UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4096
- --------------------------------------------------------------------------------
MFS MUNICIPAL SERIES TRUST
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
- --------------------------------------------------------------------------------
(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
- --------------------------------------------------------------------------------
Date of fiscal year end: March 31
- --------------------------------------------------------------------------------
Date of reporting period: March 31, 2007
- --------------------------------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS.
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
3/31/07 Annual report
MFS(R) MUNICIPAL SERIES TRUST
For the states of: Alabama, Arkansas, California,
Florida, Georgia, Maryland, and Massachusetts
MSTA_ANN
MFS(R) Municipal Series Trust
Alabama, Arkansas, California, Florida,
Georgia, Maryland, and Massachusetts
LETTER FROM THE CEO 1
- ---------------------------------------------------
PORTFOLIO COMPOSITION 2
- ---------------------------------------------------
MANAGEMENT REVIEW 5
- ---------------------------------------------------
PERFORMANCE SUMMARY 6
- ---------------------------------------------------
EXPENSE TABLES 13
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS 16
- ---------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 46
- ---------------------------------------------------
STATEMENTS OF OPERATIONS 50
- ---------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 52
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS 56
- ---------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 71
- ---------------------------------------------------
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 80
- ---------------------------------------------------
TRUSTEES AND OFFICERS 81
- ---------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 84
- ---------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 84
- ---------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 84
- ---------------------------------------------------
FEDERAL TAX INFORMATION 84
- ---------------------------------------------------
MFS(R) PRIVACY NOTICE 85
- ---------------------------------------------------
CONTACT INFORMATION BACK COVER
- ---------------------------------------------------
THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
- -----------------------------------------------------------------------------
NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF
- -----------------------------------------------------------------------------
LETTER FROM THE CEO
[Photo of Robert J. Manning]
Dear Shareholders:
The past year has been a great example of why investors should keep their eyes
on the long term.
In 2006 the Dow Jones Industrial Average returned 19%. In February 2007 it hit
its all-time high of 12,787. Less than a week later, stocks sold off around
the globe. By March 5 the Dow was off 5.8%. That is a sign of volatile markets
and a reason investors should make sure they have an investment plan that can
ride out the peaks and troughs.
If you are focused on a long-term investment strategy, the short-term ups and
downs of the markets should not necessarily dictate portfolio action on your
part. Both the bond and stock markets are inherently cyclical. In our view,
investors who remain committed to a long-term plan are more likely to achieve
their financial goals. We believe you should not let the headlines guide you
in your investment decisions and that there is no sense in reacting to short-
term volatility.
In any market environment, we believe individual investors are best served by
following a three-pronged investment strategy of allocating their holdings
across the major asset classes, diversifying within each class, and regularly
rebalancing their portfolios to maintain their desired allocations. Of course,
these strategies cannot guarantee a profit or protect against a loss.
Investing and planning for the long term require diligence and patience, two
traits that in our experience are essential to capitalizing on the many
opportunities the financial markets can offer -- through both up and down
economic cycles.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
May 15, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
MFS(R) Alabama Municipal Bond Fund
PORTFOLIO STRUCTURE(i)
Bonds 107.0%
Cash & Other New Assets (7.0)%
TOP FIVE INDUSTRIES (i)
Utilities - Municipal Owned 16.5%
------------------------------------------------
Water & Sewer Utility Revenue 16.5%
------------------------------------------------
Healthcare Revenue - Hospitals 15.2%
------------------------------------------------
General Obligations - General Purpose 13.9%
------------------------------------------------
State & Local Agencies 9.1%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 56.2%
------------------------------------------------
AA 12.6%
------------------------------------------------
A 4.1%
------------------------------------------------
BBB 9.4%
------------------------------------------------
B 0.2%
------------------------------------------------
Not Rated 17.5%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.2
------------------------------------------------
Average Life (i)(m) 13.3 yrs.
------------------------------------------------
Average Maturity (i)(m) 15.9 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Arkansas Municipal Bond Fund
PORTFOLIO STRUCTURE(i)
Bonds 105.0%
Cash & Other New Assets (5.0)%
TOP FIVE INDUSTRIES (i)
Universities - Colleges 18.3%
------------------------------------------------
General Obligations - General Purpose 11.7%
------------------------------------------------
Water & Sewer Utility Revenue 10.0%
------------------------------------------------
Healthcare Revenue - Hospitals 9.7%
------------------------------------------------
Single Family Housing - State 9.1%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 62.3%
------------------------------------------------
AA 7.3%
------------------------------------------------
A 6.7%
------------------------------------------------
BBB 10.1%
------------------------------------------------
BB 0.2%
------------------------------------------------
B 0.6%
------------------------------------------------
Not Rated 12.8%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.2
------------------------------------------------
Average Life (i)(m) 15.5 yrs.
------------------------------------------------
Average Maturity (i)(m) 16.5 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) California Municipal Bond Fund
PORTFOLIO STRUCTURE(i)
Bonds 105.4%
Cash & Other New Assets (5.4)%
TOP FIVE INDUSTRIES (i)
General Obligations - Schools 17.6%
------------------------------------------------
State & Local Agencies 14.3%
------------------------------------------------
General Obligations - General Purpose 11.5%
------------------------------------------------
Healthcare Revenue - Hospitals 10.0%
------------------------------------------------
Tax Assessment 8.2%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 50.8%
------------------------------------------------
AA 6.1%
------------------------------------------------
A 15.5%
------------------------------------------------
BBB 15.3%
------------------------------------------------
BB 0.5%
------------------------------------------------
B 0.6%
------------------------------------------------
Not Rated 11.2%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.4
------------------------------------------------
Average Life (i)(m) 15.3 yrs.
------------------------------------------------
Average Maturity (i)(m) 18.8 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Florida Municipal Bond Fund
PORTFOLIO STRUCTURE(i)
Bonds 108.2%
Cash & Other New Assets (8.2)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 19.1%
------------------------------------------------
Water & Sewer Utility Revenue 13.7%
------------------------------------------------
General Obligations - General Purpose 13.4%
------------------------------------------------
Transportation - Special Tax 8.6%
------------------------------------------------
General Obligations - Schools 6.4%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 54.5%
------------------------------------------------
AA 7.9%
------------------------------------------------
A 6.9%
------------------------------------------------
BBB 10.5%
------------------------------------------------
BB 0.6%
------------------------------------------------
B 0.3%
------------------------------------------------
Not Rated 19.3%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.1
------------------------------------------------
Average Life (i)(m) 16.2 yrs.
------------------------------------------------
Average Maturity (i)(m) 17.3 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Georgia Municipal Bond Fund
PORTFOLIO STRUCTURE(i)
Bonds 107.4%
Cash & Other New Assets (7.4)%
TOP FIVE INDUSTRIES (i)
Water & Sewer Utility Revenue 31.8%
------------------------------------------------
Healthcare Revenue - Hospitals 10.6%
------------------------------------------------
Universities - Colleges 9.5%
------------------------------------------------
General Obligations - Schools 7.0%
------------------------------------------------
Single Family Housing - State 6.3%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 37.6%
------------------------------------------------
AA 24.8%
------------------------------------------------
A 7.8%
------------------------------------------------
BBB 9.2%
------------------------------------------------
BB 0.4%
------------------------------------------------
B 0.2%
------------------------------------------------
Not Rated 20.0%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.6
------------------------------------------------
Average Life (i)(m) 12.3 yrs.
------------------------------------------------
Average Maturity (i)(m) 15.1 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Maryland Municipal Bond Fund
PORTFOLIO STRUCTURE(i)
Bonds 103.5%
Cash & Other New Assets (3.5)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 19.1%
------------------------------------------------
General Obligations - Improvement 15.3%
------------------------------------------------
Universities - Colleges 13.1%
------------------------------------------------
General Obligations - General Purpose 6.1%
------------------------------------------------
Water & Sewer Utility Revenue 5.6%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 39.2%
------------------------------------------------
AA 16.0%
------------------------------------------------
A 17.6%
------------------------------------------------
BBB 14.5%
------------------------------------------------
BB 1.0%
------------------------------------------------
B 0.2%
------------------------------------------------
Not Rated 11.5%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.2
------------------------------------------------
Average Life (i)(m) 16.1 yrs.
------------------------------------------------
Average Maturity (i)(m) 17.3 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA-
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
MFS(R) Massachusetts Municipal Bond Fund
PORTFOLIO STRUCTURE(i)
Bonds 106.6%
Cash & Other New Assets (6.6)%
TOP FIVE INDUSTRIES (i)
Universities - Colleges 21.2%
------------------------------------------------
General Obligations - General Purpose 14.8%
------------------------------------------------
Healthcare Revenue - Hospitals 12.0%
------------------------------------------------
General Obligations - Improvement 7.9%
------------------------------------------------
General Obligations - Schools 7.3%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 42.8%
------------------------------------------------
AA 20.1%
------------------------------------------------
A 7.4%
------------------------------------------------
BBB 11.8%
------------------------------------------------
BB 0.6%
------------------------------------------------
Not Rated 17.3%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.7
------------------------------------------------
Average Life (i)(m) 13.3 yrs.
------------------------------------------------
Average Maturity (i)(m) 16.2 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
------------------------------------------------
(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond's price is likely to fluctuate
with general changes in interest rates, e.g., if rates rise 1.00%, a bond
with a 5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this presentation, the bond component includes both accrued
interest amounts and the equivalent exposure from any derivative holdings,
if applicable.
(m) The average maturity shown is calculated using the final stated maturity on
the portfolio's holdings without taking into account any holdings which
have been pre-refunded or pre-paid to an earlier date or which have a
mandatory put date prior to the stated maturity. The average life shown
takes into account these earlier dates.
(r) Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in the "AAA"-rating
category. Percentages are based on the total market value of investments as
of 3/31/07.
From time to time "Cash & Other Net Assets" may be negative due to timing of
cash receipts and/or equivalent exposure from any derivative holdings.
Percentages are based on net assets as of 3/31/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
MANAGEMENT REVIEW
FACTORS THAT AFFECTED PERFORMANCE
During the period, duration(d) positioning relative to the benchmark, the
Lehman Brothers Municipal Bond Index, had a neutral effect on relative
performance for all funds except the Arkansas and Maryland funds, where the
effect was positive.
Yield curve(y) positioning was also neutral for all funds, with the exception
of the Alabama, Georgia, and Massachusetts funds, where the effect was
negative. In comparison to the benchmark, the negative impact on the funds
noted above was due to relative underexposure to the short end of the curve
(represented by bonds with durations of 0 - to - 4 years), during a period
when interest rates were decreasing.
Credit quality had a neutral effect on all funds relative to the benchmark
during the period.
Notable positive contributions came from the health care and housing sectors.
These sectors were generally positive contributors across all of the funds on
a relative basis. The credit enhanced sectors had a positive impact on the
California and Georgia funds but hurt the relative performance of the Alabama
and Maryland funds. Our positioning in pre-refunded bonds had a negative
impact on the Arkansas, Georgia, and Massachusetts funds. Positioning in
education-related bonds boosted performance in the California and Maryland
funds.
Respectfully,
Michael Dawson
Portfolio Manager
(d) Duration is a measure of how much a bond's price is likely to fluctuate
with general changes in interest rates, e.g., if rates rise 1.00%, a bond
with a 5-year duration is likely to lose about 5.00% of its value.
(y) A yield curve graphically depicts the yields of different maturity bonds
of the same credit quality and type; a normal yield curve is upward
sloping, with short-term rates lower than long-term rates.
The views expressed in this report are those of the portfolio manager only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market
and other conditions, and MFS disclaims any responsibility to update such
views. These views may not be relied upon as investment advice or an
indication of trading intent on behalf of any MFS portfolio. References to
specific securities are not recommendations of such securities, and may not be
representative of any MFS portfolio's current or future investments.
PERFORMANCE SUMMARY THROUGH 3/31/07
The following information illustrates the historical performance of each
fund's original share class in comparison to its benchmark. Performance
results include the deduction of the maximum applicable sales charge and
reflect the percentage change in net asset value, including reinvestment of
dividends and capital gains distributions. Each fund's results have been
compared to the Lehman Brothers Municipal Bond Index, a market-value-weighted
index representative of the tax-exempt bond market. However, while this index
is considered the benchmark for the performance of municipal bond funds, it is
comprised of municipal bonds issued nationwide, while each of the funds is
limited to investing in the bonds of a particular state. The performance of
other share classes will be greater than or less than that of the class
depicted below. Benchmark comparisons are unmanaged; do not reflect sales
charges, commissions or expenses; and cannot be invested in directly. (See
Notes to Performance Summary.) It is not possible to invest directly in an
index.
PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES, WHEN
SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT PERFORMANCE MAY
BE LOWER OR HIGHER THAN QUOTED. FOR MOST RECENT MONTH-END PERFORMANCE, PLEASE
VISIT MFS.COM. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF
ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF
FUND SHARES.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Alabama Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,451 11,072
3/99 10,977 11,757
3/00 10,887 11,748
3/01 12,084 13,031
3/02 12,453 13,522
3/03 13,707 14,859
3/04 14,407 15,730
3/05 14,752 16,149
3/06 15,191 16,765
3/07 15,898 17,676
MFS(R) ALABAMA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- ---------------------------------------------------------------------------
A 2/01/90 4.66% 5.01% 5.26%
- ---------------------------------------------------------------------------
B 9/07/93 3.88% 4.20% 4.47%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- ---------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- ---------------------------------------------------------------------------
A -0.31% 3.99% 4.75%
With Initial Sales Charge (4.75%)
- ---------------------------------------------------------------------------
B -0.11% 3.86% 4.47%
With CDSC (Declining over six years from 4% to 0%) (x)
- ---------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Arkansas Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,483 11,072
3/99 10,965 11,757
3/00 10,940 11,748
3/01 12,082 13,031
3/02 12,573 13,522
3/03 13,768 14,859
3/04 14,391 15,730
3/05 14,699 16,149
3/06 15,164 16,765
3/07 15,925 17,676
MFS(R) ARKANSAS MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -------------------------------------------------------------------------
A 2/03/92 5.02% 4.84% 5.27%
- -------------------------------------------------------------------------
B 9/07/93 4.21% 4.02% 4.46%
- -------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- -------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- -------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -------------------------------------------------------------------------
A 0.03% 3.83% 4.76%
With Initial Sales Charge (4.75%)
- -------------------------------------------------------------------------
B 0.21% 3.68% 4.46%
With CDSC (Declining over six years from
4% to 0%) (x)
- -------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS California Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,621 11,072
3/99 11,321 11,757
3/00 11,161 11,748
3/01 12,365 13,031
3/02 12,749 13,522
3/03 13,997 14,859
3/04 14,727 15,730
3/05 15,189 16,149
3/06 15,830 16,765
3/07 16,670 17,676
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -------------------------------------------------------------------------
A 6/18/85 5.30% 5.51% 5.76%
- -------------------------------------------------------------------------
B 9/07/93 4.51% 4.70% 4.93%
- -------------------------------------------------------------------------
C 1/03/94 4.36% 4.56% 4.80%
- -------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- -------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- -------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -------------------------------------------------------------------------
A 0.30% 4.49% 5.24%
With Initial Sales Charge (4.75%)
- -------------------------------------------------------------------------
B 0.51% 4.37% 4.93%
With CDSC (Declining over six years from
4% to 0%) (x)
- -------------------------------------------------------------------------
C 3.36% 4.56% 4.80%
With CDSC (1% for 12 months) (x)
- -------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Florida Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,493 11,072
3/99 11,044 11,757
3/00 10,892 11,748
3/01 12,060 13,031
3/02 12,484 13,522
3/03 13,658 14,859
3/04 14,368 15,730
3/05 14,834 16,149
3/06 15,447 16,765
3/07 16,207 17,676
MFS(R) FLORIDA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- ---------------------------------------------------------------------------
A 2/03/92 4.92% 5.36% 5.46%
- ---------------------------------------------------------------------------
B 9/07/93 4.12% 4.56% 4.63%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- ---------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- ---------------------------------------------------------------------------
A -0.07% 4.34% 4.95%
With Initial Sales Charge (4.75%)
- ---------------------------------------------------------------------------
B 0.12% 4.23% 4.63%
With CDSC (Declining over six years from
4% to 0%) (x)
- ---------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Georgia Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,574 11,072
3/99 11,093 11,757
3/00 10,946 11,748
3/01 12,129 13,031
3/02 12,497 13,522
3/03 13,743 14,859
3/04 14,421 15,730
3/05 14,747 16,149
3/06 15,121 16,765
3/07 15,808 17,676
MFS(R) GEORGIA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- ---------------------------------------------------------------------------
A 6/06/88 4.55% 4.81% 5.20%
- ---------------------------------------------------------------------------
B 9/07/93 3.77% 4.09% 4.45%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- ---------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- ---------------------------------------------------------------------------
A -0.42% 3.80% 4.69%
With Initial Sales Charge (4.75%)
- ---------------------------------------------------------------------------
B -0.23% 3.75% 4.45%
With CDSC (Declining over six years from
4% to 0%) (x)
- ---------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Maryland Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,531 11,072
3/99 11,052 11,757
3/00 10,911 11,748
3/01 12,031 13,031
3/02 12,463 13,522
3/03 13,611 14,859
3/04 14,286 15,730
3/05 14,623 16,149
3/06 15,070 16,765
3/07 15,806 17,676
MFS(R) MARYLAND MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- ---------------------------------------------------------------------------
A 10/31/84 4.88% 4.87% 5.19%
- ---------------------------------------------------------------------------
B 9/07/93 4.21% 4.19% 4.52%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- ---------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- ---------------------------------------------------------------------------
A -0.10% 3.85% 4.68%
With Initial Sales Charge (4.75%)
- ---------------------------------------------------------------------------
B 0.21% 3.85% 4.52%
With CDSC (Declining over six years from
4% to 0%) (x)
- ---------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Massachusetts Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,474 11,072
3/99 11,010 11,757
3/00 10,836 11,748
3/01 11,968 13,031
3/02 12,319 13,522
3/03 13,603 14,859
3/04 14,259 15,730
3/05 14,634 16,149
3/06 15,195 16,765
3/07 15,924 17,676
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- ---------------------------------------------------------------------------
A 4/09/85 4.80% 5.27% 5.27%
- ---------------------------------------------------------------------------
B 9/07/93 4.12% 4.59% 4.60%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- ---------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- ---------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- ---------------------------------------------------------------------------
A -0.18% 4.25% 4.76%
With Initial Sales Charge (4.75%)
- ---------------------------------------------------------------------------
B 0.12% 4.25% 4.60%
With CDSC (Declining over six years from
4% to 0%) (x)
- ---------------------------------------------------------------------------
CDSC - Contingent Deferred Sales Charge.
(f) Source: FactSet Research Systems Inc.
(x) Assuming redemption at the end of the applicable period.
NOTES TO PERFORMANCE SUMMARY
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
A portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax.
From time to time the funds may receive proceeds from litigation settlements,
without which performance would be lower.
EXPENSE TABLES
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, OCTOBER 1, 2006,
THROUGH MARCH 31, 2007
As a shareholder of the funds, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1)
fees; and other fund expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the funds and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning
of the period and held for the entire period October 1, 2006 through March 31,
2007.
ACTUAL EXPENSES
The first line for each share class in the following tables provides
information about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested, to estimate
the expenses that you paid over the period. Simply divide your account value
by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your
account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the following tables provides
information about hypothetical account values and hypothetical expenses based
on each fund's actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not each fund's actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in each fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the tables is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have
been higher.
MFS(R) ALABAMA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Expense Account Value Account Value 10/01/06-
Share Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 1.13% $1,000.00 $1,016.30 $5.68
A ---------------------------------------------------------------------
Hypothetical (h) 1.13% $1,000.00 $1,019.30 $5.69
- --------------------------------------------------------------------------------
Actual 1.91% $1,000.00 $1,012.50 $9.58
B ---------------------------------------------------------------------
Hypothetical (h) 1.91% $1,000.00 $1,015.41 $9.60
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
MFS(R) ARKANSAS MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Expense Account Value Account Value 10/01/06-
Share Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 0.88% $1,000.00 $1,017.70 $4.43
A ---------------------------------------------------------------------
Hypothetical (h) 0.88% $1,000.00 $1,020.54 $4.43
- --------------------------------------------------------------------------------
Actual 1.66% $1,000.00 $1,013.80 $8.33
B ---------------------------------------------------------------------
Hypothetical (h) 1.66% $1,000.00 $1,016.65 $8.35
- --------------------------------------------------------------------------------
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Expense Account Value Account Value 10/01/06-
Share Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 0.84% $1,000.00 $1,020.40 $4.23
A ---------------------------------------------------------------------
Hypothetical (h) 0.84% $1,000.00 $1,020.74 $4.23
- --------------------------------------------------------------------------------
Actual 1.63% $1,000.00 $1,014.90 $8.19
B ---------------------------------------------------------------------
Hypothetical (h) 1.63% $1,000.00 $1,016.80 $8.20
- --------------------------------------------------------------------------------
Actual 1.75% $1,000.00 $1,015.90 $8.80
C --------------------------------------------------------------------
Hypothetical (h) 1.75% $1,000.00 $1,016.21 $8.80
- -------------------------------------------------------------------------------
MFS(R) FLORIDA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Expense Account Value Account Value 10/01/06-
Share Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 0.95% $1,000.00 $1,017.00 $4.78
A ---------------------------------------------------------------------
Hypothetical (h) 0.95% $1,000.00 $1,020.19 $4.78
- --------------------------------------------------------------------------------
Actual 1.73% $1,000.00 $1,013.20 $8.68
B ---------------------------------------------------------------------
Hypothetical (h) 1.73% $1,000.00 $1,016.31 $8.70
- --------------------------------------------------------------------------------
MFS(R) GEORGIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Expense Account Value Account Value 10/01/06-
Share Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 1.21% $1,000.00 $1,012.30 $6.07
A ---------------------------------------------------------------------
Hypothetical (h) 1.21% $1,000.00 $1,018.90 $6.09
- --------------------------------------------------------------------------------
Actual 1.97% $1,000.00 $1,008.60 $9.87
B ---------------------------------------------------------------------
Hypothetical (h) 1.97% $1,000.00 $1,015.11 $9.90
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
MFS(R) MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Expense Account Value Account Value 10/01/06-
Share Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 1.02% $1,000.00 $1,017.40 $5.13
A ---------------------------------------------------------------------
Hypothetical (h) 1.02% $1,000.00 $1,019.85 $5.14
- --------------------------------------------------------------------------------
Actual 1.68% $1,000.00 $1,013.20 $8.43
B ---------------------------------------------------------------------
Hypothetical (h) 1.68% $1,000.00 $1,016.55 $8.45
- --------------------------------------------------------------------------------
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Expense Account Value Account Value 10/01/06-
Share Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 1.12% $1,000.00 $1,016.20 $5.63
A ---------------------------------------------------------------------
Hypothetical (h) 1.12% $1,000.00 $1,019.35 $5.64
- --------------------------------------------------------------------------------
Actual 1.78% $1,000.00 $1,012.90 $8.93
B ---------------------------------------------------------------------
Hypothetical (h) 1.78% $1,000.00 $1,016.06 $8.95
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) ALABAMA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 105.2%
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 2.5%
- -------------------------------------------------------------------------------------------------------------------
Alabama Docks Department Facilities Rev., MBIA, 5.5%, 2008 (c) $ 1,000,000 $ 1,046,310
Alabama Port Authority Docks Facility, MBIA, 5.25%, 2011 (c) 1,000,000 1,058,930
- -------------------------------------------------------------------------------------------------------------------
$ 2,105,240
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 13.7%
- -------------------------------------------------------------------------------------------------------------------
Boaz, AL, School Warrants, "A", XLCA, 5%, 2025 $ 1,000,000 $ 1,050,080
Boaz, AL, School Warrants, "A", XLCA, 5%, 2029 650,000 680,901
Fairfield, AL, Refunding Warrants, AMBAC, 5.25%, 2025 1,030,000 1,099,834
Gadsden, AL, Warrants, "B", AMBAC, 5.125%, 2028 1,500,000 1,594,395
Hoover, AL, "B", 6%, 2010 (c) 500,000 534,885
Houston County, AL, AMBAC, 6.25%, 2009 (c) 750,000 810,787
Jefferson County, AL, School Warrants, FSA, 5.5%, 2020 1,750,000 1,829,923
Mobile County, AL, 6%, 2009 (c) 1,345,000 1,414,765
Morgan County, AL, Warrants, AMBAC, 5%, 2028 1,380,000 1,448,848
Puerto Rico Commonwealth, Public Improvement, "A", 5.25%, 2030 1,000,000 1,070,970
- -------------------------------------------------------------------------------------------------------------------
$ 11,535,388
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 6.3%
- -------------------------------------------------------------------------------------------------------------------
Birmingham, AL, "A", 5.75%, 2017 $ 1,000,000 $ 1,071,080
Birmingham, AL, "B", 5.75%, 2009 (c) 1,820,000 1,915,368
Birmingham, AL, "B", 5.75%, 2009 (c) 180,000 189,509
Montgomery, AL, Warrants, MBIA, 5.1%, 2021 1,005,000 1,053,260
Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 1,000,000 1,051,850
- -------------------------------------------------------------------------------------------------------------------
$ 5,281,067
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.7%
- -------------------------------------------------------------------------------------------------------------------
Bessemer, AL, School Warrants, AMBAC, 5.5%, 2020 $ 2,015,000 $ 2,142,066
Phenix City, AL, AMBAC, 5.65%, 2021 1,500,000 1,618,665
Tuscaloosa, AL, Warrants, 5.7%, 2010 (c) 1,000,000 1,062,020
- -------------------------------------------------------------------------------------------------------------------
$ 4,822,751
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 15.0%
- -------------------------------------------------------------------------------------------------------------------
Alabama Special Care Facilities Financing
Authority (Ascension Health Senior Credit), "C-2", 5%, 2036 $ 750,000 $ 775,417
Alabama Special Care Facilities Financing Authority (Daughters
of Charity), ETM, AMBAC, 5%, 2025 (c) 1,500,000 1,508,715
Alexander City, AL, Special Care Facilities Financing Authority
Medical Facilities Rev. (Russell Hospital Corp.), "A", 5.75%, 2036 500,000 524,815
Birmingham Medical Center, East Alabama, Special Health Care
Facilities, Eastern Health Systems, "B", 5%, 2018 500,000 503,245
Birmingham, AL, Baptist Health Systems, "A", (Baptist Medical
Center), 5.625%, 2015 300,000 318,666
Birmingham, AL, Baptist Medical Center, Special Care Facilities
Rev. (Baptist Health Systems, Inc.), "A", 5%, 2030 200,000 204,626
Health Care Authority For Baptist Health, "D", 5%, 2021 400,000 412,688
Houston County, AL, Health Care Authority, AMBAC, 6.125%, 2009 (c) 1,000,000 1,068,070
Huntsville, AL, Health Care Authority Rev., 5.625%, 2011 (c) 1,050,000 1,137,045
Huntsville, AL, Health Care Authority Rev., "A", MBIA, 5%, 2023 1,000,000 1,019,390
Lauderdale County & Florence, AL, Health Care Authority Rev.
(Eliza Coffee Memorial Hospital), MBIA, 5.75%, 2008 (c) 1,000,000 1,025,570
Lauderdale County & Florence, AL, Health Care Authority Rev., "A"
(Coffee Health Group), MBIA, 5.75%, 2014 1,000,000 1,050,870
Marshall County, AL, Health Care Authority Rev., "A", 5.75%, 2032 1,065,000 1,124,683
Montgomery, AL, Medical Clinic Board Health Care Facility Rev.
(Jackson Hospital & Clinic), 5.25%, 2031 500,000 519,805
Montgomery, AL, Special Care Facilities, Financing Authority Rev.
(Baptist Health), "A-2", MBIA, 0% to 2007, 5% to 2014 (c) 1,135,000 1,174,793
Valley, AL, Special Care Facilities Financing Authority, "A"
(Lanier Memorial Hospital), 5.65%, 2022 225,000 228,917
- -------------------------------------------------------------------------------------------------------------------
$ 12,597,315
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Metals - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Mobile County, AL, Industrial Development Authority Rev.
(Ipsco, Inc.), 6.875%, 2030 $ 500,000 $ 527,120
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.5%
- -------------------------------------------------------------------------------------------------------------------
Fairfield, AL, Environment Improvement Rev. (USX Corp.), 5.4%, 2016 $ 400,000 $ 427,672
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 3.8%
- -------------------------------------------------------------------------------------------------------------------
Butler, AL, Industrial Development Board, Solid Waste Disposal
Rev. (Georgia Pacific Corp.), 5.75%, 2028 $ 200,000 $ 204,944
Camden, AL, Industrial Development Board Exempt Rev., "B"
(Weyerhaeuser), 6.375%, 2024 500,000 547,370
Mobile, AL, Industrial Development Board Improvement Rev., "A"
(International Paper Co.), 6.35%, 2016 650,000 685,419
Mobile, AL, Industrial Development Board Improvement Rev., "B"
(International Paper Co.), 6.45%, 2019 350,000 369,128
Phenix City, AL, Environmental Improvement Rev., "A"
(MeadWestvaco), 6.35%, 2035 750,000 815,205
Selma, AL, Industrial Development Board, "A" (International
Paper Co.), 6.7%, 2018 500,000 532,420
- -------------------------------------------------------------------------------------------------------------------
$ 3,154,486
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.6%
- -------------------------------------------------------------------------------------------------------------------
Birmingham, AL, Downtown Redevelopment Authority Rev. (Social
Security Administrative Building), ETM, 12.5%, 2010 (c) $ 1,160,000 $ 1,315,881
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.5%
- -------------------------------------------------------------------------------------------------------------------
Alabama Housing Finance Authority, Multi-Family Residential
Development Rev., FHA, 7.25%, 2023 $ 1,065,000 $ 1,072,743
Alabama Housing Finance Authority, Multi-Family Residential
Development Rev., "K" (South Bay Apartments), FNMA, 5.875%, 2021 960,000 1,010,333
Birmingham, AL, Multi-Family Housing Rev., "C" (Beaconview
Apartments), 8%, 2030 (d) 395,000 19,750
- -------------------------------------------------------------------------------------------------------------------
$ 2,102,826
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Alabama Housing Finance Authority, Collateral Home Mortgage Bond
Program II, "B", 5.15%, 2019 $ 50,000 $ 51,175
Alabama Housing Finance Authority, Single Family Mortgage Rev.,
Collateral Home Mortgage Bond Program II, "A-2", GNMA, 5.4%, 2022 545,000 554,379
Alabama Housing Finance Authority, Single Family Mortgage Rev.,
Collateral Home Mortgage Bond Program II, "B", 5.15%, 2019 55,000 56,292
- -------------------------------------------------------------------------------------------------------------------
$ 661,846
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 9.0%
- -------------------------------------------------------------------------------------------------------------------
Alabama Building Renovation Authority, AMBAC, 6%, 2014 $ 1,515,000 $ 1,621,535
Alabama Building Renovation Finance Authority, FSA, 4.5%, 2031 500,000 499,970
Alabama Public School & College, Capital Improvement, "A", 5%, 2019 500,000 520,065
Alabama Public School & College, Capital Improvement, "C", 5.75%, 2017 1,000,000 1,057,020
Alabama Public School & College, Capital Improvement, "C", 5.75%, 2018 1,035,000 1,093,788
Montgomery County, AL, Public Building Authority Rev., MBIA, 5%, 2031 500,000 529,455
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 1,000,000 1,093,170
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) 1,000,000 1,119,170
- -------------------------------------------------------------------------------------------------------------------
$ 7,534,173
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.2%
- -------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, "A", 5.5%, 2018 $ 1,000,000 $ 1,029,470
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 0.5%
- -------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico,
5.375%, 2033 $ 445,000 $ 463,272
- -------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 7.4%
- -------------------------------------------------------------------------------------------------------------------
Alabama Board of Education Rev., Refunding & Improvement
(Southern Union State Community College), MBIA, 5%, 2022 $ 1,000,000 $ 1,046,610
Alabama Private Colleges & Universities, Facilities Authority
Rev. (Tuskegee University), ASSD GTY, 4.75%, 2026 1,000,000 1,025,530
Auburn University, General Fee Rev., AMBAC, 5%, 2029 1,000,000 1,050,230
Mobile, AL, Spring Hill College, Educational Building Authority
Rev., "A", 5.25%, 2034 1,360,000 1,450,059
University of Alabama, General Rev., "A", MBIA, 5%, 2029 1,000,000 1,052,000
University of Alabama, University Rev., General Fee, FGIC, 5%, 2021 525,000 553,828
- -------------------------------------------------------------------------------------------------------------------
$ 6,178,257
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 16.5%
- -------------------------------------------------------------------------------------------------------------------
Alabama Municipal Electric Power Authority, "A", MBIA, 5%, 2023 $ 1,000,000 $ 1,056,310
Guam Power Authority Rev., AMBAC, 5.25%, 2013 (u) 1,000,000 1,045,700
Guam Power Authority Rev., AMBAC, 5%, 2018 (u) 9,000,000 9,323,280
Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 925,225
Southeastern Alabama Gas District Systems Rev., "A", AMBAC, 5.5%, 2010 (c) 1,000,000 1,072,500
Tuskegee, AL, Utilities Board, AMBAC, 5.5%, 2022 400,000 408,532
- -------------------------------------------------------------------------------------------------------------------
$ 13,831,547
- -------------------------------------------------------------------------------------------------------------------
Utilities - Other - 1.3%
- -------------------------------------------------------------------------------------------------------------------
Foley, AL, Utilities Board Utilities Rev., FSA, 5%, 2025 $ 1,000,000 $ 1,057,810
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 16.3%
- -------------------------------------------------------------------------------------------------------------------
Alabama Drinking Water Finance Authority, Revolving Fund Loan,
"A", AMBAC, 6%, 2021 $ 725,000 $ 774,648
Alabama Drinking Water Finance Authority, Revolving Fund Loan,
"C", AMBAC, 5.75%, 2018 1,000,000 1,070,150
Alabama Water Pollution Control Authority, Revolving Fund Loan,
AMBAC, 5.75%, 2019 1,000,000 1,044,100
Alabama Water Pollution Control Authority, Revolving Fund Loan,
"B", AMBAC, 5.5%, 2016 1,000,000 1,006,580
Alabama Water Pollution Control Authority, Revolving Fund Loan,
"B", AMBAC, 5.5%, 2020 1,380,000 1,388,832
Alabaster, AL, Sewer Rev., AMBAC, 5%, 2029 750,000 786,952
Bessemer, AL, Water Rev., Warrants, "A", AMBAC, 5.75%, 2026 1,000,000 1,014,940
Birmingham, AL, Waterworks & Sewer Board Rev., "A", AMBAC, 4.375%, 2032 1,000,000 979,940
Birmingham, AL, Waterworks & Sewer Board Rev., "A", FGIC, 5%, 2034 1,365,000 1,436,294
Birmingham, AL, Waterworks & Sewer Board Rev., "B", MBIA, 5%, 2013 (c) 525,000 559,702
Jasper, AL, Waterworks & Sewer Board, "A", AMBAC, 5.2%, 2011 (c) 750,000 800,588
Limestone County, AL, Water Authority, FGIC, 5.5%, 2009 (c) 2,650,000 2,751,840
Ozark, AL, Utilities Board Water & Sewer Rev., AMBAC, 5%, 2031 100,000 104,773
- -------------------------------------------------------------------------------------------------------------------
$ 13,719,339
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $84,656,390) $ 88,345,460
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Warrants Rev., "B-4", 3.7%, due 4/05/07,
at Identified Cost and Value $ 475,000 $ 475,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $85,131,390) (k) $ 88,820,460
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.8)% (4,839,310)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 83,981,150
- -------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $12,137
8/15/22 USD 1,750,000 Goldman Sachs 5.286% (fixed rate) 3-Month LIBOR (4,814)
9/12/19 USD 1,000,000 Goldman Sachs 5.145% (fixed rate) 3-Month LIBOR (8,343)
- -------------------------------------------------------------------------------------------------------------------
$(1,020)
- -------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) ARKANSAS MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 102.3%
- -------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Little Rock, AR, Airport Rev., "A", FSA, 5.25%, 2019 $ 800,000 $ 825,000
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 11.5%
- -------------------------------------------------------------------------------------------------------------------
Arkansas College Savings, "A", 0%, 2017 $ 1,840,000 $ 1,205,071
Commonwealth of Puerto Rico, MBIA, 5.75%, 2010 (c)(u) 6,000,000 6,383,460
Commonwealth of Puerto Rico, 5.5%, 2019 (u) 2,500,000 2,678,325
Commonwealth of Puerto Rico, Public Improvement, "A", 5.25%, 2027 2,000,000 2,146,660
Commonwealth of Puerto Rico, Public Improvement, "A", CIFG, 5%, 2034 1,000,000 1,051,360
Puerto Rico Public Buildings Authority Rev. (State Office Building),
"F", XLCA, 5.25%, 2025 2,000,000 2,287,720
- -------------------------------------------------------------------------------------------------------------------
$ 15,752,596
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 6.1%
- -------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) $ 1,470,000 $ 1,546,220
Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 6,500,000 6,837,025
- -------------------------------------------------------------------------------------------------------------------
$ 8,383,245
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 6.2%
- -------------------------------------------------------------------------------------------------------------------
Arkansas, Capital Appreciation, College Savings, "B", 0%, 2012 $ 1,200,000 $ 979,752
Arkansas, Capital Appreciation, College Savings, "B", 0%, 2013 1,000,000 782,620
Arkansas, Capital Appreciation, College Savings, "B", 0%, 2014 1,150,000 863,075
Arkansas, Capital Appreciation, College Savings, "B", 0%, 2015 1,100,000 789,305
Little Rock, AR, School District Construction, "C", FSA, 5%, 2017 1,000,000 1,041,930
Little Rock, AR, School District, "A", FSA, 5.4%, 2010 (c) 1,000,000 1,047,340
Northwest Arkansas Community College District, Capital Improvement,
AMBAC, 5%, 2028 1,380,000 1,462,000
Pine Bluff, AR, School District Construction, MBIA, 4.75%, 2033 1,500,000 1,518,735
- -------------------------------------------------------------------------------------------------------------------
$ 8,484,757
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 9.6%
- -------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev. (Washington Regional
Medical Center), 7.25%, 2010 (c) $ 500,000 $ 547,300
Arkansas Development Finance Authority, Health Refunding Rev. (Sister
of Mercy), "A", MBIA, 5%, 2013 4,200,000 4,322,094
Batesville, AR, Medical District Rev. (White River Medical Center),
5.5%, 2024 750,000 783,915
Baxter County, AR, Hospital Rev. (Baxter Regional Hospital), 5%, 2026 1,000,000 1,027,150
Baxter County, AR, Hospital Rev., Refunding & Improvement, "B",
5.6%, 2009 (c) 1,500,000 1,566,090
Crittenden County, AR, Hospital Rev., Refunding & Improvement, 7.15%, 2025 750,000 759,750
Jefferson County, AR, Hospital Rev., Refunding & Improvement (Regional
Medical Center), 5.8%, 2021 1,000,000 1,063,930
Little Rock, AR, Health Facilities Hospital Board Rev. (Baptist Medical
Center), 6.9%, 2009 400,000 426,184
North Little Rock, AR, Health Facilities Board Rev. (Baptist Health
Facilities), 5.7%, 2022 500,000 518,120
Sebastian County, AR, Health Facilities Improvement Rev. (Sparks
Regional Medical Center), "A", 5.25%, 2021 1,000,000 1,038,080
Washington County, AR, Hospital Rev. (Regional Medical Center),
"A", 5%, 2035 1,000,000 1,022,020
- -------------------------------------------------------------------------------------------------------------------
$ 13,074,633
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.0%
- -------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev. (Evangelical Lutheran
Project), "B", AMBAC, 5.375%, 2009 (c) $ 1,315,000 $ 1,389,035
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa
Refinery), 5.875%, 2022 $ 335,000 $ 368,423
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.2%
- -------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Industrial Facilities Rev.
