobacco - 0.7%
- ----------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 230,000 $ 237,282
Guam Economic Development Authority
Tobacco Settlement, "B", 5.5%, 2041 350,000 358,992
- ----------------------------------------------------------------------------------------------------------
$ 596,274
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.5%
- ----------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special
Obligations, Madison County (Road & Bridge)
AMBAC, 5.1%, 2013 (c) $ 1,175,000 $ 1,277,014
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 11.3%
- ----------------------------------------------------------------------------------------------------------
Jackson State University, Educational Building
Corp. Rev., (Campus Facilities), "A", FGIC,
5%, 2029 $ 3,100,000 $ 3,230,882
Jackson State University, Educational Building
Corp. Rev., (Student Recreation Center),
AMBAC, 5.125%, 2027 750,000 787,943
Medical Center, Educational Building Corp.
Rev. (University of Mississippi Medical Center),
"B", AMBAC, 5.5%, 2023 1,000,000 1,159,110
Mississippi State University Educational
Building Corp. Rev., AMBAC, 5.5%, 2016 1,000,000 1,076,530
Mississippi State University Educational
Building Corp. Rev., AMBAC, 5%, 2021 250,000 260,300
Mississippi Valley State University, Educational
Building Corp., MBIA, 5.5%, 2021 890,000 954,231
University of Mississippi, Educational Building
Corp. (Performing Arts Center), AMBAC,
5.25%, 2009 (c) 1,000,000 1,046,080
University of Southern Mississippi, Educational
Building Corp. Rev., "B", FSA, 5%, 2032 1,000,000 1,055,240
- ----------------------------------------------------------------------------------------------------------
$ 9,570,316
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.1%
- ----------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC,
5.25%, 2013 (u) $ 2,000,000 $ 2,123,060
Mississippi Development Bank Special
Obligations (Municipal Energy Agency Power
Supply Project), "A", XLCA, 5%, 2026 1,000,000 1,054,450
Mississippi Development Bank Special
Obligations (Okolona Electric System),
5.2%, 2011 (c) 1,010,000 1,079,357
Puerto Rico Electric Power Authority Rev., "II",
5.25%, 2031 875,000 922,618
- ----------------------------------------------------------------------------------------------------------
$ 5,179,485
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 12.6%
- ----------------------------------------------------------------------------------------------------------
Harrison County, MS, Wastewater & Solid
Waste Management, FGIC, 4.75%, 2027 $ 1,000,000 $ 1,014,370
Jackson, MS, Water & Sewer Systems Rev.,
FGIC, 5.25%, 2009 (c) 420,000 439,904
Mississippi Development Bank Special
Obligations (Combined Water Sewer & Solid
Waste Management) FSA, 5.25%, 2021 1,270,000 1,384,110
Water & Sewer Utility Revenue - continued
Mississippi Development Bank Special
Obligations (Combined Water Sewer & Solid
Waste Management) FSA, 5.05%, 2027 1,610,000 1,716,614
Mississippi Development Bank Special
Obligations (Gulfport Water & Sewer Project)
FSA, 5.625%, 2012 (c) 500,000 560,495
Mississippi Development Bank Special
Obligations (Gulfport Water & Sewer Project),
"A", FGIC, 5.25%, 2012 (c) 2,000,000 2,170,760
Mississippi Development Bank Special
Obligations (Jackson Water & Sewer System
Project) FSA, 5%, 2029 2,000,000 2,091,580
Mississippi Development Bank Special
Obligations (Jackson Water & Sewer System
Project), FGIC, 5%, 2032 250,000 259,565
Mississippi Development Bank Special
Obligations, Grenada, MS, Water & Sewer
Systems Project, "N", FSA, 5%, 2030 1,000,000 1,052,830
- ----------------------------------------------------------------------------------------------------------
$ 10,690,228
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $84,313,730) $ 88,405,558
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.6%
- ----------------------------------------------------------------------------------------------------------
Jackson County, MS, Pollution Control Rev.
(Chevron USA, Inc.), 3.85%, due 10/02/06 $ 300,000 $ 300,000
Jackson County, MS, Pollution Control Rev.
(Chevron USA, Inc.), 3.85%, due 10/02/06 200,000 200,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $500,000) $ 500,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $84,813,730) (k) $ 88,905,558
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.9)% (4,140,993)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 84,764,565
- ----------------------------------------------------------------------------------------------------------
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 17,217
1/04/19 USD 1,000,000 Citigroup 7-Day BMA 4.307% (fixed rate) (43,423)
11/09/26 USD 850,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 52,238
- -------------------------------------------------------------------------------------------------------------------------
$ 26,032
- -------------------------------------------------------------------------------------------------------------------------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 103.8%
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 3.6%
- ----------------------------------------------------------------------------------------------------------
New York, NY, City Industrial Development
Agency, Special Facilities Rev. (Terminal One
Group), 5.5%, 2024 $ 1,000,000 $ 1,079,560
Port Authority NY & NJ, (120th Series) MBIA,
5.5%, 2018 1,500,000 1,538,565
Port Authority NY & NJ, (132nd Series),
5%, 2033 2,000,000 2,095,300
Port Authority NY & NJ, Special Obligation
Rev. (JFK International), MBIA, 6.25%, 2015 1,000,000 1,175,250
- ----------------------------------------------------------------------------------------------------------
$ 5,888,675
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 8.4%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, XLCA,
5.5%, 2017 (u) $ 2,700,000 $ 3,091,311
Nassau County, NY, Health Systems Rev.
(Nassau County), FSA, 6%, 2009 (c) 1,000,000 1,084,200
New York NY, "N", 5%, 2026 1,500,000 1,578,600
New York, NY, "D", 5%, 2028 2,000,000 2,091,820
New York, NY, "A", 6%, 2010 (c) 990,000 1,080,615
New York, NY, "B", 5.375%, 2017 1,250,000 1,335,762
New York, NY, "C-1", 5.25%, 2025 1,000,000 1,072,420
New York, NY, "G", 5%, 2028 2,000,000 2,092,560
New York, NY, "J", FGIC, 5.5%, 2026 200,000 202,790
New York, NY, Unrefunded, "A", 6%, 2019 10,000 10,795
- ----------------------------------------------------------------------------------------------------------
$ 13,640,873
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 0.1%
- ----------------------------------------------------------------------------------------------------------
Erie County, NY, Public Improvement, "A",
FGIC, 5%, 2019 $ 140,000 $ 147,703
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.6%
- ----------------------------------------------------------------------------------------------------------
Genesee Valley, NY, Central School District
(Angelica Belmont), FGIC, 5.25%, 2028 $ 1,720,000 $ 1,862,296
North Babylon, NY, Union Free School
District, "A", FGIC, 5.5%, 2018 2,415,000 2,565,455
Port Byron, NY, Central School District,
AMBAC, ETM, 7.4%, 2012 (c) 500,000 598,750
Port Byron, NY, Central School District,
AMBAC, ETM, 7.4%, 2013 (c) 500,000 613,140
Port Byron, NY, Central School District,
AMBAC, ETM, 7.4%, 2014 (c) 500,000 626,325
Port Byron, NY, Central School District,
AMBAC, ETM, 7.4%, 2015 (c) 500,000 638,610
Rome, NY, City School District, FSA,
5.5%, 2009 (c) 1,000,000 1,060,900
Washingtonville, NY, Central School Central
District, FGIC, 7.35%, 2008 550,000 585,118
Washingtonville, NY, Central School Central
District, FGIC, 7.35%, 2009 550,000 604,010
- ----------------------------------------------------------------------------------------------------------
$ 9,154,604
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 6.8%
- ----------------------------------------------------------------------------------------------------------
Chautauqua County, NY, Industrial
Development Agency, Civic Facilities Rev.
(Women's Christian Assn.), "A", 6.35%, 2017 $ 155,000 $ 159,016
Chautauqua County, NY, Industrial
Development Agency, Civic Facilities Rev.
(Women's Christian Assn.), "A", 6.4%, 2029 490,000 499,197
Fulton County, NY, Industrial Development
Agency, Civic Facilities Rev. (Nathan Littauer
Hospital), "A", 5.75%, 2009 615,000 624,822
Monroe County, NY, Industrial Development
Agency, Civic Facilities Rev. (Highland
Hospital of Rochester), 5%, 2025 1,000,000 1,028,680
Nassau County, NY, Industrial Development
Agency, Civic Facilities Rev. (North Shore
Health Systems), "D", 5.625%, 2010 500,000 528,140
New York Dormitory Authority Rev.
(Montefiore Medical Center), AMBAC,
5.25%, 2019 785,000 825,687
New York Dormitory Authority Rev. (North
Shore Long Island Jewish Group), 5.5%, 2033 250,000 267,457
New York Dormitory Authority Rev. (White
Plains Hospital), FHA, 5.375%, 2043 1,500,000 1,611,105
New York Dormitory Authority Rev., Non
State Supported Debt (Kaleida Health), FHA,
4.6%, 2027 1,000,000 1,015,020
New York Dormitory Authority Rev., Non
State Supported Debt (Mt. Sinai NYU Health),
5.5%, 2026 250,000 254,250
New York Dormitory Authority Rev., Non
State Supported Debt (Mt. Sinai NYU Health),
"C", 5.5%, 2026 500,000 508,500
New York Dormitory Authority Rev., Non
State Supported Debt (NYU Hospitals Center),
"A", 5%, 2026 800,000 820,944
New York, NY, Industrial Development
Agency, Civic Facilities Rev. (Staten Island
University Hospital), "B", 6.375%, 2031 495,000 517,018
New York, NY, Health & Hospital Corp. Rev.,
"A", 5.25%, 2017 760,000 790,552
Suffolk County, NY, Industrial Development
Agency, Civic Facilities Rev. (Huntington
Hospital), "C", 5.875%, 2032 1,000,000 1,061,970
Yonkers, NY, Industrial Development Agency,
Civic Facilities Rev. (St. John's Riverside
Hospital), "A", 7.125%, 2031 500,000 538,255
- ----------------------------------------------------------------------------------------------------------
$ 11,050,613
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.7%
- ----------------------------------------------------------------------------------------------------------
East Rochester, NY, Housing Authority Rev.
(Woodland Village Project), 5.5%, 2033 $ 400,000 $ 405,580
Suffolk County, NY, Industrial Development
Agency, Civic Facilities Rev. (Gurwin Jewish
Phase II), 6.7%, 2039 385,000 418,430
Westchester County, NY, Industrial
Development Agency, Civic Facilities Rev.,
Continuing Care Retirement (Kendal On
Hudson), "A", 6.5%, 2034 300,000 318,615
- ----------------------------------------------------------------------------------------------------------
$ 1,142,625
- ----------------------------------------------------------------------------------------------------------
Human Services - 0.9%
- ----------------------------------------------------------------------------------------------------------
Nassau County, NY, Industrial Development
Agency, Civic Facility Rev. (Special Needs
Facility), "B-1", 6.5%, 2017 $ 205,000 $ 215,426
New York Dormitory Authority Rev. (Jewish
Board of Families & Children), AMBAC,
5%, 2023 695,000 732,732
New York, NY, Industrial Development
Agency (PSCH, Inc.), 6.375%, 2033 500,000 534,110
- ----------------------------------------------------------------------------------------------------------
$ 1,482,268
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 0.3%
- ----------------------------------------------------------------------------------------------------------
New York, NY, Industrial Development
Agency Rev. (American Airlines, Inc.),
7.625%, 2025 $ 350,000 $ 411,110
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.0%
- ----------------------------------------------------------------------------------------------------------
Onondaga County, NY, Industrial
Development Agency, Sewer Facilities Rev.
(Bristol-Meyers Squibb Co.), 5.75%, 2024 $ 1,000,000 $ 1,157,630
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 430,000 468,648
- ----------------------------------------------------------------------------------------------------------
$ 1,626,278
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.6%
- ----------------------------------------------------------------------------------------------------------
Essex County, NY, Industrial Development
Agency, Pollution Control Rev. (International
Paper Corp.), 5.55%, 2014 $ 750,000 $ 808,725
Essex County, NY, Industrial Development
Agency, Pollution Control Rev. (International
Paper Corp.), 6.15%, 2021 1,000,000 1,026,700
Essex County, NY, Industrial Development
Agency, Pollution Control Rev. (International
Paper Corp.), 6.45%, 2023 700,000 748,671
- ----------------------------------------------------------------------------------------------------------
$ 2,584,096
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.6%
- ----------------------------------------------------------------------------------------------------------
New York Liberty Development Corp. Rev.
(National Sports Museum), 6.125%, 2019 $ 500,000 $ 517,385
New York, NY, City Industrial Development
Agency Rev., Liberty Bonds (IAC/
InterActiveCorp), 5%, 2035 500,000 504,100
- ----------------------------------------------------------------------------------------------------------
$ 1,021,485
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.6%
- ----------------------------------------------------------------------------------------------------------
New York, NY, Industrial Development
Agency, Civic Facilities Rev. (United Jewish
Appeal), "A", 5%, 2027 $ 1,000,000 $ 1,052,340
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.0%
- ----------------------------------------------------------------------------------------------------------
New York Housing Finance Agency Rev.
Multi-Family Housing, "A ", 5.1%, 2041 $ 840,000 $ 861,260
New York, NY, City Housing Development
Corp., "C ", 5%, 2026 500,000 518,065
New York, NY, City Housing Development
Corp., "E ", 4.65%, 2025 1,000,000 1,021,810
New York, NY, Housing Development Corp.,
Multi-Family Housing Rev., 5.5%, 2034 2,000,000 2,067,680
New York, NY, Housing Development Corp.,
Multi-Family Housing Rev., "C ", 5.6%, 2019 400,000 421,636
- ----------------------------------------------------------------------------------------------------------
$ 4,890,451
- ----------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.3%
- ----------------------------------------------------------------------------------------------------------
Schenectady, NY, Metroplex Development
Authority Rev., "A ", MBIA, 5.375%, 2021 $ 475,000 $ 516,757
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 3.9%
- ----------------------------------------------------------------------------------------------------------
New York Mortgage Agency Rev.,
4.6%, 2015 $ 2,000,000 $ 2,032,980
New York Mortgage Agency Rev.,
5.1%, 2024 2,000,000 2,055,100
New York Mortgage Agency Rev., "130 ",
4.75%, 2030 1,500,000 1,509,375
New York Mortgage Agency Rev., "B ",
5.85%, 2018 690,000 719,263
- ----------------------------------------------------------------------------------------------------------
$ 6,316,718
- ----------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.6%
- ----------------------------------------------------------------------------------------------------------
Niagara County, NY, Industrial Development
Agency, Solid Waste Disposal Rev., (American
Ref-fuel), "C ", 5.625%, 2024 $ 850,000 $ 912,365
- ----------------------------------------------------------------------------------------------------------
State & Agency - Other - 5.8%
- ----------------------------------------------------------------------------------------------------------
New York Dormitory Authority (City
University), AMBAC, 5.75%, 2018 $ 800,000 $ 921,840
New York Dormitory Authority (Pace
University), MBIA, 6%, 2010 (c) 1,700,000 1,863,285
New York Dormitory Authority (School
Program), 6.25%, 2020 1,690,000 1,850,803
New York Dormitory Authority (State
University), 5.375%, 2010 (c) 1,500,000 1,608,405
New York Dormitory Authority (State
University), 5.875%, 2017 1,130,000 1,315,987
New York Dormitory Authority (Upstate
Community Colleges), "A ", FSA, 6%, 2010 (c) 1,010,000 1,107,010
New York Municipal Bond Bank Agency,
Special Program Rev., "A ", AMBAC,
5.25%, 2015 715,000 762,834
- ----------------------------------------------------------------------------------------------------------
$ 9,430,164
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 12.7%
- ----------------------------------------------------------------------------------------------------------
New York City Industrial Development
Agency (Yankee Stadium), FGIC, 5%, 2031 $ 1,000,000 $ 1,059,270
New York Dormitory Authority (City
University), "A ", 5.625%, 2016 2,450,000 2,776,903
New York Dormitory Authority (Judicial
Institute at Pace), AMBAC, 5.5%, 2020 2,500,000 2,669,400
New York Dormitory Authority Rev., Mental
Health Services, "A ", MBIA, 5.75%, 2010 (c) 5,000 5,355
New York Dormitory Authority Rev., Mental
Health Services, "B ", MBIA, 5.25%, 2011 (c) 385,000 414,699
New York Dormitory Authority Rev., Mental
Health Services, "D ", FSA, 5.25%, 2010 (c) 35,000 37,207
New York Dormitory Authority Rev., Mental
Health Services, Unrefunded, "B ", MBIA,
5.25%, 2031 830,000 873,160
New York Dormitory Authority Rev., Mental
Health Services, Unrefunded, "D ", FSA,
5.25%, 2030 70,000 73,638
New York Dormitory Authority, Mental Health
Services Facilities Improvement, "B ", MBIA,
5.25%, 2011 (c) 785,000 845,555
New York Dormitory Authority, Mental Health
Services Facilities Improvement, "D ", FSA,
5.25%, 2010 (c) 895,000 951,439
New York Municipal Bond Bank Agency,
Special School Purpose Rev., 5.25%, 2022 1,000,000 1,069,370
New York Urban Development Corp.
(Correctional Facilities), AMBAC, 0%, 2009 5,000,000 4,600,450
New York Urban Development Corp. (State
Facilities), AMBAC, 5.6%, 2015 2,750,000 3,058,440
Tobacco Settlement Financing Corp., NY,
"A-1 ", 5.5%, 2018 2,000,000 2,165,180
- ----------------------------------------------------------------------------------------------------------
$ 20,600,066
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 2.4%
- ----------------------------------------------------------------------------------------------------------
New York, NY, Transitional Finance Authority
Rev., "A ", 5.75%, 2009 (c) $ 2,730,000 $ 2,922,902
New York, NY, Transitional Finance Authority
Rev., "A ", 5%, 2026 1,000,000 1,051,230
- ----------------------------------------------------------------------------------------------------------
$ 3,974,132
- ----------------------------------------------------------------------------------------------------------
Tobacco - 2.0%
- ----------------------------------------------------------------------------------------------------------
Erie County, NY, Tobacco Asset Securitization
Corp., 0%, 2047 $ 8,000,000 $ 726,000
Guam Economic Development Authority
Tobacco Settlement, "B ", 5.5%, 2041 400,000 410,276
New York County Tobacco Trust II,
5.625%, 2035 800,000 827,704
Rockland Tobacco Asset Securitization Corp.,
NY, Tobacco Asset Backed, "C ", 0%, 2060 5,000,000 91,400
TSASC, Inc., NY, "1 ", 5%, 2034 750,000 759,345
Westchester, NY, Tobacco Asset Securitization
Corp., 5.125%, 2045 500,000 505,440
- ----------------------------------------------------------------------------------------------------------
$ 3,320,165
- ----------------------------------------------------------------------------------------------------------
Toll Roads - 14.0%
- ----------------------------------------------------------------------------------------------------------
New York Thruway Authority, General Rev.,
"E ", 5.25%, 2008 (c) $ 200,000 $ 206,270
New York Thruway Authority, General Rev.,
"E ", 5.25%, 2015 1,300,000 1,339,299
Niagara Falls, NY, Bridge Commission Toll
Rev., FGIC, 5.25%, 2015 (u) 7,000,000 7,595,490
Triborough Bridge & Tunnel Authority Rev.,
NY, "B ", 5%, 2032 1,000,000 1,036,690
Triborough Bridge & Tunnel Authority Rev.,
NY, ETM, 6%, 2012 (c) 1,000,000 1,084,020
Triborough Bridge & Tunnel Authority Rev.,
NY, ETM, 5.5%, 2017 (c)(u) 10,000,000 11,202,300
Triborough Bridge & Tunnel Authority Rev.,
NY, Unrefunded "A ", MBIA, 5%, 2032 310,000 322,722
- ----------------------------------------------------------------------------------------------------------
$ 22,786,791
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 8.5%
- ----------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority Rev.,
NY, "A ", 5%, 2026 $ 1,500,000 $ 1,591,635
Metropolitan Transportation Authority Rev.,
NY, AMBAC, ETM, 5.75%, 2013 (c) 825,000 894,151
Metropolitan Transportation Authority Rev.,
NY, Dedicated Tax Fund Rev., 5.5%, 2015 (c) 750,000 853,005
Metropolitan Transportation Authority Rev.,
NY, ETM, 7.375%, 2008 (c) 755,000 787,699
Metropolitan Transportation Authority Rev.,
NY, FGIC, 5.875%, 2010 (c) 2,000,000 2,155,520
Metropolitan Transportation Authority Rev.,
NY, FGIC, 5%, 2025 2,500,000 2,621,750
Metropolitan Transportation Authority, NY,
Commuter Facilities Rev., FGIC,
5.25%, 2011 (c) 1,000,000 1,075,340
New York Thruway Authority, General Rev.,
Highway & Bridges, "A ", FSA, 5.8%, 2010 (c) 20,000 21,684
New York Thruway Authority, General Rev.,
Highway & Bridges, "B-1 ", FGIC,
5.4%, 2010 (c) 2,000,000 2,142,280
Puerto Rico Highway & Transportation
Authority Rev., "Y ", 5%, 2036 1,700,000 1,760,894
- ----------------------------------------------------------------------------------------------------------
$ 13,903,958
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 4.7%
- ----------------------------------------------------------------------------------------------------------
Amherst, NY, Industrial Development Agency
Rev. (Daemen College), "A ", 6%, 2011 (c) $ 1,000,000 $ 1,120,120
Cattaraugus County, NY, Industrial
Development Agency Rev. (Jamestown
Community College), "A ", 6.4%, 2010 (c) 500,000 557,505
Hempstead Town, NY, Industrial Development
Agency, Civic Facilities Rev. (Hofstra
University), MBIA, 5.8%, 2015 1,500,000 1,532,010
New York Dormitory Authority Rev. (Fordham
University), AMBAC, 7.2%, 2015 20,000 20,028
New York Dormitory Authority Rev. (St.
John's University), "A ", MBIA, 5%, 2017 300,000 317,844
New York Dormitory Authority Rev. (Yeshiva
University), AMBAC, 5.125%, 2034 1,000,000 1,065,290
Onondaga County, NY, Industrial
Development Agency Rev. (Le Moyne
College), 5.625%, 2021 750,000 808,733
Schenectady, NY, Industrial Development
Agency, Civic Facilities Rev. (Union College),
"A ", AMBAC, 5%, 2032 2,000,000 2,085,800
Utica, NY, Industrial Development Agency,
Civic Facilities Rev. (Utica College), "A ",
5.3%, 2008 75,000 75,813
- ----------------------------------------------------------------------------------------------------------
$ 7,583,143
- ----------------------------------------------------------------------------------------------------------
Universities - Dormitories - 0.6%
- ----------------------------------------------------------------------------------------------------------
New York Dormitory Authority Rev. (New
York University), "A ", FGIC, 5%, 2029 $ 1,000,000 $ 1,056,400
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 1.4%
- ----------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Water
Facilities Rev. (NY American Water Co.),
8.85%, 2015 $ 2,250,000 $ 2,257,515
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 3.6%
- ----------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., "B-1 ",
AMBAC, 5.25%, 2014 (u) $ 1,000,000 $ 1,060,950
Long Island Power Authority, Electrical
Systems Rev., "C ", 5.5%, 2021 400,000 435,888
New York Power Authority Rev.,
5.25%, 2040 3,000,000 3,140,820
New York Power Authority Rev., "A ",
5%, 2021 1,000,000 1,059,280
Virgin Islands Water & Power Authority Rev.,
5.5%, 2017 200,000 204,796
- ----------------------------------------------------------------------------------------------------------
$ 5,901,734
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 10.1%
- ----------------------------------------------------------------------------------------------------------
New York Environmental Facilities Corp.,
Clean Water & Drinking Rev., 5%, 2024 $ 1,005,000 $ 1,056,758
New York Environmental Facilities Corp.,
Clean Water & Drinking Rev., 5%, 2025 1,500,000 1,583,670
New York Environmental Facilities Corp.,
Clean Water & Drinking Rev., 5%, 2029 2,000,000 2,117,680
New York Environmental Facilities Corp.,
Pollution Control Rev., 5.75%, 2010 175,000 188,723
New York Environmental Facilities Corp.,
Pollution Control Rev., 6.875%, 2010 165,000 165,185
New York Environmental Facilities Corp.,
Pollution Control Rev., 7.25%, 2010 70,000 70,088
New York Environmental Facilities Corp.,
Pollution Control Rev., ETM, 5.75%, 2010 (c) 945,000 1,018,426
New York Environmental Facilities Corp.,
Pollution Control Rev., ETM, 5.75%, 2010 (c) 1,115,000 1,201,635
New York Environmental Facilities Corp.,
Water Facilities Rev., 6%, 2031 1,005,000 1,078,606
New York Environmental Facilities Corp.,
Water Facilities Rev. (Spring Valley Water
Co.), "B ", AMBAC, 6.15%, 2024 1,500,000 1,501,485
New York, NY, Municipal Water & Sewer
Finance Authority Rev., "A ", 5%, 2027 1,500,000 1,569,330
New York, NY, Municipal Water & Sewer
Finance Authority Rev., "A ", ETM,
6%, 2010 (c) 620,000 673,506
New York, NY, Municipal Water & Sewer
Finance Authority Rev., AMBAC, ETM,
6.75%, 2014 (c) 1,000,000 1,152,280
New York, NY, Municipal Water & Sewer
Finance Authority Rev., FGIC, 5.25%, 2033 2,000,000 2,109,480
Suffolk County, NY, Water Authority Rev.,
MBIA, 5.1%, 2012 660,000 710,239
Suffolk County, NY, Water Authority Rev.,
MBIA, ETM, 5.1%, 2012 (c) 235,000 253,638
- ----------------------------------------------------------------------------------------------------------
$ 16,450,729
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $157,529,322) $169,103,758
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.5%
- ----------------------------------------------------------------------------------------------------------
New York, NY, Job Development Authority
Rev., 3.8%, due 10/02/06 $ 800,000 $ 800,000
New York, NY, Municipal Water & Sewer
Finance Authority Rev., 3.8%, due 10/02/06 1,600,000 1,600,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $2,400,000) $ 2,400,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $159,929,322) (k) $171,503,758
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.3)% (8,655,341)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $162,848,417
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 25,823
3/01/19 USD 1,500,000 Merrill Lynch 7-Day BMA 3.976% (fixed rate) (20,911)
11/09/26 USD 1,650,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 101,402
---------
$ 106,314
---------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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.
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 5.4%
- ----------------------------------------------------------------------------------------------------------
Charlotte, NC, Airport Rev., "A ", MBIA,
5%, 2029 $ 2,000,000 $ 2,108,735
Charlotte, NC, Airport Rev., "A ", MBIA,
5%, 2034 4,485,000 4,710,679
Charlotte, NC, Airport Rev., "B ", MBIA,
5.875%, 2019 1,000,000 1,067,350
Charlotte, NC, Airport Rev., "B ", MBIA,
5.875%, 2020 3,775,000 4,026,189
Raleigh Durham, NC, Airport Authority Rev.,
"A ", AMBAC, 5%, 2030 3,000,000 3,175,650
Raleigh Durham, NC, Airport Authority Rev.,
"A ", FGIC, 5.25%, 2018 2,700,000 2,889,162
- ----------------------------------------------------------------------------------------------------------
$ 17,977,765
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 1.6%
- ----------------------------------------------------------------------------------------------------------
Charlotte, NC, 5.5%, 2010 (c) $ 3,100,000 $ 3,361,144
Puerto Rico Commonwealth, Public
Improvement, "A ", 5.25%, 2030 2,000,000 2,135,000
- ----------------------------------------------------------------------------------------------------------
$ 5,496,144
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 1.4%
- ----------------------------------------------------------------------------------------------------------
New Hanover County, NC, Public
Improvement, 5.8%, 2010 (c) $ 4,200,000 $ 4,629,954
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 3.8%
- ----------------------------------------------------------------------------------------------------------
Brunswick County, NC, FGIC, 5%, 2020 $ 2,800,000 $ 2,980,852
Cumberland County, NC, 5.8%, 2010 (c) 4,400,000 4,787,112
Johnston County, NC, FGIC, 5.6%, 2010 (c) 2,000,000 2,166,620
New Hanover County, NC, Public
Improvement, 5%, 2021 1,435,000 1,515,877
New Hanover County, NC, School
Improvement, 5%, 2019 1,255,000 1,339,185
- ----------------------------------------------------------------------------------------------------------
$ 12,789,646
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 21.5%
- ----------------------------------------------------------------------------------------------------------
Catawba County, NC, Hospital Rev. (Catawba
Memorial Hospital), AMBAC, 5%, 2017 $ 1,200,000 $ 1,248,312
Charlotte-Mecklenburg, NC, Healthcare
Systems Rev. (Carolinas Healthcare), "A ",
5.125%, 2022 1,000,000 1,023,750
Charlotte-Mecklenburg, NC, Healthcare
Systems Rev. (Carolinas Healthcare), "A ",
5%, 2031 3,500,000 3,626,140
Cumberland County, NC, Hospital Facilities
Rev. (Cumberland Hospital), MBIA, ETM,
0%, 2009 (c) 1,800,000 1,614,438
New Hanover County, NC, Hospital Rev.
(New Hanover Regional Medical Center),
MBIA, 5%, 2019 6,225,000 6,439,887
North Carolina Medical Care Commission
(Cleveland County Healthcare), "A ", AMBAC,
5%, 2035 1,305,000 1,360,162
North Carolina Medical Care Commission
(Morehead Memorial Hospital), FHA,
5%, 2026 2,000,000 2,108,260
North Carolina Medical Care Commission
(Northeast Medical Center), 5.25%, 2029 2,000,000 2,118,600
North Carolina Medical Care Commission
(Novant Health), "A ", MBIA, 5%, 2018 1,975,000 2,040,294
North Carolina Medical Care Commission,
Health Care Facilities Rev. (Wakemed),
AMBAC, 5%, 2021 3,500,000 3,695,440
North Carolina Medical Care Commission,
Hospital Rev. (Betsy Johnson Health Care
System), FSA, 5.125%, 2032 1,500,000 1,585,170
North Carolina Medical Care Commission,
Hospital Rev. (Gaston Memorial Hospital),
5.5%, 2015 5,790,000 5,933,592
North Carolina Medical Care Commission,
Hospital Rev. (Gaston Memorial Hospital),
5.5%, 2019 6,500,000 6,661,200
North Carolina Medical Care Commission,
Hospital Rev. (Mission-St. Joseph Health
Systems), 5.5%, 2021 2,825,000 3,023,626
North Carolina Medical Care Commission,
Hospital Rev. (Mission-St. Joseph Health
Systems), MBIA, 5.1%, 2018 1,500,000 1,551,270
North Carolina Medical Care Commission,
Hospital Rev. (Pitt County Memorial Hospital),
"B ", 5%, 2008 (c) 3,000,000 3,117,930
North Carolina Medical Care Commission,
Hospital Rev. (Rex Healthcare), AMBAC,
5%, 2017 5,000,000 5,152,050
North Carolina Medical Care Commission,
Hospital Rev. (Southeastern Regional Medical
Center), 5.375%, 2032 3,330,000 3,497,799
North Carolina Medical Care Commission,
Hospital Rev. (Wilson Memorial Hospital),
AMBAC, 0%, 2013 1,000,000 747,810
North Carolina Medical Care Commission,
Hospital Rev. (Wilson Memorial Hospital),
AMBAC, 0%, 2015 1,140,000 776,249
Northern Hospital District, Surry County, NC,
Health Care Facilities Rev., ASST GTY,
5.5%, 2019 1,190,000 1,251,321
Northern Hospital District, Surry County, NC,
Health Care Facilities Rev., ASST GTY,
5.1%, 2021 1,000,000 1,047,780
Onslow County, NC, Hospital Authority
(Onslow Memorial Hospital Project), FHA,
MBIA, 5%, 2026 1,315,000 1,401,225
Pitt County, NC, Rev., Pitt County Memorial
Hospital, ETM, 5.25%, 2021 (c) 10,135,000 10,892,490
- ----------------------------------------------------------------------------------------------------------
$ 71,914,795
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.3%
- ----------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commission,
Health Care Facilities Rev. (Arbor Acres
Community), 6.375%, 2032 $ 1,000,000 $ 1,051,320
North Carolina Medical Care Commission,
Health Care Facilities Rev. (Deerfield), "A ",
5%, 2023 1,000,000 1,041,750
North Carolina Medical Care Commission,
Health Care Facilities Rev. (First Mortgage-
Presbyterian Homes), 5.5%, 2031 750,000 779,130
North Carolina Medical Care Commission,
Health Care Facilities Rev. (Givens Estates),
6.5%, 2032 800,000 859,720
North Carolina Medical Care Commission,
Health Care Facilities Rev., "A ",
6.125%, 2035 750,000 787,763
- ----------------------------------------------------------------------------------------------------------
$ 4,519,683
- ----------------------------------------------------------------------------------------------------------
Human Services - 0.7%
- ----------------------------------------------------------------------------------------------------------
Cumberland County, NC, Finance Corp.,
Installment Payment Rev. (Detention Center
& Mental Health), AMBAC, 5.625%, 2019 $ 2,125,000 $ 2,247,931
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 $ 860,000 $ 937,297
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.2%
- ----------------------------------------------------------------------------------------------------------
Columbus County, NC, Industrial Facilities &
Pollution Control Financing Authority Rev.
(International Paper Co.), "A ", 5.8%, 2016 $ 2,000,000 $ 2,069,640
Haywood County, NC, Industrial Facilities &
Pollution Control Financing Authority Rev.
(Champion International Corp.), "A ",
5.75%, 2025 5,400,000 5,451,894
- ----------------------------------------------------------------------------------------------------------
$ 7,521,534
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.3%
- ----------------------------------------------------------------------------------------------------------
Charlotte, NC, Housing Authority Rev.,
Mortgage Rocky Branch II, GNMA,
4.65%, 2035 $ 2,000,000 $ 2,009,280
Mecklenburg County, NC (Little Rock
Apartments), FNMA, 5.15%, 2022 1,000,000 1,049,400
North Carolina Housing Finance Agency, "H ",
FHA, 6.05%, 2028 3,500,000 3,554,110
North Carolina Medical Care Commission,
Health Care Facilities Rev., "A ", 5.8%, 2034 1,000,000 1,093,460
- ----------------------------------------------------------------------------------------------------------
$ 7,706,250
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 6.1%
- ----------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev.,
"15-A ", FSA, 4.95%, 2032 $ 435,000 $ 441,917
North Carolina Housing Finance Agency Rev.,
"19-A ", 5.1%, 2030 2,430,000 2,491,892
North Carolina Housing Finance Agency Rev.,
"22-A ", 4.8%, 2026 2,000,000 2,042,660
North Carolina Housing Finance Agency Rev.,
"23-A ", 4.8%, 2037 3,000,000 3,031,380
North Carolina Housing Finance Agency Rev.,
"24-A ", 4.75%, 2026 2,000,000 2,036,280
North Carolina Housing Finance Agency Rev.,
"25-A ", 5.75%, 2037 2,000,000 2,146,900
North Carolina Housing Finance Agency Rev.,
"5-A ", 5.55%, 2019 2,650,000 2,712,567
North Carolina Housing Finance Agency Rev.,
"7-A ", 6.15%, 2020 625,000 645,569
North Carolina Housing Finance Agency Rev.,
"A ", 5.25%, 2020 1,310,000 1,328,969
North Carolina Housing Finance Agency Rev.,
"A ", 5.375%, 2023 245,000 252,115
North Carolina Housing Finance Agency Rev.,
"PP ", FHA, 6.15%, 2017 1,100,000 1,126,862
North Carolina Housing Finance Agency Rev.,
"RR ", 5.85%, 2028 2,040,000 2,074,150
- ----------------------------------------------------------------------------------------------------------
$ 20,331,261
- ----------------------------------------------------------------------------------------------------------
State & Agency - Other - 8.2%
- ----------------------------------------------------------------------------------------------------------
Brunswick County, NC, Certificates of
Participation, FSA, 5.5%, 2010 (c) $ 1,000,000 $ 1,075,450
Cabarrus County, NC, Installment Financing
Contract, 5%, 2021 5,500,000 5,821,365
Carteret County, NC, AMBAC, 5.625%, 2020 1,010,000 1,080,791
Charlotte, NC, Certificates of Participation
(Convention Facilities), AMBAC, 0%, 2006 1,075,000 1,068,862
Charlotte, NC, Certificates of Participation
(Convention Facilities), AMBAC, 0%, 2008 3,000,000 2,777,640
Charlotte, NC, Certificates of Participation
(Public Safety Facilities), "D ", 5.5%, 2010 (c) 3,000,000 3,220,980
Charlotte, NC, Certificates of Participation
(Transit Projects), "E ", 5%, 2035 1,990,000 2,080,923
Harnett County, NC, Certificates of
Participation, FSA, 5.25%, 2015 1,020,000 1,127,498
Harnett County, NC, Certificates of
Participation, FSA, 5.5%, 2016 1,225,000 1,318,247
Pitt County, NC, Certificates of Participation
(School Facilities Improvement), "A ", FSA,
5.5%, 2020 1,250,000 1,329,413
Pitt County, NC, Certificates of Participation
(School Facilities Improvement), "B ", FSA,
5.75%, 2018 1,390,000 1,496,182
Pitt County, NC, Certificates of Participation
(School Facilities Improvement), "B ", FSA,
5.75%, 2019 1,390,000 1,495,237
Randolph County, NC, Certificates of
Participation, FSA, 5.6%, 2009 (c) 3,000,000 3,184,230
Rockingham, NC, Certificates of Participation,
AMBAC, 5.125%, 2024 350,000 374,021
- ----------------------------------------------------------------------------------------------------------
$ 27,450,839
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 6.2%
- ----------------------------------------------------------------------------------------------------------
Cabarrus County, NC, Development Corp.,
AMBAC, 5.3%, 2019 $ 1,250,000 $ 1,321,575
Forsyth County, NC, Certificates of
Participation (Public Facilities & Equipment),
5.25%, 2013 (c) 1,230,000 1,350,872
Iredell County, NC, Public Facilities (School
Projects), AMBAC, 5.5%, 2010 (c) 1,000,000 1,075,450
New Hanover County, NC, Certificates of
Participation (New Hanover County Projects),
AMBAC, 5.25%, 2011 (c) 1,635,000 1,777,719
Puerto Rico Housing Bank & Finance Agency
(Kidder), 7.5%, 2006 7,000,000 7,026,670
Puerto Rico Public Finance Corp.,
AMBAC, 5.375%, 2016 (u) 3,000,000 3,394,410
Rutherford County, NC, Certificates of
Participation (Rutherford County School),
AMBAC, 5%, 2023 840,000 887,846
Winston Salem, NC, Certificates of
Participation, "A ", 4.75%, 2031 1,000,000 1,019,350
Winston Salem, NC, Certificates of
Participation, "C ", 5%, 2011 (c) 2,575,000 2,732,745
- ----------------------------------------------------------------------------------------------------------
$ 20,586,637
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 0.8%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev.,
"A ", 5.5%, 2022 $ 1,650,000 $ 1,707,998
Virgin Islands Public Finance Authority Rev.,
ASST GTY, 5.5%, 2018 1,000,000 1,048,670
- ----------------------------------------------------------------------------------------------------------
$ 2,756,668
- ----------------------------------------------------------------------------------------------------------
Tobacco - 0.6%
- ----------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 1,795,000 $ 1,851,830
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "A ", 0%, 2050 2,000,000 133,340
- ----------------------------------------------------------------------------------------------------------
$ 1,985,170
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 3.9%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Highway &
Transportation Authority Rev., FSA,
6%, 2018 (u) $ 10,850,000 $ 13,036,167
Universities - Colleges - 10.4%
- ----------------------------------------------------------------------------------------------------------
University of North Carolina, Wilmington,
Certificates of Participation (Student Housing
Project), FGIC, 5%, 2028 $ 1,825,000 $ 1,935,376
Appalachian State University, NC, "A ", FGIC,
5.125%, 2022 1,260,000 1,350,985
Appalachian State University, NC, Rev., "C ",
MBIA, 5%, 2030 1,000,000 1,058,930
Appalachian State University, NC, Rev., FSA,
5.6%, 2010 (c) 2,285,000 2,470,062
East Carolina University, NC, Rev., "A ",
AMBAC, 5.25%, 2021 1,375,000 1,479,143
North Carolina Capital Facilities, Finance
Agency Rev. (Duke University), "A ",
5%, 2041 2,000,000 2,092,860
North Carolina Capital Facilities, Finance
Agency Rev. (Duke University), "A ",
5.125%, 2041 5,000,000 5,201,750
North Carolina Capital Facilities, Finance
Agency Rev. (Duke University), "A ",
5.25%, 2042 2,000,000 2,108,060
North Carolina Capital Facilities, Finance
Agency Rev. (High Point University),
5.125%, 2018 510,000 533,480
North Carolina Capital Facilities, Finance
Agency Rev. (High Point University),
5.125%, 2021 300,000 311,649
North Carolina Capital Facilities, Finance
Agency Rev. (Johnson & Wales University),
"A ", XLCA, 5.25%, 2022 1,870,000 2,015,767
North Carolina Capital Facilities, Finance
Agency Rev. (Johnson & Wales University),
"A ", XLCA, 5%, 2033 3,385,000 3,517,963
Puerto Rico Industrial Tourist Authority
(University Plaza), "A ", MBIA, 5%, 2020 2,180,000 2,281,937
University of North Carolina, Greensboro
Rev., "A ", FSA, 5%, 2020 2,835,000 2,990,982
University of North Carolina, Systems Pool
Rev., "C ", AMBAC, 5%, 2029 2,000,000 2,101,920
University of North Carolina, University Rev.,
5%, 2028 2,000,000 2,104,240
University of North Carolina, Wilmington
Rev., "A ", AMBAC, 5%, 2019 1,375,000 1,455,878
- ----------------------------------------------------------------------------------------------------------
$ 35,010,982
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.8%
- ----------------------------------------------------------------------------------------------------------
Wake County, NC, Industrial Facilities &
Pollution Control Rev. (Carolina Power &
Light Co.), 5.375%, 2017 $ 2,500,000 $ 2,658,750
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 18.0%
- ----------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power
Agency, "A ", ETM, 7.5%, 2010 (c) $ 2,595,000 $ 2,906,893
North Carolina Eastern Municipal Power
Agency, "A ", ETM, 5%, 2017 (c) 3,120,000 3,410,098
North Carolina Eastern Municipal Power
Agency, "A ", MBIA, 7.5%, 2010 3,005,000 3,358,358
North Carolina Eastern Municipal Power
Agency, "B ", MBIA, 7.25%, 2007 5,000,000 5,044,000
North Carolina Eastern Municipal Power
Agency, AMBAC, 6%, 2018 1,245,000 1,472,312
North Carolina Eastern Municipal Power
Agency, AMBAC, 6%, 2018 (u) 13,000,000 15,373,540
North Carolina Municipal Power Agency,
Catawba Electric Rev., 6.375%, 2013 1,000,000 1,087,260
North Carolina Municipal Power Agency,
Catawba Electric Rev., MBIA, 7%, 2007 5,000,000 5,041,050
North Carolina Municipal Power Agency,
Catawba Electric Rev., MBIA, 6%, 2011 5,000,000 5,461,650
North Carolina Municipal Power Agency,
Catawba Electric Rev., MBIA,
5.25%, 2019 (u) 10,000,000 10,752,400
North Carolina Municipal Power Agency,
Catawba Electric Rev., MBIA,
5.25%, 2020 (u) 6,000,000 6,441,120
- ----------------------------------------------------------------------------------------------------------
$ 60,348,681
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 8.6%
- ----------------------------------------------------------------------------------------------------------
Broad River, NC, Water Authority Rev., MBIA,
5.75%, 2010 (c) $ 1,490,000 $ 1,615,086
Cary, NC, Combined Enterprise Systems Rev.,
5%, 2026 1,000,000 1,043,770
Charlotte, NC, Storm Water Fee Rev.,
6%, 2010 (c) 3,180,000 3,474,023
Charlotte, NC, Storm Water Fee Rev.,
5%, 2034 3,675,000 3,853,348
Charlotte, NC, Water & Sewer Systems Rev.,
5.75%, 2009 (c) 2,000,000 2,130,360
Charlotte, NC, Water & Sewer Systems Rev.,
5.75%, 2010 (c) 3,075,000 3,333,146
Charlotte, NC, Water & Sewer Systems Rev.,
5.5%, 2017 1,650,000 1,786,884
Durham County, NC, Enterprise Systems Rev.,
MBIA, 5%, 2023 1,675,000 1,771,983
Greensboro, NC, Enterprise Systems Rev.,
"A ", 5.125%, 2018 1,490,000 1,588,623
Greensboro, NC, Enterprise Systems Rev.,
"A ", 5.125%, 2019 1,750,000 1,862,735
Greenville, NC, Combined Enterprise Systems
Rev., FSA, 5%, 2016 1,005,000 1,070,576
Greenville, NC, Combined Enterprise Systems
Rev., FSA, 5.25%, 2019 1,170,000 1,263,729
Harnett County, NC, Water & Sewer Systems
Rev., AMBAC, 5%, 2028 700,000 738,185
Kannapolis, NC, Water & Sewer Rev., "B ",
FSA, 5.25%, 2021 1,000,000 1,061,030
Raleigh, NC, Combined Enterprise Systems
Rev., 5%, 2014 (c) 385,000 418,199
Winston Salem, NC, Water & Sewer Systems
Rev., 5%, 2033 1,600,000 1,687,264
- ----------------------------------------------------------------------------------------------------------
$ 28,698,941
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $328,177,708) $348,605,095
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.6%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "A ", 3.8%, due 10/05/06 $ 400,000 $ 400,000
Bell County, TX, Health Facility Development
Corp. Rev. (Scott & White Memorial
Hospital), 3.89%, due 10/02/06 200,000 200,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), 3.75%, due 10/02/06 900,000 900,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), 3.81%, due 10/02/06 100,000 100,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "B ", 3.81%, due 10/02/06 200,000 200,000
Missouri Development Finance, Board of
Cultural Facilities Rev. (Nelson Gallery), "B ",
3.89%, due 10/02/06 100,000 100,000
Sevier County, TN, Public Building Authority,
Government Public Improvement II, "B ",
3.76%, due 10/05/06 200,000 200,000
State of Oregon, "73G ", 3.8%, due 10/04/06 100,000 100,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $2,200,000) $ 2,200,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $330,377,708) (k) $350,805,095
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.8)% (16,114,666)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $334,690,429
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 7,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 60,259
1/04/19 USD 2,500,000 Citigroup 7-Day BMA 4.307% (fixed rate) (108,558)
11/09/26 USD 3,300,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 202,807
---------
$ 154,508
---------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 101.9%
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 2.0%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Airport Rev.
