As filed with the Securities and Exchange Commission on April 27, 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. 3 | | 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.
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M F S(R)
INVESTMENT MANAGEMENT
MFS MUNICIPAL BOND FUND
500 Boylston Street, Boston, Massachusetts 02116-3741
(617) 954-5000
April 30, 2007
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 a similar investment objective 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 1-888-684-2426, 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,
/s/ Maria F. Dwyer
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 30, 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 30, 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,
1-800-225-2606 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 20, 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 30, 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 3
Risk Factors 14
General 16
Proposal Regarding Approval or Disapproval of Reorganization Transaction
and Related Agreement and Plan of Reorganization 16
Background and Reasons for the Proposed Reorganization 17
Information About the Reorganization 20
Voting Information 25
Miscellaneous 27
Form of Agreement and Plan of Reorganization A-1
Enclosures
Class A1/Class B1 Prospectus of the Municipal Income Fund, dated March 20,
2007, as supplemented. Annual Report of the Municipal Income Fund, for the
fiscal year ended March 31, 2006, as restated. Semi-Annual Report of the
Municipal Income Fund, for the six-month period ended September 30, 2006, as
restated.
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 0.04% 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.
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(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 February 28, 2007, the average credit quality of rated
securities held in Municipal Bond Fund's portfolio was AA, compared to A+ 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) "Certain Investment Policies and Risks" in Municipal Bond
Fund's current prospectus; (iii) "Investment Techniques, Practices, Risks and
Restrictions" in Part I of each Fund's current Statement of Additional
Information, and (iv) "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 REORGANIZAITON?
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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Effective Management Fee Rate
(for the fiscal year ended August
Contractual Management Fee Rate 31, 2006)
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0.40% on first $1.3 billion of average daily net assets; 0.30% of 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
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MUNICIPAL INCOME FUND
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Effective Management Fee Rate
(for the fiscal year ended March
Contractual Management Fee Rate 31, 2006)
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0.55% of average daily net assets (at all asset levels) 0.30% of average daily net assets
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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 completed, and if the management fee reduction
resulting from the NYAG Settlement is not extended beyond 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 discussed
below reflect estimated Class A1 and Class B1 expenses based on the Municipal
Income Fund's operating expenses for the twelve-month period ended March 31,
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
for the fiscal year ended March 31, 2006 shares are 0.03% lower than the
Municipal Bond Fund's "Other Expenses" for Class A and Class B shares,
respectively, for the twelve-month period ended August 31, 2006.
For the same periods, the Municipal Income Fund's estimated "Total Annual
Operating Expenses" for Class A1 and Class B1 shares were each 0.12% higher
than those for the Municipal Bond Fund's Class A and Class B shares,
respectively. For the same periods, the Municipal Income Fund's estimated "Net
Expenses" for Class A1 and Class B1 shares were each 0.03% 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 0.04% 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 August 31, 2006 and
March 31, 2006, respectively, 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
March 31, 2006).
CLASS A/ CLASS B/
CLASS A1 CLASS B1
SHARES SHARES
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%**
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+ 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(1)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
TOTAL
DISTRIBUTION ANNUAL
MANAGEMENT (12B-1) OTHER OPERATING FEE NET
FEES FEES(2) EXPENSES(3) EXPENSES(4) REDUCTIONS(5) EXPENSES
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MUNICIPAL BOND FUND(5)
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(6)
Class A1 0.55% N/A 0.37% 0.92% (0.25)% 0.67%
Class B1 0.55% 0.76% 0.37% 1.68% (0.25)% 1.43%
MUNICIPAL INCOME FUND
(PRO FORMA COMBINED)(7)
Class A1 0.55% N/A 0.36% 0.91% (0.25)% 0.66%
Class B1 0.55% 0.76% 0.36% 1.67% (0.25)% 1.42%
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(1) Expenses associated with the reorganization have not been reflected in the "Annual Fund Operating Expenses" table.
(2) 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.
(3) 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.
(4) Includes certain interest expenses and fees of 0.11% for Municipal Income Fund and 0.21% for Municipal Bond Fund
related to each 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 affected 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 0.49% and 1.25% for Class A and Class B shares of
Municipal Bond Fund, respectively, 0.56% for Class A1 shares and 1.32% for Class B1 shares of Municipal Income Fund,
respectively, and 0.48% and 1.24% for Class A1 and Class B1 shares of the Municipal Income Fund (pro forma combined),
respectively.
(5) 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.
(6) Expenses computed for the Municipal Bond Fund based on operating expenses for the twelve-month period ended August 31,
2006, the Fund's most recently reported fiscal year. Expenses computed for the Municipal Income Fund based on
operating expenses for the twelve-month period ended March 31, 2006, the Fund's most recently reported fiscal year.