(Potlatch Corp.), "A", 7.75%, 2025 $ 250,000 $ 282,280
Camden, AR, Environmental Improvement Rev. (International Paper Co.),
"A", 5%, 2018 750,000 764,175
Pine Bluff, AR, Environmental Improvement (International Paper Co.),
"A", 5.55%, 2022 250,000 255,823
Pine Bluff, AR, Environmental Refunding (International Paper Co.),
"A", 6.7%, 2020 300,000 321,597
- -------------------------------------------------------------------------------------------------------------------
$ 1,623,875
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Fort Smith, AR, Residential Housing Facilities Board Rev. (Gorman Towers),
"A", GNMA, 5.45%, 2037 $ 1,000,000 $ 1,033,770
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 7.3%
- -------------------------------------------------------------------------------------------------------------------
Harrison, AR, Residential Housing Facilities Board, Single Family Mortgage
Rev., FGIC, ETM, 7.4%, 2011 (c) $ 4,000,000 $ 4,579,240
Lonoke County, AR, Residential Housing Facilities Rev., "A-2",
FNMA, 7.9%, 2011 64,639 65,325
Pulaski County, AR, Public Facilities Board Rev., "A", GNMA, 5.75%, 2034 1,835,000 1,877,352
Pulaski County, AR, Public Facilities Board Rev., "C", FNMA, 0%, 2014 2,750,000 1,990,175
Sherwood, AR, Residential Housing Facilities Board, Single Family Rev.,
MBIA, 7.5%, 2010 (c) 1,250,000 1,399,900
- -------------------------------------------------------------------------------------------------------------------
$ 9,911,992
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 8.9%
- -------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev., "1", 0%, 2011 $ 75,000 $ 53,221
Arkansas Development Finance Authority Rev., Mortgage Backed Securities
Program, "B", GNMA, 5%, 2029 195,000 200,368
Arkansas Development Finance Authority Rev., Mortgage Backed Securities
Program, "B", GNMA, 4.45%, 2034 945,000 948,874
Arkansas Development Finance Authority Rev., Mortgage Backed Securities
Program, "C", GNMA, 5.35%, 2027 1,560,000 1,596,535
Arkansas Development Finance Authority Rev., Mortgage Backed Securities
Program, "C", 5.625%, 2035 1,730,000 1,837,710
Arkansas Development Finance Authority Rev., Mortgage Backed Securities
Program, "D", GNMA, 5.85%, 2024 795,000 796,129
Arkansas Development Finance Authority Rev., Mortgage Backed Securities
Program, "E", GNMA, 5.4%, 2034 760,000 785,475
Arkansas Development Finance Authority, Mortgage Backed Securities
Program, "C", 5.3%, 2023 370,000 370,733
Arkansas Development Finance Authority, Mortgage Backed Securities
Program, "I", GNMA, 5.3%, 2033 355,000 361,276
Arkansas Development Finance Authority, Mortgage Rev., "B",
GNMA, 4.85%, 2031 995,000 1,007,069
Arkansas Development Finance Authority, Mortgage Rev., "B",
GNMA, 5.25%, 2035 2,510,000 2,596,093
Arkansas Development Finance Authority, Single Family Mortgage Rev.,
"B", GNMA, 5.125%, 2024 445,000 458,737
Arkansas Housing Development Agency, Single Family Rev., Mortgage
Program, ETM, 8.375%, 2011 (c) 1,000,000 1,182,740
- -------------------------------------------------------------------------------------------------------------------
$ 12,194,960
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 2.4%
- -------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev., Environmental State Agency
Facilities, "A", AMBAC, 5%, 2040 $ 2,500,000 $ 2,625,250
Arkansas Development Finance Authority, Economic Development Rev.
(Agritecsorbents LLC), "B", 5%, 2018 175,000 180,462
Arkansas Development Finance Authority, Economic Development Rev. (Madison
Industrial), "B", AMBAC, 5.8%, 2020 500,000 510,665
- -------------------------------------------------------------------------------------------------------------------
$ 3,316,377
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 3.1%
- -------------------------------------------------------------------------------------------------------------------
Little Rock, AR, Hotel & Restaurant Gross Receipts Tax Rev., 7.375%, 2015 $ 2,790,000 $ 3,245,467
Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 1,000,000 1,029,470
- -------------------------------------------------------------------------------------------------------------------
$ 4,274,937
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 2.3%
- -------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Tobacco Settlement Rev.
(Cancer Research Center Project), AMBAC, 0%, 2026 $ 2,000,000 $ 853,400
Arkansas Development Finance Authority, Tobacco Settlement Rev.
(Cancer Research Center Project), AMBAC, 0%, 2027 1,940,000 787,271
Arkansas Development Finance Authority, Tobacco Settlement Rev.
(Cancer Research Center Project), AMBAC, 0%, 2036 1,200,000 316,824
Arkansas Development Finance Authority, Tobacco Settlement Rev.
(Cancer Research Center Project), "N", AMBAC, 0%, 2030 1,725,000 606,889
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 230,000 239,444
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.5%, 2039 290,000 303,549
- -------------------------------------------------------------------------------------------------------------------
$ 3,107,377
- -------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 2.5%
- -------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority,
"B", MBIA, 5.875%, 2010 (c) $ 2,000,000 $ 2,156,360
Commonwealth of Puerto Rico Highway & Transportation Authority,
"G", FGIC, 5%, 2022 500,000 529,895
Commonwealth of Puerto Rico Highway & Transportation Authority,
"G", 5%, 2023 750,000 780,090
- -------------------------------------------------------------------------------------------------------------------
$ 3,466,345
- -------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 18.0%
- -------------------------------------------------------------------------------------------------------------------
Arkansas State University, Student Fee-ASU (Newport Campus),
AMBAC, 5%, 2028 $ 700,000 $ 708,596
Conway, AR, Public Facilities Board, Capital Improvement Rev. (Hendrix
College), "B", 5%, 2035 1,000,000 1,023,110
Pulaski, AR, Student Tuition & Fee Rev. (Technical College),
FGIC, 5%, 2029 1,820,000 1,895,075
Pulaski, AR, Student Tuition & Fee Rev. (Technical College),
AMBAC, 4.5%, 2031 1,190,000 1,172,555
Siloam Springs, AR, Public Education Facilities, Capital Improvement
Rev. (John Brown University), AMBAC, 5.35%, 2020 500,000 525,340
University of Arkansas, University Construction Rev. (Monticello),
AMBAC, 5%, 2025 1,525,000 1,604,178
University of Arkansas, University Construction Rev. (UAMS Campus),
"B", MBIA, 5%, 2026 1,405,000 1,485,647
University of Arkansas, University Construction Rev. (UAMS Campus),
"B", MBIA, 5%, 2027 1,000,000 1,056,730
University of Arkansas, University Construction Rev. (UAMS Campus),
"B", MBIA, 5%, 2034 3,290,000 3,459,172
University of Arkansas, University Facilities Rev. (Fayetteville Campus),
FGIC, 5%, 2027 3,155,000 3,293,694
University of Arkansas, University Facilities Rev. (Fayetteville Campus),
FGIC, 5%, 2032 2,500,000 2,602,225
University of Arkansas, University Facilities Rev. (Pine Bluff Campus),
"A", AMBAC, 5%, 2030 1,000,000 1,061,240
University of Arkansas, University Facilities Rev. (UAMS Campus),
FGIC, 5%, 2028 2,000,000 2,120,860
University of Central Arkansas Rev., "A", AMBAC, 5%, 2023 1,100,000 1,110,780
University of Central Arkansas, Student Housing Rev., "C", FGIC, 5%, 2034 250,000 255,438
University of Puerto Rico Rev., "Q", 5%, 2036 1,145,000 1,189,254
- -------------------------------------------------------------------------------------------------------------------
$ 24,563,894
- -------------------------------------------------------------------------------------------------------------------
Universities - Dormitories - 2.5%
- -------------------------------------------------------------------------------------------------------------------
Arkansas State University, Housing Systems Rev., AMBAC, 5.15%, 2021 $ 1,240,000 $ 1,295,180
Arkansas Technical University, Housing Systems Rev., AMBAC, 5.2%, 2026 1,000,000 1,080,850
Pope County, AR, Residential Housing, Facilities Board Rev. (Arkansas
Technical University Project), "A", 6%, 2027 500,000 506,305
University of Central Arkansas, Student Housing Rev., "C",
FGIC, 5.25%, 2029 500,000 513,775
- -------------------------------------------------------------------------------------------------------------------
$ 3,396,110
- -------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Jefferson County, AR, Pollution Control Rev. (Entergy Arkansas, Inc.,
Project), 4.6%, 2017 $ 750,000 $ 758,220
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 7.4%
- -------------------------------------------------------------------------------------------------------------------
Benton, AR, Utilities Rev., AMBAC, 5%, 2030 $ 470,000 $ 489,157
North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2010 1,650,000 1,718,920
North Little Rock, AR, Electric Rev., "A", MBIA, 6.5%, 2015 6,000,000 6,849,660
Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,000,000 1,054,190
- -------------------------------------------------------------------------------------------------------------------
$ 10,111,927
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 10.0%
- -------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority, Economic Development Rev.,
"I", AMBAC, 5.65%, 2014 $ 70,000 $ 70,807
Fort Smith, AR, Water & Sewer Rev., AMBAC, 5.65%, 2009 (c) 1,000,000 1,048,440
Fort Smith, AR, Water & Sewer Rev., "C", FSA, 5.25%, 2020 1,315,000 1,402,000
Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA,
5%, 2019 2,125,000 2,220,455
Fort Smith, AR, Water & Sewer Rev., Refunding & Construction, "A", FSA,
5%, 2021 2,750,000 2,860,880
Little Rock, AR, Sewer Rev., Refunding & Construction, 5%, 2022 1,750,000 1,815,258
Paragould, AR, Water Sewer & Electric Rev., AMBAC, 5.6%, 2010 (c) 765,000 816,423
Rogers, AR, Sewer Rev., Improvement, AMBAC, 5%, 2037 1,000,000 1,053,910
South Sebastian County, AR, Water Refunding Rev., MBIA, 5%, 2038 1,000,000 1,012,400
Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 1,250,000 1,280,400
- -------------------------------------------------------------------------------------------------------------------
$ 13,580,973
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $132,899,296) $139,618,446
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.4%
- -------------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White
Memorial Hospital), 3.77%, due 4/02/07 $ 100,000 $ 100,000
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants Rev., "A",
3.7%, due 4/05/07 600,000 600,000
Jefferson County, AL, Sewer Rev., Warrants Rev., "B-4", 3.7%, due 4/05/07 400,000 400,000
New York, NY, "A-4", 3.76%, due 4/02/07 300,000 300,000
State of Oregon, "73G", 3.68%, due 4/04/07 400,000 400,000
State of Oregon, "73H", 3.68%, due 4/04/07 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 1,900,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $134,799,296) (k) $141,518,446
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (3.7)% (5,049,002)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $136,469,444
- -------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $18,205
8/08/17 USD 1,000,000 Goldman Sachs 7-Day BMA 3.736% (fixed rate) (3,693)
5/30/19 USD 2,000,000 Citibank 7-Day BMA 3.695% (fixed rate) 7,899
7/23/22 USD 1,000,000 Merrill Lynch 7-Day BMA 3.889% (fixed rate) (4,796)
- -------------------------------------------------------------------------------------------------------------------
$17,615
- -------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 98.4%
- -------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 1.9%
- -------------------------------------------------------------------------------------------------------------------
Long Beach, CA, Harbor Rev., "A", FGIC, 5.25%, 2018 $ 3,500,000 $ 3,672,375
Palm Springs, CA, Palm Springs International Airport, 5.55%, 2028 530,000 543,669
Port Oakland, CA, "K", FGIC, 5.75%, 2020 4,000,000 4,209,960
- -------------------------------------------------------------------------------------------------------------------
$ 8,426,004
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 11.1%
- -------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) $ 3,000,000 $ 3,399,210
Commonwealth of Puerto Rico, Public Improvement, FGIC, 5.5%, 2016 (u) 6,600,000 7,456,152
Los Angeles, CA, FGIC, 5.25%, 2014 (u) 10,810,000 11,916,187
State of California, 10%, 2007 1,055,000 1,086,344
State of California, 5.125%, 2025 2,000,000 2,107,460
State of California, 4.5%, 2027 5,000,000 4,947,150
State of California, 5.25%, 2029 2,000,000 2,112,680
State of California, AMBAC, 7.2%, 2008 1,600,000 1,658,480
State of California, AMBAC, 6.3%, 2010 3,000,000 3,259,530
State of California, AMBAC, 7%, 2010 2,000,000 2,222,640
State of California, XLCA, 5.75%, 2009 (c)(u) 440,000 468,811
State of California, XLCA, 5.75%, 2009 (c)(u) 200,000 213,096
State of California, XLCA, 5.75%, 2009 (c)(u) 1,860,000 1,981,793
State of California, Various Purposes, 4.75%, 2034 3,130,000 3,191,379
State of California, Various Purposes, "91", 5%, 2028 3,000,000 3,156,210
- -------------------------------------------------------------------------------------------------------------------
$ 49,177,122
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Golden Valley, CA, Unified School District, Election of 1999, "D",
FSA, 0%, 2031 $ 1,090,000 $ 336,766
Golden Valley, CA, Unified School District, Election of 1999, "D",
FSA, 0%, 2032 1,225,000 359,170
Golden Valley, CA, Unified School District, Election of 1999, "D",
FSA, 0%, 2033 1,370,000 380,463
Golden Valley, CA, Unified School District, Election of 1999, "D",
FSA, 0%, 2034 1,520,000 400,231
- -------------------------------------------------------------------------------------------------------------------
$ 1,476,630
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 16.9%
- -------------------------------------------------------------------------------------------------------------------
Antelope Valley, CA (Union High School), "A", MBIA, 5%, 2027 $ 1,500,000 $ 1,577,025
Butte Glenn Community College District, "A", MBIA, 5%, 2026 1,885,000 1,982,869
Campbell, CA, Union High School District, Election of 2002, "B",
FGIC, 5.5%, 2012 (c) 2,270,000 2,520,585
Campbell, CA, Union High School District, FSA, 5%, 2021 1,280,000 1,335,795
Capistrano, CA, Union High School District, "A", FGIC, 5.875%, 2020 1,185,000 1,274,977
Chaffey, CA, Union High School District, "C", FSA, 5%, 2027 1,000,000 1,049,580
Chino Valley, CA, Unified School District, Election of 2002, "D",
FGIC, 0%, 2025 3,945,000 1,663,015
Chino Valley, CA, Unified School District, Election of 2002, "D",
FGIC, 0%, 2026 4,415,000 1,768,472
Coast Community College District, CA, Capital Appreciation, Election
of 2002, "C", FSA, 0%, 2033 5,000,000 1,279,000
Colton, CA, Joint Union School District, "A", FGIC, 5.375%, 2026 1,200,000 1,306,260
Colton, CA, Joint Union School District, Election of 2001, "C",
FGIC, 0%, 2032 1,000,000 283,640
Colton, CA, Joint Union School District, Election of 2001, "C",
FGIC, 0%, 2033 3,000,000 805,290
Coronado, CA, Union School District, "A", 5.7%, 2020 1,285,000 1,379,769
Escondido, CA, Union School District, "A", FSA, 5%, 2026 1,000,000 1,044,550
Folsom Cordova, CA, Union School District, Facilities Improvement, "A",
MBIA, 0%, 2025 1,505,000 665,722
Gilroy Cauni School District, Election of 2002, "N", FGIC, 5%, 2027 1,190,000 1,263,018
Glendale, CA, Union School District, "B", FSA, 5.5%, 2018 4,275,000 4,429,670
Hillsborough, CA, School District, Capital Appreciation, Election of
2002, "B", 0%, 2023 2,285,000 1,115,171
Hillsborough, CA, School District, Capital Appreciation, Election of
2002, "B", 0%, 2024 2,640,000 1,229,131
Inglewood, CA, Union School District, "A", FGIC, 6%, 2009 (c) 1,695,000 1,810,819
Little Lake, CA, City School District, "A", FSA, 6.125%, 2010 (c) 1,035,000 1,126,090
Live Oak, CA, School District, Santa Cruz County, Election of
2004, "A", MBIA, 5%, 2033 1,410,000 1,491,526
Los Angeles, CA, Union School District, FSA, 5.25%, 2013 (c)(u) 10,000,000 10,914,500
Los Angeles, CA, Union School District, Election of 1997, "E",
MBIA, 5.125%, 2012 (c) 5,000,000 5,373,350
Moreland, CA, School District, Election of 2002, "B", FGIC, 0%, 2028 1,440,000 558,634
Moreno Valley, CA, Union School District, Election of 2004, "A",
FSA, 5%, 2025 1,075,000 1,135,619
Moreno Valley, CA, Union School District, Election of 2004, "A",
FSA, 5%, 2026 1,715,000 1,810,611
Morgan Hill, CA, Union School District, FGIC, 5.5%, 2010 (c) 2,545,000 2,724,346
Mount Diablo, CA, Unified School District, Election of 2002, "N",
MBIA, 5%, 2028 2,000,000 2,118,240
Natomas Union School District, Election of 2002 "B", FGIC, 5%, 2028 1,430,000 1,508,650
Oceanside, CA, Union School District, Election of 2000, "C",
MBIA, 5.25%, 2032 1,940,000 2,050,580
Palos Verdes Peninsula, CA, Capital Appreciation, "N", FSA, 0%, 2029 4,405,000 1,625,049
Perris, CA, Union School District, "A", FGIC, 0%, 2027 3,100,000 1,255,066
San Gabriel, CA, Union School District, "A", FSA, 5%, 2024 2,000,000 2,092,020
San Ysidro, CA, School District, AMBAC, 6.125%, 2021 960,000 1,103,030
Santa Clara, CA, Union School District, FGIC, 5.5%, 2019 2,210,000 2,356,258
Santa Maria, CA, Joint Union High School District, "A",
FSA, 5.375%, 2015 (c) 1,120,000 1,272,410
Santa Maria, CA, Joint Union High School District, "A",
FSA, 5.375%, 2015 (c) 1,210,000 1,374,657
Sausalito Marin City, CA, School District, Capital Appreciation,
Election of 2004, "B", MBIA, 0%, 2039 1,315,000 257,306
Sausalito Marin City, CA, School District, Capital Appreciation,
Election of 2004, "B", MBIA, 0%, 2040 1,400,000 259,672
Tehachapi, CA, Union School District, "A", FGIC, 5.625%, 2009 (c) 1,100,000 1,161,842
Walnut Valley, CA, Union School District, Election of 2000, "E",
FSA, 0%, 2028 1,535,000 595,488
Washington, CA, Union School District, Election of 1999, "A",
FGIC, 5.625%, 2021 1,000,000 1,085,600
- -------------------------------------------------------------------------------------------------------------------
$ 75,034,902
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 9.6%
- -------------------------------------------------------------------------------------------------------------------
Abag Finance Authority Rev. (San Diego Hospital), "C", 5.375%, 2020 $ 2,000,000 $ 2,094,380
California Health Facilities Financing Authority Rev., Catholic
Healthcare West, "G", 5.25%, 2023 2,000,000 2,114,480
California Health Facilities Financing Authority Rev., Cedars Sinai
Medical Center, 5%, 2027 1,000,000 1,041,130
California Health Facilities Financing Authority Rev., Health Facilities
(Adventist Health Systems), "A", 5%, 2033 1,750,000 1,791,230
California Statewide Communities Development Authority Rev. (Henry Mayo
Newhall Memorial Hospital), "A", CHFC, 5%, 2018 2,000,000 2,070,520
California Statewide Communities Development Authority Rev. (Kaiser
Permanente), "A", 5.5%, 2032 2,000,000 2,114,740
California Statewide Communities Development Authority Rev. (Los Angeles
Children's Hospital), 5.125%, 2019 4,000,000 4,113,920
California Statewide Communities Development Authority Rev., ETM, CHFC,
0%, 2007 (c) 3,645,000 3,601,442
California Statewide Communities Development Authority Rev., ETM, CHFC,
0%, 2008 (c) 6,345,000 6,041,011
California Statewide Communities Development Authority Rev., Health
Facilities (Memorial Health Services), "A", 6%, 2023 1,500,000 1,650,885
California Statewide Communities Development, "B", 5.625%, 2042 4,000,000 4,255,200
California Valley Health Systems, COP, 6.875%, 2023 470,000 470,757
Central California Joint Powers Health Financing (Community Hospitals
of Central California), 5.625%, 2021 1,000,000 1,038,140
Kaweah Delta Health Care District Rev., 6%, 2012 (c) 2,000,000 2,266,800
Rancho Mirage, CA, Joint Powers (Eisenhower Medical Center), 5.625%, 2029 3,000,000 3,260,430
Tahoe Forest California Hospital District, "A", 5.85%, 2009 (c) 795,000 848,352
Tahoe Forest California Hospital District, "A", 5.85%, 2022 205,000 215,072
Turlock, CA, Health Facilities Rev. (Emanuel Medical Center), 5%, 2024 500,000 509,730
Washington Township, CA, Health Care Rev., 5%, 2018 1,000,000 1,024,480
West Contra Costa California Healthcare District, AMBAC, 5.5%, 2029 2,000,000 2,129,920
- -------------------------------------------------------------------------------------------------------------------
$ 42,652,619
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.8%
- -------------------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Rev. (Paradise Valley
Estates), 5.125%, 2022 $ 1,000,000 $ 1,045,140
California Statewide Communities Development Authority Rev. (Senior Living
Presbyterian Homes), 4.875%, 2036 1,000,000 1,014,910
La Verne, CA, COP (Brethren Hillcrest Homes), "B", 6.625%, 2025 1,000,000 1,079,100
Millbrae, CA, Residential Facilities Rev. (Magnolia of Millbrae),
"A", 7.375%, 2027 455,000 470,893
- -------------------------------------------------------------------------------------------------------------------
$ 3,610,043
- -------------------------------------------------------------------------------------------------------------------
Human Services - 0.4%
- -------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority (Prides Industries),
7.125%, 2009 (c) $ 1,565,000 $ 1,691,702
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.2%
- -------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid Waste Disposal Rev.
(Browning Ferris, Inc.), "A", 5.8%, 2016 $ 2,000,000 $ 2,005,760
California Pollution Control Financing Authority, Solid Waste Disposal Rev.
(Waste Management, Inc.), "A", 5.125%, 2031 2,250,000 2,342,633
California Pollution Control Financing Authority, Solid Waste Disposal Rev.
(Waste Management, Inc.), "A-2", 5.4%, 2025 1,000,000 1,056,860
- -------------------------------------------------------------------------------------------------------------------
$ 5,405,253
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.7%
- -------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, 4.7%, 2022 $ 2,000,000 $ 2,002,080
Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa
Refinery), 5.875%, 2022 960,000 1,055,779
- -------------------------------------------------------------------------------------------------------------------
$ 3,057,859
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.8%
- -------------------------------------------------------------------------------------------------------------------
San Diego County, CA, COP (Burnham Institute for Medical Research),
5%, 2034 $ 1,000,000 $ 1,016,400
San Diego County, CA, COP (Burnham Institute), 6.25%, 2009 (c) 2,300,000 2,464,841
- -------------------------------------------------------------------------------------------------------------------
$ 3,481,241
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.1%
- -------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev. (Irvine
Apartments), 5.25%, 2025 $ 6,000,000 $ 6,166,860
San Bernardino County, CA (Equity Residential/Redlands), "A", 5.2%, 2029 3,000,000 3,054,570
- -------------------------------------------------------------------------------------------------------------------
$ 9,221,430
- -------------------------------------------------------------------------------------------------------------------
Parking - 0.2%
- -------------------------------------------------------------------------------------------------------------------
San Francisco, CA, Union Square, MBIA, 6%, 2020 $ 1,000,000 $ 1,096,210
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 2.2%
- -------------------------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev., "A", 4.95%, 2036 $ 1,000,000 $ 1,015,760
California Rural Home Mortgage Finance Authority Rev., GNMA,
7.3%, 2031 20,000 20,054
California Rural Home Mortgage Finance Authority Rev., "A", GNMA,
5.75%, 2044 2,000,000 2,149,580
California Rural Home Mortgage Finance Authority Rev., GNMA,
5.4%, 2036 2,500,000 2,686,650
California Rural Home Mortgage Finance Authority Rev., Mortgage
Backed Securities Program, "B4", GNMA, 6.35%, 2029 30,000 30,008
Pomona, CA, Single Family Mortgage Rev., ETM, GNMA, 7.375%, 2010 (c) 1,020,000 1,076,916
Pomona, CA, Single Family Mortgage Rev., ETM, GNMA, 7.5%, 2023 (c) 2,000,000 2,617,540
- -------------------------------------------------------------------------------------------------------------------
$ 9,596,508
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - Other - 0.5%
- -------------------------------------------------------------------------------------------------------------------
California Department Veterans Affairs Rev., "A", 4.6%, 2028 $ 2,320,000 $ 2,329,164
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 1.7%
- -------------------------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev., Home Mortgage, FSA, 0%, 2019 $ 1,820,000 $ 861,042
California Housing Finance Agency Rev., Home Mortgage, MBIA, 0%, 2028 3,865,000 1,298,331
California Housing Finance Agency Rev., Home Mortgage, "I", 4.75%, 2031 3,000,000 3,021,330
California Housing Finance Agency Rev., Home Mortgage, "N", FGIC,
5.05%, 2026 2,480,000 2,567,321
- -------------------------------------------------------------------------------------------------------------------
$ 7,748,024
- -------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.7%
- -------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid Waste Disposal
Rev. (West County Resource Recovery), "A", 5.125%, 2014 $ 1,000,000 $ 1,013,130
South Bayside Waste Management Authority, California Solid Waste System
Rev., AMBAC, 5.75%, 2020 2,100,000 2,222,514
- -------------------------------------------------------------------------------------------------------------------
$ 3,235,644
- -------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 1.1%
- -------------------------------------------------------------------------------------------------------------------
Pasadena CA, COP, Old Pasadena Parking Facilities Project, 6.25%, 2018 $ 2,820,000 $ 3,127,521
Sacramento County, CA, COP, Capital Projects, AMBAC, 5.75%, 2018 1,500,000 1,596,045
- -------------------------------------------------------------------------------------------------------------------
$ 4,723,566
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 13.7%
- -------------------------------------------------------------------------------------------------------------------
Banning, CA, COP, Water Systems Improvement Project, ETM, AMBAC,
8%, 2019 (c) $ 880,000 $ 1,091,024
Calabasas, CA, Certificate Participants (City Hall & Civic Center
Project), AMBAC, 4.5%, 2041 3,000,000 2,953,200
California Department of Water Resources Power Supply Rev.,
"C", 5.25%, 2028 2,500,000 2,637,575
California Public Works Board Lease Rev., Department of Corrections
State Prison, "A", 7.4%, 2010 5,000,000 5,581,950
California Public Works Board, Department of Justice, "D", 5.25%, 2020 1,565,000 1,643,626
Fortuna & Susanville, CA, COP, "B", 7.375%, 2017 625,000 634,150
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev.,
"A", FSA, 0% to 2010, 4.55% to 2022 3,000,000 2,617,860
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement
Rev., Enhanced, "A", 5%, 2045 5,500,000 5,671,270
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement
Rev., Enhanced, "B", 5.5%, 2013 (c) 7,000,000 7,687,890
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev.,
Enhanced, "B", 5.625%, 2013 (c) $ 5,000,000 $ 5,525,450
Los Angeles, CA, COP, Antelope Valley Courthouse, "A", AMBAC,
5.25%, 2010 (c) 3,000,000 3,170,760
Los Angeles, CA, COP, Real Property Program, AMBAC, 5.3%, 2027 3,000,000 3,193,020
Pomona, CA, Public Financing Authority Rev., "A", AMBAC, 5%, 2042 3,735,000 3,949,949
Pomona, CA, Public Financing Authority Rev., "P", 6.25%, 2010 4,020,000 4,238,326
Sacramento, CA, City Financing Authority Rev., Capital Improvement,
5.5%, 2010 (c) 1,635,000 1,745,526
Sacramento, CA, City Financing Authority Rev., City Hall & Redevelopment
Projects, "A", FSA, 5%, 2012 (c) 2,000,000 2,147,380
Salinas, CA, COP, Capital Improvement Projects, "A", 5.7%, 2007 (c) 2,200,000 2,266,968
San Francisco, CA, City & County, COP (San Bruno Jail No. 3), AMBAC,
5.25%, 2033 3,930,000 4,088,497
- -------------------------------------------------------------------------------------------------------------------
$ 60,844,421
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 2.0%
- -------------------------------------------------------------------------------------------------------------------
Irvine, CA, School District Special Tax Rev., Community Facilities
District No. 86-1, AMBAC, 5.8%, 2020 $ 3,500,000 $ 3,613,330
Santa Cruz County, CA, Redevelopment Agency Tax Allocation (Oak/Soquel
Community), 5.6%, 2017 1,455,000 1,494,009
Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 2,000,000 2,058,940
Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,600,000 1,661,872
- -------------------------------------------------------------------------------------------------------------------
$ 8,828,151
- -------------------------------------------------------------------------------------------------------------------
Tax Assessment - 7.9%
- -------------------------------------------------------------------------------------------------------------------
Camarillo, CA, Community Development (Camarillo Corridor Project), AMBAC,
4.5%, 2037 $ 1,755,000 $ 1,746,295
Camarillo, CA, Community Development (Camarillo Corridor Project), AMBAC,
4.5%, 2038 985,000 978,401
Duarte, CA, Redevelopment Agency Tax Allocation, Davis Addition Project
Area, 6.7%, 2014 555,000 572,005
Fontana, CA, Redevelopment Agency Tax Allocation, Jurupa Hills
Redevelopment Project, "A", 5.5%, 2027 3,350,000 3,436,263
Huntington Park, CA, Public Financing Rev. Wastewater Systems Project,
"A", 6.2%, 2025 2,000,000 2,050,440
La Mirada, CA, Redevelopment Agency, Special Tax Rev., Community
Facilities District No. 89-1, 5.7%, 2020 1,500,000 1,533,735
Manteca, CA, Redevelopment Agency, Tax Allocation (Sub Amended Merged
Project), XLCA, 4.5%, 2042 2,500,000 2,439,375
Modesto, CA, Irrigation District, COP, Refunding & Capital Improvements,
"B", 5.3%, 2022 1,655,000 1,655,794
Modesto, CA, Public Financing Authority (John Thurman Field Renovation),
6.125%, 2016 1,170,000 1,195,553
Norco, CA, Special Tax Community Facilities (District No. 2001), "N",
AMBAC, 4.75%, 2026 1,700,000 1,758,616
Orange County, CA, Community Facilities District, Special Tax (Rancho
Santa Margarita), "A", 5.55%, 2017 1,000,000 1,017,400
Pittsburg, CA, Redevelopment Agency, Tax Allocation (Los Medanos
Community), "C", AMBAC, 4.5%, 2034 2,550,000 2,522,154
Poway, CA, Community Facilities District, Special Tax (Parkway Business
Center), 6.5%, 2010 715,000 750,335
Poway, CA, Community Facilities District, Special Tax (Parkway Business
Center), 6.75%, 2015 775,000 816,176
Riverside County, CA, Public Financing Authority, Jurupa Valley, Tax
Allocation, MBIA, 4.75%, 2035 3,000,000 3,085,440
Riverside County, CA, Public Financing Authority, Tax Allocation Rev.,
XLCA, 5%, 2037 3,000,000 3,127,410
Riverside County, CA, Redevelopment Agency, Tax Allocation, "A",
XLCA, 5%, 2037 2,000,000 2,084,940
San Diego, CA, Redevelopment Agency, Tax Allocation (Centre City),
"B", AMBAC, 5.3%, 2020 1,250,000 1,322,013
Temecula, CA, Redevelopment Agency, Tax Allocation, "A", MBIA, 4.5%, 2038 2,000,000 1,970,140
Temecula, CA, Redevelopment Agency, Tax Allocation, "A", MBIA, 4.5%, 2036 1,000,000 987,100
- -------------------------------------------------------------------------------------------------------------------
$ 35,049,585
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 4.6%
- -------------------------------------------------------------------------------------------------------------------
California County, CA, Tobacco Securitization Agency, Capital
Appreciation Asset Backed (Gold Country), 0%, 2033 $ 4,000,000 $ 901,920
California County, CA, Tobacco Securitization Corp., Tobacco Settlement,
L.A. County, "A", 0% to 2010, 5.65% to 2041 2,500,000 2,166,650
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A", 0%, 2050 2,000,000 136,920
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "B", 0%, 2055 2,000,000 73,320
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement, "A-1",
6.75%, 2013 (c) 2,645,000 3,085,472
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement, "A-1",
6.25%, 2033 2,935,000 3,240,680
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement, "A-1",
5.125%, 2047 10,000,000 9,911,000
Silicon Valley Tobacco Securitization Authority, CA, Tobacco Settlement
Rev. (Turbo-Santa Clara), "A", 0%, 2036 5,000,000 994,400
- -------------------------------------------------------------------------------------------------------------------
$ 20,510,362
- -------------------------------------------------------------------------------------------------------------------
Toll Roads - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Foothill/Eastern Corridor Agency, California Toll Road Rev., Capital
Appreciation, "A", 7.1%, 2010 (c) $ 2,500,000 $ 2,777,225
- -------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 6.1%
- -------------------------------------------------------------------------------------------------------------------
Cabrillo, CA, Community College District Capital Appreciation,
"A", MBIA, 0%, 2028 $ 1,000,000 $ 387,940
California Educational Facilities Authority Rev. (Dominican University),
5%, 2036 1,150,000 1,182,763
California Educational Facilities Authority Rev. (Fresno Pacific
University), "A", 6.75%, 2019 2,000,000 2,158,160
California Educational Facilities Authority Rev. (L.A. College of
Chiropractic), 5.6%, 2017 2,100,000 2,114,385
California Educational Facilities Authority Rev. (Lutheran University),
"C", 5%, 2029 2,500,000 2,580,350
California Educational Facilities Authority Rev. (Pomona College), "B",
5.875%, 2009 (c) 2,000,000 2,119,940
California Educational Facilities Authority Rev. (Santa Clara University),
"A", MBIA, 5%, 2027 1,340,000 1,394,015
California Educational Facilities Authority Rev. (University Financing
Project), 5%, 2017 685,000 712,414
California Educational Facilities Authority Rev. (University Financing
Project), 5%, 2026 1,315,000 1,359,145
California Educational Facilities Authority Rev. (University of La Verne),
"A", 5%, 2029 1,500,000 1,546,515
California Educational Facilities Authority Rev., Pooled College &
University Projects, "B", 6.625%, 2020 1,000,000 1,091,550
California Statewide Communities, Notre Dame De Namur University,
6.625%, 2033 1,000,000 1,093,010
Chabot Las Positas, CA, Community College, Capital Appreciation,
"C", AMBAC, 0%, 2036 5,000,000 1,193,250
Chabot Las Positas, CA, Community College, Election of 2004,
"B", AMBAC, 0%, 2024 5,000,000 2,221,550
Foothill-De Anza, CA, Community College District, Election of 1999, "B", FGIC,
0%, 2025 1,500,000 674,430
Long Beach, CA, Industrial Development Rev. (CSU Foundation),
"A", 5.25%, 2023 1,450,000 1,472,301
San Mateo County, CA (Community College District, 2005 Election),
"A", MBIA, 0%, 2026 3,000,000 1,279,290
Santa Monica, CA (Community College District, 2002 Election), "C",
MBIA, 0%, 2027 2,000,000 745,760
University of California, COP, San Diego Campus Projects,
"A", 5.25%, 2010 (c) 1,840,000 1,939,121
- -------------------------------------------------------------------------------------------------------------------
$ 27,265,889
- -------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.9%
- -------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev., Aspire Public
Schools (Oakland Project), "A", 7.25%, 2031 $ 960,000 $ 985,565
California Statewide Communities, Development Authority Rev. (Escondido
Charter High School), 7.5%, 2011 (c) 1,000,000 1,171,980
Los Angeles, CA, COP, 5.7%, 2018 1,900,000 1,966,405
- -------------------------------------------------------------------------------------------------------------------
$ 4,123,950
- -------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 1.4%
- -------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Pollution Control Rev.
(Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 $ 3,500,000 $ 3,731,140
Chula Vista, CA, Industrial Development Rev. (San Diego Gas),
"B", 5%, 2027 2,500,000 2,604,750
- -------------------------------------------------------------------------------------------------------------------
$ 6,335,890
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 1.9%
- -------------------------------------------------------------------------------------------------------------------
Glendale, CA, Electric Works Rev., MBIA, 5.75%, 2010 (c) $ 1,420,000 $ 1,517,227
Glendale, CA, Electric Works Rev., MBIA, 5.75%, 2010 (c) 1,160,000 1,239,425
Hollister, CA, Joint Powers Financing Authority Rev. (Refinancing &
Improvement Project), FSA, 4.5%, 2037 2,500,000 2,467,350
Northern California Power Agency Public Power Rev., 5.85%, 2010 880,000 927,608
Virgin Islands Water & Power Authority Rev., 5.5%, 2017 800,000 816,320
Virgin Islands Water & Power Authority Rev., 5.3%, 2018 250,000 251,013
Virgin Islands Water & Power Authority Rev., "A", 5.125%, 2013 1,000,000 1,006,000
- -------------------------------------------------------------------------------------------------------------------
$ 8,224,943
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 7.1%
- -------------------------------------------------------------------------------------------------------------------
California Communities Development Authority, Rev. "D-2",
FSA, 4.5%, 2032 $ 2,880,000 $ 2,871,331
California Department of Water Resources, Central Valley Project
Rev., "X", FGIC, 5%, 2029 2,000,000 2,085,860
California Department of Water Resources, Water Systems Rev., 7%, 2012 1,090,000 1,271,441
California Department of Water Resources, Water Systems Rev.,
ETM, 7%, 2012 (c) 405,000 474,445
Castaic Lake Water Agency, California Rev., Water Systems Improvement
Project, AMBAC, 5.125%, 2009 (c) 1,725,000 1,802,901
Culver City, CA, Wastewater Facilities Rev., "A", FGIC, 5.6%, 2019 1,000,000 1,064,300
El Monte, CA, Water Authority Rev., Water Systems Project,
AMBAC, 6%, 2010 (c) 1,065,000 1,168,007
Livermore Amador Valley Water Management Rev., "A", AMBAC, 5%, 2031 4,875,000 5,054,839
Modesto, CA, Wastewater Rev. "A", FSA, 4.25%, 2031 1,575,000 1,514,504
Southern California Metropolitan Water District Rev., 5.75%, 2018 (u) 10,000,000 11,421,400
West Sacramento, CA, Financing Authority Rev., Water Systems
Improvement Project, FGIC, 5%, 2032 2,750,000 2,874,988
- -------------------------------------------------------------------------------------------------------------------
$ 31,604,016
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $416,163,713) $437,528,353
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.8%
- -------------------------------------------------------------------------------------------------------------------
Bay Area Toll Authority, California Toll Bridge Rev., "A", 3.46%,
due 4/05/07 $ 2,800,000 $ 2,800,000
California Department of Water Resources, Power Supply Rev., "C-2",
3.53%, due 4/05/07 2,200,000 2,200,000
California Department of Water Resources, Power Supply Rev., "C-3",
3.53%, due 4/05/07 3,600,000 3,600,000
California Health Facilities Financing Authority Rev. (Adventist
Health System), "A", 3.68%, due 4/02/07 2,680,000 2,680,000
California Health Facilities Financing Authority Rev. (Adventist
Health System), "B", 3.68%, due 4/02/07 700,000 700,000
California Health Facilities Financing Authority Rev. (Adventist Health
System), "C", 3.68%, due 4/02/07 200,000 200,000
Orange County, CA, 3.63%, due 4/02/07 300,000 300,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 12,480,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $428,643,713) (k) $450,008,353
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (1.2)% (5,527,973)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $444,480,380
- -------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 9,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 54,615
6/06/17 USD 2,500,000 Merrill Lynch 7-Day BMA 3.579% (fixed rate) 17,534
8/08/17 USD 2,500,000 Goldman Sachs 7-Day BMA 3.736% (fixed rate) (9,233)
5/30/19 USD 4,000,000 Citibank 7-Day BMA 3.695% (fixed rate) 15,798
8/22/19 USD 3,000,000 Goldman Sachs 7-Day BMA 3.726% (fixed rate) 10,181
4/27/22 USD 3,000,000 Citibank 7-Day BMA 3.878% (fixed rate) (15,176)
7/23/22 USD 3,000,000 Merrill Lynch 7-Day BMA 3.889% (fixed rate) (14,387)
- ------------------------------------------------------------------------------------------------------------------
$ 59,332
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) FLORIDA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 106.1%
- -------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 4.2%
- -------------------------------------------------------------------------------------------------------------------
Greater Orlando Aviation Authority Rev., "A", FGIC, 5.25%, 2018 $ 1,000,000 $ 1,037,940
Lee County, FL, Airport Rev., "A", FSA, 5.875%, 2018 1,000,000 1,069,240
Miami-Dade County, FL, Aviation Rev., "C", MBIA, 5.25%, 2018 500,000 513,380
Pensacola, FL, Airport Rev., "B", MBIA, 5.625%, 2014 500,000 513,620
- -------------------------------------------------------------------------------------------------------------------
$ 3,134,180
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 13.2%
- -------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, MBIA, 5.75%, 2010 (c)(u) $ 2,000,000 $ 2,127,820
Miami-Dade County, FL, Educational Facilities Authority Rev. (University of
Miami), "A", AMBAC, 5.5%, 2018 1,400,000 1,481,242
State of Florida, Department of Transportation, 5%, 2017 (u) 6,000,000 6,219,960
- -------------------------------------------------------------------------------------------------------------------
$ 9,829,022
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 6.3%
- -------------------------------------------------------------------------------------------------------------------
Florida Board of Education, Capital Outlay, 9.125%, 2014 $ 2,600,000 $ 3,086,356
Florida Board of Education, Capital Outlay, ETM, 9.125%, 2014 (c) 400,000 523,600
Florida Board of Education, Public Education, "J", 5%, 2032 1,000,000 1,048,330
- -------------------------------------------------------------------------------------------------------------------
$ 4,658,286
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 18.8%
- -------------------------------------------------------------------------------------------------------------------
Brevard County, FL, Health Facilities Rev. (Health First, Inc.), 5%, 2034 $ 500,000 $ 516,080
Citrus County, FL, Hospital Development Authority Rev. (Citrus Memorial
Hospital), 6.25%, 2023 465,000 502,786
Coral Gables, FL, Health Facilities Authority, Hospital Rev. (Baptist
Health South Florida), FSA, 5%, 2029 535,000 560,461
Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 250,000 265,800
Hillsborough County, FL, Industrial Development Authority Rev. (University
Community Hospital), MBIA, 6.5%, 2019 1,000,000 1,205,430
Indiana Health Facilities Financing Authority, Hospital Rev. (Munster
Medical Research Foundation, Inc.), "A", 6.375%, 2031 500,000 533,005
Jacksonville, FL, Health Facilities Rev. (Ascension Health),
"A", 5.25%, 2032 1,000,000 1,054,140
Lakeland, FL, Hospital Systems Rev. (Lakeland Regional Health Systems),
5.5%, 2012 (c) 1,000,000 1,100,190
Leesburg, FL, Hospital Rev. (Leesburg Regional Medical Center), 5.5%, 2032 750,000 780,360
Marion County, FL, Hospital District Rev., Refunding & Improvement, Health
Systems (Munroe Regional Health System), 5.5%, 2014 500,000 521,300
Marshall County, AL, Health Care Authority Rev., "A", 6.25%, 2022 500,000 548,625
Martin County, FL, Health Facilities Authority Rev. (Martin Memorial
Medical Center), "A", 5.75%, 2022 500,000 534,825
Miami Beach, FL, Health Facilities Authority Rev. (Mount Sinai Medical
Center), "A", 6.7%, 2019 250,000 274,740
Miami Dade County, FL (Public Facilities Jackson Health Systems),
"A", MBIA, 5%, 2029 1,000,000 1,042,090
New Hampshire Health & Educational Facilities Authority Rev. (Exeter
Hospital), 6%, 2024 500,000 546,435
Orange County, FL, Health Facilities Authority Hospital Rev. (Orlando
Regional Healthcare), 5.75%, 2012 (c) 1,000,000 1,105,350
Rhode Island Health & Education Building Corp. Rev., Hospital Financing
(Lifespan Obligated Group), 6.5%, 2012 (c) 500,000 567,520
South Dakota Health & Education Facilities Authority Rev. (Prairie Lakes
Health Care System), 5.625%, 2032 500,000 522,050
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Healthcare),
6.25%, 2020 300,000 316,575
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial Regional
Medical Center), MBIA, 6.625%, 2013 1,000,000 1,001,330
Wisconsin Health & Educational Facilities Authority Rev. (Marshfield
Clinic), "A", 5.375%, 2034 500,000 526,800
- -------------------------------------------------------------------------------------------------------------------
$ 14,025,892
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.8%
- -------------------------------------------------------------------------------------------------------------------
New Jersey Economic Development Authority Rev. (First Mortgage Seashore
Gardens), 5.375%, 2036 $ 300,000 $ 303,816
Orange County, FL, Health Facilities Authority Rev. (Orlando Lutheran
Towers), 5.7%, 2026 250,000 255,960
- -------------------------------------------------------------------------------------------------------------------
$ 559,776
- -------------------------------------------------------------------------------------------------------------------
Human Services - 0.4%
- -------------------------------------------------------------------------------------------------------------------
Orange County, FL, Health Facilities Authority Rev. (GF/Orlando Healthcare
Facilities), 8.875%, 2021 $ 300,000 $ 331,608
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 1.0%
- -------------------------------------------------------------------------------------------------------------------
Brazos River, TX, Brazoria County Environmental Rev. (Dow Chemical, Co.),
"A-7", 6.625%, 2033 $ 500,000 $ 557,095
Red River Authority, TX, Pollution Control Rev. (Celanese Project),
"B", 6.7%, 2030 200,000 217,716
- -------------------------------------------------------------------------------------------------------------------
$ 774,811
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.1%
- -------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid Waste Disposal
Rev. (Waste Management, Inc.), "B", 5%, 2027 $ 500,000 $ 508,105
Nevada Department of Business & Industry Rev. (Republic Services,
Inc.), 5.625%, 2026 300,000 326,583
- -------------------------------------------------------------------------------------------------------------------
$ 834,688
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.1%
- -------------------------------------------------------------------------------------------------------------------
Madison County, FL, Rev. (Twin Oaks Project), "A", 6%, 2025 $ 140,000 $ 145,410
Park Creek Metropolitan District, CO (Custodial Receipts), "CR-2",
7.875%, 2032 (n) 160,000 177,267
Tooele County, UT, Hazardous Waste Treatment Rev. (Union Pacific Corp.),
5.7%, 2026 500,000 519,000
- -------------------------------------------------------------------------------------------------------------------
$ 841,677
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.7%
- -------------------------------------------------------------------------------------------------------------------
Delta County, MI, Economic Development Corp., Environmental Improvements
Rev. (Mead Westvaco Escanaba), "A", 6.25%, 2012 (c) $ 500,000 $ 556,815
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.4%
- -------------------------------------------------------------------------------------------------------------------
Palm Beach County, FL, Industrial Development Rev. (South Florida Fair
Project), MBIA, 5.5%, 2020 $ 1,000,000 $ 1,051,000
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.0%
- -------------------------------------------------------------------------------------------------------------------
Summit County, OH, Port Authority Building Rev. (Seville Project),
"A", 5.1%, 2025 $ 200,000 $ 205,878
Tamarac, FL, Capital Improvement Rev., MBIA, 5%, 2030 500,000 523,230
- -------------------------------------------------------------------------------------------------------------------
$ 729,108
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.3%
- -------------------------------------------------------------------------------------------------------------------
Bay County, FL, Housing Finance Authority, Multi-Family Rev. (Andrews
Place II Apartments), FSA, 5%, 2035 $ 500,000 $ 512,445
Florida Housing Finance Corp., Housing Rev. (Augustine Club Apartments),
"D-1", MBIA, 5.5%, 2020 500,000 524,830
Florida Housing Finance Corp., Housing Rev. (Crossing at University
Apartments), "Q-1", AMBAC, 5.1%, 2018 1,050,000 1,069,908
Palm Beach County, FL, Housing Finance Authority Rev. (Westlake Apartments
Project, Phase II), FSA, 4.3%, 2012 120,000 122,250
Tampa, FL, Housing Finance Authority, Multi-Family Rev. (Meridian River
Development Corp.), 4.75%, 2026 200,000 204,036
- -------------------------------------------------------------------------------------------------------------------
$ 2,433,469
- -------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 3.7%
- -------------------------------------------------------------------------------------------------------------------
Miami-Dade County, FL, Special Obligations, Capital Appreciation,
"A", MBIA, 0%, 2032 $ 2,000,000 $ 562,300
Pasco County, FL, Sales Tax Rev. (Half Central), AMBAC, 5%, 2023 1,000,000 1,053,120
Volusia County, FL, Tourist Development Tax Rev., FSA, 5%, 2034 815,000 855,644
Wyandotte County-Kansas City, KS, Unified Government Rev. (Sales Tax
Second Lien Area B), 5%, 2020 250,000 259,020
- -------------------------------------------------------------------------------------------------------------------
$ 2,730,084
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 3.4%
- -------------------------------------------------------------------------------------------------------------------
Brevard County, FL, Housing Finance Authority Rev., "B", GNMA, 6.5%, 2022 $ 29,000 $ 29,685
Lee County, FL, Housing Finance Authority Rev. (Multi-County Program),
"A-1", GNMA, 7.2%, 2033 30,000 30,198
Lee County, FL, Housing Finance Authority Rev. (Multi-County Program),
"A-4", GNMA, 7%, 2031 25,000 25,000
Manatee County, FL, Housing Finance Mortgage Rev. (Single Family,
Subordinated), Series 3, GNMA, 5.3%, 2028 55,000 56,471
Miami-Dade County, FL, Housing Finance Authority Rev. (Home Ownership
Mortgage), "A-1", GNMA, 5.2%, 2031 445,000 451,141
Palm Beach County, FL, Housing Finance Authority Rev., "B", GNMA, 5.5%, 2022 120,000 121,639
Pinellas County, FL, Housing Finance Authority Rev. (Multi-County Program),
"A-1", GNMA, 5.5%, 2035 555,000 578,127
Pinellas County, FL, Housing Finance Authority Rev. (Multi-County Program),
"B-1", GNMA, 6.2%, 2031 200,000 200,262
Pinellas County, FL, Housing Finance Authority Rev., "A-1",
GNMA, 4.85%, 2037 1,000,000 1,013,070
- -------------------------------------------------------------------------------------------------------------------
$ 2,505,593
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 1.6%
- -------------------------------------------------------------------------------------------------------------------
Florida Housing Finance Corp. Rev. (Homeowner Mortgage), "1",
GNMA, 4.8%, 2031 $ 1,000,000 $ 1,009,420
Florida Housing Finance Corp. Rev. (Homeowner Mortgage), "4",
FSA, 5.85%, 2031 160,000 160,565
- -------------------------------------------------------------------------------------------------------------------
$ 1,169,985
- -------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority, Resource Recovery
Facilities Rev. (American Ref-Fuel Co.), "A", 6.2%, 2019 $ 200,000 $ 206,634
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 5.7%
- -------------------------------------------------------------------------------------------------------------------
Florida Municipal Loan Council Rev., "C", MBIA, 5.25%, 2022 $ 1,000,000 $ 1,074,570
Osceola County, FL, School Board Certificate, "A", AMBAC, 5.25%, 2027 1,950,000 2,080,260
St. Augustine, FL, Capital Improvement Rev., AMBAC, 5%, 2029 1,000,000 1,054,910
- -------------------------------------------------------------------------------------------------------------------
$ 4,209,740
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 2.3%
- -------------------------------------------------------------------------------------------------------------------
Orange County, FL, Tourist Development Tax Rev., Subordinated,
AMBAC, 5.25%, 2027 $ 1,500,000 $ 1,588,950
Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 130,000 137,072
- -------------------------------------------------------------------------------------------------------------------
$ 1,726,022
- -------------------------------------------------------------------------------------------------------------------
Tax Assessment - 5.8%
- -------------------------------------------------------------------------------------------------------------------
Amelia Walk Community Development District, FL, Special Assessment,
"B", 5.2%, 2014 $ 200,000 $ 201,376
Arborwood Community Development District, FL, Special Assessment (Master
Infrastructure Projects), "B", 5.1%, 2014 200,000 199,610
Ave Maria Stewardship Community, FL, "A", 5.125%, 2038 200,000 200,038
Concord Station Community Development District, FL, Special Assessment,
5%, 2015 165,000 163,931
Concorde Estates Community Development District, FL, Special Assessment,
"B", 5%, 2011 205,000 204,629
Creekside Community Development District, FL, Special Assessment,
5.2%, 2038 200,000 200,536
Durbin Crossing Community Development District, FL, Special Assessment,
"B-1", 4.875%, 2010 250,000 247,530
Fishawk Community Development District II, FL, Tax Allocation,
"B", 5%, 2007 10,000 10,006
Greyhawk Landing Community Development, FL, Special Assessment,
"B", 6.25%, 2009 100,000 100,959
Heritage Harbour South Community Development District, FL, Special
Assessment, "B", 5.4%, 2008 5,000 5,015
Killarney, FL, Community Development District, Special Assessment,
"B", 5.125%, 2009 140,000 140,024
Lakes by the Bay South Community Development District, FL, Rev., "B",
5.3%, 2009 155,000 155,144
Middle Village Community Development District, FL, Special Assessment,
"A", 5.8%, 2022 95,000 98,395
Middle Village Community Development District, FL, Special Assessment,
"B", 5%, 2009 60,000 59,927
New Port Tampa Bay Community Development District, FL, Special Assessment,
"B", 5.3%, 2012 200,000 201,710
North Springs Improvement District, FL, Special Assessment (Parkland
Golf Country Club), "B-2", 5.125%, 2015 250,000 250,430
Old Palm Community Development District, FL, Special Assessment (Palm
Beach Gardens), "B", 5.375%, 2014 130,000 131,478
Palm Glades Community Development District, FL, Special Assessment,
"A", 5.3%, 2036 200,000 202,368
Panther Trace II, Community Development District Rev., FL, Special Assessment,
"B", 5%, 2010 180,000 179,354
Parkway Center, Community Development District, FL, Special Assessment,
"B", 5.625%, 2014 100,000 102,050
Renaissance Community Development District, FL, Special Assessment,
"B", 6.25%, 2008 100,000 100,628
Rolling Hills Community Development District, FL, "B", 5.125%, 2013 200,000 200,178
Sterling Hill Community Development District, FL, Special Assessment,
5.5%, 2010 135,000 136,191
Tuscany Reserve Community Development District, FL, Special Assessment,
"B", 5.25%, 2016 245,000 247,732
Villa Portofino West Community Development District, FL, Special Assessment,
"A", 5.35%, 2036 200,000 202,362
Watergrass Community Development District, FL, Special Assessment,
"B", 4.875%, 2010 185,000 183,946
Wentworth Estates Community Development District, FL, Special Assessment,
"B", 5.125%, 2012 200,000 199,924
- -------------------------------------------------------------------------------------------------------------------
$ 4,325,471
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 2.1%
- -------------------------------------------------------------------------------------------------------------------
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement,
"A-1", 5.125%, 2047 $ 1,000,000 $ 991,100
Louisiana Tobacco Settlement Authority Rev., "2001B", 5.875%, 2039 250,000 268,040
South Carolina Tobacco Settlement Authority Rev., "B", 6.375%, 2030 250,000 290,030
- -------------------------------------------------------------------------------------------------------------------
$ 1,549,170
- -------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 8.4%
- -------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority, MBIA,
5.5%, 2020 (u) $ 5,000,000 $ 5,759,300
St. Johns County, FL, Transportation Improvement Rev., AMBAC, 5%, 2027 500,000 525,420
- -------------------------------------------------------------------------------------------------------------------
$ 6,284,720
- -------------------------------------------------------------------------------------------------------------------
Universities - Dormitories - 3.9%
- -------------------------------------------------------------------------------------------------------------------
Florida Board Regents, Housing Rev., MBIA, 5.3%, 2020 $ 610,000 $ 642,830
Florida Board Regents, Housing Rev. (University of Central Florida),
FGIC, 5.25%, 2020 1,185,000 1,250,685
Florida Finance Authority, Capital Loan Projects Rev.,
"F", MBIA, 5.125%, 2021 1,000,000 1,038,470
- -------------------------------------------------------------------------------------------------------------------
$ 2,931,985
- -------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Deerfield, IL, Educational Facilities Authority Rev. (Chicagoland
Jewish High School Project), 6%, 2041 $ 200,000 $ 204,892
- -------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Port Morrow, OR, Pollution Control Rev. (Portland General Electric),
5.2%, 2033 $ 200,000 $ 204,648
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 1.4%
- -------------------------------------------------------------------------------------------------------------------
Palm Coast, FL, Utility Systems Rev., MBIA, 5%, 2024 $ 250,000 $ 263,293
St. Lucie West, FL, Utility Rev., MBIA, 5.25%, 2034 720,000 783,605
- -------------------------------------------------------------------------------------------------------------------
$ 1,046,898
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 13.6%
- -------------------------------------------------------------------------------------------------------------------
Florida Community Services Corp., Utility Rev., AMBAC, 5.5%, 2018 $ 1,125,000 $ 1,205,224
Miami Beach, FL, Stormwater Rev., FGIC, 5.25%, 2020 1,000,000 1,054,378
Miami-Dade County, FL, Stormwater Utility Rev., MBIA, 5%, 2028 2,000,000 2,111,840
Pinellas County, FL, Sewer Rev., FSA, 5%, 2032 1,500,000 1,566,690
Polk County, FL, Utility Systems Rev., FGIC, 5%, 2023 1,000,000 1,052,000
Polk County, FL, Utility Systems Rev., "A", FGIC, 5%, 2030 1,000,000 1,051,620
Seminole County, FL, Water & Sewer Rev., Unrefunded Balance, MBIA, 6%, 2019 940,000 1,073,480
Tohopekaliga Water Authority, Florida Utility System Rev., "A", FSA, 5%, 2024 1,000,000 1,053,170
- -------------------------------------------------------------------------------------------------------------------
$ 10,168,402
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $75,419,568) $ 79,024,576
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Pinellas County, FL, Health Facilities Authority Rev. (Pooled Hospital Loan
Program), 3.8%, due 4/02/07, at Identified Cost and Value $ 600,000 $ 600,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $76,019,568) (k) $ 79,624,576
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (6.9)% (5,128,262)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 74,496,314
- -------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $12,137
8/08/17 USD 500,000 Goldman Sachs 7-Day BMA 3.736% (fixed rate) (1,847)
5/30/19 USD 1,500,000 Citibank 7-Day BMA 3.695% (fixed rate) 5,924
6/12/19 USD 1,000,000 Merrill Lynch 7-Day BMA 3.660% (fixed rate) 7,536
9/26/22 USD 1,000,000 Goldman Sachs 7-Day BMA 3.807% (fixed rate) 4,948
- ------------------------------------------------------------------------------------------------------------------
$28,698
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) GEORGIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 104.1%
- -------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 5.1%
- -------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Airport Passenger Facilities Rev., "J", FSA, 5%, 2029 $ 750,000 $ 787,238
Atlanta, GA, Airport Passenger Facilities Rev., "J", FSA, 5%, 2034 750,000 785,220
Atlanta, GA, Airport Rev., "B", FSA, 5.25%, 2033 1,000,000 1,070,070
Augusta, GA, Airport Rev., "B", 5.35%, 2028 350,000 362,754
- -------------------------------------------------------------------------------------------------------------------
$ 3,005,282
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 5.3%
- -------------------------------------------------------------------------------------------------------------------
Atlanta & Fulton County, GA, Park Improvement, "A", MBIA, 5%, 2030 $ 500,000 $ 528,015
Columbia County, GA (Courthouse Detention Center), 5.625%, 2008 (c) 1,490,000 1,543,536
Macon Bibb County, GA, Urban Development Rev. (Bibb County Public
Facilities Project), 5.5%, 2022 1,000,000 1,070,590
- -------------------------------------------------------------------------------------------------------------------
$ 3,142,141
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 3.2%
- -------------------------------------------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency, FSA, 6%, 2009 (c)(u) $ 1,000,000 $ 1,062,910
Suwanee, GA, MBIA, 5.25%, 2012 (c) 750,000 801,773
- -------------------------------------------------------------------------------------------------------------------
$ 1,864,683
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 6.9%
- -------------------------------------------------------------------------------------------------------------------
Fayette County, GA, School District Rev., FSA, 0% to 2010, 4.9% to 2024 $ 575,000 $ 502,797
Forsyth County, GA, School District, 6%, 2010 (c) 750,000 810,615
Fulton County, GA, School District, 6.375%, 2010 1,535,000 1,598,257
Wilkes County, GA, School District, 5%, 2024 1,115,000 1,177,317
- -------------------------------------------------------------------------------------------------------------------
$ 4,088,986
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 10.4%
- -------------------------------------------------------------------------------------------------------------------
Athens Clarke County, GA (United Catholic Health East Issue), 5.5%, 2032 $ 500,000 $ 529,110
Chatham County, GA, Hospital Authority Rev. (Memorial Health Medical
Center), "A", 6%, 2017 350,000 375,459
Chatham County, GA, Hospital Authority Rev., Hospital Improvement
(Memorial Health University), "A", 5.375%, 2026 200,000 209,828
Cobb County, GA, Hospital Authority Revolving, Refunding & Improvement
Rev., Anticipation Certificates, AMBAC, 5.25%, 2023 750,000 808,860
Coffee County, GA, Hospital Authority Rev. (Coffee Regional Medical
Center, Inc.), 5%, 2026 350,000 355,992
Gainesville & Hall County, GA, Hospital Authority Rev. (Northeast
Georgia Health System, Inc.), 5.5%, 2031 500,000 520,085
Georgia Medical Center Hospital Authority Rev. (Spring Harbor Green
Island Project), 5.25%, 2037 200,000 202,652
Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare System,
Inc.), 6.125%, 2009 220,000 221,509
Tift County, GA, Hospital Authority Rev., Anticipation Certificates,
AMBAC, 5%, 2022 2,000,000 2,103,840
Valdosta & Lowndes County, GA, Hospital Authority Rev. (Southern Georgia
Medical Center Project), AMBAC, 5.25%, 2027 500,000 532,020
Valdosta & Lowndes County, GA, Hospital Authority Rev. (Southern Georgia
Medical Center Project), 5%, 2033 300,000 312,435
- -------------------------------------------------------------------------------------------------------------------
$ 6,171,790
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.5%
- -------------------------------------------------------------------------------------------------------------------
Fulton County, GA, Residential Care Facilities (Canterbury Court),
"A", 6.125%, 2034 $ 150,000 $ 157,784
Fulton County, GA, Residential Care Facilities, First Mortgage (Lenbrook
Project), "A", 5%, 2027 150,000 150,210
- -------------------------------------------------------------------------------------------------------------------
$ 307,994
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.9%
- -------------------------------------------------------------------------------------------------------------------
Savannah, GA, Economic Development Authority, Solid Waste Disposal Rev.
(Georgia Waste Management Project), "A", 5.5%, 2016 $ 500,000 $ 537,425
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.7%
- -------------------------------------------------------------------------------------------------------------------
Cartersville, GA, Development Authority Waste (Anheuser Busch Project),
5.95%, 2032 $ 750,000 $ 808,433
Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa
Refinery), 5.875%, 2022 160,000 175,963
- -------------------------------------------------------------------------------------------------------------------
$ 984,396
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.2%
- -------------------------------------------------------------------------------------------------------------------
Effingham County, GA, Development Authority, Solid Waste Disposal Rev.