(Pittsburgh International Airport), FGIC,
6.125%, 2017 $ 500,000 $ 535,255
Allegheny County, PA, Airport Rev.
(Pittsburgh International Airport), MBIA,
5.75%, 2014 1,000,000 1,101,745
Susquehanna Area Regional Airport, AMBAC,
5.375%, 2023 500,000 531,645
- ----------------------------------------------------------------------------------------------------------
$ 2,168,645
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 8.4%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Unrefunded Balance,
"C53 ", FGIC, 5.3%, 2018 $ 285,000 $ 302,927
Allegheny County, PA, Unrefunded Balance,
"C53 ", FGIC, 5.4%, 2019 290,000 308,946
Commonwealth of Puerto Rico, FGIC,
5.5%, 2015 (u) 2,000,000 2,268,260
Commonwealth of Puerto Rico, XLCA,
5.5%, 2017 (u) 2,000,000 2,289,860
Erie County, PA, Convention Center, FGIC,
5%, 2025 500,000 528,775
Erie County, PA, Convention Center, FGIC,
5%, 2026 500,000 528,060
Luzerne County, PA, MBIA, 5.25%, 2025 500,000 533,300
North Huntingdon Township, PA, AMBAC,
5.25%, 2019 500,000 536,935
Pennsylvania Finance Authority Rev. (Penn
Hills), "A ", FGIC, 5.45%, 2010 (c) 85,000 91,222
Pennsylvania Finance Authority Rev. (Penn
Hills), "A ", FGIC, 5.45%, 2019 415,000 441,884
State of Pennsylvania, 6%, 2010 (c) 1,000,000 1,084,410
State of Pennsylvania, 6.25%, 2010 300,000 328,128
- ----------------------------------------------------------------------------------------------------------
$ 9,242,707
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 0.5%
- ----------------------------------------------------------------------------------------------------------
Pittsburgh, PA, FGIC, 5.75%, 2009 (c) $ 500,000 $ 530,550
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 20.8%
- ----------------------------------------------------------------------------------------------------------
Allegheny Valley, PA, School District, "A ",
MBIA, 5%, 2028 $ 1,000,000 $ 1,056,380
Ambridge, PA, Area School District, MBIA,
5%, 2034 750,000 788,085
Butler, PA, School District, FGIC,
5.375%, 2018 500,000 516,715
Chambersburg, PA, School District, FSA,
5%, 2011 (c) 500,000 530,865
Chester County, PA, School Authority (School
Intermediate Unit Project), "N ", AMBAC,
5%, 2025 750,000 796,275
Downingtown, PA, School District, AMBAC,
5.65%, 2008 (c) 500,000 519,285
Exeter Township, PA, School District, FGIC,
5%, 2025 1,000,000 1,053,740
Garnet Valley, PA, School District, FGIC,
5.5%, 2015 750,000 820,043
Gateway, PA, Allegheny School District, FGIC,
5.2%, 2023 1,000,000 1,074,170
Gateway, PA, Allegheny School District, FGIC,
5%, 2032 1,890,000 1,977,677
North Allegheny, PA, School District, FGIC,
5.05%, 2022 590,000 615,978
North Schuylkill, PA, School District, FGIC,
5%, 2028 650,000 676,728
Palmyra, PA, School District, FGIC,
5.375%, 2016 820,000 890,315
Pennridge, PA, School District, MBIA,
5%, 2020 500,000 528,690
Pennridge, PA, School District, MBIA,
5%, 2021 500,000 528,110
Pennsylvania Public School Building (Garnet
Valley School District), AMBAC,
5.5%, 2011 (c) 1,005,000 1,082,465
Perkiomen Valley, PA, School District, "A ",
FSA, 5.25%, 2028 1,000,000 1,070,820
Perkiomen Valley, PA, School District, FSA,
5%, 2011 (c) 280,000 296,307
Perkiomen Valley, PA, School District, FSA,
5%, 2019 220,000 230,432
Perkiomen Valley, PA, School District, FSA,
5%, 2025 1,260,000 1,322,597
Philadelphia, PA, School District, AMBAC,
5.375%, 2007 (c) 500,000 504,600
Philadelphia, PA, School District, FSA,
5.75%, 2011 (c) 500,000 543,505
Philadelphia, PA, School District, MBIA,
6%, 2010 (c) 500,000 538,315
South Park, PA, School District, FGIC,
5%, 2019 750,000 784,583
Southeastern Area, PA, Special Schools
Authority Rev., 0%, 2007 360,000 347,213
State Public School Building Authority, PA
School (Colonial Intermediate Unit 20), FGIC,
5%, 2030 500,000 526,790
State Public School Building Authority, PA
School (Lease Philadelphia School District),
FSA, 5.25%, 2024 1,000,000 1,072,990
State Public School Building Authority, PA
School (Tuscarora School District), FSA,
5%, 2013 (c) 1,000,000 1,079,200
State Public School Building Authority, PA,
School Rev., (Haverford Township Project),
XLCA, 5%, 2027 1,000,000 1,056,240
- ----------------------------------------------------------------------------------------------------------
$ 22,829,113
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 11.3%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development
Authority Rev. (South Hills Health Systems),
"B ", 6.75%, 2025 $ 555,000 $ 599,211
Allegheny County, PA, Hospital Development
Authority Rev. (UPMC Health Systems), MBIA,
5%, 2018 500,000 517,285
Allegheny County, PA, Hospital Development
Authority Rev. (West Penn Allegheny Health),
9.25%, 2030 150,000 178,373
Allegheny County, PA, Hospital Development
Authority Rev. (West Penn Allegheny Health),
"B ", 9.25%, 2022 50,000 59,416
Blair County, PA, Hospital Authority Rev.
(Altoona), AMBAC, 5.5%, 2008 470,000 484,838
Erie County, PA, Hospital Authority Rev.
(Hamot Health Foundation), AMBAC,
5.25%, 2017 675,000 727,630
Lancaster County, PA, Hospital Authority
Rev., 5.5%, 2026 500,000 534,765
Lebanon County, PA, Health Facilities
Authority Rev. (Good Samaritan Hospital),
5%, 2018 200,000 205,408
Lebanon County, PA, Health Facilities
Authority Rev. (Good Samaritan Hospital),
6%, 2035 350,000 379,071
Lehigh County, PA, General Purpose Authority
(Good Shepherd Group), "A ", 5.625%, 2034 350,000 376,401
Lehigh County, PA, General Purpose Authority
(Lehigh Valley Hospital), 5.25%, 2032 600,000 629,250
Lehigh County, PA, General Purpose Authority
(Lehigh Valley Hospital), MBIA, 7%, 2016 250,000 294,295
Lehigh County, PA, General Purpose Authority
(St. Luke's Bethlehem Hospital),
5.375%, 2033 600,000 630,312
Lehigh County, PA, Hospital Rev. (Lehigh
Valley Hospital), FSA, 5.25%, 2019 500,000 533,995
Lycoming County, PA, Authority Hospital Rev.
(Williamsport Hospital Obligation Group),
CONNIE LEE, 5.375%, 2010 750,000 758,873
Monroe County, PA, Hospital Authority Rev.
(Pocono Medical Center), 6%, 2043 750,000 804,443
Mount Lebanon, PA, Hospital Authority Rev.
(St. Clair Memorial Hospital), 5.625%, 2032 400,000 422,516
Pennsylvania Higher Educational Facilities
Authority Rev. (UPMC Health), 6.25%, 2018 100,000 110,774
Pennsylvania Higher Educational Facilities
Authority Rev. (UPMC Health), 6%, 2031 650,000 710,951
Philadelphia, PA, Health & Educational
Facilities Rev. (Jeane Health), ETM,
6.6%, 2010 (c) 115,000 121,709
Philadelphia, PA, Health & Educational
Facilities Rev. (Temple University),
6.625%, 2023 250,000 253,668
Sayre, PA, Health Care Facilities Authority
Rev. (Guthrie Health), 5.875%, 2031 500,000 543,455
Sayre, PA, Health Care Facilities Authority
Rev. (Latrobe Hospital), AMBAC,
5.25%, 2012 (c) 585,000 634,947
South Central, PA, General Authority Rev.,
5.625%, 2011 (c) 490,000 535,751
South Central, PA, General Authority Rev.,
Wellspan Health, ETM, 5.625%, 2026 (c) 110,000 118,962
St. Mary's Hospital Authority, PA, Health
Systems Rev. (Catholic Health East), "B ",
5.375%, 2034 750,000 798,353
West Shore, PA, Hospital Authority (Holy
Spirit Hospital), 6.25%, 2032 350,000 376,429
- ----------------------------------------------------------------------------------------------------------
$ 12,341,081
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.5%
- ----------------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development
Authority Rev. (Ann's Choice, Inc.),
6.125%, 2025 $ 250,000 $ 265,418
Chartiers Valley, PA, Industrial & Commercial
Development Authority (Asbury Health Center
Project), 5.75%, 2022 250,000 258,523
Clarion, PA, Industrial Development Authority
Rev. (Beverly Enterprises, Inc.), 7.5%, 2012 150,000 152,385
Cumberland County, PA, Municipal Authority
Rev. (Wesley), "A ", 7.25%, 2013 (c) 110,000 132,317
Cumberland County, PA, Municipal Authority
Rev. (Wesley), "A ", 7.25%, 2035 40,000 43,198
Lancaster County, PA, Hospital Authority Rev.
(Willow Valley Retirement Project),
5.875%, 2031 500,000 527,535
Montgomery County, PA, Industrial
Development Authority Rev. (Whitemarsh
Continuing Care), 6.25%, 2035 250,000 265,000
- ----------------------------------------------------------------------------------------------------------
$ 1,644,376
- ----------------------------------------------------------------------------------------------------------
Human Services - 0.1%
- ----------------------------------------------------------------------------------------------------------
Montgomery County, PA, Industrial
Development Authority (Wordsworth
Academy), 8%, 2024 $ 150,000 $ 150,782
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.0%
- ----------------------------------------------------------------------------------------------------------
New Morgan, PA, Industrial Development
Authority, Solid Waste Disposal Rev. (New
Morgan Landfill Co., Inc./Browning Ferris,
Inc.), 6.5%, 2019 $ 530,000 $ 532,936
Westmoreland County, PA, Industrial
Development Corp. (Waste Management),
LOC, 5.1%, 2018 500,000 511,470
- ----------------------------------------------------------------------------------------------------------
$ 1,044,406
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.8%
- ----------------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development
Authority Rev. (USX Corp.), 5.4%, 2017 $ 300,000 $ 323,364
Pennsylvania Economic Development
Financing Authority Rev. (Amtrak),
6.125%, 2021 150,000 161,711
Pennsylvania Economic Development
Financing Authority, Solid Waste Disposal
Rev. (Procter & Gamble), 5.375%, 2031 1,000,000 1,143,320
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 270,000 294,268
- ----------------------------------------------------------------------------------------------------------
$ 1,922,663
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.6%
- ----------------------------------------------------------------------------------------------------------
Erie County, PA, Industrial Development
Authority, Pollution Control (International
Paper Co.), "A ", 5.3%, 2012 $ 650,000 $ 686,043
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.1%
- ----------------------------------------------------------------------------------------------------------
Gallery Certificate Trust, PA, Parking Rev.,
4.5%, 2013 (n) $ 150,000 $ 149,996
- ----------------------------------------------------------------------------------------------------------
Parking - 2.0%
- ----------------------------------------------------------------------------------------------------------
Philadelphia, PA, Public Parking Authority
Rev., FSA, 5.625%, 2015 $ 1,000,000 $ 1,063,280
Pittsburgh, PA, Public Parking Authority Rev.,
"A ", FGIC, 5%, 2025 500,000 528,565
Pittsburgh, PA, Public Parking Authority Rev.,
AMBAC, 6%, 2010 (c) 500,000 541,830
- ----------------------------------------------------------------------------------------------------------
$ 2,133,675
- ----------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.5%
- ----------------------------------------------------------------------------------------------------------
Pittsburgh & Allegheny County, PA, Sales Tax
Rev. (Public Auditorium Hotel Room),
AMBAC, 5.25%, 2017 $ 500,000 $ 526,465
- ----------------------------------------------------------------------------------------------------------
Single Family Housing Revenue - Local - 0.3%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Residential Financing
Authority, Single Family Mortgage Rev.,
"RR ", 4.75%, 2025 $ 375,000 $ 377,351
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 5.8%
- ----------------------------------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., 5.1%, 2020 $ 1,405,000 $ 1,436,332
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., 5.25%, 2021 750,000 760,763
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., 5.25%, 2033 515,000 522,267
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., 5%, 2034 755,000 767,299
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., "93-A ", 5.75%, 2037 745,000 796,517
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., "94-A ", 5.1%, 2031 500,000 513,605
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., "95-A ", 4.875%, 2031 1,000,000 1,008,980
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., "A ", 4.875%, 2026 500,000 510,880
- ----------------------------------------------------------------------------------------------------------
$ 6,316,643
- ----------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.3%
- ----------------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development
Authority, Resource Recovery Facilities Rev.
(American Ref-Fuel Co.), "A ", 6.2%, 2019 $ 300,000 $ 312,861
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 4.2%
- ----------------------------------------------------------------------------------------------------------
Delaware Valley, PA, Regional Finance
Authority, RITES, AMBAC, 7.025%, 2018 (p) $ 500,000 $ 613,210
Northumberland County, PA (Country Careers
& Arts Center), 6.65%, 2020 235,000 241,465
Pennsylvania Industrial Development
Authority, Economic Development, AMBAC,
7%, 2007 300,000 302,448
Philadelphia, PA, Industrial Development
Authority, FSA, 5.125%, 2026 1,000,000 1,055,400
Philadelphia, PA, Industrial Development
Authority, FSA, 5.25%, 2030 750,000 787,688
Philadelphia, PA, Industrial Development
Authority, MBIA, 5.35%, 2012 500,000 513,095
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2013 (u) 1,000,000 1,104,830
- ----------------------------------------------------------------------------------------------------------
$ 4,618,136
- ----------------------------------------------------------------------------------------------------------
Student Loan Revenue - 1.4%
- ----------------------------------------------------------------------------------------------------------
Pennsylvania Higher Education, Capital
Acquisition Rev., MBIA, 5%, 2026 $ 1,500,000 $ 1,558,455
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 0.6%
- ----------------------------------------------------------------------------------------------------------
Pittsburgh & Allegheny County, PA, Sales Tax
Rev. (Public Auditorium Hotel Room),
AMBAC, 5.25%, 2013 $ 500,000 $ 526,745
Virgin Islands Public Finance Authority Rev.,
"A ", 5.25%, 2024 135,000 142,289
- ----------------------------------------------------------------------------------------------------------
$ 669,034
- ----------------------------------------------------------------------------------------------------------
Tax Assessment - 0.3%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Redevelopment
Authority Rev. (Pittsburgh Mills), 5.6%, 2023 $ 350,000 $ 369,842
- ----------------------------------------------------------------------------------------------------------
Tobacco - 0.4%
- ----------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 315,000 $ 324,973
Virgin Islands Tobacco Settlement Financing
Corp., 5%, 2021 140,000 141,473
- ----------------------------------------------------------------------------------------------------------
$ 466,446
- ----------------------------------------------------------------------------------------------------------
Toll Roads - 0.3%
- ----------------------------------------------------------------------------------------------------------
Pennsylvania Turnpike Commission,
5.5%, 2015 $ 250,000 $ 269,963
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 7.3%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Port Authority Special
Rev., MBIA, 6.25%, 2009 (c) $ 500,000 $ 535,835
Commonwealth of Puerto Rico Highway &
Transportation Authority, "Y ", 5.5%, 2036 1,020,000 1,113,116
Commonwealth of Puerto Rico Highway &
Transportation Authority, MBIA,
5.5%, 2020 (u) 3,000,000 3,475,440
Pennsylvania Turnpike Commission, MBIA,
5%, 2024 1,775,000 1,872,022
Southeastern Pennsylvania Transportation
Authority, Special Rev., FGIC, 5.25%, 2013 500,000 523,795
Southeastern Pennsylvania Transportation
Authority, Special Rev., FGIC, 5.375%, 2017 500,000 513,535
- ----------------------------------------------------------------------------------------------------------
$ 8,033,743
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 12.2%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, (Chatham College),
5.95%, 2032 $ 335,000 $ 357,247
Allegheny County, PA, Higher Education
Building Authority Rev. (Duquesne University),
"A ", XLCA, 5%, 2024 1,000,000 1,064,810
Cumberland County, PA, Municipal Authority
(Dickinson College), AMBAC, 5.55%, 2010 (c) 535,000 575,457
Lycoming County, PA, (College of
Technology), AMBAC, 5.25%, 2032 750,000 787,995
Pennsylvania Higher Educational Facilities
(Allegheny College), 4.75%, 2031 500,000 506,510
Pennsylvania Higher Educational Facilities
(Philadelphia University), 5.5%, 2020 500,000 530,335
Pennsylvania Higher Educational Facilities
Authority Rev. (Clarion University
Foundation), XLCA, 5%, 2023 1,000,000 1,050,080
Pennsylvania Higher Educational Facilities
Authority Rev. (Drexel University),
5.2%, 2032 500,000 526,550
Pennsylvania Higher Educational Facilities
Authority Rev. (Drexel University), MBIA,
5%, 2028 750,000 794,468
Pennsylvania Higher Educational Facilities
Authority Rev. (Marywood University), MBIA,
5.5%, 2010 (c) 300,000 319,995
Pennsylvania Higher Educational Facilities
Authority Rev. (Mercyhurst College), "B ",
5%, 2023 500,000 512,480
Pennsylvania Higher Educational Facilities
Authority Rev. (Widener University),
5.375%, 2029 300,000 318,048
Pennsylvania Higher Educational Facilities
Authority Rev. (Widener University),
5%, 2031 300,000 307,914
Pennsylvania Public School Building Authority
(Delaware County College), MBIA,
5.75%, 2010 (c) 500,000 538,290
Pennsylvania Public School Building Authority,
Montgomery County Community College,
AMBAC, 5%, 2025 500,000 531,500
Pennsylvania State University, 5%, 2029 1,400,000 1,483,538
Pennsylvania State University, "A ", 5%, 2029 1,000,000 1,054,010
State Public School Building Authority, PA,
Jefferson County (Dubois Technical School),
FGIC, 5%, 2026 1,000,000 1,055,560
Union County, PA, Higher Educational
Facilities Financing Authority, University Rev.
(Bucknell University), 5.25%, 2021 1,000,000 1,077,360
- ----------------------------------------------------------------------------------------------------------
$ 13,392,147
- ----------------------------------------------------------------------------------------------------------
Universities - Dormitories - 0.6%
- ----------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development
Financing Authority (Germantown Friends
School Project), 5.35%, 2031 $ 600,000 $ 633,276
- ----------------------------------------------------------------------------------------------------------
Utilities - Cogeneration - 0.3%
- ----------------------------------------------------------------------------------------------------------
Carbon County, PA, Industrial Development
Authority Rev. (Panther Creek Partners),
6.65%, 2010 $ 110,000 $ 115,006
Pennsylvania Economic Development
Financing Authority Rev., Resources Recovery
Rev. (Colver), "G ", 5.125%, 2015 100,000 99,707
Pennsylvania Economic Development
Financing Authority Rev., Resources Recovery
Rev. (Northampton Generating), 6.4%, 2009 150,000 150,032
- ----------------------------------------------------------------------------------------------------------
$ 364,745
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 1.2%
- ----------------------------------------------------------------------------------------------------------
Lehigh County, PA, Industrial Development
Authority Pollution Control Rev. (PPL Electric
Utilities Corp.), "A ", FGIC, 4.7%, 2029 $ 500,000 $ 512,905
Lehigh County, PA, Industrial Development
Authority Rev. (PPL Electric Utilities Corp.),
FGIC, 4.75%, 2027 750,000 772,403
- ----------------------------------------------------------------------------------------------------------
$ 1,285,308
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.6%
- ----------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC,
5.25%, 2014 (u) $ 4,340,000 $ 4,604,523
Philadelphia, PA, Gas Works Rev. (1998
General Ordinance), FSA, 5.25%, 2020 1,000,000 1,070,870
Philadelphia, PA, Gas Works Rev., FSA,
5.5%, 2009 (c) 1,000,000 1,060,350
Philadelphia, PA, Gas Works Rev., FSA,
5.5%, 2011 (c) 500,000 542,630
- ----------------------------------------------------------------------------------------------------------
$ 7,278,373
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.5%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Sewer Rev., MBIA,
5.75%, 2010 (c) $ 750,000 $ 816,975
Bucks County, PA, (Suburban Water Co.),
FGIC, 5.55%, 2032 1,000,000 1,062,180
Delaware County, PA, Water Quality Control
Authority, Sewer Rev., FGIC, 5%, 2018 750,000 785,168
Fairview Township, PA, Sewer Rev., FGIC,
5.05%, 2018 750,000 788,640
Johnstown, PA, Redevelopment Authority,
Sewer Rev., "A ", FSA, 5%, 2034 1,500,000 1,574,460
Lancaster County, PA, Water & Sewer
Authority Rev., MBIA, 5%, 2028 440,000 463,289
Unity Township, PA, Municipal Authority
Sewer Rev., FSA, 5%, 2034 1,660,000 1,744,992
University Area Joint Authority, Sewer Rev.,
MBIA, 5%, 2023 1,500,000 1,561,935
Virgin Islands Water & Power Authority Rev.,
ASST GTY, 5.3%, 2018 500,000 520,275
Westmoreland County, PA, Municipal
Authority Services Rev., FSA, 5.25%, 2026 1,000,000 1,086,240
- ----------------------------------------------------------------------------------------------------------
$ 10,404,154
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $106,729,882) $111,720,979
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.1%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "A ", 3.8%, due 10/05/06 $ 800,000 $ 800,000
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "B ", 3.8%, due 10/05/06 1,240,000 1,240,000
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "D ", 3.8%, due 10/05/06 200,000 200,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $2,240,000) $ 2,240,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $108,969,882) (k) $113,960,979
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.0)% (4,366,447)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $109,594,532
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 17,217
12/06/16 USD 1,000,000 Merrill Lynch 3-Month LIBOR 5.569% (fixed rate) (30,673)
12/13/16 USD 1,500,000 Merrill Lynch 7-Day BMA 3.848% (fixed rate) (13,594)
3/26/17 USD 2,000,000 Goldman Sachs 7-Day BMA 3.710% (fixed rate) 5,985
3/01/19 USD 2,000,000 Merrill Lynch 7-Day BMA 3.976% (fixed rate) (27,882)
--------
$(48,947)
--------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based
asset classes.
Municipal Bonds - 104.0%
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 3.2%
- ----------------------------------------------------------------------------------------------------------
Horry County, SC, "A ", FSA, 5.7%, 2027 $ 2,250,000 $ 2,291,419
Richland Lexington, SC, Airport Rev.
(Columbia Airport), "A ", FSA, 5%, 2026 1,000,000 1,038,180
Richland Lexington, SC, Airport Rev.
(Columbia Airport), FSA, 5.125%, 2025 1,500,000 1,578,630
- ----------------------------------------------------------------------------------------------------------
$ 4,908,229
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 10.7%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ETM,
5.5%, 2018 (c)(u) $ 4,000,000 $ 4,301,000
Commonwealth of Puerto Rico, ETM,
5.5%, 2019 (c)(u) 3,500,000 3,760,680
Commonwealth of Puerto Rico, MBIA,
5.75%, 2010 (c)(u) 4,000,000 4,299,760
Hilton Head Island, SC, Rev., MBIA,
5.125%, 2022 1,000,000 1,068,700
Horry County, SC, Hospital Fee Special
Obligation, 6%, 2015 915,000 995,785
Puerto Rico Commonwealth, Public
Improvement, "A ", 5.25%, 2030 1,000,000 1,067,500
Richland Lexington Riverbanks, SC, Parks
District, FGIC, 5.8%, 2018 1,000,000 1,060,170
- ----------------------------------------------------------------------------------------------------------
$ 16,553,595
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 1.9%
- ----------------------------------------------------------------------------------------------------------
Beaufort County, SC, FGIC, 5.25%, 2018 $ 1,000,000 $ 1,047,470
Commonwealth of Puerto Rico, FSA,
6%, 2009 (c)(u) 1,700,000 1,830,118
- ----------------------------------------------------------------------------------------------------------
$ 2,877,588
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 10.3%
- ----------------------------------------------------------------------------------------------------------
Anderson County, SC, School District, "B ",
5.5%, 2018 $ 1,465,000 $ 1,557,720
Berkeley County, SC, School District,
5%, 2008 (c) 2,000,000 2,080,020
Chesterfield County, SC, School District, FSA,
5%, 2023 3,000,000 3,145,980
Darlington County, SC, School District, FSA,
5%, 2027 2,770,000 2,953,817
Lexington County, SC, School District, "A ",
4.75%, 2028 1,000,000 1,037,330
Orangeburg County, SC, Consolidated School
District, FSA, 5.25%, 2020 1,065,000 1,140,892
Orangeburg County, SC, Consolidated School
District, FSA, 5.375%, 2022 2,050,000 2,222,344
Richland County, SC, School District,
5.1%, 2021 1,750,000 1,856,435
- ----------------------------------------------------------------------------------------------------------
$ 15,994,538
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 21.0%
- ----------------------------------------------------------------------------------------------------------
Charleston County, SC, Hospital Facilities Rev.
(Medical Society Health), MBIA, ETM,
5%, 2022 (c) $ 2,450,000 $ 2,469,061
Florence County, SC, Hospital Rev. (McLeod
Regional Medical Center), "A ", FSA,
5%, 2031 2,000,000 2,098,760
Florence County, SC, Hospital Rev. (McLeod
Regional Medical Center), "A ", FSA,
5.25%, 2034 2,000,000 2,132,620
Greenville, SC, Hospital Systems, Hospital
Facilities Rev., 6%, 2020 3,400,000 3,990,614
Greenwood County, SC, Hospital Facilities
Rev. (Self Memorial Hospital), 5.5%, 2021 1,000,000 1,057,990
Lexington County, SC, Health Services
District, Inc., 5.5%, 2032 250,000 268,710
Lexington County, SC, Health Services
District, Inc., 5.5%, 2037 250,000 267,875
Lexington County, SC, Health Services
District, Inc., Hospital Rev., Refunding &
Improvement, 5.5%, 2032 1,000,000 1,070,610
Lexington County, SC, Health Services
District, Inc., Hospital Rev., Refunding &
Improvement, FSA, 5.125%, 2021 1,500,000 1,564,545
South Carolina Jobs & Economic Development
Authority Rev. (Bon Secours Health Systems,
Inc.), "A ", 5.625%, 2030 1,250,000 1,326,425
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Anderson
Area Medical Center, Inc.), MBIA,
5.25%, 2015 1,750,000 1,776,093
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev.
(Georgetown Memorial Hospital), AMBAC,
6%, 2014 1,000,000 1,076,680
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev.
(Georgetown Memorial Hospital), AMBAC,
5%, 2023 1,000,000 1,022,170
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev.
(Georgetown Memorial Hospital), ASST GTY,
5.25%, 2021 1,500,000 1,574,070
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Palmetto
Health Alliance), 6.25%, 2031 750,000 820,808
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Tuomey),
CIFG, 5%, 2030 1,000,000 1,050,430
South Carolina Medical University, Hospital
Facilities Rev., "A ", MBIA, 5%, 2031 3,100,000 3,228,619
Spartanburg County, SC, Health Service Rev.,
AMBAC, 5.3%, 2020 2,500,000 2,521,450
Spartanburg County, SC, Health Service Rev.,
AMBAC, 5.3%, 2025 1,000,000 1,008,580
Spartanburg County, SC, Health Service Rev.,
FSA, 5.25%, 2032 2,250,000 2,364,345
- ----------------------------------------------------------------------------------------------------------
$ 32,690,455
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.4%
- ----------------------------------------------------------------------------------------------------------
Greenville County, SC, Hospital Rev.
(Chestnut Hill), "A ", 8%, 2015 $ 1,375,000 $ 1,377,791
South Carolina Jobs & Economic Development
Authority, First Mortgage (Wesley Commons),
5.125%, 2026 400,000 396,772
South Carolina Jobs & Economic Development
Authority, Residential Care Facilities Rev.
(Episcopal Home), "A ", 6.375%, 2032 400,000 415,160
- ----------------------------------------------------------------------------------------------------------
$ 2,189,723
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.5%
- ----------------------------------------------------------------------------------------------------------
York County, SC, Industrial Rev., Exempt
Facilities Hoechst Celanese, 5.7%, 2024 $ 850,000 $ 850,459
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.1%
- ----------------------------------------------------------------------------------------------------------
Calhoun County, SC, Solid Waste Disposal
Facilities Rev. (Carolina Eastman Co.), ETM,
6.75%, 2017 (c) $ 1,000,000 $ 1,216,860
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 385,000 419,604
- ----------------------------------------------------------------------------------------------------------
$ 1,636,464
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.1%
- ----------------------------------------------------------------------------------------------------------
Darlington County, SC, Industrial
Development Rev. (Sonoco Products Co.),
6.125%, 2025 $ 1,500,000 $ 1,515,975
Florence County, SC, Industrial Development
Rev. (Stone Container Co.), 7.375%, 2007 225,000 226,656
Georgetown County, SC, Environmental
Improvement Rev., International Paper, "A ",
5.3%, 2028 500,000 511,340
Richland County, SC, Environmental
Improvement Rev., International Paper, "A ",
6.1%, 2023 1,000,000 1,083,770
- ----------------------------------------------------------------------------------------------------------
$ 3,337,741
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.6%
- ----------------------------------------------------------------------------------------------------------
Myrtle Beach, SC, Hospitality Fee Rev., "A ",
FGIC, 5%, 2036 $ 510,000 $ 534,414
South Carolina Jobs & Economic Development
Authority Rev. (Myrtle Beach Convention),
"B ", MBIA, 5.125%, 2018 570,000 597,314
South Carolina Jobs & Economic Development
Authority Rev. (Myrtle Beach Convention),
"B ", MBIA, 5.125%, 2019 595,000 627,773
South Carolina Jobs & Economic Development
Authority Rev. (Myrtle Beach Convention),
"B ", MBIA, 5.125%, 2020 630,000 663,636
- ----------------------------------------------------------------------------------------------------------
$ 2,423,137
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.4%
- ----------------------------------------------------------------------------------------------------------
North Charleston SC, Housing Authority Rev.
(Horizon Village), "A ", FHA, 5%, 2038 $ 1,000,000 $ 1,008,140
North Charleston SC, Housing Authority Rev.
(Horizon Village), "A ", FHA, 5.1%, 2041 1,210,000 1,219,801
- ----------------------------------------------------------------------------------------------------------
$ 2,227,941
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 3.4%
- ----------------------------------------------------------------------------------------------------------
South Carolina Housing, Finance &
Development Authority Mortgage Rev.,
"A-2 ", AMBAC, 5.05%, 2027 $ 1,000,000 $ 1,028,390
South Carolina Housing, Finance &
Development Authority Mortgage Rev.,
"A-2 ", FSA, 5.5%, 2034 1,045,000 1,082,756
South Carolina Housing, Finance &
Development Authority Mortgage Rev.,
"A-2 ", FSA, 5.2%, 2035 990,000 1,014,800
South Carolina Housing, Finance &
Development Authority Rev., "A-2 ", FSA,
6%, 2020 375,000 380,996
South Carolina Housing, Finance &
Development Authority Rev., "A-2 ", FSA,
5.35%, 2024 1,715,000 1,769,640
- ----------------------------------------------------------------------------------------------------------
$ 5,276,582
- ----------------------------------------------------------------------------------------------------------
State & Agency - Other - 1.0%
- ----------------------------------------------------------------------------------------------------------
Greenville County, SC (University Center),
"A ", AMBAC, 5.25%, 2009 (c) $ 1,000,000 $ 1,050,090
South Carolina Water Resources Authority
Rev. (Local Government Program), "A ",
7.25%, 2020 575,000 575,759
- ----------------------------------------------------------------------------------------------------------
$ 1,625,849
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 5.7%
- ----------------------------------------------------------------------------------------------------------
North Charleston, SC, Municipal Golf Course
Mortgage Rev., 5.5%, 2009 (c) $ 1,000,000 $ 1,057,450
Puerto Rico Public Finance Corp.,
5.75%, 2007 (c) 1,000,000 1,007,380
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2013 (u) 2,750,000 3,038,283
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2019 (u) 2,600,000 2,980,120
Spartanburg, SC, Public Facilities Corp.
