As filed with the Securities and Exchange Commission on March __, 2007
1933 Act File No. 333-139458
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
|X| PRE-EFFECTIVE AMENDMENT NO. 2 | | POST-EFFECTIVE AMENDMENT NO.
MFS(R) MUNICIPAL SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
500 Boylston, Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 617-954-5000
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Susan S. Newton, Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the registration statement.
Title of Securities Being Registered: Class A1 and Class B1 shares of
beneficial interest in the series of the Registrant designated MFS Municipal
Income Fund, a series of MFS Municipal Series Trust.
NO FILING FEE IS REQUIRED BECAUSE AN INDEFINITE NUMBER OF SHARES HAVE
PREVIOUSLY BEEN REGISTERED PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY
ACT OF 1940.
The Registrant hereby amends this Registration Statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
===============================================================================
DRAFT 3-13-07
MFS MUNICIPAL BOND FUND
500 Boylston Street, Boston, Massachusetts 02116-3741
(617) 954-5000
April [ ], 2006
Dear Shareholder:
I am writing to ask for your vote on an important matter that will
affect your investment in MFS(R) Municipal Bond Fund (the "Municipal Bond
Fund"). Votes will be cast at a shareholder meeting scheduled for June 7, 2007.
While you are, of course, welcome to join us at the Municipal Bond Fund's
meeting, most shareholders cast their vote by filling out and signing the
enclosed proxy card or by voting by telephone or over the Internet.
You may be aware that MFS offers a wide array of funds designed to
meet the investment needs of investors. MFS offers a fund that is similar to
the Municipal Bond Fund called MFS(R) Municipal Income Fund (the "Municipal
Income Fund"). Municipal Income Fund has a substantially similar investment
objective to that of the Municipal Bond Fund and also has investment strategies
and policies that are similar to those of the Municipal Bond Fund, although the
Municipal Income Fund has the ability to invest in securities that are rated
below investment grade to a greater degree than Municipal Bond Fund. This
reorganization would provide you with the opportunity to participate in a
somewhat larger combined fund with similar investment objectives and similar
strategies and policies, potentially lower expenses resulting from fixed costs
being spread over a larger asset base, and potentially greater prospects for
asset growth over time.
After careful consideration, the Municipal Bond Fund's Trustees have
unanimously determined that a tax-free reorganization of the Municipal Bond
Fund into the Municipal Income Fund would be in your best interests. For this
reason, your Trustees recommend that you vote FOR the proposed transaction, by
attending the meeting and voting in person, by signing and returning the
enclosed proxy card, or by following the instructions on the proxy card to vote
via telephone or over the Internet. This proposed reorganization is detailed in
the enclosed Prospectus/Proxy Statement. For your convenience, a summary of the
transaction is included in question and answer format at the beginning of the
Prospectus/Proxy Statement. You should read both thoroughly before voting.
YOUR VOTE MAKES A DIFFERENCE
No matter what the size of your investment may be, your vote is
critical. I urge you to review the enclosed materials and to vote according to
the manner specified, either by mail, by phone, via the Internet or in person.
Your prompt response will help avoid the need for additional mailings at the
Municipal Bond Fund's expense. For your convenience, we have provided a
postage-paid envelope should you choose to vote by mail.
If you have any questions or need additional information, please
contact your financial adviser or call [NUMBER], Monday through Friday between
9:00 A.M. and 11:00 P.M. and Saturday between 12:00 P.M. and 6:00 P.M. Eastern
time. I thank you for your prompt vote on this matter.
Sincerely,
Maria F. Dwyer
President
MFS(R) Family of Funds
MFS MUNICIPAL BOND FUND
500 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 7, 2007
A Special Meeting (the "Meeting") of Shareholders of MFS Municipal Bond Fund, a
series of MFS Series Trust IV, a Massachusetts business trust, will be held at
the offices of the MFS Municipal Bond Fund, 500 Boylston Street, 24th Floor,
Boston, Massachusetts 02116, on June 7, 2007, at 2:00 p.m. Eastern time for the
following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement and
Plan of Reorganization (the "Agreement") between MFS Series Trust IV,
a Massachusetts business trust, on behalf of its MFS Municipal Bond
Fund ("Municipal Bond Fund"), and MFS Municipal Series Trust, a
Massachusetts business trust, on behalf of its MFS Municipal Income
Fund ("Municipal Income Fund"), providing for the transfer of assets
to and the assumption of liabilities of the Municipal Bond Fund by the
Municipal Income Fund in exchange solely for shares of beneficial
interest of the Municipal Income Fund, the distribution of the
Municipal Income Fund shares to the shareholders of the Municipal Bond
Fund in liquidation of the Municipal Bond Fund and the termination of
the Municipal Bond Fund.
ITEM 2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR
ITEM 1.
Only shareholders of record on [April 2], 2007 will be entitled to vote at the
Meeting.
By order of the Board of Trustees,
Susan S. Newton
Assistant Secretary and Assistant Clerk
April [ ], 2007
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING BY PHONE OR
VIA THE INTERNET, OR BY SIGNING AND RETURNING THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSE OF
A SECOND SOLICITATION.
PROSPECTUS/PROXY STATEMENT
APRIL [ ], 2007
ACQUISITION OF THE ASSETS AND LIABILITIES OF
MFS MUNICIPAL BOND FUND
A SERIES OF MFS SERIES TRUST IV
500 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 954-5000
BY AND IN EXCHANGE FOR SHARES OF
MFS MUNICIPAL INCOME FUND
A SERIES OF MFS MUNICIPAL SERIES TRUST
500 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 954-5000
This Prospectus/Proxy Statement relates to the proposed reorganization
of MFS Municipal Bond Fund (the "Municipal Bond Fund") into MFS Municipal
Income Fund (the "Municipal Income Fund"). If the proposed reorganization is
approved, each Class A and Class B shareholder of the Municipal Bond Fund will
receive a number of full and fractional Class A1 and Class B1 shares,
respectively, of the Municipal Income Fund equal in value at the date of the
exchange to the total value of the shareholder's Municipal Bond Fund shares.
(Municipal Income Fund also offers three separate classes of shares, Class A,
Class B and Class C shares, which are not involved in the reorganization.) Like
the Municipal Bond Fund, the Municipal Income Fund is part of the family of
funds advised by Massachusetts Financial Services Company ("MFS") and is a
registered open-end management investment company (mutual fund). The Municipal
Bond Fund and the Municipal Income Fund are collectively referred to herein as
the "Funds," and each is referred to individually as a "Fund."
This document provides you with the information you need to vote on
the proposed reorganization. Much of the information is required under rules of
the Securities and Exchange Commission (the "SEC") and some is technical. If
there is anything you do not understand, please call the toll-free number,
[NUMBER], or your financial intermediary.
This Prospectus/Proxy Statement explains concisely what you should
know before voting on the proposed reorganization or investing in the Municipal
Income Fund. Please read it carefully and keep it for future reference. This
Prospectus/Proxy Statement is accompanied by (i) the Class A1/Class B1
Prospectus, dated [March] _, 2007, of the Municipal Income Fund, as
supplemented from time to time (the "Municipal Income Fund Prospectus"); (ii)
the Municipal Income Fund's Annual Report to Shareholders for the fiscal year
ended March 31, 2006, as restated (the "Municipal Income Fund Annual Report");
and (iii) the Municipal Income Fund's Semi-Annual Report to Shareholders for
the six-month period ended September 30, 2006, as restated (the "Municipal
Income Fund Semi-Annual Report"). The Municipal Income Fund Prospectus, the
Municipal Income Fund Annual Report and the Municipal Income Fund Semi-Annual
Report are incorporated into this Prospectus/Proxy Statement by reference,
which means they are part of the Prospectus/Proxy Statement for legal purposes.
The following documents have been filed with the SEC and are also
incorporated into this Prospectus/Proxy Statement by reference:
(i) the Prospectus, dated January 1, 2007, of the Municipal Bond
Fund, as supplemented from time to time;
(ii) the Statement of Additional Information, dated January 1,
2007, of the Municipal Bond Fund, as supplemented from time
to time;
(iii) the Statement of Additional Information, dated August 1,
2006, of the Municipal Income Fund, as supplemented from time
to time;
(iv) the Municipal Bond Fund's Annual Report to Shareholders for
the fiscal year ended August 31, 2006, as restated; and
(v) a Statement of Additional Information, dated April [ ], 2007,
relating to the proposed reorganization.
For a free copy of any of the above documents, please contact us at
our toll-free number (1-800-225-2606) or write to MFS Service Center, Inc., 500
Boylston Street, Boston, MA 02116-3741.
Proxy materials, registration statements and other information filed
by the Funds can be inspected and copied at the Public Reference Room
maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549
and the public reference facilities at the SEC's Northeast and Midwest regional
offices, at 3 World Financial Center, New York, NY 10281 and 175 W. Jackson
Boulevard, Suite 900, Chicago, IL 60604, respectively. Copies of such material
can also be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549 at prescribed rates. You may also access material and
other information about the Funds on the SEC's Internet site at
http://www.sec.gov. The SEC file numbers for the documents listed above
relating to the Municipal Bond Fund are 002-54607 and 811-2594. The SEC file
numbers for the documents listed above relating to the Municipal Income Fund
are 002-92915 and 811-4096. The SEC file number for the Statement of Additional
Information relating to this Prospectus/Proxy Statement is 333-139458.
THE SECURITIES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC PASSED UPON THE
ACCURACY OR ADEQUACY OF SUCH PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Synopsis __
Risk Factors __
General __
Proposal Regarding Approval or Disapproval of Reorganization
Transaction and Related Agreement and Plan of Reorganization __
Background and Reasons for the Proposed Reorganization __
Information About the Reorganization __
Voting Information __
Miscellaneous __
Form of Agreement and Plan of Reorganization __
Enclosures
Class A1/Class B1 Prospectus of the Municipal Income Fund, dated [March] _,
2007, as supplemented. Annual Report of the Municipal Income Fund, for the
fiscal year ended March 31, 2006. Semi-Annual Report of the Municipal Income
Fund, for the six-month period ended September 30, 2006.
SYNOPSIS
The questions and responses thereto that follow provide an overview of
matters that may be particularly relevant to shareholders considering a
proposed reorganization between the Funds. These responses are qualified in
their entirety by the remainder of the Prospectus/Proxy Statement, which
contains additional information and further details regarding the proposed
reorganization.
1. WHAT IS BEING PROPOSED?
The Board of Trustees of the Municipal Bond Fund, who are also the
Trustees of the Municipal Income Fund, are recommending that shareholders of
the Municipal Bond Fund approve the reorganization of the Municipal Bond Fund
into the Municipal Income Fund. If approved by shareholders, the assets and
liabilities of the Municipal Bond Fund will be transferred to the Municipal
Income Fund. In consideration therefore, the Municipal Income Fund will deliver
to the Municipal Bond Fund a number of shares of the Municipal Income Fund
having an aggregate net asset value equal to the value of the assets of the
Municipal Bond Fund less the value of liabilities of the Municipal Bond Fund.
Immediately following the transfer, the Municipal Income Fund shares received
by the Municipal Bond Fund will be distributed to its shareholders, in
proportion to their holdings in the Municipal Bond Fund, and the Municipal Bond
Fund will be terminated as soon as reasonably practicable thereafter. (All of
these transactions are referred to below collectively as the "reorganization.")
2. WHAT WILL HAPPEN TO MY SHARES OF THE MUNICIPAL BOND FUND AS A RESULT
OF THE REORGANIZATION?
Your shares of the Municipal Bond Fund will, in effect, be exchanged
on a tax-free basis for shares of a similar class of the Municipal Income Fund
with an equal total net asset value. The Municipal Bond Fund will then be
terminated.
3. WHY IS THE REORGANIZATION BEING PROPOSED, AND WHAT ARE THE BENEFITS OF
MERGING THE MUNICIPAL BOND FUND INTO THE MUNICIPAL INCOME FUND?
The reorganization is designed to reduce existing overlap in funds
within the same asset class offered within the MFS fund family, thereby
reducing inefficiencies and creating a larger combined fund. The Trustees
believe that the reorganization is in the best interest of each Fund's
shareholders and that the interests of shareholders will not be diluted as a
result of the reorganization. The reorganization would provide you with the
opportunity to participate in a somewhat larger combined fund with a similar
investment objective and similar policies and strategies, potentially lower
expenses resulting from fixed costs being spread over a somewhat larger asset
base, a generally better historical performance record, and greater prospects
for asset growth over time. In addition, combining the Funds will likely
eliminate the duplication of certain services and expenses that currently exist
as a result of their separate operations, which could promote more efficient
management and operations on a more cost-effective basis.
As shown in more detail below, the two Funds have substantially
similar investment objectives, policies and strategies, but the Municipal
Income Fund has a more diversified portfolio of investments. It is estimated
that if the reorganization is completed, each class of the combined fund will
have a slightly lower expense ratio than the current expense ratio of the
corresponding class of the Municipal Bond Fund (by an estimated 0.02% for each
class). In addition, although past performance is not an indication of future
performance, Municipal Income Fund generally has a better historical
performance record than does the Municipal Bond Fund. It is expected that the
reorganization will be a tax-free event for federal income tax purposes and,
accordingly, no gain or loss will be recognized by you or the Municipal Bond
Fund as a direct result of the reorganization.
For a complete discussion of the factors considered by the Board of
Trustees in approving the reorganization, please see "Background and Reasons
for the Proposed Reorganization" below.
4. HOW DO THE INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES,
POLICIES AND RESTRICTIONS OF THE TWO FUNDS COMPARE?
The investment objectives of the two Funds are similar. Municipal Bond
Fund's investment objective is to seek total return with an emphasis on income
exempt from federal income tax, but also considering capital preservation.
Municipal Income Fund's investment objective is to provide as high a level of
current income exempt from federal income taxes as is considered consistent
with prudent investing while seeking protection of shareholders' capital.(1)
Both Funds' investment objectives can be changed without shareholder approval.
Both Funds seek to achieve their respective objective by investing, under
normal market conditions, at least 80% of their respective net assets in
securities and other investments, the interest on which is exempt from federal
income tax. Investment by the Funds in municipal securities, which include
bonds or other debt obligations of a U.S. state or political subdivision, such
as a county, city, town, village, or authority, satisfies this policy. Both
Funds also may invest in participation interests in municipal securities, which
are interests in holdings of municipal obligations backed by a letter of credit
or guarantee from the issuing bank. While each fund seeks to invest in
municipal securities whose income is exempt from federal income tax, the
interest income on certain of these municipal securities may be subject to
alternative minimum tax.
- ---------------
(1) Although the Funds currently have slightly different investment objectives,
the Board of Trustees of Municipal Income Fund has approved changes to the
Fund's investment objective that will make the Municipal Income Fund's
investment objective identical to Municipal Bond Fund's current investment
objective. This change will become effective August 1, 2007 in connection
with the Municipal Income Fund's annual prospectus update.
Both Funds focus on municipal securities rated, or issued by issuers
who have securities that are rated, in one of the top four credit ratings by
credit rating agencies. Each Fund may invest in speculative securities, which
are securities rated in the lowest investment grade category. Municipal Income
Fund (but not Municipal Bond Fund) also may invest as part of its principal
investment strategies in lower rated bonds, commonly known as junk bonds, which
are bonds assigned credit ratings below the four highest credit ratings by
credit rating agencies or which are unrated and considered by MFS to be
comparable to lower rated bonds. On the other hand, Municipal Bond Fund
generally invests substantially all of its assets in investment grade debt
securities. As of [___, 2006], the average credit quality of rated securities
held in Municipal Bond Fund's portfolio was __, compared to __ for Municipal
Income Fund.
In addition to the Funds' principal investment strategies referred to
above, the Funds may engage in a number of other investment techniques and
practices. The investment techniques and practices employed by each Fund,
together with their risks, are described in each Fund's Prospectus. For more
information regarding each Fund's investment policies and restrictions, see,
among other disclosures, (i) "Certain Investment Strategies and Risks" and
"Appendix A - Investment Techniques and Practices" in Municipal Income Fund's
current prospectus, (ii) "Investment Techniques, Practices, Risks and
Restrictions" in Part I of each Fund's current Statement of Additional
Information, and (iii) "Appendix C - Investment Techniques and Practices," and
"Appendix F - Investment Restrictions" in Part II of each Fund's current
Statement of Additional Information.
5. HOW DO THE MANAGEMENT FEES AND OTHER EXPENSES OF THE TWO FUNDS
COMPARE, AND WHAT ARE THEY ESTIMATED TO BE FOLLOWING THE
REORGANIZATION?
The tables below show the Funds' contractual and effective management
fee rates, sales charges and annual operating expenses.
Management Fees. The annual management fee rate set forth in each
Fund's Investment Advisory Agreement with MFS and each Fund's effective
management fee rate is as follows:
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MUNICIPAL BOND FUND
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Contractual Management Fee Rate Effective Management Fee Rate (for the
fiscal year ended August 31, 2006)
- -------------------------------------------------------------------------------
0.40% on first $1.3 billion of 0.30% of average daily net assets
average daily net assets; 0.37% on
average daily net assets over $1.3
billion and up to $2.0 billion;
0.35% on average daily net assets in
excess of $2.0 billion
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MUNICIPAL INCOME FUND
- -------------------------------------------------------------------------------
Contractual Management Fee Rate Effective Management Fee Rate
(for the fiscal year ended March 31, 2006)
- -------------------------------------------------------------------------------
0.55% of average daily net assets 0.30% of average daily net assets
(at all asset levels)
- -------------------------------------------------------------------------------
With respect to both Funds, MFS has agreed in writing to reduce its
management fee to 0.30% annually of the fund's average daily net assets. MFS
has agreed in writing to maintain these management fee reductions until
February 28, 2009, as part of its settlement with the New York Attorney General
concerning market timing and related matters (the "NYAG Settlement"). For the
twelve-month period ended September 30, 2006, each Fund paid an effective
management fee rate of 0.30% annually of its average daily net assets after
taking into account these management fee reductions.
If the reorganization is consummated, and after the expiration of the
NYAG Settlement on February 28, 2009, MFS will agree to impose Municipal Bond
Fund's lower contractual management fee schedule, as described above, effective
March 1, 2009. This agreement could only be modified or rescinded upon approval
of Municipal Income Fund's Board of Trustees. Thus, the contractual and
effective management fee rates for the Municipal Income Fund after giving
effect to the reorganization would remain equal to those of the Municipal Bond
Fund.
Sales Charges and Rule 12b-1 Fees. The maximum sales charges are the
same for the relevant classes of both Funds; however, no initial sales charge
will be charged to Class A shareholders in connection with the reorganization
of the Funds. The contingent deferred sales charge ("CDSC") aging schedule for
Class A and Class B shares held by a shareholder of the Municipal Bond Fund
will be carried over to Class A1 and Class B1 shares of Municipal Income Fund
received by such shareholder. In addition, the maximum amounts payable under
the Rule 12b-1 distribution plans, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"), are the same for Class B
shares of Municipal Bond Fund and Class B1 shares of Municipal Income Fund.
Further, Class B shares of Municipal Bond Fund and Class B1 shares of Municipal
Income Fund are subject to similar expense limitations on Rule 12b-1 fees.
Neither Class A shares of Municipal Bond Fund nor Class A1 shares of Municipal
Income Fund are subject to Rule 12b-1 fees.
Other Expenses, Total Annual Fund Operating Expenses, and Net Annual
Fund Operating Expenses. The Class A1 and Class B1 shares of the Municipal
Income Fund to be issued to shareholders of the Municipal Bond Fund were
recently created and will be issued solely in connection with this transaction.
As a result, Class A1 and Class B1 shares did not incur any expenses during the
Fund's most recent fiscal year. The Class A1 and Class B1 expenses discusses
below reflect estimated Class A1 and Class B1 expenses based on the Municipal
Income Fund's operating expenses for the twelve month period ended September
30, 2006, adjusted to reflect the Class A1 and Class B1 expense structure. The
Municipal Income Fund's estimated "Other Expenses" for Class A1 and Class B1
shares are 0.01% lower than the Municipal Bond Fund's "Other Expenses" for
Class A and Class B shares, respectively, for the twelve month period ended
September 30, 2006.
For the same period, the Municipal Income Fund's estimated "Total
Annual Fund Expenses" for Class A1 and Class B1 shares were each 0.14% higher
than those for the Municipal Bond Fund's Class A and Class B shares,
respectively. For the same period, the Municipal Income Fund's estimated "Net
Expenses" for Class A1 and Class B1 shares were each 0.01% lower than those for
the Municipal Bond Fund's Class A and Class B shares, respectively. If the
reorganization is approved, it is estimated that Class A1 and Class B1 shares
of the combined fund will have a net annual expense ratio that is 0.02% lower
than the net annual expense ratio for Class A and Class B shares of Municipal
Bond Fund. In addition, if the reorganization is consummated, MFS will agree in
writing to bear Municipal Income Fund's expenses such that "Net Expenses"
(excluding interest expenses and fees associated with investments in inverse
floating rate instruments) do not exceed 0.49% for Class A1 shares and 1.25%
for Class B1 shares for a period of one year from the closing date of the
reorganization. This written agreement will exclude taxes, brokerage and
transaction costs, currency conversion costs, extraordinary expenses, and
expenses associated with the Fund's investing activities.
The following tables summarize the maximum fees and expenses that you
may pay when investing in the Funds, expenses that the Municipal Bond Fund and
the Municipal Income Fund incurred in the twelve months ended September 30,
2006, and estimates of pro forma expenses of the Municipal Income Fund after
giving effect to the reorganization (assuming that the reorganization occurred
at the beginning of the twelve-month period ended September 30, 2006).
CLASS A/ LASS B/
CLASS A1 CLASS B1
SHARES CSHARES
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SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
Municipal Bond Fund 4.75*% None
Municipal Income Fund 4.75%*+ None
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase
price or redemption proceeds, whichever
is less)
Municipal Bond Fund See Below* 4.00%**
Municipal Income Fund See Below* 4.00%**
- ----------------
+ No sales charge will be paid on shares of the Municipal Income Fund issued
in connection with this proposed reorganization.
* For Class A and Class A1 shares only, an initial sales charge will not be
deducted from your purchase if you buy $1 million or more of Class A or
Class A1 shares, or if you are investing through a retirement plan and your
Class A or Class A1 purchase meets certain requirements. However, in either
case, a contingent deferred sales charge (referred to as a CDSC) of 1% may
be deducted from your redemption proceeds if you redeem your investment
within 12 months of your purchase.
** 4.00% in the first year, declining to 1.00% in the sixth year, and
eliminated thereafter.
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT (12B-1) OTHER OPERATING FEE NET
FEES FEES (1) EXPENSES(2) EXPENSES(3) REDUCTIONS (4) EXPENSES
----------------------------------------------------------------------------------------
MUNICIPAL INCOME FUND (5)
Class A1 0.55% N/A 0.39% 0.94% 0.25% 0.69%
Class B1 0.55% 0.76% 0.39% 1.70% 0.25% 1.45%
MUNICIPAL BOND FUND (6)
Class A 0.40% N/A 0.40% 0.80% 0.10% 0.70%
Class B 0.40% 0.76% 0.40% 1.56% 0.10% 1.46%
MUNICIPAL INCOME FUND
(PRO FORMA COMBINED)
(7)
Class A1 0.55% N/A 0.38% 0.93% 0.25% 0.68%
Class B1 0.55% 0.76% 0.38% 1.69% 0.25% 1.44%
- ---------------
(1) Each Fund has adopted a distribution plan under Rule 12b-1 that permits it to pay marketing and other fees to
support the sale and distribution of each class of shares and the services provided to you by your financial
adviser (referred to as distribution and service fees). The maximum Rule 12b-1 fee for Class B shares of
Municipal Bond Fund and Class B1 shares of Municipal Income Fund is 1.00% (consisting of a 0.75% distribution
fee and a 0.25% service fee). With respect to Class B shares of Municipal Bond Fund and Class B1 shares of
Municipal Income Fund, for one year from the date of sales of shares, assets attributable to such shares are
subject to a 0.25% per annum service fee. On assets attributable to all other Class B or Class B1 shares, the
service fee is not currently in effect, but may be implemented on such date as the Funds' board of trustees may
determine. Class A shares of Municipal Bond Fund and Class A1 shares of Municipal Income Fund are not subject
to a Rule 12b-1 distribution and service fee.
(2) Each Fund had an expense offset agreement that reduced that Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent that reduced fund expenses. Any such
fee reductions are not reflected in the table.
(3) Includes certain interest expenses and fees of 0.13% for Municipal Income Fund and 0.21% for Municipal Bond
Fund related to the Fund's investment in inverse floating rate investments. Under accounting rules, each Fund
recognizes additional income in an amount equal to these expenses. Therefore, each Fund's net asset values per
share and performance have not been affective by these expenses. However, these expenses are included in each
Fund's "Total Annual Operating Expenses" and "Net Expenses" in the table above and in the "Example of Expenses"
below. Had these expenses and fees not been included, "Net Expenses" would have been 0.56% for Class A1 shares
and 1.32% for Class B1 shares of Municipal Income Fund, respectively, 0.49% and 1.25% for Class A and Class B
shares of Municipal Bond Fund, respectively, and 0.48% and 1.24% for Class A1 and Class B1 shares of the
Municipal Income Fund (pro forma combined), respectively.
(4) With respect to each Fund, MFS has agreed in writing to waive its management fee to 0.30% annually. MFS has
agreed in writing to maintain this management fee reduction until February 28, 2009, as part of the NYAG
Settlement. With respect to the Municipal Income Fund, if the reorganization is consummated and if the
management fee reduction resulting from the NYAG Settlement is not extended beyond February 28, 2009, MFS has
agreed to impose Municipal Bond Fund's lower contractual management fee schedule effective March 1, 2009. This
agreement will remain in place until modified by Municipal Income Fund's Board of Trustees. In addition, if the
reorganization is consummated, MFS will agree in writing to bear Municipal Income Fund's expenses such that
"Net Expenses" (excluding interest expenses and fees associated with investments in inverse floating rate
instruments) do not exceed 0.49% for Class A1 shares and 1.25% for Class B1 shares for a period of one year
from the closing date of the reorganization. This written agreement will exclude taxes, brokerage and
transaction costs, currency conversion costs, extraordinary expenses, and expenses associated with the Fund's
investing activities.
(5) Expenses estimated based on Municipal Income Fund's operating expenses for the twelve-month period ended
September 30, 2006 and adjusted to reflect Class A1 and Class B1 expense structure, respectively.
(6) Expenses computed for the twelve-month period ended September 30, 2006, Municipal Income Fund's most recent
reporting period. The Municipal Bond Fund's fiscal year end is August 31 and the Municipal Income Fund's fiscal
year end is March 31. However, the Municipal Bond Fund's expenses have been restated as of September 30, 2006.
(7) Assumes that the reorganization occurred at the beginning of the twelve-month period ended September 30, 2006.
The above tables are provided to help you understand the expenses of investing
in the Funds, including estimates of pro forma expenses of the Municipal Income
Fund after giving effect to the reorganization, and your share of the operating
expenses that each Fund incurs.
EXAMPLE OF EXPENSES
The following examples translate the expense percentages shown in the
preceding tables into dollar amounts. By doing this, you can more easily
compare the cost of investing in the Funds. The examples make certain
assumptions. They assume that you invest $10,000 in a Fund for the time periods
shown and that you redeem all your shares at the end of these periods (unless
otherwise indicated below). They also assume a 5% return on your investment
each year and that dividends and other distributions are reinvested. They also
assume that a Fund's operating expenses remain the same, except that a Fund's
total operating expenses are assumed to be the Fund's "Net Expenses" for the
period during which any contractual fee reductions are in effect. The examples
are hypothetical; your actual costs and returns may be higher or lower.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
MUNICIPAL BOND
Class A $ 543 $ 700 $ 881 $ 1,401
Class B (1)
Assuming redemption at end of period $ 549 $ 774 $ 1,032 $ 1,636
Assuming no redemption $ 149 $ 474 $ 832 $ 1,636
MUNICIPAL INCOME
Class A1 $ 542 $ 716 $ 927 $ 1,534
Class B1 (2)
Assuming redemption at end of period $ 548 $ 790 $ 1,079 $ 1,767
Assuming no redemption $ 148 $ 490 $ 879 $ 1,767
MUNICIPAL INCOME (PRO FORMA COMBINED)
Class A1 $ 541 $ 694 $ 870 $ 1,379
Class B1 (2)
Assuming redemption at end of period $ 547 $ 768 $ 1,022 $ 1,613
Assuming no redemption $ 147 $ 468 $ 822 $ 1,613
(1) Class B shares convert to Class A shares approximately eight years after
purchase. Therefore years nine and ten reflect Class A expenses,
respectively,
(2) Class B1 shares convert to Class A1 shares approximately eight years aftyer
purchase. Therefore years nin and ten reflect Class A1 exenses,
respectively.
For more information on the fees and expenses of each Fund, see "Expense
Summary" in each Fund's current Prospectus.
6. HOW HAS THE MUNICIPAL INCOME FUND PERFORMED?
As shown in the tables below, Class A shares of Municipal Income Fund
outperformed Class A shares of Municipal Bond Fund in seven of the last ten
calendar years and Class A and Class B shares of the Municipal Income Fund
outperformed Class A and Class B shares of the Municipal Bond Fund for the
1-Year, 5-Year, and 10-Year periods ended December 31, 2006. Because Municipal
Income Fund's Class A1 and Class B1 shares have not yet commenced operations,
these classes do not have a performance record to report. As a result, Class A
and Class B share average annual total returns for Municipal Income Fund are
reported below. Although Class A1 and Class B1 shares of Municipal Income Fund
would have similar returns (because they represent interests in the same
portfolio of securities), Class A1 and Class B1 performance would differ to the
extent that Class A1 and Class B1 have lower expenses than Class A and Class B
shares of Municipal Income Fund, respectively. The following information
provides some indication of the risks of investing in the Funds, by showing
changes in the Funds' performance from year to year, and by showing how the
Funds' average annual total returns for the 1-Year, 5-Year, and 10-Year periods
ending December 31, 2006 compare with those of a broad measure of market
performance.
ANNUAL TOTAL RETURN* (TOTAL INVESTMENT RETURN AT NAV)
CLASS A SHARES
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Municipal Income Fund 4.77% 3.97% 5.04% 5.91% 8.04%
Municipal Bond Fund 4.40% 3.24% 3.88% 5.20% 10.08%
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Municipal Income Fund 4.08% 9.93% (2.90)% 5.04% 9.63%
Municipal Bond Fund 4.23% 11.96% (3.52)% 4.90% 8.93%
- -------------
* The performance information in the table above reflects reinvestment of
dividends and other earnings, but does not reflect any applicable sales
charges. During the periods shown in the table, the highest quarterly returns
for the Municipal Income Fund and Municipal Bond Fund were 4.37% (for the
calendar quarter ended September 30, 2002), and 5.12% (for the calendar
quarter ended September 30, 2002), respectively, and the lowest quarterly
returns were (2.03)% (for the calendar quarter ended June 30, 2004), and
(2.47)% (for the calendar quarter ended June 30, 1999), respectively.
AVERAGE ANNUAL TOTAL RETURNS* AS OF DECEMBER 31, 2006 (LOAD ADJUSTED)
1-YEAR 5-YEAR 10-YEAR
------ ------ -------
MUNICIPAL INCOME FUND
RETURNS BEFORE TAXES
Class A Shares (0.20)% 4.52% 4.78%
Class B Shares (0.01)% 4.42% 4.51%
RETURNS AFTER TAXES (CLASS A SHARES ONLY)
Returns After Taxes on Distributions** (0.21)% 4.52% 4.76%
Returns After Taxes on Distributions
and Sale of Class A Shares 1.45% 4.57% 4.81%
BENCHMARK COMPARISON (RETURNS BEFORE TAXES)
Lehman Brothers Municipal Bond Index+*** 4.85% 5.53% 5.75%
MUNICIPAL BOND FUND
RETURNS BEFORE TAXES
Class A Shares (0.56)% 4.31% 4.74%
Class B Shares (0.34)% 4.18% 4.42%
RETURNS AFTER TAXES (CLASS A SHARES ONLY)
Returns After Taxes on Distributions** (0.70)% 4.27% 4.61%
Returns After Taxes on Distributions
and Sale of Class A Shares 1.35% 4.39% 4.70%
BENCHMARK COMPARISON (RETURNS BEFORE TAXES)
Lehman Brothers Municipal Bond Index+*** 4.85% 5.53% 5.75%
- -------------
* The performance information in the table above reflects reinvestment of
dividends and other earnings, and takes into account the deduction of the
4.75% maximum sales charge on Class A shares and the applicable CDSC for
Class B shares (declining over six years from 4% to 0% from the end of the
calendar month of purchase). The performance returns for the benchmark
comparisons do not reflect the deduction of sales charges. All performance
results reflect any applicable expense subsidies and waivers in effect
during the periods shown; without these the results would have been less
favorable.
+ Source: FactSet Research Systems, Inc.
** After-tax returns are calculated using the historic highest individual
federal marginal income tax rates (without regard for phaseouts of certain
exemptions, deductions and credits) and do not reflect the impact of state
and local taxes. Your actual after-tax returns will depend on your own tax
situation and may differ from those shown. The after-tax returns shown are
not relevant to investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts. The
after-tax returns are shown for only Class A shares of each Fund, and
after-tax returns for Class B shares of each Fund vary from the returns
shown.
*** The Lehman Brothers Municipal Bond Index measures the municipal bond
market.
Of course, the Funds' past performance is not an indication of future
performance. To review information regarding the Municipal Income Fund in more
detail, please refer to the Municipal Income Fund Prospectus, the Municipal
Income Fund Annual Report and the Municipal Income Fund Semi-Annual Report, all
of which are enclosed.
7. WHAT ARE THE DIFFERENCES IN PORTFOLIO TURNOVER RATES OF THE TWO FUNDS?
Portfolio turnover is a measure of how frequently a Fund trades
portfolio securities. Frequent trading of portfolio securities increases
transaction costs, which could detract from a Fund's performance. Additionally,
active and frequent trading may result in the realization and distribution to a
Fund of higher capital gains, which would increase the tax liability for the
Fund's shareholders who do not hold shares in tax-free accounts such as a
401(k) plan. The difference in portfolio turnover rates between the Funds is
minimal. During each Fund's respective most recent fiscal year, Municipal Bond
Fund had a portfolio turnover rate of 12% and Municipal Income Fund had a
portfolio turnover rate of 9%.
8. WHO MANAGES THE MUNICIPAL INCOME FUND?
The Municipal Income Fund is managed by Geoffrey L. Schechter, an MFS
Senior Vice President. Mr. Schechter also currently manages the Municipal Bond
Fund. Mr. Schechter has been a portfolio manager of the Municipal Bond Fund
since 1998 and of the Municipal Income Fund since 2000, and has been employed
in the investment management area of MFS since 1993.