(Fort James), 5.625%, 2018 $ 150,000 $ 151,511
Savannah, GA, Economic Development Pollution (Union Camp Corp.),
6.15%, 2017 1,000,000 1,127,280
- -------------------------------------------------------------------------------------------------------------------
$ 1,278,791
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.4%
- -------------------------------------------------------------------------------------------------------------------
East Point Housing Authority, Multi-Family Rev. (Laurel Ridge at
Washington Road Apartments LP), FNMA, 5%, 2032 $ 500,000 $ 513,465
Hinesville, GA, Leased Housing Corp., "A", FHA, 6.7%, 2017 900,000 903,600
- -------------------------------------------------------------------------------------------------------------------
$ 1,417,065
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 6.2%
- -------------------------------------------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev., 5.5%, 2032 $ 1,000,000 $ 1,008,080
Georgia Housing & Finance Authority Rev., Single Family Mortgage,
"A", 5.6%, 2032 635,000 653,269
Georgia Housing & Finance Authority Rev., Single Family Mortgage,
"A-2", 4.85%, 2037 500,000 504,585
Georgia Housing & Finance Authority Rev., Single Family Mortgage,
"B", 5%, 2026 250,000 255,448
Georgia Housing & Finance Authority Rev., Single Family Mortgage,
"C-2", 5.1%, 2022 750,000 766,200
Georgia Housing & Finance Authority Rev., Single Family Mortgage,
"C-2", 4.55%, 2031 500,000 492,680
- -------------------------------------------------------------------------------------------------------------------
$ 3,680,262
- -------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 2.7%
- -------------------------------------------------------------------------------------------------------------------
County Commissioners of Georgia Assn., Leasing Program, Rockdale County,
GA (Public Purpose Project), AMBAC, 5.625%, 2010 (c) $ 335,000 $ 358,333
County Commissioners of Georgia Assn., Leasing Program, Rockdale County,
GA (Public Purpose Project), AMBAC, 5.625%, 2020 165,000 175,709
Fulton County, GA, Facilities Corp., Fulton County, GA (Public Purpose
Project), AMBAC, 5.9%, 2019 1,000,000 1,079,680
- -------------------------------------------------------------------------------------------------------------------
$ 1,613,722
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 3.9%
- -------------------------------------------------------------------------------------------------------------------
Clayton County, GA, Development Authority Rev., "A", 6.25%, 2009 (c) $ 500,000 $ 538,470
De Kalb County, GA, Public Safety & Judicial Facilities Authority Rev.,
5%, 2029 400,000 421,284
Fayette County, GA, Public Facilities Authority (Criminal Justice Center
Project), 6.25%, 2010 (c) 755,000 820,459
Gilmer County, GA, Building Authority Rev., Courthouse Project,
"A", XLCA, 5%, 2029 500,000 528,305
- -------------------------------------------------------------------------------------------------------------------
$ 2,308,518
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.8%
- -------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 $ 1,000,000 $ 1,035,210
- -------------------------------------------------------------------------------------------------------------------
Tax Assessment - 0.5%
- -------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Tax Allocation (Eastside Project), "B", 5.6%, 2030 $ 150,000 $ 156,042
Atlanta, GA, Tax Allocation (Princeton Lakes Project), 5.5%, 2031 150,000 153,590
- -------------------------------------------------------------------------------------------------------------------
$ 309,632
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 360,000 $ 374,782
- -------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.2%
- -------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway & Transportation Authority,
"Y", 5.5%, 2016 (c) $ 610,000 $ 688,623
- -------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 9.3%
- -------------------------------------------------------------------------------------------------------------------
Fulton County, GA (Morehouse College), AMBAC, 6.25%, 2021 $ 980,000 $ 1,072,581
Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation
Funding), "A", 5%, 2031 265,000 275,205
Fulton County, GA, Development Authority Rev. (Georgia Tech Foundation),
"A", 5.75%, 2017 1,000,000 1,085,520
Private Colleges & University Authority (Emory University),
"A", 5.75%, 2009 (c) 1,000,000 1,061,010
Private Colleges & University Authority (Emory University),
"A", 5.75%, 2010 (c) 1,000,000 1,078,890
Private Colleges & University Authority (Mercer University),
5.75%, 2011 (c) 500,000 550,540
Savannah, GA, Economic Development Authority Rev. (College of Art & Design,
Inc.), ETM, 6.2%, 2009 (c) 385,000 396,696
- -------------------------------------------------------------------------------------------------------------------
$ 5,520,442
- -------------------------------------------------------------------------------------------------------------------
Universities - Dormitories - 2.6%
- -------------------------------------------------------------------------------------------------------------------
Georgia Private College & University Authority Rev. (Mercer Housing
Corp.), "A", 6%, 2021 $ 500,000 $ 530,635
Marietta, GA, Development Authority Rev., Student Housing (Southern
Polytechnic University), "A", 6.25%, 2007 (c) 1,000,000 1,034,390
- -------------------------------------------------------------------------------------------------------------------
$ 1,565,025
- -------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Gainesville, GA, Redevelopment Authority Educational Facilities Rev.
(Riverside Military Academy, Inc.), 5.125%, 2037 $ 200,000 $ 205,684
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 5.1%
- -------------------------------------------------------------------------------------------------------------------
Georgia Municipal Electric Authority Power Rev., "A", MBIA, 6.5%, 2020 $ 1,250,000 $ 1,503,675
Monroe County, GA, Pollution Control Rev. (Oglethorpe Power Corp.),
"A", 6.8%, 2012 1,000,000 1,125,280
Summerville, GA, Public Utility Rev., Refunding & Improvement, 5.75%, 2026 350,000 374,395
- -------------------------------------------------------------------------------------------------------------------
$ 3,003,350
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 31.3%
- -------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., FGIC, 5.5%, 2016 (u) $ 8,000,000 $ 8,980,400
Atlanta, GA, Water & Wastewater Rev., "A", MBIA, 5%, 2033 500,000 520,415
Augusta, GA, Water & Sewer Rev., FSA, 5.25%, 2034 1,000,000 1,082,920
Clayton County, GA, Water Authority, Water & Sewer Rev., 6.25%, 2010 (c) 1,000,000 1,084,200
Columbia County, GA, Water & Sewer Rev., FGIC, 6.25%, 2010 (c) 470,000 506,552
Fairburn, GA, Utility Rev., 5.75%, 2020 500,000 528,915
Forsyth County, GA, Water & Sewer Authority, 6.25%, 2010 (c) 1,105,000 1,195,964
Fulton County, GA, Water & Sewer Rev., FGIC, 6.375%, 2014 100,000 110,598
Fulton County, GA, Water & Sewer Rev., ETM, FGIC, 6.375%, 2014 (c) 2,150,000 2,379,873
Gainesville, GA, Water & Sewer Rev., FGIC, 5.625%, 2009 (c) 1,000,000 1,059,150
Jackson County, GA, Water & Sewer Authority, "A", AMBAC, 5.75%, 2017 1,000,000 1,083,030
- -------------------------------------------------------------------------------------------------------------------
$ 18,532,017
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $58,204,285) $ 61,635,820
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.7%
- -------------------------------------------------------------------------------------------------------------------
Georgia Municipal Electric Authority Rev., 3.61%, due 4/04/07, at
Identified Cost and Value $ 970,000 $ 970,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $59,174,285) (k) $ 62,605,820
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.8)% (3,416,136)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 59,189,684
- -------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 1,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 6,068
5/30/19 USD 750,000 Citibank 7-Day BMA 3.695% (fixed rate) 2,962
6/12/19 USD 500,000 Merrill Lynch 7-Day BMA 3.660% (fixed rate) 3,768
9/26/22 USD 1,000,000 Goldman Sachs 7-Day BMA 3.807% (fixed rate) 4,949
- -------------------------------------------------------------------------------------------------------------------
$17,747
- -------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) MARYLAND MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 101.6%
- -------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Maryland Transportation Authority Rev. (Baltimore/Washington International
Airport), "A", AMBAC, 5%, 2027 $ 1,000,000 $ 1,046,440
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 5.9%
- -------------------------------------------------------------------------------------------------------------------
Baltimore, MD, "B", 7.15%, 2009 $ 2,120,000 $ 2,290,851
Baltimore, MD, UT, Public Improvement, "A", MBIA, 7%, 2009 1,000,000 1,082,020
Frederick County, MD, Public Facilities, 5.25%, 2009 (c) 2,000,000 2,088,800
Puerto Rico Commonwealth Public Improvement, "A", 5.25%, 2026 2,330,000 2,504,540
- -------------------------------------------------------------------------------------------------------------------
$ 7,966,211
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 15.2%
- -------------------------------------------------------------------------------------------------------------------
Howard County, MD, "B", 0%, 2008 $ 1,000,000 $ 951,990
Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2008 (c) 1,000,000 1,025,930
Howard County, MD, Consolidated Public Improvement, "A", 5.5%, 2008 (c) 2,000,000 2,051,860
Prince George's County, MD, 0%, 2007 5,110,000 5,065,083
Prince George's County, MD, Consolidated Public Improvement, "A", 5%, 2023 2,000,000 2,121,560
Prince George's County, MD, Unrefunded Balance, Public Improvement, FSA,
5.375%, 2015 80,000 83,930
Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 2,000,000 2,103,700
Washington Suburban Sanitation District, General Construction Rev., 5%, 2027 930,000 990,813
Washington Suburban Sanitation District, General Construction Rev., 5%, 2028 980,000 1,043,377
Washington Suburban Sanitation District, General Construction Rev., 5%, 2029 1,025,000 1,090,559
Worcester County, MD, Public Improvement, 5.625%, 2010 (c) 1,620,000 1,723,437
Worcester County, MD, Public Improvement, 5.625%, 2010 (c) 2,030,000 2,159,616
- -------------------------------------------------------------------------------------------------------------------
$ 20,411,855
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 18.9%
- -------------------------------------------------------------------------------------------------------------------
Baltimore County, MD, Rev. (Catholic Health Initiatives), "A", 4.5%, 2033 $ 1,250,000 $ 1,248,037
Maryland Health & Higher Education (Peninsula Regional Medical Center),
5%, 2036 1,000,000 1,038,930
Maryland Health & Higher Educational Facilities Authority Rev. (University
of Maryland Medical System), "A", 5%, 2041 500,000 515,265
Maryland Health & Higher Educational Facilities Authority Rev. (Adventist
Healthcare), "A", 5.75%, 2025 1,000,000 1,065,600
Maryland Health & Higher Educational Facilities Authority Rev. (Anne
Arundel Health Systems), "A", FSA, 5%, 2023 1,000,000 1,052,000
Maryland Health & Higher Educational Facilities Authority Rev. (Calvert
Health Systems), 5.5%, 2039 1,000,000 1,067,510
Maryland Health & Higher Educational Facilities Authority Rev. (Carroll
County General Hospital), 6%, 2037 1,000,000 1,068,310
Maryland Health & Higher Educational Facilities Authority Rev. (Catholic
Health), "A", 6%, 2020 245,000 264,277
Maryland Health & Higher Educational Facilities Authority Rev. (Catholic
Health), "A", ETM, 6%, 2020 (c) 755,000 813,935
Maryland Health & Higher Educational Facilities Authority Rev. (Doctors
Community Hospital), "A", 5%, 2029 750,000 776,093
Maryland Health & Higher Educational Facilities Authority Rev. (Frederick
Memorial Hospital), 5.125%, 2035 1,000,000 1,024,130
Maryland Health & Higher Educational Facilities Authority Rev. (Good
Samaritan Hospital), ETM, 5.7%, 2009 (c) 1,085,000 1,116,639
Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins Hospital), 5%, 2021 750,000 776,430
Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins Medical Institutions), "A", 5%, 2037 750,000 788,228
Maryland Health & Higher Educational Facilities Authority Rev. (Lifebridge
Health), "A", 5.125%, 2034 1,000,000 1,036,320
Maryland Health & Higher Educational Facilities Authority Rev. (Medstar
Health), 5.5%, 2033 800,000 846,544
Maryland Health & Higher Educational Facilities Authority Rev. (North
Arundel Hospital), 6.5%, 2010 (c) 500,000 547,765
Maryland Health & Higher Educational Facilities Authority Rev. (Suburban
Hospital), "A", 5.5%, 2016 1,000,000 1,086,230
Maryland Health & Higher Educational Facilities Authority Rev. (Union
Hospital of Cecil County Issue), 5.625%, 2032 1,000,000 1,056,710
Maryland Health & Higher Educational Facilities Authority Rev. (Union
Hospital of Cecil County Issue), 5%, 2035 500,000 516,675
Maryland Health & Higher Educational Facilities Authority Rev. (University
of Maryland Medical Systems), 6.625%, 2010 (c) 1,000,000 1,083,650
Maryland Health & Higher Educational Facilities Authority Rev. (University
of Maryland Medical Systems), "B", AMBAC, 5%, 2024 1,000,000 1,050,750
Maryland Health & Higher Educational Facilities Authority Rev. (Upper
Chesapeake Hospital), "A", FSA, 5.5%, 2020 2,000,000 2,046,180
Maryland Health & Higher Educational Facilities Rev. (Helix Health Issue),
ETM, AMBAC, 5%, 2027 (c) 1,000,000 1,101,440
Maryland Industrial Development Authority, Economic Development Rev.,
RIBS, FSA, 8.076%, 2022 (p) 1,400,000 1,798,160
Montgomery County, MD, Economic Development (Trinity Healthcare Group),
5.125%, 2022 500,000 521,720
- -------------------------------------------------------------------------------------------------------------------
$ 25,307,528
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.5%
- -------------------------------------------------------------------------------------------------------------------
Gaithersburg, MD, Economic Development Rev. (Asbury Maryland Obligations
Group), "A", 5.125%, 2036 $ 400,000 $ 409,304
Howard County, MD, Retirement (Ref-Vantage House Facilities),
"B", 5.25%, 2037 300,000 305,445
Maryland Health & Higher Educational Facilities (King Farm Presbyterian
Community), "A", 5.3%, 2037 300,000 306,099
Maryland Health & Higher Educational Facilities Authority Rev. (Mercy
Ridge), "A", 6%, 2013 (c) 150,000 169,161
Maryland Health & Higher Educational Facilities Authority Rev. (Edenwald),
"A", 5.4%, 2037 350,000 361,452
Westminster, MD, Economic Development Rev. (Carroll Lutheran Village),
"A", 6.25%, 2034 400,000 422,028
- -------------------------------------------------------------------------------------------------------------------
$ 1,973,489
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 1.2%
- -------------------------------------------------------------------------------------------------------------------
Baltimore, MD, Port Facilities Rev., Consolidated Coal Sales,
"B", 6.5%, 2011 $ 1,500,000 $ 1,563,570
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.5%
- -------------------------------------------------------------------------------------------------------------------
Northeast Maryland Waste Disposal Authority Resources Recovery Rev.
(Baltimore Resco Retrofit Project), 5%, 2012 $ 690,000 $ 702,855
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa
Refinery), 5.875%, 2022 $ 375,000 $ 412,414
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Maryland Industrial Development Authority Economic Development (Baltimore
Aquarium Project), 5.2%, 2026 $ 1,000,000 $ 1,051,240
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.7%
- -------------------------------------------------------------------------------------------------------------------
Baltimore, MD, Convention Center Hotel Rev., "B", 5.875%, 2039 $ 300,000 $ 319,116
Harford County MD, Economic Development Rev. (Battelle Memorial Institute
Project), 5.25%, 2034 1,600,000 1,693,920
Maryland Economic Development Corp. (Chesapeake Bay Conference Center),
"A", 5%, 2031 300,000 301,977
- -------------------------------------------------------------------------------------------------------------------
$2,315,013
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.5%
- -------------------------------------------------------------------------------------------------------------------
Baltimore, MD, City Housing Corp. Rev., FHA, 7.75%, 2009 $ 320,000 $ 320,000
Howard County, MD, Multi-Family Rev. (Patuxent Square Apartments), FNMA,
4.75%, 2036 1,000,000 1,007,300
Maryland Community Development Administration (Waters Landing II
Apartments), "A", GNMA, 5.875%, 2033 1,500,000 1,576,455
Maryland Community Development Administration, "A", 5%, 2034 910,000 927,663
Maryland Community Development Administration, "A", 5.1%, 2044 970,000 988,760
Maryland Community Development Administration, "A", 5.05%, 2047 1,000,000 1,014,750
Maryland Community Development Administration, "B", 5%, 2039 500,000 507,215
Maryland Community Development Administration, "D", 5%, 2032 1,000,000 1,015,450
- -------------------------------------------------------------------------------------------------------------------
$ 7,357,593
- -------------------------------------------------------------------------------------------------------------------
Parking - 1.2%
- -------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins
Medical Institutions), AMBAC, 5%, 2034 $ 1,500,000 $ 1,579,905
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 0.1%
- -------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Housing Single Family Collateral,
"A", 7.4%, 2032 $ 30,000 $ 30,215
Prince George's County, MD, Housing Single Family Collateral,
"A", GNMA, 5.6%, 2034 50,000 50,832
- -------------------------------------------------------------------------------------------------------------------
$ 81,047
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 3.9%
- -------------------------------------------------------------------------------------------------------------------
Maryland Community Development Administration Housing, "A", 5.875%, 2016 $ 1,155,000 $ 1,180,017
Maryland Community Development Administration Residential, "B", 4.75%, 2019 305,000 310,331
Maryland Community Development Administration, "I", 6%, 2041 990,000 1,065,507
Maryland Community Development Administration, Department of Housing &
Community Development, "L", 4.95%, 2038 1,000,000 1,020,770
Montgomery County, MD, Housing Opportunities Commission (Single Family
Mortgage Rev.), "B", 4.55%, 2026 1,505,000 1,510,719
Puerto Rico Housing Finance Authority Home Mortgage Rev., Mortgage Backed
Securities, "A", 4.75%, 2023 175,000 175,824
- -------------------------------------------------------------------------------------------------------------------
$ 5,263,168
- -------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 4.0%
- -------------------------------------------------------------------------------------------------------------------
Howard County, MD, COP, 8%, 2019 $ 805,000 $ 1,121,429
Howard County, MD, COP, 8%, 2019 385,000 536,336
Howard County, MD, COP, 8%, 2019 680,000 947,294
Howard County, MD, COP, "B", 8.15%, 2021 450,000 646,627
Puerto Rico Commonwealth Infrastructure Financing Authority, Special Tax
Rev., "B", 5%, 2031 2,000,000 2,087,100
- -------------------------------------------------------------------------------------------------------------------
$ 5,338,786
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 5.3%
- -------------------------------------------------------------------------------------------------------------------
Prince George's County, MD, Lease Development Authority Rev., MBIA, 0%, 2009 $ 1,500,000 $ 1,378,755
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 1,000,000 1,093,170
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) 3,040,000 3,402,277
Puerto Rico Public Finance Corp., Commonwealth Appropriation, "E",
5.7%, 2010 (c) 1,235,000 1,302,641
- -------------------------------------------------------------------------------------------------------------------
$ 7,176,843
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.5%
- -------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $ 1,000,000 $ 1,029,470
Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,000,000 1,038,670
- -------------------------------------------------------------------------------------------------------------------
$ 2,068,140
- -------------------------------------------------------------------------------------------------------------------
Tax Assessment - 1.8%
- -------------------------------------------------------------------------------------------------------------------
Anne Arundel County, MD, Special Obligations (Arundel Mills Project),
5.125%, 2029 $ 1,555,000 $ 1,664,954
Brunswick, MD, Special Obligation (Brunswick Crossing Special Taxing),
5.5%, 2036 250,000 255,335
Prince George's County, MD, Special Obligations (National Harbor Project),
5.2%, 2034 500,000 511,850
- -------------------------------------------------------------------------------------------------------------------
$ 2,432,139
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 230,000 $ 239,444
Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 400,000 412,984
Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 225,000 227,441
- -------------------------------------------------------------------------------------------------------------------
$ 879,869
- -------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.4%
- -------------------------------------------------------------------------------------------------------------------
Maryland Department of Transportation, Port Administration Facilities
Project, AMBAC, 5.25%, 2020 $ 1,690,000 $ 1,828,141
- -------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 13.0%
- -------------------------------------------------------------------------------------------------------------------
Annapolis, MD, Economic Development Rev. (St. John's College), 5.5%, 2018 $ 750,000 $ 766,132
Anne Arundel County, MD, Economic Development (Community College Project),
5.25%, 2028 1,600,000 1,711,648
Frederick County, MD, Educational Facilities Rev. (Mount St. Mary's
College), 5%, 2030 1,000,000 1,026,080
Frederick County, MD, Educational Facilities Rev. (Mount St. Mary's
College), "A", 5.7%, 2020 850,000 882,351
Maryland Health & Higher Education (College Of Art), 5%, 2030 750,000 775,575
Maryland Health & Higher Education (Loyola College), "A", 5%, 2040 1,000,000 1,035,680
Maryland Health & Higher Educational Facilities Authority Rev. (Goucher
College), 5.375%, 2025 500,000 535,355
Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins University), 5.625%, 2027 1,400,000 1,432,634
Maryland Health & Higher Educational Facilities Authority Rev. (Johns
Hopkins University), "A", 5%, 2032 2,000,000 2,068,740
Montgomery County, MD, Rev. Authority (College Arts Center Project),
"A", 5%, 2027 1,950,000 2,059,941
Morgan State University, MD, Academic, MBIA, 6.05%, 2015 1,500,000 1,671,840
Morgan State University, MD, Academic, "A", ETM, MBIA, 0%, 2008 (c) 1,400,000 1,338,190
Westminster, MD, Educational Facilities Rev. (McDaniel College, Inc.),
5.5%, 2012 (c) 1,000,000 1,087,680
Westminster, MD, Educational Facilities Rev. (McDaniel College, Inc.),
5%, 2031 1,000,000 1,037,730
- -------------------------------------------------------------------------------------------------------------------
$ 17,429,576
- -------------------------------------------------------------------------------------------------------------------
Universities - Dormitories - 5.4%
- -------------------------------------------------------------------------------------------------------------------
Maryland Economic Development Corp. (Morgan State University Project), "A",
6%, 2034 $ 1,000,000 $ 1,022,260
Maryland Economic Development Corp. (University of Maryland College Park
Project), AMBAC, 5%, 2019 1,810,000 1,891,360
Maryland Economic Development Corp., Collegiate Housing (Salisbury), "A",
6%, 2019 1,000,000 1,044,410
Maryland Economic Development Corp., Collegiate Housing Rev. (Towson
University), "A", 5.75%, 2029 1,000,000 1,018,500
Maryland Economic Development Corp., Student Housing Rev. (University of
Maryland College Park Projects), CIFG, 5%, 2033 2,120,000 2,234,522
- -------------------------------------------------------------------------------------------------------------------
$ 7,211,052
- -------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.7%
- -------------------------------------------------------------------------------------------------------------------
Maryland Health & Higher Educational Facilities Authority Rev. (Washington
Christian Academy), 5.5%, 2038 $ 500,000 $ 511,210
Maryland Industrial Development Financing Authority, Economic Development
Authority Rev. (Our Lady of Good Council), "A", 6%, 2035 400,000 427,208
- -------------------------------------------------------------------------------------------------------------------
$ 938,418
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 4.9%
- -------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC, 5.25%, 2015 (u) $ 3,360,000 $ 3,508,646
Puerto Rico Electric Power Authority Rev., "NN", 5.125%, 2024 1,500,000 1,581,285
Puerto Rico Electric Power Authority Rev., RITES, FSA, 6.014%, 2015 (n)(v) 1,400,000 1,490,076
- -------------------------------------------------------------------------------------------------------------------
$ 6,580,007
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 5.5%
- -------------------------------------------------------------------------------------------------------------------
Baltimore, MD, Project Rev., Refunding Water Projects, "A", FGIC,
5.125%, 2032 $ 1,000,000 $ 1,053,630
Baltimore, MD, Rev., LEVRRS, MBIA, 7.57%, 2020 (p) 3,000,000 3,841,620
Baltimore, MD, Wastewater Rev. Project, "A", MBIA, 5.65%, 2020 2,000,000 2,280,540
Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009 (c) 195,000 206,942
- -------------------------------------------------------------------------------------------------------------------
$ 7,382,732
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $129,245,751) $136,298,031
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), "A", 3.7%, due 4/05/07 $ 200,000 $ 200,000
Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White
Memorial Hospital), 3.77%, due 4/02/07 100,000 100,000
Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White
Memorial Hospital), 3.77%, due 4/02/07 100,000 100,000
Jefferson County, AL, Sewer Rev., Warrants Rev., "B-4", 3.7%, due 4/05/07 500,000 500,000
Pinellas County, FL, Health Facilities Authority Rev. (Pooled Hospital Loan
Program), 3.8%, due 4/02/07 200,000 $ 200,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 1,100,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $130,345,751) (k) $137,398,031
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (2.4)% (3,284,926)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $134,113,105
- -------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 18,205
6/12/19 USD 2,000,000 Merrill Lynch 7-Day BMA 3.660% (fixed rate) 15,071
4/27/22 USD 2,000,000 Citibank 7-Day BMA 3.878% (fixed rate) (10,117)
7/23/22 USD 1,000,000 Merrill Lynch 7-Day BMA 3.889% (fixed rate) (4,796)
9/26/22 USD 2,000,000 Goldman Sachs 7-Day BMA 3.807% (fixed rate) 9,897
- ------------------------------------------------------------------------------------------------------------------
$ 28,260
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 105.0%
- -------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 4.5%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev., "A", AMBAC, 5%, 2035 $ 2,000,000 $ 2,101,820
Massachusetts Port Authority Rev., "A", FSA, 5.125%, 2017 1,275,000 1,321,780
Massachusetts Port Authority Rev., "A", MBIA, 5%, 2033 3,000,000 3,135,420
Massachusetts Port Authority Rev., "C", 6%, 2010 (c) 1,000,000 1,070,040
Massachusetts Port Authority Rev., "C", 6.125%, 2010 (c) 1,460,000 1,566,989
Massachusetts Port Authority Rev., ETM, 13%, 2013 (c) 610,000 794,464
- -------------------------------------------------------------------------------------------------------------------
$ 9,990,513
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 14.6%
- -------------------------------------------------------------------------------------------------------------------
Boston, MA, "A", 5.75%, 2010 (c) $ 3,645,000 $ 3,851,489
Brookline, MA, 5.375%, 2019 1,800,000 1,896,066
Commonwealth of Massachusetts, "B", 5.25%, 2028 2,500,000 2,867,250
Commonwealth of Massachusetts, "B", ETM, FGIC, 7%, 2009 (c) 1,150,000 1,193,562
Greater Lawrence, MA, Sanitation District, MBIA, 5.625%, 2010 (c) 1,640,000 1,752,963
Lynn, MA, AMBAC, 5.125%, 2018 3,690,000 3,828,892
Massachusetts Consolidated Loan, "A", 6%, 2010 (c) 3,000,000 3,215,370
Massachusetts Consolidated Loan, "B", 5.75%, 2010 (c) 1,000,000 1,062,980
Massachusetts Consolidated Loan, "C", 5.875%, 2009 (c) 1,000,000 1,060,700
Massachusetts Consolidated Loan, "C", 5.75%, 2010 (c) 1,500,000 1,602,900
Middleborough, MA, FGIC, 5.6%, 2010 (c) 75,000 79,569
Puerto Rico Commonwealth, Public Improvement, "A", 5.25%, 2030 1,000,000 1,070,970
Salisbury, MA, MBIA, 5.25%, 2012 (c) 2,790,000 3,013,646
Sutton, MA, MBIA, 5.5%, 2017 1,000,000 1,058,910
Sutton, MA, MBIA, 5.5%, 2019 1,000,000 1,058,330
Westford, MA, FGIC, 5.25%, 2020 2,250,000 2,356,988
Weymouth, MA, MBIA, 5.375%, 2020 1,250,000 1,324,000
- -------------------------------------------------------------------------------------------------------------------
$ 32,294,585
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 7.9%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority, Transit Improvements,
6.2%, 2016 (u) $ 9,670,000 $ 10,984,927
Massachusetts Bay Transportation Authority, Unrefunded Balance,
"A", 5.75%, 2018 320,000 340,349
Maynard, MA, MBIA, 5.5%, 2021 1,000,000 1,093,320
Springfield, MA, FSA, 6.25%, 2009 (c) 1,600,000 1,714,816
Worcester, MA, "A", FSA, 6%, 2016 2,955,000 3,179,255
- -------------------------------------------------------------------------------------------------------------------
$ 17,312,667
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 7.2%
- -------------------------------------------------------------------------------------------------------------------
Belmont, MA, 5%, 2015 $ 2,165,000 $ 2,183,402
Dudley-Charlton, MA, Regional School District, FGIC, 5.25%, 2015 (u) 2,730,000 3,010,453
Dudley-Charlton, MA, Regional School District, FGIC, 5.25%, 2016 (u) 2,860,000 3,172,169
Dudley-Charlton, MA, Regional School District, FGIC, 5.25%, 2018 (u) 3,130,000 3,504,192
Narragansett, MA, Regional School District, AMBAC, 6%, 2019 1,720,000 1,849,980
Tantasqua, MA, Regional School District, FSA, 5.375%, 2010 (c) 2,000,000 2,127,860
- -------------------------------------------------------------------------------------------------------------------
$ 15,848,056
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 11.9%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Massachusetts Biomedical
Research), "C", 6.375%, 2016 $ 50,000 $ 53,952
Massachusetts Health & Educational Facilities Authority Rev. (Baystate
Medical Center), "F", 5.75%, 2033 2,000,000 2,123,100
Massachusetts Health & Educational Facilities Authority Rev. (Berkshire
Health Systems), "E", 6.25%, 2031 1,350,000 1,466,478
Massachusetts Health & Educational Facilities Authority Rev. (Caritas
Christi), "B", 6.5%, 2012 500,000 547,435
Massachusetts Health & Educational Facilities Authority Rev. (Caritas
Christi), "B", 6.25%, 2022 20,000 21,873
Massachusetts Health & Educational Facilities Authority Rev. (Catholic
Health East Issue), 5.5%, 2032 1,575,000 1,666,697
Massachusetts Health & Educational Facilities Authority Rev. (Covenant
Health Systems, Inc.), 6.5%, 2017 75,000 83,024
Massachusetts Health & Educational Facilities Authority Rev. (Covenant
Health Systems, Inc.), 6%, 2031 1,000,000 1,086,140
Massachusetts Health & Educational Facilities Authority Rev. (Jordan
Hospital), "D", 5.25%, 2018 1,330,000 1,349,445
Massachusetts Health & Educational Facilities Authority Rev.
(Milford-Whitinsville Hospital), "D", 6.35%, 2012 (c) 300,000 339,960
Massachusetts Health & Educational Facilities Authority Rev.
(Milford-Whitinsville Regional Hospital), "C", 5.25%, 2018 1,500,000 1,513,800
Massachusetts Health & Educational Facilities Authority Rev. (Milton
Hospital), "C", 5.5%, 2016 800,000 825,088
Massachusetts Health & Educational Facilities Authority Rev. (New England
Medical Center Hospital), "H", FGIC, 5.375%, 2018 1,000,000 1,074,460
Massachusetts Health & Educational Facilities Authority Rev. (New England
Medical Center Hospital), "H", FGIC, 5.375%, 2019 815,000 874,894
Massachusetts Health & Educational Facilities Authority Rev. (New England
Medical Center Hospital), "H", FGIC, 5%, 2025 1,135,000 1,178,459
Massachusetts Health & Educational Facilities Authority Rev. (Newton
Wellesley Hospital), "G", MBIA, 6.125%, 2015 1,000,000 1,025,290
Massachusetts Health & Educational Facilities Authority Rev. (North Adams
Regional Hospital), "C", 6.625%, 2018 475,000 481,346
Massachusetts Health & Educational Facilities Authority Rev. (Partners
Healthcare Systems), "A", MBIA, 5.375%, 2018 2,000,000 2,026,760
Massachusetts Health & Educational Facilities Authority Rev. (Partners
Healthcare Systems), "C", 5.75%, 2021 100,000 108,051
Massachusetts Health & Educational Facilities Authority Rev. (South Shore
Hospital), "F", 5.625%, 2019 2,000,000 2,095,100
Massachusetts Health & Educational Facilities Authority Rev. (University
of Massachusetts Memorial Hospital), "C", 6.5%, 2021 1,000,000 1,090,050
Massachusetts Health & Educational Facilities Authority Rev. (University
of Massachusetts Memorial Hospital), "D", 5%, 2033 500,000 507,385
Massachusetts Industrial Finance Agency Rev., Capital Appreciation
(Massachusetts Biomedical Research), "A", 0%, 2010 5,300,000 4,632,465
- -------------------------------------------------------------------------------------------------------------------
$ 26,171,252
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Boston, MA, Industrial Development Finance Authority Rev. (Alzheimer's Center
Project), FHA, 5.5%, 2012 $ 30,000 $ 30,576
Massachusetts Development Finance Agency Rev., First Mortgage (Loomis
Communities Project), "A", 6.9%, 2032 530,000 580,069
- -------------------------------------------------------------------------------------------------------------------
$ 610,645
- -------------------------------------------------------------------------------------------------------------------
Human Services - 0.5%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Health & Educational Facilities Authority Rev. (Learning
Center for Deaf Children), "C", 6.1%, 2019 $ 1,000,000 $ 1,021,460
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 1.4%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Port Authority Rev. (U.S. Airways), MBIA, 5.875%, 2016 $ 1,900,000 $ 1,987,495
Massachusetts Port Authority Rev., Special Facilities (U.S. Airways Project),
"A", MBIA, 5.625%, 2011 1,140,000 1,160,440
- -------------------------------------------------------------------------------------------------------------------
$ 3,147,935
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Waste Management, Inc.