(Renaissance Park), AMBAC, 5.125%, 2025 685,000 722,312
- ----------------------------------------------------------------------------------------------------------
$ 8,805,545
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 0.1%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev.,
"A ", 5.25%, 2024 $ 180,000 $ 189,718
- ----------------------------------------------------------------------------------------------------------
Tax Assessment - 0.3%
- ----------------------------------------------------------------------------------------------------------
Lancaster County, SC, Assessment Rev. (Sun
City Carolina Lakes), 5.45%, 2037 $ 500,000 $ 507,730
- ----------------------------------------------------------------------------------------------------------
Tobacco - 0.7%
- ----------------------------------------------------------------------------------------------------------
South Carolina Tobacco Settlement Authority,
6.375%, 2028 $ 1,000,000 $ 1,073,360
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 3.5%
- ----------------------------------------------------------------------------------------------------------
South Carolina Transportation Infrastructure
Rev., "A ", AMBAC, 5%, 2023 $ 500,000 $ 521,730
South Carolina Transportation Infrastructure
Rev., "A ", AMBAC, 5%, 2027 2,000,000 2,103,480
South Carolina Transportation Infrastructure
Rev., "A ", AMBAC, 5%, 2033 1,645,000 1,728,994
South Carolina Transportation Infrastructure
Rev., "A ", MBIA, 5.375%, 2009 (c) 1,000,000 1,061,240
- ----------------------------------------------------------------------------------------------------------
$ 5,415,444
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 11.8%
- ----------------------------------------------------------------------------------------------------------
Clemson University, University Rev., AMBAC,
6.25%, 2009 (c) $ 1,250,000 $ 1,344,688
College of Charleston, SC, Academic &
Administrative Facilities Rev., "B ", XLCA,
5%, 2024 800,000 842,344
College of Charleston, SC, Academic &
Administrative Facilities Rev., "B ", XLCA,
5.125%, 2034 1,510,000 1,598,984
College of Charleston, SC, Higher Education
Facility Rev., "A ", FGIC, 5.25%, 2028 2,435,000 2,581,270
South Carolina Educational Facilities Authority
(Furman University), 5%, 2038 1,000,000 1,043,970
South Carolina Educational Facilities Authority
(Furman University), AMBAC, 5.375%, 2020 1,245,000 1,335,835
South Carolina Educational Facilities Authority
(Furman University), AMBAC, 5.5%, 2030 2,000,000 2,134,360
South Carolina Jobs & Economic Development
Authority, Student Housing Rev. (Francis
Marion University), "A ", MBIA, 5%, 2034 1,945,000 2,033,225
University of South Carolina, University Rev.,
"A ", AMBAC, 5%, 2034 3,665,000 3,810,464
University of South Carolina, University Rev.,
"A ", FGIC, 5.625%, 2010 (c) 1,555,000 1,665,250
- ----------------------------------------------------------------------------------------------------------
$ 18,390,390
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 10.4%
- ----------------------------------------------------------------------------------------------------------
Camden, SC, Public Utilities Rev., MBIA,
5.5%, 2007 (c) $ 1,425,000 $ 1,464,644
Camden, SC, Public Utilities Rev., MBIA,
5.5%, 2017 75,000 77,099
Easley, SC, Utility Rev., FSA, 5%, 2027 1,000,000 1,050,710
Easley, SC, Utility Rev., Refunding &
Improvement, FSA, 5%, 2034 2,000,000 2,112,700
Greenwood, SC, Combined Public Utility,
Refunding & Improvement Systems, MBIA,
5%, 2021 175,000 185,344
Orangeburg County, SC, Solid Waste Disposal
Facilities Rev., Electric & Gas, AMBAC,
5.7%, 2024 2,000,000 2,002,040
Piedmont, SC, Municipal Power Agency,
FGIC, 6.25%, 2021 2,600,000 3,207,854
Puerto Rico Electric Power Authority, RITES,
FSA, 6.558%, 2015 (v)(z) 1,000,000 1,055,720
South Carolina Public Service Authority, "A ",
AMBAC, 5%, 2034 2,000,000 2,086,200
South Carolina Public Service Authority, "A ",
MBIA, 5.5%, 2018 200,000 212,288
South Carolina Public Service Authority, "A ",
MBIA, 5%, 2030 1,000,000 1,056,760
South Carolina Public Service Authority, "B ",
FSA, 5.125%, 2037 1,500,000 1,564,575
- ----------------------------------------------------------------------------------------------------------
$ 16,075,934
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 11.9%
- ----------------------------------------------------------------------------------------------------------
Anderson County, SC, Joint Municipal Water,
FSA, 5%, 2032 $ 1,000,000 $ 1,040,100
Anderson County, SC, Water & Sewer
Systems Rev., FGIC, 5.125%, 2032 2,000,000 2,115,940
Berkeley County, SC, Water & Sewer Systems
Rev., "A ", FSA, 4.75%, 2029 1,000,000 1,033,650
Charleston, SC, Waterworks & Sewer Rev.,
Capital Improvement, "B ", 5%, 2028 1,000,000 1,042,350
Columbia, SC, Waterworks & Sewer Systems
Rev., 6%, 2010 (c) 2,000,000 2,149,680
Columbia, SC, Waterworks & Sewer Systems
Rev., FSA, 5%, 2029 1,020,000 1,076,773
Greenville, SC, Stormwater Systems, FSA,
5%, 2022 595,000 626,731
Greenville, SC, Waterworks Rev.,
5.5%, 2007 (c) 1,000,000 1,026,190
Greenville, SC, Waterworks Rev.,
5.25%, 2020 860,000 928,981
Rock Hill, SC, Utility Systems Rev., Refunding
& Improvement, "A ", FSA, 5.375%, 2023 500,000 540,480
Spartanburg, SC, Water & Sewer Authority
Rev., "B ", MBIA, 5.25%, 2030 1,250,000 1,342,650
Western Carolina Regional Sewer Authority
Rev., AMBAC, 0%, 2007 4,000,000 3,942,520
York County, SC, Water & Sewer Rev.,
Refunding & Capital Improvement, MBIA,
5%, 2027 1,490,000 1,566,631
- ----------------------------------------------------------------------------------------------------------
$ 18,432,676
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $152,069,698) $161,483,098
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- ----------------------------------------------------------------------------------------------------------
Blount County, TN, Public Building Authority
(Local Government Public Improvement),
"A-2C ", 3.8%, due 10/02/06 $ 100,000 $ 100,000
Chicago, IL, Midway Airport Rev., Second
Lien, "B ", 3.95%, due 10/02/06 700,000 700,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), 3.81%, due 10/02/06 200,000 200,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), 3.81%, due 10/02/06 200,000 200,000
State of Oregon, "73G ", 3.8%, due 10/04/06 100,000 100,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $1,300,000) $ 1,300,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $153,369,698) (k) $162,783,098
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.8)% (7,492,864)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $155,290,234
- ----------------------------------------------------------------------------------------------------------
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 25,825
1/04/19 USD 2,000,000 Citigroup 7-Day BMA 4.307% (fixed rate) (86,846)
11/09/26 USD 1,500,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 92,185
--------
$ 31,164
--------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (Not Restated)
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 - 96.7%
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 1.4%
- ----------------------------------------------------------------------------------------------------------
Memphis-Shelby County, TN, Airport
Authority Facilities Rev., FSA, 5.125%, 2021 $ 1,500,000 $ 1,550,982
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 5.8%
- ----------------------------------------------------------------------------------------------------------
Chattanooga, TN, Public Improvement,
5%, 2021 $ 2,570,000 $ 2,660,721
Commonwealth of Puerto Rico, Unrefunded,
Public Improvement, FSA, 5%, 2024 770,000 808,338
Lincoln County, TN, School Improvement,
FGIC, 5.8%, 2007 (c) 1,000,000 1,021,090
Lincoln County, TN, School Improvement,
FGIC, 5.8%, 2007 (c) 1,000,000 1,021,090
Puerto Rico Public Building Authority,
5.5%, 2021 1,000,000 1,121,020
- ----------------------------------------------------------------------------------------------------------
$ 6,632,259
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 0.6%
- ----------------------------------------------------------------------------------------------------------
Knoxville, TN, Recreational Facilities
Improvement, 5.5%, 2008 (c) $ 645,000 $ 670,787
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 13.1%
- ----------------------------------------------------------------------------------------------------------
Fayette County, TN, School District, MBIA,
5.6%, 2008 (c) $ 1,215,000 $ 1,247,854
Gibson County, TN, School District, MBIA,
5.75%, 2009 (c) 455,000 479,001
Gibson County, TN, School District, MBIA,
5.75%, 2016 190,000 200,999
Giles County, TN, School Improvement, FGIC,
5.75%, 2010 (c) 1,980,000 2,116,006
Greene County, TN, Rural School, FGIC,
5%, 2011 (c) 1,240,000 1,315,962
Roane County, TN, Rural School, FGIC,
5.6%, 2008 (c) 915,000 940,803
Roane County, TN, Rural School, FGIC,
5.6%, 2008 (c) 975,000 1,002,495
Rutherford County, TN, School & Public
Improvement, 5%, 2022 1,510,000 1,585,515
Rutherford County, TN, School District,
5.875%, 2010 (c) 1,100,000 1,183,666
Rutherford County, TN, School Improvement,
0%, 2007 (c) 1,500,000 932,475
Rutherford County, TN, School Improvement,
5.875%, 2010 (c) 2,000,000 2,152,120
Williamson County, TN, Rural School,
6.125%, 2010 (c) 1,575,000 1,701,961
- ----------------------------------------------------------------------------------------------------------
$ 14,858,857
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 14.3%
- ----------------------------------------------------------------------------------------------------------
Jackson, TN, Hospital Rev. (Jackson-Madison
County General Hospital), AMBAC,
5%, 2008 (c) $ 1,000,000 $ 1,038,140
Johnson City, TN, Health & Education
Financing Authority Rev. (Johnson City
Medical Center Hospital), MBIA, 5.25%, 2016 1,375,000 1,375,825
Johnson City, TN, Health & Education
Financing Authority Rev. (Johnson City
Medical Center Hospital), MBIA, ETM,
5%, 2018 (c) 1,500,000 1,553,010
Johnson City, TN, Health & Educational
Facilities, Hospital Rev. (Mountain States
Health), "A ", 5.5%, 2036 600,000 641,484
Knox County, TN, Health Educational Housing
Facilities Board, Hospital Facilities Rev.
(Baptist Health Systems), 6.5%, 2031 300,000 321,399
Knox County, TN, Health, Education &
Housing Facilities Board Rev. (Catholic
Healthcare Partners), 5.25%, 2030 1,000,000 1,049,710
Knox County, TN, Health, Education &
Housing Facilities Board Rev. (Covenent
Health), FSA, 5%, 2022 1,000,000 1,046,820
Knox County, TN, Health, Education &
Housing Facilities Board Rev. (East Tennessee
Children's Hospital), 5.75%, 2033 450,000 477,797
Knox County, TN, Health, Education &
Housing Facilities Board Rev. (Fort Sanders),
MBIA, 5.75%, 2014 3,250,000 3,652,090
Metropolitan Government Nashville, TN,
Davidson Town Prerefunded, 5.25%, 2008 (c) 540,000 563,641
Metropolitian Government Nashville, TN,
Davidson Town Unrefunded Hospital,
5.25%, 2020 460,000 472,641
Shelby County, TN, Health Educational &
Housing Facilities Board Rev. (St. Judes
Children's Research), 5.5%, 2020 1,750,000 1,848,333
Shelby County, TN, Health Educational &
Housing Facilities Hospital Rev. (Methodist
Healthcare), 6.5%, 2012 (c) 375,000 431,539
Shelby County, TN, Health Educational &
Housing Facilities Hospital Rev. (Methodist
Healthcare), 6.5%, 2012 (c) 625,000 719,231
Springfield, TN, Health & Higher Educational
Facilities Hospital Rev. (Northcrest Medical
Center), 5.25%, 2013 1,000,000 1,019,690
- ----------------------------------------------------------------------------------------------------------
$ 16,211,350
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.5%
- ----------------------------------------------------------------------------------------------------------
Shelby County, TN, Health Educational Rev.
(Germantown Village), 7.25%, 2034 $ 250,000 $ 269,125
Shelby County, TN, Nursing Home Rev.
(Beverly Enterprises, Inc.), 7.4%, 2006 (c) 250,000 256,233
- ----------------------------------------------------------------------------------------------------------
$ 525,358
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.2%
- ----------------------------------------------------------------------------------------------------------
Hardeman County, TN, Correctional Facilities
Rev., 7.75%, 2017 $ 945,000 $ 974,068
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 320,000 348,762
- ----------------------------------------------------------------------------------------------------------
$ 1,322,830
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.9%
- ----------------------------------------------------------------------------------------------------------
McMinn County, TN, Industrial Development
Board, Pollution Control Rev. (Bowater, Inc.),
7.625%, 2016 $ 1,000,000 $ 1,007,770
- ----------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 3.4%
- ----------------------------------------------------------------------------------------------------------
Memphis-Shelby County, TN (Memphis Sports
Arena), AMBAC, 5.125%, 2028 $ 2,000,000 $ 2,109,180
Memphis-Shelby County, TN (Memphis Sports
Arena), AMBAC, 5.35%, 2029 1,665,000 1,791,623
- ----------------------------------------------------------------------------------------------------------
$ 3,900,803
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.0%
- ----------------------------------------------------------------------------------------------------------
Chattanooga, TN, Health, Educational &
Housing Facilities (Rainbow Creek), GNMA,
6.125%, 2019 $ 420,000 $ 443,701
Knoxville, TN, Community Development Corp.,
5%, 2024 1,000,000 1,057,760
Memphis, TN, Health & Educational Facilities
Board Rev. (Hickory Point Apartments), MBIA,
5.85%, 2020 1,000,000 1,046,300
Memphis, TN, Health, Educational & Housing
Facilities Board Rev. (Prescott Place
Apartments Project), FNMA, 5.125%, 2038 1,000,000 1,030,390
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Berkshire
Place), GNMA, 6%, 2023 500,000 526,250
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Herman Street),
FHA, 7.25%, 2032 485,000 486,940
- ----------------------------------------------------------------------------------------------------------
$ 4,591,341
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 13.1%
- ----------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency
Mortgage Finance, 5.2%, 2023 $ 1,500,000 $ 1,572,360
Tennessee Housing Development Agency
Mortgage Finance, 5.35%, 2034 845,000 874,381
Tennessee Housing Development Agency
Rev., Homeownership Program, 5.45%, 2014 2,535,000 2,636,704
Tennessee Housing Development Agency
Rev., Homeownership Program, 4.45%, 2017 645,000 648,322
Tennessee Housing Development Agency
Rev., Homeownership Program, 4.45%, 2017 660,000 663,399
Tennessee Housing Development Agency
Rev., Homeownership Program, 4.55%, 2018 575,000 578,283
Tennessee Housing Development Agency
Rev., Homeownership Program, 4.55%, 2018 690,000 693,940
Tennessee Housing Development Agency
Rev., Homeownership Program, 6%, 2020 1,100,000 1,130,063
Tennessee Housing Development Agency
Rev., Homeownership Program, 5%, 2026 2,000,000 2,044,420
Tennessee Housing Development Agency
Rev., Homeownership Program, 5.05%, 2027 820,000 834,235
Tennessee Housing Development Agency
Rev., Homeownership Program,
5.125%, 2034 1,055,000 1,088,939
Tennessee Housing Development Agency
Rev., Homeownership Program, 5.25%, 2034 1,345,000 1,385,619
Tennessee Housing Development Agency
Rev., Homeownership Program, FSA,
5.4%, 2032 745,000 768,795
Tennessee Housing Development Agency
Rev., Homeownership Program, MBIA,
6.125%, 2020 25,000 25,109
- ----------------------------------------------------------------------------------------------------------
$ 14,944,569
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 5.5%
- ----------------------------------------------------------------------------------------------------------
Chattanooga, TN, Industrial Development
Board, AMBAC, 5.75%, 2018 $ 1,000,000 $ 1,075,420
Puerto Rico Public Finance Corp.,
5.75%, 2007 (c) 2,000,000 2,014,760
Tennessee School Bond Authority (Higher
Education Facilities), FSA, 5.25%, 2029 3,000,000 3,177,960
- ----------------------------------------------------------------------------------------------------------
$ 6,268,140
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 0.7%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev.,
"E ", 5.875%, 2018 $ 730,000 $ 765,420
- ----------------------------------------------------------------------------------------------------------
Tobacco - 1.0%
- ----------------------------------------------------------------------------------------------------------
Guam Economic Development Authority
Tobacco Settlement, "B ", 5.5%, 2041 $ 350,000 $ 358,992
Tobacco Settlement Financing Corp.,
5%, 2031 750,000 757,643
- ----------------------------------------------------------------------------------------------------------
$ 1,116,635
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 4.3%
- ----------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (McKendree
Village, Inc.), 5.125%, 2020 $ 1,000,000 $ 1,013,330
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Meharry
Medical College), AMBAC, 5%, 2024 3,750,000 3,861,600
- ----------------------------------------------------------------------------------------------------------
$ 4,874,930
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 7.1%
- ----------------------------------------------------------------------------------------------------------
Jackson, TN, Electrical Systems Rev., MBIA,
5%, 2018 $ 1,000,000 $ 1,012,130
Lawrenceburg, TN, Electrical Rev., MBIA,
5.5%, 2009 (c) 1,255,000 1,319,331
Metropolitan Government of Nashville &
Davidson County, TN, Electrical Rev.,
5.125%, 2021 1,500,000 1,581,375
Metropolitan Government of Nashville &
Davidson County, TN, Electrical Rev., "A ",
AMBAC, 5%, 2029 1,500,000 1,578,435
Metropolitan Government of Nashville &
Davidson County, TN, Electrical Rev., MBIA,
0%, 2012 3,305,000 2,644,661
- ----------------------------------------------------------------------------------------------------------
$ 8,135,932
- ----------------------------------------------------------------------------------------------------------
Utilities - Other - 1.0%
- ----------------------------------------------------------------------------------------------------------
Tennessee Energy Acquisition, "A ",
5.25%, 2026 $ 1,000,000 $ 1,121,870
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 18.8%
- ----------------------------------------------------------------------------------------------------------
Hallsdale-Powell Utility District, TN, Water &
Sewer Rev., "A ", FGIC, 5%, 2024 $ 1,500,000 $ 1,575,390
Hallsdale-Powell Utility District, TN, Water &
Sewer Rev., "N ", FGIC, 5%, 2036 1,000,000 1,062,950
Hallsdale-Powell Utility District, TN, Water &
Sewer Rev., FGIC, 5%, 2027 3,000,000 3,149,040
Madison, TN, Utility Waterworks Rev., MBIA,
5%, 2019 2,750,000 2,804,258
Memphis, TN, Sewage Systems Rev.,
5.75%, 2008 (c) 625,000 651,875
Memphis, TN, Sewage Systems Rev.,
5.75%, 2008 (c) 1,145,000 1,194,235
Memphis, TN, Sewage Systems Rev.,
5.75%, 2008 (c) 750,000 782,250
Rutherford County, TN, Water Rev., MBIA,
5%, 2027 770,000 821,983
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, ETM, 0%, 2006 (c) 1,920,000 1,909,421
West Knox Utility District, TN, Water & Sewer
Rev., MBIA, ETM, 0%, 2007 (c) 1,920,000 1,842,893
West Wilson Utility District, TN, Waterworks
Rev., MBIA, 5.25%, 2030 2,000,000 2,144,320
White House Utility District, TN, Water &
Sewer Rev. (Robertson & Sumner Counties
Waterworks), FSA, 6%, 2010 (c) 1,000,000 1,074,650
White House Utility District, TN, Water &
Sewer Rev. (Robertson & Sumner Counties
Waterworks), FSA, 5%, 2021 800,000 832,464
White House Utility District, TN, Water &
Sewer Rev. (Robertson & Sumner Counties
Waterworks), FSA, 5%, 2032 1,500,000 1,552,980
- ----------------------------------------------------------------------------------------------------------
$ 21,398,709
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $104,037,274) $109,898,542
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.0%
- ----------------------------------------------------------------------------------------------------------
Sevier County, TN, Public Building Authority,
3.76%, due 10/05/06 $ 1,000,000 $ 1,000,000
Sevier County, TN, Public Building Authority,
3.76%, due 10/05/06 70,000 70,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $1,070,000) $ 1,070,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $105,107,274) (k) $110,968,542
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 2.3% 2,669,753
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $113,638,295
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
1/11/22 USD 3,000,000 Merrill Lynch 5.763% (fixed rate) 3-Month LIBOR $ 156,319
11/09/26 USD 2,150,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 132,132
11/16/26 USD 2,200,000 Merrill Lynch 5.856% (fixed rate) 3-Month LIBOR 152,827
---------
$ 441,278
---------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
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 - 101.9%
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 8.6%
- ----------------------------------------------------------------------------------------------------------
Metropolitan Washington, DC, Airport
Authority Rev., "A ", FGIC, 5.125%, 2024 $ 1,000,000 $ 1,053,060
Metropolitan Washington, DC, Airport
Authority Rev., "A ", FGIC, 5%, 2025 705,000 735,393
Metropolitan Washington, DC, Airport
Authority Rev., "A ", FSA, 5%, 2032 1,455,000 1,523,763
Metropolitan Washington, DC, Airport
Authority Rev., "A ", MBIA, 5%, 2035 3,000,000 3,127,950
Metropolitan Washington, DC, Airport
Authority Rev., "B ", 5.5%, 2016 2,465,000 2,533,527
Metropolitan Washington, DC, Airport
Authority Rev., "B ", 5.75%, 2020 11,000,000 11,332,310
Norfolk, VA, Airport Authority Rev., "A ",
FGIC, 5.375%, 2017 1,755,000 1,886,414
Norfolk, VA, Airport Authority Rev., "A ",
FGIC, 5%, 2022 3,000,000 3,124,290
Virginia Resources Authority, Airport Rev.,
"B ", 5.125%, 2027 720,000 746,302
- ----------------------------------------------------------------------------------------------------------
$ 26,063,009
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 2.9%
- ----------------------------------------------------------------------------------------------------------
Lebanon, VA, 6.375%, 2006 (c) $ 1,625,000 $ 1,664,504
Newport News, VA, Economic Development,
"A ", 5%, 2031 1,595,000 1,692,135
Puerto Rico Commonwealth, Public
Improvement, "A ", 5.25%, 2030 2,000,000 2,135,000
Stafford County, VA, Industrial Development
Authority Rev., "B ", MBIA, 5%, 2034 3,060,000 3,219,579
- ----------------------------------------------------------------------------------------------------------
$ 8,711,218
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 13.7%
- ----------------------------------------------------------------------------------------------------------
Chesterfield County, VA, 6%, 2010 (c) $ 1,900,000 $ 2,043,450
Chesterfield County, VA, 5%, 2020 2,015,000 2,120,163
Hampton, VA, Public Improvement,
6%, 2010 (c) 3,280,000 3,583,761
Hampton, VA, Public Improvement,
6%, 2010 (c) 3,480,000 3,802,283
Lynchburg, VA, Public Improvement,
5.6%, 2010 (c) 1,765,000 1,904,170
Puerto Rico Municipal Finance Agency, FSA,
6%, 2009 (c)(u) 2,210,000 2,379,153
Puerto Rico Municipal Finance Agency, FSA,
5.5%, 2009 (c)(u) 1,230,000 1,307,736
Richmond, VA, 0%, 2008 2,000,000 1,911,160
Richmond, VA, "A ", FSA, 5.125%, 2010 (c) 5,000,000 5,287,700
Richmond, VA, "B ", 0%, 2007 5,280,000 5,227,200
Richmond, VA, "B ", 0%, 2008 5,270,000 5,035,907
Richmond, VA, "B ", 0%, 2009 5,175,000 4,730,209
Suffolk, VA, Public Improvement,
5.5%, 2010 (c) 1,880,000 2,016,657
- ----------------------------------------------------------------------------------------------------------
$ 41,349,549
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 0.4%
- ----------------------------------------------------------------------------------------------------------
Harrisonburg, VA, Public Recreation Facilities,
FSA, 5.75%, 2029 $ 1,000,000 $ 1,086,950
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 12.5%
- ----------------------------------------------------------------------------------------------------------
Albemarle County, VA, Industrial
Development Authority, Hospital Rev. (Martha
Jefferson Hospital), 5.25%, 2035 $ 3,000,000 $ 3,133,020
Arlington County, VA, Industrial Development
Authority Rev. (Virginia Hospital Center
Arlington Health Systems), 5.25%, 2011 (c) 2,600,000 2,806,102
Fredericksburg, VA, Industrial Development
Rev. (Medicorp Health Systems), "B ",
5.125%, 2033 750,000 772,140
Fredericksburg, VA, Industrial Development
Rev. (Medicorp Health Systems), AMBAC,
5.25%, 2023 11,000,000 11,320,870
Henrico County, VA, Economic Development
Authority Rev. (Bon Secours Health Systems,
Inc.), "A ", 5.6%, 2030 2,000,000 2,125,120
Henrico County, VA, Industrial Development
Authority Rev. (Bon Secours Health Systems,
Inc.), MBIA, 6.25%, 2020 1,500,000 1,795,305
Loudoun County, VA, Industrial Development
Authority, Hospital Rev. (Loudoun Hospital
Center), "A ", 6.1%, 2012 (c) 1,000,000 1,130,130
Lynchburg, VA, Industrial Development
Authority, Healthcare Facilities Rev. (Central
Health), 5.2%, 2008 (c) 855,000 880,231
Lynchburg, VA, Industrial Development
Authority, Healthcare Facilities Rev.,
Unrefunded Balance (Central Health),
5.2%, 2018 145,000 149,691
Medical College of Virginia, Hospital
Authority Rev., MBIA, 5.125%, 2018 3,000,000 3,116,190
Peninsula Ports Authority, VA, Health System
Rev. (Riverside Health System), 5%, 2018 3,580,000 3,687,006
Peninsula Ports Authority, VA, Hospital
Facility Rev. (Whittaker Memorial), FHA,
8.7%, 2023 2,015,000 2,333,854
Prince William County, VA, Industrial
Development Authority, Hospital Rev.
(Potomac Hospital Corp.), 5.2%, 2026 1,000,000 1,055,840
Roanoke, VA, Industrial Development
Authority, Hospital Rev. (Roanoke Memorial
Hospital), "B ", MBIA, ETM, 6.125%, 2017 (c) 3,000,000 3,536,310
- ----------------------------------------------------------------------------------------------------------
$ 37,841,809
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.8%
- ----------------------------------------------------------------------------------------------------------
Henrico County, VA, Economic Development
Authority, Residential Care Facilities (United
Methodist Homes), "A ", 6.7%, 2027 $ 750,000 $ 801,075
Norfolk, VA, Redevelopment & Housing
Authority Rev. (Fort Norfolk Retirement
Community), "A ", 6.125%, 2035 750,000 775,162
Suffolk VA, Industrial Development Authority
Retirement, 5.3%, 2031 750,000 762,975
- ----------------------------------------------------------------------------------------------------------
$ 2,339,212
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.1%
- ----------------------------------------------------------------------------------------------------------
Charles City County, VA, Industrial
Development Authority, Solid Waste Disposal
Facility Rev. (Waste Management, Inc.),
6.25%, 2027 $ 1,500,000 $ 1,633,305
Henrico County, VA, Industrial Development
Authority Rev. (Browning Ferris, Inc.),
5.45%, 2014 1,750,000 1,727,145
- ----------------------------------------------------------------------------------------------------------
$ 3,360,450
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.3%
- ----------------------------------------------------------------------------------------------------------
Loudoun County, VA, Industrial Development
Authority Rev. (Dulles Airport Marriot Hotel),
7.125%, 2015 $ 2,000,000 $ 2,037,840
Peninsula Ports Authority, Virginia Coal
(Dominion Terminal Associates), 6%, 2033 1,000,000 1,100,010
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 750,000 817,410
- ----------------------------------------------------------------------------------------------------------
$ 3,955,260
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.9%
- ----------------------------------------------------------------------------------------------------------
Bedford County, VA, Industrial Development
Authority Rev. (Nekooska Packaging Corp.),
5.6%, 2025 $ 1,000,000 $ 1,012,900
Isle Wight County, VA, Industrial
Development Authority, Solid Waste Disposal
Facilities Rev. (Union Camp Corp.),
6.1%, 2027 2,750,000 2,822,792
West Point, VA, Industrial Development
Authority, Solid Waste Disposal Rev.
(Chesapeake Corp.), "A ", 6.375%, 2019 1,750,000 1,753,360
- ----------------------------------------------------------------------------------------------------------
$ 5,589,052
- ----------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.4%
- ----------------------------------------------------------------------------------------------------------
Alexandria, VA, Redevelopment & Housing
Finance Authority Rev. (Jefferson Village
Apartments), "B ", 9%, 2018 $ 3,610,000 $ 3,609,531
Arlington County, VA, Industrial Development
Authority Rev. (Colonial Village), FNMA,
5.15%, 2031 3,000,000 3,118,770
Virginia Housing Development Authority Rev.,
"B ", 5.95%, 2016 1,345,000 1,359,230
Virginia Housing Development Authority Rev.,
"G ", 5.625%, 2020 2,000,000 2,073,240
Virginia Housing Development Authority Rev.,
"I ", 5.15%, 2017 3,000,000 3,072,600
- ----------------------------------------------------------------------------------------------------------
$ 13,233,371
- ----------------------------------------------------------------------------------------------------------
Parking - 0.6%
- ----------------------------------------------------------------------------------------------------------
Norfolk, VA, Parking Systems Rev., MBIA,
5%, 2020 $ 1,630,000 $ 1,690,196
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.1%
- ----------------------------------------------------------------------------------------------------------
Virginia Housing Development Authority
Commonwealth, "C ", 4.4%, 2022 $ 1,270,000 $ 1,256,055
Virginia Housing Development Authority
Commonwealth, "C ", 4.75%, 2032 1,795,000 1,809,504
Virginia Housing Development Authority, "A ",
5%, 2031 2,000,000 2,044,940
Virginia Housing Development Authority, "C ",
4.66%, 2027 1,285,000 1,286,658
- ----------------------------------------------------------------------------------------------------------
$ 6,397,157
- ----------------------------------------------------------------------------------------------------------
State & Agency - Other - 1.7%
- ----------------------------------------------------------------------------------------------------------
Fairfax County, VA, COP, 6.1%, 2017 $ 3,090,000 $ 3,476,775
Virginia Biotechnology Research Park Lease
Rev. (Consolidated Laboratories), 5%, 2021 1,500,000 1,575,750
- ----------------------------------------------------------------------------------------------------------
$ 5,052,525
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 23.1%
- ----------------------------------------------------------------------------------------------------------
Blue Ridge, VA, Regional Jail Authority,
MBIA, 5.2%, 2021 $ 1,830,000 $ 1,898,387
Caroline County, VA, Industrial Development
Authority, Lease Rev., AMBAC, 5.125%, 2034 1,000,000 1,059,560
Chesapeake, VA, Industrial Development
Authority (Chesapeake Court House), MBIA,
6.25%, 2011 3,985,000 4,132,565
Chesapeake, VA, Industrial Development
Authority (Chesapeake Court House), MBIA,
5.25%, 2017 2,000,000 2,060,520
Chesterfield County, VA, Industrial
Development Authority, Public Facilities Lease
Rev., 7.5%, 2008 830,000 831,577
Dinwiddie County, VA, Industrial
Development Authority Lease Rev., "B ",
MBIA, 5%, 2030 2,500,000 2,623,825
Fairfax County, VA, Economic Development
Authority, 4.5%, 2026 2,325,000 2,353,900
Fairfax County, VA, Economic Development
Authority Rev. (U.S. Route 28), MBIA,
5%, 2029 1,000,000 1,055,570
Fairfax County, VA, Economic Development
Authority, Parking Rev. (Vienna II Metrorail),
6%, 2009 (c) 1,750,000 1,900,535
Fairfax County, VA, Economic Development
Authority, Parking Rev. (Vienna II Metrorail),
6%, 2009 (c) 1,650,000 1,791,933
Fairfax County, VA, Redevelopment &
Housing Authority Rev. (Mott & Gum Springs
Community Centers), 5.5%, 2017 2,225,000 2,273,483
Fairfax, VA, Economic Development Authority
Fairfax Public Improvement Project, 5%, 2030 1,000,000 1,049,690
Front Royal & Warren County, VA, Industrial
Development Authority Lease Rev., School &
Capital Improvement, "B ", FSA, 5%, 2035 2,875,000 3,019,641
King George County, VA, Industrial
Development Authority Lease Rev., FSA,
5%, 2036 2,000,000 2,093,100
Middlesex County, VA, Industrial
Development Authority Rev., AMBAC,
5.125%, 2027 1,000,000 1,067,980
Middlesex County, VA, Industrial
Development Authority Rev., AMBAC,
5.25%, 2032 2,000,000 2,131,640
Montgomery County, VA, Industrial
Development, "B ", AMBAC, 6%, 2011 (c) 1,000,000 1,104,620
Montgomery County, VA, Industrial
Development, "C ", AMBAC, 6%, 2011 (c) 1,120,000 1,237,174
New River Valley, VA, Regional Jail Authority,
MBIA, 5.125%, 2019 3,405,000 3,521,894
Orange County, VA, Industrial Development
Authority (Orange County Project), AMBAC,
5%, 2034 1,000,000 1,045,290
Powhatan County, VA, Economic
Development Authority Lease Rev. (Virginia
Capital Projects), AMBAC, 5.25%, 2033 1,000,000 1,064,900
Prince William County, VA, Lease
Partnerships, 5%, 2021 1,500,000 1,582,200
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2013 (u) 4,000,000 4,419,320
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2016 (u) 1,000,000 1,131,470
Richmond, VA, Public Facilities, COP
(Megahertz Project), "A ", AMBAC, 5%, 2022 1,600,000 1,670,208
Southwest Virginia Regional Jail Authority
Rev., MBIA, 5%, 2035 1,720,000 1,800,651
Virginia College Building Authority (21st
Century College Program), 6%, 2009 (c) 2,000,000 2,125,820
Virginia Public Building Authority Rev., "B ",
MBIA, 0%, 2007 3,750,000 3,641,813
Virginia Resources Authority Rev., "B ", FSA,
5.5%, 2019 1,070,000 1,142,557
Virginia Resources Authority Rev.,
5%, 2021 (u) 2,780,000 2,965,621
Virginia Resources Authority Rev.,
5%, 2023 (u) 3,040,000 3,221,792
Virginia Resources Authority Rev.,
5%, 2033 (u) 5,020,000 5,269,695
Virginia Resources Authority, Infrastructure
Rev., "A ", 5%, 2017 1,360,000 1,425,919
- ----------------------------------------------------------------------------------------------------------
$ 69,714,850
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 1.6%
- ----------------------------------------------------------------------------------------------------------
Greater Richmond Convention Center
Authority, Hotel Tax Rev. (Convention Center
Expansion), 6.125%, 2010 (c) $ 3,500,000 $ 3,841,495
Virgin Islands, Public Finance Authority Rev.,
"A ", 5.625%, 2025 1,000,000 1,035,960
- ----------------------------------------------------------------------------------------------------------
$ 4,877,455
- ----------------------------------------------------------------------------------------------------------
Tobacco - 1.0%
- ----------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 450,000 $ 464,247
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.5%, 2039 965,000 999,036
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "B ", 0%, 2055 2,000,000 70,340
Tobacco Settlement Financing Corp., VA,
5.625%, 2037 1,000,000 1,047,900
Virgin Islands Tobacco Settlement Financing
Corp., 5%, 2021 540,000 545,681
- ----------------------------------------------------------------------------------------------------------
$ 3,127,204
- ----------------------------------------------------------------------------------------------------------
Toll Roads - 0.4%
- ----------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA, Toll Road
Rev., 0%, 2008 (c) $ 1,500,000 $ 1,088,955
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 0.9%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Highway &
Transportation Authority Rev., "J ", MBIA,
5%, 2029 $ 1,210,000 $ 1,282,358
Virginia Commonwealth Board Program (Oak
Grove Connector), "A ", 5.25%, 2007 (c) 1,500,000 1,530,705
- ----------------------------------------------------------------------------------------------------------
$ 2,813,063
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 3.7%
- ----------------------------------------------------------------------------------------------------------
Amherst, VA, Industrial Development
Authority Rev. (Educational Facilities Sweet
Briar), 5%, 2026 $ 1,770,000 $ 1,827,189
Danville, VA, Industrial Development
Authority, Educational Facilities Rev. (Averett
University), 6%, 2022 500,000 521,800
Loudoun County, VA, Industrial Development
Authority, University Facilities Rev. (George
Washington University), 6.25%, 2012 2,710,000 2,713,225
University of Virginia, (University Revenue),
"B ", 5%, 2027 2,690,000 2,836,094
Virginia College Building Authority,
Educational Facilities Rev. (Washington & Lee
University), MBIA, 5.25%, 2031 1,000,000 1,164,300
Virginia College Building Authority,
Educational Facilities Rev. (Hampton
University), 6%, 2010 (c) 1,000,000 1,087,260
Virginia College Building Authority,
Educational Facilities Rev. (Regent University),
MBIA, 5.125%, 2011 (c) 1,000,000 1,070,990
- ----------------------------------------------------------------------------------------------------------
$ 11,220,858
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 2.3%
- ----------------------------------------------------------------------------------------------------------
Chesapeake, VA, Industrial Development
Authority Rev. (Virginia Electric & Power Co.),
5.25%, 2008 $ 750,000 $ 754,065
Halifax County, VA, Industrial Development
Authority (Old Dominion Electric Cooperative),
AMBAC, 5.625%, 2028 3,000,000 3,245,010
Mecklenburg County, VA, Industrial
Development Authority Rev. (UAE
Mecklenburg LP), 6.5%, 2017 700,000 772,821
Pittsylvania County, VA, Industrial
Development Authority Rev., 7.5%, 2014 2,000,000 2,017,720
- ----------------------------------------------------------------------------------------------------------
$ 6,789,616
- ----------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 7.5%
- ----------------------------------------------------------------------------------------------------------
Bristol, VA, Utility Systems Rev., FSA, ETM,
5.75%, 2016 (c) $ 240,000 $ 279,197
Guam Power Authority Rev., AMBAC,
5.25%, 2015 (u) 2,020,000 2,144,291
Puerto Rico Electric Power Authority Rev.,
FSA, 5.75%, 2010 (c)(u) 5,000,000 5,436,800
Puerto Rico Electric Power Authority Rev.,
FSA, 5.625%, 2010 (c)(u) 2,540,000 2,750,845
Puerto Rico Electric Power Authority Rev.,
FSA, 5.3%, 2020 (u) 2,500,000 2,682,900
Richmond, VA, Public Utilities Rev., FSA,
5%, 2033 6,950,000 7,210,416
Richmond, VA, Public Utilities Rev., FSA,
5%, 2035 1,000,000 1,054,690
Richmond, VA, Public Utilities Rev., FSA, "N ",
5%, 2027 1,000,000 1,060,430
- ----------------------------------------------------------------------------------------------------------
$ 22,619,569
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.4%
- ----------------------------------------------------------------------------------------------------------
Fairfax County, VA, Water Authority Rev.,
5%, 2026 $ 1,000,000 $ 1,061,520
Fairfax County, VA, Water Authority Rev.,
5%, 2027 3,155,000 3,344,899
Fairfax County, VA, Water Authority Rev.,
5%, 2032 2,000,000 2,080,720
Fairfax County, VA, Water Authority Rev.,
"A ", 5%, 2030 2,000,000 2,123,560
Fairfax County, VA, Water Authority Rev.,
Unrefunded, 5%, 2027 3,210,000 3,365,236
Prince William County, VA, Water & Sewer
Rev., FGIC, 5.5%, 2009 (c) 2,000,000 2,120,700
Puerto Rico Aqueduct & Sewer Authority
Rev., ETM, 10.25%, 2009 (c) 175,000 191,182
Spotsylvania County, VA, Water & Sewer
Rev., FSA, 5%, 2022 1,450,000 1,513,495
Virginia Beach, VA, Storm Water Utilities
Rev., 6%, 2020 1,000,000 1,093,900
Virginia Resources Authority Sewer Systems
Rev. (Hopewell Regional Wastewater),
5.75%, 2021 1,335,000 1,446,699
Virginia Resources Authority, Clean Water
Rev., 5.4%, 2010 (c) 1,135,000 1,212,940
Virginia Resources Authority, Clean Water
Rev., 6%, 2010 (c) 2,750,000 2,999,755
Virginia Resources Authority, Infrastructure
Rev., "A ", MBIA, 5.5%, 2019 1,600,000 1,727,360
Virginia Resources Authority, Infrastructure
Rev., "A ", MBIA, 5.5%, 2020 1,690,000 1,822,310
Virginia Resources Authority, Water & Sewer
Systems Rev. (Tuckahoe Creek Project),
5%, 2035 2,015,000 2,110,712
- ----------------------------------------------------------------------------------------------------------
$ 28,214,988
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $292,252,484) $307,136,316
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.9%
- ----------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "A ", 3.8%, due 10/05/06 $ 100,000 $ 100,000
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "C ", 3.8%, due 10/05/06 500,000 500,000
Burke County, GA, Development Authority
Pollution Control Rev. (Oglethorpe Power
Corp.), "A ", 3.78%, due 10/04/06 100,000 100,000
Chicago, IL, Midway Airport Rev., Second
Lien, "B ", 3.95%, due 10/02/06 900,000 900,000
Georgia Municipal Electric Authority Rev.,
3.76%, due 10/04/06 200,000 200,000
Jefferson County, AL, Sewer Rev., Warrants
Rev., "B-4 ", 3.78%, due 10/05/06 200,000 200,000
Massachusetts Water Resources Authority,
3.75%, due 10/04/06 100,000 100,000
Sevier County, TN, Public Building Authority,
3.76%, due 10/05/06 190,000 190,000
Sevier County, TN, Public Building Authority,
3.76%, due 10/05/06 400,000 400,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $2,690,000) $ 2,690,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $294,942,484) (k) $309,826,316
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (2.8)% (8,300,323)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $301,525,993
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 6,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 51,650
1/11/22 USD 3,000,000 Merrill Lynch 5.763% (fixed rate) 3-Month LIBOR 156,319
11/09/26 USD 3,000,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 184,370
11/16/26 USD 3,000,000 Merrill Lynch 5.856% (fixed rate) 3-Month LIBOR 208,401
--------
$600,740
--------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited) (As Restated - See Note 8)
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.2%
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 24.6%
- ----------------------------------------------------------------------------------------------------------
Charleston, WV, Public Improvements,
7.2%, 2009 $ 1,140,000 $ 1,244,584
Commonwealth of Puerto Rico, Public
Improvement, 5.25%, 2023 1,500,000 1,589,730
Commonwealth of Puerto Rico, Public
Improvement, "A ", CIFG, 5%, 2034 2,000,000 2,093,920
Commonwealth of Puerto Rico, Public
Improvement, MBIA,
5.75%, 2010 (c)(u) 6,000,000 6,449,640
Puerto Rico Commonwealth Public
Improvement, "A ", CIFG, 5%, 2025 1,000,000 1,064,580
Puerto Rico Public Buildings Authority Rev.