(7) Assumes that the reorganization occurred at the beginning of the twelve- month period ended March 31, 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 $540 $710 $ 916 $1,511
Class B1(2)
Assuming redemption at end of period $546 $784 $1,069 $1,745
Assuming no redemption $146 $484 $ 869 $1,745
MUNICIPAL INCOME (PRO FORMA COMBINED)
Class A1 $539 $688 $ 860 $1,356
Class B1(2)
Assuming redemption at end of period $545 $762 $1,011 $1,591
Assuming no redemption $145 $462 $ 811 $1,591
- ----------
(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 after purchase. Therefore years nine
and ten reflect Class A1 expenses, 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. The Municipal Income Fund's total return for the
three-month period ended March 31, 2007 was 0.69%. The Municipal Bond Fund's total return for the
three-month period ended March 31, 2007 was 0.90%. 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 recently reported 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 February 28, 2007, the three-year standard
deviation was 2.57% for the Municipal Income Fund versus 2.70% 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 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 30, 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 95,573,976.465, and
3,490,045.837 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)
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(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 Municipal 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 carry forwards of the Municipal Bond Fund, if any, but the
use by the Municipal Income Fund of any such capital loss carry forwards (and
of capital loss carry forwards 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 carry forwards. Capital loss carry forwards 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 carry forwards 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 capital loss carry forwards 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 carry forwards as of the end of the last fiscal year as
adjusted by year-to-date realized gains or losses) of 0.287% 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
0.981% 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 carry forwards 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 MUNICIPAL PRO FORMA PRO FORMA
BOND FUND INCOME FUND (a) ADJUSTMENTS COMBINED 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. Municipal Income Fund
also offers Class A, Class B, and Class C shares, which are not being offered in the reorganization and
therefore are not reflected in this table.
(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(1)(2)
A Citigroup Global Markets Inc 6.08% 6.08%
109,801,250.000
Surpas House Account
c/o MFS
B Merrill Lynch Pierce 12.01% 12.01%
Fenner & Smith Inc
For the sole Benefit of its Customers
4800 Deer Lake Dr E
Jacksonville Fl 32246-6484
Citigroup Global Markets Inc 8.75% 8.75%
109801250
Surpas House Account
c/o MFS
- ----------
(1) Percentage owned assuming completion of the reorganization on April 2, 2007.
(2) The holders of Municipal Bond Fund Class A and Class B shares will, as a result of the
Reorganization, receive newly issued Class A1 or Class B1 shares of Municipal Income Fund,
respectively. These new classes of shares are available only to holders of Municipal Bond Fund in
connection with the Reorganization.
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(1)(2)
A Merrill Lynch Pierce 6.07% 6.07%
Fenner & Smith Inc
For the sole benefit of its customers
4800 Deer Lake Dr E
Jacksonville FL 32246-6484
B Merrill Lynch Pierce 14.73% 14.73%
Fenner & Smith Inc
For the sole Benefit of its Customers
4800 Deer Lake Dr E
Jacksonville Fl 32246-6484
Citigroup Global Markets Inc 5.48% 5.48%
109801250
Surpas House Account
c/o MFS
C Merrill Lynch Pierce 9.08% 9.08%
Fenner & Smith Inc
For the sole Benefit of its Customers
4800 Deer Lake Dr E
Jacksonville Fl 32246-6484
Citigroup Global Markets Inc 7.95% 7.95%
109,801,250.000
Surpas House Account
c/o MFS
- ----------
(1) Percentage owned assuming completion of the reorganization on April 2, 2007.
(2) Class A, Class B, and Class C shares of Municipal Income Fund are not being offered in the
Reorganization.
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 MIS, an ADP company, to aid in the
solicitation of instructions for nominee and registered accounts for a fee of
approximately $30,000, 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 PROMPTLY.
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 30, 2007
MFS MUNICIPAL BOND FUND
500 Boylston Street
Boston, MA 02116
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this th
day of , 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 A1 and 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 JPMorgan Chase Bank, N.A. (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 June 22, 2007 or such other date on or
before September 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 "JPMorgan
Chase Bank, N.A., 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 September 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 Municipal Trust, 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 ABD 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 IN EXCHANGE FOR SHARES OF
MFS MUNICIPAL INCOME FUND
A SERIES OF MFS MUNICIPAL SERIES TRUST
APRIL 30, 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 30, 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.
MMB-PRX-SAI-4/07
- -----------------
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-1
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 ACCOUNTING 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 related services and assistance 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 semiannual 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 twelvemonth 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 twelvemonth 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 precombination 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
INVESTMENT TYPE (PERCENT OF NET ASSETS)
MUNICIPAL BONDS
(104.4%, 102.3%, AND 103.9%, RESPECTIVELY)
MFS MUNICIPAL
MFS MUNICIPAL BOND FUND INCOME FUND PRO FORMA COMBINED
-------------------------- ----------------------- PRO FORMA ---------------------------
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 $ 1,845,000 $ 1,981,646 $ 350,000 $ 375,920 $ 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) 5,000,000 5,505,450 3,000,000 3,303,265 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 3,395,000 3,582,404 950,000 1,002,435 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 700,000 723,345 200,000 206,665 900,000 930,010