The Statement of Additional Information, dated August 1, 2006, of the
Municipal Income Fund, as supplemented from time to time, provides additional
information about the Portfolio Manager's compensation, other accounts managed
by the Portfolio Manager, and the Portfolio Manager's ownership of securities
in the Municipal Income Fund.
9. HOW WILL THE REORGANIZATION HAPPEN?
If the reorganization is approved, your Municipal Bond Fund shares
will be effectively exchanged for that number of Municipal Income Fund shares
equal in total net asset value to the net value of assets of the Municipal Bond
Fund shares transferred to the Municipal Income Fund as of the close of trading
on or about [June 22, 2007]. This exchange will not affect the total dollar
value of your investment.
10. WILL THE REORGANIZATION HAVE TAX CONSEQUENCES?
It is expected that the reorganization itself will be a tax-free event
for federal income tax purposes. Accordingly, no gain or loss will be
recognized by you or the Municipal Bond Fund as the direct result of the
reorganization and your aggregate tax basis in the Municipal Income Fund shares
you will receive in connection with the reorganization will be the same as your
aggregate tax basis in your Municipal Bond Fund shares. That said, because the
reorganization will cause the Municipal Bond Fund's tax year to end on a date
earlier than the last day of its normal tax year, it may accelerate
distributions from that Fund to its shareholders. In particular, the Municipal
Bond Fund will recognize net gains or losses on the sales of any securities,
net of any available capital loss carryforwards, in the short period ending on
the closing date, and on or before that date it must declare a dividend paying
out any such net gains to shareholders. Also, to the extent that the Municipal
Bond Fund holds any securities that are marked to market in connection with the
reorganization, it will also recognize and be required to pay out any net gain
from such securities.
At any time prior to the consummation of the reorganization, you may
redeem shares, which will likely result in the recognition of gain or loss for
federal income tax purposes. For more information about the federal income tax
consequences of the reorganization, see "Federal Income Tax Consequences"
below.
11. WILL MY DIVIDEND BE AFFECTED BY THE REORGANIZATION?
Currently, the Municipal Bond Fund intends to declare daily as
dividends substantially all of its net investment income (excluding any capital
gains) and to pay these dividends to shareholders at least monthly. Any capital
gains are distributed at least annually. Distributions by the Municipal Bond
Fund may be accelerated prior to the reorganization, as described above.
Following the reorganization, the payment frequency for dividends and capital
gains in the Municipal Income Fund is the same as the Municipal Bond Fund's
regular distribution schedule. Except as described below, your distributions
will continue to be either reinvested or paid in cash, according to the option
you selected with the Municipal Bond Fund. Of course, the amount of these
dividends will reflect the investment performance of the Municipal Income Fund.
The Municipal Income Fund will not permit any Municipal Bond Fund
shareholder holding certificates for Municipal Bond Fund shares at the time of
the reorganization to receive cash dividends or other distributions, to receive
certificates for shares issued in the reorganization (referred to as
"Reorganization Shares"), to exchange Reorganization Shares for shares of other
investment companies managed by MFS, or to pledge or redeem Reorganization
Shares until such certificates for Municipal Bond Fund shares have been
surrendered, or, in the case of lost certificates, until an adequate surety
bond has been posted.
If a shareholder is not permitted to receive cash dividends or other
distributions on Reorganization Shares for one of the reasons above, the
Municipal Income Fund will pay all such dividends and distributions in
additional shares, notwithstanding any election the shareholder may have made
previously to receive dividends and distributions on Municipal Bond Fund shares
in cash.
12. WHAT MUNICIPAL INCOME FUND SHARES WILL SHAREHOLDERS OF THE MUNICIPAL
BOND FUND RECEIVE IF THE REORGANIZATION OCCURS?
As noted above, shareholders holding Class A and Class B shares of the
Municipal Bond Fund will receive newly-issued Class A1 and Class B1 shares,
respectively, of the Municipal Income Fund in accordance with their percentage
ownership of Class A and Class B shares of the Municipal Bond Fund. The
Municipal Income Fund is a series of MFS Municipal Series Trust (the "Municipal
Series Trust"), a voluntary association with transferable shares organized
under the laws of The Commonwealth of Massachusetts (commonly referred to as a
"Massachusetts business trust") and is governed by the Municipal Series Trust's
Amended and Restated Declaration of Trust ("Municipal Series Trust's
Declaration of Trust") and by-laws, as amended and restated. The Municipal Bond
Fund is a series of MFS Series Trust IV, another Massachusetts business trust,
and is governed by its Amended and Restated Declaration of Trust ("Series Trust
IV's Declaration of Trust") and by-laws, as amended and restated. The Municipal
Series Trust's and the Series Trust IV's Declarations of Trust are
substantially similar, and their by laws are identical, to one another.
Accordingly, shareholders of the Municipal Bond Fund will have substantially
similar rights they currently have as shareholders of Municipal Bond Fund if
they become shareholders of the Municipal Income Fund. Each Fund is overseen by
a separate Board of Trustees comprised of the same individuals.
13. DO THE PROCEDURES FOR PURCHASING, REDEEMING AND EXCHANGING SHARES OF
THE TWO FUNDS DIFFER?
Except as noted below, the procedures for purchasing and redeeming
shares of each Fund, and for exchanging shares of each Fund for shares of other
MFS Funds, are similar.
Both Funds currently offer Class A and Class B shares. The Municipal
Income Fund also offers Class A1, Class B1, and Class C shares. Shares of both
Funds may be purchased through financial intermediaries that have sales
agreements with MFS Fund Distributors, Inc. ("MFD") at prices based on net
asset value, plus varying sales charges, depending on the class and number of
shares purchased. Reinvestment of distributions by the Funds are made at net
asset value for all classes.
Shares of each Fund may be redeemed any day the New York Stock
Exchange is open at their net asset value next determined after receipt by the
Fund of a properly completed redemption request either directly from you or
through a financial intermediary by the Fund's valuation time.
Class A1 and Class B1 shares will be available only to shareholder
accounts opened in the Municipal Income Fund in connection with Municipal
Income Fund 's acquisition of all the assets and certain stated liabilities of
Municipal Bond Fund pursuant to the Agreement and Plan of Reorganization. Class
A1 and Class B1 shareholders of Municipal Income Fund will be able to purchase
additional Class A1 and Class B1 shares after the reorganization through
accounts opened in connection with the reorganization. However, once a Class A1
or Class B1 shareholder has closed their account in Municipal Income Fund, they
will be prohibited from purchasing Class A1 or Class B1 shares in the future.
Class A1 or Class B1 shares may be exchanged for shares for class A or
class B shares, respectively, of most other MFS funds by having your financial
intermediary process your exchange request or by contacting MFSC directly.
However, exchanges of Class A or Class B shares of certain other MFS funds for
Class A1 and Class B1 shares of Municipal Income Fund, respectively, will not
be permitted.
For more information on the principal share characteristics of the
Funds, see "Description of Share Classes" and "How to Purchase, Redeem and
Exchange Shares" in each Fund's current prospectus.
14. HOW WILL I BE NOTIFIED OF THE OUTCOME OF THE REORGANIZATION?
If the proposed reorganization is approved by shareholders, you will
receive confirmation after the reorganization is completed, indicating your new
account number, the number of shares of the Municipal Income Fund you are
receiving and the procedures for surrendering your certificates of the
Municipal Bond Fund, if you have any. If the reorganization is not approved,
the Municipal Bond Fund will continue to be managed as a separate fund in
accordance with its current investment objectives and policies and the Trustees
may consider other alternatives.
15. WILL THE NUMBER OF SHARES EACH SHAREHOLDER OWNS CHANGE?
Yes, but the total value of the shares of the Municipal Income Fund
you receive will equal the total value of the shares of the Municipal Bond Fund
that you hold at the time of the reorganization. Even though the net asset
value per share of each Fund (and the resulting number of shares) is different,
the total value of your holdings will not change as a result of the
reorganization.
RISK FACTORS
WHAT ARE THE PRINCIPAL RISK FACTORS ASSOCIATED WITH AN INVESTMENT IN THE
MUNICIPAL INCOME FUND, AND HOW DO THEY COMPARE WITH THOSE FOR THE MUNICIPAL
BOND FUND?
Because the Funds share similar investment objectives and investment
policies, the risks of an investment in the Municipal Income Fund are similar
to the risks of an investment in the Municipal Bond Fund. While Municipal
Income Fund has the ability to invest a greater portion of its assets in
lower-rated municipal securities, each Fund has experienced a similar risk
profile over the last three years. For example, as of December 31, 2006, the
three-year standard deviation was __% for the Municipal Income Fund versus __%
for the Municipal Bond Fund (a higher percentage for standard deviation
reflects a higher risk profile).
Each Fund, unless specified otherwise, is principally subject to the risks
described below:
Municipal Securities Risk:
o Interest Rate Risk: As with any fixed income security, the prices of
municipal securities in the fund's portfolio will generally fall when
interest rates rise. Conversely, when interest rates fall, the prices
of municipal securities in the fund's portfolio will generally rise.
o Maturity Risk: Interest rate risk will generally affect the price of a
municipal security more if the security has a longer maturity.
Municipal securities with longer maturities will therefore be more
volatile than other fixed income securities with shorter maturities.
Conversely, municipal securities with shorter maturities will be less
volatile but generally provide lower returns than municipal securities
with longer maturities. The average maturity of the fund's municipal
security investments will affect the volatility of the fund's share
price.
o Credit Risk: Credit risk is the risk that the issuer of a municipal
security will not be able to pay principal and interest when due.
Rating agencies assign credit ratings to certain municipal securities
to indicate their credit risk. The price of a municipal security will
generally fall if the issuer defaults on its obligation to pay
principal or interest, the rating agencies downgrade the issuer's
credit rating or other news affects the market's perception of the
issuer's credit risk. A participation interest is also subject to the
risk of default by the issuing bank.
o General Obligations and Revenue Obligations Risk: The Fund may invest
in municipal bonds that are general obligations backed by the full
faith and credit of the municipal issuer. The Fund may also invest in
municipal bonds called revenue obligations which are subject to a
higher degree of credit risk than general obligations. Revenue
obligations finance specific projects (such as building a hospital or
toll roads, water and sewer projects, etc.), and are not backed by the
full faith and credit of the municipal issuer. The Fund may invest in
excess of 25% of its assets in revenue bonds relating to any one
specific industry (e.g., housing, healthcare, water and sewer, etc.).
Because revenue obligations are repaid from the revenues from a
facility, they are subject to a risk of default in payments of
principal and interest if the facility does not generate enough
income. Municipal securities backed by current or anticipated revenues
from a specific project or specific assets can be negatively affected
by the discontinuance of the taxation supporting the project or assets
or the inability to collect revenues from the project or from the
assets. If the Internal Revenue Service determines an issuer of a
municipal security has not complied with applicable tax requirements,
interest from the security could become taxable and the security could
decline significantly in value.
o Municipal Lease Obligations Risk: The Fund's investments in municipal
securities may include municipal lease obligations. Municipal lease
obligations are undivided interests issued by a state or municipality
in a lease or installment purchase which generally relates to
equipment or facilities. When the Fund invests in municipal lease
obligations, it may have limited recourse in the event of default or
termination. In some cases, payments under municipal leases do not
have to be made unless the appropriate legislative body specifically
approves money for that purpose.
o Speculative Bonds Risk: Bonds rated in the lowest investment grade
category (i.e., the fourth highest credit rating) by credit rating
agencies are called speculative bonds. Speculative bonds are subject
to a higher risk that the issuer will default on payments of principal
and interest than higher rated investment grade bonds. Although the
issuer's ability to make interest and principal payments appears
adequate, an adverse change in economic conditions or other
circumstances is more likely to cause a default by the issuer of a
speculative bond than the issuer of a higher rated investment grade
bond.
o Liquidity Risk: The fixed income securities purchased by the Fund may
be traded in the over-the-counter market rather than on an organized
exchange and are subject to liquidity risk. This means that they may
be harder to purchase or sell at a fair price. The inability to
purchase or sell these fixed income securities at a fair price could
have a negative impact on the Fund's performance.
Junk Bond Risk: (Municipal Income Fund only)
o Higher Credit Risk: Junk bonds (i.e. bonds rated below the four
highest credit ratings) are subject to a substantially higher degree
of credit risk than higher rated bonds. During recessions, a high
percentage of issuers of junk bonds may default on payments of
principal and interest. The price of a junk bond may therefore
fluctuate drastically due to bad news about the issuer or the economy
in general.
o Higher Liquidity Risk: During recessions and periods of broad market
declines, junk bonds could become less liquid, meaning that they will
be harder to value or sell at a fair price.
Other Investments. In addition to the Funds' main investment strategies
described above, each Fund also may buy and sell the other types of
investments. The risks associated with the principal investment techniques and
practices used by the Funds are summarized above. The non-principal investment
techniques in which the Funds may engage are described, together with their
risks, in each Fund's Statement of Additional Information.
As with any mutual fund, you could lose money on your investment in a
Fund.
An investment in a Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
For more information on the risks described above and other risks
associated with each Fund, see, among other disclosures, (i) "Risk Return
Summary - Principal Risks of an Investment" and "Certain Investment Strategies
and Risks - Further Information on Investment Strategies and Risks" in each
Fund's current prospectus, (ii) "Investment Techniques, Practices, Risks and
Restrictions" in Part I of each Fund's current Statement of Additional
Information, and (iii) "Appendix C - Investment Techniques, Practices and
Risks" in Part II of each Fund's current Statement of Additional Information.
GENERAL
This Prospectus/Proxy Statement is furnished in connection with the
proposed reorganization of the Municipal Bond Fund into the Municipal Income
Fund and the solicitation of proxies by and on behalf of the Trustees of the
Municipal Bond Fund for use at the Special Meeting of Shareholders of the
Municipal Bond Fund (the "Meeting"). The Meeting is to be held on June 7, 2007,
at 2:00 p.m. at 500 Boylston Street, 24th floor, Boston, Massachusetts 02116.
The Notice of the Meeting, the combined Prospectus/Proxy Statement and the
enclosed proxy card are being mailed to shareholders on or about April [ ],
2007.
Any shareholder giving a proxy has the power to revoke it by mail
(addressed to the Municipal Bond Fund's Assistant Secretary at the principal
office of the Municipal Bond Fund, 500 Boylston Street, Boston, Massachusetts
02116) or in person at the Meeting, by executing a superseding proxy, or by
submitting a notice of revocation to the Municipal Bond Fund. All properly
executed proxies received in time for the Meeting will be voted as specified in
the proxy, or, if no specification is made, FOR the proposal (set forth in Item
1 of the Notice of Meeting) to implement the reorganization of the Municipal
Bond Fund as described below.
As of [April 2], 2007, Municipal Bond Fund had outstanding [ ], and
[ ] of its Class A and Class B shares of beneficial interest, respectively.
Only shareholders of record as of the close of business on [April 2], 2007 will
be entitled to notice of and to vote at the Meeting. Each shareholder is
entitled to one vote for each dollar of net asset value of shares held by that
shareholder on that date (i.e., number of shares times net asset value per
share), with fractional dollar amounts voting proportionately.
The Trustees of the Municipal Bond Fund know of no matters other than
those set forth herein to be brought before the Meeting. If, however, any other
matters properly come before the Meeting, it is the Trustees' intention that
proxies will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF
REORGANIZATION TRANSACTION AND RELATED AGREEMENT AND
PLAN OF REORGANIZATION
The shareholders of the Municipal Bond Fund are being asked to approve
or disapprove a reorganization between the Municipal Bond Fund and the
Municipal Income Fund pursuant to an Agreement and Plan of Reorganization
between the Funds (the "Agreement"), a copy of the form of which is attached to
this Prospectus/Proxy Statement as Appendix A.
The reorganization is structured as a transfer of the assets and
liabilities of the Municipal Bond Fund to the Municipal Income Fund in exchange
for that number of full and fractional Class A1 and Class B1 Reorganization
Shares, equal in total net asset value to the net value of assets transferred
to the Municipal Income Fund, all as more fully described below under
"Information About the Reorganization."
After receipt of the Reorganization Shares, the Municipal Bond Fund
will distribute the Class A1 Reorganization Shares to its Class A shareholders
and the Class B1 Reorganization Shares to its Class B shareholders, each in
proportion to their existing shareholdings, in complete liquidation of the
Municipal Bond Fund, and the legal existence of the Municipal Bond Fund under
Massachusetts law will be terminated as soon as reasonably practicable
thereafter. Each shareholder of the Municipal Bond Fund will receive a number
of full and fractional Class A1 and Class B1 Reorganization Shares equal in
value at the date of the exchange to the aggregate value of the shareholder's
Municipal Bond Fund shares of the corresponding class.
On or prior to the "Exchange Date" (as defined below), the Municipal
Bond Fund will declare and pay a distribution to shareholders which, together
with all previous distributions, will have the effect of distributing to
shareholders all of its investment company taxable income (computed without
regard to the deduction for dividends paid) and net realized gains, if any,
through the Exchange Date.
The Trustees of the Municipal Bond Fund have voted unanimously to
approve the proposed transaction and to recommend that shareholders also
approve the transaction. The transactions contemplated by the Agreement will be
consummated only if the Agreement is approved by the affirmative vote of the
holders of the lesser of (a) 67% or more of the voting power of the securities
present at the Meeting or represented by proxy if the holders of more than 50%
of the outstanding voting power of the securities are present or represented by
proxy or (b) more than 50% of the voting power of the outstanding voting
securities of the Municipal Bond Fund. Shareholders of record are entitled to
one vote for each dollar of net asset value of their shares (i.e., number of
shares owned times net asset value per share), with fractional amounts voting
proportionately. The reorganization does not require the approval of the
shareholders of the Municipal Income Fund.
In the event that this proposal is not approved by the shareholders of
the Municipal Bond Fund, the Municipal Bond Fund will continue to be managed as
a separate fund in accordance with its current investment objectives and
policies and the Trustees may consider such alternatives as may be in the best
interests of the Municipal Bond Fund and its shareholders.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
The Funds' Boards of Trustees, including all Trustees who are not
"interested persons" of the Funds, have determined that the reorganization
would be in the best interests of each Fund, and that the interests of existing
shareholders of each Fund would not be diluted as a result of effecting the
reorganization. The Trustees have unanimously approved the proposed
reorganization and have recommended its approval by shareholders of the
Municipal Bond Fund. The Municipal Income Fund and the Municipal Bond Fund have
separate Boards of Trustees comprised of the same individuals.
As discussed above, while not identical, the Municipal Income Fund and
the Municipal Bond Fund have substantially similar investment objectives and
policies. Municipal Bond Fund's investment objective is to seek total return
with an emphasis on income exempt from federal income tax, but also considering
capital preservation. Municipal Income Fund's investment objective is to
provide as high a level of current income exempt from federal income taxes as
is considered consistent with prudent investing while seeking protection of
shareholders' capital.(2)
- ---------------
(2) Although the Funds currently have slightly different investment objectives,
the Board of Trustees of Municipal Income Fund has approved changes to the
Fund's investment objective that will make the Municipal Income Fund's
investment objective identical to Municipal Bond Fund's current investment
objective. This change will become effective August 1, 2007 in connection
with the Municipal Income Fund's annual prospectus update.
In light of the similarities of the Funds, MFS advised the Board of
Trustees of each Fund that it believes combining the Funds would be in the best
interests of shareholders of both Funds and that the interests of each Fund's
existing shareholders will not be diluted as a result of the proposed
reorganization. The Board of Trustees of the Municipal Bond Fund believes that
the proposed reorganization will be advantageous to the Municipal Bond Fund's
shareholders for a number of reasons and considered the following matters,
among others, in unanimously approving the proposal:
1. The Funds have similar, but not identical, investment objectives,
strategies, and restrictions.
2. The relative risks of investing in either Fund, including the
somewhat higher risk profile of the Municipal Income Fund in
comparison to the Municipal Bond Fund.
3. The reduction of overlap of similar funds within the MFS family of
funds could reduce or eliminate portfolio and operational
inefficiencies and will create a larger combined Fund with the
potential for greater prospects for asset growth;
4. The pro forma total expense ratio for Class A1 and Class B1 shares
(following the reorganization) of the Municipal Income Fund are
estimated to be 0.02% lower than the corresponding Class A and
Class B shares of the Municipal Bond Fund, based on expenses
incurred for the twelve-month period ended September 30, 2006.
5. The effective management fees paid to MFS by each Fund are equal
(giving effect to current management fee waivers) and MFS'
agreement to impose Municipal Bond Fund's lower contractual
management fee schedule effective upon the expiration of the NYAG
Settlement.
6. The respective liabilities of each Fund.
7. The relative sizes of the Funds, and the possibility that the
increased size of the combined Fund could, over time, provide the
potential for lower expenses by spreading fixed expenses across a
larger asset base.
8. Although past performance is not an indication of future results,
the Municipal Income Fund generally has a better overall historical
performance record than the Municipal Bond Fund.
9. The expectation that the transaction will qualify as a tax-free
reorganization for federal income tax purposes, pursuant to which
no gain or loss will be recognized by the Municipal Bond Fund or
its shareholders for federal income tax purposes as a result of the
transaction.
10. The fact that the combined fund will be managed by the same
investment adviser, portfolio management team and portfolio manager
who currently manage the Municipal Bond Fund.
11. The fact that the Class A and Class B shares of the Municipal Bond
Fund have a structure that is substantially similar to that of the
Class A1 and Class B1 shares, respectively, of Municipal Income
Fund, including identical shareholder fees and Rule 12b-1 fees.
12. The compatibility of the Funds' shareholder service features.
13. The costs that will be borne directly or indirectly by each Fund in
connection of the reorganization.
14. The fact that the combined fund's ability to use the Municipal Bond
Fund's pre-reorganization capital loss carry forwards, if any, to
offset future realized capital gains may be subject to certain
limitations under the federal income tax laws.
15. The potential alternatives to the reorganization, including
liquidation of the Municipal Bond Fund through the sale of the
Fund's portfolio securities and distribution of the cash to its
shareholders.
16. The reorganization will not result in dilution of the interests of
shareholders of either Fund.
The Board of Trustees of the Municipal Income Fund considered that the
reorganization presents an opportunity for the Municipal Income Fund to acquire
investment assets without the need to pay brokerage commissions or other
transaction costs that are normally associated with the purchase of securities.
The Trustees also considered that the expenses the Municipal Income Fund would
incur as a result of the reorganization were reasonable in relation to the
benefits the Municipal Income Fund would realize as a result of the
transaction. In addition, the Trustees considered that the Municipal Income
Fund shareholders are expected to benefit from a decrease (estimated to be
0.01%) in the combined fund's expenses following the reorganization, as well as
provide shareholders with the potential for further expense reductions over
time as a result of fixed expenses being spread over a larger asset base (see
"Synopsis, question 5" for a discussion of expenses). The Trustees also believe
that the Municipal Income Fund shareholders could, over time, also benefit from
improved diversification as a result of the reorganization.
The Boards of Trustees of both Funds also considered that MFS could
benefit from the reorganization. For example, MFS might realize time and cost
savings from a consolidated portfolio management effort and from the need to
prepare fewer reports and regulatory filings.
The Boards of Trustees of both Funds also considered that each Fund
had recently restated its financial statements for certain periods to reflect a
change in accounting treatment for certain inverse floating rate instruments
held by the Funds. The Trustees considered that, in accordance with the
restatements prepared by MFS, the revised accounting treatment and related
restatements did not impact the net asset values of the shares of the funds,
reported net income, past performance, or the total returns for any period. The
Trustees also considered that MFS believes that each Fund's historical
accounting treatment of inverse floating rate instruments was consistent with
then-prevailing industry practices.
Based on its review and the advice and recommendations of MFS, the
Board of Trustees of each Fund has unanimously approved the proposal.
Exchange without recognition of gain or loss for federal income tax
purposes. If a Municipal Bond Fund shareholder were to redeem his or her shares
to invest in another fund, such as the Municipal Income Fund, that shareholder
would generally recognize gain or loss for federal income tax purposes. Also,
if the Municipal Bond Fund were liquidated or reorganized in a taxable
reorganization, the transaction would likely result in a taxable event for its
shareholders. By contrast, the proposed reorganization will permit Municipal
Bond Fund's shareholders to exchange their investment in that fund for an
investment in the Municipal Income Fund without recognition of gain or loss for
federal income tax purposes. After the reorganization, shareholders will be
free to redeem any or all of the Municipal Income Fund shares they receive in
the reorganization at net asset value (minus any applicable sales charge or
redemption fee) at any time, at which point a taxable gain or loss would be
recognized.
INFORMATION ABOUT THE REORGANIZATION
Agreement and Plan of Reorganization. The proposed reorganization will
be governed by an Agreement and Plan of Reorganization (the "Agreement"). The
Agreement provides that the Municipal Income Fund will acquire the assets and
liabilities of the Municipal Bond Fund in exchange for the issuance of Class A1
and Class B1 Reorganization Shares equal in value to the value of the
transferred assets net of assumed liabilities. The Reorganization Shares will
be issued on June 22, 2007 (or such other date as may be agreed upon by the
parties) following the time as of which the Funds' shares are valued for
determining net asset value for the reorganization at the close of the New York
Stock Exchange (generally 4:00 p.m. Eastern time) (the "Exchange Date). The
following discussion of the Agreement is qualified in its entirety by the full
text of the Agreement, a form of which is attached as Appendix A to this
Prospectus/Proxy Statement.
The Municipal Bond Fund will sell its assets to the Municipal Income
Fund, and in exchange, the Municipal Income Fund will assume all liabilities of
the Municipal Bond Fund and deliver to the Municipal Bond Fund (i) a number of
full and fractional Class A1 Reorganization Shares having an aggregate net
asset value equal to the value of assets of the Municipal Bond Fund
attributable to its Class A shares, less the value of the liabilities of the
Municipal Bond Fund assumed by the Municipal Income Fund attributable to such
Class A shares; and (ii) a number of full and fractional Class B1
Reorganization Shares having a net asset value equal to the value of assets of
the Municipal Bond Fund attributable to its Class B shares, less the value of
the liabilities of the Municipal Bond Fund assumed by the Municipal Income Fund
attributable to such Class B shares.
On or as soon after the Exchange Date as is conveniently practicable,
the Municipal Bond Fund will distribute to its shareholders of record as of the
close of business on the Exchange Date, in proportion their holdings in the
Municipal Bond Fund, the full and fractional Reorganization Shares received by
the Municipal Bond Fund, with Class A1 Reorganization Shares being distributed
to holders of Class A shares of the Municipal Bond Fund and Class B1
Reorganization Shares being distributed to holders of Class B shares of the
Municipal Bond Fund. As a result of the proposed transaction, each holder of
Class A and Class B shares of the Municipal Bond Fund will receive a number of
Class A1 and Class B1 Reorganization Shares equal in aggregate net asset value
to the net asset value of the Class A and Class B shares, respectively, of the
Municipal Bond Fund held by the shareholder. This distribution will be
accomplished by the establishment of accounts on the share records of the
Municipal Income Fund in the name of such Municipal Bond Fund shareholders,
each account representing the respective number of full and fractional Class A1
and Class B1 Reorganization Shares due such shareholder. New certificates for
Reorganization Shares will not be issued, except in certain limited
circumstances.
The Trustees of each Fund have determined that the interests of each
Fund's shareholders will not be diluted as a result of the transactions
contemplated by the reorganization and that the proposed reorganization is in
the best interests of each Fund.
The consummation of the reorganization is subject to the conditions
set forth in the Agreement. The Agreement may be terminated and the
reorganization abandoned at any time, before or after approval by the
shareholders by the mutual consent of the Municipal Bond Fund and the Municipal
Income Fund. In addition, either Fund may at its option terminate the Agreement
unilaterally at or prior to the Exchange Date because (i) of a material breach
by the other party of any representation, warranty or agreement contained in
the Agreement to be performed at or prior to the Exchange Date or (ii) a
condition set forth in the Agreement expressed to be precedent to the
obligations of the terminating Fund has not been fulfilled (or waived by the
terminating Fund) and it reasonably appears that the condition will not or
cannot be met.
The fees and expenses for the transaction are estimated to be
approximately $165,000. Each Fund shall bear its own fees and expenses,
including legal and accounting expenses, portfolio transfer taxes (if any) and
other similar expenses incurred in connection with the consummation of the
transactions contemplated by the Agreement.
Description of the Reorganization Shares. Reorganization Shares will
be issued to the Municipal Bond Fund's shareholders in accordance with the
procedures under the Agreement as described above. The Reorganization Shares
are Class A1 and Class B1 shares of the Municipal Income Fund. Investors
purchasing Class A1 shares of the Municipal Income Fund normally pay a sales
charge at the time of purchase, but Municipal Bond Fund shareholders receiving
Class A1 Reorganization Shares in the reorganization will not pay a sales
charge on such shares. (Certain investors purchasing Class A shares of the
Municipal Bond Fund and Class A1 shares of the Municpal Income Fund do not pay
a sales charge at the time of purchase, but are subject to a 1% CDSC if such
shares are redeemed within 12 months of purchase. For purposes of determining
the CDSC payable on a post-reorganization redemption of Class A1 Reorganization
Shares received by such holders of Class A shares of the Municipal Bond Fund,
such shares will be treated as having been acquired as of the dates such
shareholders originally acquired such Class A shares of the Municipal Bond
Fund.) Class A1 shares of the Municipal Income Fund are not subject to a Rule
12b-1 fee.
Class B1 shares of the Municipal Income Fund are sold without a sales
charge at the time of purchase, but may be subject to a CDSC of up to 4% if
redeemed within six years of purchase. For purposes of determining the CDSC
payable on a post-reorganization redemption of Class B1 Reorganization Shares
received by holders of Class B shares of the Municipal Bond Fund, such shares
will be treated as having been acquired as of the dates such shareholders
originally acquired their Class B shares of the Municipal Bond Fund. Class B1
shares of the Municipal Income Fund are also subject to a maximum Rule 12b-1
fee of 1.00% of the Fund's average daily net assets attributable to Class B1
shares (consisting of a 0.75% distribution fee and 0.25% service fee). For one
year from the date of sale of Class B1 shares, assets attributable to such
shares are subject to the 0.25% service fee. The service fee on Class B1 shares
is not currently imposed on shares held longer than one year, but may be
implemented on such date as the Municipal Income Fund's board of trustees may
determine. Class B1 shares will automatically convert to Class A1 shares, based
on relative net asset value, approximately eight years after purchase. For
purposes of determining the conversion date of Class B1 Reorganization Shares
received by holders of Class B shares of the Municipal Bond Fund, such shares
will be treated as having been acquired as of the dates such shareholders
originally acquired their Class B shares of the Municipal Bond Fund.
Each of the Reorganization Shares will be fully paid and nonassessable
when issued, will be transferable without restriction, and will have no
preemptive or conversion rights, except that Class B Reorganization Shares will
have the conversion rights specified above. The Declaration of Trust of the
Municipal Income Fund permits the Fund to divide its shares, without
shareholder approval, into two or more classes of shares having such
preferences and special or relative rights and privileges as the Trustees may
determine. The Municipal Income Fund's shares are currently divided into five
classes -- Class A, Class B, Class C, Class A1 and Class B1.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Municipal
Income Fund. However, the Declaration of Trust disclaims shareholder liability
for acts or obligations of the Municipal Income Fund and requires that notice
of such disclaimer be given in each agreement, obligation, or instrument
entered into or executed by the Municipal Income Fund or its Trustees. The
Declaration of Trust provides for indemnification out of Fund property for all
loss and expense of any shareholder held personally liable for the obligations
of the Municipal Income Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Municipal Income Fund would be unable to meet its obligations. The
likelihood of such circumstances is remote. The shareholders of the Municipal
Bond Fund are subject to this same risk of shareholder liability.
Federal Income Tax Consequences. As a condition to each Fund's
obligation to consummate the reorganization, each Fund will receive an opinion
from Ropes & Gray LLP, counsel to the Funds (which opinion will be based on
certain factual representations and assumptions and subject to certain
qualifications), substantially to the effect that, [although not free from
doubt,] on the basis of the existing provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and current administrative rules and court
decisions, for federal income tax purposes, except as noted below:
(a) the reorganization will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the Municipal
Income Fund and Municipal Bond Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) under Section 361 of the Code, no gain or loss will be
recognized by the Municipal Bond Fund upon the transfer of its assets
to the Municipal Income Fund in exchange for Reorganization Shares and
the assumption by the Municipal Income Fund of the Municipal Bond
Fund's liabilities, or upon the distribution of the Reorganization
Shares by the Municipal Bond Fund to its shareholders in liquidation;
(c) under Section 354 of the Code, no gain or loss will be
recognized by shareholders of the Municipal Bond Fund on the
distribution of Reorganization Shares to them in exchange for their
shares of the Municipal Bond Fund;
(d) under Section 358 of the Code, the aggregate tax basis of
the Reorganization Shares that the Municipal Bond Fund's shareholders
receive in exchange for their Municipal Bond Fund shares will be the
same as the aggregate tax basis of the Municipal Bond Fund shares
exchanged therefore;
(e) under Section 1223(1) of the Code, a Municipal Bond Fund
shareholder's holding period for the Reorganization Shares received
pursuant to the Agreement will be determined by including the holding
period for the Municipal Bond Fund shares exchanged for the
Reorganization Shares, provided that the shareholder held the
Municipal Bond Fund shares as a capital asset;
(f) under Section 1032 of the Code, no gain or loss will be
recognized by the Municipal Income Fund upon receipt of the assets
transferred to the Municipal Income Fund pursuant to the Agreement in
exchange for the Reorganization Shares and the assumption by the
Municipal Income Fund of the liabilities of the Municipal Bond Fund;
(g) under Section 362(b) of the Code, the Municipal Income
Fund' tax basis in the assets that the Municipal Income Fund receives
from the Municipal Bond Fund will be the same as the Municipal Bond
Fund's tax basis in such assets immediately prior to such exchange;
(h) under Section 1223(2) of the Code, the Municipal Income
Fund's holding periods in such assets will include the Municipal Bond
Fund's holding periods in such assets; and
(i) under Section 381 of the Code, the Municipal Income Fund
will succeed to the capital loss carryovers of the Municipal Bond
Fund, if any, but the use by the Municipal Income Fund of any such
capital loss carryovers (and of capital loss carryovers of the
Municipal Income Fund) may be subject to limitation under Sections
381, 382, 383 and 384 of the Code.