(State Office Building), "F ", XLCA,
5.25%, 2025 2,000,000 2,295,820
Puerto Rico Public Buildings Authority Rev.,
"B ", 5.25%, 2007 (c) 3,115,000 3,201,784
West Virginia Highway Improvements, FGIC,
5.625%, 2010 (c) 2,000,000 2,159,400
West Virginia Public Improvements, FGIC,
5%, 2021 4,000,000 4,083,400
West Virginia Sewer Improvements, FGIC,
5.5%, 2017 2,565,000 2,713,411
West Virginia Water Utility Improvements,
FGIC, 5.25%, 2026 8,000,000 8,168,640
- ----------------------------------------------------------------------------------------------------------
$ 35,064,909
- ----------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 2.4%
- ----------------------------------------------------------------------------------------------------------
Brooke County, WV, Board of Education,
FGIC, 5%, 2016 $ 1,390,000 $ 1,458,207
Puerto Rico, Municipal Finance Agency, FSA,
5.5%, 2009 (c)(u) 1,800,000 1,913,760
- ----------------------------------------------------------------------------------------------------------
$ 3,371,967
- ----------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.2%
- ----------------------------------------------------------------------------------------------------------
Jefferson County, WV, Board of Education,
FGIC, ETM, 6.85%, 2009 (c) $ 1,680,000 $ 1,824,866
Monongalia County, WV, Board of Education,
MBIA, 5%, 2027 2,350,000 2,489,331
Monongalia County, WV, Board of Education,
MBIA, 5%, 2033 3,000,000 3,151,380
- ----------------------------------------------------------------------------------------------------------
$ 7,465,577
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 5.5%
- ----------------------------------------------------------------------------------------------------------
Kanawha County, WV, Building Commission
Rev. (St. Francis Hospital), ETM,
7.5%, 2007 (c) $ 60,000 $ 61,587
Monongalia County, WV, Building Community
Hospital Rev. (Monongalia General Hospital),
"A ", 5.25%, 2035 1,000,000 1,044,810
Ohio County, WV, County Commission Health
System Rev. (Ohio Valley Medical Center),
5.75%, 2013 750,000 725,520
Randolph County, WV, Community Health
Systems Rev. (Davis Health Systems, Inc.),
FSA, 5.2%, 2021 1,000,000 1,071,370
Weirton, WV, Municipal Hospital Building,
Commission Rev. (Weirton Hospital Medical
Center), 6.375%, 2031 600,000 626,256
West Virginia Hospital Finance Authority,
Hospital Rev. (Charleston Area Medical
Center), ETM, 6.5%, 2023 (c) 2,000,000 2,450,760
West Virginia Hospital Finance Authority,
Hospital Rev. (Fairmont General Hospital),
6.625%, 2019 300,000 300,630
West Virginia Hospital Finance Authority,
Hospital Rev. (General Division Medical Office
Building), 7.25%, 2014 1,510,000 1,512,069
- ----------------------------------------------------------------------------------------------------------
$ 7,793,002
- ----------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 2.1%
- ----------------------------------------------------------------------------------------------------------
Harrison County, WV, Building Commission
Rev. (Maplewood Retirement), AMBAC,
5.25%, 2008 (c) $ 2,625,000 $ 2,741,445
West Virginia Economic Development
(Edgewood Summit), 5.5%, 2029 300,000 305,517
- ----------------------------------------------------------------------------------------------------------
$ 3,046,962
- ----------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 $ 350,000 $ 381,458
- ----------------------------------------------------------------------------------------------------------
Parking - 0.9%
- ----------------------------------------------------------------------------------------------------------
West Virginia Economic Development
Authority, Auto Lease Rev. (Capitol Parking
Garage), AMBAC, 5.8%, 2020 $ 1,260,000 $ 1,350,859
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 1.0%
- ----------------------------------------------------------------------------------------------------------
Charlestown, WV, Residential Mortgage Rev.,
6.2%, 2011 $ 75,000 $ 75,310
Kanawha County, WV, 0%, 2014 (c) 1,920,000 1,289,702
- ----------------------------------------------------------------------------------------------------------
$ 1,365,012
- ----------------------------------------------------------------------------------------------------------
Single Family Housing - State - 1.9%
- ----------------------------------------------------------------------------------------------------------
Puerto Rico Housing Finance Authority Home
Mortgage Rev., Mortgage Backed Securities,
"A ", 4.75%, 2023 $ 680,000 $ 680,116
West Virginia Housing Development Fund
Rev., 5.25%, 2018 1,000,000 1,029,250
West Virginia Housing Development Fund
Rev., 5.3%, 2023 920,000 940,976
- ----------------------------------------------------------------------------------------------------------
$ 2,650,342
- ----------------------------------------------------------------------------------------------------------
State & Local Agencies - 25.3%
- ----------------------------------------------------------------------------------------------------------
Huntington, WV, Municipal Development
Authority, Rev., MBIA, 5.1%, 2018 $ 1,740,000 $ 1,803,232
West Virginia Building Commission, "A ",
AMBAC, 5.375%, 2018 (u) 9,040,000 10,176,961
West Virginia Building Commission, "B ",
AMBAC, 5.375%, 2018 (u) 2,500,000 2,814,425
West Virginia Building Commission, Lease
Rev., MBIA, ETM, 0%, 2007 (c) 3,150,000 3,068,415
West Virginia Building Commission, Lease
Rev., MBIA, ETM, 0%, 2008 (c) 3,050,000 2,866,725
West Virginia Building Commission, Lease
Rev., MBIA, ETM, 0%, 2009 (c) 1,000,000 905,100
West Virginia Economic Development
Authority (Correctional Juvenile & Public),
5%, 2020 1,000,000 1,049,010
West Virginia Economic Development
Authority (Correctional Juvenile & Public),
MBIA, 5.5%, 2013 1,000,000 1,098,670
West Virginia Economic Development
Authority (Correctional Juvenile & Public),
MBIA, 5%, 2026 2,100,000 2,197,818
West Virginia Economic Development
Authority State Office Building, "B ", MBIA,
5.25%, 2030 1,355,000 1,443,834
West Virginia Economic Development
Authority, Auto Lease Rev., 5.2%, 2033 1,000,000 1,051,550
West Virginia Economic Development
Authority, Department of Environmental
Protection, 5.5%, 2022 2,000,000 2,177,020
West Virginia Economic Development
Authority, Lease Rev. (State Office Building),
"B ", MBIA, 5.25%, 2025 645,000 690,608
West Virginia Hospital Finance Authority,
Hospital Rev. (Veterans Nursing Home),
5.5%, 2034 1,000,000 1,027,470
West Virginia Hospital Finance Authority,
Hospital Rev. (West Virginia University
Hospital), AMBAC, 5%, 2018 1,000,000 1,021,880
West Virginia School Building Authority,
Miscellaneous Tax Rev., FSA, 5.25%, 2021 2,550,000 2,629,458
- ----------------------------------------------------------------------------------------------------------
$ 36,022,176
- ----------------------------------------------------------------------------------------------------------
Tax - Other - 0.4%
- ----------------------------------------------------------------------------------------------------------
Virgin Islands, Public Finance Authority Rev.,
"A ", 5.625%, 2025 $ 500,000 $ 517,980
- ----------------------------------------------------------------------------------------------------------
Tobacco - 0.5%
- ----------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 665,000 $ 686,054
- ----------------------------------------------------------------------------------------------------------
Toll Roads - 1.8%
- ----------------------------------------------------------------------------------------------------------
West Virginia Parkways, Economic
Development & Tourism Authority, Rev.,
FGIC, ETM, 0%, 2007 (c) $ 2,000,000 $ 1,948,200
West Virginia Parkways, Economic
Development & Tourism Authority, Rev.,
FGIC, ETM, 0%, 2008 (c) 610,000 573,345
- ----------------------------------------------------------------------------------------------------------
$ 2,521,545
- ----------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.3%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Highway &
Transportation Authority Rev., "J ", MBIA,
5%, 2029 $ 1,820,000 $ 1,928,836
- ----------------------------------------------------------------------------------------------------------
Universities - Colleges - 20.8%
- ----------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Industrial
Tourist Education (University Plaza), MBIA,
5%, 2021 $ 1,270,000 $ 1,326,223
Fairmont State College, West Virginia,
College Rev., "A ", FGIC, 5%, 2032 3,210,000 3,351,946
Fairmont State College, West Virginia,
College Rev., "A ", FGIC, 5.375%, 2027 1,500,000 1,619,370
Fairmont State College, West Virginia,
College Rev., "A ", FGIC, 5%, 2032 2,250,000 2,342,880
Fairmont State College, West Virginia,
College Rev., "B ", FGIC, 5.25%, 2022 5,130,000 5,495,102
Shepherd University Board of Governors,
West Virginia Rev. (Residence Facilities
Projects), MBIA, 5%, 2035 1,675,000 1,758,917
West Virginia Department of Higher
Education (Marshall University), FGIC,
5.25%, 2019 1,680,000 1,778,465
West Virginia Department of Higher
Education (Student Union James C. Wilson
College), 5.125%, 2022 1,500,000 1,594,245
West Virginia Department of Higher
Education, "B ", FGIC, 5%, 2029 1,000,000 1,050,311
West Virginia Department of Higher
Education, "A ", MBIA, 5%, 2010 1,345,000 1,407,610
West Virginia University, Dormitory Rev.,
AMBAC, 5%, 2007 (c) 2,000,000 2,051,240
West Virginia University, University Systems
Rev. (Marshall University), FGIC, 6%, 2020 2,705,000 2,935,466
West Virginia University, University Systems
Rev. (West Virginia University), MBIA,
5.5%, 2020 1,700,000 1,954,286
West Virginia, West Virginia University
Improvement Rev., "C ", FGIC, 5%, 2028 1,000,000 1,048,990
- ----------------------------------------------------------------------------------------------------------
$ 29,715,051
- ----------------------------------------------------------------------------------------------------------
Universities - Dormitories - 0.4%
- ----------------------------------------------------------------------------------------------------------
West Liberty State College, Capital
Improvement, 6%, 2028 $ 500,000 $ 535,870
- ----------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.5%
- ----------------------------------------------------------------------------------------------------------
Mason County, WV, Pollution Control Rev.
(Appalachian Power Co.), 5.5%, 2022 $ 750,000 $ 777,427
- ----------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.3%
- ----------------------------------------------------------------------------------------------------------
Fairmont, WV, Waterworks Rev., AMBAC,
5.25%, 2022 $ 200,000 $ 226,970
West Virginia Water Development Authority
Loan Program, "B ", AMBAC, 4.75%, 2035 500,000 511,085
West Virginia Water Development Authority
Loan Program, "B ", AMBAC, 5.125%, 2024 2,140,000 2,294,701
West Virginia Water Development Authority
Rev., AMBAC, 6.25%, 2020 1,000,000 1,086,750
West Virginia Water Development Authority
Rev., AMBAC, 5.25%, 2023 1,000,000 1,076,320
West Virginia Water Development Authority
Rev., AMBAC, 5%, 2026 2,850,000 3,006,693
West Virginia Water Development Authority
Rev., ETM, 7.1%, 2009 (c) 80,000 84,232
West Virginia Water Development Authority,
"A ", FGIC, 5%, 2033 1,500,000 1,579,305
West Virginia Water Development Authority,
Infrastructure Rev., "A ", AMBAC, 5%, 2033 1,950,000 2,042,840
West Virginia Water Development Authority,
Infrastructure Rev., FSA, 5.5%, 2010 (c) 390,000 418,220
West Virginia Water Development Authority,
Infrastructure Rev., FSA, 5.5%, 2010 (c) 895,000 959,762
- ----------------------------------------------------------------------------------------------------------
$ 13,286,878
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $140,685,052) $148,481,905
- ----------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes-0.9%
- ----------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facility Development
Corp. Rev. (Scott & White Memorial
Hospital), 3.89%, due 10/02/06 $ 100,000 $ 100,000
Illinois Development Finance Authority Rev.
(Jewish Federation of Metropolitan Chicago),
3.89%, due 10/02/06 200,000 200,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), 3.81%, due 10/02/06 200,000 200,000
New York, NY, Municipal Water & Sewer
Finance Authority Rev., 3.78%, due 10/02/06 100,000 100,000
Sevier County, TN, Public Building Authority,
3.76%, due 10/05/06 500,000 500,000
State of Oregon, "73G ", 3.8%, due 10/04/06 100,000 100,000
- ----------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES
(IDENTIFIED COST, $1,200,000) $ 1,200,000
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $141,885,052) (k) $149,681,905
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.1)% (7,215,274)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $142,466,631
- ----------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 25,825
11/09/26 USD 1,500,000 Goldman Sachs 5.787% (fixed rate) 3-Month LIBOR 92,185
--------
$118,010
--------
At September 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
Portfolio Footnotes:
(c) Refunded bond.
(k) As of September 30, 2006, the following funds held securities fair valued in accordance with the policies
adopted by the Board of Trustees. All of these security values were provided by an independent pricing
service using an evaluated bid.
FUND MARKET VALUE % OF MARKET VALUE
- ---- ------------ -----------------
Mississippi Fund $ 88,405,558 99.44%
New York Fund 169,103,758 98.60%
North Carolina Fund 348,605,095 99.37%
Pennsylvania Fund 111,720,979 98.03%
South Carolina Fund 161,483,098 99.20%
Tennessee Fund 109,898,542 99.04%
Virginia Fund 307,136,316 99.13%
West Virginia Fund 148,481,905 99.20%
(n) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be
sold in the ordinary course of business in transactions exempt from registration, normally to qualified
institutional buyers. At period end, the aggregate value of these securities was $149,996, representing 1.4%
of net assets for the Pennsylvania Fund.
(p) Primary inverse floater.
(u) As restated (See Note 8). Underlying security deposited into special purpose trust ("the trust") by
investment banker upon creation of self-deposited inverse floaters (See Note 7).
(v) Externally deposited inverse floater.
(z) Restricted securities are not registered under the Securities Act of 1933 and are subject to legal
restrictions on resale. These securities generally may be resold in transactions exempt from registration or
to the public if the securities are subsequently registered. Disposal of these securities may involve
time-consuming negotiations and prompt sale at an acceptable price may be difficult. South Carolina Fund
holds the following restricted security:
ACQUISITION ACQUISITION CURRENT TOTAL %
FUND DESCRIPTION DATE COST MARKET VALUE OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
South Carolina Puerto Rico Electric Power Authority,
Fund RITES, FSA, 6.558%, 2015 9/16/99 976,500 1,055,720
---------- ---
Total Restricted Securities $1,055,720 0.7%
========== ===
The following abbreviations are used in this report and are
defined:
BMA Bond Market Assn.
COP Certificate of Participation
ETM Escrowed to Maturity
LIBOR London Interbank Offered Rate
LOC Letter of Credit
Insurers Inverse Floaters
- ----------------------------------------------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corp. RITES Residual Interest Tax-Exempt Security
ASST GTY Assured Guaranty Insurance Co.
CIFG CIFG IXIS Financial Guaranty
CONNIE LEE Connie Lee Insurance Co.
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Assn.
FSA Financial Security Assurance Inc.
GNMA Government National Mortgage Assn.
MBIA MBIA Insurance Corp.
XLCA XL Capital Insurance Co.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
At 9/30/06 (unaudited) (As Restated - See Note 8)
These statements represent each fund's balance sheet, which details the assets and liabilities comprising the total value of
each fund.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $ 84,813,730 $ 159,929,322 $ 330,377,708 $ 108,969,882
Unrealized appreciation (depreciation) 4,091,828 11,574,436 20,427,387 4,991,097
- --------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $ 88,905,558 $ 171,503,758 $ 350,805,095 $ 113,960,979
Cash 3,901 59,155 62,732 80,721
Receivable for investments sold 170,732 455,000 60,000 275,000
Receivable for fund shares sold 66,287 79,181 593,924 113,250
Interest receivable 1,224,301 2,555,627 5,470,546 1,697,868
Receivable from investment adviser -- -- -- 8,331
Unrealized appreciation on interest rate swaps 69,455 127,225 263,066 23,202
Other assets 319 556 985 398
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $ 90,440,553 $ 174,780,502 $ 357,256,348 $ 116,159,749
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $ 125,987 $ 215,516 $ 386,565 $ 133,041
Payable for investments purchased -- 968,528 -- --
Payable to the holder of the floating rate certificate
from trust assets 5,360,000 10,350,000 21,425,000 6,170,000
Payable for fund shares reacquired 34,798 157,645 309,958 33,204
Unrealized depreciation on interest rate swaps 43,423 20,911 108,558 72,149
Payable to affiliates -
Management fee 2,087 4,012 8,231 2,700
Shareholder servicing costs 1,801 3,322 8,831 6,881
Distribution and service fees 879 5,989 12,984 13,168
Administrative services fee 194 306 552 229
Payable for independent trustees' compensation 9,807 12,793 16,095 9,771
Payable for interest expense and fees 58,922 139,743 210,085 80,374
Accrued expenses and other liabilities 38,090 53,320 79,060 43,700
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 5,675,988 $ 11,932,085 $ 22,565,919 $ 6,565,217
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $ 84,764,565 $ 162,848,417 $ 334,690,429 $ 109,594,532
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- --------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 80,985,222 $ 151,080,727 $ 313,634,342 $ 104,808,869
Unrealized appreciation (depreciation) on investments 4,117,860 11,680,750 20,581,895 4,942,150
Accumulated net realized gain (loss) on investments (277,985) 535,857 1,023,265 (5,581)
Accumulated distributions in excess of net investment income (60,532) (448,917) (549,073) (150,906)
- --------------------------------------------------------------------------------------------------------------------------------
Net assets $ 84,764,565 $ 162,848,417 $ 334,690,429 $ 109,594,532
- --------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) (As Restated - See Note 8) - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
Net Assets
Class A $ 74,635,218 $ 119,896,982 $ 271,422,024 $ 72,574,677
Class B 10,129,347 27,761,080 30,690,242 37,019,855
Class C -- 15,190,355 32,578,163 --
- --------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 84,764,565 $ 162,848,417 $ 334,690,429 $ 109,594,532
- --------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 7,586,331 10,658,512 22,705,039 7,074,139
Class B 1,028,261 2,475,829 2,570,916 3,599,267
Class C -- 1,352,339 2,727,018 --
- --------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 8,614,592 14,486,680 28,002,973 10,673,406
- --------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $ 9.84 $ 11.25 $ 11.95 $ 10.26
- --------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25_net asset value per share) $ 10.33 $ 11.81 $ 12.55 $ 10.77
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $ 9.85 $ $ 11.21 $ 11.94 $ 10.29
- --------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $ -- $ 11.23 $ 11.95 $ --
- --------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be
imposed on redemptions of Class A, Class B and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Statement of Assets and Liabilities (unaudited) (As Restated - See Note 8) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
(NOT RESTATED)
ASSETS
Investments -
Identified cost $ 153,369,698 $ 105,107,274 $ 294,942,484 $ 141,885,052
Unrealized appreciation (depreciation) 9,413,400 5,861,268 14,883,832 7,796,853
- ------------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $ 162,783,098 $ 110,968,542 $ 309,826,316 $ 149,681,905
Cash 65,114 24,530 75,212 61,683
Receivable for investments sold -- 1,020,000 2,889,912 160,000
Receivable for fund shares sold 243,573 17,046 267,790 102,122
Interest receivable 2,558,491 1,603,215 4,792,124 2,425,850
Unrealized appreciation on interest rate swaps 118,010 441,278 600,740 118,010
Other assets 525 424 912 500
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 165,768,811 $ 114,075,035 $ 318,453,006 $ 152,550,070
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $ 156,533 $ 171,181 $ 423,765 $ 159,087
Payable for investments purchased 397,447 -- -- --
Payable to the holder of the floating rate
certificate from trust assets 9,275,000 -- 15,670,000 9,670,000
Payable for fund shares reacquired 355,491 196,777 516,903 90,063
Unrealized depreciation on interest rate swaps 86,846 -- -- --
Payable to affiliates -
Management fee 3,830 2,807 7,427 3,508
Shareholder servicing costs 3,450 4,352 8,943 5,050
Distribution and service fees 5,718 4,069 10,142 4,709
Administrative services fee 295 236 505 277
Payable for independent trustees' compensation 15,410 12,615 16,222 15,183
Payable for interest expense and fees 131,722 -- 193,928 90,496
Accrued expenses and other liabilities 46,835 44,703 79,178 45,066
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 10,478,577 $ 436,740 $ 16,927,013 $ 10,083,439
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets $ 155,290,234 $ 113,638,295 $ 301,525,993 $ 142,466,631
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $ 146,132,172 $ 107,517,794 $ 286,466,325 $ 134,629,052
Unrealized appreciation (depreciation) on investments 9,444,564 6,302,546 15,484,572 7,914,863
Accumulated net realized gain (loss) on investments (266,593) 27,228 258,507 133,754
Accumulated distributions in excess of net investment income (19,909) (209,273) (683,411) (211,038)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets $ 155,290,234 $ 113,638,295 $ 301,525,993 $ 142,466,631
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) (As Restated - See Note 8) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
(NOT RESTATED)
Net Assets
Class A $ 131,892,601 $ 98,886,750 $ 273,842,334 $ 130,919,547
Class B 23,397,633 14,751,545 14,683,969 11,547,084
Class C -- -- 12,999,690 --
- -----------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 155,290,234 $ 113,638,295 $ 301,525,993 $ 142,466,631
- -----------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 10,683,291 9,296,694 23,835,042 11,312,503
Class B 1,896,384 1,387,887 1,279,054 998,257
Class C -- -- 1,131,741 --
- -----------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 12,579,675 10,684,581 26,245,837 12,310,760
- -----------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $ 12.35 $ 10.64 $ 11.49 $ 11.57
- -----------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25_net asset value per share) $ 12.97 $ 11.17 $ 12.06 $ 12.15
- -----------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $ 12.34 $ 10.63 $ 11.48 $ 11.57
- -----------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $ -- $ -- $ 11.49 $ --
- -----------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be
imposed on redemptions of Class A, Class B and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF OPERATIONS
Six months ended 9/30/06 (unaudited) (As Restated - See Note 8)
These statements describe how much each fund earned in investment income and accrued in expenses. They also describe any
gains or losses generated by each fund's operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
Interest $2,299,900 $4,485,823 $8,888,462 $2,791,680
- -------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $ 233,926 $ 450,649 $909,136 $ 300,832
Distribution and service fees 38,700 374,606 784,376 197,750
Shareholder servicing costs 55,074 107,201 202,864 71,934
Administrative services fee 12,006 19,295 34,713 14,257
Independent trustees' compensation 1,940 3,100 6,267 3,117
Custodian fee 18,687 31,142 50,367 25,633
Shareholder communications 4,463 10,601 17,423 8,484
Auditing fees 20,883 20,883 20,883 21,085
Legal fees 1,841 2,626 4,228 2,213
Interest expense and fees 100,865 199,455 406,898 116,773
Miscellaneous 22,077 29,897 35,485 24,093
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses $510,462 $1,249,455 $2,472,640 $ 786,171
- -------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (3,885) (6,918) (12,822) (4,992)
Reduction of expenses by investment adviser (106,548) (205,261) (414,091) (198,238)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses $400,029 $1,037,276 $2,045,727 $ 582,941
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,899,871 $3,448,547 $6,842,735 $2,208,739
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) (identified cost basis) -
Investment transactions $ 51,641 $ 260,016 $ 517,979 $ 193,632
Swap transactions 30,279 48,036 279,967 18,587
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $ 81,920 $ 308,052 $ 797,946 $ 212,219
- -------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $ 832,681 $1,396,069 $2,125,711 $1,012,708
Swap transactions (11,937) (10,371) (54,496) (160,504)
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $ 820,744 $1,385,698 $2,071,215 $ 852,204
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $ 902,664 $1,693,750 $2,869,161 $1,064,423
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $2,802,535 $5,142,297 $9,711,896 $3,273,162
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations (unaudited) (As Restated - See Note 8) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
(NOT RESTATED)
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
Interest $4,177,826 $2,966,024 $8,247,208 $3,914,385
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $ 427,537 $ 315,763 $ 830,294 $ 401,284
Distribution and service fees 352,486 253,925 621,432 294,322
Shareholder servicing costs 96,461 70,729 187,509 89,050
Administrative services fee 18,518 14,761 32,068 17,637
Independent trustees' compensation 3,482 3,118 6,245 3,580
Custodian fee 24,567 19,281 53,735 23,456
Shareholder communications 7,540 6,910 16,880 7,260
Auditing fees 20,883 20,883 20,883 20,883
Legal fees 2,508 2,612 3,944 2,567
Interest expense and fees 176,823 -- 294,445 184,433
Miscellaneous 24,172 22,462 33,396 22,536
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses $1,154,977 $ 730,444 $2,100,831 $1,067,008
- ----------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (7,514) (5,012) (11,888) (5,212)
Reduction of expenses by investment adviser (194,733) (143,823) (378,180) (182,776)
- ----------------------------------------------------------------------------------------------------------------------------------
Net expenses $ 952,730 $ 581,609 $1,710,763 $ 879,020
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,225,096 $2,384,415 $6,536,445 $3,035,365
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) (identified cost basis) -
Investment transactions $ (1,337) $ 204,792 $ 272,328 $ 48,101
Swap transactions 109,457 (311,473) (200,021) 130,827
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $ 108,120 $ (106,681) $ 72,307 $ 178,928
- ----------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $1,118,233 $ 239,037 $1,157,357 $1,008,446
Swap transactions (117,895) 592,962 613,711 19,443
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $1,000,338 $ 831,999 $1,771,068 $1,027,889
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $1,108,458 $ 725,318 $1,843,375 $1,206,817
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $4,333,554 $3,109,733 $8,379,820 $4,242,182
- ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited) (Not Restated)
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any
shareholder transactions.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
SIX MONTHS ENDED 9/30/06 FUND FUND FUND FUND
CHANGE IN NET ASSETS
OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,899,871 $ 3,448,547 $ 6,842,735 $ 2,208,739
Net realized gain (loss) on investments 81,920 308,052 797,946 212,219
Net unrealized gain (loss) on investments 820,744 1,385,698 2,071,215 852,204
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 2,802,535 $ 5,142,297 $ 9,711,896 $ 3,273,162
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(1,651,979) $(2,576,694) $ (5,668,740) $ (1,504,568)
Class B (185,892) (521,666) (561,831) (644,688)
Class C -- (292,717) (575,848) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1,837,871) $(3,391,077) $ (6,806,419) $ (2,149,256)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,261,619) $(4,488,094) $ (3,171,747) $ (2,600,926)
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(1,296,955) $(2,736,874) $ (266,270) $ (1,477,020)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 86,061,520 165,585,291 334,956,699 111,071,552
At end of period $84,764,565 $162,848,417 $334,690,429 $109,594,532
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income $ (60,532) $ (448,917) $ (549,073) $ (150,906)
- ---------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
SIX MONTHS ENDED 9/30/06 FUND FUND FUND FUND
CHANGE IN NET ASSETS
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 3,225,096 $ 2,384,415 $ 6,536,445 $ 3,035,365
Net realized gain (loss) on investments 108,120 (106,681) 72,307 178,928
Net unrealized gain (loss) on investments 1,000,338 831,999 1,771,068 1,027,889
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 4,333,554 $ 3,109,733 $ 8,379,820 $ 4,242,182
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $ (2,717,800) $ (2,050,898) $ (5,872,798) $ (2,754,634)
Class B (434,014) (286,802) (285,678) (207,761)
Class C -- -- (236,808) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (3,151,814) $ (2,337,700) $ (6,395,284) $ (2,962,395)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $ (3,272,842) $ (3,176,726) $ (7,971,263) $ (5,616,917)
- -----------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $ (2,091,102) $ (2,404,693) $ (5,986,727) $ (4,337,130)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
At beginning of period 157,381,336 116,042,988 307,512,720 146,803,761
At end of period $ 155,290,234 $ 113,638,295 $ 301,525,993 $ 142,466,631
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income $ (19,909) $ (209,273) $ (683,411) $ (211,038)
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets (Not Restated) - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
YEAR ENDED 3/31/06 FUND FUND FUND FUND
CHANGE IN NET ASSETS
OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 3,838,529 $ 7,198,028 $ 14,258,999 $ 4,423,018
Net realized gain (loss) on investments 286,632 809,461 1,019,442 343,891
Net unrealized gain (loss) on investments (1,103,224) (2,621,239) (3,747,594) (599,785)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 3,021,937 $ 5,386,250 $ 11,530,847 $ 4,167,124
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(3,413,002) $ (5,263,309) $ (11,694,658) $ (2,989,205)
Class B (412,712) (1,168,804) (1,306,917) (1,394,784)
Class C -- (642,938) (1,170,926) --
From net realized gain on investments
Class A -- (564,709) (1,065,305) --
Class B -- (152,917) (135,859) --
Class C -- (82,521) (127,766) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,825,714) $ (7,875,198) $ (15,501,431) $ (4,383,989)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(4,252,560) $(12,844,892) $ (14,095,028) $ 1,890,721
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(5,056,337) $(15,333,840) $ (18,065,612) $ 1,673,856
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 91,117,857 180,919,131 353,022,311 109,397,696
At end of period $ 86,061,520 $165,585,291 $ 334,956,699 $111,071,552
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income $ (122,532) $ (506,387) $ (585,389) $ (210,389)
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets (Not Restated) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
YEAR ENDED 3/31/06 FUND FUND FUND FUND
CHANGE IN NET ASSETS
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 6,758,875 $ 4,974,219 $ 13,515,722 $ 6,088,091
Net realized gain (loss) on investments 690,541 481,186 1,195,139 401,417
Net unrealized gain (loss) on investments (2,164,942) (1,720,907) (4,166,118) (1,928,663)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $ 5,284,474 $ 3,734,498 $ 10,544,743 $ 4,560,845
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income
Class A $(5,659,836) $ (4,261,947) $ (12,295,006) $ (5,562,081)
Class B (1,056,777) (664,458) (688,908) (467,115)
Class C -- -- (466,544) --
From net realized gain on investments
Class A -- (373,368) -- --
Class B -- (67,191) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (6,716,613) $ (5,366,964) $ (13,450,458) $ (6,029,196)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $ (2,560,303) $ (7,850,463) $ ( 6,612,020) $(521,038)
- --------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $ (3,992,442) $ (9,482,929) $ (9,517,735) $ (1,989,389)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
At beginning of period 161,373,778 125,525,917 317,030,455 148,793,150
At end of period $157,381,336 $116,042,988 $ 307,512,720 $146,803,761
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income $ (93,191) $ (255,988) $ (824,572) $ (284,008)
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND (AS RESTATED - SEE NOTE 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 9.73 $ 9.82 $ 10.02 $ 10.02 $ 9.61 $ 9.78
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.22 $ 0.44 $ 0.46 $ 0.46 $ 0.46 $ 0.49
Net realized and unrealized gain (loss) on investments 0.10 (0.09) (0.19) 0.01 0.44 (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.35 $ 0.27 $ 0.47 $ 0.90 $ 0.33
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.44) $ (0.47) $ (0.47) $ (0.49) $ (0.50)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.84 $ 9.73 $ 9.82 $ 10.02 $ 10.02 $ 9.61
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.38(n) 3.59 2.76 4.77 9.48 3.45
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.11(a) 1.07 0.93 0.82 0.84 0.85
Expenses after expense reductions (f) 0.86(a) 0.82 0.68 0.62 0.64 0.65
Expenses after expense reductions and excluding interest
and fees (f)(l) 0.62(a) 0.64 0.58 0.62 0.64 0.65
Net investment income 4.56(a) 4.48 4.70 4.61 4.70 5.05
Portfolio turnover 9 9 19 12 22 6
Net assets at end of period (000 Omitted) $ 74,635 $75,597 $ 79,574 $ 82,507 $ 87,724 $ 76,004
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND - CONTINUED
(AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED ----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 9.74 $ 9.84 $ 10.03 $ 10.04 $ 9.62 $ 9.79
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.19 $ 0.37 $ 0.39 $ 0.38 $ 0.38 $ 0.42
Net realized and unrealized gain (loss) on investments 0.10 (0.10) (0.19) (0.01)(g) 0.44 (0.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.29 $ 0.27 $ 0.20 $ 0.37 $ 0.82 $ 0.25
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.18) $ (0.37) $ (0.39) $ (0.38) $ (0.40) $ (0.42)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.85 $ 9.74 $ 9.84 $ 10.03 $ 10.04 $ 9.62
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.99(n) 2.71 2.08 3.80 8.67 2.62
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.87(a) 1.83 1.70 1.64 1.67 1.65
Expenses after expense reductions (f) 1.62(a) 1.58 1.45 1.44 1.47 1.45
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.38(a) 1.40 1.35 1.44 1.47 1.45
Net investment income 3.80(a) 3.72 3.93 3.79 3.86 4.23
Portfolio turnover 9 9 19 12 22 6
Net assets at end of period (000 Omitted) $ 10,129 $10,465 $11,544 $ 13,177 $ 12,900 $ 10,177
- ---------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) 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 fund shares and the amount of per share realized and unrealized gains and losses at such time.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NEW YORK MUNICIPAL BOND FUND
(AS RESTATED - SEE NOTE 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 11.13 $ 11.30 $ 11.53 $ 11.49 $ 10.94 $ 11.14
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.25 $ 0.49 $ 0.51 $ 0.51 $ 0.52 $ 0.53
Net realized and unrealized gain (loss) on investments 0.11 (0.12) (0.24) 0.04 0.56 (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.36 $ 0.37 $ 0.27 $ 0.55 $ 1.08 $ 0.35
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.24) $ (0.49) $ (0.50) $ (0.51) $ (0.53) $ (0.55)
From net realized gain on investments -- (0.05) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.24) $ (0.54) $ (0.50) $ (0.51) $ (0.53) $ (0.55)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.25 $ 11.13 $ 11.30 $ 11.53 $ 11.49 $ 10.94
- ----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.30(n) 3.30 2.45 4.90 10.05 3.16
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.31(a) 1.28 1.14 1.13 1.17 1.21
Expenses after expense reductions (f) 1.06(a) 1.03 0.89 0.93 0.97 1.01
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.82(a) 0.85 0.79 0.86 0.87 0.88
Net investment income 4.41(a) 4.36 4.47 4.39 4.56 4.80
Portfolio turnover 5 12 20 13 17 18
Net assets at end of period (000 Omitted) $ 119,897 $ 118,476 $ 125,861 $ 131,642 $132,843 $ 121,717
- ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NEW YORK MUNICIPAL BOND FUND - CONTINUED (AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 11.09 $ 11.27 $ 11.49 $ 11.45 $ 10.93 $ 11.13
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.20 $ 0.41 $ 0.42 $ 0.42 $ 0.43 $ 0.45
Net realized and unrealized gain (loss) on investments 0.12 (0.14) (0.22) 0.04 0.54 (0.19)
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.27 $ 0.20 $ 0.46 $ 0.97 $ 0.26
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.20) $ (0.40) $ (0.42) $ (0.42) $ (0.45) $ (0.46)
From net realized gain on investments -- (0.05) -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.20) $ (0.45) $ (0.42) $ (0.42) $ (0.45) $ (0.46)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.21 $ 11.09 $ 11.27 $ 11.49 $ 11.45 $ 10.93
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.92(n) 2.43 1.77 4.12 8.96 2.39
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.07(a) 2.03 1.89 1.87 1.92 1.96
Expenses after expense reductions (f) 1.81(a) 1.78 1.64 1.67 1.72 1.76
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.57(a) 1.60 1.54 1.60 1.62 1.63
Net investment income 3.67(a) 3.61 3.70 3.62 3.80 4.05
Portfolio turnover 5 12 20 13 17 18
Net assets at end of period (000 Omitted) $ 27,761 $ 30,046 $ 35,328 $ 41,509 $ 40,867 $ 29,903
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NEW YORK MUNICIPAL BOND FUND - CONTINUED
(AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS C
Net asset value, beginning of period $ 11.11 $ 11.29 $ 11.51 $ 11.47 $ 10.93 $ 11.13
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.20 $ 0.41 $ 0.42 $ 0.42 $ 0.43 $ 0.45
Net realized and unrealized gain (loss) on investments 0.12 (0.14) (0.22) 0.04 0.56 (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.27 $ 0.20 $ 0.46 $ 0.99 $ 0.27
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.20) $ (0.40) $ (0.42) $ (0.42) $ (0.45) $ (0.47)
From net realized gain on investments -- (0.05) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.20) $ (0.45) $ (0.42) $ (0.42) $ (0.45) $ (0.47)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.23 $ 11.11 $ 11.29 $ 11.51 $ 11.47 $ 10.93
- ----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.91(n) 2.43 1.78 4.12 9.14 2.39
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.07(a) 2.03 1.89 1.87 1.92 1.96
Expenses after expense reductions (f) 1.82(a) 1.78 1.64 1.67 1.72 1.76
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.58(a) 1.60 1.54 1.60 1.62 1.63
Net investment income 3.68(a) 3.61 3.72 3.63 3.81 4.05
Portfolio turnover 5 12 20 13 17 18
Net assets at end of period (000 Omitted) $ 15,190 $ 17,064 $ 19,730 $ 21,907 $ 14,005 $ 10,178
- ----------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
(AS RESTATED - SEE NOTE 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 11.85 $ 11.99 $ 12.30 $ 12.24 $ 11.68 $ 11.89
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.25 $ 0.51 $ 0.53 $ 0.53 $ 0.54 $ 0.57
Net realized and unrealized gain (loss) on investments 0.10 (0.09) (0.27) 0.07 0.58 (0.21)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.35 $ 0.42 $ 0.26 $ 0.60 $ 1.12 $ 0.36
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.25) $ (0.51) $ (0.53) $ (0.53) $ (0.56) $ (0.57)
From net realized gain on investments -- (0.05) (0.04) (0.01) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.25) $ (0.56) $ (0.57) $ (0.54) $ (0.56) $ (0.57)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.95 $ 11.85 $ 11.99 $ 12.30 $ 12.24 $ 11.68
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.01(n) 3.49 2.15 5.01 9.71 3.08
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.38(a) 1.33 1.10 1.12 1.11 1.12
Expenses after expense reductions (f) 1.12(a) 1.08 0.85 0.92 0.91 0.92
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.87(a) 0.89 0.85 0.92 0.91 0.92
Net investment income 4.26(a) 4.24 4.38 4.30 4.50 4.78
Portfolio turnover 3 8 9 9 20 13
Net assets at end of period (000 Omitted) $ 271,422 $ 270,124 $ 279,875 $ 305,185 $ 316,687 $ 303,250
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - CONTINUED (AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 11.83 $ 11.98 $ 12.29 $ 12.23 $ 11.67 $ 11.89
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.21 $ 0.43 $ 0.45 $ 0.45 $ 0.47 $ 0.48
Net realized and unrealized gain (loss) on investments 0.11 (0.10) (0.27) 0.07 0.57 (0.20)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.33 $ 0.18 $ 0.52 $ 1.04 $ 0.28
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.43) $ (0.45) $ (0.45) $ (0.48) $ (0.50)
From net realized gain on investments -- (0.05) (0.04) (0.01) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.21) $ (0.48) $ (0.49) $ (0.46) $ (0.48) $ (0.50)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.94 $ 11.83 $ 11.98 $ 12.29 $ 12.23 $ 11.67
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.76(n) 2.73 1.49 4.33 9.01 2.33
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.03(a) 1.98 1.75 1.76 1.76 1.77
Expenses after expense reductions (f) 1.78(a) 1.73 1.50 1.56 1.56 1.57
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.53(a) 1.54 1.50 1.56 1.56 1.57
Net investment income 3.62(a) 3.59 3.72 3.64 3.85 4.07
Portfolio turnover 3 8 9 9 20 13
Net assets at end of period (000 Omitted) $ 30,690 $ 32,610 $ 40,251 $ 50,363 $ 59,116 $57,534
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - CONTINUED
(AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS C
Net asset value, beginning of period $ 11.84 $ 11.98 $ 12.29 $ 12.23 $ 11.67 $ 11.89
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.21 $ 0.43 $ 0.45 $ 0.45 $ 0.46 $ 0.48
Net realized and unrealized gain (loss) on investments 0.11 (0.09) (0.27) 0.07 0.58 (0.20)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.34 $ 0.18 $ 0.52 $ 1.04 $ 0.28
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.43) $ (0.45) $ (0.45) $ (0.48) $ (0.50)
From net realized gain on investments -- (0.05) (0.04) (0.01) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.21) $ (0.48) $ (0.49) $ (0.46) $ (0.48) $ (0.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.95 $ 11.84 $ 11.98 $ 12.29 $ 12.23 $ 11.67
- ----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.76(n) 2.82 1.49 4.33 9.01 2.33
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.02(a) 1.98 1.76 1.77 1.76 1.77
Expenses after expense reductions (f) 1.77(a) 1.73 1.51 1.57 1.56 1.57
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.52(a) 1.54 1.51 1.57 1.56 1.57
Net investment income 3.61(a) 3.61 3.76 3.67 3.84 4.07
Portfolio turnover 3 8 9 9 20 13
Net assets at end of period (000 Omitted) $ 32,578 $ 32,223 $ 32,897 $ 35,256 $ 31,836 $ 23,741
- ----------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND (AS RESTATED - SEE NOTE 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 10.15 $ 10.17 $ 10.31 $ 10.21 $ 9.73 $ 9.85
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.22 $ 0.43 $ 0.44 $ 0.42 $ 0.45 $ 0.48
Net realized and unrealized gain (loss) on investments 0.10 (0.02) (0.14) 0.10 0.51 (0.11)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.32 $ 0.41 $ 0.30 $ 0.52 $ 0.96 $ 0.37
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.43) $ (0.44) $ (0.42) $ (0.48) $ (0.49)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.26 $ 10.15 $ 10.17 $ 10.31 $ 10.21 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.22(n) 4.08 2.97 5.12 10.12 3.85