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 680,000 734,101 195,000 210,514 875,000 944,615
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
-------------- ------------ --------------
$ 34,532,954 $ 9,880,032 $ 44,412,986
-------------- ------------ --------------
GENERAL OBLIGATIONS --
GENERAL PURPOSE
Chicago, IL (Lakefront Millennium
Parking Facilities), MBIA,
5.7%, 2025 $2,355,000 $2,565,513 $645,000 $702,657 $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 800,000 858,592 235,000 252,211 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 2,460,000 2,592,815 710,000 748,333 3,170,000 3,341,148
Cranston, RI, FGIC,
6.375%, 2009 (c) 830,000 906,717 200,000 218,486 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) 3,315,000 3,632,577 850,000 931,430 4,165,000 4,564,007
Interlocken Metropolitan District,
CO, Improvement, "C", XLCA,
0%, 2027 1,860,000 571,504 510,000 156,703 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 2,990,000 3,087,713 700,000 722,876 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) 1,835,000 942,071 3,185,000 1,246,195 5,020,000 2,188,266
Southlake, TX, AMBAC, 0%, 2009 (c) 3,150,000 1,319,000 3,150,000 1,152,774 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 390,000 410,705 110,000 115,840 500,000 526,545
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
-------------- ------------ --------------
$ 138,328,559 $ 26,013,155 $ 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
-------------- ------------ --------------
$ 32,060,347 $ 4,864,216 $ 36,924,563
-------------- ------------ --------------
GENERAL OBLIGATIONS -- SCHOOLS
Adams 12 Five Star Schools, CO,
"B", FGIC, 0%, 2025 $ 1,700,000 $ 677,620 $ 490,000 $ 195,314 $ 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 1,345,000 386,042 380,000 109,068 1,725,000 495,110
De Soto, TX, Independent School
District, School Building, PSF,
0%, 2034 1,015,000 246,726 285,000 69,278 1,300,000 316,004
De Soto, TX, Independent School
District, School Building, PSF,
0%, 2036 1,250,000 272,688 380,000 82,897 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 705,000 239,897 200,000 68,056 905,000 307,953
Ennis, TX, Independent School
District, Capital Appreciation,
11N", PSF, 0%, 2029 1,350,000 442,841 385,000 126,292 1,735,000 569,133
Ennis, TX, Independent School
District, Capital Appreciation,
"N", PSF, 0%, 2031 1,340,000 387,314 380,000 109,835 1,720,000 497,149
Ferris, TX, Independent School
District, PSF, 5.5%, 2034 2,360,000 2,575,468 640,000 698,432 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) 1,765,000 642,407 485,000 176,525 2,250,000 818,932
Lancaster, TX, Independent School
District, Capital Appreciation,
FSA, 0%, 2014 (c) 1,570,000 537,317 430,000 147,163 2,000,000 684,480
Lancaster, TX, Independent School
District, Capital Appreciation,
FSA, 0%, 2025 970,000 400,707 275,000 113,603 1,245,000 514,310
Lancaster, TX, Independent School
District, Capital Appreciation,
FSA, 0%, 2026 970,000 379,590 275,000 107,616 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 3,280,000 1,209,664 900,000 331,920 4,180,000 1,541,584
Leander, TX, Independent School
District, Capital Appreciation,
3,320,000 910,145 910,000 249,467 4,230,000 1,159,612
Leander, TX, Independent School
District, PSF, 0%, 2018 4,885,000 2,509,913 2,500,000 1,284,500 7,385,000 3,794,413
Manchester, NH, School Facilities
Rev., MBIA, 5.5%, 2027 785,000 933,436 215,000 255,654 1,000,000 1,189,090
Manchester, NH, School Facilities
Rev., MBIA, 5.5%, 2028 785,000 934,158 215,000 255,852 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 3,885,000 1,370,628 1,115,000 393,372 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 1,760,000 495,950 515,000 145,122 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 3,955,000 4,206,696 1,080,000 1,148,731 5,035,000 5,355,427
-------------- ------------ --------------
$ 107,024,163 $ 29,512,448 $ 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) 1,250,000 1,434,900 500,000 573,960 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 1,555,000 1,623,000 445,000 464,460 2,000,000 2,087,460
Gulfport, MS, Hospital Facilities
Rev. (Memorial Hospital),
5.75%, 2031 1,575,000 1,632,929 525,000 544,310 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 1,620,000 1,717,767 465,000 493,063 2,085,000 2,210,830
Highlands County, FL, Health
Facilities Authority Rev.
(Adventist/ Sunbelt Hospital),
6%, 2011 (c) 1,000,000 1,118,980 350,000 391,643 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 6,500,000 6,940,700 1,000,000 1,067,800 7,500,000 8,008,500
Illinois Health Facilities
Authority Rev. (Decatur Memorial
Hospital), 5.75%, 2024 2,650,000 2,784,541 350,000 367,770 3,000,000 3,152,311
Illinois Health Facilities
Authority Rev. (Passavant
Memorial Area Hospital
Associates), 6%, 2024 1,165,000 1,258,328 335,000 361,837 1,500,000 1,620,165
Illinois Health Facilities
Authority Rev. (Riverside
Health Systems), 5.75%, 2022 1,975,000 2,061,584 650,000 678,496 2,625,000 2,740,080
Illinois Health Facilities
Authority Rev. (Sinai Health),
FHA, 5.15%, 2037 2,400,000 2,515,656 640,000 670,842 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 2,075,000 2,228,758 565,000 606,867 2,640,000 2,835,625
Indiana Health Facilities
Financing Authority, Hospital
Rev. (Clarian Health), "A",
5%, 2039 910,000 939,493 260,000 268,427 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 4,750,000 5,165,958 1,250,000 1,359,463 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 2,610,000 2,726,850 750,000 783,578 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 1,115,000 1,182,034 305,000 323,337 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 2,550,000 2,659,625 1,000,000 1,042,990 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 1,500,000 1,630,785 400,000 434,876 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 2,325,000 2,439,971 670,000 703,132 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 1,335,000 1,410,147 375,000 396,109 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 4,000,000 4,340,320 1,000,000 1,085,080 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 3,945,000 4,135,070 1,120,000 1,173,962 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 1,200,000 1,312,980 300,000 328,245 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 2,000,000 2,122,680 1,000,000 1,061,340 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 1,595,000 1,771,646 1,500,000 1,666,125 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 520,000 555,677 325,000 347,298 845,000 902,975
Wisconsin Health & Educational
Facilities Authority Rev.