The opinion will be based on certain factual certifications made by
officers of MFS Series Trust IV, on behalf of the Municipal Bond Fund, and by
officers of the Municipal Series Trust, on behalf of the Municipal Income Fund,
and will also be based on customary assumptions. Notwithstanding the above,
Ropes & Gray LLP will express no view with respect to the effect of the
reorganization on any transferred asset as to which any unrealized gain or loss
is required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under federal income
tax principles. Each Fund has agreed to make and provide additional
representations to tax counsel with respect to each Fund that are reasonably
requested by tax counsel. A Fund may not waive in any material respect the
receipt of the tax opinions as a condition to confirmation and to the
reorganization.
Prior to the Exchange Date, the Municipal Bond Fund will declare a
distribution to shareholders, which together with all previous distributions,
will have the effect of distributing to shareholders all of its investment
company taxable income (computed without regard to the deduction for dividends
paid) and net realized capital gains, if any, through the Exchange Date.
This description of the federal income tax consequences of the
reorganization is made without regard to the particular facts and circumstances
of any shareholder. Shareholders are urged to consult their own tax advisers as
to the specific consequences to them of the reorganization, including the
applicability and effect of state, local, non-U.S. and other tax laws.
Additional Tax Considerations. As of October 31, 2006, the Municipal
Bond Fund had no capital loss carryovers. Capital loss carryovers are used to
reduce the amount of realized capital gains that a Fund is required to
distribute to its shareholders in order to avoid paying taxes on undistributed
capital gain.
The ability of the Municipal Income Fund, as the surviving combined
fund, to use its own pre-reorganization capital loss carryovers to offset
future realized capital gains may be subject to an annual limitation under
applicable tax laws if the reorganization occurs. Other tax rules would
prohibit the use of one Fund's pre-reorganization "built-in losses" (i.e., net
unrealized losses) against the other Fund's "built-in gains" (i.e., net
unrealized gains). The effect of these limitations will depend on the amount of
losses and "built-in gains" in each Fund at the time of the reorganization. For
example, if the reorganization had occurred on October 31, 2006, the combined
fund would have had net losses (i.e., capital loss carryforwards as of the end
of the last fiscal year as adjusted by year-to-date realized gains or losses)
of .287% of its net assets available to reduce capital gains, whereas absent
the reorganization, the Municipal Income Fund would have net losses equal to
1.268% of its net assets available to reduce capital gains. As a result of the
loss limitation and the spreading of the losses remaining available over a
larger asset base, the percentage of losses available to offset capital gains
would have decreased by .981% with respect to the Municipal Income Fund. As of
October 31, 2006, both Funds had "built-in gains" and therefore, if the
reorganization had occurred on that date, the prohibition on the use of capital
loss carryforwards to offset such gains would apply. The application of these
rules may accelerate taxable gain distributions to shareholders of the combined
fund.
Capitalization. The following table shows the capitalization of the
Funds as of September 30, 2006, and on a pro forma combined basis, giving
effect to the proposed acquisition of assets at net asset value as of that
date:
MUNICIPAL INCOME PRO FORMA PRO FORMA COMBINED
FUND (A) MUNCIPAL BOND FUND ADJUSTMENTS FUND
--------------------------------------------------------------------------------------
NET ASSETS
CLASS A1 -- $1,024,624,262 $ (26,411) (b) $1,024,597,851
CLASS B1 -- $ 42,245,966 $ (1,089) (b) $ 42,244,877
SHARES OUTSTANDING
CLASS A1 -- 97,134,035 119,142,356 (c) 119,142,356
CLASS B1 -- 4,009,259 4,906,616 (c) 4,906,616
NET ASSET VALUE PER SHARE
CLASS A1 -- $10.55 $8.60
CLASS B1 -- $10.54 $8.61
- ------------
(a) Class A1 and Class B1 shares of Municipal Income Fund have not yet commenced operations.
(b) Adjustments are the result of reorganization expenditures and will not be borne by pro forma combined fund on a
going forward basis.
(c) If the reorganization had taken place on September 30, 2006, the MFS Municipal Bond Fund would have received
119,142,356 and 4,906,616 shares for Class A1 and B1, respectively, of the MFS Municipal Income Fund, which would
be available for distribution to its shareholders. Such Class A1 and Class B1 capital stock shares to be
distributed in the reorganization are determined based on the Class A and Class B net asset values per share,
respectively, of the MFS Municipal Income Fund. No assurances can be given as to the number of Reorganization
Shares the MFS Municipal Bond Fund will receive on the Exchange Date. The foregoing is merely an example of what
the MFS Municipal Bond Fund would have received and distributed had the reorganization been consummated on
September 30, 2006, and should not be relied upon to reflect the amount that will be actually received on or after
the Exchange Date.
Unaudited pro forma combined financial statements of the Funds as of
September 30, 2006 and for the twelve-month period then ended are included in
the Statement of Additional Information relating to the proposed
reorganization. Because the Agreement provides that the Municipal Income Fund
will be the surviving Fund following the reorganization and because the
Municipal Income Fund's investment objectives and policies will remain
unchanged, the pro forma combined financial statements reflect the transfer of
the assets and liabilities of the Municipal Bond Fund to the Municipal Income
Fund as contemplated by the Agreement.
THE TRUSTEES OF THE MUNICIPAL BOND FUND, INCLUDING THE INDEPENDENT
TRUSTEES, UNANIMOUSLY RECOMMEND APPROVAL OF THE PLAN.
VOTING INFORMATION
Required Vote. Proxies are being solicited from the Municipal Bond
Fund's shareholders by its Trustees for the Meeting to be held on June 7, 2007
at 2:00 p.m. at 500 Boylston St., 24th Floor, Boston, Massachusetts 02116, or
at such later time made necessary by adjournment. Unless revoked, all valid
proxies will be voted in accordance with the specification thereon or, in the
absence of specifications, FOR approval of the Agreement.
The transactions contemplated by the Agreement will be consummated
only if approved by the affirmative vote of a "majority of the outstanding
voting securities" of the Municipal Bond Fund entitled to vote. Under the 1940
Act, the vote of a "majority of the outstanding voting securities" means the
affirmative vote of the lesser of (a) 67% or more of the voting power of the
securities present at the Meeting or represented by proxy if the holders of
more than 50% of the outstanding voting power of the securities are present or
represented by proxy or (b) more than 50% of the voting power of the
outstanding voting securities.
When shares of the Municipal Bond Fund are held jointly by two or more
persons, any one of them may vote at the Meeting in person or by proxy in
respect to such shares. A proxy shall be valid if executed by any one of the
joint owners.
Record Date, Quorum and Method of Tabulation. Shareholders of record
of the Municipal Bond Fund at the close of business on [April 2], 2007 (the
"record date") will be entitled vote at the Meeting or any adjournment thereof.
The holders of a majority of the voting power of the shares of the Municipal
Bond Fund outstanding at the close of business on the record date present in
person or represented by proxy will constitute a quorum for the Meeting.
Shareholders of record are entitled to one vote for each dollar of net asset
value of the shares (i.e., number of shares owned times net asset value per
share), with fractional amounts voting proportionately.
Votes cast by proxy or in person at the Meeting will be counted by
persons appointed by the Municipal Bond Fund as the vote tabulator for the
Meeting. The vote tabulator will count the total number of votes cast "for"
approval of the proposal for purposes of determining whether sufficient
affirmative votes have been cast. The vote tabulator will count shares
represented by proxies that are marked with an abstention or that reflect
"broker non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owner or the persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter) as shares that are present and entitled to
vote on the matter for purposes of determining the presence of a quorum. Thus,
abstentions and broker non-votes have the effect of a negative vote on the
proposal.
As of the record date, the officers and Trustees, as a group,
beneficially owned less than 1% of any class of the outstanding shares of the
Municipal Bond Fund. To the best of the knowledge of the Municipal Bond Fund,
as of the record date, the following shareholders owned of record or
beneficially 5% or more of the following classes of the Municipal Bond Fund's
outstanding shares:
PRO FORMA
SHAREHOLDER PERCENTAGE PERCENTAGE
CLASS NAME AND ADDRESS OWNED OWNED*
- --------------------------------- ---------------- ---------- ----------
[To be updated]
- -------------
* Percentage owned assuming completion of the reorganization on , 2006.
** Believed to be a record owner.
*** Believed to be a beneficial owner.
The votes of the shareholders of the Municipal Income Fund are not
being solicited because their approval or consent is not necessary for this
transaction. As of the record date, the officers and Trustees of the Municipal
Income Fund, as a group, beneficially owned less than 1% of any class of the
outstanding shares of the Municipal Income Fund. To the best of the knowledge
of the Municipal Income Fund, as of the record date, the following shareholders
owned of record or beneficially 5% or more of the following classes of the
Municipal Income Fund:
PRO FORMA
SHAREHOLDER PERCENTAGE PERCENTAGE
CLASS NAME AND ADDRESS OWNED OWNED*
- --------------------------------- ---------------- ---------- ----------
[To be updated]
- -------------
* Percentage owned assuming completion of the reorganization on , 2007.
** Believed to be a record owner.
*** Believed to be a beneficial owner.
Solicitation of Proxies. In addition to soliciting proxies by mail,
the Trustees and employees of MFS, MFS Distributors, Inc. and MFS Service
Center, Inc. may solicit proxies in person or by telephone. In addition, the
Municipal Bond Fund has retained at its own expense [SOLICITOR] to aid in the
solicitation of instructions for nominee and registered accounts for a fee of
approximately $__,000, plus reasonable out-of-pocket expenses for proxy
solicitation services, which will be paid by the Municipal Bond Fund. The
Municipal Bond Fund may also arrange to have votes recorded by telephone. The
telephonic voting procedure is designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their shares in
accordance with their instructions and to confirm that their instructions have
been properly recorded. Shareholders would be asked for their Social Security
numbers or other identifying information. The shareholders would then be given
an opportunity to authorize their proxies to vote their shares in accordance
with their instructions. To ensure that the shareholders' instructions have
been recorded correctly, they will also receive a confirmation of their
instructions in the mail. A toll-free number will be available in the event the
information in the confirmation is incorrect.
Shareholders have the opportunity to vote via the Internet as directed
on your proxy card. The giving of such a proxy will not affect your right to
vote in person should you decide to attend the Meeting. To vote via the
Internet, you will need the "control" number that appears on your proxy card.
The Internet voting procedures are designed to authenticate shareholder
identities, to allow shareholders to give their voting instructions, and to
confirm that shareholders' instructions have been recorded properly.
Shareholders voting via the Internet should understand that there may be costs
associated with electronic access, such as usage charges from Internet access
providers and telephone companies, that must be borne by the shareholders.
Persons holding shares as nominees will upon request be reimbursed by
the Municipal Bond Fund for their reasonable expenses in soliciting
instructions from their principals.
Revocation of Proxies. Proxies, including proxies given by telephone
or via the Internet, may be revoked at any time before they are voted, by a
written revocation received by the Secretary of the Municipal Bond Fund or by
properly executing a later-dated proxy or by attending the Meeting and voting
in person.
Shareholder Proposals. The Municipal Bond Fund does not hold annual
shareholder meetings in any year in which the election of Trustees is not
required to be acted upon by the Investment Company Act of 1940 Act. However,
the Fund currently maintains a policy to hold a shareholder meeting at least
every five years to elect Trustees. If the reorganization is not approved, any
shareholder who wishes to submit a proposal to be considered by the Fund's
shareholders at the next meeting of shareholders should send the proposal to
Municipal Bond Fund, c/o Susan S. Newton, Assistant Secretary, at 500 Boylston
Street, 20th Floor, Boston, Massachusetts 02116, so as to be received within a
reasonable time before the Board of Trustees makes the solicitation relating to
such meeting. The submission by a shareholder of a proposal for inclusion in
the proxy materials does not guarantee that it will be included. Shareholder
proposals are subject to certain requirements under the federal securities
laws.
Adjournment. If the necessary quorum to transact business or
sufficient votes in favor of the proposal are not received by the time
scheduled for the Meeting, the persons named as proxies may propose
adjournments of the Meeting to permit further solicitation of proxies. Any
adjournment will require the affirmative vote of a majority of the votes cast
on the question in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the proposal. They
will vote against any such adjournment those proxies required to be voted
against the proposal. They will not vote any proxy that directs them to abstain
from voting on the proposal. The Municipal Bond Fund pays the costs of any
additional solicitation and of any adjourned session.
MISCELLANEOUS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP serves as Independent Registered Public
Accounting Firm to both the Municipal Bond Fund and the Municipal Income Fund.
The audited financial statements of the Municipal Bond Fund and the Municipal
Income Fund for the fiscal years ended August 31, 2006 and March 31, 2006,
respectively, included in the Funds' respective Statement of Additional
Information, have been audited by Deloitte & Touche LLP, Independent Registered
Public Accounting Firm, whose reports thereon are included in the respective
Fund's Statements of Additional Information and in the Annual Reports to
Shareholders for the fiscal years ended August 31, 2006 and March 31, 2006
respectively. The financial statements audited by Deloitte & Touche LLP have
been incorporated by reference in reliance on their reports given on their
authority as experts in auditing and accounting.
AVAILABLE INFORMATION
The Municipal Bond Fund and the Municipal Income Fund are each subject
to the informational requirements of the Securities Exchange Act of 1934 and
the 1940 Act, and in accordance with these laws, they each file reports, proxy
material and other information with the SEC. Such reports, proxy material and
other information can be inspected and copied at the Public Reference Room
maintained by the SEC at 100 F Street, N.W., Washington D.C. 20549 and the
public reference facilities at the SEC's Northeast and Midwest regional offices
at 3 World Financial Center, Room 4300, New York, NY 10281 and 175 W. Jackson
Boulevard, Suite 900, Chicago, IL 60604, respectively. Copies of such material
can also be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange Commission,
Washington D.C. 20549, at prescribed rates, or at the SEC website
(http://www.sec.gov).
OTHER BUSINESS
Management of the Municipal Bond Fund knows of no business other than
the matters specified above that will be presented at the Meeting. Because
matters not known at the time of the solicitation may come before the Meeting,
the proxy as solicited confers discretionary authority with respect to such
matters as properly come before the Meeting, including any adjournment or
adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote this proxy in accordance with their
judgment on such matters.
LEGAL PROCEEDINGS
On March 31, 2004, MFS settled an administrative proceeding with the
Securities and Exchange Commission ("SEC") regarding disclosure of brokerage
allocation practices in connection with MFS fund sales (the term "MFS funds"
means the open-end registered management investment companies sponsored by
MFS). The brokerage allocation practices which were the subject of this
proceeding were discontinued by MFS in November 2003. In addition, in February
2004, MFS reached agreement with the SEC, the New York Attorney General
("NYAG") and the Bureau of Securities Regulation of the State of New Hampshire
to settle administrative proceedings alleging false and misleading information
in certain MFS open-end retail fund prospectuses regarding market timing and
related matters.
Since December 2003, MFS, MFD, MFS Service Center, Inc., MFS
Corporation Retirement Committee, Sun Life Financial Inc., various MFS funds,
certain current and/or former Trustees of the MFS funds, and certain officers
of MFS have been named as defendants in multiple lawsuits filed in federal and
state courts. The various lawsuits generally allege that some or all of the
defendants (i) permitted or acquiesced in market timing and/or late trading in
some of the MFS funds, and inadequately disclosed MFS' internal policies
concerning market timing and such matters, (ii) received excessive compensation
as fiduciaries with respect to the MFS funds, or (iii) permitted or acquiesced
in the improper use of fund assets by MFS to support the distribution of MFS
fund shares and inadequately disclosed MFS' use of fund assets in this matter.
The lawsuits assert that some or all of the defendants violated the federal
securities laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, the Employee Retirement Income Security Act of 1974
(ERISA), as well as fiduciary duties and other violations of common law. The
lawsuits variously have been commenced as class actions or individual actions
on behalf of investors who purchased, held or redeemed shares of the MFS funds
during specified periods, as ERISA actions by participants in certain
retirement plan accounts on behalf of those accounts, or as derivative actions
on behalf of the MFS funds.
The lawsuits relating to market timing and related matters have been
transferred to, and consolidated before, the United States District Court for
the District of Maryland, as part of a multi-district litigation of market
timing and related claims involving several other fund complexes (In re Mutual
Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam,
Allianz Dresdner), No. 1:04-md-15863 (transfer began March 19, 2004)). The
market timing cases related to the MFS funds include Riggs v. MFS et al., Case
No. 04-CV-01162-JFM (direct), Hammerslough v. MFS et al., Case No. 04-MD-01620
(derivative), Anita Walker v. MFS et al., Case No. 1:04-CV-01758 (ERISA), and
Reaves v. MFS Series Trust I, et al., Case No. 1:05-CV-02220-JFM (Class B
Shares). The plaintiffs in these consolidated lawsuits generally seek
injunctive relief including removal of the named Trustees, adviser and
distributor, rescission of contracts and 12b-1 Plans, disgorgement of fees and
profits, monetary damages, punitive damages, attorney's fees and costs and
other equitable and declaratory relief. Two lawsuits alleging improper
brokerage allocation practices and excessive compensation are pending in the
United States District Court for the District of Massachusetts (Forsythe v. Sun
Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action, first
filed on March 25, 2004) and Marcus Dumond, et al. v. Massachusetts Financial
Servs. Co., et al., No. 04cv11458 (GAO) (filed on May 4, 2004)). The plaintiffs
in these lawsuits generally seek compensatory damages, punitive damages,
recovery of fees, rescission of contracts, an accounting, restitution,
declaratory relief, equitable and/or injunctive relief and attorney's fees and
costs. Insofar as any of the actions is appropriately brought derivatively on
behalf of any of the MFS funds, any recovery will inure to the benefit of the
MFS funds. Several claims of the various lawsuits have been dismissed; MFS and
other named defendants continue to defend the various lawsuits.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPLY.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise the Municipal Bond Fund, in care of MFS Service Center,
Inc., 500 Boylston Street, Boston, MA 02116, whether other persons are
beneficial owners of shares for which proxies are being solicited and, if so,
the number of copies of the Proxy Statement you wish to receive in order to
supply copies to the beneficial owners of the shares.
April [ ], 2007
MFS MUNICIPAL BOND FUND
500 Boylston Street
Boston, MA 02116
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
DRAFT 3-13-07
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
__th day of March, 2007, by and between MFS Series Trust IV, a Massachusetts
business trust ("Trust IV"), on behalf of MFS Municipal Bond Fund, a segregated
portfolio of assets ("series") thereof (the "Acquired Fund"), and MFS Municipal
Series Trust, a Massachusetts business trust ("Municipal Trust"), on behalf of
MFS Municipal Income Fund, a segregated portfolio of assets ("series") thereof
(the "Surviving Fund"), each with its principal place of business at 500
Boylston Street, Boston, Massachusetts 02116. Each of the Acquired Fund and the
Surviving Fund are also referred to herein as a "Fund" and, together, as the
"Funds."
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of the regulations under Section 368(a) (the
"Regulations") of the United States Internal Revenue Code of 1986, as amended
(the "Code"). The reorganization will consist of (1) the transfer of the Assets
(as defined herein) of the Acquired Fund to the Surviving Fund in exchange
solely for the assumption by the Surviving Fund of the Liabilities (as defined
herein) of the Acquired Fund and the issuance to the Acquired Fund of shares of
beneficial interest, no par value ("shares"), in the Surviving Fund (the
"Reorganization Shares"), (2) the distribution of the Reorganization Shares to
the shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided herein and (3) the termination of the Acquired Fund, all upon the
terms and conditions hereinafter set forth in this Agreement (collectively, the
"Reorganization").
All representations, warranties, covenants and obligations of the
Surviving Fund and the Acquired Fund contained herein shall be deemed to be
representations, warranties, covenants and obligations of Trust IV, acting on
behalf of the Acquired Fund, and the Municipal Trust acting on behalf of the
Surviving Fund, respectively, and all rights and benefits created hereunder in
favor of the Surviving Fund and the Acquired Fund shall inure to, and shall be
enforceable by, Trust IV, acting on behalf of the Acquired Fund and the
Municipal Trust, acting on behalf of the Surviving Fund, respectively.
The Acquired Fund's shares are divided into two classes, designated Class
A and Class B shares (the "Class A Acquired Fund Shares," and the "Class B
Acquired Fund Shares," respectively, and together, the "Acquired Fund Shares").
The Surviving Fund's shares are divided into five classes, including two
classes designated Class A1 and Class B1 shares (the "Class A1 Reorganization
Shares" and "Class B1 Reorganization Shares", respectively), which two classes
are the only classes of the Surviving Fund's shares involved in the
Reorganization and thus included in the term "Reorganization Shares." Each
class of Acquired Fund Shares is substantially similar to the corresponding
class of Reorganization Shares, i.e., the Acquired Fund's Class A and Class B
shares correspond to the Surviving Fund's Class A1 and Class B1 shares.
In consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. THE REORGANIZATION
1.1 The Acquired Fund will transfer to the Surviving Fund all of its
assets (consisting of, without limitation, portfolio securities and
instruments, dividend and interest receivables, claims and rights of action,
cash and other assets) as set forth in a statement of assets and liabilities as
of the Valuation Time (as defined in paragraph 2.1 hereof) prepared in
accordance with generally accepted accounting principles consistently applied,
certified by the Acquired Fund's Treasurer or Assistant Treasurer and delivered
by the Acquired Fund to the Surviving Fund pursuant to paragraph 5.6 hereof
(the "Statement of Assets and Liabilities") (collectively, the "Assets"), free
and clear of all liens and encumbrances, except as otherwise provided herein,
in exchange solely for (a) the assumption by the Surviving Fund of all of the
liabilities of the Acquired Fund as set forth in the Statement of Assets and
Liabilities (collectively, the "Liabilities") and (b) the issuance and delivery
by the Surviving Fund to the Acquired Fund, for distribution in accordance with
paragraph 1.3 hereof pro rata to the Acquired Fund shareholders of record
determined as of the Valuation Time (the "Acquired Fund Shareholders"), of the
number of full and fractional (rounded to the third decimal place)
Reorganization Shares determined as provided in paragraph 2.2 hereof. Such
transactions shall take place at the closing provided for in paragraph 3.1
hereof (the "Closing").
1.2 The Acquired Fund has provided the Surviving Fund with a list of the
current securities holdings and other assets of the Acquired Fund as of the
date of execution of this Agreement. The Acquired Fund reserves the right to
sell any of these securities or other assets prior to the Closing.
1.3 On or as soon after the closing date established in paragraph 3.1
hereof (the "Closing Date") as is conveniently practicable (the "Liquidation
Date"), the Acquired Fund will distribute the Reorganization Shares it received
pursuant to paragraph 1.1 hereof pro rata to the Acquired Fund Shareholders in
actual or constructive exchange for their Acquired Fund Shares in complete
liquidation of the Acquired Fund. Such distribution will be accomplished by the
transfer of the Class A1and Class B1 Reorganization Shares then credited to the
account of the Acquired Fund on the books of the Surviving Fund to open
accounts on the share records of the Surviving Fund in the names of the
Acquired Fund Shareholders and representing the respective pro rata number of
full and fractional (rounded to the third decimal place) Class A1 and Class B1
Reorganization Shares due such shareholders, by class (i.e., the account for
each Acquired Fund Shareholder of Class A and Class B Acquired Fund Shares
shall be credited with the respective pro rata number of Class A1 and Class B1
(as applicable) Reorganization Shares due that shareholder). The Surviving Fund
will not issue share certificates representing the Reorganization Shares in
connection with such distribution, except in connection with pledges and
assignments and in certain other limited circumstances.
1.4 The Acquired Fund shall use reasonable efforts to ensure that
Acquired Fund Shareholders holding certificates representing their ownership of
Acquired Fund Shares surrender such certificates or deliver an affidavit with
respect to lost certificates, in such form and accompanied by such surety bonds
as the Acquired Fund may require (collectively, an "Affidavit"), to the
Acquired Fund prior to the Closing Date. Any Acquired Fund Share certificate
that remains outstanding on the Closing Date shall be deemed to be cancelled,
shall no longer show evidence of ownership of Acquired Fund Shares and shall
not evidence ownership of any Reorganization Shares. Unless and until any such
certificate shall be so surrendered or an Affidavit relating thereto shall be
delivered, any dividends and other distributions payable by the Surviving Fund
subsequent to the Closing Date with respect to the Reorganization Shares
allocable to a holder of such certificate(s) shall be paid to such holder, but
such holder may not redeem or transfer such Reorganization Shares.
1.5 Any transfer taxes payable upon issuance of the Reorganization Shares
in a name other than the registered holder of the Acquired Fund Shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Reorganization Shares
are to be issued and transferred.
1.6 The legal existence of the Acquired Fund shall be terminated promptly
following the Liquidation Date.
2. VALUATION
2.1 The net asset value of each class of the Reorganization Shares and
the net value of the Assets shall in each case be determined as of the close of
business (4:00 p.m. Boston time) on the Closing Date (the "Valuation Time").
The net asset value of each class of the Reorganization Shares shall be
computed by State Street Bank and Trust Company (the "Custodian"), as custodian
and pricing agent for the Surviving Fund, using the valuation procedures set
forth in Municipal Trust's Amended and Restated Declaration of Trust ("the
Municipal Trust's Declaration of Trust") or By-laws and the Surviving Fund's
then-current prospectus and statement of additional information (collectively,
the "Surviving Fund Valuation Procedures"), to not less than two decimal
places. The net value of the Assets shall be computed by the Custodian, as
custodian and pricing agent for the Acquired Fund, by calculating the value of
the Assets and subtracting therefrom the amount of the Liabilities, using the
valuation procedures set forth in Trust IV's Amended and Restated Declaration
of Trust ("Trust IV's Declaration of Trust") or By-laws and the Acquired Fund's
then-current prospectus and statement of additional information (collectively,
the "Acquired Fund Valuation Procedures"). The determinations of the Custodian
shall be conclusive and binding on all parties in interest; provided, however,
that, in computing each Fund's net asset value in accordance with this
paragraph 2.1, any fair value determination required to be made by the
Surviving Fund Valuation Procedures or Acquired Fund Valuation Procedures with
respect to a portfolio security or other asset of either Fund shall be made in
accordance with the applicable Fund's Valuation Procedures, and any such fair
value determinations shall be conclusive and binding on the Custodian and all
parties in interest.
2.2 The number of each class of Reorganization Shares (including
fractional shares, if any, rounded to the third decimal place) the Surviving
Fund shall issue pursuant to paragraph 1.1(b) hereof shall be as follows: (a)
the number of Class A1 Reorganization Shares shall be determined by dividing
the net value of the Assets (computed as set forth in paragraph 2.1 hereof)
(the "Acquired Fund Value") attributable to the Class A Acquired Fund Shares by
the net asset value of a Class A1 Reorganization Share (computed as set forth
in such paragraph), and (b) the number of Class B1 Reorganization Shares shall
be determined by dividing the Acquired Fund Value attributable to the Class B
Acquired Fund Shares by the net asset value of a Class B1 Reorganization Share
(as so computed).
2.3 Except for certain fair value determinations as described in
paragraph 2.1 hereof, all computations of value shall be made by the Custodian
in its capacity as pricing agent for the Surviving Fund and the Acquired Fund,
as applicable, and in accordance with its regular practice in pricing the
shares and assets of the Surviving Fund and the Acquired Fund, as applicable,
using the relevant Fund's Valuation Procedures.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be March 16, 2007 or such other date on or
before June 30, 2007 as the parties may agree. The Closing shall be held at
5:00 p.m., Boston time, at the offices of Trust IV and Municipal Trust, 500
Boylston Street, Boston, Massachusetts 02116, or at such other time and/or
place as the parties may agree.
3.2 Portfolio securities shall be transferred by the Acquired Fund to the
Custodian for the account of the Surviving Fund on the Closing Date, duly
endorsed in proper form for transfer, in such condition as to constitute good
delivery thereof in accordance with the custom of brokers or, in the case of
portfolio securities held in the US Treasury Department's book-entry system or
by the Depository Trust Company or other third-party depositories, by transfer
to the account of the Custodian in accordance with Rule 17f-4, Rule 17f-5, or
Rule 17f-7, as the case may be, under the Investment Company Act of 1940, as
amended (the "1940 Act") and shall be accompanied by all necessary federal and
state stock transfer stamps or a check for the appropriate purchase price
thereof. The cash delivered shall be in the form of currency, certified or
official bank check or federal fund wire, payable to the order of "State Street
Bank and Trust Company, Custodian for the MFS Municipal Income Fund" or in the
name of any successor organization.
3.3 If on the Closing Date (a) the New York Stock Exchange shall be
closed to trading or trading thereon shall be restricted or (b) trading or the
reporting of trading on such exchange or elsewhere shall be disrupted so that
accurate appraisal of the net value of the Assets or the net asset value of
each class of the Reorganization Shares is impracticable, the Closing Date
shall be postponed until the next business day when trading shall have been
fully resumed and reporting shall have been restored; provided that if trading
shall not be fully resumed and reporting restored on or before June 30, 2007,
this Agreement may be terminated by either Fund upon the giving of written
notice to the other.
3.4 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status of the Acquired Fund Shareholders and the
number of outstanding Acquired Fund Shares owned by each such shareholder, all
as of the close of business on the Closing Date (the "Shareholder List"). The
Surviving Fund shall issue and deliver to the Acquired Fund a confirmation
evidencing the Reorganization Shares credited on the Liquidation Date, or
provide evidence satisfactory to the Acquired Fund that such Reorganization
Shares have been credited to the Acquired Fund's account on the books of the
Surviving Fund. At the Closing each party shall deliver to the other such bills
of sale, checks, assignments, stock certificates, receipts or other documents
as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Trust IV, on behalf of the Acquired Fund, represents and warrants to
Municipal Trust, on behalf of the Surviving Fund, as follows:
(a) Trust IV is a business trust that is duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts and has the power to own all of its properties and assets
and, subject to approval by the shareholders of the Acquired Fund, to
carry out its obligations under this Agreement. Neither Trust IV nor the
Acquired Fund is required to qualify to do business in any other
jurisdiction. This Agreement has been duly authorized by Trust IV,
subject to the approval of the shareholders of the Acquired Fund. Trust
IV has all necessary federal, state and local authorizations to own all
of the properties and assets of Trust IV and to carry on its business as
now being conducted;
(b) Trust IV is a duly registered investment company classified as
a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act is in full force and effect; and the Acquired
Fund is a separate series of Trust IV duly constituted in accordance with
the applicable provisions of Trust IV's Declaration of Trust and By-Laws
and the laws of the Commonwealth of Massachusetts;
(c) Trust IV is not, and the execution, delivery and performance of
this Agreement by Trust IV will not result, in violation of any provision
of Trust IV's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
Trust IV or the Acquired Fund is a party or by which Trust IV or the
Acquired Fund is bound;
(d) The Acquired Fund has no material contracts or other
commitments (other than this Agreement and agreements for the purchase
and sale of securities entered into in the ordinary course of business
and consistent with the Acquired Fund's obligations under this Agreement)
that will not be terminated at or prior to the Closing Date and no such
termination will result in liability to Trust IV or the Acquired Fund (or
the Surviving Fund);
(e) Except as otherwise disclosed in writing to and accepted by
Municipal Trust, on behalf of the Surviving Fund, no material litigation
or administrative proceeding or investigation of or before any court or
governmental body is currently pending or, to the knowledge of Trust IV
or the Acquired Fund, threatened against Trust IV or the Acquired Fund or
any of its properties or assets. Neither Trust IV nor the Acquired Fund
know of facts that might form the basis for the institution of such
proceedings, and neither Trust IV nor the Acquired Fund is a party to or
subject to the provisions of any order, decree or judgment of any court
or governmental body that materially and adversely affects their business
or their ability to consummate the transactions herein contemplated;
(f) The statement of assets and liabilities, including the schedule
of portfolio investments, of the Acquired Fund as of August 31, 2006, and
the related statement of operations for the fiscal year then ended, and
the statement of changes in net assets for the fiscal years ended August
31, 2006 and August 31, 2005 (copies of which have been furnished to the
Surviving Fund) have been audited by Deloitte & Touche LLP, Independent
Registered Public Accounting Firm, and present fairly in all material
respects the financial position of the Acquired Fund as of August 31,
2006 and the results of its operations and changes in net assets for the
respective stated periods in accordance with accounting principles
generally accepted in the United States of America consistently applied,
and there are no known actual or contingent liabilities of the Acquired
Fund as of the respective dates thereof not disclosed therein;
(g) Since August 31, 2006, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquired Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as
otherwise disclosed to and accepted by Municipal Trust, on behalf of the
Surviving Fund. For the purposes of this subparagraph (g), a decline in
net asset value per Acquired Fund Share resulting from losses upon the
disposition of investments or from changes in the value of investments
held by the Acquired Fund, or a distribution or a payment of dividends
shall not constitute a material adverse change;
(h) As of the Closing Date, the Acquired Fund will have, within
the times and in the manner prescribed by law, properly filed all
required federal and other tax returns and reports which, to the
knowledge of the Acquired Fund's officers, are required to have been
filed by the Acquired Fund by such date and all such returns and reports
were complete and accurate in all material respects. The Acquired Fund
has timely paid or will timely pay, in the manner prescribed by law, all
federal and other taxes shown to be due on said returns or on any
assessments received by the Acquired Fund. All tax liabilities of the
Acquired Fund have been adequately provided for on its books, and no tax
deficiency or liability of the Acquired Fund has been asserted, and no
question with respect thereto has been raised or is under audit, by the
Internal Revenue Service or by any state, local or other tax authority
for taxes in excess of those already paid;
(i) For each taxable year of its operations and since its
inception, for federal income tax purposes, the Acquired Fund has
satisfied, and for the current taxable year it will satisfy, the
requirements of Subchapter M of the Code for qualification and treatment
as a "regulated investment company," and the provisions of sections 851
through 855 of the Code have applied and will continue to apply to
Acquired Fund for each taxable year since its inception and for the
remainder of its current taxable year beginning September 1, 2006 and
ending on the Closing Date.
Acquired Fund will declare to Acquired Fund shareholders of record
on or prior to the Closing Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing to
the Acquired Fund shareholders (a) all of the excess of (i) Acquired
Fund's investment income excludable from gross income under section
103(a) of the Code over (ii) Acquired Fund's deductions disallowed under
sections 265 and 171(a)(2) of the Code, (b) all of Acquired Fund's
investment company taxable income (as defined in section 852 of the
Code), (computed in each case without regard to any deduction for
dividends paid), and (c) all of Acquired Fund's net realized capital gain
(after reduction for any capital loss carryover) in each case for both
the taxable year ending on August 31, 2006 and the short taxable year
beginning on September 1, 2006 and ending on the Closing Date. Such
dividends will be made to ensure continued qualification of Acquired Fund
as a "regulated investment company" for tax purposes and to eliminate
fund-level tax.