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.17(a) 1.13 1.03 1.05 1.03 0.99
Expenses after expense reductions (f) 0.81(a) 0.77 0.69 0.75 0.55 0.46
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.60(a) 0.60 0.60 0.64 0.48 0.36
Net investment income 4.30(a) 4.24 4.33 4.12 4.47 4.90
Portfolio turnover 3 9 20 24 19 19
Net assets at end of period (000 Omitted) $ 72,575 $ 72,429 $ 67,942 $ 75,083 $ 68,705 $47,661
- ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - CONTINUED (AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 10.18 $ 10.20 $ 10.34 $ 10.24 $ 9.75 $ 9.88
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.18 $ 0.36 $ 0.36 $ 0.34 $ 0.36 $ 0.40
Net realized and unrealized gain (loss) on investments 0.10 (0.03) (0.14) 0.10 0.53 (0.12)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.28 $ 0.33 $ 0.22 $ 0.44 $ 0.89 $ 0.28
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.17) $ (0.35) $ (0.36) $ (0.34) $ (0.40) $ (0.41)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.29 $ 10.18 $ 10.20 $ 10.34 $ 10.24 $ 9.75
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.83(n) 3.30 2.19 4.38 9.21 2.86
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.93(a) 1.89 1.80 1.85 1.85 1.83
Expenses after expense reductions (f) 1.57(a) 1.53 1.46 1.55 1.37 1.30
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.36(a) 1.36 1.37 1.44 1.30 1.20
Net investment income 3.54(a) 3.49 3.56 3.32 3.62 4.06
Portfolio turnover 3 9 20 24 19 19
Net assets at end of period (000 Omitted) $ 37,020 $ 38,642 $ 41,455 $ 48,480 $ 46,941 $ 28,286
- ---------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND (AS RESTATED - SEE NOTE 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 12.25 $ 12.36 $ 12.61 $ 12.53 $ 12.00 $ 12.15
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.26 $ 0.54 $ 0.56 $ 0.55 $ 0.58 $ 0.60
Net realized and unrealized gain (loss) on investments 0.09 (0.11) (0.25) 0.10 0.54 (0.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.35 $ 0.43 $ 0.31 $ 0.65 $ 1.12 $ 0.44
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.25) $ (0.54) $ (0.56) $ (0.57) $ (0.59) $ (0.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.35 $ 12.25 $ 12.36 $ 12.61 $ 12.53 $ 12.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.93(n) 3.48 2.52 5.30 9.51 3.68
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.38(a) 1.34 1.23 1.21 1.23 1.27
Expenses after expense reductions (f) 1.13(a) 1.09 0.98 1.01 1.03 1.07
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.90(a) 0.92 0.89 0.94 0.95 0.94
Net investment income 4.25(a) 4.35 4.50 4.39 4.68 4.91
Portfolio turnover 5 13 15 16 21 10
Net assets at end of period (000 Omitted) $131,893 $131,167 $130,342 $ 137,911 $ 129,844 $ 121,438
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - CONTINUED (AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 12.24 $ 12.36 $ 12.60 $ 12.52 $ 11.99 $ 12.14
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.22 $ 0.46 $ 0.48 $ 0.47 $ 0.50 $ 0.52
Net realized and unrealized gain (loss) on investments 0.09 (0.12) (0.24) 0.10 0.54 (0.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.31 $ 0.34 $ 0.24 $ 0.57 $ 1.04 $ 0.36
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.46) $ (0.48) $ (0.49) $ (0.51) $ (0.51)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.34 $ 12.24 $ 12.36 $ 12.60 $ 12.52 $ 11.99
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.60(n) 2.73 1.94 4.62 8.81 3.01
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.04(a) 1.99 1.88 1.86 1.88 1.92
Expenses after expense reductions (f) 1.79(a) 1.74 1.63 1.66 1.68 1.72
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.56(a) 1.57 1.54 1.59 1.60 1.59
Net investment income 3.61(a) 3.70 3.85 3.74 4.03 4.25
Portfolio turnover 5 13 15 16 21 10
Net assets at end of period (000 Omitted) $ 23,398 $ 26,214 $ 31,032 $ 36,817 $ 37,603 $ 34,139
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) TENNESSEE MUNICIPAL BOND FUND (NOT RESTATED)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 10.56 $ 10.71 $ 10.96 $ 10.90 $ 10.43 $ 10.58
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.22 $ 0.45 $ 0.45 $ 0.45 $ 0.47 $ 0.49
Net realized and unrealized gain (loss) on investments 0.08 (0.12) (0.18) 0.06 0.49 (0.14)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.30 $ 0.33 $ 0.27 $ 0.51 $ 0.96 $ 0.35
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.22) $ (0.44) $ (0.44) $ (0.45) $ (0.49) $ (0.50)
From net realized gain on investments -- (0.04) (0.08) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.22) $ (0.48) $ (0.52) $ (0.45) $ (0.49) $ (0.50)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.64 $ 10.56 $ 10.71 $ 10.96 $ 10.90 $ 10.43
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.88(n) 3.13 2.53 4.80 9.34 3.36
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.18(a) 1.19 1.16 1.14 1.17 1.14
Expenses after expense reductions (f) 0.93(a) 0.94 0.91 0.94 0.97 0.94
Net investment income 4.24(a) 4.17 4.16 4.08 4.35 4.66
Portfolio turnover 5 5 11 19 16 12
Net assets at end of period (000 Omitted) $ 98,887 $ 98,825 $ 104,837 $ 118,990 $ 115,819 $ 101,294
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) TENNESSEE MUNICIPAL BOND FUND - CONTINUED (NOT RESTATED)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 10.56 $ 10.70 $ 10.95 $ 10.89 $ 10.42 $ 10.57
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.19 $ 0.38 $ 0.38 $ 0.38 $ 0.40 $ 0.42
Net realized and unrealized gain (loss) on investments 0.07 (0.11) (0.18) 0.06 0.49 (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.26 $ 0.27 $ 0.20 $ 0.44 $ 0.89 $ 0.28
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.19) $ (0.37) $ (0.37) $ (0.38) $ (0.42) $ (0.43)
From net realized gain on investments -- (0.04) (0.08) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (0.19) $ (0.41) $ (0.45) $ (0.38) $ (0.42) $ (0.43)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.63 $ 10.56 $ 10.70 $ 10.95 $ 10.89 $ 10.42
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.45(n) 2.56 1.87 4.12 8.64 2.69
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.83(a) 1.84 1.81 1.79 1.82 1.79
Expenses after expense reductions (f) 1.58(a) 1.59 1.56 1.59 1.62 1.59
Net investment income 3.60(a) 3.52 3.51 3.43 3.70 4.00
Portfolio turnover 5 5 11 19 16 12
Net assets at end of period (000 Omitted) $ 14,752 $ 17,217 $ 20,689 $ 24,306 $ 27,546 $ 26,183
- ---------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) VIRGINIA MUNICIPAL BOND FUND (AS RESTATED - SEE NOTE 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 11.41 $ 11.52 $ 11.73 $ 11.61 $ 11.14 $ 11.36
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.25 $ 0.51 $ 0.53 $ 0.53 $ 0.53 $ 0.54
Net realized and unrealized gain (loss) on investments 0.08 (0.12) (0.21) 0.12 0.47 (0.22)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.33 $ 0.39 $ 0.32 $ 0.65 $ 1.00 $ 0.32
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.25) $ (0.50) $ (0.53) $ (0.53) $ (0.53) $ (0.54)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.49 $ 11.41 $ 11.52 $ 11.73 $ 11.61 $ 11.14
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.89(n) 3.45 2.83 5.70 9.10 2.87
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.34(a) 1.30 1.10 1.13 1.13 1.12
Expenses after expense reductions (f) 1.08(a) 1.05 0.85 0.93 0.93 0.92
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.88(a) 0.90 0.85 0.93 0.93 0.92
Net investment income 4.39(a) 4.38 4.63 4.53 4.62 4.77
Portfolio turnover 3 13 11 11 13 14
Net assets at end of period (000 Omitted) $273,842 $277,633 $ 285,185 $ 301,218 $308,164 $ 299,088
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) VIRGINIA MUNICIPAL BOND FUND - CONTINUED (AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 11.40 $ 11.51 $ 11.72 $ 11.60 $ 11.13 $ 11.35
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.21 $ 0.43 $ 0.46 $ 0.45 $ 0.46 $ 0.47
Net realized and unrealized gain (loss) on investments 0.08 (0.11) (0.21) 0.12 0.46 (0.22)
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.29 $ 0.32 $ 0.25 $ 0.57 $ 0.92 $ 0.25
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.43) $ (0.46) $ (0.45) $ (0.45) $ (0.47)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.48 $ 11.40 $ 11.51 $ 11.72 $ 11.60 $ 11.13
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.56(n) 2.78 2.16 5.02 8.40 2.20
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.99(a) 1.95 1.75 1.77 1.78 1.78
Expenses after expense reductions (f) 1.74(a) 1.70 1.50 1.57 1.58 1.58
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.54(a) 1.55 1.50 1.57 1.58 1.58
Net investment income 3.75(a) 3.73 3.98 3.88 3.97 4.12
Portfolio turnover 3 13 11 11 13 14
Net assets at end of period (000 Omitted) $ 14,684 $ 16,885 $ 19,637 $ 23,564 $ 25,470 $ 26,970
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) VIRGINIA MUNICIPAL BOND FUND - CONTINUED (AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS C
Net asset value, beginning of period $ 11.41 $ 11.52 $ 11.72 $ 11.61 $ 11.13 $ 11.36
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.21 $ 0.43 $ 0.46 $ 0.45 $ 0.45 $ 0.47
Net realized and unrealized gain (loss) on investments 0.08 (0.11) (0.20) 0.11 0.48 (0.23)
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.29 $ 0.32 $ 0.26 $ 0.56 $ 0.93 $ 0.24
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.21) $ (0.43) $ (0.46) $ (0.45) $ (0.45) $ (0.47)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.49 $ 11.41 $ 11.52 $ 11.72 $ 11.61 $ 11.13
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.56(n) 2.78 2.25 4.93 8.49 2.10
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.98(a) 1.95 1.75 1.77 1.78 1.77
Expenses after expense reductions (f) 1.73(a) 1.70 1.50 1.57 1.58 1.57
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.53(a) 1.55 1.50 1.57 1.58 1.57
Net investment income 3.74(a) 3.72 3.98 3.88 3.97 4.10
Portfolio turnover 3 13 11 11 13 14
Net assets at end of period (000 Omitted) $ 13,000 $ 12,995 $ 12,208 $ 13,338 $ 12,758 $ 10,619
- --------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
(AS RESTATED - SEE NOTE 8)
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. 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 share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 11.47 $ 11.58 $ 11.82 $ 11.77 $ 11.32 $ 11.45
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.24 $ 0.48 $ 0.51 $ 0.51 $ 0.55 $ 0.57
Net realized and unrealized gain (loss) on investments 0.10 (0.11) (0.25) 0.05 0.46 (0.14)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.34 $ 0.37 $ 0.26 $ 0.56 $ 1.01 $ 0.43
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.24) $ (0.48) $ (0.50) $ (0.51) $ (0.56) $ (0.56)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.57 $ 11.47 $ 11.58 $ 11.82 $ 11.77 $ 11.32
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.97(n) 3.21 2.28 4.84 9.04 3.79
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
Expenses before expense reductions (f) 1.41(a) 1.34 1.25 1.21 1.26 1.30
Expenses after expense reductions (f) 1.16(a) 1.09 1.00 1.01 1.06 1.10
Expenses after expense reductions and excluding
interest and fees (f)(l) 0.91(a) 0.92 0.89 0.93 0.96 0.93
Net investment income 4.21(a) 4.16 4.35 4.33 4.71 4.97
Portfolio turnover 2 7 14 17 13 2
Net assets at end of period (000 Omitted) $ 130,920 $ 134,416 $ 134,459 $140,599 $ 139,564 $ 121,860
- -----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - CONTINUED (AS RESTATED - SEE NOTE 8)
SIX MONTHS YEARS ENDED 3/31
ENDED -----------------------------------------------------
9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
CLASS B
Net asset value, beginning of period $ 11.46 $ 11.58 $ 11.82 $ 11.76 $ 11.31 $ 11.44
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.20 $ 0.41 $ 0.43 $ 0.43 $ 0.47 $ 0.50
Net realized and unrealized gain (loss) on investments 0.11 (0.13) (0.24) 0.06 0.46 (0.15)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.31 $ 0.28 $ 0.19 $ 0.49 $ 0.93 $ 0.35
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.20) $ (0.40) $ (0.43) $ (0.43) $ (0.48) $ (0.48)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.57 $ 11.46 $ 11.58 $ 11.82 $ 11.76 $ 11.31
- ----------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.72(n) 2.45 1.62 4.25 8.34 3.12
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.06(a) 1.99 1.90 1.86 1.91 1.96
Expenses after expense reductions (f) 1.81(a) 1.74 1.65 1.66 1.71 1.76
Expenses after expense reductions and excluding
interest and fees (f)(l) 1.56(a) 1.57 1.54 1.58 1.61 1.59
Net investment income 3.57(a) 3.51 3.71 3.68 4.06 4.31
Portfolio turnover 2 7 14 17 13 2
Net assets at end of period (000 Omitted) $ 11,547 $ 12,388 $ 14,334 $ 17,744 $ 19,443 $ 16,248
- ----------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(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), and MFS West Virginia Municipal Bond Fund (West Virginia Fund) are each a
series of MFS Municipal Series Trust which 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, the security could
decline in value, interest from the security could become taxable and the fund
may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. Values of debt
instruments obtained from pricing services can utilize both dealer-supplied
valuations and electronic data processing techniques, which take into account
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. Short-term instruments with a maturity at issuance of 60
days or less may be valued at amortized cost, which approximates market value.
Swaps are generally valued at a broker-dealer bid quotation. Securities and
other assets generally valued on the basis of information from an independent
pricing service may also be valued at a broker-dealer bid quotation. The Board
of Trustees has delegated primary responsibility for determining or causing to
be determined the value of the fund's investments valuation policies and
procedures approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as
determined in good faith by the adviser in accordance with such procedures under
the oversight of the Board of Trustees. Under each fund's quotations are not
considered to be readily available for many types of debt instruments. These
investments are generally valued at fair value based on information from
independent pricing services. The adviser may rely on independent pricing
services or other information (such as the correlation with price movements of
similar securities in the same or other markets; the type, cost and investment
characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to
fair value and at what value to fair value an investment. The value of an
investment for purposes of calculating each fund's net asset determine value.
When fair valuation is used, the value of investments used to determine each
differ from quoted or published prices for the same investments. In September
2006, FASB Statement No. 157, Fair Value Measurements (the "Statement") interim
periods within those fiscal years. This Statement provides a single definition
of fair value, a hierarchy for measuring fair value and expanded disclosures
about fair value measurements. Management is evaluating the application of the
Statement to each fund, and believes the impact will be limited to expanded
disclosures resulting from the adoption of this Statement on each fund's
financial statements.
DERIVATIVE RISK - Each fund may invest in derivatives for hedging or non-hedging
purposes. While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. When the funds use derivatives as an investment to gain market
exposure, or for hedging purposes, gains and losses from derivative instruments
may be substantially greater than the derivative's original cost. Derivative
instruments include swap agreements.
SWAP AGREEMENTS - Each fund may enter into swap agreements. A swap is an
exchange of cash payments between the fund and another party. Net cash payments
are exchanged at specified intervals and are 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, including accruals of periodic amounts of interest to be paid
or received, is recorded as unrealized appreciation or depreciation in the
Statement of Operations. A liquidation payment received or made upon early
termination is recorded as a realized gain or loss in the Statement of
Operations. Collateral, in the form of cash or securities, may be required to be
held in segregated accounts with the fund's custodian in connection with these
agreements. Risk of Assets and Liabilities. These risks include the possible
lack of a liquid market, failure of the counterparty to perform under the terms
of the agreements, and unfavorable market movement of the underlying instrument.
All swap agreements entered into by the fund with the same counterparty are
generally governed by a single master agreement, which provides for the netting
of all amounts owed by the parties under the agreement upon the occurrence of an
event of default, thereby reducing the credit risk to which such party is
exposed.
INTEREST RATE SWAP AGREEMENTS - Interest rate swap agreements involve the
periodic exchange of cash flows, such as the exchange of fixed rate interest
payments for floating rate interest payments based on a notional principal
amount. The interest rates may be based on a specific financial index or the
exchange of two distinct floating rate payments. Each fund may enter into an
interest rate swap in order to manage its exposure to interest fluctuations.
INDEMNIFICATIONS - Under each fund's organizational documents, liabilities and
expenses arising out of the performance of their duties to the fund.
Additionally, in the normal course of business, each fund enters into agreements
with service providers that may contain indemnification clauses. Each maximum
exposure under these agreements is unknown as this would involve future claims
that may be made against the fund that have not yet occurred.
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.
Each fund may receive proceeds from litigation settlements involving its
portfolio holdings. Any proceeds received are reflected in realized gain/loss in
the Statement of Operations, or in unrealized gain/loss if the security is still
held by the fund.
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 nonrecurring, 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.
INTEREST EXPENSE AND FEES - Interest expense and fees relate to payments made to
the holder of the floating rate certificate from trust assets in connection with
self-deposited inverse floater transactions. Interest expense and fees are
recorded as incurred.
FEES PAID INDIRECTLY - Each fund's custody fee is reduced according deposited
with the custodian by each fund. This amount, for the six months ended September
30, 2006, is shown as a reduction of total expenses on the Statement of
Operations.
TAX MATTERS AND DISTRIBUTIONS - Each fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue Code,
and to distribute all of its taxable and tax-exempt income, including realized
capital gains. Accordingly, no provision for federal income tax is required in
the financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These
adjustments have no impact on net assets or net asset value per share. Temporary
differences which arise from recognizing certain items of income, expense, gain
or loss in different periods for financial statement and tax purposes will
reverse at some time in the future. Distributions in excess of net investment
income or net realized gains are temporary overdistributions for financial
statement purposes resulting from differences in the recognition or
classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to amortization and accretion of debt
securities, secured borrowings, wash sale loss deferrals, and treating a portion
of the proceeds from redemptions as a distribution for tax purposes.
The tax character of distributions made during the current period will be
determined at fiscal year end. The tax character of distributions declared to
shareholders is as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
YEAR ENDED 3/31/06 FUND FUND FUND FUND FUND FUND FUND FUND
- ------------------ ---- ---- ---- ---- ---- ---- ---- ----
Ordinary income (including any
short-term capital gains) $ -- $ -- $ 398,095 $ -- $ -- $ 178,774 $ -- $ --
Tax-exempt income 3,825,714 7,075,051 14,172,501 4,383,989 6,716,613 4,915,444 13,450,458 6029,196
Long-term capital gain -- 800,147 930,835 -- -- 272,746 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ 3,825,714 $ 7,875,198 $15,501,431 $ 4,383,989 $6,716,613 $ 5,366,964 $ 13,450,458 $6,029,196
YEAR ENDED 3/31/06
Ordinary income (including any
short-term capital gains) $ -- $ -- $ 338,971 $ -- $ 36,036 $ 194,393 $ -- $ 35,541
Tax-exempt income 4,288,716 7,823,631 15,104,858 4,481,113 7,152,028 5,259,087 14,692,962 6,402,713
Long-term capital gain -- -- 1,184,575 -- -- 713,987 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ 4,288,716 $ 7,823,631 $16,628,404 $4,481,113 $7,188,064 $ 6,167,467 $ 14,692,962 $6,438,254
The federal tax cost and the tax basis components of distributable earnings were
as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
AS OF 9/30/06 FUND FUND FUND FUND FUND FUND FUND FUND
- ------------------ ---- ---- ---- ---- ---- ---- ---- ----
Cost of investments $ 79,477,890 $149,902,862 $308,686,177 $102,824,602 $143,829,132 $104,964,251 $279,013,417 $132,009,747
- -----------------------------------------------------------------------------------------------------------------------------------
Gross appreciation 4,121,653 11,285,284 20,701,220 4,994,274 9,682,308 6,021,601 15,160,041 8,023,295
Gross depreciation (53,985) (34,388) (7,302) (27,897) (3,342) (17,310) (17,142) (21,137)
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation) $ 4,067,668 $11,250,896 $ 20,693,918 $ 4,966,377 $ 9,678,966 $6,004,291 $ 15,142,899 $ 8,002,158
AS OF 3/31/06
Undistributed ordinary
income $ -- $ 42,588 $ -- $ -- $ -- $ -- $ -- $ --
Undistributed tax-exempt
income 198,486 76,149 586,480 162,694 445,131 154,994 276,734 228,967
Undistributed long-term
capital gain -- 528,821 -- -- -- -- -- --
Capital loss carryforwards (317,125) -- -- (190,380) (615,121) -- -- (221,741)
Post-October capital loss
deferral (21,979) -- -- -- -- -- (69,610) --
Other temporary differences (283,657) (466,763) (964,966) (262,134) (390,175) (562,666) (1,116,101) (415,320)
Net unrealized appreciation
(depreciation) 3,238,954 9,835,675 18,529,096 3,951,577 8,536,487 5,756,140 13,984,109 6,965,886
The aggregate cost above includes prior fiscal year end tax adjustments. As of
March 31, 2006, certain funds had capital loss carryforwards available to offset
future realized gains. Such losses expire as follows:
MISSISSIPPI PENNSYLVANIA SOUTH CAROLINA WEST VIRGINIA
EXPIRATION DATE FUND FUND FUND FUND
3/31/09 $ -- $ -- $(615,121) $ (75,960)
3/31/10 -- -- -- (83,347)
3/31/12 -- (190,380) -- --
3/31/13 (287,448) -- -- (62,434)
3/31/14 (29,677) -- -- --
----------------------------------------------------------------------------------
Total $(317,125) $(190,380) $(615,121) $(221,741)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the is effective for fiscal years beginning after December 15, 2006 and
is to be applied to all open tax years as of the effective date. This
Interpretation prescribes a minimum threshold for financial statement
recognition of the benefit of a tax position taken or expected to be taken in a
tax return, and requires certain expanded disclosures. Management is evaluating
the application of the Interpretation to each fund, and has not at this time
determined the impact, if any, resulting from the adoption of this
Interpretation on each fund's financial statements
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 - Each fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
management and related administrative services and facilities to each fund. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
each fund's average daily net assets.
As part of a settlement agreement with the New York Attorney General concerning
market timing and related matters, MFS has agreed to reduce the management fee
to 0.30% of each fund's through February 28, 2009. For the six months ended
September 30, 2006, this waiver amounted to the following for each fund and is
reflected as a reduction of total expenses in the Statement of Operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$106,330 $204,841 $413,244 $136,742 $194,335 $143,529 $377,406 $182,402
The management fee incurred for the six months ended September 30, 2006 was
equivalent to an annual effective rate of 0.30% of each fund's average daily net
assets.
For the Pennsylvania Fund, the investment adviser has agreed in writing to pay a
portion of the exclusive of management, distribution and service, and certain
other fees and expenses, such that operating expenses do not exceed 0.20%
annually of the fund's average daily net assets. This unless changed or
rescinded by the fund's Board of Trustees. For amounted to $61,216 and is
reflected as a reduction of total expenses in the Statement of Operations.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received the following amounts for the six months ended
September 30, 2006, as its portion of the initial sales charge on sales of Class
A shares of the funds.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$15,321 $10,009 $25,759 $13,594 $15,714 $5,904 $18,575 $16,480
The Board of Trustees has adopted a distribution plan for certain class shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940.
Each fund's distribution plan provides that the fund will pay MFD for in
connection with the distribution and servicing of certain share classes. One
component of the plan is a distribution fee paid to MFD and another component of
the plan is a service fee paid to MFD. MFD may subsequently pay all, or a
portion, of the distribution and/or service fees to financial intermediaries.
Distribution Fee Plan Table:
CLASS A
----------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Mississippi Fund 0.10% 0.25% 0.35% -- $ --
New York Fund 0.10% 0.25% 0.35% 0.25% 148,253
North Carolina Fund 0.10% 0.25% 0.35% 0.35% 467,708
Pennsylvania Fund 0.10% 0.25% 0.35% 0.10% 35,909
South Carolina Fund 0.10% 0.25% 0.35% 0.35% 228,769
Tennessee Fund 0.10% 0.25% 0.35% 0.35% 172,410
Virginia Fund 0.10% 0.25% 0.35% 0.35% 478,259
West Virginia Fund 0.10% 0.25% 0.35% 0.35% 234,385
CLASS B
----------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Mississippi Fund 0.75% 0.25% 1.00% 0.76% $38,700
New York Fund 0.75% 0.25% 1.00% 1.00% 145,053
North Carolina Fund 0.75% 0.25% 1.00% 1.00% 156,335
Pennsylvania Fund 0.75% 0.25% 1.00% 0.86% 161,841
South Carolina Fund 0.75% 0.25% 1.00% 1.00% 123,717
Tennessee Fund 0.75% 0.25% 1.00% 1.00% 81,515
Virginia Fund 0.75% 0.25% 1.00% 1.00% 78,252
West Virginia Fund 0.75% 0.25% 1.00% 1.00% 59,937
CLASS C
----------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(D) RATE(E) FEE
New York Fund 0.75% 0.25% 1.00% 1.00% $81,300
North Carolina Fund 0.75% 0.25% 1.00% 1.00% 160,333
Virginia Fund 0.75% 0.25% 1.00% 1.00% 64,921
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLIN PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Total Distribution and
Service Fees $38,700 $374,606 $784,376 $197,750 $352,486 $253,925 $621,432 $294,322
(d) In accordance with the distribution plan for certain classes, each fund pays distribution and/or service fees up
to these annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended
September 30, 2006 based on each class' average daily net assets. Payment of the Mississippi Fund's 0.25% annual
Class A service fee and 0.10% annual Class A distribution fee is not yet in effect and will be implemented on such
date as the fund's Board of Trustees may determine. For one year from the date of sale of Class B shares of the
Mississippi Fund, assets attributable to such Class B shares are subject to the 0.25% annual Class B service fee.
On assets attributable to all other Class B shares of the Mississippi Fund, the service fee is not currently in
effect, but may be implemented on such date as the fund's Board of Trustees may determine. Payment of the New York
Fund's 0.10% annual Class A distribution fee is not yet in effect and will be implemented on such date as the
fund's Board of Trustees may determine. Payment of the Pennsylvania Fund's 0.10% annual Class A distribution fee
is not yet in effect and will be implemented on such date as the fund's Board of Trustees may determine. 0.10% of
the Class A service fee is currently being paid by the Pennsylvania Fund. Payment of the remaining 0.15% of the
Pennsylvania Fund's Class A service fee is not yet in effect and will be implemented on such date as the fund's
Board of Trustees may determine. For one year from the date of sale of Class B shares of the Pennsylvania Fund,
assets attributable to such Class B shares are subject to the 0.25% annual Class B service fee. On assets
attributable to all other Class B shares of the Pennsylvania Fund, 0.10% of the Class B service fee is currently
in effect and the remaining portion of the Class B service fee is not in effect but may be implemented on such
date as the fund's Board of Trustees 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 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event
of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and
during the six months ended September 30, 2006, were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANI CAROLINA TENNESSEE VIRGINIA VIRGINIA
CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND FUND
Class A $ -- $ 975 $ -- $ -- $ 27 $ -- $ -- $ --
Class B 6,900 30,463 19,406 39,233 21,147 10,040 21,140 10,864
Class C N/A 113 1,122 N/A N/A N/A 21 N/A
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from
the funds' for its services as shareholder servicing agent calculated as a determined periodically under the
supervision of the fund's Board of each fund paid the following fees, which equated to the following annual percentage
of each for shareholder services:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANI CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Expenses paid $ 41,001 $78,987 $159,347 $ 52,728 $74,936 $ 55,345 $145,528 $70,334
Percentage of average
daily
net assets 0.0964% 0.0964% 0.0964% 0.0964% 0.0964% 0.0964% 0.0964% 0.0964%
MFSC also receives payment from each fund for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the
funds. For the six months ended September 30, 2006, these costs amounted to following. Each fund may also pay
shareholder servicing related costs to non-related parties.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$2,372 $4,683 $9,396 $8,012 $3,887 $4,748 $10,229 $5,268
ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other
administrative services to certain funds. Under an administrative services agreement, the funds may partially
reimburse MFS the costs incurred to provide these services. Each fund is charged a fixed amount plus a fee based on
calendar year average net assets. Each fund's annual fixed amount is $17,500. The September 30, 2006 was equivalent to
the following annual effective rates of each
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Percentage of average
daily net assets 0.0282% 0.0236% 0.0210% 0.0261% 0.0238% 0.0257% 0.0212% 0.0242%
TRUSTEES' AND OFFICERS' COMPENSATION - Each fund pays compensation to Independent Trustees in the form of a retainer,
attendance fees, and additional compensation to Board and Committee chairpersons. The funds do not pay compensation
directly to Trustees or officers of each fund who are also officers of the investment adviser, 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, MFD, and MFSC.
Each fund has an unfunded, defined benefit plan for certain retired Independent Trustees which resulted in the
following pension expense for the funds. These amounts are included in Independent trustees' September 30, 2006.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$346 $393 $805 $351 $791 $366 $802 $789
The deferred liability for retirement benefits payable to retired Trustees amounted to the following for each fund at
September 30, 2006, and is included in payable for independent trustees'
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$9,400 $12,104 $14,700 $9,288 $14,658 $12,085 $14,723 $14,655
OTHER - 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. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement.
For the six months ended September 30, 2006, the fees paid to Tarantino LLC amounted to the following:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$218 $420 $848 $280 $398 $294 $774 $374
MFS has agreed to reimburse the funds for a portion of the payments made by the funds to Tarantino LLC in the
following amounts, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS
has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to
the ICCO.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
- ----------- -------- -------- ------------ -------- --------- -------- --------
$218 $420 $847 $280 $398 $294 $774 $374
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
(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 $7,591,614 $ 8,384,893 $11,167,032 $3,573,680 $6,836,356 $ 6,106,165 $8,061,056 $2,537,622
Sales $9,432,114 $12,740,254 $15,167,019 $7,341,301 $9,565,265 $10,654,894 $18,048,530 $8,455,703
(5) SHARES OF BENEFICIAL INTEREST
Each fund's Declaration permits the Trustees to issue an unlimited Transactions in each fund's shares were as follows:
MISSISSIPPI FUND NEW YORK FUND
------------------------------------------- --------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06 9/30/06 3/31/06
------------------- ------------------ ------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 281,142 $2,724,451 866,381 $ 8,546,452 715,625 $ 7,915,015 653,127 $ 7,390,698
Class B 20,407 198,403 24,252 239,436 44,081 486,768 138,910 1,569,384
Class C -- -- -- -- 29,569 327,755 134,687 1,526,215
- ----------------------------------------------------------------------------------------------------------------------------
301,549 $2,922,854 890,633 $ 8,785,888 789,275 $ 8,729,538 926,724 $ 10,486,297
Shares issued to
shareholders in
reinvestment of
distributions
Class A 96,252 $ 935,502 185,126 $ 1,824,861 137,902 $ 1,533,961 324,484 $ 3,670,111
Class B 9,908 96,378 21,153 208,716 29,578 327,745 74,060 834,700
Class C -- -- -- -- 15,927 176,771 39,815 449,550
- ----------------------------------------------------------------------------------------------------------------------------
106,160 $1,031,880 206,279 $ 2,033,577 183,407 $ 2,038,477 438,359 $ 4,954,361
Shares reacquired
Class A (563,700) $(5,471,994) (1,380,138) $(13,645,231) (839,413) $ (9,326,920) (1,469,796) $(16,663,402)
Class B (76,588) (744,359) (144,591) (1,426,794) (305,966) (3,391,695) (640,793) (7,238,245)
Class C -- -- -- -- (228,469) (2,537,494) (387,465) (4,383,903)
- ----------------------------------------------------------------------------------------------------------------------------
(640,288) $(6,216,353) (1,524,729) $(15,072,025) (1,373,848) $(15,256,109) (2,498,054) $(28,285,550)
Net change
Class A (186,306) $(1,812,041) (328,631) $(3,273,918) 14,114 $122,056 (492,185) $ (5,602,593)
Class B (46,273) (449,578) (99,186) (978,642) (232,307) (2,577,182) (427,823) (4,834,161)
Class C -- -- -- -- (182,973) (2,032,968) (212,963) (2,408,138)
- ----------------------------------------------------------------------------------------------------------------------------
(232,579) $(2,261,619) (427,817) $(4,252,560) (401,166) $(4,488,094) (1,132,971) $(12,844,892)
NORTH CAROLINA FUND PENNSYLVANIA FUND
------------------------------------------- --------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06 9/30/06 3/31/06
------------------- ------------------ ------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 997,329 $ 11,810,832 1,314,537 $15,818,825 477,884 $4,837,893 1,258,762 $12,897,989
Class B 42,955 508,177 132,671 1,590,635 73,185 744,044 275,025 2,820,655
Class C 138,266 1,630,450 271,600 3,270,481 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
1,178,550 $ 13,949,459 1,718,808 $20,679,941 551,069 $5,581,937 1,533,787 $15,718,644
Shares issued to
shareholders in
reinvestment of
distributions
Class A 312,240 $ 3,692,942 698,501 $8,393,304 91,045 $922,780 185,707 $1,901,237
Class B 26,728 315,597 69,832 838,029 39,928 405,814 87,173 894,888
Class C 36,075 426,389 79,561 954,980 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
375,043 $ 4,434,928 847,894 $10,186,313 130,973 $1,328,594 272,880 $2,796,125
Shares reacquired
Class A (1,401,362) $(16,563,402) (2,554,557) $(30,727,514) (629,373) $(6,362,173) (990,703) $(10,143,698)
Class B (254,745) (3,003,316) (807,609) (9,719,958) (310,624) (3,149,284) (631,297) (6,480,350)
Class C (168,513) (1,989,416) (375,266) (4,513,810) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
(1,824,620) $(21,556,134) (3,737,432) $(44,961,282) (939,997) $(9,511,457) (1,622,000) $(16,624,048)
Net change
Class A (91,793) $ (1,059,628) (541,519) $(6,515,385) (60,444) $(601,500) 453,766 $4,655,528
Class B (185,062) (2,179,542) (605,106) (7,291,294) (197,511) (1,999,426) (269,099) (2,764,807)
Class C 5,828 67,423 (24,105) (288,349) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
(271,027) $(3,171,747) (1,170,730) $(14,095,028) (257,955) $(2,600,926) 184,667 $1,890,721
SOUTH CAROLINA FUND TENNESSEE FUND
------------------------------------------- --------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06 9/30/06 3/31/06
------------------- ------------------ ------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 473,037 $ 5,778,509 1,132,204 $14,046,582 635,337 $6,697,438 493,536 $ 5,305,262
Class B 47,692 582,684 85,307 1,056,145 9,240 97,420 79,543 857,100
- ----------------------------------------------------------------------------------------------------------------------------------
520,729 $ 6,361,193 1,217,511 $15,102,727 644,577 $6,794,858 573,079 $ 6,162,362
Shares issued to
shareholders in
reinvestment
of distributions
Class A 154,968 $ 1,894,212 307,593 $3,815,307 102,937 $1,084,791 210,399 $ 2,255,583
Class B 23,918 292,092 54,579 676,705 16,330 171,919 40,963 439,012
- ----------------------------------------------------------------------------------------------------------------------------------
178,886 $ 2,186,304 362,172 $4,492,012 119,267 $1,256,710 251,362 $ 2,694,595
Shares reacquired
Class A (651,221) $ (7,961,884) (1,274,850) $(15,823,297) (797,875) $(8,394,998) (1,135,271) $(12,170,537)
Class B (316,288) (3,858,455) (510,226) (6,331,745) (268,881) (2,833,296) (422,094) (4,536,883)
- ----------------------------------------------------------------------------------------------------------------------------------
(967,509) $(11,820,339) (1,785,076) $(22,155,042) (1,066,756) $(11,228,294) (1,557,365) $(16,707,420)
Net change
Class A (23,216) $(289,163) 164,947 $2,038,592 (59,601) $(612,769) (431,336) $ (4,609,692)
Class B (244,678) (2,983,679) (370,340) (4,598,895) (243,311) (2,563,957) (301,588) (3,240,771)
- ----------------------------------------------------------------------------------------------------------------------------------
(267,894) $(3,272,842) (205,393) $(2,560,303) (302,912) $(3,176,726) (732,924) $ (7,850,463)
VIRGINIA FUND WEST VIRGINIA FUND
-------------------------------------------------- -------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06 9/30/06 3/31/06
--------------------- ------------------------- ------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 692,937 $7,897,092 1,481,053 $17,100,137 300,134 $3,430,420 767,854 $8,913,846
Class B 27,782 316,030 138,191 1,599,934 18,318 210,344 78,236 910,206
Class C 88,470 1,006,755 152,773 1,767,443 - - - -
- ---------------------------------------------------------------------------------------------------------------------------------
809,189 $9,219,877 1,772,017 $20,467,514 318,452 $3,640,764 846,090 $9,824,052
Shares issued to shareholders in
reinvestment of distributions
Class A 303,729 $3,459,241 610,984 $7,063,585 163,720 $1,873,992 325,732 $3,779,345
Class B 14,629 166,440 33,680 389,119 10,480 119,914 23,338 270,745
Class C 13,733 156,357 26,043 300,916 - - - -
- ---------------------------------------------------------------------------------------------------------------------------------
332,091 $3,782,038 670,707 $7,753,620 174,200 $1,993,906 349,070 $4,050,090
Shares reacquired
Class A (1,490,964) $(16,954,757) (2,517,056) $(29,092,777) (870,047) $(9,980,288) (981,278) $(11,390,785)
Class B (244,113) (2,774,296) (396,940) (4,587,647) (111,099) (1,271,299) (258,946) (3,004,395)
Class C (109,521) (1,244,125) (99,697) (1,152,730) - - - -
- ---------------------------------------------------------------------------------------------------------------------------------
(1,844,598) $(20,973,178) (3,013,693) $(34,833,154) (981,146) $(11,251,587) (1,240,224) $(14,395,180)
Net change
Class A (494,298) $(5,598,424) (425,019) $(4,929,055) (406,193) $(4,675,876) 112,308 $1,302,406
Class B (201,702) (2,291,826) (225,069) (2,598,594) (82,301) (941,041) (157,372) (1,823,444)
Class C (7,318) (81,013) 79,119 915,629 - - - -
- ---------------------------------------------------------------------------------------------------------------------------------
(703,318) $(7,971,263) (570,969) $(6,612,020) (488,494) $(5,616,917) (45,064) $(521,038)
(6) LINE OF CREDIT
Each fund and other affiliated funds participate in a $1 billion unsecured committed line of credit provided by a
syndication of banks under a credit agreement. In addition, these funds and other affiliated funds have established
uncommitted borrowing arrangements with certain banks. Borrowings may be made for temporary financing needs. Interest
is charged to each fund, based on its borrowings, generally at a rate equal to the Federal Reserve funds rate plus
0.35%. In addition, a commitment fee, based on the average daily, unused portion of the committed line of credit, is
allocated among the participating funds at the end of each calendar quarter. The interest expense incurred and
commitment fee allocated to each fund for the six months ended September 30, 2006 is included in miscellaneous expense
on the Statement of Operations as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Commitment Fee $259 $507 $1,006 $335 $475 $352 $924 $447
Interest Expense - - - - - - - -
(7) INVERSE FLOATERS
The funds invest in municipal inverse floating rate securities which are
structured by the issuer (known as primary market inverse floating rate
securities) or by an investment banker utilizing municipal bonds which have
already been issued (known as secondary market inverse floating rate
securities) to have variable rates of interest which typically move in the
opposite direction of short term interest rates. A secondary market inverse
floating rate security is created when an investment banker transfers a fixed
rate municipal bond to a special purpose trust, and causes the trust to (a)
issue floating rate certificates to third parties, in an amount equal to a
fraction of the par amount of the deposited bonds (these certificates usually
pay taxexempt interest at short-term interest rates that typically reset
weekly; and the certificate holders typically, on seven days notice, have the
option to tender their certificates to the investment banker or another party
for redemption at par plus accrued interest), and (b) issue inverse floating
rate certificates (sometimes referred to as ''inverse floaters''). If the
holder of the inverse floater transfers the municipal bonds to an investment
banker for the purpose of depositing the municipal bonds into the special
purpose trust, the inverse floating rate certificates that are issued by the
trust are referred to as ''self-deposited inverse floaters.'' If the bonds held
by the trust are purchased by the investment banker for deposit into the trust
from someone other than the purchasers of the inverse floaters, the inverse
floating rate certificates that are issued by the trust are referred to as
''externally deposited inverse floaters.'' Such self-deposited inverse floaters
held by the funds are accounted for as secured borrowings, with the municipal
bonds reflected in the investments of the funds and amounts owed to the holder
of the floating rate certificate under the provisions of the trust, which
amounts are paid solely from the assets of the trust, reflected as liabilities
of the funds in the Statements of Assets and Liabilities under the caption,
''Payable to the holder of the floating rate certificate from trust assets''.