(Aurora Health Care, Inc.),
6.875%, 2030 2,000,000 2,305,240 750,000 864,465 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
-------------- ------------ --------------
$ 168,055,477 $ 61,652,666 $ 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 930,000 966,028 275,000 285,654 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
-------------- ------------ --------------
$ 3,516,928 $ 6,078,610 $ 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 $ 3,500,000 $ 3,745,525 $ 1,000,000 $ 1,070,150 $ 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
-------------- ------------ --------------
$ 3,745,525 $ 2,167,770 $ 5,913,295
-------------- ------------ --------------
INDUSTRIAL REVENUE -- ENVIRONMENTAL
SERVICES
California Pollution Control
Financing Authority, Solid
Waste Disposal Rev. (Waste
Management, Inc.), "A-2",
5.4%, 2025 $ 785,000 $ 834,722 $ 215,000 $ 228,618 $ 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 1,730,000 1,904,332 230,000 253,177 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 1,500,000 1,640,280 450,000 492,084 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
-------------- ------------ --------------
$ 6,712,615 $ 4,607,300 $ 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 8,650,000 9,064,422 2,895,000 3,033,699 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 3,640,000 3,806,494 980,000 1,024,825 4,620,000 4,831,319
-------------- ------------ --------------
$ 15,026,534 $ 8,013,685 $ 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) 1,500,000 1,698,510 900,000 1,019,106 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
-------------- ------------ --------------
$ 6,109,256 $ 6,951,210 $ 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 1,945,000 2,091,108 555,000 596,692 2,500,000 2,687,800
Gallery Certificate Trust, PA,
Parking Rev., 4.5%, 2013 (n) 2,410,000 2,409,928 640,000 639,981 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
-------------- ------------ --------------
$ 13,604,586 $ 2,563,211 $ 16,167,797
-------------- ------------ --------------
MULTI-FAMILY HOUSING REVENUE
Bay County, FL, Housing Finance
Authority, Multi-Family Rev.
(Andrews Place II Apartments),
FSA, 5%, 2035 $ 395,000 $ 403,963 $ 150,000 $ 153,404 $ 545,000 $ 557,367
Bay County, FL, Housing Finance
Authority, Multi-Family Rev.
(Andrews Place II Apartments),
FSA, 5.1%, 2046 995,000 1,016,791 275,000 281,023 1,270,000 1,297,814
California Statewide Communities
Development Authority Rev.
(Irvine Apartments),
5.25%, 2025 3,500,000 3,591,035 1,000,000 1,026,010 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 1,145,000 1,180,415 320,000 329,898 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 785,000 861,969 215,000 236,081 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 1,630,000 1,659,699 455,000 463,290 2,085,000 2,122,989
Tampa, FL, Housing Finance
Authority, Multi-Family Rev.
(Meridian River Development
Corp.), 4.75%, 2026 1,130,000 1,149,334 335,000 340,732 1,465,000 1,490,066
-------------- ------------ --------------
$ 11,095,390 $ 9,890,747 $ 20,986,137
-------------- ------------ --------------
PARKING
Rail Connections, Inc., MA Rev.,
0%, 2009 (c) $ 375,000 $ 237,578 $ 100,000 $ 59,279 $ 475,000 $ 296,857
Rail Connections, Inc., MA Rev.,
0%, 2009 (c) 450,000 266,756 210,000 116,399 660,000 383,155
Rail Connections, Inc., MA Rev.,
0%, 2009 (c) 975,000 540,423 300,000 155,739 1,275,000 696,162
-------------- ------------ --------------
$ 1,044,757 $ 331,417 $ 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 3,120,000 3,307,262 220,000 233,204 3,340,000 3,540,466
Miami Dade County, FL,
Transportation Systems, "N",
XLCA, 5%, 2022 3,870,000 4,147,169 1,130,000 1,210,931 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
-------------- ------------ --------------
$ 29,164,599 $ 2,531,789 $ 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 1,600,000 1,720,720 430,000 462,444 2,030,000 2,183,164
California Rural Home Mortgage
Finance Authority Rev., GNMA,
6.55%, 2030 370,000 371,254 85,000 85,288 455,000 456,542
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 30,000 30,580 10,000 10,193 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 405,000 433,281 280,000 299,552 685,000 732,833
Jefferson Parish, LA, Single
Family Mortgage Rev., GNMA,
6.75%, 2030 575,000 589,042 400,000 409,768 975,000 998,810
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 50,000 50,251 10,000 10,050 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 210,000 213,150 65,000 65,975 275,000 279,125
Nortex Housing Finance Corp.,
TX, Single Family Mortgage
Backed Securities Rev., "A",
GNMA, 5.5%, 2038 2,715,000 2,882,841 785,000 833,529 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 325,000 326,453 160,000 160,715 485,000 487,168
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 360,000 365,486 495,000 502,544 855,000 868,030
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev., "A",
GNMA, 5.9%, 2035 790,000 854,085 230,000 248,658 1,020,000 1,102,743
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev., "A",
GNMA, 6.25%, 2035 395,000 424,033 115,000 123,453 510,000 547,486
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev., "A",
GNMA, 5.8%, 2036 2,145,000 2,361,066 585,000 643,927 2,730,000 3,004,993
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"A-1", GNMA, 6.875%, 2026 275,000 279,868 60,000 61,062 335,000 340,930
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"A-1", GNMA, 5.75%, 2037 665,000 725,774 190,000 207,364 855,000 933,138
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"A-3", GNMA, 6%, 2035 1,395,000 1,525,795 365,000 399,222 1,760,000 1,925,017