(j) The authorized capital of Trust IV consists of an unlimited
number of shares, currently divided into four series and, with respect to
the Acquired Fund, into two classes at the date hereof. All issued and
outstanding Acquired Fund Shares are, and at the Closing Date will be,
duly and validly issued and outstanding, fully paid and nonassessable by
Trust IV (except as described in the Acquired Fund's current prospectus
and statement of additional information). All of the issued and
outstanding Acquired Fund Shares will, at the time of Closing, be held by
the persons and in the amounts set forth in the Shareholder List. Trust
IV does not have outstanding any options, warrants or other rights to
subscribe for or purchase any Acquired Fund Shares, nor is there
outstanding any security convertible into any Acquired Fund Shares;
(k) Except as previously disclosed to Municipal Trust, at the
Closing Date the Acquired Fund will have good and marketable title to the
Assets and full right, power and authority to sell, assign, transfer,
convey and deliver the Assets hereunder, and upon delivery and payment
for the Assets, the Surviving Fund will acquire good and marketable title
thereto subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the Securities Act of
1933, as amended (the "1933 Act");
(l) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of Trust IV, on
behalf of the Acquired Fund (with the exception of the approval of this
Agreement by the Acquired Fund's shareholders holding at least a majority
of the outstanding voting securities (as defined by the 1940 Act) of the
Acquired Fund), and this Agreement constitutes a valid and binding
obligation of the Acquired Fund enforceable in accordance with its terms,
subject to the approval of such shareholders and, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general
equity principles;
(m) The information to be furnished by the Acquired Fund for use in
applications for orders, registration statements, proxy materials and
other documents that may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply fully
with federal securities and other laws and regulations thereunder
applicable thereto;
(n) The proxy statement of the Acquired Fund (the "Proxy
Statement") to be included in the Registration Statement (as defined in
paragraph 5.7 hereof) (other than written information furnished by the
Surviving Fund for inclusion therein, as covered by Municipal Trust's
representation and warranty in paragraph 4.2(o) hereof), on the effective
date of the Registration Statement, on the date of the Meeting (as
defined in paragraph 5.2 hereof) and on the Closing Date, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Trust IV, on
behalf of the Acquired Fund, of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933 Act, the
Securities Exchange Act of 1934, as amended, and the 1940 Act and the
rules and regulations thereunder (collectively, the "Acts"), and such as
may be required under state securities laws;
(p) All of the issued and outstanding Acquired Fund Shares have
been offered for sale and sold in conformity with all applicable federal
and state securities laws, except as may have been previously disclosed
in writing to the Surviving Fund;
(q) The then current prospectus and statement of additional
information of the Acquired Fund, as supplemented and updated from time
to time, will conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder on the date of the Proxy
Statement, on the date of the Meeting and on the Closing Date and will
not on any of such dates include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and
(r) The Acquired Fund incurred the Liabilities in the ordinary
course of its business.
4.2 Municipal Trust, on behalf of the Surviving Fund, represents and
warrants to Trust IV, on behalf of the Acquired Fund, as follows:
(a) Municipal Trust is a business trust that is duly organized,
validly existing and in good standing under the laws of The Commonwealth
of Massachusetts and has the power to own all of its properties and
assets and to carry out its obligations under this Agreement. Neither
Municipal Trust nor the Surviving Fund is required to qualify to do
business in any other jurisdiction. This Agreement has been duly
authorized by Municipal Trust on behalf of the Surviving Fund. Municipal
Trust has all necessary federal, state and local authorizations to own
all of its properties and assets and to carry on its business as now
being conducted.
(b) Municipal Trust is a duly registered investment company
classified as a management company of the open-end type, and its
registration with the Commission as an investment company under the 1940
Act is in full force and effect; and the Surviving Fund is a separate
series of Municipal Trust duly constituted in accordance with the
applicable provisions of the Municipal Trust's Declaration of Trust and
By-laws and the laws of the Commonwealth of Massachusetts;
(c) The current prospectus and statement of additional information
of the Surviving Fund, each dated August 1, 2006, as supplemented and
updated from time to time (collectively, the "Surviving Fund
Prospectus"), and the Registration Statement (other than written
information furnished by the Acquired Fund for inclusion therein as
covered by the Acquired Fund's representation and warranty in paragraph
4.1(m) hereof) will conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder on the date of the Proxy
Statement, on the date of the Meeting and on the Closing Date and will
not on any of such dates include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(d) At the Closing Date, the Surviving Fund will have good and
marketable title to its assets;
(e) The Surviving Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of Municipal
Trust's Declaration of Trust or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which Municipal Trust
or the Surviving Fund is a party or by which Municipal Trust or the
Surviving Fund is bound;
(f) Except as otherwise disclosed in writing to and accepted by
Trust IV, on behalf of the Acquired Fund, no material litigation or
administrative proceeding or investigation of or before any court or
governmental body is currently pending or, to the knowledge of Municipal
Trust or the Surviving Fund, threatened against Municipal Trust or the
Surviving Fund or any of its properties or assets. Neither the Municipal
Trust nor the Surviving Fund know of facts that might form the basis for
the institution of such proceedings, and neither the Municipal Trust nor
the Surviving Fund is a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that
materially and adversely affects their business or their ability to
consummate the transaction herein contemplated;
(g) The statement of assets and liabilities, including the schedule
of portfolio investments, of the Surviving Fund as of March 31, 2006, and
the related statement of operations for the fiscal year then ended, and
the statement of changes in net assets for the fiscal years ended March
31, 2006 and March 31, 2005 (copies of which have been furnished to the
Acquired Fund) have been audited by Deloitte & Touche LLP, Independent
Registered Public Accounting Firm, and present fairly in all material
respects the financial position of the Surviving Fund as of March 31,
2006 and the results of its operations and changes in net assets for the
respective stated periods in accordance with accounting principles
generally accepted in the United States of America consistently applied,
and there are no known actual or contingent liabilities of the Surviving
Fund as of the respective dates thereof not disclosed therein;
(h) The unaudited statement of assets and liabilities, including
the schedule of portfolio investments, of the Surviving Fund as of
September 30, 2006, and the related statement of operations and statement
of changes in net assets for the semi-annual period then ended, (copies
of which have been furnished to the Acquired Fund) present fairly in all
material respects the financial position of the Surviving Fund as of
September 30, 2006, and the results of its operations and changes in net
assets for the stated period in accordance with accounting principles
generally accepted in the United States of America consistently applied
and there are no known actual or contingent liabilities of the Surviving
Fund as of the date thereof not disclosed therein;
(i) Since March 31, 2006, there has not been any material adverse
change in the Surviving Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of
business, or any incurrence by the Surviving Fund of indebtedness
maturing more than one year from the date such indebtedness was incurred,
except as otherwise disclosed to and accepted by the Acquired Fund. For
the purposes of this subparagraph (i), a decline in net asset value per
Surviving Fund Share resulting from losses upon the disposition of
investments or from changes in the value of investments held by the
Surviving Fund, or a distribution or a payment of dividends, shall not
constitute a material adverse change;
(j) As of the Closing Date, Municipal Trust, on behalf of the
Surviving Fund, will have, within the times and in the manner prescribed
by law, properly filed all federal and other tax returns and reports
which, to the knowledge of the officers of MunicipalTrust, are required
to be filed by Municipal Trust on behalf of the Surviving Fund, and all
such returns and reports were complete and accurate in all material
respects. Municipal Trust, on behalf of the Surviving Fund, has timely
paid or will timely pay, in the manner prescribed by law, all federal and
other taxes shown to be due on said returns or on any assessments
received by the Surviving Fund. All tax liabilities of the Surviving Fund
have been adequately provided for on its books, and no tax deficiency or
liability of the Surviving Fund has been asserted, and no question with
respect thereto has been raised or is under audit, by the Internal
Revenue Service or by any state, local or other tax authority for taxes
in excess of those already paid;
(k) For each taxable year of its operations since its inception,
for federal income tax purposes, the Surviving Fund has satisfied, and
for the current taxable year it will satisfy, the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company, and the provisions of sections 851 through 855 of the
Code have applied and will continue to apply to the Surviving Fund for
each taxable year since its inception and for the remainder of its
current taxable year beginning April 1, 2006 and ending on the Closing
Date.
(l) The authorized capital of Municipal Trust consists of an
unlimited number of shares, currently divided into sixteen series and,
with respect to the Surviving Fund, into five classes at the date hereof.
All issued and outstanding Surviving Fund Shares are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid and
nonassessable by the Surviving Fund (except as described in the Surviving
Fund's current prospectus and statement of additional information). The
Surviving Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Surviving Fund Shares, nor is
there outstanding any security convertible into any such shares;
(m) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of Municipal
Trust, on behalf of the Surviving Fund, and this Agreement constitutes a
valid and binding obligation of the Surviving Fund enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(n) The Reorganization Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement will be duly
authorized at the Closing Date and, when so issued and delivered, will be
duly and validly issued Surviving Fund Shares and will be fully paid and
nonassessable by the Surviving Fund (except as described in the Surviving
Fund's current prospectus and statement of additional information);
(o) The information to be furnished by the Surviving Fund for use
in applications for orders, registration statements, proxy materials and
other documents that may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply fully
with federal securities and other laws and regulations applicable
thereto;
(p) Municipal Trust, on behalf of the Surviving Fund, agrees to use
all reasonable efforts to obtain the approvals and authorizations
required by the 1933 Act, the 1940 Act and such state securities laws or
other securities laws as it may deem appropriate in order to continue its
operations and the operations of the Surviving Fund after the Closing
Date;
(q) All of the Surviving Fund's issued and outstanding Surviving
Fund Shares have been offered for sale and sold in conformity with all
applicable federal and state securities laws, except as may have been
previously disclosed in writing to the Acquired Fund;
(r) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Surviving
Fund, of the transactions contemplated by this Agreement, except such as
have been obtained under the Acts and such as may be required under state
securities laws; and
(s) No consideration other than Reorganization Shares (and the
Surviving Fund's assumption of the Liabilities) will be issued in
exchange for the Assets in the Reorganization.
5. COVENANTS
5.1 Each Fund will operate its business in the ordinary course between
the date hereof and the Closing Date, it being understood that such ordinary
course of business will include the declaration and payment of customary
dividends and other distributions.
5.2 Trust IV will call a meeting of shareholders of the Acquired Fund
(the "Meeting") to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3 Trust IV covenants that the Reorganization Shares to be issued
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
5.4 Trust IV will provide such information as Municipal Trust reasonably
requests concerning the ownership of Acquired Fund Shares, including the
information specified in paragraph 3.4 hereof.
5.5 Subject to the provisions of this Agreement, Trust IV and Municipal
Trust each will take, or cause to be taken, all action, and do or cause to be
done all things, reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement.
5.6 Trust IV will furnish to Municipal Trust on the Closing Date the
Statement of Assets and Liabilities. As promptly as practicable, but in any
case within 60 days after the Closing Date, Trust IV or its designee will
furnish to Municipal Trust, in such form as is reasonably satisfactory to
Municipal Trust, a statement of the earnings and profits of the Acquired Fund
for federal income tax purposes, and of any capital loss carryovers and other
items that the Surviving Fund will succeed to and take into account as a result
of Section 381 of the Code.
5.7 Municipal Trust, on behalf of the Surviving Fund, will prepare and
file with the Commission a Registration Statement on Form N-14 (the
"Registration Statement") in compliance with the 1933 Act and the 1940 Act, in
connection with the issuance of the Reorganization Shares as contemplated
herein.
5.8 Municipal Trust, on behalf of the Surviving Fund, will prepare a
Proxy Statement, to be included in the Registration Statement in compliance
with the Acts, in connection with the Meeting to consider approval of this
Agreement.
5.9 Trust IV agrees to provide the Surviving Fund with information
applicable to the Acquired Fund required under the Acts for inclusion in the
Registration Statement and the Proxy Statement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF TRUST IV ON BEHALF OF THE ACQUIRED
FUND
The obligations of Trust IV to consummate the transactions provided for
herein shall be, at its election, subject to the performance by the Surviving
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date, and, in addition thereto, the following further conditions:
6.1 All representations and warranties of Municipal Trust, on behalf of
the Surviving Fund, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date;
6.2 Municipal Trust, on behalf of the Surviving Fund, shall have
delivered to Trust IV on the Closing Date a certificate executed in its name by
its President, Vice President, Secretary or Assistant Secretary and Treasurer
or Assistant Treasurer, in form and substance satisfactory to Trust IV and
dated as of the Closing Date, to the effect that the representations and
warranties of the Surviving Fund, made in this Agreement are true and correct
at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and that Municipal Trust and the
Surviving Fund shall have complied with all covenants and agreements and
satisfied all conditions on their parts to be performed or satisfied under this
Agreement at or prior to the Closing Date, and as to such other matters as
Trust IV shall reasonably request; and
6.3 Trust IV shall have received on the Closing Date a favorable opinion
from Susan S. Newton, Associate General Counsel and Senior Vice President of
Massachusetts Financial Services Company ("MFS"), the Surviving Fund's
investment adviser, dated as of the Closing Date, in a form satisfactory to
Trust IV, to the effect that:
(i) Municipal Trust is a business trust duly organized and validly
existing under the laws of The Commonwealth of Massachusetts and
has power to own all of its properties and assets and to carry on
its business as currently conducted, as described in the
Registration Statement. The Surviving Fund is a separate series of
Municipal Trust duly constituted in accordance with Municipal
Trust's Declaration of Trust and By-laws;
(ii) this Agreement has been duly authorized, executed and delivered by
the Surviving Fund and, assuming that the Surviving Fund
prospectus contained in the Registration Statement, the
Registration Statement and the Proxy Statement comply with the
Acts, and assuming due authorization, execution and delivery of
this Agreement by Trust IV on behalf of the Acquired Fund, is a
valid and binding obligation of Municipal Trust and the Surviving
Fund enforceable against Municipal Trust and the Surviving Fund in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and other
equitable principles;
(iii) assuming that consideration therefor of not less than the net
asset value thereof has been paid, the Reorganization Shares to be
issued and delivered to the Acquired Fund on behalf of the
Acquired Fund Shareholders as provided by this Agreement are duly
authorized and upon such issuance and delivery will be validly
issued and outstanding and fully paid and nonassessable by the
Surviving Fund (except as described in the Surviving Fund's
current prospectus and statement of additional information), and
no shareholder of the Surviving Fund has any preemptive right to
subscription or purchase in respect thereof pursuant to any
federal or Massachusetts law or Municipal Trust's Declaration of
Trust or By-laws;
(iv) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate Municipal Trust's Declaration of Trust or By-Laws, or any
material provision of any agreement (known to such counsel) to
which Municipal Trust or the Surviving Fund is a party or by which
it is bound or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty,
under any agreement, judgment or decree to which Municipal Trust
or the Surviving Fund is a party or by which it is bound;
(v) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by Municipal Trust or the Surviving
Fund of the transactions contemplated herein, except such as have
been obtained under the Acts and such as may be required under
state securities laws;
(vi) the descriptions in the Registration Statement of statutes, legal
and governmental proceedings and contracts and other documents, if
any, only insofar as they relate to Municipal Trust or the
Surviving Fund, are accurate in all material respects;
(vii) to the knowledge of such counsel, there are no legal or
governmental proceedings relating to Municipal Trust or the
Surviving Fund existing on or before the date of mailing the Proxy
Statement or the Closing Date required to be described in the
Registration Statement that are not described as required;
(viii) to the knowledge of such counsel, Municipal Trust is a duly
registered investment company and, to the knowledge of such
counsel, its registration with the Commission as an investment
company under the 1940 Act is in full force and effect; and
(ix) except as may have been previously disclosed by Municipal Trust,
on behalf of the Surviving Fund, in writing to Trust IV, on behalf
of the Acquired Fund, to the knowledge of such counsel, no
litigation or administrative proceeding or investigation of or
before any court or governmental body currently is pending or
threatened as to Municipal Trust or the Surviving Fund or any of
their properties or assets, and neither Municipal Trust nor the
Surviving Fund is a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transactions contemplated hereby.
Such opinion shall also state that while such counsel has not
independently verified, and is not passing upon and does not
assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration
Statement, she generally reviewed and discussed certain of such
statements with certain officers of the Surviving Fund and that in
the course of such review and discussion no facts came to the
attention of such counsel that led her to believe that, on the
effective date of the Registration Statement, the date of the
Meeting or the Closing Date and only insofar as such statements
relate to the Surviving Fund, the Registration Statement contained
any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading. Such opinion may state that such counsel
does not express any opinion or belief as to the financial
statements or other financial or statistical data, or as to the
information relating to Trust IV or the Acquired Fund, contained
in the Proxy Statement or Registration Statement. Such opinion may
also state that such opinion is solely for the benefit of Trust
IV, its Board of Trustees and its officers and the Acquired Fund.
Such opinion shall also include such other matters incidental to
the transaction contemplated hereby as Trust IV may reasonably
request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF MUNICIPAL TRUST ON BEHALF OF THE
SURVIVING FUND
The obligations of Municipal Trust, on behalf of the Surviving Fund, to
complete the transactions provided for herein shall be, at its election,
subject to the performance by Trust IV, on behalf of the Acquired Fund of all
the obligations to be performed by it hereunder on or before the Closing Date
and, in addition thereto, the following conditions:
7.1 All representations and warranties of Trust IV, on behalf of the
Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date;
7.2 Trust IV, on behalf of the Acquired Fund, shall have delivered to the
Surviving Fund the Statement of Assets and Liabilities, together with a list of
the Acquired Fund's portfolio securities showing the federal income tax bases
of and holding periods for such securities as of the Closing Date, certified by
the Treasurer or Assistant Treasurer of Trust IV;
7.3 Trust IV, on behalf of the Acquired Fund, shall have delivered to
Municipal Trust on the Closing Date a certificate executed in its name by its
President, Vice President, Secretary or Assistant Secretary and Treasurer or
Assistant Treasurer, in form and substance satisfactory to the Surviving Fund
and dated as of the Closing Date, to the effect that the representations and
warranties of Trust IV, on behalf of the Acquired Fund, made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and that the
Acquired Fund shall have complied with all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied under this
Agreement at or prior to the Closing Date, and as to such other matters as the
Surviving Fund shall reasonably request;
7.4 Municipal Trust shall have received on the Closing Date a favorable
opinion from Susan S. Newton, Associate General Counsel and Senior Vice
President of MFS, the Acquired Fund's investment adviser, dated as of the
Closing Date, in a form satisfactory to the Surviving Fund to the effect that:
(a) Trust IV is a business trust duly organized and validly existing
under the laws of The Commonwealth of Massachusetts and has power to
own all of its properties and assets and to carry on its business as
currently conducted, as described in the Registration Statement. The
Acquired Fund is a separate series of Trust IV duly constituted in
accordance with Trust IV's Declaration of Trust and By-Laws;
(b) this Agreement has been duly authorized, executed and delivered by
Trust IV and, assuming that the Surviving Fund prospectus contained
in the Registration Statement, the Registration Statement and the
Proxy Statement comply with the Acts, and assuming due authorization,
execution and delivery of this Agreement by Municipal Trust, on
behalf of the Surviving Fund, is a valid and binding obligation of
Trust IV and the Acquired Fund enforceable against Trust IV and the
Acquired Fund in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and
other equitable principles;
(c) Trust IV, on behalf of the Acquired Fund, has power to sell, assign,
convey, transfer and deliver the assets contemplated hereby and, upon
consummation of the transactions contemplated hereby in accordance
with the terms of this Agreement, the Acquired Fund will have duly,
sold, assigned, conveyed, transferred and delivered such assets to
the Surviving Fund.
(d) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate Trust IV's Declaration of Trust or By-Laws, or any material
provision of any agreement (known to such counsel) to which Trust IV
or the Acquired Fund is a party or by which it is bound or, to the
knowledge of such counsel, result in the acceleration of any
obligation or the imposition of any penalty, under any agreement,
judgment or decree to which Trust IV or the Surviving Fund is a party
or by which it is bound;
(e) to the knowledge of such counsel, no consent, approval, authorization
or order of any court or governmental authority is required for the
consummation by Trust IV of the transactions contemplated herein,
except such as have been obtained under the Acts and such as may be
required under state securities laws;
(f) the descriptions in the Proxy Statement of statutes, legal and
governmental proceedings and contracts and other documents, if any,
only insofar as they relate to Trust IV and the Acquired Fund, are
accurate in all material respects;
(g) to the knowledge of such counsel, there are no legal or governmental
proceedings relating to Trust IV or the Acquired Fund existing on or
before the date of mailing the Proxy Statement or the Closing Date
required to be described in the Proxy Statement that are not
described as required;
(h) assuming that consideration therefor of not less than the net asset
value and the par value thereof has been paid, and assuming that such
shares were issued in accordance with the terms of the Acquired
Fund's registration statement or any amendment thereto in effect at
the time of such issuance, all issued and outstanding shares of the
Acquired Fund are validly issued and outstanding and fully paid and
nonassessable (except as described in the Acquired Fund's current
prospectus and statement of additional information);
(i) to the knowledge of such counsel, Trust IV is a duly registered
investment company and, to the knowledge of such counsel, its
registration with the Commission as an investment company under the
1940 Act is in full force and effect; and
(j) except as may have been previously disclosed by Trust IV on behalf of
the Acquired Fund, in writing to Municipal Trust, on behalf of the
Surviving Fund, to the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is currently pending or threatened as to Trust IV
or the Acquired Fund or any of the Acquired Fund's properties or
assets, and Trust IV is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body
that materially and adversely affects its business or its ability to
consummate the transactions contemplated hereby.
Such opinion shall also state that while such counsel has not
verified, and is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Proxy Statement, she generally reviewed
and discussed certain of such statements with certain officers of
Trust IV and that in the course of such review and discussion no
facts came to the attention of such counsel that led her to believe
that, on the effective date of the Registration Statement or on the
date of the Meeting and only insofar as such statements relate to
Trust IV or the Acquired Fund, the Proxy Statement contained any
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. Such opinion may state that such counsel does not express
any opinion or belief as to the financial statements or other
financial or statistical data, or as to the information relating to
Municipal Trust or the Surviving Fund, contained in the Proxy
Statement or Registration Statement. Such opinion may also state that
such opinion is solely for the benefit of Municipal Trust, its Board
of Trustees and its officers, and the Surviving Fund. Such opinion
shall also include such other matters incidental to the transaction
contemplated hereby as the Surviving Fund may reasonably request.
7.5 The assets of the Acquired Fund to be acquired by the Surviving Fund
will include no assets which the Surviving Fund, by reason of limitations
contained in Municipal Trust's Declaration of Trust or of investment
restrictions disclosed in the Surviving Fund's prospectus and statement of
additional information in effect on the Closing Date, may not properly acquire.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MUNICIPAL TRUST ON
BEHALF OF THE SURVIVING FUND AND TRUST IV ON BEHALF OF THE ACQUIRED FUND
The obligations of Trust IV hereunder are, at the option of Municipal
Trust, and the obligations of Municipal Trust hereunder are, at the option of
Trust IV , each subject to the further conditions that on or before the Closing
Date:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of outstanding Acquired Fund
Shares in accordance with the provisions of Trust IV's Declaration of Trust and
By-Laws and the 1940 Act and the rules thereunder, and certified copies of the
resolutions evidencing such approval shall have been delivered to the Surviving
Fund;
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities, including
"no-action" positions of such federal or state authorities) deemed necessary by
Municipal Trust, on behalf of the Surviving Fund, or Trust IV on behalf of the
Acquired Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of either Fund, provided
that either Municipal Trust, on behalf of the Surviving Fund, or Trust IV, on
behalf of the Acquired Fund may waive any such conditions for itself,
respectively;
8.4 The Registration Statement shall have become effective under the 1933
Act and, as of the Closing Date, no stop orders suspending the effectiveness
thereof shall have been issued, and, to the best knowledge of the parties
hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act;
8.5 The Acquired Fund shall have declared to Acquired Fund shareholders
of record on or prior to the Closing Date a dividend or dividends which
together with all previous such dividends shall have the effect of distributing
to the Acquired Fund shareholders (a) all of the excess of (i) the Acquired
Fund's investment income excludable from gross income under section 103(a) of
the Code over (ii) the Acquired Fund's deductions disallowed under sections 265
and 171(a)(2) of the Code, (b) all of the Acquired Fund's investment company
taxable income as defined in section 852 of the Code, (computed in each case
without regard to any deduction for dividends paid), and (c) all of the
Acquired Fund's net realized capital gain (after reduction for any capital loss
carryover) in each case for both the taxable year ending on August 31, 2006 and
the short taxable year beginning on September 1, 2006 and ending on the Closing
Date;
8.6 Trust IV and Municipal Trust shall have received an opinion of Ropes
& Gray LLP ("Tax Counsel"), reasonably satisfactory to them, as to the federal
income tax consequences mentioned below (the "Tax Opinion"). In rendering the
Tax Opinion, Tax Counsel may rely as to factual matters, exclusively and
without independent verification, on the representations and warranties made in
this Agreement, which Tax Counsel may treat as representations and warranties
made to it, and in separate letters addressed to Tax Counsel and certificates
delivered pursuant to this Agreement. The Tax Opinion shall be substantially to
the effect that, [although not free from doubt], based on the existing
provisions of the Code, Treasury regulations, current administrative rules, and
court decisions, on the basis of the facts and assumptions stated therein and
conditioned on consummation of the Reorganization in accordance with this
Agreement, for federal income tax purposes:
(a) the Reorganization will constitute a reorganization within the
meaning of Section 368(a) of the Code, and Surviving Fund and
Acquired Fund each will be a "party to a reorganization" within the
meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by Surviving Fund upon the receipt
of the Assets of Acquired Fund in exchange for Reorganization Shares
and the assumption by Surviving Fund of the Liabilities of Acquired
Fund;
(c) the basis in the hands of Surviving Fund of the Assets of Acquired
Fund transferred to Surviving Fund in the Transaction will be the
same as the basis of such Assets in the hands of Acquired Fund
immediately prior to the transfer;
(d) the holding periods of the Assets of Acquired Fund in the hands of
Surviving Fund will include the periods during which such Assets were
held by Acquired Fund;
(e) no gain or loss will be recognized by Acquired Fund Shareholders upon
the transfer of Acquired Fund's Assets to Surviving Fund in exchange
for Reorganization Shares and the assumption by Surviving Fund of the
Liabilities of Acquired Fund, or upon the distribution of
Reorganization Shares by Acquired Fund to its shareholders in
liquidation pursuant to this Agreement;
(f) no gain or loss will be recognized by Acquired Fund Shareholders upon
the exchange of their Acquired Fund shares for Reorganization Shares;
(g) the aggregate basis of Reorganization Shares that an Acquired Fund
Shareholder receives in connection with the Reorganization will be
the same as the aggregate basis of his or her Acquired Fund shares
exchanged therefore;
(h) an Acquired Fund Shareholder's holding period for his or her
Reorganization Shares will be determined by including the period for
which he or she held the Acquired Fund shares exchanged therefore,
provided that he or she held such Acquired Fund shares as capital
assets; and
(i) the Surviving Fund will succeed to and take into account the items of
the Acquired Fund described in Section 381(c) of the Code, subject to
the conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code and the regulations thereunder.
Notwithstanding the above, the Tax Opinion will state that no opinion is
expressed as to the effect of the Reorganization on the Funds or any Acquired
Fund Shareholder with respect to any Asset as to which any unrealized gain or
loss is required to be recognized for federal income tax purposes at the end of
a taxable year (or on the termination or transfer thereof) under federal income
tax principles. Municipal Trust and Trust IV each agrees to make and provide
additional representations to Tax Counsel with respect to the Surviving Fund
and the Acquired Fund, respectively, that are reasonably necessary to enable
Tax Counsel to deliver the Tax Opinion. Notwithstanding anything herein to the
contrary, Municipal Trust and Trust IV may not waive in any material respect
the condition set forth in this paragraph 8.6.
8.7 The Board of Trustees of each Fund shall have determined, with respect
to each Fund, that the Reorganization is in the best interests of the Fund and
is not dilutive of the interests of the Fund's existing shareholders and, based
on such determinations, shall have approved this Agreement and the transactions
contemplated thereby.
9. BROKERAGE FEES AND EXPENSES; CONTINGENT DEFERRED SALES CHARGES; CERTAIN TAX
MATTERS; CERTAIN RECORDS
9.1 Municipal Trust and Trust IV each represents and warrants to the
other that there are no brokers or finders entitled to receive any payments
from either party to this Agreement in connection with the transactions
provided for herein.
9.2 Each Fund will be liable for its own expenses incurred in connection
with entering into and carrying out the provisions of this Agreement, whether
or not the Reorganization is consummated.
9.3 Reorganization Shares issued in connection with the Reorganization
will not be subject to any initial sales charge; however, if any Acquired Fund
Shares are at the Closing Date subject to a contingent deferred sales charge (a
"CDSC"), the Surviving Fund CDSC schedule and the methodology of aging such
shares as set forth in the Surviving Fund Prospectus will apply to the
Reorganization Shares issued in respect of such Acquired Fund Shares, and the
Reorganization Shares received by Acquired Fund Shareholders pursuant to
paragraph 1.4 hereof will, for purposes of calculating the CDSC, if applicable,
and determining when the Surviving Fund's Class B1 shares will convert to Class
A1 shares of the Surviving Fund, be treated as if purchased on the original
date of purchase of such Acquired Fund Shares.
9.4 Trust IV agrees that it or its designee shall, on behalf of the
Acquired Fund, file or furnish all federal, state and other tax returns, forms
and reports, including information returns and payee statements, if applicable,
of the Acquired Fund required by law to be filed or furnished by such dates as
required by law to be filed or furnished, and shall provide such other federal
and state tax information to shareholders of the Acquired Fund as has been
customarily provided by the Acquired Fund, all with respect to the fiscal
period commencing September 1, 2006 and ending on the Closing Date.
9.5 Trust IV, on behalf of the Acquired Fund, agrees that it or its
designee shall deliver to Municipal Trust, on behalf of the Surviving Fund, on
the Closing Date or as soon thereafter as possible: (a) Acquired Fund
shareholder statements and tax forms (i.e., Forms 1099) for the taxable years
ended August 31, 2005 and August 31, 2006, and the short taxable year
commencing on September 1, 2006 and ending on the Closing Date (all on
microfilm or microfiche, if available); (b) detailed records indicating the
status of all certificates representing ownership of the Acquired Fund Shares
issued since inception of the Acquired Fund (e.g., indicating whether the
certificates are outstanding or cancelled); and (c) for each Acquired Fund
Shareholder, a record indicating the dollar amount of such shareholder's
Acquired Fund Share holdings as of such date representing that portion of such
holdings subject to a CDSC as of such date and that portion of such holdings
not subject to a CDSC as of such date, together with such other information
with respect thereto as the Surviving Fund may reasonably request.
10. ENTIRE AGREEMENT
Municipal Trust and Trust IV agree that neither party has made any
representation, warranty or covenant not set forth herein or referred to in
Article 4 hereof or required in connection with paragraph 8.6 hereof and that
this Agreement constitutes the entire agreement between the parties.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of
Municipal Trust and Trust IV. In addition, either party may at its option
terminate this Agreement unilaterally at or prior to the Closing Date because
of:
(a) a material breach by the other of any representation, warranty or
agreement contained herein to be performed at or prior to the Closing
Date; or
(b) a condition herein expressed to be precedent to the obligations of
the terminating party that has not been met and that reasonably
appears will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability
for damages on the part of either Municipal Trust or Trust IV, or their
respective trustees or officers, to the other party or its trustees or
officers, but each shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of Trust IV
and Municipal Trust; provided, however, that following the Meeting, no such
amendment may have the effect of changing the provisions for determining the
number of Reorganization Shares to be issued to the Acquired Fund Shareholders
under this Agreement to their detriment without their further approval; and
provided further that nothing contained in this Article 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing
Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be personally
delivered or given by prepaid telegraph, telecopy or certified mail addressed
to Municipal Trust, on behalf of the MFS Municipal Income Fund or Trust IV, on
behalf the MFS Municipal Bond Fund (as applicable), 500 Boylston Street,
Boston, Massachusetts 02116, Attention: Assistant Secretary.
14. MISCELLANEOUS
14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts; provided that, in the case of
any conflict between such laws and the federal securities laws, the latter
shall govern.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5 A copy of Municipal Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. Trust IV acknowledges
that the obligations of or arising out of this instrument are not binding upon
any of the Surviving Fund's trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and property
of the Surviving Fund in accordance with its proportionate interest hereunder.
Trust IV further acknowledges that the assets and liabilities of each series of
the Surviving Fund are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or property
of the Surviving Fund.
14.6 A copy of Trust IV's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. Municipal Trust
acknowledges that the obligations of or arising out of this instrument are not
binding upon any of Acquired Fund's trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and property
of Trust IV in accordance with its proportionate interest hereunder. Municipal
Trust further acknowledges that the assets and liabilities of each series of
Trust IV are separate and distinct and that the obligations arising out of this
instrument are binding solely upon the assets or property of the Acquired Fund.
14.7 Notwithstanding Article 12 of this Agreement, but subject to the
first proviso contained therein, either party to this Agreement, with the
consent of its President, Vice President, Secretary or Assistant Secretary, may
waive any condition (other than that contained in paragraph 8.6 hereof) or
covenant to which the other party is subject or may modify such condition or
covenant in a manner deemed appropriate by any such officer.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by a duly authorized officer thereof.
MFS MUNICIPAL SERIES
TRUST, ON ITS BEHALF AND
ON BEHALF OF MFS MUNICIPAL
INCOME FUND, ONE OF ITS
SERIES
By:
------------------------------
Susan S. Newton
Assistant Secretary
MFS SERIES TRUST IV, ON ITS
BEHALF AND ON BEHALF OF MFS
MUNICIPAL BOND FUND, ONE OF
ITS SERIES
By:
------------------------------
Maria F. Dwyer
President
M F S(R)
INVESTMENT MANAGEMENT
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE 1-888-221-0697
OR LOG ON TO WWW.PROXYWEB.COM
- -------------------
999 999 999 999 99 << THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF
- ------------------- THE FUND.
PROXY FOR A MEETING OF SHAREHOLDERS
MFS MUNICIPAL BOND FUND TO BE HELD ON THURSDAY, JUNE 7, 2007
The undersigned hereby appoints Mark N. Polebaum, Susan S. Newton, Tracy A.
Atkinson and Brian E. Langenfeld, and each of them separately, proxies, with
power of substitution, and hereby authorizes them to represent, and to vote, as
designated on the reverse side, at the Meeting of Shareholders of MFS Municipal
Bond Fund, on Thursday, June 7, 2007, at 2:00 p.m., Boston time, and at any
adjournments thereof, all of the shares of the Fund that the undersigned would
be entitled to vote if personally present.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. The Trustees
recommend a vote for the proposal on the reverse side.