At September 30, 2006, the funds' Statement of Assets and Liabilities impacts
were as follows:
PAYABLE TO THE WEIGHTED AVERAGE
HOLDER OF THE INTEREST RATE ON
FLOATING RATE FLOATING RATE VALUE OF BONDS
CERTIFICATE FROM CERTIFICATES ISSUED TRANSFERRED TO
FUND TRUST ASSETS BY THE TRUST THE TRUST
Mississippi Fund $5,360,000 3.42% $11,929,227
New York Fund $10,350,000 3.66% $22,950,051
North Carolina Fund $21,425,000 3.53% $48,997,637
Pennsylvania Fund $6,170,000 3.44% $13,742,913
South Carolina Fund $9,275,000 3.67% $20,209,961
Tennessee Fund $0 - $0
Virginia Fund $15,670,000 3.53% $33,709,623
West Virginia Fund $9,670,000 3.71% $21,354,786
Primary and externally deposited inverse floaters held by the funds are not
accounted for as secured borrowings.
(8) RESTATEMENT INFORMATION
After the funds issued their September 30, 2006 financial statements, certain
of the funds determined that the criteria for sale accounting in FASB Statement
No. 140 had not been met for certain transfers of municipal bonds during the
period ended September 30, 2006 and that its transfers of municipal bonds in
connection with self-deposited inverse floaters should have been accounted for
as secured borrowings rather than as sales. Accordingly, certain of the funds
have restated the Statements of Assets and Liabilities, including the
Portfolios of Investments, as of September 30, 2006, the related Statements of
Operations for the period then ended, and certain Financial Highlights for each
of the applicable periods in the five years then ended, to give effect to this
change, including recording interest on the bonds as interest income and
interest paid to the holder of the floating rate certificate from trust assets
as interest expense in the Statements of Operations. The funds' Statements of
Changes in Net Assets were not restated. The Tennessee Fund did not invest in
self-deposited inverse floaters and therefore no financial statement
restatement is required.
The restatement did not affect the funds' reported net investment income,
annual total return or net asset value.
MISSISSIPPI FUND NEW YORK FUND NORTH CAROLINA FUND
--------------------------- ----------------------------- -------------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
STATEMENT OF ASSETS AND
LIABILITIES
AT SEPTEMBER 30, 2006
(UNAUDITED)
Investments, identified cost $79,484,502 $84,813,730 $150,042,832 $159,929,322 $308,832,423 $330,377,708
Unrealized appreciation $ 4,061,056 $ 4,091,828 $ 11,110,926 $ 11,574,436 $ 20,547,672 $ 20,427,387
Investments, at value $83,545,558 $88,905,558 $161,153,758 $171,503,758 $329,380,095 $350,805,095
Interest receivable $ 1,165,379 $ 1,224,301 $ 2,415,884 $ 2,555,627 $ 5,260,461 $ 5,470,546
Total assets $85,021,631 $90,440,553 $164,290,759 $174,780,502 $335,621,263 $357,256,348
Payable to the holder of the
floating rate certificate from
trust assets $ - $ 5,360,000 $ - $ 10,350,000 $ - $ 21,425,000
Payable for interest expense
and fees $ - $ 58,922 $ - $ 139,743 $ - $ 210,085
Total liabilities $ 257,066 $ 5,675,988 $ 1,442,342 $ 11,932,085 $ 930,834 $ 22,565,919
Unrealized appreciation
(depreciation) on
investments $4,087,088 $ 4,117,860 $11,217,240 $ 11,680,750 $ 20,702,180 $ 20,581,895
Accumulated net realized
gain (loss) on investments $ (247,213) $ (277,985) $ 999,367 $ 535,857 $ 902,980 $ 1,023,265
Statement of Operations
Six Months ended
September 30, 2006
(unaudited)
Interest income $2,199,035 $ 2,299,900 $ 4,286,368 $ 4,485,823 $ 8,481,564 $ 8,888,462
Interest expense and fees $ - $ 100,865 $ - $ 199,455 $ - $ 406,898
Total expenses $ 409,597 $ 510,462 $ 1,050,000 $ 1,249,455 $ 2,065,742 $ 2,472,640
Net expenses $ 299,164 $ 400,029 $ 837,821 $ 1,037,276 $ 1,638,829 $ 2,045,727
PENNSYLVANIA FUND
--------------------------------------
PREVIOUSLY
REPORTED RESTATED
STATEMENT OF ASSETS AND
LIABILITIES
AT SEPTEMBER 30, 2006
(UNAUDITED)
Investments, identified cost $102,842,449 $108,969,882
Unrealized appreciation $ 4,948,530 $ 4,991,097
Investments, at value $107,790,979 $113,960,979
Interest receivable $ 1,617,494 $ 1,697,868
Total assets $109,909,375 $116,159,749
Payable to the holder of the
floating rate certificate from
trust assets $ - $ 6,170,000
Payable for interest expense
and fees $ - $ 80,374
Total liabilities $ 314,843 $ 6,565,217
Unrealized appreciation
(depreciation) on
investments $ 4,899,583 $ 4,942,150
Accumulated net realized
gain (loss) on investments $ 36,986 $ (5,581)
Statement of Operations
Six Months ended
September 30, 2006
(unaudited)
Interest income $ 2,674,907 $ 2,791,680
Interest expense and fees $ - $ 116,773
Total expenses $ 669,398 $ 786,171
Net expenses $ 466,168 $ 582,941
SOUTH CAROLINA FUND VIRGINIA FUND
------------------- -------------
PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED
-------- -------- -------- --------
STATEMENT OF ASSETS AND
LIABILITIES
AT SEPTEMBER 30, 2006 (UNAUDITED)
Investments, identified cost $144,055,177 $153,369,698 $279,164,976 $294,942,484
Unrealized appreciation $9,452,921 $ 9,413,400 $14,991,340 $14,883,832
Investments, at value $153,508,098 $162,783,098 $294,156,316 $309,826,316
Interest receivable $2,426,769 $ 2,558,491 $4,598,196 $4,792,124
Total assets $156,362,089 $165,768,811 $302,589,078 $318,453,006
Payable to the holder of the
floating rate certificate
from
trust assets $ -- $ 9,275,000 $ -- $ 15,670,000
Payable for interest expense and fees $ -- $ 131,722 $ -- $ 193,928
Total liabilities $ 1,071,855 $ 10,478,577 $ 1,063,085 $ 16,927,013
Unrealized appreciation (depreciation) on investments $ 9,484,085 $ 9,444,564 $ 15,592,080 $ 15,484,572
Accumulated net realized gain (loss) on investments $ (306,114) $ (266,593) $ 150,999 $ 258,507
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
Interest income $ 4,001,003 $ 4,177,826 $ 7,952,763 $ 8,247,208
Interest expense and fees $ -- $176,823 $ -- $ 294,445
Total expenses $ 978,154 $ 1,154,977 $ 1,806,386 $ 2,100,831
Net expenses $ 775,907 $ 952,730 $ 1,416,318 $ 1,710,763
WEST VIRGINIA FUND
------------------
PREVIOUSLY
REPORTED RESTATED
-------- --------
STATEMENT OF ASSETS AND
LIABILITIES
AT SEPTEMBER 30, 2006 (UNAUDITED)
Investments, identified cost
Unrealized appreciation $132,091,143 $141,885,052
Investments, at value $ 7,920,762 $ 7,796,853
Interest receivable $140,011,905 $149,681,905
Total assets $ 2,335,354 $ 2,425,850
Payable to the holder of the $142,789,574 $152,550,070
floating rate certificate
from
trust assets
Payable for interest expense and fees $ -- $ 9,670,000
Total liabilities $ -- $ 90,496
Unrealized appreciation (depreciation) on investments $ 322,943 $ 10,083,439
Accumulated net realized gain (loss) on investments $ 8,038,772 $ 7,914,863
$ 9,845 $ 133,754
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
Interest income
Interest expense and fees $ 3,729,952 $ 3,914,385
Total expenses $ -- $ 184,433
Net expenses $ 882,575 $ 1,067,008
$ 694,587 $ 879,020
MISSISSIPPI FUND
-------------------------------------------------------------------
SIX MONTHS ENDED
9/30/06 (UNAUDITED) 2006 2005
------------------- ---- ----
PREVIOUSLY PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
RATIOS (%) TO AVERAGE NET ASSETS:
CLASS A
Expenses before expense reductions 0.87(a) 1.11(a) 0.89 1.07 0.83 0.93
Expenses after expense reductions 0.62(a) 0.86(a) 0.64 0.82 0.58 0.68
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.62(a) N/A 0.64 N/A 0.58
CLASS B
Expenses before expense reductions 1.63(a) 1.87(a) 1.65 1.83 1.60 1.70
Expenses after expense reductions 1.38(a) 1.62(a) 1.40 1.58 1.35 1.45
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.38(a) N/A 1.40 N/A 1.35
NEW YORK FUND
------------------------------------------------------------------------------------------
SIX MONTHS ENDED
9/30/06 (UNAUDITED) 2006 2005
---------------------------- --------------------------- ----------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.07(a) 1.31(a) 1.10 1.28 1.04 1.14
Expenses after expense reductions 0.82(a) 1.06(a) 0.85 1.03 0.79 0.89
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.82(a) N/A 0.85 N/A 0.79
CLASS B
Expenses before expense reductions 1.83(a) 2.07(a) 1.85 2.03 1.79 1.89
Expenses after expense reductions 1.57(a) 1.81(a) 1.60 1.78 1.54 1.64
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.57(a) N/A 1.60 N/A 1.54
CLASS C
Expenses before expense reductions 1.83(a) 2.07(a) 1.85 2.03 1.79 1.89
Expenses after expense reductions 1.58(a) 1.82(a) 1.60 1.78 1.54 1.64
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.58(a) N/A 1.60 N/A 1.54
NEW YORK FUND
------------------------------------------------------------------------------------------
2004 2003 2002
---------------------------- --------------------------- ----------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
- --------------------------------- -------- -------- -------- -------- -------- --------
CLASS A
Expenses before expense reductions 1.06 1.13 1.07 1.17 1.08 1.21
Expenses after expense reductions 0.86 0.93 0.87 0.97 0.88 1.01
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.86 N/A 0.87 N/A 0.88
CLASS B
Expenses before expense reductions 1.80 1.87 1.82 1.92 1.83 1.96
Expenses after expense reductions 1.60 1.67 1.62 1.72 1.63 1.76
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.60 N/A 1.62 N/A 1.63
CLASS C
Expenses before expense reductions 1.80 1.87 1.82 1.92 1.83 1.96
Expenses after expense reductions 1.60 1.67 1.62 1.72 1.63 1.76
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.60 N/A 1.62 N/A 1.63
NORTH CAROLINA FUND
--------------------------------------------------------------
SIX MONTHS ENDED
9/30/06 (UNAUDITED) 2006
---------------------------- ---------------------------
PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED
- --------------------------------- -------- -------- -------- --------
CLASS A
Expenses before expense reductions 1.13(a) 1.38(a) 1.14 1.33
Expenses after expense reductions 0.87(a) 1.12(a) 0.89 1.08
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.87(a) N/A 0.89
CLASS B
Expenses before expense reductions 1.78(a) 2.03(a) 1.79 1.98
Expenses after expense reductions 1.53(a) 1.78(a) 1.54 1.73
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.53(a) N/A 1.54
CLASS C
Expenses before expense reductions 1.77(a) 2.02(a) 1.79 1.98
Expenses after expense reductions 1.52(a) 1.77(a) 1.54 1.73
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.52(a) N/A 1.54
PENNSYLVANIA FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED
9/30/06 (UNAUDITED) 2006 2005
---------------------- ----------------------- -------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.96(a) 1.17(a) 0.96 1.13 0.94 1.03
Expenses after expense reductions 0.60(a) 0.81(a) 0.60 0.77 0.60 0.69
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.60(a) N/A 0.60 N/A 0.60
CLASS B
Expenses before expense reductions 1.72(a) 1.93(a) 1.72 1.89 1.71 1.80
Expenses after expense reductions 1.36(a) 1.57(a) 1.36 1.53 1.37 1.46
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.36(a) N/A 1.36 N/A 1.37
PENNSYLVANIA FUND
----------------------------------------------------------------------------
2004 2003 2002
---------------------- ----------------------- -------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 0.94 1.05 0.96 1.03 0.89 0.99
Expenses after expense reductions 0.64 0.75 0.48 0.55 0.36 0.46
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.64 N/A 0.48 N/A 0.36
CLASS B
Expenses before expense reductions 1.74 1.85 1.78 1.85 1.73 1.83
Expenses after expense reductions 1.44 1.55 1.30 1.37 1.20 1.30
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.44 N/A 1.30 N/A 1.20
SOUTH CAROLINA FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED
9/30/06 (UNAUDITED) 2006 2005
---------------------- ----------------------- -------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.15(a) 1.38(a) 1.17 1.34 1.14 1.23
Expenses after expense reductions 0.90(a) 1.13(a) 0.92 1.09 0.89 0.98
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.90(a) N/A 0.92 N/A 0.89
CLASS B
Expenses before expense reductions 1.81(a) 2.04(a) 1.82 1.99 1.79 1.88
Expenses after expense reductions 1.56(a) 1.79(a) 1.57 1.74 1.54 1.63
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.56(a) N/A 1.57 N/A 1.54
SOUTH CAROLINA FUND
----------------------------------------------------------------------------
2004 2003 2002
---------------------- ----------------------- -------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.14 1.21 1.15 1.23 1.14 1.27
Expenses after expense reductions 0.94 1.01 0.95 1.03 0.94 1.07
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.94 N/A 0.95 N/A 0.94
CLASS B
Expenses before expense reductions 1.79 1.86 1.80 1.88 1.79 1.92
Expenses after expense reductions 1.59 1.66 1.60 1.68 1.59 1.72
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.59 N/A 1.60 N/A 1.59
VIRGINIA FUND
--------------------------------------------------
SIX MONTHS ENDED
9/30/06 (UNAUDITED) 2006
---------------------- -------------------------
PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.14(a) 1.34(a) 1.15 1.30
Expenses after expense reductions 0.88(a) 1.08(a) 0.90 1.05
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.88(a) N/A 0.90
CLASS B
Expenses before expense reductions 1.79(a) 1.99(a) 1.80 1.95
Expenses after expense reductions 1.54(a) 1.74(a) 1.55 1.70
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.54(a) N/A 1.55
CLASS C
Expenses before expense reductions 1.78(a) 1.98(a) 1.80 1.95
Expenses after expense reductions 1.53(a) 1.73(a) 1.55 1.70
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.53(a) N/A 1.55
WEST VIRGINIA FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED
9/30/06 (UNAUDITED) 2006 2005
---------------------- ----------------------- -------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.16(a) 1.41(a) 1.17 1.34 1.14 1.25
Expenses after expense reductions 0.91(a) 1.16(a) 0.92 1.09 0.89 1.00
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.91(a) N/A 0.92 N/A 0.89
CLASS B
Expenses before expense reductions 1.81(a) 2.06(a) 1.82 1.99 1.79 1.90
Expenses after expense reductions 1.56(a) 1.81(a) 1.57 1.74 1.54 1.65
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.56(a) N/A 1.57 N/A 1.54
WEST VIRGINIA FUND
----------------------------------------------------------------------------
2004 2003 2002
---------------------- ----------------------- -------------------------
PREVIOUSLY PREVIOUSLY PREVIOUSLY
RATIOS (%) TO AVERAGE NET ASSETS: REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.13 1.21 1.16 1.26 1.13 1.30
Expenses after expense reductions 0.93 1.01 0.96 1.06 0.93 1.10
Expenses after expense reductions and
excluding interest and fees(s) N/A 0.93 N/A 0.96 N/A 0.93
CLASS B
Expenses before expense reductions 1.78 1.86 1.81 1.91 1.79 1.96
Expenses after expense reductions 1.58 1.66 1.61 1.71 1.59 1.76
Expenses after expense reductions and
excluding interest and fees(s) N/A 1.58 N/A 1.61 N/A 1.59
(a) Annualized.
While the "Statements of Assets and Liabilities" as of March 31, 2005, 2004,
2003 and 2002 (not presented herein) have not been reissued to give effect to
the restatement, the principal effects of the restatement would be to increase
investments and payable to the holder of the floating rate certificate from
trust assets by corresponding amounts each year end, with no effect on
previously reported net assets. The "Statements of Operations" for the years
ended March 31, 2005, 2004, 2003 and 2002 (not presented herein) have not been
reissued to give effect to the restatement, but the principal effects of the
restatement would be to increase interest income and interest expense and fees
by corresponding amounts each year, with no effect on previously reported net
investment income.
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT (NOT RESTATED)
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of each Fund's investment
advisory agreement with MFS. The Trustees consider matters bearing on the Funds
and their advisory arrangements at their meetings throughout the year,
including a review of performance data at each regular meeting. In addition,
the independent Trustees met several times over the course of three months
beginning in May and ending in July, 2006 ("contract review meetings") for the
specific purpose of considering whether to approve the continuation of the
investment advisory agreements for the Funds and the other investment companies
that the Board oversees (the "MFS Funds"). The independent Trustees were
assisted in their evaluation of the Funds' investment advisory agreements by
independent legal counsel, from whom they received separate legal advice and
with whom they met separately from MFS during various contract review meetings.
The independent Trustees were also assisted in this process by the MFS Funds'
Independent Chief Compliance Officer, a full-time senior officer appointed by
and reporting to the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreements, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light of
the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for each Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreements and other arrangements with the Funds.
In connection with their contract review meetings, the Trustees received and
relied upon materials which included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Funds for various
time periods ended December 31, 2005 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a
group of funds identified by objective criteria suggested by MFS ("MFS peer
funds"), (ii) information provided by Lipper Inc. on the Funds' advisory fees
and other expenses and the advisory fees and other expenses of comparable funds
identified by Lipper (the "Lipper expense group"), as well as the advisory fees
and other expenses of MFS peer funds, (iii) information provided by MFS on the
advisory fees of comparable portfolios of other clients of MFS, including
institutional separate accounts and other clients, (iv) information as to
whether and to what extent applicable expense waivers, reimbursements or fee
"breakpoints" are observed for the Funds, (v) information regarding MFS'
financial results and financial condition, including MFS' and certain of its
affiliates' estimated profitability from services performed for the Funds and
the MFS Funds as a whole, (vi) MFS' views regarding the outlook for the mutual
fund industry and the strategic business plans of MFS, (vii) descriptions of
various functions performed by MFS for the Funds, such as compliance monitoring
and portfolio trading practices, and (viii) information regarding the overall
organization of MFS, including information about MFS' senior management and
other personnel providing investment advisory, administrative and other
services to the Funds and other MFS Funds. The comparative performance, fee and
expense information prepared and provided by Lipper Inc. was not independently
verified and the independent Trustees did not independently verify any
information provided to them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreements with the Funds was based on a comprehensive consideration of all
information provided to the Trustees and not the result of any single factor.
Some of the factors that figured particularly in the Trustees' deliberations
are described below, although individual Trustees may have evaluated the
information presented differently from one another, giving different weights to
various factors. It is also important to recognize that the fee arrangements
for the Funds and other MFS Funds are the result of years of review and
discussion between the independent Trustees and MFS, that certain aspects of
such arrangements may receive greater scrutiny in some years than others, and
that the Trustees' conclusions may be based, in part, on their consideration of
these same arrangements during the course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed
each Fund's total return investment performance as well as the performance of
peer groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of each Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2005, which the Trustees believed was
a long enough period to reflect differing market conditions.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Funds' performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of each Fund's advisory fee, the Trustees
considered, among other information, each Fund's advisory fee and the total
expense ratio of each Fund's Class A shares as a percentage of average net
assets and the advisory fee and total expense ratios of peer groups of funds
based on information provided by Lipper Inc. and MFS. The Trustees considered
whether the Funds were subject to any fee waivers or reductions or expense
limitations. The Trustees considered that MFS observes an advisory fee
reduction that will remain in effect for each Fund through February 28, 2009 as
part of MFS's settlement with the New York Attorney General concerning market
timing and related matters.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information provided
by MFS as to the generally broader scope of services provided by MFS to the
Funds in comparison to institutional accounts, the higher demands placed on
MFS' investment personnel and trading infrastructure as a result of the daily
cash in-flows and out-flows of the Funds, and the impact on MFS and expenses
associated with the more extensive regulatory regime to which the Funds are
subject in comparison to institutional accounts.
The Trustees also considered whether each Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that each Fund's advisory fee rate schedule is
not currently subject to any breakpoints. Taking into account the advisory fee
reduction noted above and any expense limitations, the Trustees determined not
to recommend any advisory fee breakpoints for the Funds at this time.
The Trustees also considered information prepared by MFS relating to MFS' costs
and profits with respect to each Fund, the MFS Funds considered as a group, and
other investment companies and accounts advised by MFS, as well as MFS'
methodologies used to determine and allocate its costs to the MFS Funds, the
Funds and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreements, that the advisory fees charged to each Fund
represent reasonable compensation in light of the services being provided by
MFS to the Funds.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Funds.
The Trustees also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and
well-capitalized companies which are spending, and appear to be prepared to
continue to spend, substantial sums to engage personnel and to provide services
to competing investment companies. In this regard, the Trustees also considered
the financial resources of MFS and its ultimate parent, Sun Life Financial Inc.
The Trustees also considered the advantages and possible disadvantages to the
Funds of having an adviser which also serves other investment companies as well
as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the
Funds by MFS and its affiliates under agreements and plans other than the
investment advisory agreements, including any 12b-1 fees the Funds pay to MFS
Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Funds' behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Funds'
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various other
factors. Additionally, the Trustees considered so-called "fall-out benefits" to
MFS such as reputational value derived from serving as investment manager to
the Funds.
Based on their evaluation of factors that they deemed to be material, including
those factors described above, the Board of Trustees, including a majority of
the independent Trustees, concluded that each Fund's investment advisory
agreement with MFS should be continued for an additional one-year period,
commencing August 1, 2006.
MFS MISSISSIPPI MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 1st quintile for each of the one and five-year periods ended December 31,
2005 relative to the Lipper performance universe. Because of the passage of
time, these performance results may differ from the performance results for
more recent periods, including those shown elsewhere in this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) and total expense
ratio were each lower than the Lipper expense group median.
MFS NEW YORK MUNICIPAL BOND FUND
The Fund's Class A performance was in the 3rd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 2nd quintile for each of the one- and five-year periods ended December 31,
2005 relative to the Lipper performance universe. Because of the passage of
time, these performance results may differ from the performance results for
more recent periods, including those shown elsewhere in this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS NORTH CAROLINA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 1st quintile for the one-year period and the 2nd quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS PENNSYLVANIA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 1st quintile for each of the one- and five-year periods ended December 31,
2005 relative to the Lipper performance universe. Because of the passage of
time, these performance results may differ from the performance results for
more recent periods, including those shown elsewhere in this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered, the advisory fee reduction noted above and that MFS currently
observes an expense limitation for the Fund. The Trustees also considered that,
according to the Lipper data, the Fund's effective advisory fee rate (taking
into account advisory fee reduction and the expense limitation) and total
expense ratio were each lower than the Lipper expense group median.
MFS SOUTH CAROLINA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 1st quintile for the one-year period and the 2nd quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS TENNESSEE MUNICIPAL BOND FUND
The Fund's Class A performance was in the 3rd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 1st quintile for the one-year period and the 2nd quintile for the five-year
period ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS VIRGINIA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 2nd quintile for each of the one- and five-year periods ended December 31,
2005 relative to the Lipper performance universe. Because of the passage of
time, these performance results may differ from the performance results for
more recent periods, including those shown elsewhere in this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was at the
Lipper expense group median.
MFS WEST VIRGINIA MUNICIPAL BOND FUND
The Fund's Class A performance was in the 2nd quintile relative to the other
funds in the universe for the three-year period ended December 31, 2005 (the
1st quintile being the best performers and the 5th quintile being the worst
performers). The total return performance of the Fund's Class A shares was in
the 2nd quintile for each of the one- and five-year periods ended December 31,
2005 relative to the Lipper performance universe. Because of the passage of
time, these performance results may differ from the performance results for
more recent periods, including those shown elsewhere in this report.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data, the Fund's effective advisory
fee rate (taking into account the advisory fee reduction) was lower than the
Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
ACCESS TO DISCLOSURE ON MFS WEB SITE
A discussion regarding the Board's most recent review and renewal of each
Fund's investment advisory agreement will be available on or before November 1,
2006, by clicking on each Fund's name under "Select a fund" on the MFS Web site
(mfs.com).
PROXY VOTING POLICIES AND INFORMATION
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 Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how each 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.
QUARTERLY PORTFOLIO DISCLOSURE
The trust 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 trust's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site 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.
CONTACT US
WEB SITE
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
ACCOUNT SERVICE AND
LITERATURE
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
MAILING ADDRESS
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA
02205-5824
OVERNIGHT MAIL
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116-3741
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply 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 a retirement
plan, MFS TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
500 Boylston Street,
Boston, MA 02116
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
SEMIANNUAL REPORT
MFS(R) MUNICIPAL INCOME FUND
(As Restated)
LETTER FROM THE CEO 1
- ------------------------------------------
PORTFOLIO COMPOSITION 2
- ------------------------------------------
EXPENSE TABLE 3
- ------------------------------------------
PORTFOLIO OF INVESTMENTS 5
- ------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 26
- ------------------------------------------
STATEMENT OF OPERATIONS 28
- ------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 29
- ------------------------------------------
FINANCIAL HIGHLIGHTS 30
- ------------------------------------------
NOTES TO FINANCIAL STATEMENTS 33
- ------------------------------------------
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT 44
- ------------------------------------------
PROXY VOTING POLICIES AND
INFORMATION 48
- ------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 48
- ------------------------------------------
CONTACT INFORMATION BACK COVER
- ------------------------------------------
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.
- -------------------------------------------
NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o
NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL
GOVERNMENT AGENCY OR NCUA/NCUSIF
- -------------------------------------------
9/30/06
LMB-SEM
LETTER FROM THE CEO [Photo of Robert J. Manning]
(Not Restated)
Dear Shareholders:
What a difference a year can make. By the end of 2005, the Dow Jones
Industrial Average had lost value over the course of the year, as stocks were
beaten back by a myriad of investor worries, including a spike in oil prices, a
rise in interest rates, and political uncertainty in the Middle East.
Fast forward to 2006, and we have seen a dramatically different picture.
While there were some fluctuations in the global markets in the first half of
the year, the second half of 2006 has, so far, been good to many investors. Oil
prices retreated, boosting consumer confidence, and interest rates have held
steady. U.S. stock markets responded favorably to this news, as the Dow reached
a record high in October, passing the 12,000 mark.
What does all of this mean for you? If you're focused on a long-term
investment strategy, the high points in the road -- and the bumps -- should not
necessarily dictate portfolio action on your part. Markets are inherently
cyclical, and we firmly believe that investors who remain committed to a
long-term investment strategy are more likely to achieve their goals than those
who consistently chase short-term performance.
At MFS(R), our unique teamwork approach to managing money and our global
research platform support an unwavering focus on helping you realize your
long-term financial goals. We believe in a three-pronged investment strategy of
allocating your holdings across major asset classes, diversifying within each
class, and rebalancing regularly. Of course, these strategies cannot guarantee a
profit or protect against a loss. Investing and planning for the long term
require diligence and patience -- two traits that are essential to capitalizing
on the many opportunities the financial markets can offer.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
November 15, 2006
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION (As Restated)
PORTFOLIO STRUCTURE(I)
Bonds 103.9%
Cash & Other Net Assets (3.9)%
TOP FIVE INDUSTRIES (I)
Healthcare Revenue - Hospitals 20.1%
- --------------------------------------------------------------------------------
General Obligations - Schools 9.6%
- --------------------------------------------------------------------------------
General Obligations - General Purpose 8.4%
- --------------------------------------------------------------------------------
Utilities - Municipal Owned 7.0%
- --------------------------------------------------------------------------------
State & Local Agencies 5.9%
- --------------------------------------------------------------------------------
CREDIT QUALITY OF BONDS (R)
AAA 36.9%
- --------------------------------------------------------------------------------
AA 11.3%
- --------------------------------------------------------------------------------
A 16.5%
- --------------------------------------------------------------------------------
BBB 22.0%
- --------------------------------------------------------------------------------
BB 2.9%
- --------------------------------------------------------------------------------
B 1.5%
- --------------------------------------------------------------------------------
CCC 0.4%
- --------------------------------------------------------------------------------
Not Rated 8.5%
- --------------------------------------------------------------------------------
PORTFOLIO FACTS
Average Duration (d) 5.8
- --------------------------------------------------------------------------------
Average Life (m) 13.9 yrs.
- --------------------------------------------------------------------------------
Average Maturity (m) 16.5 yrs.
- --------------------------------------------------------------------------------
Average Credit Quality of Rated Securities (long-term) (a) A+
- --------------------------------------------------------------------------------
Average Credit Quality of Rated Securities (short-term) (a) A-1
- --------------------------------------------------------------------------------
(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond's price is likely to fluctuate with
general changes in interest rates, e.g., if rates rise 1.00%, a bond with a
5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this graphical presentation, the bond component includes
both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
(m) The average maturity shown is calculated using the final stated maturity on
the portfolio's holdings without taking into account any holdings which have
been pre-refunded or pre-paid to an earlier date or which have a mandatory
put date prior to the stated maturity. The average life shown takes into
account these earlier dates.
(r) Each security is assigned a 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. For those portfolios that hold a security
which is not rated by any of the three agencies, the security is considered
Not Rated. Holdings in U.S. Treasuries and government agency mortgage-backed
securities, if any, are included in the "AAA"-rating category. Percentages
are based on the total market value of investments as of 9/30/06.
Percentages are based on net assets as of 9/30/06, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
EXPENSE TABLE (As Restated)
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD,
APRIL 1, 2006 THROUGH SEPTEMBER 30, 2006.
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, 2006 through September 30, 2006.
ACTUAL EXPENSES
The first line for each share class in the following table 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 following table 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.