Project), 5.5%, 2027 $ 750,000 $ 797,790
Massachusetts Development Finance Agency Rev. (Waste Management, Inc.),
"B", 6.9%, 2029 1,000,000 1,064,580
- -------------------------------------------------------------------------------------------------------------------
$ 1,862,370
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 2.1%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev., Resource Recovery (Flour
Corp.), 5.625%, 2019 $ 1,675,000 $ 1,747,193
Massachusetts Industrial Finance Agency Rev. (Welch Foods, Inc.), 5.6%, 2017 2,100,000 2,161,026
Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa
Refinery), 5.875%, 2022 595,000 654,363
- -------------------------------------------------------------------------------------------------------------------
$ 4,562,582
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 2.5%
- -------------------------------------------------------------------------------------------------------------------
Martha's Vineyard, MA, Land Bank Rev., AMBAC, 5%, 2029 $ 785,000 $ 824,046
Martha's Vineyard, MA, Land Bank Rev., AMBAC, 5%, 2034 1,365,000 1,429,496
Massachusetts Development Finance Agency Rev. (WGBH Educational Foundation),
"A", AMBAC, 5.375%, 2012 (c) 3,000,000 3,248,550
- -------------------------------------------------------------------------------------------------------------------
$ 5,502,092
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 6.5%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Credit Housing-Chelsea
Homes), "I-A", LOC, 5%, 2024 $ 1,185,000 $ 1,203,071
Massachusetts Development Finance Agency Rev. (Morville House Apartments),
"A", LOC, 4.95%, 2023 2,500,000 2,533,375
Massachusetts Housing Finance Agency Rev., "A", 5%, 2028 1,000,000 1,024,500
Massachusetts Housing Finance Agency Rev., "E", 5%, 2028 1,000,000 1,029,740
Massachusetts Housing Finance Agency Rev., "F", 5.125%, 2034 720,000 741,902
Massachusetts Housing Finance Agency Rev., "P", 5%, 2023 1,240,000 1,275,638
Massachusetts Housing Finance Agency Rev., "P", 5.1%, 2033 1,565,000 1,602,654
Massachusetts Housing Finance Agency Rev., "P", 5.2%, 2045 1,445,000 1,478,495
Massachusetts Housing Finance Agency Rev., Rental Mortgage, "A",
AMBAC, 5.7%, 2020 1,475,000 1,537,275
Massachusetts Housing Finance Agency, "E", 4.5%, 2038 2,000,000 1,963,700
- -------------------------------------------------------------------------------------------------------------------
$ 14,390,350
- -------------------------------------------------------------------------------------------------------------------
Parking - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Rail Connections, Inc., Massachusetts Rev. (Route 128 Parking Garage),
"A", 6%, 2009 (c) $ 450,000 $ 481,338
Rail Connections, Inc., Massachusetts Rev. (Route 128 Parking Garage),
"A", 6%, 2009 (c) 500,000 534,820
Rail Connections, Inc., Massachusetts Rev. (Route 128 Parking Garage),
"A", 6%, 2009 (c) 250,000 267,410
- -------------------------------------------------------------------------------------------------------------------
$ 1,283,568
- -------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.7%
- -------------------------------------------------------------------------------------------------------------------
Route 3 North Transit Improvement Associates Rev., MBIA, 5.625%, 2010 (c) $ 1,500,000 $ 1,589,940
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.3%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Housing Finance Agency, Single Family Housing Rev.,
"102", 5%, 2029 $ 1,500,000 $ 1,526,505
Massachusetts Housing Finance Agency, Single Family Housing Rev.,
"118", 4.75%, 2030 1,500,000 1,503,735
Massachusetts Housing Finance Agency, Single Family Housing Rev.,
"122", 4.85%, 2031 2,000,000 2,040,940
- -------------------------------------------------------------------------------------------------------------------
$ 5,071,180
- -------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 1.2%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency, Resource Recovery Rev. (Ogden
Haverhill Associates), "A", 6.7%, 2014 $ 600,000 $ 648,852
Massachusetts Industrial Finance Agency, Resource Recovery Rev. (Ogden
Haverhill Associates), "A", 5.5%, 2013 25,000 25,981
Massachusetts Industrial Finance Agency, Resource Recovery Rev. (Ogden
Haverhill Associates), "A", 5.6%, 2019 1,925,000 1,997,573
- -------------------------------------------------------------------------------------------------------------------
$ 2,672,406
- -------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Visual & Performing Arts
Project), 6%, 2015 $ 1,235,000 $ 1,413,062
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 3.2%
- -------------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) $ 5,000,000 $ 5,595,850
University of Massachusetts, Building Authority Project Rev., "2",
AMBAC, 5.5%, 2018 1,400,000 1,487,472
- -------------------------------------------------------------------------------------------------------------------
$ 7,083,322
- -------------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Educational Financing Authority, Education Loan Rev., "E",
AMBAC, 5%, 2015 $ 90,000 $ 92,089
Massachusetts Educational Financing Authority, Education Loan Rev.,
"Issue E", AMBAC, 5.3%, 2016 1,490,000 1,525,924
Massachusetts Educational Financing Authority, Education Loan Rev.,
"Issue G", "A", MBIA, 6.05%, 2017 50,000 51,462
- -------------------------------------------------------------------------------------------------------------------
$ 1,669,475
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 2.0%
- -------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 $ 2,950,000 $ 3,036,937
Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 1,420,000 1,474,911
- -------------------------------------------------------------------------------------------------------------------
$ 4,511,848
- -------------------------------------------------------------------------------------------------------------------
Tax Assessment - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority, Unfunded Balance,
"A", 5.25%, 2030 $ 615,000 $ 641,537
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 660,000 $ 687,099
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.5%, 2039 400,000 418,687
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A", 0%, 2050 2,000,000 136,920
- -------------------------------------------------------------------------------------------------------------------
$ 1,242,706
- -------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 21.0%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts College Building Authority Project Rev., "A",
XLCA, 5.25%, 2023 $ 1,000,000 $ 1,064,020
Massachusetts College Building Authority Project Rev., "A", XLCA, 5%, 2043 2,110,000 2,180,179
Massachusetts Development Finance Agency Rev. (Boston University),
XLCA, 6%, 2059 1,500,000 1,843,500
Massachusetts Development Finance Agency Rev. (Clark University),
XLCA, 5.125%, 2025 1,500,000 1,598,235
Massachusetts Development Finance Agency Rev. (Curry College), "A",
ACA, 5%, 2036 1,000,000 1,026,720
Massachusetts Development Finance Agency Rev. (Hampshire College),
5.7%, 2034 1,000,000 1,062,530
Massachusetts Development Finance Agency Rev. (Massachusetts College
of Pharmacy), "B", 6.625%, 2010 (c) 50,000 54,338
Massachusetts Development Finance Agency Rev. (Massachusetts College
of Pharmacy), "C", 5.75%, 2033 1,000,000 1,068,110
Massachusetts Development Finance Agency Rev. (Mount Holyoke College),
5.125%, 2021 1,000,000 1,048,600
Massachusetts Development Finance Agency Rev. (Olin College), "B",
XLCA, 5.25%, 2033 3,000,000 3,189,810
Massachusetts Development Finance Agency Rev. (Suffolk University),
5.75%, 2009 (c) 1,000,000 1,053,520
Massachusetts Development Finance Agency Rev. (Suffolk University),
5.85%, 2009 (c) 1,000,000 1,055,650
Massachusetts Development Finance Agency Rev. (Western New England
College), 6.125%, 2012 (c) 1,115,000 1,259,682
Massachusetts Development Finance Agency Rev. Higher Education (Smith
College), 5.5%, 2010 (c) 1,210,000 1,289,691
Massachusetts Health & Educational Facilities Authority Rev. (Boston
College), "K", 5.25%, 2023 4,350,000 4,352,001
Massachusetts Health & Educational Facilities Authority Rev. (Simmons
College), "D", AMBAC, 6.05%, 2010 (c) 1,745,000 1,898,298
Massachusetts Health & Educational Facilities Authority Rev. (Simmons
College), "F", FGIC, 5%, 2013 (c) 500,000 537,805
Massachusetts Health & Educational Facilities Authority Rev. (Umass
Worcester), "B", FGIC, 5.125%, 2011 (c) 775,000 822,624
Massachusetts Health & Educational Facilities Authority Rev. (Umass
Worcester), "B", FGIC, 5.125%, 2019 1,005,000 1,059,089
Massachusetts Health & Educational Facilities Authority Rev. (University
of Massachusetts), "A", FGIC, 5.75%, 2010 (c) 2,395,000 2,582,050
Massachusetts Health & Educational Facilities Authority Rev. (University
of Massachusetts), "A", FGIC, 5.85%, 2010 (c) 1,200,000 1,297,620
Massachusetts Health & Educational Facilities Authority Rev. (University
of Massachusetts), "C", MBIA, 5.25%, 2031 3,000,000 3,236,910
Massachusetts Health & Educational Facilities Authority Rev. (University
of Massachusetts), "D", FGIC, 5%, 2029 1,500,000 1,575,465
Massachusetts Health & Educational Facilities Authority Rev. (Wellesley
College), 5%, 2033 1,000,000 1,044,020
Massachusetts Health & Educational Facilities Authority Rev. (Wheelock
College), "B", MBIA, 5.5%, 2021 3,275,000 3,454,339
Massachusetts Health & Educational Facilities Authority Rev. (Williams
College), "H", 5%, 2028 1,000,000 1,047,940
Massachusetts Health & Educational Facilities Authority Rev. (University
of Massachusetts), "A", FGIC, 5.625%, 2010 (c) 2,170,000 2,330,645
Massachusetts Industrial Finance Agency Rev. (Brandeis University),
"C", MBIA, 0%, 2009 1,000,000 908,250
Massachusetts Industrial Finance Agency Rev. (Brandeis University),
"C", MBIA, 0%, 2010 1,000,000 873,830
Massachusetts Industrial Finance Agency Rev. (Brandeis University),
"C", MBIA, 0%, 2011 500,000 420,365
- -------------------------------------------------------------------------------------------------------------------
$ 46,235,836
- -------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 4.3%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Deerfield Academy),
"A", 5%, 2028 $ 1,000,000 $ 1,046,300
Massachusetts Development Finance Agency Rev. (Middlesex School),
5.125%, 2023 500,000 531,215
Massachusetts Development Finance Agency Rev. (Williston Northampton
School), 6.5%, 2008 (c) 1,300,000 1,378,143
Massachusetts Development Finance Agency Rev. (Xaverian Brothers High
School), 5.55%, 2019 1,000,000 1,040,030
Massachusetts Development Finance Agency Rev. (Xaverian Brothers High
School), 5.65%, 2029 1,000,000 1,034,320
Massachusetts Industrial Finance Agency Rev. (Concord Academy),
5.5%, 2027 2,000,000 2,052,980
Massachusetts Industrial Finance Agency Rev. (Dana Hall School),
5.9%, 2007 (c) 1,340,000 1,373,714
Massachusetts Industrial Finance Agency Rev. (Tabor Academy), 5.4%, 2018 1,000,000 1,046,860
- -------------------------------------------------------------------------------------------------------------------
$ 9,503,562
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 0.3%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev. (Devens Electric Systems),
5.625%, 2016 $ 725,000 $ 768,130
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 6.9%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Water Pollution Abatement Trust Rev., Unrefunded Balance,
"5", 5.75%, 2017 $ 25,000 $ 26,377
Massachusetts Water Pollution Abatement Trust, "10", 5%, 2014 (c) 855,000 925,136
Massachusetts Water Pollution Abatement Trust, "10", 5%, 2029 160,000 167,886
Massachusetts Water Pollution Abatement Trust, "10", 5%, 2034 145,000 151,683
Massachusetts Water Pollution Abatement Trust, "A", 5%, 2012 (c) 1,435,000 1,527,916
Massachusetts Water Pollution Abatement Trust, "A", 5%, 2032 75,000 78,086
Massachusetts Water Resources Authority, 6.5%, 2019 (u) 8,020,000 9,571,790
Massachusetts Water Resources Authority, General, Rev., "A",
FGIC, 6%, 2010 (c) 1,000,000 1,082,090
Massachusetts Water Resources Authority, General, Rev., "J", FSA, 5%, 2023 500,000 522,275
Springfield, MA, Water & Sewer Commission, General, Rev., "A",
AMBAC, 5%, 2021 1,000,000 1,054,470
- -------------------------------------------------------------------------------------------------------------------
$ 15,107,709
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $217,700,196) $231,508,788
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.4%
- -------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev. (Presbyterian
University Hospital), "D", 3.7%, due 4/05/07 $ 300,000 $ 300,000
Bell County, TX, Health Facilities Development Corp. Rev. (Scott & White
Memorial Hospital), 3.77%, due 4/02/07 103,000 103,000
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants Rev., "A",
3.7%, due 4/05/07 100,000 100,000
Lincoln County, WY, Pollution Control Rev. (Exxon Mobil Corp.), 3.75%,
due 4/02/07 300,000 $ 300,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 803,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $218,503,196) (k) $232,311,788
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.4)% (11,848,077)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $220,463,711
- -------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 5,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $30,341
8/15/22 USD 2,500,000 Goldman Sachs 5.286% (fixed rate) 3-Month LIBOR (6,877)
- -------------------------------------------------------------------------------------------------------------------
$23,464
- -------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
Portfolio Footnotes:
(c) Refunded Bond
(d) Non-income producing security - in default.
(k) As of March 31, 2007, the following funds held securities fair valued in accordance with the policies adopted
by the Board of Trustees. All of these security values were provided by an independent pricing service using
an evaluated bid.
FUND MARKET VALUE % OF MARKET VALUE
---------------------------------------------------------------------------------------------------------
Alabama Fund $ 88,345,460 99.47%
Arkansas Fund 139,618,446 98.66%
California Fund 437,528,353 97.23%
Florida Fund 79,024,576 99.25%
Georgia Fund 61,635,820 98.45%
Maryland Fund 136,298,031 99.20%
Massachusetts Fund 231,508,788 99.65%
(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 $177,267 and $1,490,076,
representing 0.2% and 1.1% of net assets for the Florida Fund and Maryland Fund, respectively.
(p) Primary inverse floater.
(u) Underlying security deposited into special purpose trust ("the trust") by investment banker upon creation of
self-deposited inverse floaters.
(v) Externally deposited inverse floater.
The following abbreviations are used in this report and are defined:
BMA Bond Market Assn.
COP Certificate of Participation
ETM Escrowed to Maturity
LIBOR London Interbank Offered Rate
LOC Letter of Credit
Insurers Inverse Floaters
- ---------------------------------------------------------------------------------------------------------------
ACA ACA Financial Guaranty Corp. LEVRRS Leveraged Reverse Rate Security
AMBAC AMBAC Indemnity Corp. RIBS Residual Interest Bonds
ASST GTY Asset Guaranty Insurance Co. RITES Residual Interest Tax-Exempt Security
CHFC California Health Facilities Construction Program
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.
XLCA XL Capital Insurance Co.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
At 3/31/07
These statements represent each fund's balance sheet, which details the assets and liabilities comprising the total value of
each fund.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $85,131,390 $134,799,296 $428,643,713 $76,019,568
Unrealized appreciation (depreciation) 3,689,070 6,719,150 21,364,640 3,605,008
- ----------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $88,820,460 $141,518,446 $450,008,353 $79,624,576
Cash 25,344 22,808 54,734 88,800
Receivable for investments sold 451,800 1,517,017 1,269,438 110,175
Receivable for fund shares sold 210,120 235,135 15,475,350 37,990
Interest receivable 1,328,596 1,921,226 5,278,353 1,401,964
Unrealized appreciation on interest rate swaps 12,137 26,104 98,128 30,545
Other assets 2,452 3,613 8,662 2,548
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $90,850,909 $145,244,349 $472,193,018 $81,296,598
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions payable $119,218 $218,811 $623,260 $131,567
Payable for investments purchased -- -- 4,966,450 --
Payable to the holder of the floating rate certificate from trust
assets 6,500,000 8,235,000 21,455,000 6,500,000
Payable for fund shares reacquired 47,821 142,840 311,588 22,043
Unrealized depreciation on interest rate swaps 13,157 8,489 38,796 1,847
Payable to affiliates -
Management fee 2,069 3,363 10,611 1,835
Shareholder servicing costs 7,665 8,651 22,246 5,976
Distribution and service fees 2,366 4,442 22,027 1,013
Administrative services fee 193 268 691 179
Payable for independent trustees' compensation 10,116 9,811 19,415 9,745
Payable for interest expense and fees 111,108 75,965 150,461 61,132
Accrued expenses and other liabilities 56,046 67,265 92,093 64,947
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities $6,869,759 $8,774,905 $27,712,638 $6,800,284
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets $83,981,150 $136,469,444 $444,480,380 $74,496,314
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- ----------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $79,852,720 $129,193,288 $423,969,629 $71,006,771
Unrealized appreciation (depreciation) on investments 3,688,050 6,736,765 21,423,972 3,633,706
Accumulated net realized gain (loss) on investments 319,646 315,487 (895,977) (79,913)
Accumulated undistributed (distributions in excess of) net investment
income 120,734 223,904 (17,244) (64,250)
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets $83,981,150 $136,469,444 $444,480,380 $74,496,314
- ----------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
Net assets
Class A $73,559,914 $127,477,261 $366,860,790 $63,590,266
Class B 10,421,236 8,992,183 47,127,267 10,906,048
Class C -- -- 30,492,323 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total net assets $83,981,150 $136,469,444 $444,480,380 $74,496,314
- ----------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 7,036,260 12,646,778 62,378,258 6,304,076
Class B 996,967 891,151 8,011,672 1,081,105
Class C -- -- 5,166,761 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 8,033,227 13,537,929 75,556,691 7,385,181
- ----------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $10.45 $10.08 $5.88 $10.09
- ----------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $10.97 $10.58 $6.17 $10.59
- ----------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $10.45 $10.09 $5.88 $10.09
- ----------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $-- $-- $5.90 $--
- ----------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be
imposed on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Assets and Liabilities - continued
GEORGIA MARYLAND MASSACHUSETTS
AT 3/31/07 FUND FUND FUND
ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $59,174,285 $130,345,751 $218,503,196
Unrealized appreciation (depreciation) 3,431,535 7,052,280 13,808,592
- ---------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $62,605,820 $137,398,031 $232,311,788
Cash 5,085 66,672 50,543
Receivable for investments sold 465,000 155,645 1,197,134
Receivable for fund shares sold 1,385 43,440 100,813
Interest receivable 1,084,409 1,832,993 3,500,121
Unrealized appreciation on interest rate swaps 17,747 43,173 30,341
Other assets 1,953 3,668 5,757
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $64,181,399 $139,543,622 $237,196,497
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions payable $74,061 $178,633 $357,078
Payable for investments purchased 203,517 306,534 --
Payable to holder of the floating rate certificate from trust assets 4,500,000 4,700,000 15,705,000
Payable for fund shares reacquired 66,588 67,636 407,927
Unrealized depreciation on interest rate swaps -- 14,913 6,877
Payable to affiliates -
Management fee 1,459 3,303 5,435
Shareholder servicing costs 4,958 6,396 15,251
Distribution and service fees 1,720 4,736 8,016
Administrative services fee 157 265 389
Payable for independent trustees' compensation 11,468 14,069 14,156
Payable for interest expense and fees 67,346 63,680 129,774
Accrued expenses and other liabilities 60,441 70,352 82,883
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities $4,991,715 $5,430,517 $16,732,786
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $59,189,684 $134,113,105 $220,463,711
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- ---------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $55,895,673 $126,627,155 $206,251,961
Unrealized appreciation (depreciation) on investments 3,449,282 7,080,540 13,832,056
Accumulated net realized gain (loss) on investments (37,816) 485,593 548,837
Accumulated distributions in excess of net investment income (117,455) (80,183) (169,143)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $59,189,684 $134,113,105 $220,463,711
- ---------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
Net assets
Class A $51,015,148 $117,598,430 $189,048,861
Class B 8,174,536 16,514,675 31,414,850
- ---------------------------------------------------------------------------------------------------------------------------------
Total net assets $59,189,684 $134,113,105 $220,463,711
- ---------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 4,710,490 10,408,731 16,805,151
Class B 752,085 1,462,413 2,788,065
- ---------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 5,462,575 11,871,144 19,593,216
- ---------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $10.83 $11.30 $11.25
- ---------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $11.37 $11.86 $11.81
- ---------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $10.87 $11.29 $11.27
- ---------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be
imposed on redemptions of Class A and Class B shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF OPERATIONS
Year ended 3/31/07
These statements describe how much each fund earned in investment income and accrued in expenses. They also describe any gains
or losses generated by each fund's operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
Interest $4,986,166 $7,829,769 $21,889,251 $4,414,816
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $469,793 $733,703 $2,181,898 $444,665
Distribution and service fees 303,935 210,665 1,062,916 96,484
Shareholder servicing costs 102,250 148,600 429,203 92,852
Administrative services fee 23,878 32,507 79,763 23,066
Independent trustees' compensation 3,888 6,343 12,685 4,128
Custodian fee 38,503 47,402 123,002 44,469
Shareholder communications 7,266 16,669 29,848 9,472
Auditing fees 40,805 40,805 41,605 40,805
Legal fees 4,201 3,188 16,553 5,104
Interest expense and fees 248,171 312,869 1,028,247 249,353
Miscellaneous 41,862 49,367 76,424 51,504
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses $1,284,552 $1,602,118 $5,082,144 $1,061,902
- ----------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (7,416) (9,510) (26,674) (7,525)
Reduction of expenses by investment adviser (213,987) (334,194) (993,826) (202,543)
- ----------------------------------------------------------------------------------------------------------------------------------
Net expenses $1,063,149 $1,258,414 $4,061,644 $851,834
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,923,017 $6,571,355 $17,827,607 $3,562,982
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $322,096 $27,552 $1,363,160 $360,428
Swap transactions 142,601 208,747 54,114 (92,508)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $464,697 $236,299 $1,417,274 $267,920
- ----------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(496,594) $(257,541) $658,111 $(10,428)
Swap transactions (45,992) (74,791) 60,379 (51,183)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(542,586) $(332,332) $718,490 $(61,611)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(77,889) $(96,033) $2,135,764 $206,309
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $3,845,128 $6,475,322 $19,963,371 $3,769,291
- ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
YEAR ENDED 3/31/07
NET INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------------------------------------
Interest $3,376,702 $7,442,912 $13,035,556
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $332,832 $742,271 $1,257,514
Distribution and service fees 218,796 598,323 1,024,363
Shareholder servicing costs 72,193 154,248 257,406
Administrative services fee 19,395 32,794 49,670
Independent trustees' compensation 3,817 6,756 11,964
Custodian fee 33,095 47,864 64,315
Shareholder communications 6,298 15,196 23,713
Auditing fees 40,944 40,805 41,605
Legal fees 12,046 6,081 4,126
Interest expense and fees 173,603 179,261 600,707
Miscellaneous 41,959 48,503 60,388
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses $954,978 $1,872,102 $3,395,771
- ---------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (5,427) (6,620) (9,858)
Reduction of expenses by investment adviser (151,603) (338,098) (572,789)
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses $797,948 $1,527,384 $2,813,124
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $2,578,754 $5,915,528 $10,222,432
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $41,612 $579,948 $975,167
Swap transactions (29,265) 112,213 306,775
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $12,347 $692,161 $1,281,942
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $51,271 $(234,137) $(927,820)
Swap transactions (48,734) (84,020) (107,972)
- ---------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $2,537 $(318,157) $(1,035,792)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $14,884 $374,004 $246,150
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $2,593,638 $6,289,532 $10,468,582
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any
shareholder transactions.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
YEAR ENDED 3/31/07
CHANGE IN NET ASSETS
FROM OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,923,017 $6,571,355 $17,827,607 $3,562,982
Net realized gain (loss) on investments 464,697 236,299 1,417,274 267,920
Net unrealized gain (loss) on investments (542,586) (332,332) 718,490 (61,611)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $3,845,128 $6,475,322 $19,963,371 $3,769,291
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(3,156,475) $(5,558,406) $(14,096,653) $(3,011,198)
Class B (428,985) (376,114) (1,967,039) (462,859)
Class C -- -- (1,065,059) --
From net realized gain on investments
Class A (333,902) -- -- --
Class B (52,906) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,972,268) $(5,934,520) $(17,128,751) $(3,474,057)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(3,538,592) $3,213,195 $61,771,471 $(11,171,039)
- ----------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(3,665,732) $3,753,997 $64,606,091 $(10,875,805)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
At beginning of period 87,646,882 132,715,447 379,874,289 85,372,119
At end of period $83,981,150 $136,469,444 $444,480,380 $74,496,314
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of) net investment
income included in net assets at end of period $120,734 $223,904 $(17,244) $(64,250)
- ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
YEAR ENDED 3/31/07
CHANGE IN NET ASSETS
FROM OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $2,578,754 $5,915,528 $10,222,432
Net realized gain (loss) on investments 12,347 692,161 1,281,942
Net unrealized gain (loss) on investments 2,537 (318,157) (1,035,792)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $2,593,638 $6,289,532 $10,468,582
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(2,152,288) $(4,893,616) $(8,163,055)
Class B (308,790) (695,797) (1,225,506)
From net realized gain on investments
Class A -- (325,482) (437,284)
Class B -- (51,909) (76,182)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(2,461,078) $(5,966,804) $(9,902,027)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,439,289) $(2,526,883) $(14,018,473)
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(2,306,729) $(2,204,155) $(13,451,918)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 61,496,413 136,317,260 233,915,629
At end of period $59,189,684 $134,113,105 $220,463,711
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included in net assets at
end of period $(117,455) $(80,183) $(169,143)
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
YEAR ENDED 3/31/06
CHANGE IN NET ASSETS
FROM OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,884,000 $6,060,009 $17,491,686 $3,752,067
Net realized gain (loss) on investments 232,548 517,963 (1,179,180) 799,247
Net unrealized gain (loss) on investments (1,578,587) (2,311,453) (1,069,351) (1,123,082)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $2,537,961 $4,266,519 $15,243,155 $3,428,232
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(3,354,087) $(5,605,194) $(13,643,612) $(3,110,488)
Class B (517,644) (401,413) (2,512,572) (644,130)
Class C -- -- (1,210,439) --
From net realized gain on investments
Class A -- -- (498,302) --
Class B -- -- (106,987) --
Class C -- -- (52,867) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,871,731) $(6,006,607) $(18,024,779) $(3,754,618)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(3,636,892) $(3,878,943) $(14,978,975) $(1,765,570)
- ----------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(4,970,662) $(5,619,031) $(17,760,599) $(2,091,956)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
At beginning of period 92,617,544 138,334,478 397,634,888 87,464,075
At end of period $87,646,882 $132,715,447 $379,874,289 $85,372,119
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of) net investment
income included in net assets at end of period $(158,182) $71,943 $(601,740) $(101,465)
- ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
YEAR ENDED 3/31/06
CHANGE IN NET ASSETS
FROM OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $2,710,686 $6,200,729 $10,103,339
Net realized gain (loss) on investments 104,934 639,411 1,768,389
Net unrealized gain (loss) on investments (1,168,516) (2,628,342) (2,752,976)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,647,104 $4,211,798 $9,118,752
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(2,297,243) $(5,277,930) $(8,657,757)
Class B (404,404) (856,271) (1,391,165)
From net realized gain on investments
Class A -- (725,708) (709,997)
Class B -- (137,622) (137,074)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(2,701,647) $(6,997,531) $(10,895,993)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(3,918,543) $(10,873,307) $(15,175,916)
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(4,973,086) $(13,659,040) $(16,953,157)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 66,469,499 149,976,300 250,868,786
At end of period $61,496,413 $136,317,260 $233,915,629
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income included in net assets
at end of period $(174,205) $(270,349) $(477,259)
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
MFS(R) ALABAMA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.47 $10.62 $10.88 $10.82 $10.31
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.49 $0.46 $0.48 $0.48 $0.48
Net realized and unrealized gain (loss) on investments (z) (0.01) (0.15) (0.22) 0.06 0.54
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.48 $0.31 $0.26 $0.54 $1.02
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.45) $(0.46) $(0.48) $(0.48) $(0.50)
From net realized gain on investments (0.05) -- (0.04) -- (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.50) $(0.46) $(0.52) $(0.48) $(0.51)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.45 $10.47 $10.62 $10.88 $10.82
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.66 2.97 2.40 5.11 10.06
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.40 1.33 1.21 1.17 1.18
Expenses after expense reductions (f) 1.15 1.08 0.96 0.96 0.98
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.86 0.87 0.84 0.88 0.88
Net investment income (z) 4.70 4.37 4.46 4.38 4.49
Portfolio turnover 9 9 17 10 21
Net assets at end of period (000 Omitted) $73,560 $74,204 $77,499 $80,704 $84,474
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) ALABAMA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.47 $10.62 $10.88 $10.82 $10.31
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.41 $0.38 $0.40 $0.39 $0.40
Net realized and unrealized gain (loss) on investments (z) (0.01) (0.15) (0.23) 0.07 0.54
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.40 $0.23 $0.17 $0.46 $0.94
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.37) $(0.38) $(0.39) $(0.40) $(0.42)
From net realized gain on investments (0.05) -- (0.04) -- (0.01)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.42) $(0.38) $(0.43) $(0.40) $(0.43)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.45 $10.47 $10.62 $10.88 $10.82
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.88 2.20 1.63 4.32 9.14
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.15 2.08 1.96 1.91 1.93
Expenses after expense reductions (f) 1.90 1.83 1.71 1.71 1.73
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.61 1.62 1.59 1.63 1.63
Net investment income (z) 3.93 3.61 3.71 3.63 3.74
Portfolio turnover 9 9 17 10 21
Net assets at end of period (000 Omitted) $10,421 $13,443 $15,118 $17,339 $16,163
- --------------------------------------------------------------------------------------------------------------------------------
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.02 per share to net investment income, a decrease of $0.02 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.21% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) ARKANSAS MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.04 $10.17 $10.41 $10.40 $9.97
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.50 $0.45 $0.45 $0.45 $0.47
Net realized and unrealized gain (loss) on investments (z) (0.01) (0.13) (0.23) 0.01 0.46
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.49 $0.32 $0.22 $0.46 $0.93
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.45) $(0.45) $(0.46) $(0.45) $(0.50)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.08 $10.04 $10.17 $10.41 $10.40
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 5.02 3.17 2.14 4.53 9.51
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.14 1.10 1.00 0.99 1.02
Expenses after expense reductions (f) 0.89 0.85 0.75 0.79 0.82
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.66 0.67 0.65 0.72 0.73
Net investment income (z) 4.98 4.45 4.47 4.31 4.59
Portfolio turnover 10 10 13 19 15
Net assets at end of period (000 Omitted) $127,477 $122,067 $127,075 $139,333 $134,521
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) ARKANSAS MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.05 $10.18 $10.42 $10.41 $9.98
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.43 $0.38 $0.38 $0.37 $0.39
Net realized and unrealized gain (loss) on investments (z) (0.01) (0.14) (0.24) 0.01 0.46
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.42 $0.24 $0.14 $0.38 $0.85
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.38) $(0.37) $(0.38) $(0.37) $(0.42)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.09 $10.05 $10.18 $10.42 $10.41
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.21 2.39 1.37 3.68 8.62
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.91 1.87 1.76 1.80 1.83
Expenses after expense reductions (f) 1.66 1.62 1.51 1.60 1.63
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.43 1.44 1.41 1.53 1.54
Net investment income (z) 4.21 3.68 3.71 3.50 3.77
Portfolio turnover 10 10 13 19 15
Net assets at end of period (000 Omitted) $8,992 $10,648 $11,259 $12,554 $12,049
- --------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.03 per share to net investment income, a decrease of $0.03 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.30% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $5.84 $5.88 $5.98 $5.96 $5.70
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.27 $0.28 $0.29 $0.28 $0.28
Net realized and unrealized gain (loss) on investments (z) 0.03 (0.03) (0.11) 0.02 0.27
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.30 $0.25 $0.18 $0.30 $0.55
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.26) $(0.28) $(0.28) $(0.28) $(0.29)
From net realized gain on investments -- (0.01) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.26) $(0.29) $(0.28) $(0.28) $(0.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.88 $5.84 $5.88 $5.98 $5.96
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 5.30 4.22 3.14 5.22 9.79
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.11 1.09 0.97 0.96 0.96
Expenses after expense reductions (f) 0.86 0.84 0.72 0.76 0.76
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.60 0.63 0.61 0.67 0.67
Net investment income (z) 4.66 4.69 4.91 4.71 4.73
Portfolio turnover 16 9 12 8 22
Net assets at end of period (000 Omitted) $366,861 $291,656 $295,332 $314,108 $333,350
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) CALIFORNIA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $5.84 $5.88 $5.98 $5.96 $5.70
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.23 $0.23 $0.25 $0.23 $0.23
Net realized and unrealized gain (loss) on investments (z) 0.03 (0.03) (0.11) 0.03 0.27
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.26 $0.20 $0.14 $0.26 $0.50
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(0.23) $(0.24) $(0.24) $(0.24)
From net realized gain on investments -- (0.01) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.22) $(0.24) $(0.24) $(0.24) $(0.24)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.88 $5.84 $5.88 $5.98 $5.96
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.51 3.44 2.38 4.38 8.93
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.88 1.85 1.70 1.76 1.75
Expenses after expense reductions (f) 1.62 1.60 1.45 1.56 1.55
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.37 1.39 1.34 1.47 1.46
Net investment income (z) 3.91 3.94 4.17 3.91 3.94
Portfolio turnover 16 9 12 8 22
Net assets at end of period (000 Omitted) $47,127 $58,338 $69,142 $85,106 $98,888
- --------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) CALIFORNIA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS C 2007 2006 2005 2004 2003
Net asset value, beginning of period $5.86 $5.90 $6.00 $5.98 $5.72
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.22 $0.23 $0.24 $0.23 $0.23
Net realized and unrealized gain (loss) on investments (z) 0.03 (0.04) (0.11) 0.02 0.27
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.25 $0.19 $0.13 $0.25 $0.50
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.21) $(0.22) $(0.23) $(0.23) $(0.24)
From net realized gain on investments -- (0.01) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.21) $(0.23) $(0.23) $(0.23) $(0.24)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.90 $5.86 $5.90 $6.00 $5.98
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.36 3.29 2.22 4.27 8.78
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.01 1.99 1.87 1.86 1.86
Expenses after expense reductions (f) 1.76 1.74 1.62 1.65 1.66
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.50 1.53 1.51 1.56 1.57
Net investment income (z) 3.77 3.79 4.01 3.81 3.83
Portfolio turnover 16 9 12 8 22
Net assets at end of period (000 Omitted) $30,492 $29,880 $33,162 $36,363 $40,804
- --------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of less than $0.01 per share to net investment income, a decrease of less than $0.01 per share to
net realized and unrealized gain (loss) on investments, and an increase of 0.06% to the net investment income ratio for
each class for the year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share
or total return of each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) FLORIDA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate
by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.05 $10.09 $10.24 $10.19 $9.78
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.46 $0.45 $0.47 $0.47 $0.48
Net realized and unrealized gain (loss) on investments (z) 0.02 (0.04) (0.15) 0.05 0.44
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.48 $0.41 $0.32 $0.52 $0.92
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.44) $(0.45) $(0.47) $(0.47) $(0.51)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.09 $10.05 $10.09 $10.24 $10.19
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.92 4.14 3.25 5.20 9.40
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.19 1.11 0.94 0.98 0.88
Expenses after expense reductions (f) 0.94 0.86 0.69 0.77 0.68
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.64 0.64 0.57 0.64 0.62
Net investment income (z) 4.53 4.46 4.68 4.58 4.78
Portfolio turnover 9 17 18 31 27
Net assets at end of period (000 Omitted) $63,590 $70,402 $69,082 $79,155 $86,045
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) FLORIDA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.05 $10.09 $10.24 $10.19 $9.78
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.38 $0.38 $0.40 $0.39 $0.40
Net realized and unrealized gain (loss) on investments (z) 0.03 (0.04) (0.16) 0.05 0.43
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.41 $0.34 $0.24 $0.44 $0.83
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.37) $(0.38) $(0.39) $(0.39) $(0.42)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.09 $10.05 $10.09 $10.24 $10.19
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.12 3.35 2.45 4.36 8.64
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.96 1.87 1.71 1.77 1.68
Expenses after expense reductions (f) 1.71 1.62 1.46 1.57 1.48
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.40 1.40 1.34 1.44 1.42
Net investment income (z) 3.77 3.70 3.92 3.78 3.97
Portfolio turnover 9 17 18 31 27
Net assets at end of period (000 Omitted) $10,906 $14,970 $18,382 $22,312 $25,175
- --------------------------------------------------------------------------------------------------------------------------------
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.01 per share to net investment income, a decrease of $0.01 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.06% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) GEORGIA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate
by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.80 $10.99 $11.22 $11.17 $10.63
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.47 $0.46 $0.48 $0.49 $0.49
Net realized and unrealized gain (loss) on investments (z) 0.01 (0.18) (0.23) 0.05 0.55
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.48 $0.28 $0.25 $0.54 $1.04
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.45) $(0.47) $(0.48) $(0.49) $(0.50)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.83 $10.80 $10.99 $11.22 $11.17
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.55 2.53 2.27 4.93 9.97
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.47 1.39 1.24 1.20 1.22
Expenses after expense reductions (f) 1.22 1.14 0.99 0.99 1.02
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.93 0.93 0.88 0.91 0.92
Net investment income (z) 4.37 4.22 4.35 4.35 4.43
Portfolio turnover 6 5 18 12 25
Net assets at end of period (000 Omitted) $51,015 $51,681 $53,190 $55,659 $57,636
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) GEORGIA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.84 $11.00 $11.23 $11.18 $10.64
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.40 $0.41 $0.40 $0.40 $0.40
Net realized and unrealized gain (loss) on investments (z) 0.00(w) (0.18) (0.24) 0.06 0.56
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.40 $0.23 $0.16 $0.46 $0.96
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.37) $(0.39) $(0.39) $(0.41) $(0.42)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.87 $10.84 $11.00 $11.23 $11.18
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.77 2.05 1.51 4.15 9.15
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.22 2.14 1.99 1.94 1.97
Expenses after expense reductions (f) 1.97 1.89 1.74 1.74 1.77
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.68 1.68 1.63 1.66 1.67
Net investment income (z) 3.63 3.72 3.60 3.60 3.68
Portfolio turnover 6 5 18 12 25
Net assets at end of period (000 Omitted) $8,175 $9,816 $13,280 $16,759 $18,077
- --------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.01 per share to net investment income, a decrease of $0.01 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.12% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) MARYLAND MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate
by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.27 $11.49 $11.74 $11.69 $11.21
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.50 $0.50 $0.52 $0.51 $0.52
Net realized and unrealized gain (loss) on investments (z) 0.04 (0.15) (0.25) 0.06 0.50
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.54 $0.35 $0.27 $0.57 $1.02
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.48) $(0.50) $(0.51) $(0.52) $(0.54)
From net realized gain on investments (0.03) (0.07) (0.01) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.51) $(0.57) $(0.52) $(0.52) $(0.54)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.30 $11.27 $11.49 $11.74 $11.69
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.88 3.06 2.36 4.96 9.21
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.29 1.19 1.14 1.17 1.15
Expenses after expense reductions (f) 1.04 0.94 0.89 0.96 0.95
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.91 0.94 0.89 0.96 0.95
Net investment income (z) 4.48 4.38 4.48 4.35 4.51
Portfolio turnover 16 9 12 21 12
Net assets at end of period (000 Omitted) $117,598 $115,307 $124,261 $138,201 $138,666
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) MARYLAND MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.26 $11.49 $11.74 $11.68 $11.20
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.43 $0.43 $0.44 $0.43 $0.45
Net realized and unrealized gain (loss) on investments (z) 0.03 (0.17) (0.25) 0.07 0.49
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.46 $0.26 $0.19 $0.50 $0.94
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.40) $(0.42) $(0.44) $(0.44) $(0.46)
From net realized gain on investments (0.03) (0.07) (0.00)(w) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.43) $(0.49) $(0.44) $(0.44) $(0.46)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.29 $11.26 $11.49 $11.74 $11.68
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.21 2.30 1.69 4.37 8.52
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.95 1.84 1.79 1.81 1.80
Expenses after expense reductions (f) 1.70 1.59 1.54 1.61 1.60
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.56 1.59 1.54 1.61 1.60
Net investment income (z) 3.83 3.72 3.83 3.70 3.86
Portfolio turnover 16 9 12 21 12
Net assets at end of period (000 Omitted) $16,515 $21,011 $25,716 $31,697 $34,033
- --------------------------------------------------------------------------------------------------------------------------------
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.01 per share to net investment income, a decrease of $0.01 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.12% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate
by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.22 $11.31 $11.52 $11.49 $10.90
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.51 $0.48 $0.51 $0.51 $0.52
Net realized and unrealized gain (loss) on investments (z) 0.02 (0.05) (0.22) 0.03 0.60
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.53 $0.43 $0.29 $0.54 $1.12
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.47) $(0.48) $(0.50) $(0.51) $(0.53)
From net realized gain on investments (0.03) (0.04) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.50) $(0.52) $(0.50) $(0.51) $(0.53)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.25 $11.22 $11.31 $11.52 $11.49
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.80 3.83 2.63 4.82 10.42
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.39 1.34 1.19 1.23 1.21
Expenses after expense reductions (f) 1.14 1.09 0.94 1.02 1.01
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.87 0.90 0.84 0.95 0.92
Net investment income (z) 4.57 4.23 4.48 4.39 4.56
Portfolio turnover 5 10 11 14 15
Net assets at end of period (000 Omitted) $189,049 $196,992 $210,103 $224,923 $233,500
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
-----------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.24 $11.33 $11.54 $11.51 $10.92
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (d)(z) $0.44 $0.41 $0.43 $0.43 $0.44
Net realized and unrealized gain (loss) on investments (z) 0.02 (0.05) (0.21) 0.04 0.60
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.46 $0.36 $0.22 $0.47 $1.04
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.40) $(0.41) $(0.43) $(0.44) $(0.45)
From net realized gain on investments (0.03) (0.04) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.43) $(0.45) $(0.43) $(0.44) $(0.45)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.27 $11.24 $11.33 $11.54 $11.51
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.12 3.16 1.97 4.14 9.69
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.04 1.99 1.84 1.87 1.86
Expenses after expense reductions (f) 1.79 1.74 1.59 1.67 1.66
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.52 1.55 1.49 1.60 1.57
Net investment income (z) 3.92 3.58 3.83 3.74 3.91
Portfolio turnover 5 10 11 14 15
Net assets at end of period (000 Omitted) $31,415 $36,924 $40,766 $46,253 $47,612
- --------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.02 per share to net investment income, a decrease of $0.02 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.20% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS AND ORGANIZATION
MFS Alabama Municipal Bond Fund (Alabama Fund), MFS Arkansas Municipal Bond
Fund (Arkansas Fund), MFS California Municipal Bond Fund (California Fund), MFS
Florida Municipal Bond Fund (Florida Fund), MFS Georgia Municipal Bond Fund
(Georgia Fund), MFS Maryland Municipal Bond Fund (Maryland Fund), and MFS
Massachusetts Municipal Bond Fund (Massachusetts Fund) are each a series of MFS
Municipal Series Trust which is organized as a Massachusetts business trust and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Because
each fund invests primarily in the securities of a single state and its
political subdivisions, each fund is vulnerable to the effects of changes in
the legal and economic environment of the particular state. Municipal
securities backed by current or anticipated revenues from a specific project or
specific assets can be negatively affected by the discontinuance of the
taxation supporting the projects or assets or the inability to collect revenues
for the project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, the security could decline in value, interest from the security
could become taxable and the funds may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. 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
an evaluated bid as reported by an independent pricing service. 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. Values
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.