\/ PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Date: ______________________________
Shareholder sign here (Sign in the Box)
----------------------------------------------
----------------------------------------------
NOTE: Please sign exactly as name appears on
this card. All joint owners should sign. When
signing as executor, administrator, attorney,
trustee or guardian or as custodian for a
minor, please give full title as such. If a
corporation, please sign in full corporate
name and indicate the signer's office. If a
partnership, sign in the partnership name.
\/
MFS MMB - lg
\/ PLEASE FILL IN A BOX AS SHOWN USING BLACK OR BLUE INK OR \/
NUMBER 2 PENCIL. X
PLEASE DO NOT USE FINE POINT PENS.
THE TRUSTEES UNANIMOUSLY RECOMMEND A VOTE "FOR" THE PROPOSAL LISTED BELOW.
FOR AGAINST ABSTAIN
1. Approval of the Agreement and Plan of | | | | | |
Reorganization providing for the transfer of the
assets of MFS Municipal Bond Fund to MFS
Municipal Income Fund, in exchange solely for
shares of beneficial interest in MFS Municipal
Income Fund and the assumption by MFS Municipal
Income Fund of the liabilities of MFS Municipal
Bond Fund, the distribution of the MFS Municipal
Income Fund shares to the shareholders of MFS
Municipal Bond Fund in liquidation of MFS
Municipal Bond Fund, and the termination of MFS
Municipal Bond Fund.
PLEASE SIGN ON THE OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
MFS MMB - lg
FORM N-14
PART B
STATEMENT OF ADDITIONAL INFORMATION
RELATING TO THE ACQUISITION OF THE ASSETS AND LIABILITIES OF
MFS MUNICIPAL BOND FUND,
A SERIES OF MFS SERIES TRUST IV
BY AND EXCHANGE FOR SHARES OF
MFS MUNICIPAL INCOME FUND
A SERIES OF MFS MUNICIPAL SERIES TRUST
APRIL __, 2007
This Statement of Additional Information (the "Statement") contains material
that may be of interest to investors but that is not included in the
Prospectus/Proxy Statement (the "Prospectus") of MFS Municipal Income Fund (the
"Municipal Income Fund") dated April __, 2007 relating to the sale of all or
substantially all of the assets of MFS Municipal Bond Fund (the "Municipal Bond
Fund") to the Municipal Income Fund.
This Statement is not a Prospectus and is authorized for distribution only when
it accompanies or follows delivery of the Prospectus. This Statement should be
read in conjunction with the Prospectus. Investors may obtain a free copy of
the Prospectus or either or both of the Statements of Additional Information by
writing MFS Service Center, Inc., 500 Boylston Street, Boston, MA 02116 or by
calling 1-800-225-2606.
TABLE OF CONTENTS
Additional Information about the Municipal Income Fund B-1
Additional Information about the Municipal Bond Fund B-1
Independent Registered Public Accounting Firm and Financial Statements B-1
Unaudited Pro Forma Financial Statements B-2
ADDITIONAL INFORMATION ABOUT THE MUNICIPAL INCOME FUND
The Municipal Income Fund's Statement of Additional Information dated August 1,
2006, as amended, has been filed with the Securities and Exchange Commission
and is incorporated herein in its entirety by reference.
ADDITIONAL INFORMATION ABOUT THE MUNICIPAL BOND FUND
The Municipal Bond Fund's Statement of Additional Information dated January
1, 2007, as amended, has been filed with the Securities and Exchange
Commission and is incorporated herein in its entirety by reference.
INDEPENDENT REGISTERED PUBLIC ACOUNTING FIRM AND FINANCIAL STATEMENTS
Deloitte & Touche LLP is the Independent Registered Public Accounting Firm for
the Municipal Income Fund and for the Municipal Bond Fund, providing audit
services, tax return review, and other tax consulting services and assistance
and consultation in connection with the review of various Securities and
Exchange Commission filings for Municipal Income Fund and Municipal Bond Fund.
The following documents are incorporated by reference into this Statement: (i)
the Municipal Income Fund's Annual Report for the fiscal year ended March 31,
2006; (ii) the Municipal Income Fund's Semi-Annual Report for the six month
period ended September 30, 2006; and (iii) the Municipal Bond Fund's Annual
Report for the fiscal year ended August 31, 2006. The audited annual financial
statements for the Municipal Income Fund and the Municipal Bond Fund are
incorporated by reference into the Prospectus and this Statement of Additional
Information and have been so included and incorporated in reliance upon the
reports of Deloitte & Touche LLP, given on their authority as experts in
auditing and accounting.
Annual or semi-annual reports may be obtained by contacting MFS Service Center
(address noted above) and may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. or on the EDGAR database on the SEC's
Internet site (http://www.sec.gov). Information on the operation of the SEC's
Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. You
can also request copies of these materials, upon payment of a duplicating fee,
by electronic request at the SEC's email address (publicinfo@sec.gov) or by
writing the Public Reference section of the SEC, Washington D.C. 20549-0102.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The accompanying unaudited pro forma combined statements of investment
portfolios and assets and liabilities assumes that the exchange described in
the next paragraph occurred on September 30, 2006 and the unaudited pro forma
combined statement of operations for the twelve months ended September 30, 2006
presents the results of operations of Municipal Income Fund as if the
combination with Municipal Bond Fund had been consummated on the first day of
the twelve-month period ended September 30, 2006. The pro forma results of
operations are not necessarily indicative of future operations or the actual
results that would have occurred had the combination been consummated on the
first day of the twelve-month period ended September 30, 2006. The historical
statements have been derived from the Municipal Income Fund's and the Municipal
Bond Fund's books and records utilized in calculating daily net asset value on
September 30, 2006 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of all of the
assets of the Municipal Bond Fund to the Municipal Income Fund in exchange for
the assumption by the Municipal Income Fund of the stated liabilities of the
Municipal Bond Fund and for a number of the Municipal Income Fund's shares
equal in value to the value of the net assets of the Municipal Bond Fund
transferred to the Municipal Income Fund. Under generally accepted accounting
principles, the historical cost of investment securities will be carried
forward to the surviving entity and the results of operations of the Municipal
Income Fund for pre-combination periods will not be restated.
The unaudited pro forma combined financial statements should be read in
conjunction with the separate financial statements of the Municipal Income Fund
and the Municipal Bond Fund incorporated by reference in this Statement of
Additional Information.
PORTFOLIO OF INVESTMENTS AND PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS (UNAUDITED)
September 30, 2006
PRO FORMA
BONDS MFS MUNICIPAL INCOME FUND MFS MUNICIPAL BOND FUND PRO FORMA COMBINED
ISSUER SHARES/PAR VALUE ($) SHARES/PAR VALUE ($) ADJUSTMENTS SHARES/PAR VALUE ($)
---------- --------- ---------- --------- ----------- ---------- ---------
AIRPORT & PORT REVENUE
Chicago, IL, O'Hare
International Airport Rev.
(Second Lien Passenger
Facility D), AMBAC,
5.5%, 2019 $ 350,000 $ 375,920 $ 1,845,000 $ 1,981,646 $ 2,195,000 $ 2,357,566
Chicago, IL, O'Hare
International Airport Rev.
(Third Lien Passenger
Facility B), FSA, 5.75%, 2022 -- -- 1,125,000 1,238,726 1,125,000 1,238,726
Chicago, IL, O'Hare
International Airport
Rev., FSA, 5.75%, 2022 (u) 3,000,000 3,303,265 5,000,000 5,505,450 8,000,000 8,808,715
Chicago, IL, O'Hare
International Airport Rev.,
XLCA, 5.75%, 2029 (u) -- -- 6,000,000 6,699,660 6,000,000 6,699,660
Chicago, IL, O'Hare
International Airport Rev.,
Third Lien, "A", MBIA,
5%, 2029 950,000 1,002,435 3,395,000 3,582,404 4,345,000 4,584,839
Denver, CO, City & County
Airport Rev., AMBAC,
6.00%, 2017 (u) -- -- 5,000,000 5,417,050 5,000,000 5,417,050
Indianapolis, IN, Local Public
Improvement (Airport Authority
Project), "I", MBIA, 5%, 2034 200,000 206,665 700,000 723,345 900,000 930,010
Louisville & Jefferson County,
KY, Regional Airport Authority,
"A", MBIA, 6.5%, 2017 3,000,000 3,112,975 -- -- 3,000,000 3,112,975
Massachusetts Port Authority
Rev., "C", 6.125%, 2010 (c) -- -- 1,500,000 1,628,655 1,500,000 1,628,655
Massachusetts Port Authority
Rev., ETM, 13%, 2013 (c) -- -- 2,725,000 3,667,005 2,725,000 3,667,005
Miami-Dade County, FL, Aviation
Rev., "A", CIFG, 5%, 2038 500,000 520,942 -- -- 500,000 520,942
New York, NY, City Industrial
Development Agency, Special
Facilities Rev. (Terminal One
Group), 5.5%, 2024 195,000 210,514 680,000 734,101 875,000 944,615
Niagara, NY, Frontier
Transportation Authority Rev.
(Buffalo-Niagara International
Airport), MBIA, 5.875%, 2013 -- -- 1,485,000 1,576,209 1,485,000 1,576,209
Port of Seattle, WA, Rev.,
XLCA, 5%, 2027 -- -- 1,685,000 1,778,703 1,685,000 1,778,703
Oklahoma City, OK, Airport
Trust, "B", FSA, 5.75%, 2017 1,080,000 1,147,316 -- -- 1,080,000 1,147,316
------------ -------------- --------------
$ 9,880,032 $ 34,532,954 $ 44,412,986
------------ -------------- --------------
GENERAL OBLIGATIONS -
GENERAL PURPOSE
Chicago, IL (Lakefront
Millennium Parking
Facilities), MBIA, 5.7%, 2025 $ 645,000 $ 702,657 $ 2,355,000 $ 2,565,513 $ 3,000,000 $ 3,268,170
Chicago, IL (Lakefront
Millennium Parking Facilities),
MBIA, 5%, 2018 4,000,000 4,184,360 -- -- 4,000,000 4,184,360
Chicago, IL, FGIC,
6.125%, 2010 (c) -- -- 3,785,000 4,158,012 3,785,000 4,158,012
Chicago, IL, AMBAC,
5.5%, 2018 (u) -- -- 11,800,000 13,263,790 11,800,000 13,263,790
Commonwealth of Massachusetts,
"B", FGIC, ETM, 7%, 2009 (c) -- -- 7,000,000 7,384,440 7,000,000 7,384,440
Commonwealth of Massachusetts,
ETM, 6.5%, 2008 (c) -- -- 6,245,000 6,554,252 6,245,000 6,554,252
Commonwealth of Massachusetts,
5.375%, 2017 (u) -- -- 5,740,000 6,198,626 5,740,000 6,198,626
Commonwealth of Puerto Rico,
Public Improvement, "A",
5.25%, 2027 235,000 252,211 800,000 858,592 1,035,000 1,110,803
Commonwealth of Puerto Rico,
FGIC, 5.5%, 2015 (u) 6,000,000 6,804,780 -- -- 6,000,000 6,804,780
Commonwealth of Puerto Rico,
XLCA, 5.5%, 2017 (u) -- -- 2,300,000 2,633,339 2,300,000 2,633,339
Country Club Hills, IL, "N",
MBIA, 5%, 2031 710,000 748,333 2,460,000 2,592,815 3,170,000 3,341,148
Cranston, RI, FGIC,
6.375%, 2009 (c) 200,000 218,486 830,000 906,717 1,030,000 1,125,203
Delaware County, OH,
6.25%, 2010 (c) -- -- 1,000,000 1,112,520 1,000,000 1,112,520
Detroit/Wayne County, MI,
Stadium Authority, FGIC,
5.5%, 2017 -- -- 6,000,000 6,154,980 6,000,000 6,154,980
Houston County, AL, AMBAC,
6.25%, 2009 (c) 850,000 931,430 3,315,000 3,632,577 4,165,000 4,564,007
Interlocken Metropolitan
District, CO, Improvement,
"C", XLCA, 0%, 2027 510,000 156,703 1,860,000 571,504 2,370,000 728,207
Kane Kendall County, IL,
Capital Appreciation, "E",
FGIC, 0%, 2023 1,360,000 593,354 -- -- 1,360,000 593,354
Kane Kendall County, IL,
Capital Appreciation, "E",
FGIC, 0%, 2025 1,335,000 520,343 -- -- 1,335,000 520,343
Massachusetts Consolidated
Loan, "C", 5.875%, 2009 (c) 3,205,000 3,431,561 -- -- 3,205,000 3,431,561
Mobile County, AL, 6%, 2009 (c) 800,000 851,752 -- -- 800,000 851,752
New York, NY, "B", 7.5%, 2007 -- -- 955,000 956,547 955,000 956,547
New York, NY, FGIC,
5.75%, 2007 (c) -- -- 8,500,000 8,780,840 8,500,000 8,780,840
New York, NY, Urban Development
Corp., 5.5%, 2008 (c) -- -- 1,325,000 1,370,686 1,325,000 1,370,686
New York, NY, Urban Development
Corp., 5.5%, 2016 -- -- 13,365,000 13,651,011 13,365,000 13,651,011
New York, NY, "J", MBIA,
5%, 2017 2,000,000 2,083,320 -- -- 2,000,000 2,083,320
Pittsfield, MA, MBIA,
5.5%, 2017 -- -- 100,000 109,691 100,000 109,691
San Antonio, TX, 5%, 2020 700,000 722,876 2,990,000 3,087,713 3,690,000 3,810,589
Schaumburg, IL, "B", FGIC,
5.25%, 2034 -- -- 2,000,000 2,156,580 2,000,000 2,156,580
Southlake, TX, AMBAC,
0%, 2009 (c) 3,185,000 1,246,195 1,835,000 942,071 5,020,000 2,188,266
Southlake, TX, AMBAC,
0%, 2009 (c) 3,150,000 1,152,774 3,150,000 1,319,000 6,300,000 2,471,774
State of California, 5.5%, 2013 -- -- 5,000,000 5,512,100 5,000,000 5,512,100
State of California, 5.1%, 2034 -- -- 5,000,000 5,109,500 5,000,000 5,109,500
State of California,
5.5%, 2012 (u) -- -- 11,650,000 12,397,697 11,650,000 12,397,697
State of California, XLCA,
5.75%, 2017 (u) -- -- 13,750,000 14,802,838 13,750,000 14,802,838
State of Illinois, MBIA,
5.5%, 2025 110,000 115,840 390,000 410,705 500,000 526,545
State of Washington,
6.75%, 2010 -- -- 3,880,000 4,256,981 3,880,000 4,256,981
State of Washington, 6%, 2012 -- -- 4,360,000 4,876,922 4,360,000 4,876,922
State of Wisconsin, "C",
6%, 2010 (c) 1,200,000 1,296,180 -- -- 1,200,000 1,296,180
------------ -------------- --------------
$ 26,013,155 $ 138,328,559 $ 164,341,714
------------ -------------- --------------
GENERAL OBLIGATIONS -
IMPROVEMENT
Birmingham, AL, "B",
5.75%, 2009 (c) $ -- $ -- $ 910,000 $ 968,122 $ 910,000 $ 968,122
Birmingham, AL, "A",
5.75%, 2017 1,000,000 1,080,010 -- -- 1,000,000 1,080,010
Birmingham, AL, "B",
5.75%, 2019 -- -- 90,000 95,418 90,000 95,418
District of Columbia,
MBIA, 6.5%, 2010 -- -- 3,095,000 3,396,546 3,095,000 3,396,546
District of Columbia, MBIA,
ETM, 6.5%, 2010 (c) -- -- 2,905,000 3,197,446 2,905,000 3,197,446
Massachusetts Bay
Transportation Authority,
General Transportation Systems,
"A", XLCA, 7%, 2021 -- -- 10,185,000 12,792,971 10,185,000 12,792,971
Massachusetts Bay
Transportation Authority,
General Transportation Systems,
"C", XLCA, 6.1%, 2013 -- -- 10,200,000 11,609,844 10,200,000 11,609,844
Worcester, MA, FSA,
6%, 2010 (c) 3,475,000 3,784,206 -- -- 3,475,000 3,784,206
------------ -------------- --------------
$ 4,864,216 $ 32,060,347 $ 36,924,563
------------ -------------- --------------
GENERAL OBLIGATIONS - SCHOOLS
Adams 12 Five Star Schools, CO,
"B", FGIC, 0%, 2025 $ 490,000 $ 195,314 $ 1,700,000 $ 677,620 $ 2,190,000 $ 872,934
Chicago, IL, Board of
Education, AMBAC, 5.4%, 2017 -- -- 3,000,000 3,117,090 3,000,000 3,117,090
Chicago, IL, Board of
Education, MBIA, 6.25%, 2009 -- -- 5,160,000 5,453,914 5,160,000 5,453,914
Chicago, IL, Board of
Education, MBIA, 6.25%, 2015 -- -- 20,295,000 23,137,112 20,295,000 23,137,112
Chicago, IL, Board of
Education, FGIC,
5.25%, 2019 (u) -- -- 10,000,000 11,246,800 10,000,000 11,246,800
Clark County, NV, School
District, "A", MBIA, 7%, 2010 -- -- 4,000,000 4,451,840 4,000,000 4,451,840
De Soto, TX, Independent School
District, School Building, PSF,
0%, 2031 380,000 109,068 1,345,000 386,042 1,725,000 495,110
De Soto, TX, Independent School
District, School Building, PSF,
0%, 2034 285,000 69,278 1,015,000 246,726 1,300,000 316,004
De Soto, TX, Independent School
District, School Building, PSF,
0%, 2036 380,000 82,897 1,250,000 272,688 1,630,000 355,585
Dudley-Charlton, MA, Regional
School District, FGIC,
5.25%, 2013 (u) 2,990,000 3,359,624 -- -- 2,990,000 3,359,624
Ennis, TX, Independent School
District, Capital Appreciation,
"N", PSF, 0%, 2028 200,000 68,056 705,000 239,897 905,000 307,953
Ennis, TX, Independent School
District, Capital Appreciation,
"N", PSF, 0%, 2029 385,000 126,292 1,350,000 442,841 1,735,000 569,133
Ennis, TX, Independent School
District, Capital Appreciation,
"N", PSF, 0%, 2031 380,000 109,835 1,340,000 387,314 1,720,000 497,149
Ferris, TX, Independent School
District, PSF, 5.5%, 2034 640,000 698,432 2,360,000 2,575,468 3,000,000 3,273,900
Florida Board of Education,
Capital Outlay, 9.125%, 2014 -- -- 1,735,000 2,104,555 1,735,000 2,104,555
Florida Board of Education,
Capital Outlay, ETM,
9.125%, 2014 (c) -- -- 265,000 353,529 265,000 353,529
Florida Board of Education
Capital Outlay, Public
Education, "A", 5%, 2019 1,000,000 1,029,760 -- -- 1,000,000 1,029,760
Forsyth County, GA, School
District, 6%, 2010 (c) -- -- 865,000 945,108 865,000 945,108
Fresno, CA, Unified School
District, MBIA, 6.55%, 2020 1,225,000 1,431,829 -- -- 1,225,000 1,431,829
Gilroy, CA, Unified School
District, FGIC, 5%, 2027 -- -- 1,000,000 1,050,620 1,000,000 1,050,620
Goose Creek, TX, Consolidated
School District, PSF,
5%, 2009 (c) 2,500,000 2,597,775 -- -- 2,500,000 2,597,775
Grand Blanc, MI, Community
Schools (School Building &
Site), FSA, 5%, 2028 -- -- 1,000,000 1,054,070 1,000,000 1,054,070
Houston, TX, Independent School
District, RITES,
6.525%, 2017 (v)(z) 500,000 538,180 -- -- 500,000 538,180
Houston, TX, Independent School
District, 5.25%, 2017 (u) 3,650,000 3,789,357 -- -- 3,650,000 3,789,357
Irving, TX, Independent School
District, Capital Appreciation,
PSF, 0%, 2026 -- -- 2,505,000 951,098 2,505,000 951,098
Kane Cook & Dupage Counties,
IL, FSA, 6.375%, 2011 (c) -- -- 1,245,000 1,381,763 1,245,000 1,381,763
Kane Cook & Dupage Counties,
IL, FSA, 6.5%, 2011 (c) -- -- 1,345,000 1,499,312 1,345,000 1,499,312
Keller, TX, Independent School
District, PSF, 6%, 2017 225,000 243,799 -- -- 225,000 243,799
Knox County, KY, Independent
School District, XLCA,
5.5%, 2029 640,000 706,227 -- -- 640,000 706,227
Knox County, KY, XLCA,
5.625%, 2035 -- -- 1,150,000 1,275,546 1,150,000 1,275,546
Lancaster, TX, Independent
School District, Capital
Appreciation, FSA, 0%, 2014 (c) 485,000 176,525 1,765,000 642,407 2,250,000 818,932
Lancaster, TX, Independent
School District, Capital
Appreciation, FSA, 0%, 2014 (c) 430,000 147,163 1,570,000 537,317 2,000,000 684,480
Lancaster, TX, Independent
School District, Capital
Appreciation, FSA, 0%, 2025 275,000 113,603 970,000 400,707 1,245,000 514,310
Lancaster, TX, Independent
School District, Capital
Appreciation, FSA, 0%, 2026 275,000 107,616 970,000 379,590 1,245,000 487,206
Lane County, OR, School
District, 6.25%, 2010 (c) -- -- 1,150,000 1,252,879 1,150,000 1,252,879
Lane County, OR, School
District, 6.25%, 2010 (c) -- -- 1,000,000 1,089,460 1,000,000 1,089,460
Leander, TX, Independent
School District, Capital
Appreciation, Refunding, School
Building, "N", PSF, 0%, 2029 -- -- 4,000,000 1,242,440 4,000,000 1,242,440
Leander, TX, Independent School
District, Capital Appreciation,
Refunding, School Building,
FGIC, 0%, 2026 900,000 331,920 3,280,000 1,209,664 4,180,000 1,541,584
Leander, TX, Independent School
District, Capital Appreciation,
910,000 249,467 3,320,000 910,145 4,230,000 1,159,612
Leander, TX, Independent School
District, PSF, 0%, 2018 2,500,000 1,284,500 4,885,000 2,509,913 7,385,000 3,794,413
Manchester, NH, School
Facilities Rev., MBIA,
5.5%, 2027 215,000 255,654 785,000 933,436 1,000,000 1,189,090
Manchester, NH, School
Facilities Rev., MBIA,
5.5%, 2028 215,000 255,852 785,000 934,158 1,000,000 1,190,010
Manistee, MI, Area Public
Schools, FGIC, 5.75%, 2009 (c) 700,000 738,087 -- -- 700,000 738,087
Palos Verdes Peninsula, CA,
Capital Appreciation, "N",
FSA, 0%, 2029 1,115,000 393,372 3,885,000 1,370,628 5,000,000 1,764,000
Phenix City, AL, AMBAC,
5.65%, 2010 (c) 1,500,000 1,635,615 -- -- 1,500,000 1,635,615
Philadelphia, PA, School
District, MBIA, 6%, 2010 (c) 750,000 807,473 -- -- 750,000 807,473
Prosper, TX, Independent School
District, Capital Appreciation
School Building, "N", PSF,
0%, 2031 515,000 145,122 1,760,000 495,950 2,275,000 641,072
Rancho Santiago, CA, Community
College District, Election of
2002, MBIA, 5%, 2013 (c) -- -- 2,200,000 2,398,066 2,200,000 2,398,066
Rockwall, TX, Independent
School District Prerefunded
Capital Appreciation, "C",
0%, 2009 (c) -- -- 1,910,000 1,321,930 1,910,000 1,321,930
Rockwall, TX, Independent
School District, Unrefunded,
Capital Appreciation, "N",
PSF, 0%, 2014 -- -- 90,000 61,853 90,000 61,853
Roma, TX, Independent School
District, PSF, 5.875%, 2010 (c) 1,705,000 1,845,594 -- -- 1,705,000 1,845,594
San Marcos, TX, Independent
School District, PSF,
5.625%, 2014 (c) -- -- 2,000,000 2,244,940 2,000,000 2,244,940
San Marcos, TX, Independent
School District, PSF,
5.625%, 2014 (c) -- -- 2,000,000 2,242,080 2,000,000 2,242,080
San Rafael, CA, Elementary
School District, Election of
1999, MBIA, 5%, 2028 -- -- 2,500,000 2,614,075 2,500,000 2,614,075
Sunnyvale, TX, Independent
School District, PSF,
5.25%, 2028 -- -- 1,900,000 2,042,576 1,900,000 2,042,576
Sunnyvale, TX, Independent
School District, PSF,
5.25%, 2031 -- -- 2,000,000 2,143,500 2,000,000 2,143,500
San Jose Evergreen, CA,
Community College District,
Election 2004, "A",
MBIA, 0%, 2028 740,000 245,184 -- -- 740,000 245,184
Texas (Transportation
Commission Mobility),
5.00%, 2027 -- -- 10,000,000 10,588,800 10,000,000 10,588,800
Wattsburg, PA, Public School
Building Authority Rev.,
Capital Appreciation, MBIA,
0%, 2029 2,150,000 768,754 -- -- 2,150,000 768,754
Williamson County, TN, Rural
School, 6.125%, 2010 (c) 1,665,000 1,799,216 -- -- 1,665,000 1,799,216
Williamson County, TN, Rural
School, 6.125%, 2010 (c) 1,765,000 1,907,277 -- -- 1,765,000 1,907,277
Wylie, TX, Independent School
District, PSF, 5.25%, 2029 1,080,000 1,148,731 3,955,000 4,206,696 5,035,000 5,355,427
------------ -------------- --------------
$ 29,512,448 $ 107,024,163 $ 136,536,611
------------ -------------- --------------
HEALTHCARE REVENUE - HOSPITALS
Akron Bath Copley, OH,
Hospital Rev. (Children's
Hospital), FSA, 5.25%, 2025 $ -- $ -- $ 1,000,000 $ 1,066,480 $ 1,000,000 $ 1,066,480
Allegheny County, PA, Hospital
Development Authority Rev.
(West Penn Allegheny Health),
9.25%, 2030 650,000 772,948 -- -- 650,000 772,948
Allegheny County, PA, Hospital
Development Authority Rev.
(West Penn Allegheny Health),
"B", 9.25%, 2022 350,000 415,912 -- -- 350,000 415,912
Baldwin County, AL, Eastern
Shore Health Care Authority
Rev. (Thomas Hospital),
5.75%, 2008 (c) 600,000 630,036 -- -- 600,000 630,036
Baxter County, AR, Hospital
Rev., 5.375%, 2014 1,000,000 1,033,750 1,000,000 1,033,750 2,000,000 2,067,500
Baxter County, AR, Hospital
Rev., 5.6%, 2021 -- -- 1,750,000 1,811,005 1,750,000 1,811,005
Chemung County, NY, Civic
Facilities Rev. (St. Joseph's
Hospital-Elmira), "A",
6%, 2013 600,000 604,140 -- -- 600,000 604,140
Colorado Health Facilities
Authority Rev. (Portercare
Adventist Health Systems),
6.625%, 2011 (c) 500,000 573,960 1,250,000 1,434,900 1,750,000 2,008,860
Cuyahoga County, OH, Hospital
Facilities Rev. (Canton, Inc.),
7.5%, 2030 900,000 1,008,801 -- -- 900,000 1,008,801
Denver, CO, Health & Hospital
Authority Rev., 5.375%, 2018 300,000 306,744 -- -- 300,000 306,744
Denver, CO, Health & Hospital
Authority Rev., "A", 6%, 2023 500,000 533,910 -- -- 500,000 533,910
Denver, CO, Health & Hospital
Authority Rev., "A",
5.375%, 2028 -- -- 2,440,000 2,470,524 2,440,000 2,470,524
District of Columbia, Health &
Hospital Authority Rev.
Medstar University Hospital),
"D", 6.875%, 2007 (c) 700,000 708,547 -- -- 700,000 708,547
District of Columbia, Hospital
Rev. (Medlantic Healthcare),
MBIA, ETM, 5.25%, 2019 (c) -- -- 6,750,000 6,963,368 6,750,000 6,963,368
Elkhart County, IN, Hospital
Authority Rev. (Elkhart General
Hospital, Inc.), 5.25%, 2018 -- -- 1,000,000 1,034,230 1,000,000 1,034,230
Elkhart County, IN, Hospital
Authority Rev. (Elkhart General
Hospital, Inc.), 5.25%, 2020 -- -- 4,345,000 4,442,415 4,345,000 4,442,415
Fulton County, NY, Industrial
Development Agency, Civic
Facilities Rev. (Nathan
Littauer Hospital), "A",
5.75%, 2009 205,000 208,274 -- -- 205,000 208,274
Florence County, SC, Hospital
Rev. (McLeod Regional
Medical Center), "A", FSA,
5.25%, 2034 -- -- 5,000,000 5,331,550 5,000,000 5,331,550
Gainesville & Hall County, GA,
Hospital Authority Rev.
(Northeast Georgia Health
System, Inc.), 5.5%, 2031 445,000 464,460 1,555,000 1,623,000 2,000,000 2,087,460
Gulfport, MS, Hospital
Facilities Rev. (Memorial
Hospital), 5.75%, 2031 525,000 544,310 1,575,000 1,632,929 2,100,000 2,177,239
Harris County, TX, Health
Facilities Development Corp.
"A" (Texas Children's
Hospital), 5.375%, 2015 -- -- 4,300,000 4,502,100 4,300,000 4,502,100
Harris County, TX, Health
Facilities Development Corp.
Hospital Rev. (Memorial Herman
Healthcare), 6.375%, 2011 (c) -- -- 2,000,000 2,249,220 2,000,000 2,249,220
Henrico County, VA, Industrial
Development Authority Rev. (Bon
Secours), RIBS, FSA,
8.177%, 2027 (p) 5,000,000 6,684,000 -- -- 5,000,000 6,684,000
Highlands County, FL, Health
Facilities Authority Rev.
(Adventist Health Systems),
"C", 5.25%, 2036 465,000 493,063 1,620,000 1,717,767 2,085,000 2,210,830
Highlands County, FL, Health
Facilities Authority Rev.
(Adventist/Sunbelt Hospital),
6%, 2011 (c) 350,000 391,643 1,000,000 1,118,980 1,350,000 1,510,623
Huntsville, AL, Health Care
Authority Rev., 5.625%, 2026 -- -- 2,595,000 2,729,551 2,595,000 2,729,551
Illinois Development Finance
Authority Rev. "A" (Provena
Health), MBIA, 5.25%, 2012 -- -- 1,600,000 1,651,488 1,600,000 1,651,488
Illinois Educational Facilities
Authority Rev. (Centegra
Health Systems), 5.25%, 2024 -- -- 5,500,000 5,569,410 5,500,000 5,569,410
Illinois Health Facilities
Authority Rev. (Advocate Health
Care Network), 6.375%, 2010 (c) -- -- 1,800,000 1,993,680 1,800,000 1,993,680
Illinois Health Facilities
Authority Rev. (Condell Medical
Center), 6.35%, 2015 1,000,000 1,067,800 6,500,000 6,940,700 7,500,000 8,008,500
Illinois Health Facilities
Authority Rev. (Decatur
Memorial Hospital), 5.75%, 2024 350,000 367,770 2,650,000 2,784,541 3,000,000 3,152,311
Illinois Health Facilities
Authority Rev. (Passavant
Memorial Area Hospital
Associates), 6%, 2024 335,000 361,837 1,165,000 1,258,328 1,500,000 1,620,165
Illinois Health Facilities
Authority Rev. (Riverside
Health Systems), 5.75%, 2022 650,000 678,496 1,975,000 2,061,584 2,625,000 2,740,080
Illinois Health Facilities
Authority Rev. (Sinai Health),
FHA, 5.15%, 2037 640,000 670,842 2,400,000 2,515,656 3,040,000 3,186,498
Illinois Health Facilities
Authority Rev., "A" (Advocate
Health) MBIA, 5.7%, 2011 -- -- 660,000 683,701 660,000 683,701
Indiana Health Facilities
Financing Authority (Community
Hospital Project), "N",
5%, 2025 -- -- 5,980,000 6,290,541 5,980,000 6,290,541
Indiana Health Facilities
Financing Authority Hospital
Rev. (Deaconess Hospital),
"A", AMBAC, 5.375%, 2034 565,000 606,867 2,075,000 2,228,758 2,640,000 2,835,625
Indiana Health Facilities
Financing Authority, Hospital
Rev. (Clarian Health), "A",
5%, 2039 260,000 268,427 910,000 939,493 1,170,000 1,207,920
Indiana Health Facilities
Financing Authority, Hospital
Rev. (Munster Medical Research
Foundation, Inc.), 6.375%, 2031 500,000 533,570 -- -- 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 -- -- 1,700,000 1,814,903
Indiana Health Facilities
Financing Authority, Hospital
Rev. (Riverview Hospital),
5.25%, 2014 400,000 410,840 -- -- 400,000 410,840
Indiana Health Facilities
Financing Authority, Hospital
Rev. (Riverview Hospital),
6.125%, 2031 250,000 267,878 -- -- 250,000 267,878
Iowa Finance Authority, Health
Care Facilities Rev.
(Genesis Medical Center),
6.125%, 2016 -- -- 2,195,000 2,358,593 2,195,000 2,358,593
Kentucky Economic Development
Finance Authority, Health
Systems Rev. (Norton
Healthcare, Inc.), 6.5%, 2020 1,250,000 1,359,463 4,750,000 5,165,958 6,000,000 6,525,421
Kentucky Economic Development
Finance Authority, Health
Systems Rev. (Norton
Healthcare, Inc.), 6.625%, 2028 250,000 272,933 -- -- 250,000 272,933
Kentucky Economic Development
Finance Authority, Refunding &
Improvement, "A", MBIA,
5%, 2018 2,400,000 2,471,040 -- -- 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 -- -- 1,000,000 1,066,670
Lauderdale County & Florence,
AL (Coffee Health Group),
"A", MBIA, 5.25%, 2019 1,100,000 1,145,166 -- -- 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 -- -- 1,000,000 1,046,140
Marion County, FL, Hospital
District Rev. (Monroe
Hospital), 5.625%, 2019 750,000 783,578 2,610,000 2,726,850 3,360,000 3,510,428
Marshall County, AL, Health
Care "A", 5.75%, 2015 -- -- 1,000,000 1,080,220 1,000,000 1,080,220
Marshall County, AL, Health
Care Authority Rev., "A",
6.25%, 2022 500,000 552,005 -- -- 500,000 552,005
Martin County, FL, Health
Facilities Authority Rev.