- ---------------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/06 9/30/06 4/01/06-9/30/06
- ---------------------------------------------------------------------------------------
A Actual 0.96% $1,000.00 $1,032.10 $4.89
-------------------------------------------------------------------------------
Hypothetical (h) 0.96% $1,000.00 $1,020.26 $4.86
- ---------------------------------------------------------------------------------------
B Actual 1.71% $1,000.00 $1,028.30 $8.69
-------------------------------------------------------------------------------
Hypothetical (h) 1.71% $1,000.00 $1,016.50 $8.64
- ---------------------------------------------------------------------------------------
C Actual 1.71% $1,000.00 $1,029.40 $8.70
-------------------------------------------------------------------------------
Hypothetical (h) 1.71% $1,000.00 $1,016.50 $8.64
- ---------------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
9/30/06 (unaudited)
(As Restated - See Note 8)
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 102.3%
- -----------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 3.2%
- -----------------------------------------------------------------------------------------------------------------
Chicago, IL, O'Hare International Airport Rev. (Second Lien
Passenger Facility D), AMBAC, 5.5%, 2019 $ 350,000 $ 375,920
Chicago, IL, O'Hare International Airport Rev., FSA,
5.75%, 2022 (u) 3,000,000 3,303,265
Chicago, IL, O'Hare International Airport Rev., Third Lien, "A",
MBIA, 5%, 2029 950,000 1,002,435
Indianapolis, IN, Local Public Improvement (Airport Authority
Project), "I", MBIA, 5%, 2034 200,000 206,665
Louisville & Jefferson County, KY, Regional Airport Authority, "A",
MBIA, 6.5%, 2017 3,000,000 3,112,975
Miami-Dade County, FL, Aviation Rev., "A", CIFG, 5%, 2038 500,000 520,942
New York, NY, City Industrial Development Agency, Special
Facilities Rev. (Terminal One Group), 5.5%, 2024 195,000 210,514
Oklahoma City, OK, Airport Trust, "B", FSA, 5.75%, 2017 1,080,000 1,147,316
------------
$ 9,880,032
- -----------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 8.3%
- -----------------------------------------------------------------------------------------------------------------
Chicago, IL (Lakefront Millennium Parking Facilities), MBIA,
5.7%, 2025 $ 645,000 $ 702,657
Chicago, IL (Lakefront Millennium Parking Facilities), MBIA,
5%, 2018 4,000,000 4,184,360
Commonwealth of Puerto Rico, Public Improvement, "A",
5.25%, 2027 235,000 252,211
Commonwealth of Puerto Rico, FGIC, 5.5%, 2015 (u) 6,000,000 6,804,780
Country Club Hills, IL, "N", MBIA, 5%, 2031 710,000 748,333
Cranston, RI, FGIC, 6.375%, 2009 (c) 200,000 218,486
Houston County, AL, AMBAC, 6.25%, 2009 (c) 850,000 931,430
Interlocken Metropolitan District, CO, Improvement, "C", XLCA,
0%, 2027 510,000 156,703
Kane Kendall County, IL, Capital Appreciation, "E", FGIC,
0%, 2023 1,360,000 593,354
Kane Kendall County, IL, Capital Appreciation, "E", FGIC,
0%, 2025 1,335,000 520,343
Massachusetts Consolidated Loan, "C", 5.875%, 2009 (c) 3,205,000 3,431,561
Mobile County, AL, 6%, 2009 (c) 800,000 851,752
New York, NY, "J", MBIA, 5%, 2017 2,000,000 2,083,320
San Antonio, TX, 5%, 2020 700,000 722,876
Southlake, TX, AMBAC, 0%, 2009 (c) 3,185,000 1,246,195
Southlake, TX, AMBAC, 0%, 2009 (c) 3,150,000 1,152,774
State of Illinois, MBIA, 5.5%, 2025 110,000 115,840
State of Wisconsin, "C", 6%, 2010 (c) 1,200,000 1,296,180
------------
$ 26,013,155
- -----------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 1.6%
- -----------------------------------------------------------------------------------------------------------------
Birmingham, AL, "A", 5.75%, 2017 $ 1,000,000 $ 1,080,010
Worcester, MA, FSA, 6%, 2010 (c) 3,475,000 3,784,206
------------
$ 4,864,216
- -----------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 9.5%
- -----------------------------------------------------------------------------------------------------------------
Adams 12 Five Star Schools, CO, "B", FGIC, 0%, 2025 $ 490,000 $ 195,314
De Soto, TX, Independent School District, School Building, PSF,
0%, 2031 380,000 109,068
De Soto, TX, Independent School District, School Building, PSF,
0%, 2034 285,000 69,278
De Soto, TX, Independent School District, School Building, PSF,
0%, 2036 380,000 82,897
Dudley-Charlton, MA, Regional School District, FGIC,
5.25%, 2013 (u) 2,990,000 3,359,624
Ennis, TX, Independent School District, Capital Appreciation, "N",
PSF, 0%, 2028 200,000 68,056
Ennis, TX, Independent School District, Capital Appreciation, "N",
PSF, 0%, 2029 385,000 126,292
Ennis, TX, Independent School District, Capital Appreciation, "N",
PSF, 0%, 2031 380,000 109,835
Ferris, TX, Independent School District, PSF, 5.5%, 2034 640,000 698,432
Florida Board of Education Capital Outlay, Public Education, "A",
5%, 2019 1,000,000 1,029,760
Fresno, CA, Unified School District, MBIA, 6.55%, 2020 1,225,000 1,431,829
Goose Creek, TX, Consolidated School District, PSF, 5%, 2009 (c) 2,500,000 2,597,775
Houston, TX, Independent School District, RITES,
6.525%, 2009 (v)(z) 500,000 538,180
Houston, TX, Independent School District, 5.25%, 2009 (u) 3,650,000 3,789,357
Keller, TX, Independent School District, PSF, 6%, 2017 225,000 243,799
Knox County, KY, Independent School District, XLCA, 5.5%, 2029 640,000 706,227
Lancaster, TX, Independent School District, Capital Appreciation,
FSA, 0%, 2014 (c) 485,000 176,525
Lancaster, TX, Independent School District, Capital Appreciation,
FSA, 0%, 2014 (c) 430,000 147,163
Lancaster, TX, Independent School District, Capital Appreciation,
FSA, 0%, 2025 275,000 113,603
Lancaster, TX, Independent School District, Capital Appreciation,
FSA, 0%, 2026 275,000 107,616
Leander, TX, Independent School District, Capital Appreciation,
Refunding, School Building, FGIC, 0%, 2026 900,000 331,920
Leander, TX, Independent School District, Capital Appreciation,
Refunding, School Building, FGIC, 0%, 2031 910,000 249,467
Leander, TX, Independent School District, PSF, 0%, 2018 2,500,000 1,284,500
Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2027 215,000 255,654
Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2028 215,000 255,852
Manistee, MI, Area Public Schools, FGIC, 5.75%, 2009 (c) 700,000 738,087
Palos Verdes Peninsula, CA, Capital Appreciation, "N", FSA,
0%, 2029 1,115,000 393,372
Phenix City, AL, AMBAC, 5.65%, 2010 (c) 1,500,000 1,635,615
Philadelphia, PA, School District, MBIA, 6%, 2010 (c) 750,000 807,473
Prosper, TX, Independent School District, Capital Appreciation
School Building, "N", PSF, 0%, 2031 515,000 145,122
Roma, TX, Independent School District, PSF, 5.875%, 2010 (c) 1,705,000 1,845,594
San Jose Evergreen, CA, Community College District, Election 2004,
"A", MBIA, 0%, 2028 740,000 245,184
Wattsburg, PA, Public School Building Authority Rev., Capital
Appreciation, MBIA, 0%, 2029 2,150,000 768,754
Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,665,000 1,799,216
Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,765,000 1,907,277
Wylie, TX, Independent School District, PSF, 5.25%, 2029 1,080,000 1,148,731
------------
$ 29,512,448
- -----------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 19.8%
- -----------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (West
Penn Allegheny Health), 9.25%, 2030 $ 650,000 $ 772,948
Allegheny County, PA, Hospital Development Authority Rev. (West
Penn Allegheny Health), "B", 9.25%, 2022 350,000 415,912
Baldwin County, AL, Eastern Shore Health Care Authority Rev
(Thomas Hospital), 5.75%, 2008 (c) 600,000 630,036
Baxter County, AR, Hospital Rev., 5.375%, 2014 1,000,000 1,033,750
Chemung County, NY, Civic Facilities Rev. (St. Joseph's Hospital-
Elmira), "A", 6%, 2013 600,000 604,140
Colorado Health Facilities Authority Rev. (Portercare Adventist
Health Systems), 6.625%, 2011 (c) 500,000 573,960
Cuyahoga County, OH, Hospital Facilities Rev. (Canton, Inc.),
7.5%, 2030 900,000 1,008,801
Denver, CO, Health & Hospital Authority Rev., 5.375%, 2018 300,000 306,744
Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 500,000 533,910
District of Columbia, Health & Hospital Authority Rev. (Medstar
University Hospital), "D", 6.875%, 2007 (c) 700,000 708,547
Fulton County, NY, Industrial Development Agency, Civic Facilities
Rev. (Nathan Littauer Hospital), "A", 5.75%, 2009 205,000 208,274
Gainesville & Hall County, GA, Hospital Authority Rev. (Northeast
Georgia Health System, Inc.), 5.5%, 2031 445,000 464,460
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital),
5.75%, 2031 525,000 544,310
Henrico County, VA, Industrial Development Authority Rev. (Bon
Secours), RIBS, FSA, 8.177%, 2027 (p) 5,000,000 6,684,000
Highlands County, FL, Health Facilities Authority Rev. (Adventist
Health Systems), "C", 5.25%, 2036 465,000 493,063
Highlands County, FL, Health Facilities Authority Rev. (Adventist/
Sunbelt Hospital), 6%, 2011 (c) 350,000 391,643
Illinois Health Facilities Authority Rev. (Condell Medical Center),
6.35%, 2015 1,000,000 1,067,800
Illinois Health Facilities Authority Rev. (Decatur Memorial Hospital),
5.75%, 2024 350,000 367,770
Illinois Health Facilities Authority Rev. (Passavant Memorial Area
Hospital Associates), 6%, 2024 335,000 361,837
Illinois Health Facilities Authority Rev. (Riverside Health Systems),
5.75%, 2022 650,000 678,496
Illinois Health Facilities Authority Rev. (Sinai Health), FHA,
5.15%, 2037 640,000 670,842
Indiana Health Facilities Financing Authority Hospital Rev
(Deaconess Hospital), "A", AMBAC, 5.375%, 2034 565,000 606,867
Indiana Health Facilities Financing Authority, Hospital Rev. (Clarian
Health), "A", 5%, 2039 260,000 268,427
Indiana Health Facilities Financing Authority, Hospital Rev
(Munster Medical Research Foundation, Inc.), 6.375%, 2031 500,000 533,570
Indiana Health Facilities Financing Authority, Hospital Rev
(Munster Medicial Research Foundation, Inc.), 6.375%, 2021 1,700,000 1,814,903
Indiana Health Facilities Financing Authority, Hospital Rev
(Riverview Hospital), 5.25%, 2014 400,000 410,840
Indiana Health Facilities Financing Authority, Hospital Rev
(Riverview Hospital), 6.125%, 2031 250,000 267,878
Kentucky Economic Development Finance Authority, Health Systems
Rev. (Norton Healthcare, Inc.), 6.5%, 2020 1,250,000 1,359,463
Kentucky Economic Development Finance Authority, Health Systems
Rev. (Norton Healthcare, Inc.), 6.625%, 2028 250,000 272,933
Kentucky Economic Development Finance Authority, Refunding &
Improvement, "A", MBIA, 5%, 2018 2,400,000 2,471,040
Knox County, TN, Health Educational Hospital Facility (Baptist
Health Systems, East Tennessee), 6.375%, 2022 1,000,000 1,066,670
Lauderdale County & Florence, AL (Coffee Health Group), "A",
MBIA, 5.25%, 2019 1,100,000 1,145,166
Macomb County, MI, Hospital Finance Authority Rev. (Mount
Clemens General Hospital), 5.75%, 2025 1,000,000 1,046,140
Marion County, FL, Hospital District Rev. (Monroe Hospital),
5.625%, 2019 750,000 783,578
Marshall County, AL, Health Care Authority Rev., "A",
6.25%, 2022 500,000 552,005
Martin County, FL, Health Facilities Authority Rev. (Martin
Memorial Medical Center), "A", 5.75%, 2022 850,000 911,727
Maryland Health & Higher Educational Facilities Authority Rev
(Medstar Health), 5.5%, 2033 305,000 323,337
Maryland Health & Higher Educational Facilities Authority Rev
(University of Maryland Medical System), 6.75%, 2010 (c) 1,000,000 1,117,650
Massachusetts Health & Educational Facilities Authority Rev
(Caritas Christi), 5.7%, 2015 1,000,000 1,042,990
Massachusetts Health & Educational Facilities Authority Rev
(Caritas Christi), "B", 6.5%, 2012 400,000 434,956
Massachusetts Health & Educational Facilities Authority Rev
(Partners Healthcare Systems), "C", 5.75%, 2021 400,000 434,876
Mecosta County, MI, General Hospital Rev., 6%, 2018 300,000 308,991
Miami Beach, FL, Health Facilities Authority Rev. (Mount Sinai
Medical Center), "A", 6.7%, 2019 750,000 828,683
Michigan Hospital Finance Authority Rev. (Memorial Healthcare
Center), 5.75%, 2015 800,000 838,768
Monroe County, MI, Hospital Finance Authority Hospital Rev
(Mercy Memorial Hospital Corp.), 5.5%, 2035 670,000 703,132
Montgomery, AL, Special Care Facilities, Financing Authority Rev
(Baptist Health), "A-2", MBIA, 0% to 2007, 5% to 2014 (c) 1,270,000 1,299,629
Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial
Hospital), 5.625%, 2032 375,000 396,109
Nassau County, NY, Industrial Development Agency, Civic Facilities
Rev. (North Shore Health System), 5.875%, 2011 330,000 345,616
New Hampshire Health & Educational Facilities Authority Rev
(Covenant Health), 6.5%, 2017 820,000 918,958
New Hampshire Health & Educational Facilities Authority Rev
(Exeter Hospital), 6%, 2024 500,000 549,900
New Jersey Health Care Facilities (Palisades Medical Center),
6.5%, 2021 500,000 548,160
North Texas Health Facilities Development Corp. Rev. (United
Regional Health Care System, Inc.), 6%, 2023 1,000,000 1,085,080
Ohio County, WV, County Commission Health System Rev. (Ohio
Valley Medical Center), 5.75%, 2013 900,000 870,624
Oklahoma Development Finance Authority Rev. (Comanche County
Hospital), 6%, 2014 600,000 663,798
Oklahoma Development Finance Authority Rev. (Comanche County
Hospital), 6.6%, 2031 255,000 279,936
Rhode Island Health & Education Building Corp. Hospital Financing
(Lifespan Obligated Group), "A", FSA, 5%, 2032 1,120,000 1,173,962
Rhode Island Health & Education Building Rev., Hospital Financing
(Lifespan Obligated Group), 6.5%, 2012 (c) 1,500,000 1,724,610
Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare Systems,
Inc.), 6.5%, 2027 290,000 298,947
Shelby County, TN, Educational & Housing Facilities Board Hospital
Rev. (Methodist Healthcare), 6%, 2012 (c) 300,000 337,323
Shelby County, TN, Educational & Housing Facilities Board Hospital
Rev. (Methodist Healthcare), 6%, 2012 (c) 500,000 562,205
South Carolina Jobs & Economic Development Authority, Hospital
Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 500,000 547,205
Steubenville, OH, Hospital Rev. (Trinity Hospital), 6.375%, 2020 300,000 328,245
Stillwater, OK, Medical Center Authority (Stillwater Medical
Center), 6.5%, 2007 (c) 1,000,000 1,037,160
Suffolk County, NY, Industrial Development Agency, Civic Facilities
Rev. (Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,061,970
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial
Healthcare), 6.25%, 2020 1,000,000 1,061,340
Tom Green County, TX, Health Facilities Rev. (Shannon Health
System), 6.75%, 2021 400,000 432,660
Upper Illinois River Valley Development, Health Facilities Rev
(Morris Hospital), 6.625%, 2031 500,000 548,010
Valley, AL, Special Care Facilities Financing (Lanier Memorial
Hospital), 5.5%, 2007 500,000 505,380
Wapello County, IA, Hospital Authority Rev. (Ottumwa Regional
Health Center), 6.375%, 2031 750,000 808,050
Weirton, WV, Municipal Hospital Building, Commission Rev
(Weirton Hospital Medical Center), 6.375%, 2031 500,000 521,880
West Plains, MO, Industrial Development Authority Rev. (Ozarks
Medical Center), 6.75%, 2024 195,000 201,839
West Shore, PA, Hospital Authority (Holy Spirit Hospital),
6.25%, 2032 1,000,000 1,075,510
Wichita, KS, Hospital Authority Rev. (Via Christi Health System),
6.25%, 2019 1,500,000 1,666,125
Wisconsin Health & Educational Facilities Authority Rev. (Agnesian
Healthcare, Inc.), 6%, 2017 325,000 347,298
Wisconsin Health & Educational Facilities Authority Rev. (Aurora
Health Care, Inc.), 6.875%, 2030 750,000 864,465
Wisconsin Health & Educational Facilities Authority Rev. (Wheaton
Franciscan Services), 6.25%, 2022 1,000,000 1,113,070
Yonkers, NY, Industrial Development Agency, Civic Facilities Rev
(St. John's Riverside Hospital), 6.8%, 2016 385,000 411,769
------------
$ 61,652,666
- -----------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.9%
- -----------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Rev. (Advanced
Living Technology), 7.75%, 2006 $ 30,000 $ 29,984
Bell County, TX, Health Facilities Development Rev. (Advanced
Living Technology), 8.125%, 2016 505,000 490,123
Bell County, TX, Health Facilities Development Rev. (Advanced
Living Technology), 8.5%, 2026 1,130,000 1,081,218
Colorado Health Facilities Authority Rev. (Evangelical Lutheran),
6.9%, 2025 500,000 564,310
Cumberland County, PA, Municipal Authority Rev. (Wesley), "A",
7.25%, 2013 (c) 270,000 324,778
Cumberland County, PA, Municipal Authority Rev. (Wesley), "A",
7.25%, 2035 105,000 113,395
Eden Prairie, MN, Multi-Family Housing Rev. (Coll-Rolling Hills),
"A", GNMA, 6%, 2021 200,000 216,876
Indiana Health Facilities Financing Authority Rev. (Hoosier Care),
7.125%, 2034 800,000 812,912
Iowa Finance Authority, Health Care Facilities Rev. (Care Initiatives
Project), 9.25%, 2011 (c) 480,000 599,400
Iowa Finance Authority, Health Care Facilities Rev. (Care Initiatives
Project), "A", 5.5%, 2025 275,000 285,654
Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae),
"A", 7.375%, 2027 930,000 967,925
Montana Facility Finance Authority Rev. (Senior Living St. Johns
Lutheran), "A", 6.125%, 2036 170,000 177,582
Shelby County, TN, Health Educational Rev. (Germantown Village),
7.25%, 2034 385,000 414,453
------------
$ 6,078,610
- -----------------------------------------------------------------------------------------------------------------
Human Services - 0.6%
- -----------------------------------------------------------------------------------------------------------------
Louisiana Local Government Environmental Facilities & Community
Development (Westside Rehab Center Project), "B", 6.5%, 2013 $ 450,000 $ 452,529
Nassau County, NY, Industrial Development Civic (Special Needs
Facilities), 6.1%, 2012 225,000 232,776
Orange County, FL, Health Facilities Authority Rev. (GF/Orlando
Healthcare Facilities), 9%, 2031 1,000,000 1,103,860
------------
$ 1,789,165
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Regional Airport Lease Rev. (AMR Corp.),
7%, 2012 $ 300,000 $ 319,158
New York, NY, Industrial Development Agency Rev. (American
Airlines, Inc.), 7.625%, 2025 970,000 1,139,362
Tulsa, OK, Municipal Airport Trust Rev. (American Airlines, Inc.),
"B", 5.65%, 2035 1,000,000 1,003,940
------------
$ 2,462,460
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.7%
- -----------------------------------------------------------------------------------------------------------------
Brazos River, TX, Harbor Navigation District (Dow Chemical Co.),
5.7%, 2033 $ 1,000,000 $ 1,070,150
Red River Authority, TX, Pollution Control Rev. (Celanese Project),
"B", 6.7%, 2030 1,000,000 1,097,620
------------
$ 2,167,770
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.5%
- -----------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid Waste
Disposal Rev. (Waste Management, Inc.), "A-2", 5.4%, 2025 $ 215,000 $ 228,618
Carbon County, UT, Solid Waste Disposal Rev. (Laidlaw
Environmental), 7.45%, 2017 2,500,000 2,602,450
Charles City County, VA, Industrial Development Authority, Solid
Waste Disposal Facility Rev. (Waste Management, Inc.),
6.25%, 2027 500,000 544,435
Colorado Housing & Finance Authority, Solid Waste Rev. (Waste
Management, Inc.), 5.7%, 2018 230,000 253,177
Gloucester County, NJ, Solid Waste Resource Recovery Rev. (Waste
Management, Inc.), 6.85%, 2029 150,000 162,371
Massachusetts Development Finance Agency Rev. (Waste
Management, Inc.), "B", 6.9%, 2029 300,000 324,165
Nevada Department of Business & Industry Rev. (Republic Services,
Inc.), 5.625%, 2026 450,000 492,084
------------
$ 4,607,300
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Metals - 0.0%
- -----------------------------------------------------------------------------------------------------------------
Burns Harbor, IN, Solid Waste Disposal Facilities Rev. (Bethlehem
Steel), 8%, 2024 (d) $ 3,000,000 $ 300
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 2.6%
- -----------------------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development Authority Rev. (USX
Corp.), 5.4%, 2017 $ 500,000 $ 538,940
Gulf Coast, TX, Industrial Development Authority (Valero Energy
Corp.), 5.6%, 2031 500,000 517,705
Hardeman County, TN, Correctional Facilities Corp. (Corrections
Corp. of America), 7.375%, 2017 500,000 513,895
Massachusetts Development Finance Agency Rev., Resource
Recovery (Fluor Corp.), 5.625%, 2019 2,895,000 3,033,699
Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.),
5.6%, 2017 1,300,000 1,346,722
Park Creek Metropolitan District, CO, (Custodial Receipts), "CR-2",
7.875%, 2032 (n) 400,000 444,960
Pennsylvania Economic Development Financing Authority Rev
(Amtrak), 6.125%, 2021 550,000 592,939
Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific
Corp.), 5.7%, 2026 980,000 1,024,825
------------
$ 8,013,685
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.2%
- -----------------------------------------------------------------------------------------------------------------
Butler, AL, Industrial Development Board, Solid Waste Disposal
Rev. (Georgia Pacific Corp.), 5.75%, 2028 $ 260,000 $ 266,139
Delta County, MI, Economic Development Corp., Environmental
Improvements Rev. (Mead Westvaco Escanaba), "A",
6.25%, 2012 (c) 900,000 1,019,106
Mobile, AL, Industrial Development Board Improvement Rev
(International Paper Co.), "B", 6.45%, 2019 2,000,000 2,124,640
Navajo County, AZ, Industrial Development Authority Rev. (Stone
Container Corp.), 7.4%, 2026 1,500,000 1,530,420
Navajo County, AZ, Industrial Development Authority Rev. (Stone
Container Corp.), 7.2%, 2027 500,000 515,920
Onondaga County, NY, Industrial Development Authority Rev.,
Solid Waste Disposal Rev. (Solvay Paperboard LLC), 6.8%, 2014 900,000 943,929
West Point, VA, Industrial Development Authority, Solid Waste
Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 550,000 551,056
------------
$ 6,951,210
- -----------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.1%
- -----------------------------------------------------------------------------------------------------------------
New York Liberty Development Corp. Rev. (National Sports
Museum), 6.125%, 2019 $ 265,000 $ 274,214
- -----------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Austin, TX, Convention Center (Convention Enterprises, Inc.), "A",
6.6%, 2021 $ 300,000 $ 323,334
Austin, TX, Convention Center (Convention Enterprises, Inc.), "A",
6.7%, 2028 400,000 431,360
Baltimore, MD, Convention Center Hotel Rev., "A", XLCA,
5.25%, 2039 555,000 596,692
Gallery Certificate Trust, PA, Parking Rev., 4.5%, 2013 (n) 640,000 639,981
San Antonio, TX, Convention Center, Hotel Financial Corp.,
Contract Rev. (Empowerment Zone), "A", AMBAC, 5%, 2034 490,000 505,783
Toledo Lucas County, OH, Port Authority Development Rev
(Northwest Ohio Bond Fund), "C", 5.125%, 2025 65,000 66,061
------------
$ 2,563,211
- -----------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.2%
- -----------------------------------------------------------------------------------------------------------------
Bay County, FL, Housing Finance Authority, Multi-Family Rev
(Andrews Place II Apartments), FSA, 5%, 2035 $ 150,000 $ 153,404
Bay County, FL, Housing Finance Authority, Multi-Family Rev
(Andrews Place II Apartments), FSA, 5.1%, 2046 275,000 281,023
California Statewide Communities Development Authority Rev
(Irvine Apartments), 5.25%, 2025 1,000,000 1,026,010
Charter Mac Equity Issuer Trust, 6.625%, 2009 (n) 2,000,000 2,119,820
Eaglebend, CO, Affordable Housing Corp., 6.2%, 2007 (c) 1,000,000 1,038,500
GMAC Municipal Mortgage Trust, "B-1", 5.6%, 2039 (n) 1,000,000 1,057,040
GMAC Municipal Mortgage Trust, "C-1", 5.7%, 2040 (n) 500,000 508,445
Indianapolis, IN, Multi-Family Rev. (Cambridge Station Apartments
II), FNMA, 5.25%, 2039 320,000 329,898
Munimae TE Bond Subsidiary LLC, "A-2", 4.9%, 2049 (n) 2,000,000 2,029,040
Newark, NJ, Housing Authority (Port Authority - Newark Marine
Terminal), MBIA, 5.5%, 2028 215,000 236,081
North Charleston, SC, Housing Authority Rev. (Horizon Village),
"A", FHA, 5.15%, 2048 305,000 307,464
Seattle, WA, Housing Authority Rev., Capped Fund Program (High
Rise Rehab), "I", FSA, 5%, 2025 455,000 463,290
Tampa, FL, Housing Finance Authority, Multi-Family Rev. (Meridian
River Development Corp.), 4.75%, 2026 335,000 340,732
------------
$ 9,890,747
- -----------------------------------------------------------------------------------------------------------------
Parking - 0.1%
- -----------------------------------------------------------------------------------------------------------------
Rail Connections, Inc., MA Rev., 0%, 2009 (c) $ 100,000 $ 59,279
Rail Connections, Inc., MA Rev., 0%, 2009 (c) 210,000 116,399
Rail Connections, Inc., MA Rev., 0%, 2009 (c) 300,000 155,739
------------
$ 331,417
- -----------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Austin, TX, Town Community Events Center Venue, FGIC,
6%, 2009 (c) $ 1,015,000 $ 1,087,654
Metropolitan Pier & Expo, IL, McCormick Place Expansion, MBIA,
5.25%, 2042 220,000 233,204
Miami Dade County, FL, Transportation Systems, "N", XLCA,
5%, 2022 1,130,000 1,210,931
------------
$ 2,531,789
- -----------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 3.5%
- -----------------------------------------------------------------------------------------------------------------
Adams County, CO, Single Family Mortgage Rev., ETM,
8.875%, 2011 (c) $ 2,510,000 $ 3,065,287
Brevard County, FL, Housing Finance Authority Rev., "B", GNMA,
6.5%, 2022 141,000 141,618
Calcasieu Parish, LA, Public Trust Authority, Single Family
Mortgage Rev., "A", GNMA, 6.05%, 2032 430,000 462,444
California Rural Home Mortgage Finance Authority Rev., GNMA,
6.55%, 2030 85,000 85,288
Chicago, IL, Single Family Mortgage Rev., "C", GNMA,
7.05%, 2030 10,000 10,193
Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 365,000 79,917
Jefferson Parish, LA, Single Family Mortgage Rev., GNMA,
6.625%, 2023 280,000 299,552
Jefferson Parish, LA, Single Family Mortgage Rev., GNMA,
6.75%, 2030 400,000 409,768
Lee County, FL, Housing Finance Authority Rev. (Multi-County
Program), "A-4", GNMA, 7%, 2031 10,000 10,050
Maricopa County, AZ, Single Family Mortgage Rev., "B", GNMA,
6.2%, 2034 65,000 65,975
Nortex Housing Finance Corp., TX, Single Family Mortgage Backed
Securities Rev., "A", GNMA, 5.5%, 2038 785,000 833,529
Pima County, AZ, Industrial Development Authority Rev., "B-1",
GNMA, 7.05%, 2030 160,000 160,715
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 6.45%, 2029 495,000 502,544
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.9%, 2035 230,000 248,658
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 6.25%, 2035 115,000 123,453
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.8%, 2036 585,000 643,927
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-1", GNMA, 6.875%, 2026 60,000 61,062
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-1", GNMA, 5.75%, 2037 190,000 207,364
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-3", GNMA, 6%, 2035 365,000 399,222
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-3", GNMA, 5.5%, 2037 335,000 356,108
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-4", GNMA, 5.85%, 2037 365,000 399,091
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.8%, 2027 280,000 296,526
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.7%, 2036 590,000 644,215
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.9%, 2037 140,000 153,889
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-6", GNMA, 5.65%, 2036 445,000 467,455
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B", GNMA, 5.45%, 2027 325,000 347,019
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B-2", GNMA, 6.45%, 2033 285,000 305,617
------------
$ 10,780,486
- -----------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.5%
- -----------------------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev., Home Mortgage, MBIA,
0%, 2028 $ 1,670,000 $ 547,677
Colorado Housing & Finance Authority Rev., 7.45%, 2016 30,000 30,299
Colorado Housing & Finance Authority Rev., 6.875%, 2028 60,000 60,303
Colorado Housing & Finance Authority Rev., 6.8%, 2030 70,000 70,924
Colorado Housing & Finance Authority Rev., "A-1", 7.4%, 2027 15,000 15,429
Colorado Housing & Finance Authority Rev., "A-2", 7.15%, 2014 7,000 7,143
Colorado Housing & Finance Authority Rev., "A-2", AMBAC,
6.6%, 2028 250,000 262,030
Colorado Housing & Finance Authority Rev., "B-2", 6.1%, 2023 105,000 109,295
Colorado Housing & Finance Authority Rev., "B-3", 6.55%, 2033 90,000 92,381
Colorado Housing & Finance Authority Rev., "C", 6.75%, 2021 35,000 36,124
Colorado Housing & Finance Authority Rev., "C-2", 5.9%, 2023 160,000 166,320
Colorado Housing & Finance Authority Rev., "C-2", FHA,
6.6%, 2032 150,000 153,821
Colorado Housing & Finance Authority Rev., "C-3", FHA,
6.375%, 2033 80,000 81,571
Louisiana Housing Finance Agency, Single Family Mortgage Rev.,
"B-2", GNMA, 7.55%, 2031 60,000 61,648
Louisiana Housing Finance Agency, Single Family Mortgage Rev.,
GNMA, 6.4%, 2032 115,000 115,899
Minnesota Housing Finance Agency Rev., Residential Housing
Finance, "B", 4.8%, 2023 165,000 165,215
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.35%, 2032 185,000 188,541
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), "B", GNMA, 6.7%, 2030 165,000 169,381
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 160,000 164,530
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.75%, 2034 95,000 100,351
New Hampshire Housing Finance Authority Rev., "B",
5.875%, 2030 95,000 95,390
New Hampshire Housing Finance Authority Rev., "B", 6.3%, 2031 80,000 80,286
New Hampshire Housing Finance Authority Rev., "B", 6.5%, 2035 705,000 766,878
New Mexico Mortgage Finance Authority Rev., "B-2", GNMA,
6.35%, 2033 165,000 170,457
New Mexico Mortgage Finance Authority Rev., GNMA, 7.1%, 2030 60,000 60,795
New Mexico Mortgage Finance Authority Rev., GNMA,
6.25%, 2032 335,000 347,140
New Mexico Mortgage Finance Authority, "N", GNMA,
5.95%, 2037 440,000 475,886
North Dakota Housing Finance Agency Rev., Housing Finance, "A",
5%, 2033 340,000 340,619
Ohio Housing Finance Agency Mortgage Rev., Residential
Mortgage Backed, "C", GNMA, 5.9%, 2035 420,000 437,653
Oklahoma County Home Finance Mortgage Backed, "N", GNMA,
5.4%, 2038 565,000 598,160
Oklahoma Housing Finance Agency Rev., 6.65%, 2029 350,000 358,344
Texas Affordable Housing Corp., Single Family Mortgage Rev.,
GNMA, "B", 5.25%, 2039 520,000 550,410
Texas Housing & Community Affairs, Residential Mortgage Rev.,
GNMA, 7.1%, 2021 685,000 712,784
Vermont Housing Finance Agency Rev., FSA, 4.95%, 2032 235,000 236,530
------------
$ 7,830,214
- -----------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 1.0%
- -----------------------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority, Resource
Recovery Facilities Rev. (American Ref-Fuel Co.), "A", 6.2%, 2019 $ 500,000 $ 521,435
Hudson County, NJ, Solid Waste System Rev., 5.9%, 2015 830,000 835,984
Massachusetts Development Finance Agency Rev. (Ogden Haverhill
Associates), "A", 6.7%, 2014 700,000 764,141
Massachusetts Industrial Finance Agency, Resource Recovery Rev
(Ogden Haverhill Associates), "A", 5.6%, 2019 1,000,000 1,040,910
------------
$ 3,162,470
- -----------------------------------------------------------------------------------------------------------------
State & Agency - Other - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency (Visual & Performing
Arts), 6%, 2021 $ 1,000,000 $ 1,206,960
State of Michigan, COP, AMBAC, 5.5%, 2010 (c) 1,250,000 1,333,313
------------
$ 2,540,273
- -----------------------------------------------------------------------------------------------------------------
State & Local Agencies - 5.9%
- -----------------------------------------------------------------------------------------------------------------
Alabama Building Renovation Authority, AMBAC, 6%, 2018 $ 760,000 $ 821,416
Alabama Public School & College, Capital Improvement, "D",
6%, 2015 2,850,000 3,071,445
Chicago, IL, Public Building Commission Rev., FGIC,
5.25%, 2016 (u) 3,000,000 3,350,190
Chicago, IL, Public Building Commission Rev., FGIC,
5.25%, 2017 (u) 2,500,000 2,807,675
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement
Rev., Enhanced, "A", 5%, 2045 325,000 333,538
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement
Rev., Enhanced, "B", 5.375%, 2010 (c) 1,500,000 1,593,600
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement
Rev., Enhanced, "B", 5.5%, 2013 (c) 1,075,000 1,193,573
Indianapolis, IN, Public Improvement Bond Bank, "C", AMBAC,
6%, 2017 500,000 539,870
New Jersey Transportation Trust Fund Authority, Capital
Appreciation Transportation Systems, "C", AMBAC, 0%, 2028 1,115,000 415,215
New York Urban Development Corp., Correctional Facilities Service
Contract C, AMBAC, 5.875%, 2009 (c) 1,000,000 1,060,640
Stafford, TX, Economic Development Corp., FGIC, 6%, 2015 525,000 609,420
Virginia College Building Authority, VA, Public Higher Education
Financing, "A", 5.75%, 2009 (c) 2,295,000 2,431,966
------------
$ 18,228,548
- -----------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 0.9%
- -----------------------------------------------------------------------------------------------------------------
Access to Loans for Learning, California Student Loan Rev.,
7.95%, 2030 $ 650,000 $ 689,436
Arizona Student Loan Acquisition Authority Rev., 5.8%, 2016 675,000 716,499
Arizona Student Loan Acquisition Authority Rev., 5.85%, 2017 700,000 743,407
Massachusetts Educational Financing Authority, Refunding Issue G,
"A", MBIA, 6.1%, 2018 505,000 518,918
------------
$ 2,668,260
- -----------------------------------------------------------------------------------------------------------------
Tax - Other - 1.1%
- -----------------------------------------------------------------------------------------------------------------
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.5%, 2024 $ 250,000 $ 263,010
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.75%, 2029 450,000 484,745
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.5%, 2031 200,000 211,292
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.75%, 2034 300,000 321,552
New York, NY, Transitional Finance Authority Rev., Future Tax
Secured, "A", 6%, 2009 (c) 2,000,000 2,154,840
------------
$ 3,435,439
- -----------------------------------------------------------------------------------------------------------------
Tax Assessment - 2.1%
- -----------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh
Mills), 5.1%, 2014 $ 75,000 $ 77,084
Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh
Mills), 5.6%, 2023 50,000 52,835
Broadview, IL, Tax Increment Rev., 5.25%, 2012 1,000,000 1,026,860
Fishhawk Community Development District, FL, 5.125%, 2009 265,000 265,647
Greyhawk Landing Community Development, FL, Special
Assessment, "B", 6.25%, 2009 100,000 101,318
Katy, TX, Development Authority Rev., 5.8%, 2011 780,000 803,704
Katy, TX, Development Authority Rev., "B", 6%, 2018 1,200,000 1,241,496
Killarney, FL, Community Development District, Special Assessment,
"B", 5.125%, 2009 205,000 205,338
Lakes by the Bay South Community Development District, FL, Rev.,
"B", 5.3%, 2009 255,000 255,658
Lancaster County, SC, Assessment Rev. (Sun City Carolina Lakes),
5.45%, 2037 50,000 50,773
Noblesville, IN, Redevelopment Authority Lease Rental,
5.25%, 2025 455,000 484,807
Panther Trace II, Community Development District, FL, Special
Assessment, "B", 5%, 2010 655,000 655,059
Parkway Center, Community Development District, FL, Special
Assessment, "B", 5.625%, 2014 935,000 954,831
Preserve at Wilderness Lake, FL, Community Development District,
Capital Improvement, "B", 5%, 2009 110,000 110,341
Renaissance Community Development District, FL, Special
Assessment, "B", 6.25%, 2008 120,000 120,884
Tuscany Reserve Community Development District, FL, Special
Assessment, "B", 5.25%, 2016 185,000 189,375
------------
$ 6,596,010
- -----------------------------------------------------------------------------------------------------------------
Tobacco - 2.0%
- -----------------------------------------------------------------------------------------------------------------
Badger, WI, Tobacco Asset Securitization Corp., 6.125%, 2027 $ 1,015,000 $ 1,085,827
California County, CA, Tobacco Securitization Agency, Capital
Appreciation Asset Backed (Gold Country), 0%, 2033 1,655,000 361,071
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A",
0%, 2050 4,000,000 266,680
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "B",
0%, 2055 2,000,000 70,340
District of Columbia, Tobacco Settlement Capital Appreciation, "A",
0%, 2046 2,215,000 197,046
District of Columbia, Tobacco Settlement, 6.25%, 2024 385,000 409,625
Guam Economic Development Authority, 5%, 2022 115,000 115,308
Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset
Backed, "B", 5.3%, 2011 (c) 750,000 798,578
Iowa Tobacco Settlement Authority, Tobacco Settlement Rev., Asset
Backed, "B", 0% to 2007, 5.6% to 2034 615,000 597,208
Louisiana Tobacco Settlement Authority, 5.5%, 2030 415,000 434,219
New Jersey Tobacco Settlement Authority, 5.75%, 2032 660,000 693,878
Northern Tobacco Securitization Corp., AK, Asset Backed, "A",
5%, 2046 455,000 453,621
South Carolina Tobacco Settlement Authority, 6.375%, 2028 500,000 536,680
Washington Tobacco Settlement Authority, 6.5% to 2026 70,000 76,871
------------
$ 6,096,952
- -----------------------------------------------------------------------------------------------------------------
Toll Roads - 0.5%
- -----------------------------------------------------------------------------------------------------------------
New Jersey Turnpike Authority Rev., Unrefunded, "C", MBIA,
6.5%, 2016 $ 235,000 $ 274,306
New Jersey Turnpike Authority Rev., "C", MBIA, ETM,
6.5%, 2016 (c) 80,000 93,728
Northwest Parkway Public Highway Authority Co. Rev., Capital
Appreciation, "B", AMBAC, 0%, 2018 750,000 422,858
San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road
Rev., ETM, 0%, 2009 (c) 1,000,000 921,710
------------
$ 1,712,602
- -----------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.4%
- -----------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Port Authority Special Rev., MBIA,
6.25%, 2009 (c) $ 1,000,000 $ 1,071,670
New Jersey Economic Development Authority Rev., Transportation
Project Sublease, "A", FSA, 6%, 2009 (c) 325,000 344,666
Pennsylvania Turnpike Commission Oil, "A", AMBAC, 5.25%, 2018 850,000 886,338
Pennsylvania Turnpike Commission Oil, "A", AMBAC, ETM,
5.25%, 2018 (c) 1,150,000 1,191,872
Utah Tranauth Sales Tax Rev., "C", 5.25%, 2029 810,000 943,059
------------
$ 4,437,605
- -----------------------------------------------------------------------------------------------------------------
Universities - Colleges - 4.2%
- -----------------------------------------------------------------------------------------------------------------
Alabama Private Colleges & Universities, Facilities Authority Rev
(Tuskegee University), ASSD GTY, 4.75%, 2026 $ 1,000,000 $ 1,023,590
Amherst, NY, Industrial Development Agency Rev. (Daemen
College), "A", 6%, 2011 (c) 1,000,000 1,120,120
Arkansas Technical University Rev., Housing Systems, "N",
AMBAC, 5%, 2036 165,000 173,484
California Educational Facilities Authority Rev. (L.A. College of
Chiropractic), 5.6%, 2017 250,000 246,423
Houston, TX, Community College Systems, MBIA, 7.875%, 2025 1,650,000 1,981,106
Illinois Finance Authority Rev. (University of Chicago), "A",
5%, 2034 215,000 224,232
Massachusetts Development Finance Agency Rev. (Boston
University), XLCA, 6%, 2059 1,250,000 1,539,188
Massachusetts Development Finance Agency Rev. (Massachusetts
College of Pharmacy), "B", 6.625%, 2010 (c) 100,000 110,255
Massachusetts Development Finance Agency Rev. (Olin College),
"B", XLCA, 5.25%, 2033 2,000,000 2,131,720
Northern Illinois University Rev., Auxiliary Facilities Systems,
AMBAC, 5.875%, 2018 1,370,000 1,444,309
Oregon Facilities Authority Rev. (Linfield College), "A", 5%, 2030 165,000 169,693
Savannah, GA, Economic Development Authority Rev. (College of
Art & Design, Inc.), 6.5%, 2009 (c) 500,000 547,220
St. Joseph County, IN, Educational Facilities Rev. (University of
Notre Dame), 6.5%, 2026 1,000,000 1,314,250
Upland, IN, Economic Development Rev. (Taylor University),
6%, 2018 435,000 483,590
Upland, IN, Economic Development Rev. (Taylor University),
6.25%, 2023 520,000 577,018
------------
$ 13,086,198
- -----------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 1.8%
- -----------------------------------------------------------------------------------------------------------------
California Statewide Communities, Development Authority Rev
(Escondido Charter High School), 7.5%, 2011 (c) $ 500,000 $ 595,030
Clark County, NV, Economic Development Rev. (Alexander Dawson
School), 5.5%, 2009 (c) 1,500,000 1,585,245
Maine Finance Authority, Educational Rev. (Waynflete School),
6.4%, 2019 1,000,000 1,064,650
Maine Finance Authority, Educational Rev. (Waynflete School),
6.5%, 2029 1,000,000 1,068,110
Michigan Municipal Bond Authority Rev. (YMCA Service Learning
Academy), 7.625%, 2021 400,000 425,620
New Hampshire Health & Education (Derryfield School),
6.5%, 2010 205,000 212,341
Pima County, AZ, Industrial Development Authority Education Rev
(Arizona Charter Schools), "C", 6.75%, 2031 500,000 522,985
------------
$ 5,473,981
- -----------------------------------------------------------------------------------------------------------------
Utilities - Cogeneration - 0.2%
- -----------------------------------------------------------------------------------------------------------------
Carbon County, PA, Industrial Development Authority Rev. (Panther
Creek Partners), 6.65%, 2010 $ 550,000 $ 575,031
- -----------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 5.0%
- -----------------------------------------------------------------------------------------------------------------
Apache County, AZ, Industrial Development Authority, Pollution
Control Rev. (Tucson Electric Power Co.), 5.875%, 2033 $ 1,000,000 $ 1,005,740
Brazos River Authority, TX, Pollution Control Rev. (Texas Utility
Co.), "B", 6.3%, 2032 120,000 130,679
California Pollution Control Financing Authority, Pollution Control
Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 1,600,000 1,724,400
Clark County, NV, Industrial Development Rev. (Southwest Gas
Corp.), "A", AMBAC, 4.85%, 2035 730,000 740,629
Connecticut Development Authority, Pollution Control Rev
(Connecticut Light & Power Co.), 5.85%, 2028 1,000,000 1,052,770
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), 5.8%, 2022 500,000 505,860
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), 6.375%, 2022 1,000,000 1,031,110
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), "A", 6.3%, 2016 565,000 578,464
Lehigh County, PA, Industrial Development Authority Pollution
Control Rev. (PPL Electric Utilities Corp.), "A", FGIC, 4.7%, 2029 320,000 328,259
Matagorda County, TX, Pollution Control Rev. (Reliant Energy),
5.95%, 2030 750,000 771,210
Mecklenburg County, VA, Industrial Development Authority Rev
(UAE Mecklenburg LP), 6.5%, 2017 700,000 772,821
New Hampshire Industrial Development Authority, Pollution Control
Rev. (Connecticut Light & Power), 5.9%, 2016 500,000 508,230
Pima County, AZ, Industrial Development Authority Rev. (Tucson
Electric Power Co.), "A", 6.1%, 2025 2,000,000 2,012,880
Pittsylvania County, VA, Industrial Development Authority Rev.,
7.5%, 2014 2,000,000 2,017,720
Port Morrow, OR, Pollution Control Rev. (Portland General Electric),
5.2%, 2033 350,000 360,773
Sabine River Authority, TX, Pollution Control Rev. (TXU Electric
Co.), "A", 5.5%, 2022 500,000 527,230
West Feliciana Parish, LA, Pollution Control Rev. (Entergy Gulf
States), 6.6%, 2028 1,665,000 1,671,926
------------
$ 15,740,701
- -----------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.9%
- -----------------------------------------------------------------------------------------------------------------
Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2011 $ 1,500,000 $ 1,707,555
California Department of Water Resources Power Supply Rev., "A",
5.125%, 2012 (c) 750,000 817,800
Easley, SC, Utility Rev., Refunding & Improvement, FSA, 5%, 2034 320,000 338,032
Georgia Municipal Electric Power Authority Rev., MBIA,
6.375%, 2016 2,000,000 2,387,720
Georgia Municipal Electric Power Authority Rev., MBIA,
6.5%, 2020 7,350,000 8,926,575
North Carolina Municipal Power Agency, Catawba Electric Rev.,
6.375%, 2013 750,000 815,445
North Carolina Municipal Power Agency, Catawba Electric Rev.,
MBIA, 7%, 2007 3,250,000 3,276,683
North Carolina Municipal Power Agency, MBIA,
5.25%, 2019 (u) 3,000,000 3,225,720
------------
$ 21,495,530
- -----------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 4.8%
- -----------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., RITES, FGIC,
7.025%, 2016 (v)(z) $ 1,000,000 $ 1,262,660
Forsyth County, GA, Water & Sewage Authority, 6.25%, 2010 (c) 1,170,000 1,281,606
Magnolia, TX, Water & Sewer System Rev., 5.15%, 2031 140,000 143,431
Massachusetts Water Resources Authority, 6.5%, 2019 5,965,000 7,160,565
Mississippi Development Bank Special Obligations, Grenada, MS,
Water & Sewer Systems Project, "N", FSA, 5%, 2030 490,000 515,887
New York Environmental Facilities, 5%, 2016 430,000 443,850
New York Environmental Facilities, ETM, 5%, 2016 (c) 570,000 586,741
Pittsburgh, PA, Water & Sewer Authority Rev., "C", FSA,
5.25%, 2022 2,000,000 2,046,800
Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA,
5.25%, 2030 255,000 273,901
West Virginia Water Development Authority Loan Program, "B",
AMBAC, 4.75%, 2035 110,000 112,439
West Wilson Utility District, TN, Waterworks Rev., MBIA,
5.25%, 2030 480,000 514,637
Westmoreland County, PA, Municipal Authority Services Rev., FSA,
5.25%, 2026 520,000 564,845
------------
$ 14,907,362
- -----------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $297,900,637) $318,352,057
- -----------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.4%
- -----------------------------------------------------------------------------------------------------------------
Chicago, IL, Midway Airport Rev., Second Lien, "A ",
3.95%, due 10/02/06 $ 200,000 $ 200,000
Chicago, IL, Midway Airport Rev., Second Lien, "B ",
3.95%, due 10/02/06 900,000 900,000
Georgia Municipal Electric Authority Rev., 3.76%, due 10/04/06 100,000 100,000
Jefferson County, AL, Sewer Rev., Warrants Rev., "B-4 ",
3.78%, due 10/05/06 100,000 100,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 1,300,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $299,200,637) (K) $319,652,057
- -----------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (2.7%) (8,362,997)
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $311,289,060
- -----------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/06
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 6,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $51,650
-------
At September 30, 2006, the fund had sufficient cash and/or securities to cover
any commitments under these derivative contracts.