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 and certain types of derivatives.
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.
In September 2006, FASB Statement No. 157, Fair Value Measurements (the
"Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for measuring
fair value and expanded disclosures about fair value measurements. Management
is evaluating the application of the Statement to each fund, and believes the
impact will be limited to expanded disclosures resulting from the adoption of
this Statement in each fund's financial statements.
DERIVATIVE RISK - Each fund may invest in derivatives for hedging or non-
hedging purposes. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. When the funds use derivatives as an investment to
gain market exposure, or for hedging purposes, gains and losses from derivative
instruments may be substantially greater than the derivative's original cost.
Derivative instruments include swap agreements.
SWAP AGREEMENTS - Each fund may enter into swap agreements. A swap is an
exchange of cash payments between the fund and another party. Net cash payments
are exchanged at specified intervals and are recorded as a realized gain or
loss in the Statement of Operations. The value of the swap is adjusted daily
and the change in value, including accruals of periodic amounts of interest to
be paid or received, is recorded as unrealized appreciation or depreciation in
the Statement of Operations. A liquidation payment received or made upon early
termination is recorded as a realized gain or loss in the Statement of
Operations. Collateral, in the form of cash or securities, may be required to
be held in segregated accounts with the fund's custodian in connection with
these agreements. Risk of loss may exceed amounts recognized on the Statement
of Assets and Liabilities. These risks include the possible lack of a liquid
market, failure of the counterparty to perform under the terms of the
agreements, and unfavorable market movement of the underlying instrument. All
swap agreements entered into by the funds with the same counterparty are
generally governed by a single master agreement, which provides for the netting
of all amounts owed by the parties under the agreement upon the occurrence of
an event of default, thereby reducing the credit risk to which such party is
exposed. Each fund holds interest rate swap agreements which involve the
periodic exchange of cash flows, such as the exchange of fixed rate interest
payments for floating rate interest payments based on a notional principal
amount. The interest rates may be based on a specific financial index or the
exchange of two distinct floating rate payments. The funds may enter into an
interest rate swap in order to manage its exposure to interest rate
fluctuations.
INVERSE FLOATERS - The funds invest in municipal inverse floating rate
securities which are structured by the issuer (known as primary market inverse
floating rate securities) or by an investment banker utilizing municipal bonds
which have already been issued (known as secondary market inverse floating rate
securities) to have variable rates of interest which typically move in the
opposite direction of short term interest rates. A secondary market inverse
floating rate security is created when an investment banker transfers a fixed
rate municipal bond to a special purpose trust, and causes the trust to (a)
issue floating rate certificates to third parties, in an amount equal to a
fraction of the par amount of the deposited bonds (these certificates usually
pay tax-exempt interest at short-term interest rates that typically reset
weekly; and the certificate holders typically, on seven days notice, have the
option to tender their certificates to the investment banker or another party
for redemption at par plus accrued interest), and (b) issue inverse floating
rate certificates (sometimes referred to as "inverse floaters"). If the holder
of the inverse floater transfers the municipal bonds to an investment banker
for the purpose of depositing the municipal bonds into the special purpose
trust, the inverse floating rate certificates that are issued by the trust are
referred to as "self-deposited inverse floaters." If the bonds held by the
trust are purchased by the investment banker for deposit into the trust from
someone other than the purchasers of the inverse floaters, the inverse floating
rate certificates that are issued by the trust are referred to as "externally
deposited inverse floaters." Such self-deposited inverse floaters held by the
funds are accounted for as secured borrowings, with the municipal bonds
reflected in the investments of the funds and amounts owed to the holder of the
floating rate certificate under the provisions of the trust, which amounts are
paid solely from the assets of the trust, reflected as liabilities of the funds
in the Statements of Assets and Liabilities under the caption, "Payable to the
holder of the floating rate certificate from trust assets". Interest expense
and fees relate to payments made to the holder of the floating rate certificate
from trust assets in connection with self-deposited inverse floater
transactions. Interest expense and fees are recorded as incurred. At March 31,
2007, the value of bonds transferred to the trust, each fund's payable to the
holder of the floating rate certificate from trust assets, the weighted average
interest rate on the floating rate certificates issued by the trust, and the
interest expense and fees in connection with self-deposited inverse floaters
were as follows:
WEIGHTED AVERAGE INTEREST EXPENSE AND
PAYABLE TO THE HOLDER INTEREST RATE ON FEES IN CONNECTION
VALUE OF BONDS OF THE FLOATING RATE FLOATING RATE WITH SELF-DEPOSITED
TRANSFERRED TO CERTIFICATE FROM CERTIFICATES ISSUED INVERSE FLOATER
THE TRUST TRUST ASSETS BY THE TRUST TRANSACTIONS
FUND
Alabama Fund $13,633,170 $ 6,500,000 4.23% $248,171
Arkansas Fund 17,445,030 8,235,000 4.21% 312,869
California Fund 47,771,149 21,455,000 4.15% 1,028,247
Florida Fund 14,107,080 6,500,000 4.00% 249,353
Georgia Fund 10,043,310 4,500,000 4.31% 173,603
Maryland Fund 10,107,793 4,700,000 4.23% 179,261
Massachusetts Fund 35,839,381 15,705,000 4.29% 600,707
Primary and externally deposited inverse floaters held by the funds are not
accounted for as secured borrowings.
INDEMNIFICATIONS - Under each fund's organizational documents, its officers and
trustees may be indemnified against certain liabilities and expenses arising
out of the performance of their duties to each fund. Additionally, in the
normal course of business, each fund enters into agreements with service
providers that may contain indemnification clauses. Each fund's maximum
exposure under these agreements is unknown as this would involve future claims
that may be made against each fund that have not yet occurred.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement purposes in
accordance with U.S. generally accepted accounting principles. All premium and
original issue discount is amortized or accreted for tax reporting purposes as
required by federal income tax regulations.
Each fund may receive proceeds from litigation settlements. Any proceeds
received from litigation involving portfolio holdings are reflected in the
Statements of Operations in realized gain/loss if the security has been
disposed of by the fund or in unrealized gain/loss if the security is still
held by the fund. Any other proceeds from litigation not related to portfolio
holdings are reflected as other income in the Statements of Operations.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions made directly to the security issuer,
which are generally non-recurring, incurred to protect or enhance the value of
high-yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
As a result of a change in estimate for the amortization of premium and
accretion of discount on certain debt securities, interest income has been
increased by the following amounts, with a corresponding reduction to net
unrealized appreciation (depreciation).
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Interest Income $183,123 $395,879 $230,572 $47,896 $75,425 $162,486 $447,164
Net unrealized appreciation
(depreciation) (183,123) (395,879) (230,572) (47,896) (75,425) (162,486) (447,164)
FEES PAID INDIRECTLY - Each fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
each fund. This amount, for the year ended March 31, 2007, is shown as a
reduction of total expenses on the Statements of Operations.
TAX MATTERS AND DISTRIBUTIONS - Each fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue Code,
and to distribute all of its taxable and tax-exempt income, including realized
capital gains. Accordingly, no provision for federal income tax is required in
the financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from U.S. generally accepted accounting
principles. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These adjustments have no impact on net assets or net asset value
per share. Temporary differences which arise from recognizing certain items of
income, expense, gain or loss in different periods for financial statement and
tax purposes will reverse at some time in the future. Distributions in excess
of net investment income or net realized gains are temporary overdistributions
for financial statement purposes resulting from differences in the recognition
or classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to amortization and accretion of debt
securities and secured borrowings.
The tax character of distributions declared to shareholders is as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
YEAR ENDED 3/31/07 FUND FUND FUND FUND FUND FUND FUND
Ordinary income (including
any short-term capital gains) $57,485 $-- $-- $-- $-- $186,693 $513,466
Tax-exempt income 3,585,460 5,934,520 17,128,751 3,474,057 2,461,078 5,582,159 9,388,561
Long-term capital gain 329,323 -- -- -- -- 197,952 --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $3,972,268 $5,934,520 $17,128,751 $3,474,057 $2,461,078 $5,966,804 $9,902,027
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
YEAR ENDED 3/31/06 FUND FUND FUND FUND FUND FUND FUND
Ordinary income (including
any short-term capital gains) $-- $-- $-- $49,709 $-- $-- $--
Tax-exempt income 3,871,731 6,006,607 17,366,623 3,704,909 2,701,647 6,134,201 10,048,922
Long-term capital gain -- -- 658,156 -- -- 863,330 847,071
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $3,871,731 $6,006,607 $18,024,779 $3,754,618 $2,701,647 $6,997,531 $10,895,993
The federal tax cost and the tax basis components of distributable earnings were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
AS OF 3/31/07 FUND FUND FUND FUND FUND FUND FUND
Cost of investments $78,497,368 $125,957,271 $407,973,746 $69,583,436 $54,645,374 $125,357,611 $203,253,873
- -----------------------------------------------------------------------------------------------------------------------------------
Gross appreciation $4,214,563 $7,374,077 $20,868,087 $3,567,739 $3,470,714 $7,364,552 $13,389,249
Gross depreciation (391,471) (47,902) (288,480) (26,599) (10,268) (24,132) (36,334)
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $3,823,092 $7,326,175 $20,579,607 $3,541,140 $3,460,446 $7,340,420 $13,352,915
Undistributed ordinary income 109,379 -- -- -- -- 8,856 454,630
Undistributed tax-exempt income 572,114 740,341 1,474,026 210,363 92,730 376,829 598,855
Undistributed long-term capital
gain 77,664 -- -- -- -- 199,581 553,431
Capital loss carryforwards -- (289,410) (104,559) (14,626) -- -- --
Post-October capital loss deferral -- -- -- -- (66,017) -- --
Other temporary differences (453,819) (500,950) (1,438,323) (247,334) (193,148) (439,736) (748,081)
As of March 31, 2007, certain funds had capital loss carryforwards available to offset future realized gains. Such losses expire
as follows:
ARKANSAS CALIFORNIA FLORIDA
EXPIRATION DATE FUND FUND FUND
3/31/11 $-- $-- $(14,626)
3/31/12 (289,410) -- --
3/31/14 -- (104,559) --
-----------------------------------------------------------------------------------------------------------------
Total $(289,410) $(104,559) $(14,626)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (the "Interpretation") was issued, and is
effective for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective
date. On December 22, 2006, the SEC delayed the implementation of the Interpretation for regulated investment companies for an
additional six months. This Interpretation prescribes a minimum threshold for financial statement recognition of the benefit of
a tax position taken or expected to be taken in a tax return, and requires certain expanded disclosures. Management has
evaluated the application of the Interpretation to each fund, and has determined that there is no impact resulting from the
adoption of this Interpretation on each fund's financial statements.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - Each fund offers multiple classes of shares, which differ in their
respective distribution and service fees. All shareholders bear the common expenses of each fund based on the value of settled
shares outstanding of each class, without distinction between share classes. Dividends are declared separately for each class.
Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert
to Class A shares approximately eight years after purchase.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - Each fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to
provide overall investment management and related administrative services and facilities to each fund. The management fee is
computed daily and paid monthly at an annual rate of 0.55% of each fund's average daily net assets.
As part of a settlement agreement with the New York Attorney General concerning market timing and related matters, MFS has
agreed to reduce the management fee to 0.30% of each fund's average daily net assets for the period March 1, 2004 through
February 28, 2009. For the year ended March 31, 2007, this waiver amounted to the following for each fund and is reflected as a
reduction of total expenses in the Statements of Operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$213,542 $333,501 $991,772 $202,120 $151,288 $337,396 $571,597
The management fee incurred for the year ended March 31, 2007 was equivalent to an annual effective rate of 0.30% of each fund's
average daily net assets.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received the following
amounts for the year ended March 31, 2007, as its portion of the initial sales charge on sales of Class A shares of the funds.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$17,753 $64,852 $85,740 $12,151 $9,074 $27,357 $36,564
The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940.
Each fund's distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in
connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to
MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the
distribution and/or service fees to financial intermediaries.
Distribution Fee Plan Table:
CLASS A
-----------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Alabama Fund 0.10% 0.25% 0.35% 0.25% $183,411
Arkansas Fund 0.10% 0.25% 0.35% 0.10% 123,342
California Fund 0.10% 0.25% 0.35% 0.10% 314,510
Florida Fund 0.10% 0.25% 0.35% -- --
Georgia Fund 0.10% 0.25% 0.35% 0.25% 128,785
Maryland Fund 0.10% 0.25% 0.35% 0.35% 404,526
Massachusetts Fund 0.10% 0.25% 0.35% 0.35% 679,553
CLASS B
-----------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Alabama Fund 0.75% 0.25% 1.00% 1.00% $120,524
Arkansas Fund 0.75% 0.25% 1.00% 0.87% 87,323
California Fund 0.75% 0.25% 1.00% 0.86% 451,834
Florida Fund 0.75% 0.25% 1.00% 0.76% 96,484
Georgia Fund 0.75% 0.25% 1.00% 1.00% 90,011
Maryland Fund 0.75% 0.25% 1.00% 1.00% 193,797
Massachusetts Fund 0.75% 0.25% 1.00% 1.00% 344,810
CLASS C
-----------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
California Fund 0.75% 0.25% 1.00% 1.00% $296,572
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Total Distribution and
Service Fees $303,935 $210,665 $1,062,916 $96,484 $218,796 $598,323 $1,024,363
(d) In accordance with the distribution plan for certain classes, each fund pays distribution and/or service fees up to these
annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the year ended March 31, 2007
based on each class' average daily net assets. Payment of Florida Fund's 0.25% annual Class A service fee is not yet in
effect and will be implemented on such date as the fund's Board of Trustees may determine. 0.10% of the Class A service fee
is currently being paid by the Arkansas Fund and California Fund. Payment of the remaining 0.15% of the Class A service fee
is not yet in effect and will be implemented on such date as the fund's Board of Trustees may determine. For one year from
the date of sale of Florida Fund's Class B shares, assets attributable to such Class B shares are subject to the 0.25%
annual Class B service fee. On assets attributable to all other Class B shares, the service fee is not currently in effect,
but may be implemented on such date as the fund's Board of Trustees may determine. For one year from the date of sale of
Arkansas Fund's and California Fund's Class B shares, assets attributable to such Class B shares are subject to the 0.25%
annual Class B service fee. On assets attributable to all other Class B shares, 0.10% of the Class B service fee is
currently in effect and the remaining portion of the Class B service fee is not in effect but may be implemented on such
date as the fund's Board of Trustees may determine. Payment of the Alabama Fund's, Arkansas Fund's, California Fund's,
Florida Fund's, and Georgia Fund's 0.10% annual Class A distribution fee is not yet in effect and will be implemented on
such date as the fund's Board of Trustees may determine.
Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption
within 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event of a shareholder
redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the year ended March
31, 2007, were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND
Class A $-- $1 $20,000 $-- $-- $-- $1,156
Class B 38,014 21,349 99,477 32,502 11,841 25,324 60,918
Class C N/A N/A 3,913 N/A N/A N/A N/A
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the funds
for its services as shareholder servicing agent calculated as a percentage of the average daily net assets of each fund as
determined periodically under the supervision of the funds' Board of Trustees. For the year ended March 31, 2007, each fund paid
MFSC the following fee, which equated to the following annual percentage of each fund's average daily net assets.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Expenses paid $71,308 $111,026 $328,396 $67,833 $50,488 $112,580 $191,101
Percentage of average daily
net assets 0.0835% 0.0832% 0.0828% 0.0839% 0.0834% 0.0834% 0.0836%
MFSC also receives payment from the funds for out-of-pocket expenses, sub-accounting and other shareholder servicing costs which
may be paid to affiliated or unaffiliated service providers. For the year ended March 31, 2007, these out-of-pocket expenses,
sub-accounting and other shareholder servicing costs amounted to the following:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$28,205 $32,334 $85,185 $21,627 $19,281 $33,479 $54,774
The funds may also pay shareholder servicing related costs directly to non- related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services
to the funds. Under an administrative services agreement, the funds partially reimburse MFS the costs incurred to provide these
services. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. Each fund's annual fixed
amount is $17,500. The administrative services fee incurred for the year ended March 31, 2007 was equivalent to the following
annual effective rates of each fund's average daily net assets:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
0.0280% 0.0244% 0.0201% 0.0285% 0.0321% 0.0243% 0.0217%
TRUSTEES' AND OFFICERS' COMPENSATION - Each fund pays compensation to independent trustees in the form of a retainer, attendance
fees, and additional compensation to Board and Committee chairpersons. The funds do not pay compensation directly to trustees or
officers of each fund who are also officers of the investment adviser, all of whom receive remuneration for their services to
the funds from MFS. Certain officers and trustees of the funds are officers or directors of MFS, MFD, and MFSC.
Each fund has an unfunded, defined benefit plan for certain retired independent trustees which resulted in the following pension
expense for the funds. These amounts are included in independent trustees' compensation for the year ended March 31, 2007.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$804 $776 $10,864 $772 $792 $1,586 $1,611
The liability for deferred retirement benefits payable to certain retired independent trustees amounted to the following for
each fund at March 31, 2007, and is included in payable for independent trustees' compensation.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$10,065 $9,703 $19,169 $9,689 $11,394 $13,959 $13,895
OTHER - These funds and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which
provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief
Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can
terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the year ended March 31, 2007, the
fee paid to Tarantino LLC amounted to the following:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$559 $874 $2,599 $532 $399 $888 $1,491
MFS has agreed to reimburse the funds for a portion of the payments made by each fund to Tarantino LLC in the following amounts,
which are shown as a reduction of total expenses in the Statements of Operations. Additionally, MFS has agreed to bear all
expenses associated with office space, other administrative support, and supplies provided to the ICCO.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$445 $693 $2,054 $423 $315 $702 $1,192
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term
obligations, were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Purchases $7,739,778 $15,003,226 $102,164,511 $7,531,782 $4,026,935 $22,125,673 $12,059,073
- ----------------------------------------------------------------------------------------------------------------------------------
Sales $11,466,205 $13,896,403 $67,120,714 $18,238,255 $7,366,118 $23,299,374 $26,307,924
- ----------------------------------------------------------------------------------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST
Each fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial
interest. Transactions in each fund's shares were as follows:
ALABAMA FUND ARKANSAS FUND
-------------------------------------------------------- ------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/07 3/31/06 3/31/07 3/31/06
--------------------------- --------------------------- -------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 669,802 $7,025,464 453,164 $4,807,670 1,572,202 $15,852,374 1,098,066 $11,184,396
Class B 29,502 309,032 47,894 508,335 44,510 445,846 127,141 1,292,625
- ------------------------------------------------------------------------------------------------------------------------------------
699,304 $7,334,496 501,058 $5,316,005 1,616,712 $16,298,220 1,225,207 $12,477,021
Shares issued to
shareholders in
reinvestment of
distributions
Class A 195,465 $2,049,643 183,725 $1,948,887 309,341 $3,114,374 306,870 $3,122,224
Class B 27,098 284,136 27,249 289,073 22,326 224,998 24,788 252,510
- ------------------------------------------------------------------------------------------------------------------------------------
222,563 $2,333,779 210,974 $2,237,960 331,667 $3,339,372 331,658 $3,374,734
Shares reacquired
Class A (917,325) $(9,608,003) (842,942) $(8,923,169) (1,396,838) $(14,049,706) (1,743,455) $(17,710,230)
Class B (344,019) (3,598,864) (213,823) (2,267,688) (235,505) (2,374,691) (198,441) (2,020,468)
- ------------------------------------------------------------------------------------------------------------------------------------
(1,261,344) $(13,206,867) (1,056,765) $(11,190,857) (1,632,343) $(16,424,397) (1,941,896) $(19,730,698)
Net change
Class A (52,058) $(532,896) (206,053) $(2,166,612) 484,705 $4,917,042 (338,519) $(3,403,610)
Class B (287,419) (3,005,696) (138,680) (1,470,280) (168,669) (1,703,847) (46,512) (475,333)
- ------------------------------------------------------------------------------------------------------------------------------------
(339,477) $(3,538,592) (344,733) $(3,636,892) 316,036 $3,213,195 (385,031) $(3,878,943)
CALIFORNIA FUND FLORIDA FUND
-------------------------------------------------------- ------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/07 3/31/06 3/31/07 3/31/06
--------------------------- --------------------------- -------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 19,060,380 $112,028,736 5,540,422 $32,768,817 628,039 $6,315,187 1,343,743 $13,639,634
Class B 439,370 2,576,697 341,572 2,022,416 51,412 517,499 116,876 1,188,551
Class C 682,033 4,026,468 501,717 2,981,705 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
20,181,783 $118,631,901 6,383,711 $37,772,938 679,451 $6,832,686 1,460,619 $14,828,185
Shares issued to
shareholders in
reinvestment of
distributions
Class A 1,284,059 $7,531,550 1,269,372 $7,511,470 150,268 $1,515,757 142,752 $1,450,063
Class B 204,868 1,201,571 262,673 1,555,229 21,190 213,659 27,817 282,641
Class C 106,824 628,361 129,873 771,330 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
1,595,751 $9,361,482 1,661,918 $9,838,029 171,458 $1,729,416 170,569 $1,732,704
Shares reacquired
Class A (7,938,517) $(46,583,688) (7,053,114) $(41,766,637) (1,476,778) $(14,895,683) (1,327,818) $(13,490,043)
Class B (2,623,694) (15,379,345) (2,363,896) (14,014,351) (480,511) (4,837,458) (476,733) (4,836,416)
Class C (724,167) (4,258,879) (1,149,084) (6,808,954) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(11,286,378) $(66,221,912) (10,566,094) $(62,589,942) (1,957,289) $(19,733,141) (1,804,551) $(18,326,459)
Net change
Class A 12,405,922 $72,976,598 (243,320) $(1,486,350) (698,471) $(7,064,739) 158,677 $1,599,654
Class B (1,979,456) (11,601,077) (1,759,651) (10,436,706) (407,909) (4,106,300) (332,040) (3,365,224)
Class C 64,690 395,950 (517,494) (3,055,919) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
10,491,156 $61,771,471 (2,520,465) $(14,978,975) (1,106,380) $(11,171,039) (173,363) $(1,765,570)
GEORGIA FUND MARYLAND FUND
-------------------------------------------------------- ------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/07 3/31/06 3/31/07 3/31/06
--------------------------- --------------------------- -------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 432,423 $4,704,786 460,892 $5,066,357 999,185 $11,309,806 730,679 $8,394,007
Class B 25,557 278,353 28,232 312,944 89,512 1,009,393 83,527 958,062
- ------------------------------------------------------------------------------------------------------------------------------------
457,980 $4,983,139 489,124 $5,379,301 1,088,697 $12,319,199 814,206 $9,352,069
Shares issued to
shareholders in
reinvestment of
distributions
Class A 131,267 $1,424,086 137,577 $1,511,329 280,526 $3,171,970 299,543 $3,427,995
Class B 16,436 178,906 20,316 223,644 37,398 422,520 48,765 557,986
- ------------------------------------------------------------------------------------------------------------------------------------
147,703 $1,602,992 157,893 $1,734,973 317,924 $3,594,490 348,308 $3,985,981
Shares reacquired
Class A (636,783) $(6,903,492) (655,008) $(7,177,983) (1,101,793) $(12,451,798) (1,610,274) $(18,401,179)
Class B (195,213) (2,121,928) (350,537) (3,854,834) (529,716) (5,988,774) (505,608) (5,810,178)
- ------------------------------------------------------------------------------------------------------------------------------------
(831,996) $(9,025,420) (1,005,545) $(11,032,817) (1,631,509) $(18,440,572) (2,115,882) $(24,211,357)
Net change
Class A (73,093) $(774,620) (56,539) $(600,297) 177,918 $2,029,978 (580,052) $(6,579,177)
Class B (153,220) (1,664,669) (301,989) (3,318,246) (402,806) (4,556,861) (373,316) (4,294,130)
- ------------------------------------------------------------------------------------------------------------------------------------
(226,313) $(2,439,289) (358,528) $(3,918,543) (224,888) $(2,526,883) (953,368) $(10,873,307)
MASSACHUSETTS FUND
--------------------------------------------------------
YEAR ENDED YEAR ENDED
3/31/07 3/31/06
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 1,205,445 $13,563,508 1,762,892 $20,057,220
Class B 113,872 1,284,027 181,196 2,072,498
- --------------------------------------------------------------------------------
1,319,317 $14,847,535 1,944,088 $22,129,718
Shares issued to
shareholders in
reinvestment of
distributions
Class A 394,127 $4,439,231 405,376 $4,607,951
Class B 69,026 778,775 81,697 930,076
- --------------------------------------------------------------------------------
463,153 $5,218,006 487,073 $5,538,027
Shares reacquired
Class A (2,349,203) $(26,419,103) (3,187,918) $(36,274,707)
Class B (680,034) (7,664,911) (575,954) (6,568,954)
- --------------------------------------------------------------------------------
(3,029,237) $(34,084,014) (3,763,872) $(42,843,661)
Net change
Class A (749,631) $(8,416,364) (1,019,650) $(11,609,536)
Class B (497,136) (5,602,109) (313,061) (3,566,380)
- --------------------------------------------------------------------------------
(1,246,767) $(14,018,473) (1,332,711) $(15,175,916)
(6) LINE OF CREDIT
Each fund and other funds managed by MFS participate in a $1 billion unsecured committed line of credit provided by a
syndication of banks under a credit agreement. In addition, these funds and other funds managed by MFS have established
uncommitted borrowing arrangements with certain banks. Borrowings may be made for temporary financing needs. Interest is charged
to each fund, based on its borrowings, generally at a rate equal to the Federal Reserve funds rate plus 0.35%. In addition, a
commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating
funds at the end of each calendar quarter. For the year ended March 31, 2007, each fund's commitment fee and interest expense on
the line of credit were as follows, and are included in miscellaneous expense on the Statements of Operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Commitment Fee $526 $808 $2,324 $509 $373 $826 $1,413
Interest Expense -- -- -- -- -- -- --
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and the Shareholders of MFS Municipal Series Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of MFS Alabama Municipal Bond Fund,
MFS Arkansas Municipal Bond Fund, MFS California Municipal Bond Fund, MFS
Florida Municipal Bond Fund, MFS Georgia Municipal Bond Fund, MFS Maryland
Municipal Bond Fund and MFS Massachusetts Municipal Bond Fund, certain of the
portfolios constituting MFS Municipal Series Trust (the "Trust") as of March
31, 2007, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Trust is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Trust's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of March 31, 2007, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
aforementioned portfolios of MFS Municipal Series Trust as of March 31, 2007,
the results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and their
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States
of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 14, 2007
TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust, as of May 1, 2007, are listed below, together with their principal occupations during
the past five years. (Their titles may have varied during that period.) The address of each Trustee and officer is 500 Boylston
Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING
POSITION(s) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j)
- ----------------------- ---------------- --------------- ------------------------------------------
INTERESTED TRUSTEES
Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services Company,
(born 10/20/63) Chief Executive Officer, President, Chief
Investment Officer and Director
Robert C. Pozen(k) Trustee February 2004
Massachusetts Financial Services Company,
(born 8/08/46) Chairman (since February
2004); MIT Sloan School (education), Senior
Lecturer (since 2006); Secretary of
Economic Affairs, The Commonwealth of
Massachusetts (January 2002 to December
2002); Fidelity Investments, Vice Chairman
(June 2000 to December 2001); Fidelity
Management & Research Company (investment
adviser), President (March 1997 to July
2001); Bell Canada Enterprises
(telecommunication s), Director; Medtronic,
Inc. (medical technology), Director;
Telesat (satellite communications),
Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern Enterprises
(born 5/01/36) Trustees (diversified services company), Chairman,
Trustee and Chief Executive Officer (until
November 2000)
Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and compliance matters
(born 11/29/41) (since July 2002); PricewaterhouseCoo pers
LLP (professional services firm), Partner
(November 2000 until June 2002)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Chief of Cardiac
(born 3/11/37) Surgery (2005); Harvard Medical School,
Professor of Cardiac Surgery; Physician
Director of Medical Device Technology for
Partners HealthCare
David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining products and
(born 5/30/42) service provider), Vice Chairman/Director
(since April 2001); Portman Limited
(mining), Director (since 2005); Encinitos
Ventures (private investment company),
Principal (1997 to April 2001); Lincoln
Electric Holdings, Inc. (welding equipment
manufacturer), Director
William R. Gutow Trustee December 1993 Private investor and real estate consultant;
(born 9/27/41) Capitol Entertainment Management Company
(video franchise), Vice Chairman; Atlantic
Coast Tan (tanning salons), Vice Chairman
(since 2002)
Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial services and
(born 12/21/44) insurance), Vice Chairman and Chief
Operating Officer (until May 2001); The
Equitable Life Assurance Society
(insurance), President and Chief Operating
Officer (until May 2001)
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys), Partner
(born 6/23/35)
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (acquisition planning
(born 9/23/38) specialists), President; Wellfleet
Investments (investor in health care
companies), Managing General Partner (since
1993); Cambridge Nutraceuticals
(professional nutritional products), Chief
Executive Officer (until May 2001)
Laurie J. Thomsen Trustee March 2005 Private investor; Prism Venture Partners
(born 8/05/57) (venture capital), Co- founder and General
Partner (until June 2004); St. Paul
Travelers Companies (commercial property
liability insurance), Director
Robert W. Uek Trustee January 2006 Retired (since 1999); PricewaterhouseCoopers
(born 5/18/41) LLP (professional services firm), Partner
(until 1999); Consultant to investment
company industry (since 2000); TT
International Funds (mutual fund complex),
Trustee (2000 until 2005); Hillview
Investment Trust II Funds (mutual fund
complex), Trustee (2000 until 2005)
OFFICERS
Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services Company,
(born 12/01/58) Executive Vice President and Chief
Regulatory Officer (since March 2004);
Fidelity Management & Research Company,
Vice President (prior to March 2004);
Fidelity Group of Funds, President and
Treasurer (prior to March 2004)
Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services Company,
(born 12/30/64) Senior Vice President (since September
2004); PricewaterhouseCoo pers LLP, Partner
(prior to September 2004)
Christopher R. Bohane(k) Assistant Secretary and July 2005 Massachusetts Financial Services Company,
(born 1/18/74) Assistant Clerk Vice President and Senior Counsel (since
April 2003); Kirkpatrick & Lockhart LLP
(law firm), Associate (prior to April 2003)
Ethan D. Corey(k) Assistant Secretary and July 2005 Massachusetts Financial Services Company,
(born 11/21/63) Assistant Clerk Special Counsel (since December 2004);
Dechert LLP (law firm), Counsel (prior to
December 2004)
David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company,
(born 8/10/68) Vice President (since June 2005); JP Morgan
Investor Services, Vice President (prior to
June 2005)
Timothy M. Fagan(k) Assistant Secretary and September 2005 Massachusetts Financial Services Company,
(born 7/10/68) Assistant Clerk Vice President and Senior Counsel (since
September 2005); John Hancock Advisers,
LLC, Vice President and Chief Compliance
Officer (September 2004 to August 2005),
Senior Attorney (prior to September 2004);
John Hancock Group of Funds, Vice President
and Chief Compliance Officer (September
2004 to December 2004)
Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company,
(born 10/27/70) Vice President (since May 2005); JP Morgan
Investment Management Company, Vice
President (prior to May 2005)
Brian E. Langenfeld(k) Assistant Secretary and June 2006 Massachusetts Financial Services Company,
(born 3/07/73) Assistant Clerk Assistant Vice President and Counsel (since
May 2006); John Hancock Advisers, LLC,
Assistant Vice President and Counsel (May
2005 to April 2006); John Hancock Advisers,
LLC, Attorney and Assistant Secretary
(prior to May 2005)
Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services Company,
(born 11/13/57) Senior Vice President
Susan S. Newton(k) Assistant Secretary and May 2005 Massachusetts Financial Services Company,
(born 3/07/50) Assistant Clerk Senior Vice President and Associate General
Counsel (since April 2005); John Hancock
Advisers, LLC, Senior Vice President,
Secretary and Chief Legal Officer (prior to
April 2005); John Hancock Group of Funds,
Senior Vice President, Secretary and Chief
Legal Officer (prior to April 2005)
Susan A. Pereira(k) Assistant Secretary and July 2005 Massachusetts Financial Services Company,
(born 11/05/70) Assistant Clerk Vice President and Senior Counsel (since
June 2004); Bingham McCutchen LLP (law
firm), Associate (prior to June 2004)
Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services Company,
(born 5/01/52) Executive Vice President, General Counsel
and Secretary (since January 2006); Wilmer
Cutler Pickering Hale and Dorr LLP (law
firm), Partner (prior to January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance
(born 3/07/44) Compliance Officer services), Principal (since June 2004); CRA
Business Strategies Group (consulting
services), Executive Vice President (April
2003 to June 2004); David L. Babson & Co.