(Martin Memorial Medical
Center), "A", 5.75%, 2022 850,000 911,727 -- -- 850,000 911,727
Martin County, FL, Health
Facilities (Martin Memorial
Medical Center) "B",
5.875%, 2032 -- -- 2,200,000 2,352,416 2,200,000 2,352,416
Maryland Health & Higher
Educational Facilities
Authority Rev. (Medstar
Health), 5.5%, 2033 305,000 323,337 1,115,000 1,182,034 1,420,000 1,505,371
Maryland Health & Higher
Educational Facilities
Authority Rev. (University of
Maryland Medical System),
6.75%, 2010 (c) 1,000,000 1,117,650 1,000,000 1,117,650 2,000,000 2,235,300
Massachusetts Health &
Educational Facilities
Authority Rev. (Caritas
Christi), 5.7%, 2015 1,000,000 1,042,990 2,550,000 2,659,625 3,550,000 3,702,615
Massachusetts Health &
Educational Facilities
Authority Rev. (Caritas
Christi), "B", 6.5%, 2012 400,000 434,956 -- -- 400,000 434,956
Massachusetts Health &
Educational Facilities
Authority Rev. (Partners
Healthcare Systems), "C",
5.75%, 2021 400,000 434,876 1,500,000 1,630,785 1,900,000 2,065,661
Mecosta County, MI, General
Hospital Rev., 6%, 2018 300,000 308,991 -- -- 300,000 308,991
Miami Beach, FL, Health
Facilities Authority Rev.
(Mount Sinai Medical Center),
"A", 6.7%, 2019 750,000 828,683 -- -- 750,000 828,683
Michigan Hospital Finance
Authority Rev. (Memorial
Healthcare Center), 5.75%, 2015 800,000 838,768 -- -- 800,000 838,768
Michigan Hospital Finance
Authority Rev. (Mercy Mount
Clement), MBIA, 5.75%, 2017 -- -- 2,900,000 3,076,030 2,900,000 3,076,030
Michigan Hospital Finance
Authority Rev. (Sisters of
Mercy Health System), MBIA,
ETM, 5.375%, 2014 (c) -- -- 515,000 548,841 515,000 548,841
Michigan Hospital Finance
Authority Rev., "A"
(Crittenton), 5.625%, 2027 -- -- 1,000,000 1,072,240 1,000,000 1,072,240
Monroe County, MI, Hospital
Finance Authority Hospital Rev.
(Mercy Memorial Hospital
Corp.), 5.5%, 2035 670,000 703,132 2,325,000 2,439,971 2,995,000 3,143,103
Monroe County, PA, Hospital
Authority Rev. (Pocono
Medical Center), 6%, 2043 -- -- 750,000 804,443 750,000 804,443
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 -- -- 1,270,000 1,299,629
Mount Lebanon, PA, Hospital
Authority Rev. (St. Clair
Memorial Hospital),
5.625%, 2032 375,000 396,109 1,335,000 1,410,147 1,710,000 1,806,256
Nassau County, NY, Industrial
Development Agency, Civic
Facilities Rev. (North Shore
Health System), 5.875%, 2011 330,000 345,616 -- -- 330,000 345,616
New Hampshire Health &
Education Facilities Rev.
(Exeter Hospital), 6%, 2016 -- -- 1,000,000 1,102,180 1,000,000 1,102,180
New Hampshire Health &
Educational Facilities
Authority Rev. (Covenant
Health), 6.5%, 2017 820,000 918,958 -- -- 820,000 918,958
New Hampshire Health &
Educational Facilities
Authority Rev. (Exeter
Hospital), 6%, 2024 500,000 549,900 -- -- 500,000 549,900
New Jersey Health Care
Facilities (Palisades Medical
Center), 6.5%, 2021 500,000 548,160 -- -- 500,000 548,160
North Central, TX, Health
Facilities Development Corp.
Rev. (Texas Health Resources
System), MBIA, 5%, 2017 -- -- 5,000,000 5,154,100 5,000,000 5,154,100
North Texas Health Facilities
Development Corp. Rev. (United
Regional Health Care System,
Inc.), 6%, 2023 1,000,000 1,085,080 4,000,000 4,340,320 5,000,000 5,425,400
Ohio County, WV, County
Commission Health System Rev.
(Ohio Valley Medical Center),
5.75%, 2013 900,000 870,624 -- -- 900,000 870,624
Oklahoma Development Finance
Authority Rev. (Comanche County
Hospital), 6%, 2014 600,000 663,798 -- -- 600,000 663,798
Oklahoma Development Finance
Authority Rev. (Comanche County
Hospital), 6.6%, 2031 255,000 279,936 -- -- 255,000 279,936
Orange County, FL, Health
Facilities Authority Hospital
Rev. (Adventist Health
Systems), 5.625%, 2032 -- -- 1,490,000 1,603,240 1,490,000 1,603,240
Orange County, FL, Health
Facilities Authority Hospital
Rev. (Orlando Regional
Healthcare), 5.75%, 2012 (c) -- -- 2,230,000 2,487,387 2,230,000 2,487,387
Peninsula Ports Authority, VA,
Hospital Facility Rev.
(Whittaker Memorial), FHA,
8.7%, 2023 -- -- 1,530,000 1,772,107 1,530,000 1,772,107
Pennsylvania Higher Educational
Facilities Authority, Health
Services Rev. (Allegheny
Delaware Valley), MBIA,
5.3%, 2006 -- -- 1,975,000 1,978,634 1,975,000 1,978,634
Pennsylvania Higher Educational
Facilities Authority, Health
Services Rev. (Allegheny
Delaware Valley), MBIA,
5.875%, 2016 -- -- 5,000,000 5,111,600 5,000,000 5,111,600
Rhode Island Health & Education
Building Corp. Hospital
Financing (Lifespan Obligated
Group), "A", FSA, 5%, 2032 1,120,000 1,173,962 3,945,000 4,135,070 5,065,000 5,309,032
Rhode Island Health &
Educational Building Corp.
Rev., Hospital Financing
(Lifespan Obligated Group),
6.375%, 2012 (c) -- -- 1,730,000 1,977,719 1,730,000 1,977,719
Rhode Island Health &
Educational Building Corp.
Rev., Hospital Financing
(Lifespan Obligated Group),
6.375%, 2021 -- -- 270,000 300,969 270,000 300,969
Rhode Island Health & Education
Building Rev., Hospital
Financing (Lifespan Obligated
Group), 6.5%, 2012 (c) 1,500,000 1,724,610 -- -- 1,500,000 1,724,610
Richland County, OH, Hospital
Facilities Rev. (Medcentral
Health), "B", 6.375%, 2010 (c) -- -- 665,000 740,956 665,000 740,956
Richland County, OH, Hospital
Facilities Rev. (Medcentral
Health), "B", 6.375%, 2022 -- -- 335,000 365,204 335,000 365,204
Royston, GA, Hospital Authority
Rev. (Ty Cobb Healthcare
Systems, Inc.), 6.5%, 2027 290,000 298,947 -- -- 290,000 298,947
Royston, GA, Hospital Authority
Rev. (Ty Cobb Healthcare
Systems, Inc.), 6.7%, 2016 -- -- 770,000 804,404 770,000 804,404
Shelby County, TN, Educational
& Housing Facilities Board
Hospital Rev. (Methodist
Healthcare), 6%, 2012 (c) 300,000 337,323 -- -- 300,000 337,323
Shelby County, TN, Educational
& Housing Facilities Board
Hospital Rev. (Methodist
Healthcare), 6%, 2012 (c) 500,000 562,205 -- -- 500,000 562,205
Shelby County, TN, Educational
& Hospital Facilities Board
Hospital Rev. (Methodist
Healthcare), 6.375%, 2012 (c) -- -- 1,255,000 1,435,946 1,255,000 1,435,946
Shelby County, TN, Educational
& Housing Facilities Board
Hospital Rev. (Methodist
Healthcare), 6.375%, 2012 (c) -- -- 745,000 852,414 745,000 852,414
South Carolina Jobs & Economic
Development Authority, Hospital
Facilities Rev. (Palmetto
Health Alliance), 6.25%, 2031 500,000 547,205 -- -- 500,000 547,205
South Carolina Jobs & Economic
Development Authority Rev.
(Bon Secours Health Systems,
Inc.), "A", 5.625%, 2030 -- -- 2,055,000 2,180,643 2,055,000 2,180,643
South Carolina Medical
University, Hospital Facilities
Rev., A, MBIA, 5%, 2031 -- -- 970,000 1,010,245 970,000 1,010,245
Steubenville, OH, Hospital Rev.
(Trinity Hospital),
6.375%, 2020 300,000 328,245 1,200,000 1,312,980 1,500,000 1,641,225
Stillwater, OK, Medical Center
Authority (Stillwater Medical
Center), 6.5%, 2007 (c) 1,000,000 1,037,160 -- -- 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 -- -- 1,000,000 1,061,970
Tallahassee, FL, Health
Facilities Rev. (Tallahassee
Memorial Healthcare),
6.25%, 2020 1,000,000 1,061,340 2,000,000 2,122,680 3,000,000 3,184,020
Tarrant County, TX, Health
Facilities Development Corp.
(Texas Health Resources),
MBIA, 5.25%, 2018 -- -- 8,605,000 8,925,364 8,605,000 8,925,364
Tom Green County, TX, Health
Facilities Rev. (Shannon Health
System), 6.75%, 2021 400,000 432,660 -- -- 400,000 432,660
Upper Illinois River Valley
Development, Health Facilities
Rev. (Morris Hospital),
6.625%, 2031 500,000 548,010 -- -- 500,000 548,010
Valley, AL, Special Care
Facilities Financing (Lanier
Memorial Hospital), 5.5%, 2007 500,000 505,380 -- -- 500,000 505,380
Wapello County, IA, Hospital
Authority Rev. (Ottumwa
Regional Health Center),
6.375%, 2031 750,000 808,050 -- -- 750,000 808,050
Weirton, WV, Municipal Hospital
Building, Commission Rev.
(Weirton Hospital Medical
Center), 6.375%, 2031 500,000 521,880 -- -- 500,000 521,880
West Plains, MO, Industrial
Development Authority Rev.
(Ozarks Medical Center),
6.75%, 2024 195,000 201,839 -- -- 195,000 201,839
West Shore, PA, Hospital
Authority Rev. (Holy Spirit
Hospital), 6.2%, 2026 -- -- 1,250,000 1,338,500 1,250,000 1,338,500
West Shore, PA, Hospital
Authority (Holy Spirit
Hospital), 6.25%, 2032 1,000,000 1,075,510 -- -- 1,000,000 1,075,510
Wichita, KS, Hospital Authority
Rev. (Via Christi Health
System), 6.25%, 2019 1,500,000 1,666,125 1,595,000 1,771,646 3,095,000 3,437,771
Wichita, KS, Hospital Authority
Rev. (Via Christi Health
System), 6.25%, 2020 -- -- 2,465,000 2,733,192 2,465,000 2,733,192
Wisconsin Health & Educational
Facilities Authority Rev.
(Agnesian Healthcare, Inc.),
6%, 2017 325,000 347,298 520,000 555,677 845,000 902,975
Wisconsin Health & Educational
Facilities Authority Rev.
(Aurora Health Care, Inc.),
6.875%, 2030 750,000 864,465 2,000,000 2,305,240 2,750,000 3,169,705
Wisconsin Health & Educational
Facilities Authority Rev.
(Wheaton Franciscan Services),
6.25%, 2022 1,000,000 1,113,070 -- -- 1,000,000 1,113,070
Wisconsin Health & Educational
Facilities Authority Rev.
(Agnesian Healthcare, Inc.),
6%, 2021 -- -- 650,000 688,038 650,000 688,038
Wisconsin Health & Educational
Facilities Authority Rev.
(Wheaton Franciscan Services),
5.75%, 2025 -- -- 3,000,000 3,243,570 3,000,000 3,243,570
Yonkers, NY, Industrial
Development Agency, Civic
Facilities Rev. (St. John's
Riverside Hospital), 6.8%, 2016 385,000 411,769 -- -- 385,000 411,769
------------ -------------- --------------
$ 61,652,666 $ 168,055,477 $ 229,708,143
------------ -------------- --------------
HEALTHCARE REVENUE -
LONG TERM CARE
Bell County, TX, Health
Facilities Development Rev.
(Advanced Living Technology),
7.75%, 2006 $ 30,000 $ 29,984 $ -- $ -- $ 30,000 $ 29,984
Bell County, TX, Health
Facilities Development Rev.
(Advanced Living Technology),
8.125%, 2016 505,000 490,123 -- -- 505,000 490,123
Bell County, TX, Health
Facilities Development Corp.
Rev. (Buckner Retirement
Facility), 5.25%, 2019 -- -- 2,500,000 2,550,900 2,500,000 2,550,900
Bell County, TX, Health
Facilities Development Rev.
(Advanced Living Technology),
8.5%, 2026 1,130,000 1,081,218 -- -- 1,130,000 1,081,218
Colorado Health Facilities
Authority Rev. (Evangelical
Lutheran), 6.9%, 2025 500,000 564,310 -- -- 500,000 564,310
Cumberland County, PA,
Municipal Authority Rev.
(Wesley), "A",
7.25%, 2013 (c) 270,000 324,778 -- -- 270,000 324,778
Cumberland County, PA,
Municipal Authority Rev.
(Wesley), "A", 7.25%, 2035 105,000 113,395 -- -- 105,000 113,395
Eden Prairie, MN, Multi-Family
Housing Rev. (Coll-Rolling
Hills), "A", GNMA, 6%, 2021 200,000 216,876 -- -- 200,000 216,876
Indiana Health Facilities
Financing Authority Rev.
(Hoosier Care), 7.125%, 2034 800,000 812,912 -- -- 800,000 812,912
Iowa Finance Authority, Health
Care Facilities Rev. (Care
Initiatives Project),
9.25%, 2011 (c) 480,000 599,400 -- -- 480,000 599,400
Iowa Finance Authority, Health
Care Facilities Rev. (Care
Initiatives Project), "A",
5.5%, 2025 275,000 285,654 930,000 966,028 1,205,000 1,251,682
Millbrae, CA, Residential
Facilities Rev. (Magnolia of
Millbrae), "A", 7.375%, 2027 930,000 967,925 -- -- 930,000 967,925
Montana Facility Finance
Authority Rev. (Senior Living
St. Johns Lutheran), "A",
6.125%, 2036 170,000 177,582 -- -- 170,000 177,582
Shelby County, TN, Health
Educational Rev. (Germantown
Village), 7.25%, 2034 385,000 414,453 -- -- 385,000 414,453
------------ -------------- --------------
$ 6,078,610 $ 3,516,928 $ 9,595,538
------------ -------------- --------------
HUMAN SERVICES
Louisiana Local Government
Environmental Facilities &
Community Development (Westside
Rehab Center Project), "B",
6.5%, 2013 $ 450,000 $ 452,529 $ -- $ -- 450,000 452,529
Nassau County, NY, Industrial
Development Civic (Special
Needs Facilities), 6.1%, 2012 225,000 232,776 -- -- 225,000 232,776
Orange County, FL, Health
Facilities Authority Rev.
(GF/Orlando Healthcare
Facilities), 9%, 2031 1,000,000 1,103,860 -- -- 1,000,000 1,103,860
------------ -------------- --------------
$ 1,789,165 $ -- $ 1,789,165
------------ -------------- --------------
INDUSTRIAL REVENUE - AIRLINES
Los Angeles, CA, Regional
Airport Lease Rev. (AMR Corp.),
7%, 2012 $ 300,000 $ 319,158 $ -- $ -- $ 300,000 $ 319,158
New York, NY, Industrial
Development Agency Rev.
(American Airlines, Inc.),
7.625%, 2025 970,000 1,139,362 -- -- 970,000 1,139,362
Tulsa, OK, Municipal Airport
Trust Rev. (American Airlines,
Inc.), "B", 5.65%, 2035 1,000,000 1,003,940 -- -- 1,000,000 1,003,940
------------ -------------- --------------
$ 2,462,460 $ -- $ 2,462,460
------------ -------------- --------------
INDUSTRIAL REVENUE - CHEMICALS
Brazos River, TX, Harbor
Navigation District (Dow
Chemical Co.), 5.7%, 2033 $ 1,000,000 $ 1,070,150 $ 3,500,000 $ 3,745,525 4,500,000 4,815,675
Red River Authority, TX,
Pollution Control Rev.
(Celanese Project),
"B", 6.7%, 2030 1,000,000 1,097,620 -- -- 1,000,000 1,097,620
------------ -------------- --------------
$ 2,167,770 $ 3,745,525 $ 5,913,295
------------ -------------- --------------
INDUSTRIAL REVENUE -
ENVIRONMENTAL SERVICES
California Pollution Control
Financing Authority, Solid
Waste Disposal Rev. (Waste
Management, Inc.), "A-2",
5.4%, 2025 $ 215,000 $ 228,618 $ 785,000 $ 834,722 $ 1,000,000 $ 1,063,340
California Pollution Control
Financing Authority, Solid
Waste Disposal Rev. (Waste
Management, Inc.), "B",
5%, 2027 -- -- 920,000 949,302 920,000 949,302
Carbon County, UT, Solid Waste
Disposal Rev. (Laidlaw
Environmental), 7.45%, 2017 2,500,000 2,602,450 -- -- 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 -- -- 500,000 544,435
Colorado Housing & Finance
Authority, Solid Waste Rev.
(Waste Management, Inc.),
5.7%, 2018 230,000 253,177 1,730,000 1,904,332 1,960,000 2,157,509
Gulf Coast Waste Disposal
Authority, TX (Waste Mangement
of Texas), "A", 5.2%, 2028 -- -- 665,000 693,795 665,000 693,795
Gloucester County, NJ, Solid
Waste Resource Recovery Rev.
(Waste Management, Inc.),
6.85%, 2029 150,000 162,371 -- -- 150,000 162,371
Massachusetts Development
Finance Agency Rev. (Waste
Management, Inc.), "B",
6.9%, 2029 300,000 324,165 -- -- 300,000 324,165
Nevada Department of Business &
Industry Rev. (Republic
Services, Inc.), 5.625%, 2026 450,000 492,084 1,500,000 1,640,280 1,950,000 2,132,364
New Hampshire Business Finance
Authority, Solid Waste
Disposal Rev. (Waste
Management, Inc.), 5.2%, 2027 -- -- 665,000 690,184 665,000 690,184
------------ -------------- --------------
$ 4,607,300 $ 6,712,615 $ 11,319,915
------------ -------------- --------------
INDUSTRIAL REVENUE - METALS
Burns Harbor, IN, Solid Waste
Disposal Facilities Rev.
(Bethlehem Steel),
8%, 2024 (d) $ 3,000,000 $ 300 $ -- $ -- $ 3,000,000 $ 300
INDUSTRIAL REVENUE - OTHER
Bucks County, PA, Industrial
Development Authority Rev.
(USX Corp.), 5.4%, 2017 $ 500,000 $ 538,940 $ -- $ -- $ 500,000 $ 538,940
Corpus Christi, TX, Nueces
County General Rev. (Union
Pacific Corp.), 5.35%, 2010 -- -- 670,000 677,484 670,000 677,484
Gulf Coast, TX, Industrial
Development Authority (Valero
Energy Corp.), 5.6%, 2031 500,000 517,705 -- -- 500,000 517,705
Hardeman County, TN,
Correctional Facilities Corp.
(Corrections Corp. of America),
7.375%, 2017 500,000 513,895 -- -- 500,000 513,895
Massachusetts Development
Finance Agency Rev., Resource
Recovery (Fluor Corp.),
5.625%, 2019 2,895,000 3,033,699 8,650,000 9,064,422 11,545,000 12,098,121
Massachusetts Industrial
Finance Agency Rev. (Welch
Foods, Inc.), 5.6%, 2017 1,300,000 1,346,722 -- -- 1,300,000 1,346,722
Park Creek Metropolitan
District, CO, (Custodial
Receipts), "CR-2",
7.875%, 2032 (n) 400,000 444,960 -- -- 400,000 444,960
Pennsylvania Economic
Development Financing Authority
Rev. (Amtrak), 6.125%, 2021 550,000 592,939 -- -- 550,000 592,939
Shelby County, TN (FedEx
Corp.), 5.05%, 2012 -- -- 1,400,000 1,478,134 1,400,000 1,478,134
Tooele County, UT, Hazardous
Waste Treatment Rev. (Union
Pacific Corp.), 5.7%, 2026 980,000 1,024,825 3,640,000 3,806,494 4,620,000 4,831,319
------------ -------------- --------------
$ 8,013,685 $ 15,026,534 $ 23,040,219
------------ -------------- --------------
INDUSTRIAL REVENUE - PAPER
Butler, AL, Industrial
Development Board, Solid Waste
Disposal Rev. (Georgia Pacific
Corp.), 5.75%, 2028 $ 260,000 $ 266,139 $ -- $ -- $ 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 1,500,000 1,698,510 2,400,000 2,717,616
Georgetown County, SC,
Environmental Improvement
(International Paper Co.),
5.7%, 2014 -- -- 1,400,000 1,526,266 1,400,000 1,526,266
Jay, ME, Solid Waste Disposal
Rev., "A" (International
Paper Co.), 5.125%, 2018 -- -- 1,500,000 1,533,405 1,500,000 1,533,405
Mobile, AL, Industrial
Development Board Improvement
Rev. (International Paper Co.),
"B", 6.45%, 2019 2,000,000 2,124,640 -- -- 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 -- -- 1,500,000 1,530,420
Navajo County, AZ, Industrial
Development Authority Rev.
(Stone Container Corp.),
7.2%, 2027 500,000 515,920 -- -- 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 -- -- 900,000 943,929
Sabine River Authority Rev.,
Louisiana Water Facilities
(International Paper Co.),
6.2%, 2025 -- -- 1,250,000 1,351,075 1,250,000 1,351,075
West Point, VA, Industrial
Development Authority, Solid
Waste Disposal Rev. (Chesapeake
Corp.), "A", 6.375%, 2019 550,000 551,056 -- -- 550,000 551,056
------------ -------------- --------------
$ 6,951,210 $ 6,109,256 $ 13,060,466
------------ -------------- --------------
MISCELLANEOUS REVENUE -
ENTERTAINMENT & TOURISM
New York Liberty Development
Corp. Rev. (National Sports
Museum), 6.125%, 2019 $ 265,000 $ 274,214 $ -- $ -- $ 265,000 $ 274,214
MISCELLANEOUS REVENUE - OTHER
Austin, TX, Convention Center
(Convention Enterprises, Inc.),
"A", 6.6%, 2021 $ 300,000 $ 323,334 $ -- $ -- $ 300,000 $ 323,334
Austin, TX, Convention Center
(Convention Enterprises, Inc.),
"A", 6.7%, 2028 400,000 431,360 -- -- 400,000 431,360
Baltimore, MD, Convention
Center Hotel Rev., "A", XLCA,
5.25%, 2039 555,000 596,692 1,945,000 2,091,108 2,500,000 2,687,800
Gallery Certificate Trust, PA,
Parking Rev., 4.5%, 2013 (n) 640,000 639,981 2,410,000 2,409,928 3,050,000 3,049,909
Kentucky Property & Buildings
Commission Rev.,
5.85%, 2010 (c) -- -- 4,000,000 4,280,720 4,000,000 4,280,720
Kentucky Property & Buildings
Commission Rev., 5.9%, 2010 (c) -- -- 4,500,000 4,822,830 4,500,000 4,822,830
San Antonio, TX, Convention
Center, Hotel Financial Corp.,
Contract Rev. (Empowerment
Zone), "A", AMBAC, 5%, 2034 490,000 505,783 -- -- 490,000 505,783
Toledo Lucas County, OH, Port
Authority Development Rev.
(Northwest Ohio Bond Fund),
"C", 5.125%, 2025 65,000 66,061 -- -- 65,000 66,061
------------ -------------- --------------
$ 2,563,211 $ 13,604,586 $ 16,167,797
------------ -------------- --------------
MULTI-FAMILY HOUSING REVENUE
Bay County, FL, Housing Finance
Authority, Multi-Family Rev.
(Andrews Place II Apartments),
FSA, 5%, 2035 $ 150,000 $ 153,404 $ 395,000 $ 403,963 $ 545,000 $ 557,367
Bay County, FL, Housing Finance
Authority, Multi-Family Rev.
(Andrews Place II Apartments),
FSA, 5.1%, 2046 275,000 281,023 995,000 1,016,791 1,270,000 1,297,814
California Statewide
Communities Development
Authority Rev. (Irvine
Apartments), 5.25%, 2025 1,000,000 1,026,010 3,500,000 3,591,035 4,500,000 4,617,045
Charter Mac Equity Issuer
Trust, 6.625%, 2009 (n) 2,000,000 2,119,820 -- -- 2,000,000 2,119,820
Eaglebend, CO, Affordable
Housing Corp., 6.2%, 2007 (c) 1,000,000 1,038,500 -- -- 1,000,000 1,038,500
GMAC Municipal Mortgage Trust,
"B-1", 5.6%, 2039 (n) 1,000,000 1,057,040 -- -- 1,000,000 1,057,040
GMAC Municipal Mortgage Trust,
"C-1", 5.7%, 2040 (n) 500,000 508,445 -- -- 500,000 508,445
Indianapolis, IN, Multi-Family
Rev. (Cambridge Station
Apartments II), FNMA,
5.25%, 2039 320,000 329,898 1,145,000 1,180,415 1,465,000 1,510,313
Michigan Housing Development
Authority, GNMA, 5.2%, 2038 -- -- 1,200,000 1,232,184 1,200,000 1,232,184
Munimae TE Bond Subsidiary LLC,
"A-2", 4.9%, 2049 (n) 2,000,000 2,029,040 -- -- 2,000,000 2,029,040
Newark, NJ, Housing Authority
(Port Authority - Newark Marine
Terminal), MBIA, 5.5%, 2028 215,000 236,081 785,000 861,969 1,000,000 1,098,050
North Charleston, SC, Housing
Authority Rev. (Horizon
Village), "A", FHA,
5.15%, 2048 305,000 307,464 -- -- 305,000 307,464
Seattle, WA, Housing Authority
Rev., Capped Fund Program (High
Rise Rehab), "I", FSA,
5%, 2025 455,000 463,290 1,630,000 1,659,699 2,085,000 2,122,989
Tampa, FL, Housing Finance
Authority, Multi-Family Rev.
(Meridian
River Development Corp.),
4.75%, 2026 335,000 340,732 1,130,000 1,149,334 1,465,000 1,490,066
------------ -------------- --------------
$ 9,890,747 $ 11,095,390 $ 20,986,137
------------ -------------- --------------
PARKING
Rail Connections, Inc., MA
Rev., 0%, 2009 (c) $ 100,000 $ 59,279 $ 375,000 $ 237,578 $ 475,000 $ 296,857
Rail Connections, Inc., MA
Rev., 0%, 2009 (c) 210,000 116,399 450,000 266,756 660,000 383,155
Rail Connections, Inc., MA
Rev., 0%, 2009 (c) 300,000 155,739 975,000 540,423 1,275,000 696,162
------------ -------------- --------------
$ 331,417 $ 1,044,757 $ 1,376,174
------------ -------------- --------------
SALES & EXCISE TAX REVENUE
Austin, TX, Town Community
Events Center Venue, FGIC,
6%, 2009 (c) $ 1,015,000 $ 1,087,654 $ -- $ -- $ 1,015,000 $ 1,087,654
Illinois Sales Tax Rev.,
0%, 2009 -- -- 8,965,000 8,069,486 8,965,000 8,069,486
Illinois Sales Tax Rev.,
6.5%, 2022 -- -- 5,000,000 6,082,500 5,000,000 6,082,500
Metropolitan Atlanta, GA,
Rapid Transit Authority Rev.,
6.25%, 2018 -- -- 4,580,000 5,311,930 4,580,000 5,311,930
Metropolitan Pier & Expo, IL,
McCormick Place Expansion,
MBIA, 5.25%, 2042 220,000 233,204 3,120,000 3,307,262 3,340,000 3,540,466
Miami Dade County, FL,
Transportation Systems,
"N", XLCA, 5%, 2022 1,130,000 1,210,931 3,870,000 4,147,169 5,000,000 5,358,100
Wyandotte County-Kansas City,
KS, Unified Government
Rev. (Sales Tax Second Lien
Area B), 5%, 2020 -- -- 2,165,000 2,246,252 2,165,000 2,246,252
------------ -------------- --------------
$ 2,531,789 $ 29,164,599 $ 31,696,388
------------ -------------- --------------
SINGLE FAMILY HOUSING -
LOCAL - 3.5%
Adams County, CO, Single Family
Mortgage Rev., ETM,
8.875%, 2011 (c) $ 2,510,000 $ 3,065,287 $ -- $ -- $ 2,510,000 $ 3,065,287
Brevard County, FL, Housing
Finance Authority Rev., "B",
GNMA, 6.5%, 2022 141,000 141,618 -- -- 141,000 141,618
Calcasieu Parish, LA, Public
Trust Authority, Single Family
Mortgage Rev., "A", GNMA,
6.05%, 2032 430,000 462,444 1,600,000 1,720,720 2,030,000 2,183,164
California Rural Home Mortgage
Finance Authority Rev., GNMA,
6.55%, 2030 85,000 85,288 370,000 371,254 455,000 456,542
California Rural Home Mortgage
Finance Authority Rev.,
GNMA, 7.3%, 2031 -- -- 60,000 60,758 60,000 60,758
Chicago, IL, Single Family
Mortgage Rev., "C", GNMA,
7.05%, 2030 10,000 10,193 30,000 30,580 40,000 40,773
Chicago, IL, Single Family
Mortgage Rev., "B", GNMA,
6%, 2033 -- -- 575,000 596,356 575,000 596,356
Chicago, IL, Single Family
Mortgage Rev., "C", GNMA,
7%, 2032 -- -- 85,000 86,638 85,000 86,638
Chicago, IL, Single Family
Mortgage Rev., "N", 5.75%, 2042 -- -- 4,000,000 4,362,560 4,000,000 4,362,560
Cook County, IL, Single Family
Mortgage Rev., "A", 0%, 2015 365,000 79,917 -- -- 365,000 79,917
Denver, CO, Single Family
Mortgage Rev., GNMA, 7.3%, 2031 -- -- 90,000 90,208 90,000 90,208
Escambia County, FL, Single
Family Housing Rev., GNMA,
6.95%, 2024 -- -- 225,000 227,651 225,000 227,651
Jefferson Parish, LA, Single
Family Mortgage Rev., GNMA,
6.625%, 2023 280,000 299,552 405,000 433,281 685,000 732,833
Jefferson Parish, LA, Single
Family Mortgage Rev., GNMA,
6.75%, 2030 400,000 409,768 575,000 589,042 975,000 998,810
Jefferson Parish, LA, Single
Family Mortgage Rev.,
D-1, GNMA, 7.5%, 2026 -- -- 175,000 175,698 175,000 175,698
Lee County, FL, Housing Finance
Authority Rev. (Multi-County
Program), "A-4", GNMA,
7%, 2031 10,000 10,050 50,000 50,251 60,000 60,301
Lubbock, TX, Housing Finance
Corp. Rev., GNMA, 6.1%, 2030 -- -- 1,330,000 1,356,108 1,330,000 1,356,108
Manatee County, FL, Housing
Finance Mortgage Rev., Single
Family, Subordinated Series 3,
GNMA, 6.5%, 2023 -- -- 145,000 148,434 145,000 148,434
Manatee County, FL, Housing
Finance Mortgage Rev.,
Single Family, Subordinated
Series 3, GNMA, 5.3%, 2028 -- -- 755,000 759,409 755,000 759,409
Manatee County, FL, Housing
Finance Mortgage Rev.,
Single Family, Subordinated
Series 3, GNMA, 5.4%, 2029 -- -- 265,000 274,768 265,000 274,768
Maricopa County, AZ, Single
Family Mortgage Rev., "B",
GNMA, 6.2%, 2034 65,000 65,975 210,000 213,150 275,000 279,125
Nortex Housing Finance Corp.,
TX, Single Family Mortgage
Backed Securities Rev.,
"A", GNMA, 5.5%, 2038 785,000 833,529 2,715,000 2,882,841 3,500,000 3,716,370
Permian Basin Housing Finance
TX (Mortgage Backed Project)
A, GNMA, 5.65%, 2038 -- -- 1,825,000 1,943,388 1,825,000 1,943,388
Pima County, AZ, Industrial
Development Authority Rev.,
"B-1", GNMA, 7.05%, 2030 160,000 160,715 325,000 326,453 485,000 487,168
Sedgwick & Shawnee Counties,
KS, Mortgage Backed,
N, 5.45%, 2038 -- -- 5,000,000 5,341,100 5,000,000 5,341,100
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A", GNMA, 6.45%, 2029 495,000 502,544 360,000 365,486 855,000 868,030
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A", GNMA, 5.9%, 2035 230,000 248,658 790,000 854,085 1,020,000 1,102,743
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A", GNMA, 6.25%, 2035 115,000 123,453 395,000 424,033 510,000 547,486
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A", GNMA, 5.8%, 2036 585,000 643,927 2,145,000 2,361,066 2,730,000 3,004,993
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-1", GNMA, 6.875%, 2026 60,000 61,062 275,000 279,868 335,000 340,930
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-1", GNMA, 5.75%, 2037 190,000 207,364 665,000 725,774 855,000 933,138
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-3", GNMA, 6%, 2035 365,000 399,222 1,395,000 1,525,795 1,760,000 1,925,017
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-3", GNMA, 5.5%, 2037 335,000 356,108 1,165,000 1,238,407 1,500,000 1,594,515
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-4", GNMA, 5.85%, 2037 365,000 399,091 -- -- 365,000 399,091
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-5", GNMA, 5.8%, 2027 280,000 296,526 1,010,000 1,069,610 1,290,000 1,366,136
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-5", GNMA, 5.7%, 2036 590,000 644,215 2,140,000 2,336,645 2,730,000 2,980,860
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-5", GNMA, 5.9%, 2037 140,000 153,889 500,000 549,605 640,000 703,494
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"A-6", GNMA, 5.65%, 2036 445,000 467,455 1,605,000 1,685,988 2,050,000 2,153,443
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"B", GNMA, 5.45%, 2027 325,000 347,019 1,235,000 1,318,671 1,560,000 1,665,690
Sedgwick & Shawnee Counties,
KS, Single Family Housing Rev.,
"B-2", GNMA, 6.45%, 2033 285,000 305,617 1,020,000 1,093,787 1,305,000 1,399,404
------------ -------------- --------------
$ 10,780,486 $ 37,869,468 $ 48,649,954
------------ -------------- --------------
SINGLE FAMILY HOUSING - STATE
Arkansas Development Finance
Authority Rev., Mortgage
Backed Securities Program, "B",
GNMA, 4.45%, 2034 $ -- $ -- $ 1,105,000 $ 1,105,210 $ 1,105,000 $ 1,105,210
California Housing Finance
Agency Rev., Home Mortgage,
FSA, 0%, 2019 -- -- 10,295,000 4,724,478 10,295,000 4,724,478
California Housing Finance
Agency Rev., Home Mortgage,
MBIA, 0%, 2028 1,670,000 547,677 1,670,000 547,677 3,340,000 1,095,354
Colorado Housing & Finance
Authority Rev., 6.05%, 2016 -- -- 235,000 242,081 235,000 242,081
Colorado Housing & Finance
Authority Rev., 7.45%, 2016 30,000 30,299 135,000 136,343 165,000 166,642
Colorado Housing & Finance
Authority Rev., 6.875%, 2028 60,000 60,303 -- -- 60,000 60,303
Colorado Housing & Finance
Authority Rev., 6.8%, 2030 70,000 70,924 285,000 288,762 355,000 359,686
Colorado Housing & Finance
Authority Rev., "A-1",
7.4%, 2027 15,000 15,429 60,000 61,714 75,000 77,143
Colorado Housing & Finance
Authority Rev., "A-2",
7.15%, 2014 7,000 7,143 19,000 19,388 26,000 26,531
Colorado Housing & Finance
Authority Rev., 7.25%, 2031 -- -- 300,000 308,448 300,000 308,448
Colorado Housing & Finance
Authority Rev., "A-2",
AMBAC, 6.6% ,2028 250,000 262,030 885,000 927,586 1,135,000 1,189,616
Colorado Housing & Finance
Authority Rev., "B-2",
6.1%, 2023 105,000 109,295 -- -- 105,000 109,295
Colorado Housing & Finance
Authority Rev., "B-3",
6.55%, 2033 90,000 92,381 -- -- 90,000 92,381
Colorado Housing & Finance
Authority Rev., "B-3",
6.55%, 2025 -- -- 104,000 104,166 104,000 104,166
Colorado Housing & Finance
Authority Rev., "C",
6.75%, 2021 35,000 36,124 145,000 149,656 180,000 185,780
Colorado Housing & Finance
Authority Rev., "C-2",
5.9%, 2023 160,000 166,320 595,000 618,503 755,000 784,823
Colorado Housing & Finance
Authority Rev., "C-2", FHA,
6.6%, 2032 150,000 153,821 520,000 533,244 670,000 687,065
Colorado Housing & Finance
Authority Rev., Single Family
Program, "C-2", 8.4%, 2021 -- -- 115,000 119,386 115,000 119,386
Colorado Housing & Finance
Authority Rev., "C-3", FHA,
6.375%, 2033 80,000 81,571 -- -- 80,000 81,571
Delaware Housing Authority Rev.