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"A-3", GNMA, 5.5%, 2037 1,165,000 1,238,407 335,000 356,108 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 1,010,000 1,069,610 280,000 296,526 1,290,000 1,366,136
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"A-5", GNMA, 5.7%, 2036 2,140,000 2,336,645 590,000 644,215 2,730,000 2,980,860
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"A-5", GNMA, 5.9%, 2037 500,000 549,605 140,000 153,889 640,000 703,494
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"A-6", GNMA, 5.65%, 2036 1,605,000 1,685,988 445,000 467,455 2,050,000 2,153,443
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"B", GNMA, 5.45%, 2027 1,235,000 1,318,671 325,000 347,019 1,560,000 1,665,690
Sedgwick & Shawnee Counties, KS,
Single Family Housing Rev.,
"B-2", GNMA, 6.45%, 2033 1,020,000 1,093,787 285,000 305,617 1,305,000 1,399,404
-------------- ------------ --------------
$ 37,869,468 $ 10,780,486 $ 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 135,000 136,343 30,000 30,299 165,000 166,642
Colorado Housing & Finance
Authority Rev., 6.875%, 2028 -- -- 60,000 60,303 60,000 60,303
Colorado Housing & Finance
Authority Rev., 6.8%, 2030 285,000 288,762 70,000 70,924 355,000 359,686
Colorado Housing & Finance
Authority Rev., "A-1",
7.4%, 2027 60,000 61,714 15,000 15,429 75,000 77,143
Colorado Housing & Finance
Authority Rev., "A-2",
7.15%, 2014 19,000 19,388 7,000 7,143 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 885,000 927,586 250,000 262,030 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 145,000 149,656 35,000 36,124 180,000 185,780
Colorado Housing & Finance
Authority Rev., "C-2",
5.9%, 2023 595,000 618,503 160,000 166,320 755,000 784,823
Colorado Housing & Finance
Authority Rev., "C-2", FHA,
6.6%, 2032 520,000 533,244 150,000 153,821 670,000 687,065
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 235,000 241,453 60,000 61,648 295,000 303,101
Louisiana Housing Finance Agency,
Single Family Mortgage Rev.,
GNMA, 6.4%, 2032 425,000 428,324 115,000 115,899 540,000 544,223
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 910,000 911,183 165,000 165,215 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 780,000 800,709 165,000 169,381 945,000 970,090
Missouri Housing Development
Commission, Single Family
Mortgage Rev. (Home Loan
Program), GNMA, 6.85%, 2032 275,000 282,785 160,000 164,530 435,000 447,315
Missouri Housing Development
Commission, Single Family
Mortgage Rev. (Home Loan
Program), GNMA, 6.75%, 2034 345,000 364,434 95,000 100,351 440,000 464,785
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 265,000 265,949 80,000 80,286 345,000 346,235
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 580,000 599,181 165,000 170,457 745,000 769,638
New Mexico Mortgage Finance
Authority Rev., GNMA,
7.1%, 2030 210,000 212,783 60,000 60,795 270,000 273,578
New Mexico Mortgage Finance
Authority Rev., GNMA,
6.25%, 2032 1,205,000 1,248,669 335,000 347,140 1,540,000 1,595,809
New Mexico Mortgage Finance
Authority, "N", GNMA,
5.95%, 2037 1,560,000 1,687,234 440,000 475,886 2,000,000 2,163,120
North Dakota Housing Finance
Agency Rev., Housing Finance,
"A", 5%, 2033 1,170,000 1,172,129 340,000 340,619 1,510,000 1,512,748
Ohio Housing Finance Agency
Mortgage Rev., Residential
Mortgage Backed, "C", GNMA,
5.9%, 2035 1,500,000 1,563,045 420,000 437,653 1,920,000 2,000,698
Oklahoma County Home Finance
Mortgage Backed, "N", GNMA,
5.4%, 2038 1,935,000 2,048,565 565,000 598,160 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 4,555,000 4,739,751 685,000 712,784 5,240,000 5,452,535
Vermont Housing Finance Agency
Rev., FSA, 4.95%, 2032 1,740,000 1,751,327 235,000 236,530 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
-------------- ------------ --------------
$ 39,125,437 $ 7,830,214 $ 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 1,250,000 1,303,588 500,000 521,435 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 2,400,000 2,619,912 700,000 764,141 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
-------------- ------------ --------------
$ 4,423,755 $ 3,162,470 $ 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
-------------- ------------ --------------
$ 5,438,300 $ 2,540,273 $ 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 2,150,000 2,206,481 325,000 333,538 2,475,000 2,540,019
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B",
5.375%, 2010 (c) 4,000,000 4,249,600 1,500,000 1,593,600 5,500,000 5,843,200
Golden State, CA, Tobacco
Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B",
5.5%, 2013 (c) 3,925,000 4,357,928 1,075,000 1,193,573 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 3,820,000 1,422,530 1,115,000 415,215 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
-------------- ------------ --------------
$ 101,445,665 $ 18,228,548 $ 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 2,500,000 2,653,700 675,000 716,499 3,175,000 3,370,199
Arizona Student Loan Acquisition
Authority Rev., 5.85%, 2017 2,800,000 2,973,628 700,000 743,407 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
-------------- ------------ --------------
$5,627,328 $2,668,260 $ $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 910,000 957,356 250,000 263,010 1,160,000 1,220,366
New Jersey Economic Development
Authority Rev. Cigarette Tax,
5.75%, 2029 1,640,000 1,766,624 450,000 484,745 2,090,000 2,251,369
New Jersey Economic Development
Authority Rev. Cigarette Tax,
5.5%, 2031 730,000 771,216 200,000 211,292 930,000 982,508
New Jersey Economic Development
Authority Rev. Cigarette Tax,
5.75%, 2034 1,095,000 1,173,665 300,000 321,552 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
-------------- ------------ --------------