(investment adviser), Managing Director,
Chief Administrative Officer and Director
(prior to March 2003)
James O. Yost(k) Assistant Treasurer September 1990 Massachusetts Financial Services Company,
(born 6/12/60) Senior Vice President
- ------------
(h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously since appointment
unless indicated otherwise.
(j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public
companies").
(k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act),
which is the principal federal law governing investment companies like the fund, as a result of position with MFS. The
address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
(n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant retained by MFS pursuant
to its settlement with the SEC concerning market timing and related matters. The terms of that settlement required that
compensation and expenses related to the independent compliance consultant be borne exclusively by MFS and, therefore, MFS
paid Mr. Butler for the services he rendered to the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler
a total of $351,119.29.
The Trust held a shareholders" meeting in 2005 to elect Trustees, and will hold a shareholders" meeting at least once every five
years thereafter, to elect Trustees.
Each Trustee (except Mr. Butler and Mr. Uek) has been elected by shareholders and each Trustee and officer holds office until
his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs.
Butler, Gutow, Sherratt and Uek and Ms. Thomsen are members of the Trust's Audit Committee.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is
the investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of January 1, 2007,
the Trustees served as board members of 97 funds within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available without charge upon
request by calling 1-800-225-2606.
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110
DISTRIBUTOR Effective April 1, 2007, the custodian changed to:
MFS Fund Distributors, Inc. JPMorgan Chase Bank
500 Boylston Street, Boston, MA 02116-3741 One Chase Manhattan Plaza
New York, NY 10081
PORTFOLIO MANAGER
Michael Dawson INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche
200 Berkeley Street
Boston, MA 02116
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board's most recent review and renewal of each
Fund's investment advisory agreement is available by clicking on the fund's
name under "Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov
or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
FEDERAL TAX INFORMATION (UNAUDITED)
The funds will notify shareholders of amounts for use in preparing 2007 income
tax forms in January 2008. The following information is provided pursuant to
provisions of the Internal Revenue Code.
The funds below designate the following amounts as capital gain dividends paid
during the fiscal year.
CAPITAL
GAINS
Alabama Fund $348,167
Georgia Fund 3,003
Maryland Fund 197,952
Massachusetts Fund 76,980
Of the dividends paid from net investment income during the fiscal year, the
following percentages were designated as exempt interest dividends for federal
income tax purposes. If each fund had earned income on private activity bonds,
a portion of the dividends paid may be considered a tax preference item for
purposes of computing a shareholder's alternative minimum tax.
EXEMPT INTEREST
DIVIDENDS
Alabama Fund 100.00%
Arkansas Fund 100.00%
California Fund 100.00%
Florida Fund 100.00%
Georgia Fund 100.00%
Maryland Fund 99.87%
Massachusetts Fund 100.00%
MFS(R) PRIVACY NOTICE
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about the investment products and services that we
offer, and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information.
We maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. We may share nonpublic
personal information with third parties or certain of our affiliates in
connection with servicing your account or processing your transactions. We may
share information with companies or financial institutions that perform
marketing services on our behalf or with other financial institutions with
which we have joint marketing arrangements, subject to any legal requirements.
Authorization to access your nonpublic personal information is limited to
appropriate personnel who provide products, services, or information to you. We
maintain physical, electronic, and procedural safeguards to help protect the
personal information we collect about you.
If you have any questions about the MFS privacy policy, please call
1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
CONTACT US
WEB SITE
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
ACCOUNT SERVICE AND
LITERATURE
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
MAILING ADDRESS
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA
02205-5824
OVERNIGHT MAIL
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116-3741
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS(R) send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to mfs.com, log in to
your account via MFS(R) Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS(R) TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
500 Boylston Street, Boston, MA 02116
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
3/31/07 ANNUAL REPORT
MFS(R) MUNICIPAL SERIES TRUST
For the states of: Mississippi, New York,
North Carolina, Pennsylvania, South Carolina,
Tennessee, Virginia, and West Virginia
MSTB-ANN
MFS(R) Municipal Series Trust
Mississippi, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Virginia, and West Virginia
LETTER FROM THE CEO 1
- -------------------------------------------------------------------
PORTFOLIO COMPOSITION 2
- -------------------------------------------------------------------
MANAGEMENT REVIEW 5
- -------------------------------------------------------------------
PERFORMANCE SUMMARY 6
- -------------------------------------------------------------------
EXPENSE TABLES 14
- -------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 17
- -------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 50
- -------------------------------------------------------------------
STATEMENTS OF OPERATIONS 54
- -------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 56
- -------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 60
- -------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 78
- -------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 88
- -------------------------------------------------------------------
TRUSTEES AND OFFICERS 89
- -------------------------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 92
- -------------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 92
- -------------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 92
- -------------------------------------------------------------------
FEDERAL TAX INFORMATION 92
- -------------------------------------------------------------------
MFS(R) PRIVACY NOTICE 93
- -------------------------------------------------------------------
CONTACT INFORMATION BACK COVER
- -------------------------------------------------------------------
THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
- --------------------------------------------------------------------------------
NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF
- --------------------------------------------------------------------------------
LETTER FROM THE CEO
[Photo of Robert J. Manning]
Dear Shareholders:
The past year has been a great example of why investors should keep their eyes
on the long term.
In 2006 the Dow Jones Industrial Average returned 19%. In February 2007 it hit
its all-time high of 12,787. Less than a week later, stocks sold off around the
globe. By March 5 the Dow was off 5.8%. That is a sign of volatile markets and
a reason investors should make sure they have an investment plan that can ride
out the peaks and troughs.
If you are focused on a long-term investment strategy, the short-term ups and
downs of the markets should not necessarily dictate portfolio action on your
part. Both the bond and stock markets are inherently cyclical. In our view,
investors who remain committed to a long-term plan are more likely to achieve
their financial goals. We believe you should not let the headlines guide you in
your investment decisions and that there is no sense in reacting to short- term
volatility.
In any market environment, we believe individual investors are best served by
following a three-pronged investment strategy of allocating their holdings
across the major asset classes, diversifying within each class, and regularly
rebalancing their portfolios to maintain their desired allocations. Of course,
these strategies cannot guarantee a profit or protect against a loss. Investing
and planning for the long term require diligence and patience, two traits that
in our experience are essential to capitalizing on the many opportunities the
financial markets can offer -- through both up and down economic cycles.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
May 15, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
MFS(R) Mississippi Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 106.5%
Cash & Other Net Assets (6.5)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 16.1%
--------------------------------------------------
General Obligations - General Purpose 15.9%
--------------------------------------------------
State & Local Agencies 15.8%
--------------------------------------------------
Water & Sewer Utility Revenue 12.7%
--------------------------------------------------
Universities - Colleges 11.4%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 75.0%
--------------------------------------------------
AA 2.1%
--------------------------------------------------
A 6.6%
--------------------------------------------------
BBB 9.7%
--------------------------------------------------
Not Rated 6.6%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.8
--------------------------------------------------
Average Life (i)(m) 13.2 yrs.
--------------------------------------------------
Average Maturity (i)(m) 15.4 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA+
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
MFS(R) New York Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 105.8%
Cash & Other Net Assets (5.8)%
TOP FIVE INDUSTRIES (i)
Toll Roads 13.6%
--------------------------------------------------
State & Local Agencies 12.3%
--------------------------------------------------
Water & Sewer Utility Revenue 10.4%
--------------------------------------------------
Transportation - Special Tax 8.7%
--------------------------------------------------
General Obligations - General Purpose 7.5%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 41.8%
--------------------------------------------------
AA 16.3%
--------------------------------------------------
A 15.8%
--------------------------------------------------
BBB 6.5%
--------------------------------------------------
BB 1.7%
--------------------------------------------------
B 0.9%
--------------------------------------------------
CCC 0.3%
--------------------------------------------------
Not Rated 16.7%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.8
--------------------------------------------------
Average Life (i)(m) 13.8 yrs.
--------------------------------------------------
Average Maturity (i)(m) 15.7 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
MFS(R) North Carolina Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 106.7%
Cash & Other Net Assets (6.7)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 23.9%
--------------------------------------------------
Utilities - Municipal Owned 15.4%
--------------------------------------------------
Universities - Colleges 11.5%
--------------------------------------------------
Water & Sewer Utility Revenue 9.5%
--------------------------------------------------
State & Agency - Other 8.1%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 44.3%
--------------------------------------------------
AA 30.0%
--------------------------------------------------
A 7.0%
--------------------------------------------------
BBB 8.3%
--------------------------------------------------
Not Rated 10.4%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.7
--------------------------------------------------
Average Life (i)(m) 13.5 yrs.
--------------------------------------------------
Average Maturity (i)(m) 16.2 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
MFS(R) Pennsylvania Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 104.7%
Cash & Other Net Assets (4.7)%
TOP FIVE INDUSTRIES (i)
General Obligations - Schools 18.2%
--------------------------------------------------
Healthcare Revenue - Hospitals 13.3%
--------------------------------------------------
Universities - Colleges 11.8%
--------------------------------------------------
Water & Sewer Utility Revenue 9.8%
--------------------------------------------------
General Obligations - General Purpose 8.6%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 62.1%
--------------------------------------------------
AA 15.6%
--------------------------------------------------
A 5.0%
--------------------------------------------------
BBB 8.7%
--------------------------------------------------
BB 0.5%
--------------------------------------------------
B 0.6%
--------------------------------------------------
Not Rated 7.5%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.6
--------------------------------------------------
Average Life (i)(m) 14.4 yrs.
--------------------------------------------------
Average Maturity (i)(m) 16.9 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
MFS(R) South Carolina Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 105.8%
Cash & Other Net Assets (5.8)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 21.2%
--------------------------------------------------
Universities - Colleges 12.5%
--------------------------------------------------
General Obligations - Schools 12.2%
--------------------------------------------------
General Obligations - General Purpose 10.6%
--------------------------------------------------
Utilities - Municipal Owned 8.8%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 65.3%
--------------------------------------------------
AA 9.9%
--------------------------------------------------
A 5.8%
--------------------------------------------------
BBB 4.2%
--------------------------------------------------
B 0.6%
--------------------------------------------------
Not Rated 14.2%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.3
--------------------------------------------------
Average Life (i)(m) 17.7 yrs.
--------------------------------------------------
Average Maturity (i)(m) 18.7 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA+
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
MFS(R) Tennessee Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 97.9%
Cash & Other Net Assets 2.1%
TOP FIVE INDUSTRIES (i)
Water & Sewer Utility Revenue 18.5%
--------------------------------------------------
Healthcare Revenue - Hospitals 15.2%
--------------------------------------------------
Single Family Housing - State 13.3%
--------------------------------------------------
General Obligations - Schools 12.0%
--------------------------------------------------
Utilities - Municipal Owned 7.8%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 54.8%
--------------------------------------------------
AA 29.9%
--------------------------------------------------
A 5.3%
--------------------------------------------------
BBB 7.0%
--------------------------------------------------
BB 0.3%
--------------------------------------------------
B 0.9%
--------------------------------------------------
Not Rated 1.8%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.1
--------------------------------------------------
Average Life (i)(m) 12.6 yrs.
--------------------------------------------------
Average Maturity (i)(m) 16.1 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
MFS(R) Virginia Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 105.3%
Cash & Other Net Assets (5.3)%
TOP FIVE INDUSTRIES (i)
State & Local Agencies 23.6%
--------------------------------------------------
Healthcare Revenue - Hospitals 14.7%
--------------------------------------------------
General Obligations - Improvement 12.4%
--------------------------------------------------
Water & Sewer Utility Revenue 9.3%
--------------------------------------------------
Airport & Port Revenue 8.9%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 48.1%
--------------------------------------------------
AA 23.6%
--------------------------------------------------
A 9.7%
--------------------------------------------------
BBB 5.4%
--------------------------------------------------
BB 1.1%
--------------------------------------------------
B 1.5%
--------------------------------------------------
CCC 0.2%
--------------------------------------------------
Not Rated 10.4%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.2
--------------------------------------------------
Average Life (i)(m) 13.0 yrs.
--------------------------------------------------
Average Maturity (i)(m) 15.9 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
MFS(R) West Virginia Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 108.5%
Cash & Other Net Assets (8.5)%
TOP FIVE INDUSTRIES (i)
State & Local Agencies 26.9%
--------------------------------------------------
Universities - Colleges 22.7%
--------------------------------------------------
General Obligations - General Purpose 16.4%
--------------------------------------------------
Water & Sewer Utility Revenue 10.5%
--------------------------------------------------
Healthcare Revenue - Hospitals 9.0%
--------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 69.8%
--------------------------------------------------
A 9.1%
--------------------------------------------------
BBB 4.2%
--------------------------------------------------
BB 0.2%
--------------------------------------------------
B 0.5%
--------------------------------------------------
Not Rated 16.2%
--------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.7
--------------------------------------------------
Average Life (i)(m) 14.4 yrs.
--------------------------------------------------
Average Maturity (i)(m) 16.0 yrs.
--------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA+
--------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A-1
--------------------------------------------------
(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond's price is likely to fluctuate
with general changes in interest rates, e.g., if rates rise 1.00%, a bond
with a 5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this presentation, the bond component includes both accrued
interest amounts and the equivalent exposure from any derivative holdings,
if applicable.
(m) The average maturity shown is calculated using the final stated maturity on
the portfolio's holdings without taking into accou nt any holdings which
have been pre-refunded or pre-paid to an earlier date or which have a
mandatory put date prior to the stated ma turity. The average life shown
takes into account these earlier dates.
(r) Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned b y Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For th ose portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holding s in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in the "AAA"-rating
category. Percentages ar e based on the total market value of investments
as of 3/31/07.
From time to time "Cash & Other Net Assets" may be negative due to timing of
cash receipts and/or equivalent exposure from any derivative holdings.
Percentages are based on net assets as of 3/31/07, unless otherwise noted. The
portfolio is actively managed and current holdings may be different.
MANAGEMENT REVIEW
FACTORS THAT AFFECTED PERFORMANCE
During the period, duration(d) positioning relative to the benchmark, the
Lehman Brothers Municipal Bond Index, had a neutral effect on relative
performance for all funds except the Pennsylvania fund, where the effect was
positive, and the Tennessee fund, where the effect was negative.
Yield curve(y) positioning also had a neutral impact on relative performance
for all funds, with the exception of the New York, North Carolina, Tennessee,
and Virginia funds, where the effect was negative. In comparison to the
benchmark, the negative impact on the funds noted above was due to relative
underexposure to the short end of the curve (represented by bonds with
durations of 0 - to - 4 years) during a period when interest rates were
decreasing.
Credit quality had a neutral effect on all funds relative to the benchmark
during the reporting period.
Notable positive contributions came from the health care and housing sectors.
These sectors were generally positive contributors across all of the funds on a
relative basis. Results from our positioning in credit enhanced bonds were
mixed, being positive for the Mississippi, Pennsylvania, and South Carolina
funds and negative for the other funds. Our positioning in pre-refunded bonds
was a negative factor in the relative performance of the South Carolina,
Tennessee, and West Virginia funds. General obligation bonds were also negative
factors to relative performance for these state funds as well as the
Pennsylvania fund.
Respectfully,
Michael Dawson
Portfolio Manager
(d) Duration is a measure of how much a bond's price is likely to fluctuate
with general changes in interest rates, e.g., if rates rise 1.00%, a bond
with a 5-year duration is likely to lose about 5.00% of its value.
(y) A yield curve graphically depicts the yields of different maturity bonds of
the same credit quality and type; a normal yield curve is upward sloping,
with short-term rates lower than long-term rates.
The views expressed in this report are those of the portfolio manager only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market and
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or an indication of
trading intent on behalf of any MFS portfolio. References to specific
securities are not recommendations of such securities, and may not be
representative of any MFS portfolio's current or future investments.
PERFORMANCE SUMMARY THROUGH 3/31/07
The following information illustrates the historical performance of each fund's
original share class in comparison to its benchmark. Performance results
include the deduction of the maximum applicable sales charge and reflect the
percentage change in net asset value, including reinvestment of dividends and
capital gains distributions. Each fund's results have been compared to the
Lehman Brothers Municipal Bond Index, a market-value-weighted index
representative of the tax-exempt bond market. However, while this index is
considered the benchmark for the performance of municipal bond funds, it is
comprised of municipal bonds issued nationwide, while each of the funds is
limited to investing in the bonds of a particular state. The performance of
other share classes will be greater than or less than that of the class
depicted below. Benchmark comparisons are unmanaged; do not reflect sales
charges, commissions or expenses; and cannot be invested in directly. (See
Notes to Performance Summary.) It is not possible to invest directly in an
index.
PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. FOR MOST RECENT MONTH-END
PERFORMANCE, PLEASE VISIT MFS.COM. THE PERFORMANCE SHOWN DOES NOT REFLECT THE
DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS
OR THE REDEMPTION OF FUND SHARES.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Mississippi Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,574 11,072
3/99 11,168 11,757
3/00 11,103 11,748
3/01 12,216 13,031
3/02 12,638 13,522
3/03 13,836 14,859
3/04 14,496 15,730
3/05 14,896 16,149
3/06 15,432 16,765
3/07 16,235 17,676
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 8/06/92 5.20% 5.14% 5.48%
--------------------------------------------------------------
B 9/07/93 4.41% 4.31% 4.65%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A 0.21% 4.12% 4.96%
With Initial Sales Charge (4.75%)
--------------------------------------------------------------
B 0.41% 3.97% 4.65%
With CDSC (Declining over six years
from 4% to 0%) (x)
- -----------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS New York Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,629 11,072
3/99 11,176 11,757
3/00 11,057 11,748
3/01 12,246 13,031
3/02 12,634 13,522
3/03 13,903 14,859
3/04 14,584 15,730
3/05 14,942 16,149
3/06 15,435 16,765
3/07 16,218 17,676
MFS(R) NEW YORK MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 6/06/88 5.07% 5.12% 5.47%
--------------------------------------------------------------
B 9/07/93 4.29% 4.28% 4.65%
--------------------------------------------------------------
C 12/11/00 4.29% 4.32% 4.66%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A 0.08% 4.10% 4.95%
With Initial Sales Charge (4.75%)
--------------------------------------------------------------
B 0.29% 3.94% 4.65%
With CDSC (Declining over six years
from 4% to 0%) (x)
--------------------------------------------------------------
C 3.29% 4.32% 4.66%
With CDSC (1% for 12 months) (x)
- -----------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS North Carolina Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,512 11,072
3/99 11,012 11,757
3/00 10,828 11,748
3/01 11,932 13,031
3/02 12,300 13,522
3/03 13,494 14,859
3/04 14,170 15,730
3/05 14,475 16,149
3/06 14,980 16,765
3/07 15,669 17,676
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 10/31/84 4.60% 4.96% 5.10%
--------------------------------------------------------------
B 9/07/93 3.93% 4.27% 4.42%
--------------------------------------------------------------
C 1/03/94 3.93% 4.28% 4.43%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A -0.36% 3.94% 4.59%
With Initial Sales Charge (4.75%)
--------------------------------------------------------------
B -0.07% 3.93% 4.42%
With CDSC (Declining over six years
from 4% to 0%) (x)
--------------------------------------------------------------
C 2.93% 4.28% 4.43%
With CDSC (1% for 12 months) (x)
- -----------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Pennsylvania Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,635 11,072
3/99 11,257 11,757
3/00 11,207 11,748
3/01 12,422 13,031
3/02 12,900 13,522
3/03 14,205 14,859
3/04 14,932 15,730
3/05 15,375 16,149
3/06 16,003 16,765
3/07 16,830 17,676
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 2/01/93 5.17% 5.46% 5.86%
--------------------------------------------------------------
B 9/07/93 4.37% 4.66% 5.03%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A 0.17% 4.44% 5.34%
With Initial Sales Charge (4.75%)
--------------------------------------------------------------
B 0.37% 4.33% 5.03%
With CDSC (Declining over six years
from 4% to 0%) (x)
- -----------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS South Carolina Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,536 11,072
3/99 10,992 11,757
3/00 10,743 11,748
3/01 11,845 13,031
3/02 12,281 13,522
3/03 13,449 14,859
3/04 14,162 15,730
3/05 14,519 16,149
3/06 15,024 16,765
3/07 15,711 17,676
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 10/31/84 4.57% 5.05% 5.13%
--------------------------------------------------------------
B 9/07/93 3.98% 4.39% 4.45%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A -0.40% 4.03% 4.62%
With Initial Sales Charge (4.75%)
--------------------------------------------------------------
B -0.02% 4.05% 4.45%
With CDSC (Declining over six years
from 4% to 0%) (x)
- -----------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Tennesee Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,583 11,072
3/99 11,091 11,757
3/00 10,897 11,748
3/01 11,973 13,031
3/02 12,375 13,522
3/03 13,531 14,859
3/04 14,180 15,730
3/05 14,539 16,149
3/06 14,994 16,765
3/07 15,659 17,676
MFS(R) TENNESSEE MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 8/12/88 4.43% 4.82% 5.10%
--------------------------------------------------------------
B 9/07/93 3.66% 4.14% 4.42%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A -0.53% 3.80% 4.59%
With Initial Sales Charge (4.75%)
--------------------------------------------------------------
B -0.34% 3.80% 4.42%
With CDSC (Declining over six years
from 4% to 0%) (x)
- -----------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS Virginia Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,508 11,072
3/99 11,003 11,757
3/00 10,883 11,748
3/01 11,923 13,031
3/02 12,265 13,522
3/03 13,381 14,859
3/04 14,143 15,730
3/05 14,543 16,149
3/06 15,044 16,765
3/07 15,732 17,676
MFS(R) VIRGINIA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 10/31/84 4.57% 5.11% 5.15%
--------------------------------------------------------------
B 9/07/93 3.89% 4.43% 4.46%
--------------------------------------------------------------
C 1/03/94 3.89% 4.44% 4.47%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A -0.40% 4.09% 4.64%
With Initial Sales Charge (4.75%)
- -----------------------------------------------------------------
B -0.11% 4.09% 4.46%
With CDSC (Declining over six years
from 4% to 0%) (x)
--------------------------------------------------------------
C 2.89% 4.44% 4.47%
With CDSC (1% for 12 months) (x)
- -----------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(FOR THE 10-YEAR PERIOD ENDED 3/31/07)
MFS West Virginia Lehman Brothers
Municipal Bond Municipal
Fund - Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,422 11,072
3/99 10,915 11,757
3/00 10,709 11,748
3/01 11,784 13,031
3/02 12,231 13,522
3/03 13,337 14,859
3/04 13,983 15,730
3/05 14,301 16,149
3/06 14,760 16,765
3/07 15,438 17,676
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -----------------------------------------------------------------
A 10/31/84 4.59% 4.77% 4.95%
--------------------------------------------------------------
B 9/07/93 3.92% 4.09% 4.26%
- -----------------------------------------------------------------
AVERAGE ANNUAL
Comparative Benchmark
- -----------------------------------------------------------------
Lehman Brothers Municipal
Bond Index (f) 5.44% 5.50% 5.86%
- -----------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -----------------------------------------------------------------
A -0.38% 3.75% 4.44%
With Initial Sales Charge (4.75%)
- -----------------------------------------------------------------
B -0.08% 3.75% 4.26%
With CDSC (Declining over six years
from 4% to 0%) (x)
- -----------------------------------------------------------------
CDSC - Contingent Deferred Sales Charge.
(f) Source: FactSet Research Systems Inc.
(x) Assuming redemption at the end of the applicable period.
NOTES TO PERFORMANCE SUMMARY
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
A portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax.
From time to time the funds may receive proceeds from litigation settlements,
without which performance would be lower.
For the MFS New York Municipal Bond Fund only:
Performance for Class C shares includes the performance of the fund's Class B
shares prior to their offering. This blended class performance has been
adjusted to take into account differences in sales loads, if any, applicable to
these share classes, but has not been adjusted to take into account differences
in class specific operating expenses (such as Rule 12b-1 fees). Compared to
performance these share classes would have experienced had they been offered
for the entire period, the use of blended performance generally results in
higher performance for share classes with higher operating expenses than the
share class to which it is blended, and lower performance for share classes
with lower operating expenses than the share class to which it is blended.
EXPENSE TABLES
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, OCTOBER 1, 2006
THROUGH MARCH 31, 2007
As a shareholder of the funds, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1)
fees; and other fund expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the funds and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning
of the period and held for the entire period October 1, 2006 through March 31,
2007.
ACTUAL EXPENSES
The first line for each share class in the following tables provides
information about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested, to estimate
the expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the following tables provides
information about hypothetical account values and hypothetical expenses based
on each fund's actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not each fund's actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in each fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the tables is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have
been higher.
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 0.86% $1,000.00 $1,017.60 $4.33
A --------------------------------------------------------------------------
Hypothetical (h) 0.86% $1,000.00 $1,020.64 $4.33
- -------------------------------------------------------------------------------
Actual 1.63% $1,000.00 $1,013.70 $8.18
B --------------------------------------------------------------------------
Hypothetical (h) 1.63% $1,000.00 $1,016.80 $8.20
- -------------------------------------------------------------------------------
MFS(R) NEW YORK MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 1.06% $1,000.00 $1,017.20 $5.33
A --------------------------------------------------------------------------
Hypothetical (h) 1.06% $1,000.00 $1,019.65 $5.34
- -------------------------------------------------------------------------------
Actual 1.82% $1,000.00 $1,013.40 $9.14
B --------------------------------------------------------------------------
Hypothetical (h) 1.82% $1,000.00 $1,015.86 $9.15
- -------------------------------------------------------------------------------
Actual 1.82% $1,000.00 $1,013.40 $9.14
C --------------------------------------------------------------------------
Hypothetical (h) 1.82% $1,000.00 $1,015.86 $9.15
- -------------------------------------------------------------------------------
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 1.09% $1,000.00 $1,015.50 $5.48
A --------------------------------------------------------------------------
Hypothetical (h) 1.09% $1,000.00 $1,019.50 $5.49
- -------------------------------------------------------------------------------
Actual 1.76% $1,000.00 $1,011.40 $8.83
B --------------------------------------------------------------------------
Hypothetical (h) 1.76% $1,000.00 $1,016.16 $8.85
- -------------------------------------------------------------------------------
Actual 1.74% $1,000.00 $1,011.40 $8.73
C --------------------------------------------------------------------------
Hypothetical (h) 1.74% $1,000.00 $1,016.26 $8.75
- -------------------------------------------------------------------------------
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 0.82% $1,000.00 $1,018.80 $4.13
A --------------------------------------------------------------------------
Hypothetical (h) 0.82% $1,000.00 $1,020.84 $4.13
- -------------------------------------------------------------------------------
Actual 1.59% $1,000.00 $1,015.00 $7.99
B --------------------------------------------------------------------------
Hypothetical (h) 1.59% $1,000.00 $1,017.00 $8.00
- -------------------------------------------------------------------------------
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 1.10% $1,000.00 $1,015.90 $5.53
A --------------------------------------------------------------------------
Hypothetical (h) 1.10% $1,000.00 $1,019.45 $5.54
- -------------------------------------------------------------------------------
Actual 1.77% $1,000.00 $1,013.40 $8.88
B --------------------------------------------------------------------------
Hypothetical (h) 1.77% $1,000.00 $1,016.11 $8.90
- -------------------------------------------------------------------------------
MFS(R) TENNESSEE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 0.91% $1,000.00 $1,015.10 $4.57
A --------------------------------------------------------------------------
Hypothetical (h) 0.91% $1,000.00 $1,020.39 $4.58
- -------------------------------------------------------------------------------
Actual 1.56% $1,000.00 $1,011.80 $7.82
B --------------------------------------------------------------------------
Hypothetical (h) 1.56% $1,000.00 $1,017.15 $7.85
- -------------------------------------------------------------------------------
MFS(R) VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 1.06% $1,000.00 $1,016.30 $5.33
A --------------------------------------------------------------------------
Hypothetical (h) 1.06% $1,000.00 $1,019.65 $5.34
- -------------------------------------------------------------------------------
Actual 1.73% $1,000.00 $1,013.00 $8.68
B --------------------------------------------------------------------------
Hypothetical (h) 1.73% $1,000.00 $1,016.31 $8.70
- -------------------------------------------------------------------------------
Actual 1.71% $1,000.00 $1,013.00 $8.58
C --------------------------------------------------------------------------
Hypothetical (h) 1.71% $1,000.00 $1,016.40 $8.60
- -------------------------------------------------------------------------------
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 10/01/06 3/31/07 10/01/06-3/31/07
- --------------------------------------------------------------------------------
Actual 1.15% $1,000.00 $1,015.80 $5.78
A --------------------------------------------------------------------------
Hypothetical (h) 1.15% $1,000.00 $1,019.20 $5.79
- -------------------------------------------------------------------------------
Actual 1.81% $1,000.00 $1,011.60 $9.08
B --------------------------------------------------------------------------
Hypothetical (h) 1.81% $1,000.00 $1,015.91 $9.10
- -------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 103.6%
- -----------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 1.9%
- -----------------------------------------------------------------------------------------------------------------
Jackson, MS, Municipal Airport Authority, Airport Rev., "A", AMBAC, 5%, 2031 $1,510,000 $ 1,584,531
- -----------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 15.7%
- -----------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement, FGIC, 5.5%, 2016 (u) $6,220,000 $ 7,026,858
Commonwealth of Puerto Rico, Public Improvement, "A", 5.25%, 2027 800,000 858,664
Hinds County, MS, MBIA, 6.25%, 2010 1,660,000 1,774,225
Hinds County, MS, MBIA, 6.25%, 2011 1,285,000 1,400,727
Mississippi Development Bank Special Obligations (Jackson, Mississippi) FSA,
5.25%, 2020 620,000 692,875
Mississippi Development Bank Special Obligations, Harrison County Mississippi
Highway Construction, "N", FGIC, 5%, 2026 1,000,000 1,051,240
Puerto Rico Commonwealth Public Improvement, "A", CIFG, 5%, 2025 500,000 530,815
- -----------------------------------------------------------------------------------------------------------------
$13,335,404
- -----------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 3.1%
- -----------------------------------------------------------------------------------------------------------------
Mississippi Capital Improvement, "I", 6%, 2009 (c) $1,000,000 $ 1,057,980
Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2017 (u) 1,500,000 1,577,775
- -----------------------------------------------------------------------------------------------------------------
$ 2,635,755
- -----------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.9%
- -----------------------------------------------------------------------------------------------------------------
Biloxi, MS, Public School District, MBIA, 5%, 2021 $1,000,000 $ 1,032,080
Jackson, MS, Public School District, "B", AMBAC, 5.75%, 2010 (c) 1,000,000 1,069,270
Jackson, MS, Public School District, "B", AMBAC, 0%, 2022 2,000,000 906,580
Jackson, MS, Public School District, "B", AMBAC, 0%, 2023 1,000,000 424,860
Madison County, MS, School District, "A", MBIA, 5.875%, 2016 1,500,000 1,578,000
- -----------------------------------------------------------------------------------------------------------------
$ 5,010,790
- -----------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 15.8%
- -----------------------------------------------------------------------------------------------------------------
Corinth & Alcorn County, MS, Hospital Rev. (Magnolia Regional Health Center),
5.5%, 2021 $ 400,000 $ 409,616
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), MBIA, 6.125%, 2015 2,250,000 2,251,710
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), MBIA, 6.2%, 2018 1,000,000 1,000,780
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital), 5.75%, 2031 500,000 517,025
Hinds County, MS, Rev. (Methodist Hospital & Rehabilitation), AMBAC, 5.6%, 2012 2,055,000 2,124,048
Jones County, MS, Hospital Rev. (South Central Regional Medical Center),
5.5%, 2007 (c) 1,000,000 1,012,070
Mississippi Development Bank Special Obligations (Covington Hospital Nursing Home),
"A", AMBAC, 5%, 2031 500,000 524,095
Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center),
MBIA, 6%, 2007 (c) 750,000 751,320
Mississippi Hospital Equipment & Facilities Authority Rev. (Baptist Medical Center),
MBIA, 6.5%, 2007 (c) 1,190,000 1,192,535
Mississippi Hospital Equipment & Facilities Authority Rev.