(Single Family), "C",
6.25%, 2037 -- -- 2,000,000 2,186,460 2,000,000 2,186,460
Louisiana Housing Finance
Agency, Single Family Mortgage
Rev., "B-2", GNMA,
7.55%, 2031 60,000 61,648 235,000 241,453 295,000 303,101
Louisiana Housing Finance
Agency, Single Family Mortgage
Rev., GNMA, 6.4%, 2032 115,000 115,899 425,000 428,324 540,000 544,223
Louisiana Housing Finance
Agency, Single Family Mortgage
Rev., GNMA, 6.375%, 2033 -- -- 720,000 726,768 720,000 726,768
Minnesota Housing Finance
Agency Rev., Residential
Housing Finance, "B",
4.8%, 2023 165,000 165,215 910,000 911,183 1,075,000 1,076,398
Mississippi Home Corp. Rev.,
Single Family Rev., "A", GNMA,
6.1%, 2034 -- -- 2,495,000 2,579,855 2,495,000 2,579,855
Mississippi Home Corp. Rev.,
Single Family Rev., "F", GNMA,
7.55%, 2027 -- -- 226,000 238,170 226,000 238,170
Missouri Housing Development
Commission, Single Family
Mortgage Rev. (Home Loan
Program), GNMA, 6.35%, 2032 185,000 188,541 -- -- 185,000 188,541
Missouri Housing Development
Commission, Single Family
Mortgage Rev. (Home Loan
Program), GNMA, 7.45%, 2031 -- -- 125,000 130,370 125,000 130,370
Missouri Housing Development
Commission, Single Family
Mortgage Rev. (Home Loan
Program), "B", GNMA,
6.7%, 2030 165,000 169,381 780,000 800,709 945,000 970,090
Missouri Housing Development
Commission, Single Family
Mortgage Rev. (Home Loan
Program), GNMA, 6.85%, 2032 160,000 164,530 275,000 282,785 435,000 447,315
Missouri Housing Development
Commission, Single Family
Mortgage Rev. (Home Loan
Program), GNMA, 6.75%, 2034 95,000 100,351 345,000 364,434 440,000 464,785
New Hampshire Housing Finance
Authority Rev., "B",
5.875%, 2030 95,000 95,390 -- -- 95,000 95,390
New Hampshire Housing Finance
Authority Rev., 6.85%, 2030 -- -- 630,000 633,326 630,000 633,326
New Hampshire Housing Finance
Authority Rev., "B",
5.875%, 2030 -- -- 345,000 346,418 345,000 346,418
New Hampshire Housing Finance
Authority Rev., "B",
6.3%, 2031 80,000 80,286 265,000 265,949 345,000 346,235
New Hampshire Housing Finance
Authority Rev., "B",
6.5%, 2035 705,000 766,878 -- -- 705,000 766,878
New Mexico Mortgage Finance
Authority Rev., 6.8%, 2031 -- -- 625,000 633,456 625,000 633,456
New Mexico Mortgage Finance
Authority Rev., "B-2", GNMA,
6.35%, 2033 165,000 170,457 580,000 599,181 745,000 769,638
New Mexico Mortgage Finance
Authority Rev., GNMA,
7.1%, 2030 60,000 60,795 210,000 212,783 270,000 273,578
New Mexico Mortgage Finance
Authority Rev., GNMA,
6.25%, 2032 335,000 347,140 1,205,000 1,248,669 1,540,000 1,595,809
New Mexico Mortgage Finance
Authority, "N", GNMA,
5.95%, 2037 440,000 475,886 1,560,000 1,687,234 2,000,000 2,163,120
North Dakota Housing Finance
Agency Rev., Housing Finance,
"A", 5%, 2033 340,000 340,619 1,170,000 1,172,129 1,510,000 1,512,748
Ohio Housing Finance Agency
Mortgage Rev., Residential
Mortgage Backed, "C", GNMA,
5.9%, 2035 420,000 437,653 1,500,000 1,563,045 1,920,000 2,000,698
Oklahoma County Home Finance
Mortgage Backed, "N", GNMA,
5.4%, 2038 565,000 598,160 1,935,000 2,048,565 2,500,000 2,646,725
Oklahoma Housing Finance Agency
Rev., 6.8%, 2016 -- -- 175,000 179,706 175,000 179,706
Oklahoma Housing Finance Agency
Rev., 6.65%, 2029 350,000 358,344 -- -- 350,000 358,344
Oregon Health & Community
Services (Single Family
Mortgage), B, 6.25%, 2031 -- -- 2,500,000 2,730,300 2,500,000 2,730,300
Texas Affordable Housing Corp.,
Single Family Mortgage Rev.,
GNMA, "B", 5.25%, 2039 520,000 550,410 -- -- 520,000 550,410
Texas Housing & Community
Affairs, Residential Mortgage
Rev., GNMA, 7.1%, 2021 685,000 712,784 4,555,000 4,739,751 5,240,000 5,452,535
Vermont Housing Finance Agency
Rev., FSA, 4.95%, 2032 235,000 236,530 1,740,000 1,751,327 1,975,000 1,987,857
Washington Housing Finance
Commission Rev., Single Family
Housing, GNMA, 5%, 2023 -- -- 530,000 536,445 530,000 536,445
------------ -------------- --------------
$ 7,830,214 $ 39,125,437 $ 46,955,651
------------ -------------- --------------
SOLID WASTE REVENUE
Central Wayne County, MI,
Sanitation Rev., "VII",
4.75%, 2007 $ -- $ -- $ 500,000 $ 500,255 $ 500,000 $ 500,255
Delaware County, PA,
Industrial Development
Authority, Resource Recovery
Facilities Rev. (American
Ref-Fuel Co.), "A",
6.2%, 2019 500,000 521,435 1,250,000 1,303,588 1,750,000 1,825,023
Hudson County, NJ, Solid Waste
System Rev., 5.9%, 2015 830,000 835,984 -- -- 830,000 835,984
Massachusetts Development
Finance Agency Rev. (Ogden
Haverhill Associates), "A",
6.7%, 2014 700,000 764,141 2,400,000 2,619,912 3,100,000 3,384,053
Massachusetts Industrial
Finance Agency, Resource
Recovery Rev. (Ogden Haverhill
Associates), "A", 5.6%, 2019 1,000,000 1,040,910 -- -- 1,000,000 1,040,910
------------ -------------- --------------
$ 3,162,470 $ 4,423,755 $ 7,586,225
------------ -------------- --------------
STATE & AGENCY - OTHER
Massachusetts Development
Finance Agency (Visual &
Performing Arts), 6%, 2021 $ 1,000,000 $ 1,206,960 $ -- $ -- $ 1,000,000 $ 1,206,960
New York Dormitory Authority
Rev. (City University),
5.75%, 2013 -- -- 5,000,000 5,438,300 5,000,000 5,438,300
State of Michigan, COP, AMBAC,
5.5%, 2010 (c) 1,250,000 1,333,313 -- -- 1,250,000 1,333,313
------------ -------------- --------------
$ 2,540,273 $ 5,438,300 $ 7,978,573
------------ -------------- --------------
STATE & LOCAL AGENCIES
Alabama Building Renovation
Authority, AMBAC, 6%, 2015 $ -- $ -- $ 1,610,000 $ 1,742,423 $ 1,610,000 $ 1,742,423
Alabama Building Renovation
Authority, AMBAC, 6%, 2016 -- -- 1,705,000 1,844,247 1,705,000 1,844,247
Alabama Building Renovation
Authority, AMBAC, 6%, 2018 760,000 821,416 -- -- 760,000 821,416
Alabama Public School &
College, Capital Improvement,
"D", 6%, 2015 2,850,000 3,071,445 -- -- 2,850,000 3,071,445
Allen County, IN, Jail Building
Corp., First Mortgage,
5.75%, 2011 (c) -- -- 2,750,000 3,015,430 2,750,000 3,015,430
Chicago, IL, Public Building
Commission Rev., FGIC,
5.25%, 2016 (u) 3,000,000 3,350,190 -- -- 3,000,000 3,350,190
Chicago, IL, Public Building
Commission Rev., FGIC,
5.25%, 2017 (u) 2,500,000 2,807,675 -- -- 2,500,000 2,807,675
Delaware Valley, PA, Regional
Finance Authority, RITES,
AMBAC, 7.025%, 2018 (p) -- -- 16,250,000 19,929,325 16,250,000 19,929,325
Fayette County, GA (Criminal
Justice Center),
6.25%, 2010 (c) -- -- 1,000,000 1,100,960 1,000,000 1,100,960
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement Rev., Enhanced,
"A", 5%, 2045 325,000 333,538 2,150,000 2,206,481 2,475,000 2,540,019
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement Rev., Enhanced,
"B", 5.375%, 2010 (c) 1,500,000 1,593,600 4,000,000 4,249,600 5,500,000 5,843,200
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement Rev., Enhanced,
"B", 5.5%, 2013 (c) 1,075,000 1,193,573 3,925,000 4,357,928 5,000,000 5,551,501
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement Rev., "A", FSA, 0%
to 2010, 4.55%, 2022 -- -- 3,415,000 2,902,682 3,415,000 2,902,682
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement Rev., "A-1", AMBAC,
0% to 2010, 4.6%, 2023 -- -- 995,000 845,939 995,000 845,939
Indianapolis, IN, Public
Improvement Bond Bank,
"C", AMBAC, 6%, 2017 500,000 539,870 -- -- 500,000 539,870
New Jersey Transportation
Trust Fund Authority, Capital
Appreciation Transportation
Systems, "C", AMBAC, 0%, 2028 1,115,000 415,215 3,820,000 1,422,530 4,935,000 1,837,745
New York Dormitory Authority
Rev. "B", ETM, 6%, 2007 -- -- 1,495,000 1,507,722 1,495,000 1,507,722
New York Dormitory Authority
Rev., Mental Health Services
Facilities, 5.75%, 2007 (c) -- -- 10,000 10,280 10,000 10,280
New York Dormitory Authority
Rev., Mental Health Services
Facilities, "A", 5.75%, 2010 -- -- 605,000 621,486 605,000 621,486
New York Dormitory Authority
Rev., Mental Health Services
Facilities, ETM, 6%, 2007 (c) -- -- 5,000 5,046 5,000 5,046
New York Urban Development
Corp., Correctional Facilities
Service Contract C, AMBAC,
5.875%, 2009 (c) 1,000,000 1,060,640 -- -- 1,000,000 1,060,640
Palm Springs, CA, Finance Lease
Rev. (Convention Center),
A, MBIA, 5.5%, 2035 -- -- 7,000,000 7,814,800 7,000,000 7,814,800
Pennsylvania Convention Center
Authority Rev., FGIC, ETM,
6.7%, 2016 (c) -- -- 26,195,000 30,407,156 26,195,000 30,407,156
Philadelphia, PA, Municipal
Authority, MBIA, 5.4%, 2017 -- -- 5,000,000 5,131,850 5,000,000 5,131,850
San Bernardino, CA, Joint
Powers Financing Authority
Lease Rev. (California
Department of Transportation),
5.5%, 2014 -- -- 10,000,000 10,130,700 10,000,000 10,130,700
Stafford, TX, Economic
Development Corp., FGIC,
6%, 2015 525,000 609,420 -- -- 525,000 609,420
Virginia College Building
Authority, VA, Public Higher
Education Financing, "A",
5.75%, 2009 (c) 2,295,000 2,431,966 -- -- 2,295,000 2,431,966
West Valley City, Utah
Municipal Building Lease Rev.,
"A", AMBAC, 5.5%, 2012 (c) -- -- 2,000,000 2,199,080 2,000,000 2,199,080
------------ -------------- --------------
$ 18,228,548 $ 101,445,665 $ 119,674,213
------------ -------------- --------------
STUDENT LOAN REVENUE
Access to Loans for Learning,
California Student Loan Rev.,
7.95%, 2030 $ 650,000 $ 689,436 $ -- $ -- $ 650,000 $ 689,436
Arizona Student Loan
Acquisition Authority Rev.,
5.8%, 2016 675,000 716,499 2,500,000 2,653,700 3,175,000 3,370,199
Arizona Student Loan
Acquisition Authority Rev.,
5.85%, 2017 700,000 743,407 2,800,000 2,973,628 3,500,000 3,717,035
Massachusetts Educational
Financing Authority, Refunding
Issue G, "A", MBIA, 6.1%, 2018 505,000 518,918 -- -- 505,000 518,918
------------ -------------- --------------
$ 2,668,260 $ 5,627,328 $ 8,295,588
------------ -------------- --------------
TAX - OTHER
Illinois Dedicated Tax Rev.
(Civic Center), AMBAC,
6.25%, 2011 $ -- $ -- $ 3,640,000 $ 3,951,948 $ 3,640,000 $ 3,951,948
New Jersey Economic Development
Authority Rev. Cigarette Tax,
5.5%, 2024 250,000 263,010 910,000 957,356 1,160,000 1,220,366
New Jersey Economic Development
Authority Rev. Cigarette Tax,
5.75%, 2029 450,000 484,745 1,640,000 1,766,624 2,090,000 2,251,369
New Jersey Economic Development
Authority Rev. Cigarette Tax,
5.5%, 2031 200,000 211,292 730,000 771,216 930,000 982,508
New Jersey Economic Development
Authority Rev. Cigarette Tax,
5.75%, 2034 300,000 321,552 1,095,000 1,173,665 1,395,000 1,495,217
New York, NY, Transitional
Finance Authority Rev., Future
Tax Secured, "A", 6%, 2009 (c) 2,000,000 2,154,840 -- -- 2,000,000 2,154,840
Virgin Islands Public Finance
Authority Rev., "A", 5.5%, 2022 -- -- 2,000,000 2,070,300 2,000,000 2,070,300
------------ -------------- --------------
$ 3,435,439 $ 10,691,109 $ 14,126,548
------------ -------------- --------------
TAX ASSESSMENT
Allegheny County, PA,
Redevelopment Authority Rev.
(Pittsburgh Mills), 5.1%, 2014 $ 75,000 $ 77,084 $ -- $ -- $ 75,000 $ 77,084
Allegheny County, PA,
Redevelopment Authority Rev.
(Pittsburgh Mills), 5.6%, 2023 50,000 52,835 -- -- 50,000 52,835
Broadview, IL, Tax Increment
Rev., 5.25%, 2012 1,000,000 1,026,860 -- -- 1,000,000 1,026,860
Fishhawk Community Development
District, FL, 5.125%, 2009 265,000 265,647 -- -- 265,000 265,647
Greyhawk Landing Community
Development, FL, Special
Assessment, "B", 6.25%, 2009 100,000 101,318 -- -- 100,000 101,318
Katy, TX, Development Authority
Rev., 5.8%, 2011 780,000 803,704 -- -- 780,000 803,704
Katy, TX, Development Authority
Rev., "B", 6%, 2018 1,200,000 1,241,496 -- -- 1,200,000 1,241,496
Killarney, FL, Community
Development District, Special
Assessment, "B", 5.125%, 2009 205,000 205,338 -- -- 205,000 205,338
Lakes by the Bay South
Community Development District,
FL, Rev., "B", 5.3%, 2009 255,000 255,658 -- -- 255,000 255,658
Lancaster County, SC,
Assessment Rev. (Sun City
Carolina Lakes), 5.45%, 2037 50,000 50,773 -- -- 50,000 50,773
Noblesville, IN, Redevelopment
Authority Lease Rental,
5.25%, 2025 455,000 484,807 1,545,000 1,646,213 2,000,000 2,131,020
Panther Trace II, Community
Development District, FL,
Special Assessment, "B",
5%, 2010 655,000 655,059 -- -- 655,000 655,059
Parkway Center, Community
Development District, FL,
Special Assessment, "B",
5.625%, 2014 935,000 954,831 -- -- 935,000 954,831
Preserve at Wilderness Lake,
FL, Community Development
District, Capital Improvement,
"B", 5%, 2009 110,000 110,341 -- -- 110,000 110,341
Renaissance Community
Development District, FL,
Special Assessment, "B",
6.25%, 2008 120,000 120,884 -- -- 120,000 120,884
Tuscany Reserve Community
Development District, FL,
Special Assessment, "B",
5.25%, 2016 185,000 189,375 -- -- 185,000 189,375
------------ -------------- --------------
$ 6,596,010 $ 1,646,213 $ 8,242,223
------------ -------------- --------------
TOBACCO
Badger, WI, Tobacco Asset
Securitization Corp.,
6.125%, 2027 $ 1,015,000 $ 1,085,827 $ 2,030,000 $ 2,171,653 $ 3,045,000 $ 3,257,480
California County, CA, Tobacco
Securitization Agency, Capital
Appreciation Asset Backed (Gold
Country), 0%, 2033 1,655,000 361,071 5,660,000 1,234,842 7,315,000 1,595,913
Children's Trust Fund, Tobacco
Settlement Rev., Puerto Rico,
"A", 0%, 2050 4,000,000 266,680 10,000,000 666,700 14,000,000 933,380
Children's Trust Fund, Tobacco
Settlement Rev., Puerto Rico,
"B", 0%, 2055 2,000,000 70,340 955,000 1,016,082 2,955,000 1,086,422
District of Columbia, Tobacco
Settlement Capital
Appreciation, "A", 0%, 2046 2,215,000 197,046 7,515,000 668,534 9,730,000 865,580
District of Columbia, Tobacco
Settlement, 6.25%, 2024 385,000 409,625 -- -- 385,000 409,625
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement, "A-1", 6.25%, 2033 -- -- 2,800,000 3,080,588 2,800,000 3,080,588
Guam Economic Development
Authority, 5%, 2022 115,000 115,308 -- -- 115,000 115,308
Iowa Tobacco Settlement
Authority, Tobacco Settlement
Rev., Asset Backed, "B",
5.3%, 2011 (c) 750,000 798,578 3,000,000 3,194,310 3,750,000 3,992,888
Iowa Tobacco Settlement
Authority, Tobacco Settlement
Rev., Asset Backed, "B", 0%
to 2007, 5.6% to 2034 615,000 597,208 2,455,000 2,383,977 3,070,000 2,981,185
Louisiana Tobacco Settlement
Authority, 5.5%, 2030 415,000 434,219 1,235,000 1,292,193 1,650,000 1,726,412
New Jersey Tobacco Settlement
Authority, 5.75%, 2032 660,000 693,878 2,275,000 2,391,776 2,935,000 3,085,654
Northern Tobacco Securitization
Corp., AK, Asset Backed, "A",
5%, 2046 455,000 453,621 1,545,000 1,540,319 2,000,000 1,993,940
South Carolina Tobacco
Settlement Authority,
6.375%, 2028 500,000 536,680 1,500,000 1,610,040 2,000,000 2,146,720
Washington Tobacco Settlement
Authority, 6.5% to 2026 70,000 76,871 155,000 170,215 225,000 247,086
------------ -------------- --------------
$ 6,096,952 $ 21,421,229 $ 27,518,181
------------ -------------- --------------
TOLL ROADS
E-470 Public Highway Authority
Rev., Capital Appreciation "B",
MBIA, 0%, 2010 (c) $ -- $ -- $ 5,000,000 $ 2,822,650 $ 5,000,000 $ 2,822,650
Harris County, TX, Toll Road
Subordinated Lien, 5%, 2024 -- -- 3,860,000 3,923,651 3,860,000 3,923,651
New Jersey Turnpike Authority
Rev., MBIA, 5.375%, 2020 (u) -- 10,000,000 10,556,800 10,000,000 10,556,800
New Jersey Turnpike Authority
Rev., Unrefunded, "C", MBIA,
6.5%, 2016 235,000 274,306 -- -- 235,000 274,306
New Jersey Turnpike Authority
Rev., "C", MBIA, ETM,
6.5%, 2016 (c) 80,000 93,728 -- -- 80,000 93,728
Northwest Parkway Public
Highway Authority Co. Rev.,
Capital Appreciation, "B",
AMBAC, 0%, 2018 750,000 422,858 1,250,000 704,763 2,000,000 1,127,621
Northwest Parkway Public
Highway Authority Co. Rev.,
Capital Appreciation "B",
AMBAC, 0%, 2019 -- -- 2,000,000 1,057,360 2,000,000 1,057,360
Northwest Parkway Public
Highway Authority Co. Rev.,
Capital Appreciation "C", FSA,
0% to 2011, 5.35%, 2016 -- -- 1,000,000 888,540 1,000,000 888,540
San Joaquin Hills, CA,
Transportation Corridor Agency,
Toll Road Rev., ETM,
0%, 2009 (c) 1,000,000 921,710 -- -- 1,000,000 921,710
------------ -------------- --------------
$ 1,712,602 $ 19,953,764 $ 21,666,366
------------ -------------- --------------
TRANSPORTATION - SPECIAL TAX
Allegheny County, PA, Port
Authority Special Rev., MBIA,
6.25%, 2009 (c) $ 1,000,000 $ 1,071,670 $ -- $ -- $ 1,000,000 $ 1,071,670
Jacksonville, FL,
Transportation Authority,
ETM, 9.2%, 2015 (c) -- -- 2,000,000 2,580,600 2,000,000 2,580,600
Metropolitan, NY,
Transportation Authority
Rev., "A", FSA, 5%, 2030 -- -- 2,750,000 2,865,913 2,750,000 2,865,913
Metropolitan, NY,
Transportation Authority Rev.,
AMBAC, 5%, 2030 -- -- 5,000,000 5,207,050 5,000,000 5,207,050
Metropolitan, NY,
Transportation Authority Rev.,
ETM, 5.75%, 2013 (c) -- -- 5,600,000 6,069,392 5,600,000 6,069,392
New Jersey Economic Development
Authority Rev., Transportation
Project Sublease, "A", FSA,
6%, 2009 (c) 325,000 344,666 1,325,000 1,405,176 1,650,000 1,749,842
New Jersey Transportation Trust
Fund Authority Rev.,
FSA, 5.5%, 2011 (u) -- -- 15,000,000 16,316,850 15,000,000 16,316,850
New Jersey Transportation Trust
Fund Authority Rev.,
Transportation Systems "B",
5.25%, 2007 (c) -- -- 8,500,000 8,768,855 8,500,000 8,768,855
New York Thruway Authority
Service Contract Rev.,
5.25%, 2013 -- -- 2,420,000 2,488,268 2,420,000 2,488,268
Pennsylvania Turnpike
Commission Oil, "A", AMBAC,
5.25%, 2018 850,000 886,338 -- -- 850,000 886,338
Pennsylvania Turnpike
Commission Oil, "A",
AMBAC, ETM, 5.25%, 2018 (c) 1,150,000 1,191,872 -- -- 1,150,000 1,191,872
Utah Tranauth Sales Tax Rev.,
"C", 5.25%, 2029 810,000 943,059 2,775,000 3,197,882 3,585,000 4,140,941
------------ -------------- --------------
$ 4,437,605 $ 48,899,986 $ 53,337,591
------------ -------------- --------------
UNIVERSITIES - COLLEGES
Alabama Private Colleges &
Universities, Facilities
Authority Rev. (Tuskegee
University), ASSD GTY,
4.75%, 2026 $ 1,000,000 $ 1,023,590 $ -- $ -- $ 1,000,000 $ 1,023,590
Amherst, NY, Industrial
Development Agency Rev. (Daemen
College), "A", 6%, 2011 (c) 1,000,000 1,120,120 -- -- 1,000,000 1,120,120
Arkansas Technical University
Rev., Housing Systems, "N",
AMBAC, 5%, 2036 165,000 173,484 575,000 604,567 740,000 778,051
California Educational
Facilities Authority Rev.
(L.A. College of Chiropractic),
5.6%, 2017 250,000 246,423 -- -- 250,000 246,423
College of Charleston, SC,
Academic & Administrative
Facilities Rev., "B", XLCA,
5.125%, 2034 -- -- 2,400,000 2,541,432 2,400,000 2,541,432
Houston, TX, Community College
Systems, MBIA, 7.875%, 2025 1,650,000 1,981,106 -- -- 1,650,000 1,981,106
Illinois Finance Authority Rev.
(University of Chicago), "A",
5%, 2034 215,000 224,232 785,000 818,708 1,000,000 1,042,940
Los Angeles, CA, Community
College "B", FSA, 5%, 2027 -- -- 5,000,000 5,268,300 5,000,000 5,268,300
Massachusetts Development
Finance Agency Rev. (Boston
University), XLCA, 6%, 2059 1,250,000 1,539,188 4,975,000 6,125,966 6,225,000 7,665,154
Massachusetts Development
Finance Agency Rev.
(Massachusetts College of
Pharmacy), "B",
6.625%, 2010 (c) 100,000 110,255 350,000 385,893 450,000 496,148
Massachusetts Development
Finance Agency Rev. (Olin
College), "B", XLCA,
5.25%, 2033 2,000,000 2,131,720 -- -- 2,000,000 2,131,720
Massachusetts Health &
Educational Facilities
Authority Rev. (Harvard
University), 6.25%, 2020 (u) -- -- 16,820,000 20,936,190 16,820,000 20,936,190
Northern Illinois University
Rev., Auxiliary Facilities
Systems, AMBAC, 5.875%, 2018 1,370,000 1,444,309 -- -- 1,370,000 1,444,309
Ohio Higher Educational
Facilities Rev. (Mt. Union
College Project), 5%, 2031 700,000 726,201 -- -- 700,000 726,201
Ohio State University,
6%, 2009 (c) -- -- 500,000 540,430 500,000 540,430
Oregon Facilities Authority
Rev. (Linfield College), "A",
5%, 2030 165,000 169,693 605,000 622,206 770,000 791,899
Rhode Island, Health &
Educational Building Corp.,
(Rhode Island School of
Design), "D", XLCA, 5.5%, 2035 -- -- 9,140,000 10,017,988 9,140,000 10,017,988
San Mateo County, CA (Community
College District, 2005
Election), "A", MBIA, 0%, 2026 -- -- 5,100,000 2,090,592 5,100,000 2,090,592
Savannah, GA, Economic
Development Authority Rev.
(College of Art & Design,
Inc.), 6.5%, 2009 (c) 500,000 547,220 -- -- 500,000 547,220
St. Joseph County, IN,
Educational Facilities Rev.
(University of Notre Dame),
6.5%, 2026 1,000,000 1,314,250 -- -- 1,000,000 1,314,250
Texas A&M University, Permanent
University Fund, "A", 0%, 2007 -- -- 6,695,000 6,517,783 6,695,000 6,517,783
University of Akron, OH,
General Receipts, FGIC,
6%, 2010 (c) -- -- 1,000,000 1,083,580 1,000,000 1,083,580
University of Arkansas,
University Construction Rev.
(UAMS Campus), "B", MBIA,
5%, 2034 -- -- 810,000 848,872 810,000 848,872
University of Hawaii,
University Systems Rev., "A",
FGIC, 5.5%, 2012 (c) -- -- 3,500,000 3,780,840 3,500,000 3,780,840
University of New Mexico, MBIA,
5.75%, 2010 (c) -- -- 500,000 537,580 500,000 537,580
Upland, IN, Economic
Development Rev. (Taylor
University), 6%, 2018 435,000 483,590 -- -- 435,000 483,590
Upland, IN, Economic
Development Rev. (Taylor
University), 6.25%, 2023 520,000 577,018 -- -- 520,000 577,018
------------ -------------- --------------
$ 13,086,198 $ 63,447,128 $ 76,533,326
------------ -------------- --------------
UNIVERSITIES - DORMITORIES
Georgia Private College &
University Authority Rev.
(Mercer Housing Corp.), "A",
6%, 2021 $ -- $ -- $ 1,000,000 $ 1,065,790 $ 1,000,000 $ 1,065,790
UNIVERSITIES -
SECONDARY SCHOOLS
California Statewide
Communities, Development
Authority Rev. (Escondido
Charter High School),
7.5%, 2011 (c) $ 500,000 $ 595,030 $ -- $ -- $ 500,000 $ 595,030
Clark County, NV, Economic
Development Rev. (Alexander
Dawson School), 5.5%, 2009 (c) 1,500,000 1,585,245 6,000,000 6,340,980 7,500,000 7,926,225
District of Columbia Rev.
(Gonzaga College High School),
FSA, 5.25%, 2032 -- -- 3,500,000 3,714,935 3,500,000 3,714,935
Maine Finance Authority,
Educational Rev. (Waynflete
School), 6.4%, 2019 1,000,000 1,064,650 1,500,000 1,604,640 2,500,000 2,669,290
Maine Finance Authority,
Educational Rev. (Waynflete
School), 6.5%, 2029 1,000,000 1,068,110 -- -- 1,000,000 1,068,110
Michigan Municipal Bond
Authority Rev. (YMCA Service
Learning Academy), 7.625%, 2021 400,000 425,620 -- -- 400,000 425,620
New Hampshire Health &
Education (Derryfield School),
6.5%, 2010 205,000 212,341 -- -- 205,000 212,341
Pima County, AZ, Industrial
Development Authority Education
Rev. (Arizona Charter Schools),
"C", 6.75%, 2031 500,000 522,985 -- -- 500,000 522,985
------------ -------------- --------------
$ 5,473,981 $ 11,660,555 $ 17,134,536
------------ -------------- --------------
UTILITIES - COGENERATION
Carbon County, PA, Industrial
Development Authority Rev.
(Panther Creek Partners),
6.65%, 2010 $ 550,000 $ 575,031 $ -- $ -- $ 550,000 $ 575,031
UTILITIES - INVESTOR OWNED
Apache County, AZ, Industrial
Development Authority,
Pollution Control Rev. (Tucson
Electric Power Co.),
5.875%, 2033 $ 1,000,000 $ 1,005,740 $ -- $ -- $ 1,000,000 $ 1,005,740
Brazos River Authority, TX,
Pollution Control Rev. (Texas
Utility Co.), "B", 6.3%, 2032 120,000 130,679 -- -- 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 -- -- 1,600,000 1,724,400
Clark County, NV, Industrial
Development Rev. (Southwest
Gas Corp.), "A", AMBAC,
4.85%, 2035 730,000 740,629 -- -- 730,000 740,629
Connecticut Development
Authority, Pollution Control
Rev. (Connecticut Light &
Power Co.), 5.85%, 2028 1,000,000 1,052,770 -- -- 1,000,000 1,052,770
Farmington, NM, Pollution
Control Rev. (New Mexico Public
Service), "C", 5.8%, 2022 -- -- 4,880,000 4,937,194 4,880,000 4,937,194
Farmington, NM, Pollution
Control Rev. (New Mexico Public
Service), 5.8%, 2022 500,000 505,860 -- -- 500000 505860
Farmington, NM, Pollution
Control Rev. (New Mexico Public
Service), 6.375%, 2022 1,000,000 1,031,110 -- -- 1,000,000 1,031,110
Farmington, NM, Pollution
Control Rev. (New Mexico Public
Service), "A", 6.3%, 2016 565,000 578,464 -- -- 565,000 578,464
Forsyth, MT, Pollution
Control Rev. (Northwestern
Corp.), AMBAC, 4.65%, 2023 -- -- 2,285,000 2,341,051 2,285,000 2,341,051
Lehigh County, PA, Industrial
Development Authority Pollution
Control Rev. (PPL Electric
Utilities Corp.), "A", FGIC,
4.7%, 2029 320,000 328,259 1,180,000 1,210,456 1,500,000 1,538,715
Matagorda County, TX, Pollution
Control Rev. (Reliant Energy),
5.95%, 2030 750,000 771,210 -- -- 750,000 771,210
Mecklenburg County, VA,
Industrial Development
Authority Rev. (UAE Mecklenburg
LP), 6.5%, 2017 700,000 772,821 -- -- 700,000 772,821
Michigan Strategic Fund,
Limited Obligation Rev.
(Detroit Edison), MBIA,
7%, 2008 -- -- 3,000,000 3,175,770 3,000,000 3,175,770
New Hampshire Industrial
Development Authority,
Pollution Control Rev.