$ 10,691,109 $ 3,435,439 $ 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 1,545,000 1,646,213 455,000 484,807 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
------------- ----------- --------------
$ 1,646,213 $ 6,596,010 $ 8,242,223
------------- ----------- --------------
TOBACCO
Badger, WI, Tobacco Asset
Securitization Corp.,
6.125%, 2027 $ 2,030,000 $ 2,171,653 $ 1,015,000 $ 1,085,827 $ 3,045,000 $ 3,257,480
California County, CA, Tobacco
Securitization Agency, Capital
Appreciation Asset Backed (Gold
Country), 0%, 2033 5,660,000 1,234,842 1,655,000 361,071 7,315,000 1,595,913
Children's Trust Fund, Tobacco
Settlement Rev., Puerto Rico,
"A", 0%, 2050 10,000,000 666,700 4,000,000 266,680 14,000,000 933,380
Children's Trust Fund, Tobacco
Settlement Rev., Puerto Rico,
"B", 0%, 2055 955,000 1,016,082 2,000,000 70,340 2,955,000 1,086,422
District of Columbia, Tobacco
Settlement Capital Appreciation,
"A", 0%, 2046 7,515,000 668,534 2,215,000 197,046 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) 3,000,000 3,194,310 750,000 798,578 3,750,000 3,992,888
Iowa Tobacco Settlement Authority,
Tobacco Settlement Rev., Asset
Backed, "B", 0% to 2007,
5.6% to 2034 2,455,000 2,383,977 615,000 597,208 3,070,000 2,981,185
Louisiana Tobacco Settlement
Authority, 5.5%, 2030 1,235,000 1,292,193 415,000 434,219 1,650,000 1,726,412
New Jersey Tobacco Settlement
Authority, 5.75%, 2032 2,275,000 2,391,776 660,000 693,878 2,935,000 3,085,654
Northern Tobacco Securitization
Corp., AK, Asset Backed, "A",
5%, 2046 1,545,000 1,540,319 455,000 453,621 2,000,000 1,993,940
South Carolina Tobacco Settlement
Authority, 6.375%, 2028 1,500,000 1,610,040 500,000 536,680 2,000,000 2,146,720
Washington Tobacco Settlement
Authority, 6.5% to 2026 155,000 170,215 70,000 76,871 225,000 247,086
-------------- ------------ --------------
$ 21,421,229 $ 6,096,952 $ 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 1,250,000 704,763 750,000 422,858 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
-------------- ------------ --------------
$ 19,953,764 $ 1,712,602 $ 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) 1,325,000 1,405,176 325,000 344,666 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 2,775,000 3,197,882 810,000 943,059 3,585,000 4,140,941
-------------- ------------ --------------
$ 48,899,986 $ 4,437,605 $ 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 575,000 604,567 165,000 173,484 740,000 778,051
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 785,000 818,708 215,000 224,232 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 4,975,000 6,125,966 1,250,000 1,539,188 6,225,000 7,665,154
Massachusetts Development Finance
Agency Rev. (Massachusetts
College of Pharmacy),
"B", 6.625%, 2010 (c) 350,000 385,893 100,000 110,255 450,000 496,148
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 605,000 622,206 165,000 169,693 770,000 791,899
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
-------------- ------------ --------------
$ 63,447,128 $ 13,086,198 $ 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) 6,000,000 6,340,980 1,500,000 1,585,245 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 1,500,000 1,604,640 1,000,000 1,064,650 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
-------------- ------------ --------------
$ 11,660,555 $ 5,473,981 $ 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 -- -- 500,000 505,860 500,000 505,860
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 1,180,000 1,210,456 320,000 328,259 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 3,500,000 3,557,610 500,000 508,230 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
-------------- ------------ --------------
$ 17,863,496 $ 15,740,701 $ 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 1,090,000 1,151,422 320,000 338,032 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 1,500,000 1,630,890 750,000 815,445 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) 7,000,000 7,526,680 3,000,000 3,225,720 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
-------------- ------------ --------------
$ 147,755,160 $ 21,495,530 $ 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) 1,000,000 1,095,390 1,170,000 1,281,606 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 920,000 988,190 255,000 273,901 1,175,000 1,262,091
West Virginia Water Development
Authority Loan Program, "B",
AMBAC, 4.75%, 2035 390,000 398,646 110,000 112,439 500,000 511,085
West Wilson Utility District,
TN, Waterworks Rev., MBIA,
5.25%, 2030 1,730,000 1,854,837 480,000 514,637 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
-------------- ------------ --------------
$ 5,492,699 $ 14,907,362 $ 20,400,061
-------------- ------------ --------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST, $1,037,283,174,
$297,900,637, AND $1,335,183,811,
RESPECTIVELY) $1,113,848,772 $318,352,057 $1,432,200,829
-------------- ------------ --------------
FLOATING RATE DEMAND NOTES
(0.8%, 0.4%, AND 0.7%,
RESPECTIVELY)
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 10/04/06 370,000 370,000 100,000 100,000 470,000 470,000
Jefferson County, AL, Sewer Rev.,
Warrants Rev., "B-4", 3.78%,
due 10/05/06 300,000 300,000 100,000 100,000 400,000 400,000
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 $ 8,655,000 $ 1,300,000 $ 9,955,000
-------------- ------------ --------------
TOTAL INVESTMENTS
(IDENTIFIED COST, $1,045,938,174,
$299,200,637, AND $1,345,138,811,
RESPECTIVELY) (k) $1,122,503,772 $319,652,057 $1,442,155,829
-------------- ------------ --------------
OTHER ASSETS, LESS LIABILITIES
((5.2)%, (2.7)%, AND (4.6)%,
RESPECTIVELY) (55,633,544) (8,362,997) (165,570)(w) (64,162,111)
-------------- ------------ ----------- --------------
NET ASSETS -- 100.0% $1,066,870,228 $311,289,000 $ (165,570) $1,377,993,718