(c) Refunded bond.
(d) Non-income producing security - in default.
(k) As of September 30, 2006 the fund held securities fair valued in accordance
with the policies adopted by the Board of Trustees, aggregating $318,352,057
and 99.59% of market value. All of these security values were provided by an
independent pricing service using an evaluated bid.
(n) Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in the ordinary course of business in
transactions exempt from registration, normally to qualified institutional
buyers. At period end, the aggregate value of these securities was
$6,799,286, representing 2.2% of net assets.
(p) Primary inverse floater.
(u) As restated (See Note 8). Underlying security deposited into special purpose
trust ("the trust") by investment banker upon creation of self-deposited
inverse floaters (See Note 7).
(v) Externally deposited inverse floater.
(z) Restricted securities (excluding 144A issues) are not registered under the
Securities Act of 1933 and are subject to legal or contractual restrictions
on resale. These securities generally may be resold in transactions exempt
from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
prompt sale at an acceptable price may be difficult.
The fund holds the following restricted securities:
CURRENT
ACQUISITION ACQUISITION MARKET TOTAL % OF
RESTRICTED SECURITIES DATE COST VALUE NET ASSETS
- -------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev.,
RITES, FGIC, 7.025%, 2016 4/20/1999 $1,167,100 $1,262,660
Houston, TX, Independent School District,
RITES, 6.525%, 2009 2/26/1999 524,910 538,180
- -------------------------------------------------------------------------------------------------------
Total Restricted Securities $1,800,840 0.6%
- -------------------------------------------------------------------------------------------------------
The following abbreviations are used in this report and are defined:
BMA Bond Market Assn.
COP Certificate of Participation
ETM Escrowed to Maturity
Insurers
AMBAC AMBAC Indemnity Corp.
ASSD GTY Assured Guaranty Insurance Co.
CIFG CDC IXIS Financial Guaranty
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Assn.
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Assn.
MBIA MBIA Insurance Corp.
PSF Permanent School Fund
XLCA XL Capital Insurance Co.
Inverse Floaters
RIBS Residual Interest Bonds
RITES Residual Interest Tax-Exempt Security
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 9/30/06 (unaudited)
(As Restated - See Note 8)
This statement represents your fund's balance sheet, which details the assets
and liabilities comprising the total value of the fund.
ASSETS
- -----------------------------------------------------------------------------------------------------
Investments, at value (identified cost, $299,200,637) $319,652,057
Cash 19,196
Receivable for investments sold 292,475
Receivable for fund shares sold 802,649
Interest receivable 4,558,821
Unrealized appreciation on interest rate swap agreements 51,650
Other assets 926
- -----------------------------------------------------------------------------------------------------
Total assets $325,377,774
- -----------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------
Distributions payable $ 498,242
Payable for investments purchased 933,436
Payable to the holder of the floating rate certificate
from trust assets 12,070,000
Payable for fund shares reacquired 333,788
Payable to affiliates
Management fee 7,651
Shareholder servicing costs 7,208
Distribution and service fees 10,461
Administrative services fee 518
Payable for independent trustees' compensation 31,067
Payable for interest expense and fees 92,031
Accrued expenses and other liabilities 104,312
- -----------------------------------------------------------------------------------------------------
Total liabilities $ 14,088,714
- -----------------------------------------------------------------------------------------------------
Net assets $311,289,060
- -----------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -----------------------------------------------------------------------------------------------------
Paid-in capital $294,529,113
Unrealized appreciation (depreciation) on investments 20,503,070
Accumulated net realized gain (loss) on investments (3,693,911)
Accumulated distributions in excess of net investment income (49,212)
- -----------------------------------------------------------------------------------------------------
Net assets $311,289,060
- -----------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 36,183,858
- -----------------------------------------------------------------------------------------------------
Class A shares
- -----------------------------------------------------------------------------------------------------
Net assets $244,820,817
Shares outstanding 28,476,172
- -----------------------------------------------------------------------------------------------------
Net asset value per share $ 8.60
- -----------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $ 9.03
- -----------------------------------------------------------------------------------------------------
Class B shares
- -----------------------------------------------------------------------------------------------------
Net assets $ 31,172,882
Shares outstanding 3,620,465
- -----------------------------------------------------------------------------------------------------
Net asset value and offering price per share $ 8.61
- -----------------------------------------------------------------------------------------------------
Class C shares
- -----------------------------------------------------------------------------------------------------
Net assets $ 35,295,361
Shares outstanding 4,087,221
- -----------------------------------------------------------------------------------------------------
Net asset value and offering price per share $ 8.64
- -----------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Six months ended 9/30/06 (unaudited)
(As Restated - See Note 8)
This statement describes how much your fund earned in investment income and
accrued in expenses. It also describes any gains and/or losses generated by fund
operations.
NET INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------
Interest income $ 8,782,023
- -----------------------------------------------------------------------------------------------------
Expenses
Management fee $ 850,323
Distribution and service fees 642,734
Shareholder servicing costs 195,256
Administrative services fee 32,736
Independent trustees' compensation 6,887
Custodian fee 68,306
Shareholder communications 19,193
Auditing fees 22,470
Legal fees 4,036
Interest expense and fees 224,394
Miscellaneous 49,538
- -----------------------------------------------------------------------------------------------------
Total expenses $ 2,115,873
- -----------------------------------------------------------------------------------------------------
Fees paid indirectly (10,655)
Reduction of expenses by investment adviser (387,303)
- -----------------------------------------------------------------------------------------------------
Net expenses $ 1,717,915
- -----------------------------------------------------------------------------------------------------
Net investment income $ 7,064,108
- -----------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $ (79,257)
Swap transactions 88,204
- -----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $ 8,947
- -----------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $ 2,696,571
Swap transactions (177,905)
- -----------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $ 2,518,666
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $ 2,527,613
- -----------------------------------------------------------------------------------------------------
Change in net assets from operations $ 9,591,721
- -----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
(Not Restated)
These statements describe the increases and/or decreases in net assets resulting
from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED
9/30/06 3/31/06
CHANGE IN NET ASSETS (UNAUDITED)
FROM OPERATIONS
- -----------------------------------------------------------------------------------------------------
Net investment income $ 7,064,108 $ 14,460,172
Net realized gain (loss) on investments 8,947 629,325
Net unrealized gain (loss) on investments 2,518,666 (2,743,791)
- -----------------------------------------------------------------------------------------------------
Change in net assets from operations $ 9,591,721 $ 12,345,706
- -----------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------
From net investment income
Class A $ (5,647,722) $(11,422,176)
Class B (659,810) (1,578,544)
Class C (679,762) (1,359,481)
- -----------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $ (6,987,294) $(14,360,201)
- -----------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $ (2,897,582) $ (6,094,125)
- -----------------------------------------------------------------------------------------------------
Total change in net assets $ (293,155) $ (8,108,620)
- -----------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------
At beginning of period 311,582,215 319,690,835
At end of period (including accumulated distributions
in excess of net investment income of $49,212 and
$126,026, respectively) $311,289,060 $311,582,215
- -----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
(As Restated - See Note 8)
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
life of a particular share class, if shorter). 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 share class (assuming reinvestment of all distributions)
held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED ----------------------------------------------------------------------
CLASS A 9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value, beginning of period $ 8.53 $ 8.58 $ 8.70 $ 8.54 $ 8.32 $ 8.54
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.20 $ 0.41 $ 0.42 $ 0.41 $ 0.41 $ 0.44
Net realized and unrealized gain
(loss) on investments 0.07 (0.06) (0.13) 0.17 0.25 (0.20)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.27 $ 0.35 $ 0.29 $ 0.58 $ 0.66 $ 0.24
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.20) $ (0.40) $ (0.41) $ (0.42) $ (0.44) $ (0.46)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.60 $ 8.53 $ 8.58 $ 8.70 $ 8.54 $ 8.32
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.21(n) 4.18 3.49 6.94 8.00 2.78
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.21(a) 1.17 1.04 1.04 1.05 1.15
Expenses after expense reductions (f) 0.96(a) 0.92 0.79 0.88 0.90 0.91
Expenses after expense reductions
and excluding interest and fees (f)(l) 0.81(a) 0.81 0.79 0.88 0.90 0.91
Net investment income 4.73(a) 4.71 4.90 4.80 4.85 5.12
Portfolio turnover 4 9 8 9 13 15
Net assets at end of period
(000 omitted) $ 244,821 $ 240,212 $ 241,850 $ 264,797 $ 274,442 $ 276,719
- ---------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEARS ENDED 3/31
ENDED ----------------------------------------------------------------------
CLASS B 9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value, beginning of period $ 8.54 $ 8.59 $ 8.72 $ 8.55 $ 8.33 $ 8.55
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.17 $ 0.34 $ 0.36 $ 0.35 $ 0.35 $ 0.37
Net realized and unrealized gain (loss)
on investments 0.07 (0.05) (0.14) 0.18 0.24 (0.20)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.24 $ 0.29 $ 0.22 $ 0.53 $ 0.59 $ 0.17
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.17) $ (0.34) $ (0.35) $ (0.36) $ (0.37) $ (0.39)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.61 $ 8.54 $ 8.59 $ 8.72 $ 8.55 $ 8.33
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.83(n) 3.40 2.60 6.27 7.19 2.00
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.96(a) 1.92 1.79 1.79 1.80 1.90
Expenses after expense reductions (f) 1.71(a) 1.67 1.54 1.63 1.65 1.66
Expenses after expense reductions and
excluding interest and fees (f)(l) 1.56(a) 1.56 1.54 1.63 1.65 1.66
Net investment income 3.99(a) 3.96 4.15 4.05 4.10 4.37
Portfolio turnover 4 9 8 9 13 15
Net assets at end of period
(000 omitted) $ 31,173 $ 36,752 $ 43,930 $ 52,594 $ 59,591 $ 61,627
- ---------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEARS ENDED 3/31
ENDED ----------------------------------------------------------------------
CLASS C 9/30/06 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value, beginning of period $ 8.56 $ 8.61 $ 8.73 $ 8.56 $ 8.34 $ 8.56
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $ 0.17 $ 0.35 $ 0.36 $ 0.35 $ 0.35 $ 0.37
Net realized and unrealized gain (loss)
on investments 0.08 (0.06) (0.13) 0.18 0.24 (0.20)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $ 0.25 $ 0.29 $ 0.23 $ 0.53 $ 0.59 $ 0.17
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.17) $ (0.34) $ (0.35) $ (0.36) $ (0.37) $ (0.39)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.64 $ 8.56 $ 8.61 $ 8.73 $ 8.56 $ 8.34
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 2.94(n) 3.41 2.72 6.27 7.18 2.00
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.96(a) 1.92 1.79 1.79 1.80 1.90
Expenses after expense reductions (f) 1.71(a) 1.67 1.54 1.63 1.65 1.66
Expenses after expense reductions and
excluding interest and fees (f)(l) 1.56(a) 1.56 1.54 1.63 1.65 1.66
Net investment income 4.01(a) 4.09 4.15 4.05 4.10 4.37
Portfolio turnover 4 9 8 9 13 15
Net assets at end of period
(000 omitted) $ 35,295 $ 34,618 $ 33,911 $ 37,508 $ 39,420 $ 36,146
- ---------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2004 and 2005 fiscal years
resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the
floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been
lower.
(s) From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Municipal Income Fund (the fund) is a series of MFS Municipal Series Trust
which 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, the
security could decline in value, interest from the security could become taxable
and the fund may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. Values of debt
instruments obtained from pricing services can utilize both dealer-supplied
valuations and electronic data processing techniques, which take into account
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. Short-term instruments with a maturity at issuance of 60
days or less may be valued at amortized cost, which approximates market value.
Swaps are generally valued at a broker-dealer bid quotation. Securities and
other assets generally valued on the basis of information from an independent
pricing service may also be valued at a broker-dealer bid quotation. The Board
of Trustees has delegated primary responsibility for determining or causing to
be determined the value of the fund's investments (including any fair valuation)
to the adviser pursuant to valuation policies and procedures approved by the
Board. If the adviser determines that reliable market quotations are not readily
available, investments are valued at fair value as determined in good faith by
the adviser in accordance with such procedures under the oversight of the Board
of Trustees. Under the fund's valuation policies and procedures, market
quotations are not considered to be readily available for many types of debt
instruments. These investments are generally valued at fair value based on
information from independent pricing services. The adviser may rely on
independent pricing services or other information (such as the correlation with
price movements of similar securities in the same or other markets; the type,
cost and investment characteristics of the security; the business and financial
condition of the issuer; and trading and other market data) to assist in
determining whether to fair value and at what value to fair value an investment.
The value of an investment for purposes of calculating the fund's net asset
value can differ depending on the source and method used to determine value.
When fair valuation is used, the value of investments used to determine the
fund's net asset value may differ from quoted or published prices for the same
investments. In September 2006, FASB Statement No. 157, Fair Value Measurements
(the "Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for measuring
fair value and expanded disclosures about fair value measurements. Management is
evaluating the application of the Statement to the fund, and believes the impact
will be limited to expanded disclosures resulting from the adoption of this
Statement on the fund's financial statements.
DERIVATIVE RISK - The fund may invest in derivatives for hedging or non-hedging
purposes. While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. When the fund uses derivatives as an investment to gain market
exposure, or for hedging purposes, gains and losses from derivative instruments
may be substantially greater than the derivative's original cost. Derivative
instruments include swap agreements.
SWAP AGREEMENTS - The fund may enter into swap agreements. A swap is an exchange
of cash payments between the fund and another party. Net cash payments are
exchanged at specified intervals and are 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, including accruals of periodic amounts of interest to be paid
or received, is recorded as unrealized appreciation or depreciation in the
Statement of Operations. A liquidation payment received or made upon early
termination is recorded as a realized gain or loss in the Statement of
Operations. Collateral, in the form of cash or securities, may be required to be
held in segregated accounts with the fund's custodian in connection with these
agreements. Risk of loss may exceed amounts recognized on the Statement of
Assets and Liabilities. These risks include the possible lack of a liquid
market, failure of the counterparty to perform under the terms of the
agreements, and unfavorable market movement of the underlying instrument. All
swap agreements entered into by the fund with the same counterparty are
generally governed by a single master agreement, which provides for the netting
of all amounts owed by the parties under the agreement upon the occurrence of an
event of default, thereby reducing the credit risk to which such party is
exposed.
INTEREST RATE SWAP AGREEMENTS - Interest rate swap agreements involve the
periodic exchange of cash flows, such as the exchange of fixed rate interest
payments for floating rate interest payments based on a notional principal
amount. The interest rates may be based on a specific financial index or the
exchange of two distinct floating rate payments. The fund may enter into an
interest rate swap in order to manage its exposure to interest fluctuations.
INDEMNIFICATIONS - Under the fund's organizational documents, its officers and
trustees may be indemnified against certain liabilities and expenses arising out
of the performance of their duties to the fund. Additionally, in the normal
course of business, the fund enters into agreements with service providers that
may contain indemnification clauses. The fund's maximum exposure under these
agreements is unknown as this would involve future claims that may be made
against the fund that have not yet occurred.
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. The fund may receive proceeds from litigation
settlements involving its portfolio holdings. Any proceeds received are
reflected in realized gain/loss in the Statement of Operations, or in unrealized
gain/loss if the security is still held by the fund. 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.
INTEREST EXPENSE AND FEES - Interest expense and fees relate to payments made to
the holder of the floating rate certificate from trust assets in connection with
self-deposited inverse floater transactions. Interest expense and fees are
recorded as incurred.
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, 2006, is shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue Code,
and to distribute all of its taxable and tax-exempt income, including realized
capital gains. Accordingly, no provision for federal income tax is required in
the financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These
adjustments have no impact on net assets or net asset value per share. Temporary
differences which arise from recognizing certain items of income, expense, gain
or loss in different periods for financial statement and tax purposes will
reverse at some time in the future. Distributions in excess of net investment
income or net realized gains are temporary overdistributions for financial
statement purposes resulting from differences in the recognition or
classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to amortization and accretion of debt
securities and secured borrowings.
The tax character of distributions made during the current period will be
determined at fiscal year end.
The tax character of distributions declared to shareholders is as follows:
3/31/06 3/31/05
Ordinary income (including any short-term capital gains) $-- $27,254
Tax-exempt income 14,360,201 15,355,366
- ---------------------------------------------------------------------------------------
Total distributions $14,360,201 $15,382,620
- ---------------------------------------------------------------------------------------
The federal tax cost and the tax basis components of distributable earnings were
as follows:
AS OF 9/30/06
Cost of investments $286,623,352
------------------------------------------------------------
Gross appreciation $24,218,758
Gross depreciation (3,260,053)
------------------------------------------------------------
Net unrealized appreciation (depreciation) $20,958,705
------------------------------------------------------------
AS OF 3/31/06
Undistributed tax-exempt income 1,078,782
Capital loss carryforwards (4,190,232)
Other temporary differences (977,077)
Net unrealized appreciation (depreciation) 18,244,047
The aggregate cost above includes prior fiscal year end tax adjustments.
As of March 31, 2006, the fund had capital loss carryforwards available to
offset future realized gains. Such losses expire as follows:
3/31/11 $(104,559)
3/31/12 (4,085,673)
------------------------------------------------------------
$(4,190,232)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the "Interpretation") was issued, and is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years as
of the effective date. This Interpretation prescribes a minimum threshold for
financial statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return, and requires certain expanded disclosures.
Management is evaluating the application of the Interpretation to the fund's,
and has not at this time determined the impact, if any, resulting from the
adoption of this Interpretation on the fund's financial statements.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - The fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. Differences in per
share dividend rates are generally due to differences in separate class
expenses. Class B shares will convert to Class A shares approximately eight
years after purchase.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
management and related administrative services and facilities to the fund. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
the fund's average daily net assets. As part of a settlement agreement with the
New York Attorney General concerning market timing and related matters, MFS has
agreed to reduce the management fee to 0.30% of the fund's average daily net
assets for the period March 1, 2004 through February 28, 2009. For the six
months ended September 30, 2006, this waiver amounted to $386,511 and is
reflected as a reduction of total expenses in the Statement of Operations.
The management fee incurred for the six months ended September 30, 2006 was
equivalent to an annual effective rate of 0.30% of the fund's average daily net
assets.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $18,175 for the six months ended September 30,
2006, as its portion of the initial sales charge on sales of Class A shares of
the fund.
The Board of Trustees has adopted a distribution plan for certain class shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay MFD for services
provided by MFD and financial intermediaries in connection with the distribution
and servicing of certain share classes. One component of the plan is a
distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution
and/or service fees to financial intermediaries.
Distribution Fee Plan Table:
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(D) RATE(E) FEE
Class A 0.10% 0.25% 0.35% 0.25% $301,103
Class B 0.75% 0.25% 1.00% 1.00% $167,240
Class C 0.75% 0.25% 1.00% 1.00% $174,391
- -------------------------------------------------------------------------------
Total Distribution and Service Fees $642,734
(d) In accordance with the distribution plan for certain classes, the fund pays
distribution and/or service fees up to these annual percentage rates of each
class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the
distribution plan for the six months ended September 30, 2006, based on each
class' average daily net assets. Payment of the 0.10% annual Class A
distribution fee is not yet in effect and will be implemented on such date
as the fund's Board of Trustees 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 12 months of purchase.
Class B shares are subject to a contingent deferred sales charge in the event of
a shareholder redemption within six years of purchase. All contingent deferred
sales charges are paid to MFD and during the six months ended September 30,
2006, were as follows:
AMOUNT
Class A $41,281
Class B $37,211
Class C $2,497
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned
subsidiary of MFS, receives a fee from the fund for its services as shareholder
servicing agent calculated as a percentage of the average net assets of the fund
as determined periodically under the supervision of the fund's Board of
Trustees. For the six months ended September 30, 2006, the fee was $149,038,
which equated to 0.0964% annually of the fund's average daily net assets. MFSC
also receives payment from the fund for out-of-pocket and sub-accounting
expenses paid by MFSC on behalf of the fund. For the six months ended September
30, 2006, these costs amounted to $9,745. The fund may also pay shareholder
servicing related costs to non-related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to the fund. Under
an administrative services agreement, the fund partially reimburses MFS the
costs incurred to provide these services. The fund is charged a fixed amount
plus a fee based on calendar year average net assets. From July 1, 2005 through
March 31, 2006, the fund's annual fixed amount was $10,000. Effective April 1,
2006, the fund's annual fixed amount is $17,500.
The administrative services fee incurred for the six months ended September 30,
2006 was equivalent to an annual effective rate of 0.0212% of the fund's average
daily net assets.
TRUSTEES' AND OFFICERS' COMPENSATION - The fund pays compensation to Independent
Trustees in the form of a retainer, attendance fees, and additional compensation
to Board and Committee chairpersons. The fund does not pay compensation directly
to Trustees or officers of the fund who are also officers of the investment
adviser, 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,
MFD, and MFSC.
The fund has an unfunded, defined benefit plan for certain retired Independent
Trustees which resulted in a pension expense of $1,462. This amount is included
in Independent Trustees' compensation for the six months ended September 30,
2006. The deferred liability for retirement benefits payable to certain retired
Trustees amounted to $29,676 at September 30, 2006, and is included in payable
for independent trustees' compensation.
OTHER - 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
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. The funds can terminate the
Agreement with Tarantino LLC at any time under the terms of the Agreement. For
the six months ended September 30, 2006, the fee paid to Tarantino LLC was $793.
MFS has agreed to reimburse the fund for a portion of the payments made by the
funds to Tarantino LLC in the amount of $792, which is shown as a reduction of
total expenses in the Statement of Operations. Additionally, MFS has agreed to
bear all expenses associated with office space, other administrative support,
and supplies provided to the ICCO.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$12,596,052 and $14,442,586, respectively.
(5) SHARES OF BENEFICIAL INTEREST
The fund 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 YEAR ENDED
9/30/06 3/31/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 2,420,313 $20,576,802 3,325,237 $28,649,761
Class B 138,300 1,178,929 537,071 4,625,461
Class C 389,852 3,334,329 633,255 5,472,817
- -----------------------------------------------------------------------------------------------
2,948,465 $25,090,060 4,495,563 $38,748,039
Shares issued to shareholders in
reinvestment of distributions
Class A 365,121 $3,110,738 734,629 $6,332,181
Class B 39,868 340,118 90,476 781,204
Class C 52,240 446,779 104,388 902,609
- -----------------------------------------------------------------------------------------------
457,229 $3,897,635 929,493 $8,015,994
Shares reacquired
Class A (2,484,138) $(21,133,649) (4,066,222) $(34,988,521)
Class B (862,024) (7,343,732) (1,435,040) (12,389,239)
Class C (398,709) (3,407,896) (634,387) (5,480,398)
- -----------------------------------------------------------------------------------------------
(3,744,871) $(31,885,277) (6,135,649) $(52,858,158)
Net change
Class A 301,296 $2,553,891 (6,356) $(6,579)
Class B (683,856) (5,824,685) (807,493) (6,982,574)
Class C 43,383 373,212 103,256 895,028
- -----------------------------------------------------------------------------------------------
(339,177) $(2,897,582) (710,593) $(6,094,125)
(6) LINE OF CREDIT
The fund and other affiliated funds participate in a $1 billion unsecured
committed line of credit provided by a syndication of banks under a credit
agreement. In addition, the fund and other affiliated funds have established
uncommitted borrowing arrangements with certain banks. Borrowings may be made
for temporary financing needs. Interest is charged to each fund, based on its
borrowings, generally at a rate equal to the Federal Reserve funds rate plus
0.35%. In addition, a commitment fee, based on the average daily, unused portion
of the committed line of credit, is allocated among the participating funds at
the end of each calendar quarter. For the six months ended September 30, 2006,
the fund's commitment fee and interest expense were $943 and $0, respectively,
and are included in miscellaneous expense on the Statement of Operations.
(7) INVERSE FLOATERS
The fund invests in municipal inverse floating rate securities which are
structured by the issuer (known as primary market inverse floating rate
securities) or by an investment banker utilizing municipal bonds which have
already been issued (known as secondary market inverse floating rate securities)
to have variable rates of interest which typically move in the opposite
direction of short term interest rates. A secondary market inverse floating rate
security is created when an investment banker transfers a fixed rate municipal
bond to a special purpose trust, and causes the trust to (a) issue floating rate
certificates to third parties, in an amount equal to a fraction of the par
amount of the deposited bonds (these certificates usually pay tax-exempt
interest at short-term interest rates that typically reset weekly; and the
certificate holders typically, on seven days notice, have the option to tender
their certificates to the investment banker or another party for redemption at
par plus accrued interest), and (b) issue inverse floating rate certificates
(sometimes referred to as "inverse floaters"). If the holder of the inverse
floater transfers the municipal bonds to an investment banker for the purpose of
depositing the municipal bonds into the special purpose trust, the inverse
floating rate certificates that are issued by the trust are referred to as
"self-deposited inverse floaters." If the bonds held by the trust are purchased
by the investment banker for deposit into the trust from someone other than the
purchasers of the inverse floaters, the inverse floating rate certificates that
are issued by the trust are referred to as "externally deposited inverse
floaters." Such self-deposited inverse floaters held by the fund are accounted
for as secured borrowings, with the municipal bonds reflected in the investments
of the fund and amounts owed to the holder of the floating rate certificate
under the provisions of the trust, which amounts are paid solely from the assets
of the trust, reflected as liabilities of the fund in the Statement of Assets
and Liabilities under the caption, "Payable to the holder of the floating rate
certificate from trust assets". At September 30, 2006, the fund's Statement of
Assets and Liabilities impact was as follows:
PAYABLE TO THE
HOLDER OF THE WEIGHTED AVERAGE INTEREST
FLOATING RATE RATE ON FLOATING RATE VALUE OF BONDS
CERTIFICATE FROM CERTIFICATES ISSUED BY TRANSFERRED TO
TRUST ASSETS THE TRUST THE TRUST
$12,070,000 2.95% $26,640,611
Primary and externally deposited inverse floaters held by the fund are not
accounted for as secured borrowings.
(8) RESTATEMENT INFORMATION
After the fund issued its September 30, 2006 financial statements, the fund
determined that the criteria for sale accounting in FASB Statement No. 140 had
not been met for certain transfers of municipal bonds during the period ended
September 30, 2006 and that its transfers of municipal bonds in connection with
self-deposited inverse floaters should have been accounted for as secured
borrowings rather than as sales. Accordingly, the fund has restated the
Statement of Assets and Liabilities, including the Portfolio of Investments, as
of September 30, 2006, the related Statement of Operations for the period then
ended, and certain Financial Highlights for each of the applicable periods in
the five years then ended, to give effect to this change, including recording
interest on the bonds as interest income and interest paid to the holder of the
floating rate certificate from trust assets as interest expense in the Statement
of Operations. The fund's Statement of Changes in Net Assets was not restated.
The restatement did not affect the fund's reported net investment income, past
performance, average annual total return or net asset value.
PREVIOUSLY
REPORTED RESTATED
STATEMENT OF ASSETS AND
LIABILITIES AT SEPTEMBER 30, 2006 (UNAUDITED)
Investments, identified cost $287,114,162 $299,200,637
Investments, at value $307,582,057 $319,652,057
Interest receivable $4,466,790 $4,558,821
Total assets $313,215,743 $325,377,774
Payable to the holder of the floating rate certificate from
trust assets $-- $12,070,000
Payable for interest expense and fees $-- $92,031
Total liabilities $1,926,683 $14,088,714
Unrealized appreciation (depreciation) on investments $20,519,545 $20,503,070
Accumulated net realized gain (loss) on investments $(3,710,386) $(3,693,911)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
Interest income $8,557,629 $8,782,023
Interest expense and fees $-- $224,394
Total expenses $1,891,479 $2,115,873
Net expenses $1,493,521 $1,717,915
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2006 MARCH 31, 2006
(UNAUDITED)
RATIOS (%) TO AVERAGE NET ASSETS: PREVIOUSLY PREVIOUSLY
REPORTED RESTATED REPORTED RESTATED
CLASS A
Expenses before expense reductions 1.06(a) 1.21(a) 1.06 1.17
Expenses after expense reductions 0.81(a) 0.96(a) 0.81 0.92
CLASS B
Expenses before expense reductions 1.81(a) 1.96(a) 1.81 1.92
Expenses after expense reductions 1.56(a) 1.71(a) 1.56 1.67
CLASS C
Expenses before expense reductions 1.81(a) 1.96(a) 1.81 1.92
Expenses after expense reductions 1.56(a) 1.71(a) 1.56 1.67
(a) Annualized.
While the "Statement of Assets and Liabilities" as of March 31, 2005, 2004, 2003
and 2002 (not presented herein) has not been reissued to give effect to the
restatement, the principal effects of the restatement would be to increase
investments and payable to the holder of the floating rate certificate from
trust assets by corresponding amounts each year end, with no effect on
previously reported net assets. The "Statement of Operations" for the years
ended March 31, 2005, 2004, 2003 and 2002 (not presented herein) has not been
reissued to give effect to the restatement, but the principal effects of the
restatement would be to increase interest income and interest expense and fees
by corresponding amounts each year, with no effect on previously reported net
investment income.
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
(Not Restated)
The Investment Company Act of 1940 requires that both the full Board of Trustees
and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of the Fund's investment advisory
agreement with MFS. The Trustees consider matters bearing on the Fund and its
advisory arrangements at their meetings throughout the year, including a review
of performance data at each regular meeting. In addition, the independent
Trustees met several times over the course of three months beginning in May and
ending in July, 2006 ("contract review meetings") for the specific purpose of
considering whether to approve the continuation of the investment advisory
agreement for the Fund and the other investment companies that the Board
oversees (the "MFS Funds"). The independent Trustees were assisted in their
evaluation of the Fund's investment advisory agreement by independent legal
counsel, from whom they received separate legal advice and with whom they met
separately from MFS during various contract review meetings. The independent
Trustees were also assisted in this process by the MFS Funds' Independent Chief
Compliance Officer, a full-time senior officer appointed by and reporting to the
independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreement, the Trustees, including the independent Trustees,
considered such information and factors as they believed, in light of the legal
advice furnished to them and their own business judgment, to be relevant. The
investment advisory agreement for the Fund was considered separately, although
the Trustees also took into account the common interests of all MFS Funds in
their review. As described below, the Trustees considered the nature, quality,
and extent of the various investment advisory, administrative, and shareholder
services performed by MFS under the existing investment advisory agreement and
other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and
relied upon materials which included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Fund for various
time periods ended December 31, 2005 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a group
of funds identified by objective criteria suggested by MFS ("MFS peer funds"),
(ii) information provided by Lipper Inc. on the Fund's advisory fees and other
expenses and the advisory fees and other expenses of comparable funds identified
by Lipper (the "Lipper expense group"), as well as the advisory fees and other
expenses of MFS peer funds, (iii) information provided by MFS on the advisory
fees of comparable portfolios of other clients of MFS, including institutional
separate accounts and other clients, (iv) information as to whether and to what
extent applicable expense waivers, reimbursements or fee "breakpoints" are
observed for the Fund, (v) information regarding MFS' financial results and
financial condition, including MFS' and certain of its affiliates' estimated
profitability from services performed for the Fund and the MFS Funds as a whole,
(vi) MFS' views regarding the outlook for the mutual fund industry and the
strategic business plans of MFS, (vii) descriptions of various functions
performed by MFS for the Funds, such as compliance monitoring and portfolio
trading practices, and (viii) information regarding the overall organization of
MFS, including information about MFS' senior management and other personnel
providing investment advisory, administrative and other services to the Fund and
the other MFS Funds. The comparative performance, fee and expense information
prepared and provided by Lipper Inc. was not independently verified and the
independent Trustees did not independently verify any information provided to
them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreement was based on a comprehensive consideration of all information provided
to the Trustees and not the result of any single factor. Some of the factors
that figured particularly in the Trustees' deliberations are described below,
although individual Trustees may have evaluated the information presented
differently from one another, giving different weights to various factors. It is
also important to recognize that the fee arrangements for the Fund and other MFS
Funds are the result of years of review and discussion between the independent
Trustees and MFS, that certain aspects of such arrangements may receive greater
scrutiny in some years than others, and that the Trustees' conclusions may be
based, in part, on their consideration of these same arrangements during the
course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed the
Fund's total return investment performance as well as the performance of peer
groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of the Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2005, which the Trustees believed was a
long enough period to reflect differing market conditions. The Fund's
performance was in the 1st quintile relative to the other funds in the universe
for this three-year period (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 1st quintile for each of the one- and five-year
periods ended December 31, 2005 relative to the Lipper performance universe.
Because of the passage of time, these performance results may differ from the
performance results for more recent periods, including those shown elsewhere in
this report.
In the course of their deliberations, the Trustees took into account information
provided by MFS in connection with the contract review meetings, as well as
during investment review meetings conducted with portfolio management personnel
during the course of the year regarding the Fund's performance. After reviewing
these and related factors, the Trustees concluded, within the context of their
overall conclusions regarding the investment advisory agreement, that they were
satisfied with MFS' responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered, among other information, the Fund's advisory fee and the total
expense ratio of the Fund's Class A shares as a percentage of average net assets
and the advisory fee and total expense ratios of peer groups of funds based on
information provided by Lipper Inc. and MFS. The Trustees considered that there
is an advisory fee reduction in effect for the Fund through February 28, 2009 as
part of MFS' settlement with the New York Attorney General concerning market
timing and related matters. The Trustees also considered that, according to the
Lipper data, the Fund's effective advisory fee rate (taking into account the
advisory fee reduction) and total expense ratio were each lower than the Lipper
expense group median.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information provided
by MFS as to the generally broader scope of services provided by MFS to the Fund
in comparison to institutional accounts, the higher demands placed on MFS'
investment personnel and trading infrastructure as a result of the daily cash
in-flows and out-flows of the Fund, and the impact on MFS and expenses
associated with the more extensive regulatory regime to which the Fund is
subject in comparison to institutional accounts.
The Trustees also considered whether the Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that the Fund's advisory fee rate schedule is not
currently subject to any breakpoints. Taking into account the advisory fee
reduction noted above, the Trustees determined not to recommend any advisory fee
breakpoints for the Fund at this time.
The Trustees also considered information prepared by MFS relating to MFS' costs
and profits with respect to the Fund, the MFS Funds considered as a group, and
other investment companies and accounts advised by MFS, as well as MFS'
methodologies used to determine and allocate its costs to the MFS Funds, the
Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that the advisory fees charged to the Fund
represent reasonable compensation in light of the services being provided by MFS
to the Fund.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Fund.
The Trustees also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and
well-capitalized companies which are spending, and appear to be prepared to
continue to spend, substantial sums to engage personnel and to provide services
to competing investment companies. In this regard, the Trustees also considered
the financial resources of MFS and its ultimate parent, Sun Life Financial Inc.
The Trustees also considered the advantages and possible disadvantages to the
Fund of having an adviser which also serves other investment companies as well
as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the Fund
by MFS and its affiliates under agreements and plans other than the investment
advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund
Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Fund's behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Fund's
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various other
factors. Additionally, the Trustees considered so-called "fall-out benefits" to
MFS such as reputational value derived from serving as investment manager to the
Fund.
Based on their evaluation of factors that they deemed to be material, including
those factors described above, the Board of Trustees, including a majority of
the independent Trustees, concluded that the Fund's investment advisory
agreement with MFS should be continued for an additional one-year period,
commencing August 1, 2006.
A discussion regarding the Board's most recent review and renewal of the Fund's
investment advisory agreement will be available on or before November 1, 2006 by
clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
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 Proxy Voting 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.
QUARTERLY PORTFOLIO DISCLOSURE
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
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site 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.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA
1-800-637-8255 02205-5824
24 hours a day
OVERNIGHT MAIL
ACCOUNT SERVICE AND MFS Service Center, Inc.
LITERATURE 500 Boylston Street
Boston, MA 02116-3741
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
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Go paperless with eDELIVERY: Arrange to have MFS send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply 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 a retirement
plan, MFS TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
ITEM 2. CODE OF ETHICS.
The Registrant has not amended any provision in its Code of Ethics (the "Code")
that relates to any element of the Code's definition enumerated in paragraph
(b) of Item 2 of this Form N-CSR.
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.
A schedule of investments for each series of the Registrant is included as part
of the report to shareholders 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.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the effectiveness of the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, the "Act") as conducted within 90 days of the
filing of this amended report on 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 control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the
second fiscal quarter of the period covered by the report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting. However, as discussed below,
subsequent to September 30, 2006, the registrant has applied the provisions of
Statement of Financial Accounting Standards No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" ("FAS
140") to certain inverse floating rate obligations, as described below.
Subsequent to the registrant's filing of the report on Form N-CSR for its
fiscal year ended September 30, 2006 on December 6, 2006, the registrant's
principal executive officer and principal financial officer became aware that
other investment companies (not affiliated with the registrant) that had
transferred municipal bonds to special purpose trusts for the purpose of
investing in municipal securities commonly referred to as "inverse floaters"
and that had accounted for such transfers as "sales" in accordance with what
the registrant understands was common practice in the mutual fund industry, had
received a comment from their independent public accountants questioning the
sale treatment that had been previously applied by such investment companies to
such transfers. In response to these comments, certain of these investment
companies restated their financial statements to apply the provisions of FAS
140 to the transfers of such municipal bonds in connection with their
investments in inverse floaters. The registrant had likewise accounted for such
transfers as "sales". Registrant's chief executive officer and chief financial
officer note that other investment companies that invested in similar
securities over the same time periods had been accounting for such transfers in
a similar manner as the registrant. After a review of this matter with the
registrant's independent public accountants, registrant applied FAS 140 to such
transfers and restated its financial statements for those series of the
registrant that invest in inverse floaters for the fiscal year ended September
30, 2006.
Subsequent to the filing of the registrant's Form N-CSR for the fiscal year
ended September 30, 2006, and prior to the date hereof, the registrant's
internal controls over financial reporting were modified to document the
revised accounting treatment of these transactions, and such documentation
included an analysis in accordance with FAS 140 of the relevant terms and
conditions for transfers of securities in connection with inverse floating rate
obligations.
The registrant's independent public accountants have advised the registrant
that its controls related to the review and analysis of the relevant terms and
conditions of certain transfers of securities related to inverse floaters
failed to operate effectively to determine whether the transfers qualified for
sale accounting and that such failure constitutes a control deficiency that
represents a material weakness in internal control over financial reporting as
of September 30, 2006. It is the view of the registrant's chief executive
officer and chief financial officer that at the time sale accounting treatment
was applied to such transfers that treatment was appropriate and in accordance
with accounting practices followed in the mutual fund industry with respect to
such transfers. Registrant's chief executive officer and chief financial
officers also note that the revised accounting treatment and restatement to the
registrant's financial statements did not impact the net asset values of the
shares of the series of the registrant investing in these securities, reported
net income, past performance or the total returns for such series for any
period.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, 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.
(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.
NOTICE
A copy of the Amended and Restated Declaration of Trust of the Registrant is on
file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually, but are binding only upon the
assets and property of the respective constituent series of the Registrant.
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
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By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President
Date: February 20, 2007
-----------------
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)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President (Principal Executive
Officer)
Date: February 20, 2007
-----------------
By (Signature and Title)* TRACY ATKINSON
-----------------------------------------------------
Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: February 20, 2007
-----------------
* Print name and title of each signing officer under his or her signature.