(Connecticut Light & Power),
5.9%, 2016 500,000 508,230 3,500,000 3,557,610 4,000,000 4,065,840
New Hampshire Industrial
Development Authority,
Pollution Control Rev.
(Connecticut Light & Power),
5.9%, 2018 -- -- 1,000,000 1,053,320 1,000,000 1,053,320
Pima County, AZ, Industrial
Development Authority Rev.
(Tucson Electric Power Co.),
"A", 6.1%, 2025 2,000,000 2,012,880 -- -- 2,000,000 2,012,880
Pittsylvania County, VA,
Industrial Development
Authority Rev., 7.5%, 2014 2,000,000 2,017,720 -- -- 2,000,000 2,017,720
Port Morrow, OR, Pollution
Control Rev. (Portland General
Electric), 5.2%, 2033 350,000 360,773 -- -- 350,000 360,773
Sabine River Authority, TX,
Pollution Control Rev. (TXU
Electric Co.), "A",
5.5%, 2022 500,000 527,230 -- -- 500,000 527,230
Sabine River Authority, TX,
Pollution (TXU Electric Co.),
5.75%, 2030 -- -- 1,500,000 1,588,095 1,500,000 1,588,095
West Feliciana Parish, LA,
Pollution Control Rev.
(Entergy Gulf States),
6.6%, 2028 1,665,000 1,671,926 -- -- 1,665,000 1,671,926
------------ -------------- --------------
$ 15,740,701 $ 17,863,496 $ 33,604,197
------------ -------------- --------------
UTILITIES - MUNICIPAL OWNED
Austin, TX, Utility Systems
Rev., AMBAC, 6.75%, 2011 $ 1,500,000 $ 1,707,555 $ -- $ -- $ 1,500,000 $ 1,707,555
Austin, TX, Utility Systems
Rev., AMBAC, 6.75%, 2012 -- -- 2,500,000 2,903,300 2,500,000 2,903,300
California Department of Water
Resources Power Supply Rev.,
"A", 5.125%, 2012 (c) 750,000 817,800 -- -- 750,000 817,800
Easley, SC, Utility Rev.,
Refunding & Improvement, FSA,
5%, 2034 320,000 338,032 1,090,000 1,151,422 1,410,000 1,489,454
Georgia Municipal Electric
Authority Power Rev., AMBAC,
6.5%, 2014 (c) -- -- 145,000 172,720 145,000 172,720
Georgia Municipal Electric
Authority Power Rev., AMBAC,
6.5%, 2017 -- -- 8,000,000 9,535,520 8,000,000 9,535,520
Georgia Municipal Electric
Authority Power Rev., AMBAC,
ETM, 6.5%, 2017 (c) -- -- 365,000 434,814 365,000 434,814
Georgia Municipal Electric
Power Authority Rev., MBIA,
6.375%, 2016 2,000,000 2,387,720 -- -- 2,000,000 2,387,720
Georgia Municipal Electric
Power Authority Rev., MBIA,
6.5%, 2020 7,350,000 8,926,575 -- -- 7,350,000 8,926,575
Hawaii Department Budget &
Finance Rev., "B" (Electric Co.
& Subsidiary), XLCA, 5%, 2022 -- -- 4,000,000 4,157,120 4,000,000 4,157,120
Intermountain Power Agency, UT,
"A", AMBAC, 6%, 2009 (c) -- -- 9,000,000 9,577,890 9,000,000 9,577,890
Intermountain Power Agency, UT,
"A", ETM, 6.15%, 2014 (c) -- -- 28,220,000 29,381,817 28,220,000 29,381,817
Intermountain Power Agency, UT,
Rev., "A", 6.15%, 2014 -- -- 230,000 234,773 230,000 234,773
Mercer County, ND, Pollution
Control Rev. (Antelope Valley
Station), AMBAC, 7.2%, 2013 -- -- 4,000,000 4,569,000 4,000,000 4,569,000
North Carolina Eastern
Municipal Power "A", MBIA,
5.625%, 2007 (c) -- -- 7,735,000 7,925,281 7,735,000 7,925,281
North Carolina Eastern
Municipal Power "A", MBIA,
5.7%, 2007 (c) -- -- 7,000,000 7,173,460 7,000,000 7,173,460
North Carolina Eastern
Municipal Power "A", MBIA,
6.5%, 2018 -- -- 9,250,000 11,307,755 9,250,000 11,307,755
North Carolina Municipal Power
Agency, Catawba Electric Rev.,
6.375%, 2013 750,000 815,445 1,500,000 1,630,890 2,250,000 2,446,335
North Carolina Municipal Power
Agency, Catawba Electric Rev.,
MBIA, 7%, 2007 3,250,000 3,276,683 -- -- 3,250,000 3,276,683
North Carolina Municipal Power
Agency, MBIA, 5.25%, 2019 (u) 3,000,000 3,225,720 7,000,000 7,526,680 10,000,000 10,752,400
Northern California
Transmission Agency, MBIA,
7%, 2013 -- -- 4,000,000 4,645,760 4,000,000 4,645,760
Piedmont, SC, Municipal Power
Agency, FGIC, 6.25%, 2021 -- -- 4,150,000 5,120,229 4,150,000 5,120,229
Puerto Rico Electric Power
Authority, FSA, 5.25%, 2015 (u) -- -- 5,000,000 5,139,300 5,000,000 5,139,300
Puerto Rico Electric Power
Authority, FSA, 5.25%, 2016 (u) -- -- 6,000,000 6,167,160 6,000,000 6,167,160
San Antonio, TX, Electric &
Gas, "A", 5%, 2025 -- -- 1,000,000 1,057,820 1,000,000 1,057,820
South Carolina Public Service
Authority, "B", FSA,
5.125%, 2037 -- -- 8,500,000 8,865,925 8,500,000 8,865,925
Southern California Public
Power Authority Rev. (Magnolia
Power), AMBAC, 5%, 2036 -- -- 4,200,000 4,375,434 4,200,000 4,375,434
Washington Public Power Supply
System Rev. (Nuclear
Project #1), FSA, 5.125%, 2014 -- -- 8,000,000 8,241,440 8,000,000 8,241,440
Washington Public Power Supply
System Rev. (Nuclear
Project #3), 7.125%, 2016 -- -- 5,145,000 6,459,650 5,145,000 6,459,650
------------ -------------- --------------
$ 21,495,530 $ 147,755,160 $ 169,250,690
------------ -------------- --------------
WATER & SEWER UTILITY REVENUE
Atlanta, GA, Water & Wastewater
Rev., RITES, FGIC,
7.025%, 2016 (v)(z) $ 1,000,000 $ 1,262,660 $ -- $ -- 1,000,000 1,262,660
Forsyth County, GA, Water &
Sewage Authority,
6.25%, 2010 (c) 1,170,000 1,281,606 1,000,000 1,095,390 2,170,000 2,376,996
Forsyth County, GA, Water &
Sewer Authority Rev.,
6.25%, 2010 (c) -- -- 1,055,000 1,155,636 1,055,000 1,155,636
Magnolia, TX, Water & Sewer
System Rev., 5.15%, 2031 140,000 143,431 -- -- 140,000 143,431
Massachusetts Water Resources
Authority, 6.5%, 2019 5,965,000 7,160,565 -- -- 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 -- -- 490,000 515,887
New York Environmental
Facilities, 5%, 2016 430,000 443,850 -- -- 430,000 443,850
New York Environmental
Facilities, ETM, 5%, 2016 (c) 570,000 586,741 -- -- 570,000 586,741
Pittsburgh, PA, Water & Sewer
Authority Rev., "C", FSA,
5.25%, 2022 2,000,000 2,046,800 -- -- 2,000,000 2,046,800
Spartanburg, SC, Water & Sewer
Authority Rev., "B", MBIA,
5.25%, 2030 255,000 273,901 920,000 988,190 1,175,000 1,262,091
West Virginia Water Development
Authority Loan Program, "B",
AMBAC, 4.75%, 2035 110,000 112,439 390,000 398,646 500,000 511,085
West Wilson Utility District,
TN, Waterworks Rev., MBIA,
5.25%, 2030 480,000 514,637 1,730,000 1,854,837 2,210,000 2,369,474
Westmoreland County, PA,
Municipal Authority Services
Rev., FSA, 5.25%, 2026 520,000 564,845 -- -- 520,000 564,845
------------ -------------- --------------
$ 14,907,362 $ 5,492,699 $ 20,400,061
------------ -------------- --------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST, $297,900,637,
$1,037,283,174, AND
$1,335,183,811, RESPECTIVELY) $318,352,057 $1,113,848,772 $1,432,200,829
FLOATING RATE DEMAND NOTES
Allegheny County, PA, Hospital
Development Authority Rev.
(Presbyterian University
Hospital), "B",
3.8%, due 10/02/06 $ -- $ -- $ 50,000 $ 50,000 $ 50,000 $ 50,000
Chicago, IL, Midway Airport
Rev., Second Lien, "A",
3.95%, due 10/02/06 200,000 200,000 -- -- 200,000 200,000
Chicago, IL, Midway Airport
Rev., Second Lien, "B",
3.95%, due 10/02/06 900,000 900,000 -- -- 900,000 900,000
Georgia Municipal Electric
Authority Rev., 3.76%,
due 10/04/06 100,000 100,000 370,000 370,000 470,000 470,000
Jefferson County, AL, Sewer
Rev., Warrants Rev., "B-4",
3.78%, due 10/05/06 100,000 100,000 300,000 300,000 400,000 400,000
Oklahoma Industries Authority,
Health System Rev. (Integris
Baptist Medical Center), "B",
3.89%, due 10/02/06 -- -- 395,000 395,000 395,000 395,000
State of Oregon,
3.8%, due, 10/02/06 -- -- 7,440,000 7,440,000 7,440,000 7,440,000
State of Oregon, "73G",
3.8%, due 10/02/06 -- -- 100,000 100,000 100,000 100,000
------------ -------------- --------------
TOTAL FLOATING RATE DEMAND
NOTES, AT IDENTIFIED COST $ 1,300,000 $ 8,655,000 $ 9,955,000
------------ -------------- --------------
TOTAL INVESTMENTS (IDENTIFIED
COST, $299,200,637,
$1,045,938,174, AND
$1,345,138,811,
RESPECTIVELY) (k) $319,652,057 $1,122,503,772 $1,442,155,829
------------ -------------- --------------
Other Assets, Less Liabilities (8,501,067) (55,661,044) -- (64,162,111)
------------ -------------- ---------- --------------
NET ASSETS - 100.0% $311,150,990 $1,066,842,728 $ -- $1,377,993,718
============ ============== ========== ==============
SWAP AGREEMENTS AT 09/30/06
Unrealized
Notional Cash Flows Cash Flows Appreciation
Expiration Amount Counterparty to Receive to Pay (Depreciation)
- --------------------------------------------------------------------------------------------------------------
Interest Rate Swaps
12/1/07 USD 33,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 284,054
12/6/16 USD 15,000,000 Merrill Lynch 3-Month Libor 5.569% (fixed rate) (203,784)
---------
$ 80,270
=========
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 pro forma combined portfolio held securities fair valued in accordance with the policies adopted
by the Board of Trustees, aggregating $1,432,200,829 and 99.31% of combined 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 $9,209,214, representing 0.7% of combined net assets.
(p) Primary inverse floater. (v) Externally deposited inverse floater.
(u) Underlying security deposited into special purpose trust by investment banker upon creation of self-deposited inverse
floaters.
(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. The pro forma combined portfolio holds the following restricted securities:
ACQUISITION ACQUISITION CURRENT TOTAL % OF
RESTRICTED SECURITIES DATE COST MARKET VALUE COMBINED 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%, 2017 2/26/1999 524,910 538,180
- -----------------------------------------------------------------------------------------------------------------------------------
Total Restricted Securities 1,800,840 0.1%
The following abbreviations are used in the Portfolio of Investments and are defined:
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
Note: As of the date of the Municipal Income (Pro Forma Combined) Fund's Portfolio of Investments, the securities held by the
Municipal Bond Fund are consistent with the investment policies of the Municipal Income Fund.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Assets and Liabilities (Unaudited)
This statement represents your funds balance sheet, which details the assets
and liabilities comprising the total value of the fund.
MFS Municipal MFS Municipal Pro Forma Pro Forma
At 9/30/06 Income Fund Bond Fund Adjustments Combined
Assets
- --------------------------------------------------------------- --------------- ------------ ---------------
Investments, at value
(identified cost, $299,200,637,
$1,045,938,174 and $1,345,138,811,
respectively) $ 319,652,057 $ 1,122,503,772 $ -- $ 1,442,155,829
Cash 19,196 14,544 -- 33,740
Receivable for investments sold 292,475 674,227 -- 966,702
Receivable for fund shares sold 802,649 421,009 -- 1,223,658
Interest receivable 4,558,821 15,650,531 -- 20,209,352
Unrealized appreciation o-
interest rate swap agreements 51,650 232,404 -- 284,054
Other assets 926 2,905 - 3,831
- --------------------------------------------------------------- --------------- ------------ ---------------
Total assets $ 325,377,774 $ 1,139,499,392 $ -- $ 1,464,877,166
- --------------------------------------------------------------- --------------- ------------ ---------------
Liabilities
- --------------------------------------------------------------- --------------- ------------ ---------------
Distributions payable $ 498,242 $ 1,648,365 $ -- $ 2,146,607
Payable for investments purchased 933,436 3,197,882 -- 4,131,318
Payable to the holder of the
floating rate certificate
from trust assets 12,070,000 65,530,000 -- 77,600,000
Payable for fund shares reacquired 333,788 912,229 -- 1,246,017
Unrealized depreciation on
interest rate swap agreements -- 203,784 -- 203,784
Payable to affiliates
Management fee 7,651 26,278 -- 33,929
Shareholder servicing costs 7,208 47,138 -- 54,346
Distribution and service fees 10,461 4,602 -- 15,063
Administrative services fee 518 1,592 -- 2,110
Payable for independent trustees compensation 31,067 63,920 -- 94,987
Reorganization costs 138,070 27,500 -- 165,570
Payable for interest expense and fees 92,031 844,513 -- 936,544
Accrued expenses and other liabilities 104,312 148,861 -- 253,173
- --------------------------------------------------------------- --------------- ------------ ---------------
Total liabilities $ 14,226,784 $ 72,656,664 $ -- $ 86,883,448
- --------------------------------------------------------------- --------------- ------------ ---------------
Net assets $ 311,150,990 $ 1,066,842,728 $ -- $ 1,377,993,718
- --------------------------------------------------------------- --------------- ------------ ---------------
Net assets consist of:
- --------------------------------------------------------------- --------------- ------------ ---------------
Paid-in capital $ 294,529,113 $ 980,832,656 $ -- $ 1,275,361,769
Unrealized appreciation
(depreciation) on investments 20,503,070 76,594,218 -- 97,097,288
Accumulated net realized gain
(loss) on investments (3,693,911) 9,552,302 -- 5,858,391
Accumulated distributions in excess
of net investment income (187,282) (136,448) -- (323,730)
- --------------------------------------------------------------- --------------- ------------ ---------------
Net assets $ 311,150,990 $ 1,066,842,728 $ -- $ 1,377,993,718
- --------------------------------------------------------------- --------------- ------------ ---------------
Shares of beneficial interest outstanding 36,183,858 101,143,294 124,184,470 160,368,328
- --------------------------------------------------------------- --------------- ------------ ---------------
Net assets:
- --------------------------------------------------------------- --------------- ------------ ---------------
Class A $ 244,712,229 $ -- $ -- $ 244,712,229
Class A1 -- 1,024,597,851 -- 1,024,597,851
Class B 31,159,055 -- -- 31,159,055
Class B1 -- 42,244,877 -- 42,244,877
Class C 35,279,706 -- -- 35,279,706
- --------------------------------------------------------------- --------------- ------------ ---------------
Total $ 311,150,990 $ 1,066,842,728 $ -- $ 1,377,993,718
- --------------------------------------------------------------- --------------- ------------ ---------------
Shares outstanding:
- --------------------------------------------------------------- --------------- ------------ ---------------
Class A 28,476,172 -- -- 28,476,172
Class A1 -- 97,134,035 119,277,980(A) 119,277,980
Class B 3,620,465 -- -- 3,620,465
Class B1 -- 4,009,259 4,906,490(A) 4,906,490
Class C 4,087,221 -- -- 4,087,221
- --------------------------------------------------------------- --------------- ------------ ---------------
Total 36,183,858 101,143,294 124,184,470 160,368,328
- --------------------------------------------------------------- --------------- ------------ ---------------
Net asset value per share:
- --------------------------------------------------------------- --------------- ------------ ---------------
Class A $ 8.59 $ -- $ -- $ 8.59
Class A1 $ -- $ 10.55 $ -- $ 8.59
Class B $ 8.61 $ -- $ -- $ 8.61
Class B1 $ -- $ 10.54 $ -- $ 8.61
Class C $ 8.63 $ -- $ -- $ 8.63
See Notes to Financial Statements
(A) The Class A1 and Class B1 capital stock shares to be distributed to the MFS Municipal Bond Fund shareholders in the
reorganization are determined based on the Class A and Class B net asset values per share, respectively, of the MFS
Municipal Income Fund.
FINANCIAL STATEMENTS Statement of Operations (Unaudited)
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.
MFS MUNICIPAL MFS MUNICIPAL PRO FORMA PRO FORMA
YEAR ENDED 9/30/06 INCOME FUND BOND FUND ADJUSTMENTS COMBINED
NET INVESTMENT INCOME
- --------------------------------------------------------------------------- ------------ -------------- ------------
Interest income $ 17,662,630 $ 61,499,696 $ -- $ 79,162,326
- --------------------------------------------------------------------------- ------------ -------------- ------------
Expenses
Management fee $ 1,712,797 $ 4,358,097 $ 1,634,286(B) $ 7,705,180
Distribution and service fees 1,306,904 364,056 -- 1,670,960
Shareholder servicing costs 414,752 1,300,811 -- 1,715,563
Administrative services fee 51,532 155,718 (9,571)(C) 197,679
Independent trustees' compensation 15,914 34,414 15,914(A) 66,242
Custodian fee 126,939 250,914 (100,000)(A) 277,853
Shareholder communications 38,386 53,927 (12,000)(A) 80,313
Auditing fees 44,940 46,444 (46,444)(A) 44,940
Legal fees 8,072 25,811 (1,500)(A) 32,383
Reorganization costs 138,070 27,500 (165,570)(D) --
Interest expense and fees 415,690 2,319,464 -- 2,735,154
Miscellaneous 83,676 170,054 (100,000)(A) 153,730
- --------------------------------------------------------------------------- ------------ -------------- ------------
Total expenses $ 4,357,672 $ 9,107,210 $ 1,215,115 $ 14,679,997
- --------------------------------------------------------------------------- ------------ -------------- ------------
Fees paid indirectly (21,945) (94,781) -- (116,726)
Reduction of expenses by investment adviser (778,544) (1,089,524) (1,634,286)(B) (3,502,354)
- --------------------------------------------------------------------------- ------------ -------------- ------------
Net expenses $ 3,557,183 $ 7,922,905 $ (419,171) $ 11,060,917
- --------------------------------------------------------------------------- ------------ -------------- ------------
Net investment income $ 14,105,447 $ 53,576,791 $ 419,171 $ 68,101,409
- --------------------------------------------------------------------------- ------------ -------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------- ------------ -------------- ------------
Realized gain (loss) (identified cost basis)
Investment transactions $ 153,478 $ 4,820,985 $ -- $ 4,974,463
Swap transactions 1,348,784 2,932,562 -- 4,281,346
- --------------------------------------------------------------------------- ------------ -------------- ------------
Net realized gain (loss) on investments $ 1,502,262 $ 7,753,547 $ -- $ 9,255,809
- --------------------------------------------------------------------------- ------------ -------------- ------------
Change in unrealized appreciation (depreciation)
Investments $ (1,957,662) $(14,484,329) $ -- $(16,441,991)
Swap transactions (789,159) (2,101,803) -- (2,890,962)
- --------------------------------------------------------------------------- ------------ -------------- ------------
Net unrealized gain (loss) on investments $ (2,746,821) $(16,586,132) $ -- $(19,332,953)
- --------------------------------------------------------------------------- ------------ -------------- ------------
Net realized and unrealized gain (loss) on investments $ (1,244,559) $ (8,832,585) $ -- $(10,077,144)
- --------------------------------------------------------------------------- ------------ -------------- ------------
Change in net assets from operations $ 12,860,888 $ 44,744,206 $ 419,171 $ 58,024,265
- --------------------------------------------------------------------------- ------------ -------------- ------------
(A) Expenditures are reduced as a result of the elimination of duplicative functions
(B) Expenditures are adjusted to reflect the application of management fee rates in effect for the pro forma combined fund.
(C) Expenditures are reduced as a result of the current administrative services fee rates in effect for the pro forma combined fund.
(D) Reorganization expenditures will not be borne by pro forma combined fund on a going forward basis.
See Notes to Financial Statements
MFS MUNICIPAL INCOME FUND AND
MFS MUNICIPAL BOND FUND
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
(1) DESCRIPTION OF THE FUND
The MFS Municipal Income Fund, (Acquiring Fund) a series of MFS Municipal
Series Trust (the trust), is registered under the Investment Company Act of
1940, as amended, as an open-end investment company.
Acquiring Fund consists of 3 classes of shares: Classes A, B, and C. All
shareholders bear the common expenses of the fund based on the value of settle
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.
(2) BASIS FOR THE COMBINATION
The accompanying pro forma financial statements are presented to show the
effect of the proposed reorganization of MFS Municipal Bond Fund (Target Fund)
into Acquiring Fund, (Acquiring Fund and Target Fund are referred to herein as
the Fund), as if such reorganization had taken place as of September 30, 2006,
at the respective net asset value on that date, the semi annual period of the
Acquiring Fund. The proforma combined Statement of Operations assumes that the
reorganization had occurred on the first day of the fiscal year ended September
30, 2006. Acquiring Fund will be the accounting survivor, based upon an
analysis of factors including surviving fund portfolio manager, investment
objectives and policies, expense ratio structures and portfolio composition and
size.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements of Acquiring Fund and Target Fund included in
their semi-annual and annual reports, respectively, dated September 30, 2006
and August 31, 2006.
(3) PORTFOLIO VALUATION
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. In
addition, investments may be valued at fair value if the adviser determines
that an investment's value has been materially affected by events occurring
after the close of the exchange or market on which the investment is
principally traded (such as foreign exchange or market) and prior to the
determination of the fund's net asset value, or after the halting of trading of
a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that
occur on a frequent basis after foreign markets close (such as developments in
foreign markets and significant movements in the U.S. markets) and prior to the
determination of the fund's net asset value may be deemed to have a material
affect on the value of securities traded in foreign markets. Accordingly, the
fund's foreign equity securities may often be valued at fair value. 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.
(4) SHARES OF BENEFICIAL INTEREST
The pro forma combined shares of beneficial interest outstanding represent
those shares that would have been outstanding on September 30, 2006, had the
acquisition taken place on September 30, 2006. In exchange for the net assets
of the Target Fund each class of shares of the Acquiring Fund would have been
issued based upon the per share net asset value as follows:
- ---------------------------------------------------------------------------
Class A1 Class B1
- ---------------------------------------------------------------------------
Net assets - Target Fund $1,024,624,262 $42,245,966
- ---------------------------------------------------------------------------
Shares - Acquiring Fund 119,142,356 4,906,616
- ---------------------------------------------------------------------------
Net asset value - Acquiring Fund $8.60 $8.61
- ---------------------------------------------------------------------------
(5) TAX MATTERS AND DISTRIBUTIONS
The fund's policy is to comply with the provision of the Internal Revenue Code
applicable to regulated investment companies and to distribute to shareholders
all of its net taxable and tax-exempt income, including any net realized gain
on investments. Accordingly, no provision for federal income or excise tax is
provided. Under the terms of the Agreement and Plan of Reorganization, the
reorganization of the Acquiring Fund and the Target Fund should be treated as a
tax-free business combination. The yearly utilization of any capital loss
acquired by the Acquiring Fund is limited by the Internal Revenue Code.
MFS MUNICIPAL SERIES TRUST
ON BEHALF OF MFS(R) MUNICIPAL INCOME FUND
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Reference is hereby made to (a) Article V of the Trust's Amended and
Restated Declaration of Trust, dated as of December 16, 2004, incorporated by
reference to Registrant's Post-Effective Amendment No. 40 filed with the SEC
via EDGAR on July 29, 2005 and (b) Section 4 of the Distribution Agreement,
incorporated by reference to Registrant's Post-Effective Amendment No. 26 filed
with the SEC via EDGAR on February 22, 1995.
ITEM 16. EXHIBITS
1 Amended and Restated Declaration of Trust, dated December
16, 2004. (1)
2 (a) Master Amended and Restated By-Laws, dated January 1,
2002, as revised June 23, 2004. (3)
(b) Appendix A, dated June 28, 2005 as revised, February 21,
2006, to the Master Amended and Restated By-Laws, dated
January 1, 2002. (13)
3 Not Applicable.
4 Plan of Reorganization; included as Exhibit A to the
Prospectus/Proxy Statement set forth in Part A to the
Registration Statement on Form N-14; filed herewith.
5 Not Applicable.
6 Investment Advisory Agreement for the Trust, dated January
1, 2002. (4)
7 (a) Distribution Agreement, dated January 1, 1995. (7)
(b) Dealer Agreement between MFS Fund Distributors, Inc. and a
dealer and the Mutual Fund Agreement between MFS and a bank
effective April 6, 2001. (2)
8 (a) Master Retirement Plan for Non-Interested Person
Trustees, as amended and restated February 10, 1999. (25)
(b) Amendment to the Master Retirement Plan for Non-Interested
Person Trustees, dated July 1, 2002. (11)
9 (a) Master Custodian Agreement between the Registrant and
State Street Bank and Trust Company, dated July 2, 2001.
(17)
(b) Exhibit A, dated July 26, 2006, to the Master Custodian
Agreement between Registrant and State Street Bank and Trust
Company, dated July 2, 2001. (14)
(c) Amendment No. 2, dated May 2, 2003, to the Master Custodian
Agreement with State Street Bank and Trust Company. (15)
(d) Revised Schedule A as of September 30, 2005, to Amendment
No. 2, dated May 2, 2003, to the Master Custodian Agreement
dated July 2, 2001 with State Street Bank and Trust Company.
(21)
(e) Amendment, dated December 28, 2004, to the Master Custodian
Agreement with State Street Bank and Trust Company. (19)
10 (a) Master Distribution Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 effective January 1,
1997, Amended and Restated effective April 25, 2006. (12)
(b) Exhibit A revised July 26, 2006, to the Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940. (14)
11 Opinion of Susan Newton, including consent, dated December
18, 2006 (27)
12 Opinion of Ropes & Gray LLP as to tax matters, including
consent; to be filed by amendment.
13 (a) Shareholder Servicing Agent Agreement, dated August 1,
1985. (18)
(b) Amendment to Exhibit B of the Shareholder Servicing Agent
Agreement to amend fee schedule dated April 1, 2003. (20)
(c) Amendment to Shareholder Servicing Agreements, dated
February 22, 2005. (16)
(d) Master Administrative Services Agreement, dated March 1,
1997 as amended and restated August 1, 2006. (22)
(e) Dividend Disbursing Agency Agreement dated February 1, 1986.
(6)
14 Consent of Deloitte & Touche LLP; filed herewith.
16 (a) Power of Attorney, dated December 14, 2006; filed herewith.
(b) Power of Attorney, dated December 14, 2006; filed herewith.
17 (a) MFS Municipal Bond Fund's Prospectus and Statement of
Additional Information, dated January 1, 2007. (24)
(b) MFS Municipal Bond Fund's Annual Report to Shareholders for
the fiscal year ended August 31, 2006 (as restated). (10)
(c) MFS Municipal Income Fund's Class A1 and Class B1 Prospectus
dated March 20, 2007 and Statement of Additional
Information, dated August 1, 2006, as supplemented. (8)
(d) MFS Municipal Income Fund's Annual Report to Shareholders
for the fiscal year ended March 31, 2006 (as restated). (5)
(e) MFS Municipal Income Fund's Semi-Annual Report to
Shareholders for the period ended September 30, 2006
(as restated). (26)
- ---------------
(1) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 40 filed with the SEC via EDGAR
on July 29, 2005.
(2) Incorporated by reference to MFS Growth Opportunities Fund (File Nos.
2-36431 and 811-2032) Post-Effective Amendment No. 41 filed with the SEC
via EDGAR on April 30, 2001.
(3) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4492) Post-Effective Amendment No. 57 filed with the SEC via EDGAR on
September 28, 2005.
(4) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 37 filed with the SEC via EDGAR
on July 29, 2002.
(5) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) N-CSR filed with the SEC via EDGAR on March 8, 2007.
(6) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 28 filed with the SEC via EDGAR
on July 28, 1995.
(7) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 26 filed with the SEC via EDGAR
on February 22, 1995.
(8) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 42 filed with the SEC via EDGAR
on November 16, 2006.
(9) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4492) Post-Effective Amendment No. 58 filed with the SEC via EDGAR on
November 28, 2005.
(10) Incorporated by reference to MFS Series Trust IV (File Nos. 2-54607 and
811-2594) Form N-CSR filed with the SEC via EDGAR on March 8, 2007.
(11) Incorporated by reference to MFS Series Trust I (File Nos. 33-7638 and
811-4777) Post-Effective Amendment No. 41 filed with the SEC via EDGAR on
December 27, 2002.
(12) Incorporated by reference to MFS Series Trust IX (File Nos. 2-50409 and
811-2464) Post-Effective Amendment No. 62 filed with the SEC via EDGAR on
April 27, 2006.
(13) Incorporated by reference to MFS Government Limited Maturity Fund (File
Nos. 2-96738 and 811-4253) Post-Effective Amendment No. 27 filed with the
SEC via EDGAR on April 28, 2006.
(14) Incorporated by reference to MFS Series Trust XII (File Nos. 333-126328
and 811-21780) Post-Effective Amendment No. 2 filed with the SEC via EDGAR
on August 25, 2006.
(15) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4992) Post-Effective Amendment No. 46 filed with the SEC via EDGAR on
September 26, 2003.
(16) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4492) Post-Effective Amendment No. 55 filed with the SEC via EDGAR on
March 14, 2005.
(17) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4492) Post-Effective Amendment No. 34 filed with the SEC via EDGAR on
July 30, 2001.
(18) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 28 filed with the SEC via EDGAR
on July 28, 1995.
(19) Incorporated by reference to MFS Series Trust XI (File Nos. 33-68310 and
811-7992) Post-Effective Amendment No. 22 filed with the SEC via EDGAR on
January 28, 2005.
(20) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 38 filed with the SEC via EDGAR
on July 29, 2003.
(21) Incorporated by reference to MFS Series Trust XIII (File Nos. 2-74959 and
811-3327) Post-Effective Amendment No. 35 filed with the SEC via EDGAR on
May 17, 2006.
(22) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4492) Post-Effective Amendment No. 62 filed with the SEC via EDGAR on
September 29, 2006.
(23) Incorporated by reference to MFS Series Trust X (File Nos. 33-1657 and
811-4492) Post-Effective Amendment No. 57 filed with the SEC via EDGAR on
September 28, 2005.
(24) Incorporated by reference to MFS Series Trust IV (File Nos. 2-54607 and
811-2594) Post-Effective Amendment No. 44 filed with the SEC via EDGAR on
October 27, 2006.
(25) Incorporated by reference to MFS Government Limited Maturity Fund (File
Nos. 2-96738 and 811-4253) Post-Effective Amendment No. 20 filed with the
SEC via EDGAR on February 26, 1999.
(26) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Form N-CSR filed with the SEC via EDGAR on March 8, 2007.
(27) Previously filed. Incorporated by reference to Registrant's Initial
Registration Statement on Form N-14 (File No. 333-139458) as filed with
the SEC via EDGAR on December 18, 2006.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which
is a part of this Registration Statement by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c) under the Securities
Act, the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(b) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (a) above will be filed as a part of an amendment to this
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new Registration Statement for the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
(c) The Registration agrees to file an executed copy of an opinion of
counsel supporting the tax consequences of the proposed reorganization as an
amendment to this Registration Statement within a reasonable time after receipt
of such opinion.
NOTICE
A copy of the Amended and Restated Declaration of Trust, as amended, is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Registration Statement has been 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 Registration
Statement are not binding upon any of the Trustees, officers, or shareholders of
the Registrant individually, but are binding only upon the assets and property
of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts on the __th day of March 2007.
MFS(R) MUNICIPAL SERIES TRUST
By: MARIA F. DWYER*
----------------------------------
Name: Maria F. Dwyer
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities indicated on March __, 2007.
SIGNATURE TITLE
MARIA F. DWYER* President (Principal Executive Officer)
- ---------------------------
Maria F. Dwyer
TRACY A. ATKINSON* Principal Financial and Accounting Officer
- ---------------------------
Tracy A. Atkinson
ROBERT E. BUTLER* Trustee
- ---------------------------
Robert E. Butler
LAWRENCE H. COHN* Trustee
- ---------------------------
Lawrence H. Cohn
DAVID H. GUNNING* Trustee
- ---------------------------
David H. Gunning
WILLIAM R. GUTOW* Trustee
- ---------------------------
William R. Gutow
MICHAEL HEGARTY* Trustee
- ---------------------------
Michael Hegarty
J. ATWOOD IVES* Trustee
- ---------------------------
J. Atwood Ives
ROBERT J. MANNING* Trustee
- ---------------------------
Robert J. Manning
LAWRENCE T. PERERA* Trustee
- ---------------------------
Lawrence T. Perera
ROBERT C. POZEN* Trustee
- ---------------------------
Robert C. Pozen
J. DALE SHERRATT* Trustee
- ---------------------------
J. Dale Sherratt
LAURIE J. THOMSEN* Trustee
- ---------------------------
Laurie J. Thomsen
ROBERT W. UEK* Trustee
- ---------------------------
Robert W. Uek
*By: SUSAN S. NEWTON
-----------------------------------
Name: Susan S. Newton
as Attorney-in-fact
Executed by Susan S. Newton on behalf of
those indicated pursuant to (i) a Power
of Attorney, dated December 14, 2006,
filed herewith (Dwyer and Atkinson); and
(ii) a Power of Attorney, dated December
14, 2006, filed herewith (Trustees).
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
4 Plan of Reorganization; included as Exhibit A to MFS Municipal Bond
Fund Prospectus/Proxy Statement set forth in Part A to the
Registration Statement on Form N-14.
14 Consent of Deloitte & Touche LLP.
16(a) Power of Attorney, dated December 14, 2006. (Dwyer and Atkinson)
16(b) Power of Attorney, dated December 14, 2006. (Trustees)