============== ============ ========== ==============
SWAP AGREEMENTS AT 9/30/06
MUNICIPAL BOND FUND
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 27,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 232,404
12/06/16 USD 15,000,000 Merrill Lynch 3-Month Libor 5.569% (fixed rate) (203,784)
---------
$ 28,620
=========
MUNICIPAL INCOME FUND
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 27,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 51,650
=========
PRO-FORMA COMBINED
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 27,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 284,054
12/06/16 USD 15,000,000 Merrill Lynch 3-Month Libor 5.569% (fixed rate) (203,784)
---------
$ 80,270
=========
At September 30, 2006, the funds 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.
(w) Pro forma adjustment includes reorganization expenditures which will not be borne by the pro forma combined fund on a
going-forward basis.
(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
SECURITY DATE COST MARKET VALUE NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., RITES, FGIC, 7.025%, 2016 4/20/1999 $1,167,100 $1,262,660
Houston, TX, Independent School District, RITES, 6.525%, 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 September 30, 2006, the securities held by the Municipal Bond Fund
are consistent with the investment objective, strategies and policies of the
Municipal Income Fund.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
This statement represents your fund's 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 BOND FUND INCOME FUND ADJUSTMENTS COMBINED
ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
Investments, at value (identified cost, $1,045,938,174,
$299,200,637 and $1,345,138,811, respectively) $1,122,503,772 $319,652,057 $ -- $1,442,155,829
Cash 14,544 19,196 -- 33,740
Receivable for investments sold 674,227 292,475 -- 966,702
Receivable for fund shares sold 421,009 802,649 -- 1,223,658
Interest receivable 15,650,531 4,558,821 -- 20,209,352
Unrealized appreciation on interest rate swap agreements 232,404 51,650 -- 284,054
Other assets 2,905 926 -- 3,831
-------------- ------------ ------------ --------------
Total assets $1,139,499,392 $325,377,774 $ -- $1,464,877,166
-------------- ------------ ------------ --------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions payable $ 1,648,365 $ 498,242 $ -- $ 2,146,607
Payable for investments purchased 3,197,882 933,436 -- 4,131,318
Payable to the holder of the floating rate certificate from
trust assets 65,530,000 12,070,000 -- 77,600,000
Payable for fund shares reacquired 912,229 333,788 -- 1,246,017
Unrealized depreciation on interest rate swap agreements 203,784 -- -- 203,784
Payable to affiliates
Management fee 26,278 7,651 -- 33,929
Shareholder servicing costs 47,138 7,208 -- 54,346
Distribution and service fees 4,602 10,461 -- 15,063
Administrative services fee 1,592 518 -- 2,110
Payable for independent trustees' compensation 63,920 31,067 -- 94,987
Reorganization costs -- -- 165,570(B) 165,570
Payable for interest expense and fees 844,513 92,031 -- 936,544
Accrued expenses and other liabilities 148,861 104,312 -- 253,173
-------------- ------------ ------------ --------------
Total liabilities $ 72,629,164 $ 14,088,714 $ 165,570 $ 86,883,448
-------------- ------------ ------------ --------------
Net assets $1,066,870,228 $311,289,060 $ (165,570) $1,377,993,718
-------------- ------------ ------------ --------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 980,832,656 $294,529,113 $ -- $1,275,361,769
Unrealized appreciation (depreciation) on investments 76,594,218 20,503,070 -- 97,097,288
Accumulated net realized gain (loss) on investments 9,552,302 (3,693,911) -- 5,858,391
Accumulated distributions in excess of net
investment income (108,948) (49,212) (165,570) (323,730)
-------------- ------------ ------------ --------------
Net assets $1,066,870,228 $311,289,060 $(165,570) $1,377,993,718
-------------- ------------ ------------ --------------
Shares of beneficial interest outstanding 101,143,294 36,183,858 124,048,972 160,232,830
-------------- ------------ ------------ --------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $ -- $244,820,817 $ (108,588)(B) $ 244,712,229
Class A1 1,024,624,262 -- (26,411)(B) 1,024,597,851
Class B -- 31,172,882 (13,827)(B) 31,159,055
Class B1 42,245,966 -- (1,089)(B) 42,244,877
Class C -- 35,295,361 (15,655)(B) 35,279,706
-------------- ------------ ------------ --------------
Total $1,066,870,228 $311,289,060 $ (165,570) $1,377,993,718
-------------- ------------ ------------ --------------
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) -- CONTINUED
MFS MUNICIPAL MFS MUNICIPAL PRO FORMA PRO FORMA
AT 9/30/06 BOND FUND INCOME FUND ADJUSTMENTS COMBINED
Shares outstanding:
- --------------------------------------------------------------------------------------------------------------------------------
Class A -- 28,476,172 -- 28,476,172
Class A1 97,134,035 -- 119,142,356(A) 119,142,356
Class B -- 3,620,465 -- 3,620,465
Class B1 4,009,259 -- 4,906,616(A) 4,906,616
Class C -- 4,087,221 -- 4,087,221
-------------- ------------ ------------ --------------
Total 101,143,294 36,183,858 124,048,972 160,232,830
-------------- ------------ ------------ --------------
NET ASSET VALUE PER SHARE:
- --------------------------------------------------------------------------------------------------------------------------------
Class A $ -- $ 8.60 $ -- $ 8.59
Class A1 $ 10.55 $ -- $ -- $ 8.60
Class B $ -- $ 8.61 $ -- $ 8.61
Class B1 $ 10.54 $ -- $ -- $ 8.61
Class C $ -- $ 8.64 $ -- $ 8.63
(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.
(B) Adjustments are the result of reorganization expenditures and will not be borne by pro forma combined fund on a going
forward basis.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS PRO FORMA 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 BOND FUND INCOME FUND ADJUSTMENTS COMBINED
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------------------
Interest income $ 61,499,696 $ 17,662,630 $ -- $ 79,162,326
Expenses
Management fee $ 4,358,097 $ 1,712,797 1,634,286(B) $ 7,705,180
Distribution and service fees 364,056 1,306,904 -- 1,670,960
Shareholder servicing costs 1,300,811 414,752 -- 1,715,563
Administrative services fee 155,718 51,532 (9,571)(C) 197,679
Independent trustees' compensation 34,414 15,914 15,914(A) 66,242
Custodian fee 250,914 126,939 (100,000)(A) 277,853
Shareholder communications 53,927 38,386 (12,000)(A) 80,313
Auditing fees 46,444 44,940 (46,444)(A) 44,940
Legal fees 25,811 8,072 (1,500)(A) 32,383
Interest expense and fees 2,319,464 415,690 -- 2,735,154
Miscellaneous 170,054 83,676 (100,000)(A) 153,730
------------ ------------ ------------ ------------
Total expenses $ 9,079,710 $ 4,219,602 $ 1,380,685 $ 14,679,997
------------ ------------ ------------ ------------
Fees paid indirectly (94,781) (21,945) -- (116,726)
Reduction of expenses by investment adviser (1,089,524) (778,544) (1,634,286)(B) (3,502,354)
------------ ------------ ------------ ------------
Net expenses $ 7,895,405 $ 3,419,113 $ (253,601) $ 11,060,917
------------ ------------ ------------ ------------
Net investment income $ 53,604,291 $ 14,243,517 $ 253,601 $ 68,101,409
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $ 4,820,985 $ 153,478 $ -- $ 4,974,463
Swap transactions 2,932,562.00 1,348,784 -- 4,281,346
------------ ------------ ------------ ------------
Net realized gain (loss) on investments $ 7,753,547 $ 1,502,262 $ -- $ 9,255,809
------------ ------------ ------------ ------------
Change in unrealized appreciation (depreciation)
Investments $(14,484,329) $ (1,957,662) $ -- $(16,441,991)
Swap transactions (2,101,803.00) (789,159) -- (2,890,962)
------------ ------------ ------------ ------------
Net unrealized gain (loss) on investments $(16,586,132) $ (2,746,821) $ -- $(19,332,953)
------------ ------------ ------------ ------------
Net realized and unrealized gain (loss) on
investments $ (8,832,585) $ (1,244,559) $ -- $(10,077,144)
------------ ------------ ------------ ------------
Change in net assets from operations $ 44,771,706 $ 12,998,958 $ 253,601 $ 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.
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) ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(4) 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.
(5) REORGANIZATION COSTS
Costs associated with the reorganization will be borne directly by the
Target Fund and the Acquiring Fund. These costs are estimated at $165,570,
of which $138,070 and $27,500 will be borne by the Target Fund and
Acquiring Fund, respectively.
(6) 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
(7) 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 with State Street Bank and Trust
Company, dated July 2, 2001. (17)
(b) Exhibit A, dated July 26, 2006, to the Master Custodian
Agreement with 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)
(f) Custodian Agreement dated November 13, 2006 effective April
1, 2007 between Registrant and JPMorgan Chase Bank, N.A.
(28)
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. (27)
(b) Power of Attorney, dated December 14, 2006. (27)
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. (29)
(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.
(28) Incorporated by reference to MFS Series Trust I (File Nos. 33-7638 and
811-4777) Post-Effective Amendment No. 52 filed with the SEC via EDGAR on
January 29, 2007.
(29) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 46 filed with the SEC via EDGAR
on March 20, 2007.
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 27th day of April 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 April 27, 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,
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.
(Dwyer and Atkinson); and (ii) a Power of
Attorney, dated December 14, 2006,
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.
(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.