(Baptist Memorial Healthcare), "B-1", 5%, 2024 1,000,000 1,031,160
Mississippi Hospital Equipment & Facilities Authority Rev.
(Forrest County General Hospital), FSA, 5.625%, 2020 1,000,000 1,066,660
Mississippi Hospital Equipment & Facilities Authority Rev.
(Mississippi Baptist Health Systems, Inc.), "A", 5%, 2026 500,000 517,565
Mississippi Hospital Equipment & Facilities Authority Rev. Refunding & Improvement,
Hospital South Central, 5.25%, 2031 500,000 519,155
Mississippi Hospital Equipment & Facilities Authority Rev., Refunding & Improvement,
Southwest Regional Medical Center, 5.5%, 2019 250,000 263,170
Mississippi Hospital Equipment & Facilities Authority, Refunding & Improvement,
Southwest Regional Medical Center, 5.75%, 2023 250,000 264,725
- -----------------------------------------------------------------------------------------------------------------
$13,445,634
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.3%
- -----------------------------------------------------------------------------------------------------------------
Mississippi Business Finance Corp. (Solid Waste Management, Inc.), 4.4%, 2027 $ 250,000 $ 249,990
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.9%
- -----------------------------------------------------------------------------------------------------------------
Mississippi Business Finance Corp. (Northrop Grumman Ship Systems), 4.55%, 2028 $ 500,000 $ 498,810
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 210,000 230,952
- -----------------------------------------------------------------------------------------------------------------
$ 729,762
- -----------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 3.3%
- -----------------------------------------------------------------------------------------------------------------
Jones County, MS, Solid Waste Disposal Rev. (International Paper Co.), "A",
5.8%, 2021 $ 500,000 $ 512,200
Lowndes County, MS, Solid Waste Disposal & Pollution Control Rev.
(Weyerhaeuser Co.), 6.8%, 2022 1,250,000 1,524,100
Warren County, MS, Environmental Improvement Rev. (International Paper Co.), "A",
4.4%, 2015 750,000 738,660
- -----------------------------------------------------------------------------------------------------------------
$ 2,774,960
- -----------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.3%
- -----------------------------------------------------------------------------------------------------------------
Mississippi Development Bank, Special Obligation (Diamond Lakes Utilities),
6.25%, 2017 $1,050,000 $ 1,074,864
- -----------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 5.8%
- -----------------------------------------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family Rev., "A", GNMA, 6.3%, 2031 $ 185,000 $ 196,135
Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.5%, 2032 270,000 274,641
Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 5.3%, 2023 645,000 656,791
Mississippi Home Corp. Rev., Single Family Rev., "A-2", GNMA, 6.95%, 2031 255,000 255,479
Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 6.625%, 2027 215,000 217,017
Mississippi Home Corp. Rev., Single Family Rev., "B", GNMA, 5.3%, 2035 725,000 738,811
Mississippi Home Corp. Rev., Single Family Rev., "B-2", GNMA, 6.375%, 2032 430,000 442,887
Mississippi Home Corp. Rev., Single Family Rev., "B-2", GNMA, 6.45%, 2033 440,000 453,741
Mississippi Home Corp. Rev., Single Family Rev., "C", GNMA, 4.95%, 2025 805,000 823,274
Mississippi Home Corp. Rev., Single Family Rev., "F", GNMA, 7.55%, 2027 139,000 146,343
Mississippi Home Corp. Rev., Single Family Rev., GNMA, 6.5%, 2024 765,000 766,530
- -----------------------------------------------------------------------------------------------------------------
$ 4,971,649
- -----------------------------------------------------------------------------------------------------------------
State & Local Agencies - 15.6%
- -----------------------------------------------------------------------------------------------------------------
Lamar County, MS (Jail Project), MBIA, 5.1%, 2021 $ 430,000 $ 448,245
Mississippi Development Bank Special Obligations (City of Jackson, MS), AMBAC,
4.375%, 2031 500,000 490,170
Mississippi Development Bank Special Obligations (Correctional Facilities),"A",
AMBAC, 5.125%, 2025 1,000,000 1,051,700
Mississippi Development Bank Special Obligations
(DeSoto County Regional Utility Authority), 5.25%, 2031 905,000 953,689
Mississippi Development Bank Special Obligations (Hinds County Public Improvements),
FSA, 5.25%, 2015 (c) 1,110,000 1,228,426
Mississippi Development Bank Special Obligations
(Mississippi, Ltd. Tax Hospital Rev.), 5.1%, 2020 1,000,000 1,042,760
Mississippi Development Bank Special Obligations
(Natchez Mississippi Convention Center), AMBAC, 6%, 2013 (c) 750,000 852,173
Mississippi Development Bank Special Obligations (Public Improvement Board),
5%, 2023 750,000 753,143
Mississippi Development Bank Special Obligations
(Southaven, MS, Recreation Facilities), 6.2%, 2009 (c) 400,000 417,568
Mississippi Development Bank Special Obligations
(Southaven, MS, Recreation Facilities), 5.875%, 2014 375,000 390,023
Mississippi Development Bank Special Obligations (Tunica County Building Project),
AMBAC, 5%, 2026 1,695,000 1,785,920
Mississippi Development Bank Special Obligations (Tupelo Fairgrounds), "A", AMBAC,
5%, 2017 785,000 815,607
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 1,000,000 1,093,170
Walnut Grove, MS, Correctional Authority, AMBAC, 6%, 2009 (c) 1,750,000 1,883,385
- -----------------------------------------------------------------------------------------------------------------
$13,205,979
- -----------------------------------------------------------------------------------------------------------------
Tax - Other - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Puerto Rico Convention Center, District Authority Hotel Occupancy Tax Rev., "A",
CIFG, 4.5%, 2036 $ 500,000 $ 500,720
Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 135,000 142,344
- -----------------------------------------------------------------------------------------------------------------
$ 643,064
- -----------------------------------------------------------------------------------------------------------------
Tobacco - 0.7%
- -----------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 230,000 $ 239,444
Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 350,000 361,361
- -----------------------------------------------------------------------------------------------------------------
$ 600,805
- -----------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 2.7%
- -----------------------------------------------------------------------------------------------------------------
Mississippi Development Bank Special Obligations, Madison County
(Highway Construction), FGIC, 5%, 2027 $1,000,000 $ 1,055,200
Mississippi Development Bank Special Obligations, Madison County (Road & Bridge),
AMBAC, 5.1%, 2019 1,175,000 1,266,133
- -----------------------------------------------------------------------------------------------------------------
$ 2,321,333
- -----------------------------------------------------------------------------------------------------------------
Universities - Colleges - 11.2%
- -----------------------------------------------------------------------------------------------------------------
Jackson State University, Educational Building Corp. Rev., (Campus Facilities), "A",
FGIC, 5%, 2029 $3,100,000 $ 3,228,464
Jackson State University, Educational Building Corp. Rev.,
(Student Recreation Center), AMBAC, 5.125%, 2027 750,000 785,228
Medical Center, Educational Building Corp. Rev.
(University of Mississippi Medical Center), "B", AMBAC, 5.5%, 2023 1,000,000 1,149,380
Mississippi State University Educational Building Corp. Rev., AMBAC, 5.5%, 2016 1,000,000 1,068,800
Mississippi State University Educational Building Corp. Rev., AMBAC, 5%, 2021 250,000 259,123
Mississippi Valley State University, Educational Building Corp., MBIA, 5.5%, 2021 890,000 946,960
University of Mississippi, Educational Building Corp. (Performing Arts Center),
AMBAC, 5.25%, 2009 (c) 1,000,000 1,036,430
University of Southern Mississippi, Educational Building Corp. Rev., "B", FSA,
5%, 2032 1,000,000 1,057,380
- -----------------------------------------------------------------------------------------------------------------
$ 9,531,765
- -----------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.0%
- -----------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC, 5.25%, 2013 (u) $2,000,000 $ 2,091,400
Mississippi Development Bank Special Obligations
(Municipal Energy Agency Power Supply Project), "A", XLCA, 5%, 2026 1,000,000 1,052,070
Mississippi Development Bank Special Obligations (Okolona Electric System),
5.2%, 2011 (c) 1,010,000 1,070,943
Puerto Rico Electric Power Authority Rev., "II", 5.25%, 2031 875,000 925,225
- -----------------------------------------------------------------------------------------------------------------
$ 5,139,638
- -----------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 12.6%
- -----------------------------------------------------------------------------------------------------------------
Harrison County, MS, Wastewater & Solid Waste Management, FGIC, 4.75%, 2008 (c) $1,000,000 $ 1,019,170
Jackson, MS, Water & Sewer Systems Rev., FGIC, 5.25%, 2009 (c) 420,000 435,834
Mississippi Development Bank Special Obligations
(Combined Water Sewer & Solid Waste Management), FSA, 5.25%, 2021 1,270,000 1,376,896
Mississippi Development Bank Special Obligations
(Combined Water Sewer & Solid Waste Management), FSA, 5.05%, 2027 1,610,000 1,712,766
Mississippi Development Bank Special Obligations (Gulfport Water & Sewer Project),
FSA, 5.625%, 2012 (c) 500,000 554,965
Mississippi Development Bank Special Obligations (Gulfport Water & Sewer Project),
"A", FGIC, 5.25%, 2012 (c) 2,000,000 2,151,300
Mississippi Development Bank Special Obligations
(Jackson Water & Sewer System Project), FSA, 5%, 2029 2,000,000 2,102,180
Mississippi Development Bank Special Obligations
(Jackson Water & Sewer System Project), FGIC, 5%, 2032 250,000 259,945
Mississippi Development Bank Special Obligations, Grenada, MS, Water & Sewer Systems
Project, "N", FSA, 5%, 2030 1,000,000 1,053,970
- -----------------------------------------------------------------------------------------------------------------
$10,667,026
- -----------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $84,369,506) $87,922,949
- -----------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.6%
- -----------------------------------------------------------------------------------------------------------------
Jackson County, MS, Pollution Control Rev. (Chevron USA, Inc.), 3.78%, due 4/02/07 $ 300,000 $ 300,000
Jackson County, MS, Pollution Control Rev. (Chevron USA, Inc.), 3.78%, due 4/02/07 1,100,000 1,100,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 1,400,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $85,769,506) (k) $89,322,949
- -----------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.2)% (4,444,439)
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $84,878,510
- -----------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $12,137
8/08/17 USD 500,000 Goldman Sachs 7-Day BMA 3.736% (fixed rate) (1,847)
5/30/19 USD 1,000,000 Citibank 7-Day BMA 3.695% (fixed rate) 3,950
8/22/19 USD 1,000,000 Goldman Sachs 7-Day BMA 3.726% (fixed rate) 3,394
7/23/22 USD 500,000 Merrill Lynch 7-Day BMA 3.889% (fixed rate) (2,398)
- -----------------------------------------------------------------------------------------------------------------
$15,236
- -----------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) NEW YORK MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 103.2%
- ------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 3.6%
- ------------------------------------------------------------------------------------------------------------------
New York, NY, City Industrial Development Agency, Special Facilities Rev.
(Terminal One Group), 5.5%, 2024 $1,000,000 $ 1,076,030
Port Authority NY & NJ, (120th Series), MBIA, 5.5%, 2018 1,500,000 1,526,445
Port Authority NY & NJ, (132nd Series), 5%, 2033 2,000,000 2,099,720
Port Authority NY & NJ, Special Obligation Rev. (JFK International), MBIA,
6.25%, 2015 1,000,000 1,158,470
- ------------------------------------------------------------------------------------------------------------------
$ 5,860,665
- ------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 7.3%
- ------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) $2,700,000 $ 3,059,289
Nassau County, NY, Health Systems Rev. (Nassau County), FSA, 6%, 2009 (c) 1,000,000 1,072,120
New York, NY, "D", 5%, 2028 2,000,000 2,092,260
New York, NY, "A", 6%, 2010 (c) 990,000 1,068,517
New York, NY, "C-1", 5.25%, 2025 1,000,000 1,069,130
New York, NY, "G", 5%, 2028 2,000,000 2,093,080
New York, NY, "J", FGIC, 5.5%, 2026 5,000 5,042
New York, NY, "B", 5.375%, 2010 (c) 210,000 223,642
New York, NY, "B", 5.375%, 2017 1,040,000 1,099,166
New York, NY, Unrefunded, "A", 6%, 2019 10,000 10,698
- ------------------------------------------------------------------------------------------------------------------
$ 11,792,944
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 0.1%
- ------------------------------------------------------------------------------------------------------------------
Erie County, NY, Public Improvement, "A", FGIC, 5%, 2019 $ 140,000 $ 146,818
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.6%
- ------------------------------------------------------------------------------------------------------------------
Genesee Valley, NY, Central School District (Angelica Belmont), FGIC, 5.25%, 2028 $1,720,000 $ 1,843,100
North Babylon, NY, Union Free School District, "A", FGIC, 5.5%, 2018 2,415,000 2,548,984
Port Byron, NY, Central School District, ETM, AMBAC, 7.4%, 2012 (c) 500,000 589,290
Port Byron, NY, Central School District, ETM, AMBAC, 7.4%, 2013 (c) 500,000 603,735
Port Byron, NY, Central School District, ETM, AMBAC, 7.4%, 2014 (c) 500,000 617,345
Port Byron, NY, Central School District, ETM, AMBAC, 7.4%, 2015 (c) 500,000 628,940
Rome, NY, City School District, FSA, 5.5%, 2019 (c) 1,000,000 1,050,070
Washingtonville, NY, Central School Central District, FGIC, 7.35%, 2008 550,000 574,442
Washingtonville, NY, Central School Central District, FGIC, 7.35%, 2009 550,000 594,006
- ------------------------------------------------------------------------------------------------------------------
$ 9,049,912
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 6.7%
- ------------------------------------------------------------------------------------------------------------------
Chautauqua County, NY, Industrial Development Agency, Civic Facilities Rev.
(Women's Christian Assn.), "A", 6.35%, 2017 $ 140,000 $ 143,571
Chautauqua County, NY, Industrial Development Agency, Civic Facilities Rev.
(Women's Christian Assn.), "A", 6.4%, 2029 480,000 488,722
Fulton County, NY, Industrial Development Agency, Civic Facilities Rev.
(Nathan Littauer Hospital), "A", 5.75%, 2009 470,000 475,344
Monroe County, NY, Industrial Development Agency, Civic Facilities Rev.
(Highland Hospital of Rochester), 5%, 2025 1,000,000 1,029,440
Nassau County, NY, Industrial Development Agency, Civic Facilities Rev.
(North Shore Health Systems), "D", 5.625%, 2010 500,000 524,590
New York Dormitory Authority Rev. (Montefiore Medical Center), AMBAC, 5.25%, 2019 760,000 791,912
New York Dormitory Authority Rev. (North Shore Long Island Jewish Group), 5.5%, 2033 250,000 266,568
New York Dormitory Authority Rev. (White Plains Hospital), FHA, 5.375%, 2043 1,500,000 1,608,015
New York Dormitory Authority Rev., Non State Supported Debt (Kaleida Health), FHA,
4.6%, 2027 1,000,000 1,016,700
New York Dormitory Authority Rev., Non State Supported Debt (Mt. Sinai NYU Health),
5.5%, 2026 250,000 255,823
New York Dormitory Authority Rev., Non State Supported Debt (Mt. Sinai NYU Health),
"C", 5.5%, 2026 500,000 509,145
New York Dormitory Authority Rev., Non State Supported Debt (NYU Hospitals Center),
"A", 5%, 2026 800,000 829,080
New York, NY, Health & Hospital Corp. Rev., "A", 5.25%, 2017 760,000 785,726
New York, NY, Industrial Development Agency, Civic Facilities Rev.
(Staten Island University Hospital), "B", 6.375%, 2031 495,000 515,948
Suffolk County, NY, Industrial Development Agency, Civic Facilities Rev.
(Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,058,510
Yonkers, NY, Industrial Development Agency, Civic Facilities Rev.
(St. John's Riverside Hospital), "A", 7.125%, 2031 500,000 535,600
- ------------------------------------------------------------------------------------------------------------------
$ 10,834,694
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.3%
- ------------------------------------------------------------------------------------------------------------------
Amherst, NY, Industrial Development Authority Rev.
(Beechwood Health Care Center, Inc.), 5.2%, 2040 $ 500,000 $ 503,965
Dutchess County, NY, Industrial Development Agency (Elant Fishkill, Inc.), "A",
5.25%, 2037 400,000 401,576
East Rochester, NY, Housing Authority Rev. (Woodland Village Project), 5.5%, 2033 400,000 407,424
Suffolk County, NY, Industrial Development Agency, Civic Facilities Rev.
(Gurwin Jewish Phase II), 6.7%, 2039 385,000 417,459
Westchester County, NY, Industrial Development Agency, Civic Facilities Rev.,
Continuing Care Retirement (Kendal On Hudson), "A", 6.5%, 2034 300,000 320,667
- ------------------------------------------------------------------------------------------------------------------
$ 2,051,091
- ------------------------------------------------------------------------------------------------------------------
Human Services - 0.9%
- ------------------------------------------------------------------------------------------------------------------
Nassau County, NY, Industrial Development Agency, Civic Facility Rev.
(Special Needs Facility), "B-1", 6.5%, 2017 $ 205,000 $ 214,280
New York Dormitory Authority Rev. (Jewish Board of Families & Children), AMBAC,
5%, 2023 695,000 730,271
New York, NY, Industrial Development Agency (PSCH, Inc.), 6.375%, 2033 500,000 532,750
- ------------------------------------------------------------------------------------------------------------------
$ 1,477,301
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 0.6%
- ------------------------------------------------------------------------------------------------------------------
New York, NY, City Industrial Development Agency (Jetblue Airways Corp.),
5.125%, 2030 $ 500,000 $ 491,725
New York, NY, Industrial Development Agencies Rev. (American Airlines, Inc.),
7.625%, 2025 350,000 422,321
- ------------------------------------------------------------------------------------------------------------------
$ 914,046
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.3%
- ------------------------------------------------------------------------------------------------------------------
New York, NY, City Industrial Development Agency Rev., Liberty Bonds
(IAC/InterActiveCorp), 5%, 2035 $ 500,000 $ 514,800
Onondaga County, NY, Industrial Development Agency, Sewer Facilities Rev.
(Bristol-Meyers Squibb Co.), 5.75%, 2024 1,000,000 1,158,480
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 430,000 472,901
- ------------------------------------------------------------------------------------------------------------------
$ 2,146,181
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.3%
- ------------------------------------------------------------------------------------------------------------------
Essex County, NY, Industrial Development Agency, Pollution Control Rev.
(International Paper Corp.), 5.55%, 2014 $ 750,000 $ 806,580
Essex County, NY, Industrial Development Agency, Pollution Control Rev.
(International Paper Corp.), 6.15%, 2021 470,000 482,596
Essex County, NY, Industrial Development Agency, Pollution Control Rev.
(International Paper Corp.), 6.45%, 2023 700,000 742,875
- ------------------------------------------------------------------------------------------------------------------
$ 2,032,051
- ------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.3%
- ------------------------------------------------------------------------------------------------------------------
New York Liberty Development Corp. Rev. (National Sports Museum), 6.125%, 2019 $ 500,000 $ 522,885
- ------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.7%
- ------------------------------------------------------------------------------------------------------------------
New York, NY, Industrial Development Agency, Civic Facilities Rev.
(United Jewish Appeal), "A", 5%, 2027 $1,000,000 $ 1,050,720
- ------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.7%
- ------------------------------------------------------------------------------------------------------------------
New York Housing Finance Agency Rev., Multi-Family Housing, "A", 5.1%, 2041 $ 835,000 $ 858,063
New York, NY, City Housing Development Corp., "C", 5%, 2026 500,000 519,050
New York, NY, City Housing Development Corp., "E", 4.65%, 2025 1,000,000 1,014,810
New York, NY, Housing Development Corp., Multi-Family Housing Rev., 5.5%, 2034 2,000,000 2,066,860
New York, NY, Housing Development Corp., Multi-Family Housing Rev., "C", 5.6%, 2019 400,000 419,112
Rochester, NY, Housing Authority Mortgage Rev., Coll Andrews Terrace Apartments,
GNMA, 4.8%, 2048 1,000,000 996,350
- ------------------------------------------------------------------------------------------------------------------
$ 5,874,245
- ------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.3%
- ------------------------------------------------------------------------------------------------------------------
Schenectady, NY, Metroplex Development Authority Rev., "A", MBIA, 5.375%, 2021 $ 475,000 $ 513,228
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 3.5%
- ------------------------------------------------------------------------------------------------------------------
New York Mortgage Agency Rev., 4.6%, 2015 $2,000,000 $ 2,030,800
New York Mortgage Agency Rev., 5.1%, 2024 2,000,000 2,058,000
New York Mortgage Agency Rev., "130", 4.75%, 2030 1,500,000 1,513,905
- ------------------------------------------------------------------------------------------------------------------
$ 5,602,705
- ------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Niagara County, NY, Industrial Development Agency, Solid Waste Disposal Rev.
(American Ref-fuel), "C", 5.625%, 2024 $ 850,000 $ 894,192
- ------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 5.8%
- ------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (City University), AMBAC, 5.75%, 2018 $ 800,000 $ 911,264
New York Dormitory Authority (Pace University), MBIA, 6%, 2010 (c) 1,700,000 1,840,454
New York Dormitory Authority (School Program), 6.25%, 2020 1,690,000 1,831,622
New York Dormitory Authority (State University), 5.375%, 2010 (c) 1,500,000 1,592,505
New York Dormitory Authority (State University), 5.875%, 2017 1,130,000 1,303,749
New York Dormitory Authority (Upstate Community Colleges), "A", FSA, 6%, 2010 (c) 1,010,000 1,093,446
New York Municipal Bond Bank Agency, Special Program Rev., "A", AMBAC, 5.25%, 2015 715,000 758,022
- ------------------------------------------------------------------------------------------------------------------
$ 9,331,062
- ------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 12.2%
- ------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority (City University), "A", 5.625%, 2016 $2,450,000 $ 2,754,903
New York Dormitory Authority (Judicial Institute at Pace), AMBAC, 5.5%, 2020 2,500,000 2,647,300
New York Dormitory Authority Rev., Mental Health Services, "A", MBIA, 5.75%, 2010 (c) 5,000 5,294
New York Dormitory Authority Rev., Mental Health Services, "B", MBIA, 5.25%, 2011 (c) 385,000 410,745
New York Dormitory Authority Rev., Mental Health Services, "D", FSA, 5.25%, 2010 (c) 35,000 36,847
New York Dormitory Authority Rev., Mental Health Services, Unrefunded, "B", MBIA,
5.25%, 2031 830,000 875,550
New York Dormitory Authority Rev., Mental Health Services, Unrefunded, "D", FSA,
5.25%, 2030 70,000 73,151
New York Dormitory Authority, Mental Health Services Facilities Improvement, "B",
MBIA, 5.25%, 2011 (c) 785,000 837,493
New York Dormitory Authority, Mental Health Services Facilities Improvement, "D",
FSA, 5.25%, 2010 (c) 895,000 942,220
New York Municipal Bond Bank Agency, Special School Purpose Rev., 5.25%, 2022 1,000,000 1,065,890
New York Urban Development Corp. (Correctional Facilities), AMBAC, 0%, 2009 5,000,000 4,688,300
New York Urban Development Corp. (State Facilities), AMBAC, 5.6%, 2015 2,750,000 3,026,155
Tobacco Settlement Financing Corp., NY, "A-1", 5.5%, 2018 2,000,000 2,143,280
- ------------------------------------------------------------------------------------------------------------------
$ 19,507,128
- ------------------------------------------------------------------------------------------------------------------
Tax - Other - 2.5%
- ------------------------------------------------------------------------------------------------------------------
New York, NY, Transitional Finance Authority Rev., "A", 5.75%, 2009 (c) $2,730,000 $ 2,888,750
New York, NY, Transitional Finance Authority Rev., "A", 5%, 2026 1,000,000 1,049,640
- ------------------------------------------------------------------------------------------------------------------
$ 3,938,390
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 2.1%
- ------------------------------------------------------------------------------------------------------------------
Erie County, NY, Tobacco Asset Securitization Corp., 0%, 2047 $8,000,000 $ 801,760
Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 400,000 412,984
New York County Tobacco Trust II, 5.625%, 2035 800,000 831,008
Rockland Tobacco Asset Securitization Corp., NY, Tobacco Asset Backed, "C", 0%, 2060 5,000,000 96,650
TSASC, Inc., NY, "1", 5%, 2034 750,000 762,248
Westchester, NY, Tobacco Asset Securitization Corp., 5.125%, 2045 500,000 510,885
- ------------------------------------------------------------------------------------------------------------------
$ 3,415,535
- ------------------------------------------------------------------------------------------------------------------
Toll Roads - 13.4%
- ------------------------------------------------------------------------------------------------------------------
New York Thruway Authority, General Rev., "E", 5.25%, 2008 (c) $ 200,000 $ 204,448
New York Thruway Authority, General Rev., "E", 5.25%, 2015 1,300,000 1,327,469
Niagara Falls, NY, Bridge Commission Toll Rev., FGIC, 5.25%, 2015 (u) 7,000,000 7,534,520
Triborough Bridge & Tunnel Authority Rev., NY, ETM, 6%, 2012 (c) 1,000,000 1,068,900
Triborough Bridge & Tunnel Authority Rev., NY, ETM, 5.5%, 2017 (c)(u) 10,000,000 11,099,100
Triborough Bridge & Tunnel Authority Rev., NY, Unrefunded, "A", MBIA, 5%, 2032 310,000 322,707
- ------------------------------------------------------------------------------------------------------------------
$ 21,557,144
- ------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 8.7%
- ------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority Rev., NY, FGIC, 5.875%, 2010 (c) $2,000,000 $ 2,129,700
Metropolitan Transportation Authority Rev., NY, FGIC, 5%, 2025 2,500,000 2,609,800
Metropolitan Transportation Authority Rev., NY, "A", 5%, 2026 1,500,000 1,586,745
Metropolitan Transportation Authority Rev., NY, Dedicated Tax Fund Rev.,
5.5%, 2015 (c) 750,000 843,968
Metropolitan Transportation Authority Rev., NY, ETM, 7.375%, 2008 (c) 755,000 774,124
Metropolitan Transportation Authority Rev., NY, ETM, AMBAC, 5.75%, 2013 (c) 825,000 884,095
Metropolitan Transportation Authority, NY, Commuter Facilities Rev., FGIC,
5.25%, 2011 (c) 1,000,000 1,065,120
New York Thruway Authority, General Rev., Highway & Bridges, "A", FSA,
5.8%, 2010 (c) 20,000 21,435
New York Thruway Authority, General Rev., Highway & Bridges, "B-1", FGIC,
5.4%, 2010 (c) 2,000,000 2,120,960
Puerto Rico Highway & Transportation Authority Rev., "Y", 5%, 2016 (c) 1,700,000 1,853,476
- ------------------------------------------------------------------------------------------------------------------
$ 13,889,423
- ------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 4.7%
- ------------------------------------------------------------------------------------------------------------------
Amherst, NY, Industrial Development Agency Rev. (Daemen College), "A", 6%, 2011 (c) $1,000,000 $ 1,113,540
Cattaraugus County, NY, Industrial Development Agency Rev.
(Jamestown Community College), "A", 6.4%, 2010 (c) 500,000 550,700
Hempstead Town, NY, Industrial Development Agency, Civic Facilities Rev.
(Hofstra University), MBIA, 5.8%, 2015 1,500,000 1,522,590
New York Dormitory Authority Rev. (Fordham University), AMBAC, 7.2%, 2015 20,000 20,021
New York Dormitory Authority Rev. (St. John's University), "A", MBIA, 5%, 2017 300,000 316,401
New York Dormitory Authority Rev. (Yeshiva University), AMBAC, 5.125%, 2034 1,000,000 1,067,470
Onondaga County, NY, Industrial Development Agency Rev. (Le Moyne College),
5.625%, 2021 750,000 803,558
Schenectady, NY, Industrial Development Agency, Civic Facilities Rev.
(Union College), "A", AMBAC, 5%, 2032 2,000,000 2,089,160
Utica, NY, Industrial Development Agency, Civic Facilities Rev. (Utica College),
"A", 5.3%, 2008 75,000 75,433
- ------------------------------------------------------------------------------------------------------------------
$ 7,558,873
- -------------------------------------------------------------------------------------------------------------------
Universities - Dormitories - 0.7%
- ------------------------------------------------------------------------------------------------------------------
New York Dormitory Authority Rev. (New York University), "A", FGIC, 5%, 2029 $1,000,000 $ 1,056,480
- ------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 1.4%
- ------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities, Water Facilities Rev. (NY American Water Co.),
8.85%, 2015 $2,250,000 $ 2,257,268
- ------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 3.7%
- ------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC, 5.25%, 2014 (u) $1,000,000 $ 1,045,450
Long Island Power Authority, Electrical Systems Rev., "C", 5.5%, 2013 (c) 400,000 441,932
New York Power Authority Rev., 5.25%, 2040 3,000,000 3,131,040
New York Power Authority Rev., "A", 5%, 2021 1,000,000 1,053,910
Virgin Islands Water & Power Authority Rev., 5.5%, 2017 200,000 204,080
- ------------------------------------------------------------------------------------------------------------------
$ 5,876,412
- ------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 10.2%
- ------------------------------------------------------------------------------------------------------------------
New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2024 $1,005,000 $ 1,052,983
New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2025 1,500,000 1,580,685
New York Environmental Facilities Corp., Clean Water & Drinking Rev., 5%, 2029 2,000,000 2,117,480
New York Environmental Facilities Corp., Pollution Control Rev., 5.75%, 2010 175,000 186,529
New York Environmental Facilities Corp., Pollution Control Rev., 6.875%, 2010 165,000 165,404
New York Environmental Facilities Corp., Pollution Control Rev., 7.25%, 2010 70,000 70,195
New York Environmental Facilities Corp., Pollution Control Rev., ETM,
5.75%, 2010 (c) 945,000 1,006,671
New York Environmental Facilities Corp., Pollution Control Rev., ETM,
5.75%, 2010 (c) 1,115,000 1,187,765
New York Environmental Facilities Corp., Water Facilities Rev., 6%, 2031 1,005,000 1,080,827
New York Environmental Facilities Corp., Water Facilities Rev.
(Spring Valley Water Co.), "B", AMBAC, 6.15%, 2024 1,500,000 1,503,000
New York, NY, Municipal Water & Sewer Finance Authority Rev., FGIC, 5.25%, 2011 (c) 2,000,000 2,128,980
Erie County, NY, Water Authority Water Rev., ETM, AMBAC, 6.75%, 2014 (c) 1,000,000 1,134,950
New York, NY, Municipal Water & Sewer Finance Authority Rev., "A", 5%, 2027 1,500,000 1,566,450
New York, NY, Municipal Water & Sewer Finance Authority Rev., "A", ETM,
6%, 2010 (c) 620,000 665,105
Suffolk County, NY, Water Authority Rev., MBIA, 5.1%, 2012 660,000 704,913
Suffolk County, NY, Water Authority Rev., ETM, MBIA, 5.1%, 2012 (c) 235,000 251,448
- ------------------------------------------------------------------------------------------------------------------
$ 16,403,385
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $155,260,416) $165,554,778
- ------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.3%
- ------------------------------------------------------------------------------------------------------------------
New York, NY, 3.76%, due 4/02/07 $ 400,000 $ 400,000
New York, NY, Municipal Water Finance Authority, Water & Sewer Systems Rev., "C",
3.76%, due 4/02/07 900,000 900,000
New York, NY, Municipal Water Finance Authority, Water & Sewer Systems Rev., "G",
3.74%, due 4/02/07 800,000 800,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 2,100,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $157,360,416) (k) $167,654,778
- ------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.5)% (7,255,801)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $160,398,977
- ------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $18,204
8/22/19 USD 2,000,000 Goldman Sachs 7-Day BMA 3.726% (fixed rate) 6,788
- ------------------------------------------------------------------------------------------------------------------
$24,992
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by
your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.2%
- ------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 5.4%
- ------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2029 $ 2,000,000 $ 2,106,532
Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2034 4,485,000 4,712,479
Charlotte, NC, Airport Rev., "B", MBIA, 5.875%, 2019 1,000,000 1,050,880
Charlotte, NC, Airport Rev., "B", MBIA, 5.875%, 2020 3,775,000 3,967,072
Raleigh Durham, NC, Airport Authority Rev., "A", FGIC, 5.25%, 2018 2,700,000 2,854,899
Raleigh Durham, NC, Airport Authority Rev., "A", AMBAC, 5%, 2030 3,000,000 3,175,470
- ------------------------------------------------------------------------------------------------------------------
$ 17,867,332
- ------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 1.7%
- ------------------------------------------------------------------------------------------------------------------
Charlotte, NC, 5.5%, 2010 (c) $ 3,100,000 $ 3,327,664
Puerto Rico Commonwealth, Public Improvement, "A", 5.25%, 2030 2,000,000 2,141,940
- ------------------------------------------------------------------------------------------------------------------
$ 5,469,604
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 1.4%
- ------------------------------------------------------------------------------------------------------------------
New Hanover County, NC, Public Improvement, 5.8%, 2010 (c) $ 4,200,000 $ 4,578,210
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 3.9%
- ------------------------------------------------------------------------------------------------------------------
Brunswick County, NC, FGIC, 5%, 2020 $ 2,800,000 $ 2,966,040
Cumberland County, NC, 5.8%, 2010 (c) 4,400,000 4,739,108
Johnston County, NC, FGIC, 5.6%, 2010 (c) 2,000,000 2,144,340
New Hanover County, NC, Public Improvement, 5%, 2021 1,435,000 1,508,042
New Hanover County, NC, School Improvement, 5%, 2019 1,255,000 1,329,334
- ------------------------------------------------------------------------------------------------------------------
$ 12,686,864
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 23.7%
- ------------------------------------------------------------------------------------------------------------------
Catawba County, NC, Hospital Rev. (Catawba Memorial Hospital), AMBAC, 5%, 2017 $ 1,200,000 $ 1,241,952
Charlotte-Mecklenburg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A",
5.125%, 2022 1,000,000 1,023,840
Charlotte-Mecklenburg, NC, Healthcare Systems Rev. (Carolinas Healthcare), "A",
5%, 2031 3,500,000 3,618,370
Cumberland County, NC, Hospital Facilities Rev. (Cumberland Hospital), MBIA, ETM,
0%, 2009 (c) 1,800,000 1,642,860
New Hanover County, NC, Hospital Rev. (New Hanover Regional Medical Center), MBIA,
5%, 2019 6,225,000 6,411,190
North Carolina Medical Care Commission (Cleveland County Healthcare), "A", AMBAC,
5%, 2035 1,305,000 1,361,246
North Carolina Medical Care Commission (Morehead Memorial Hospital), FHA, 5%, 2026 2,000,000 2,102,960
North Carolina Medical Care Commission (Northeast Medical Center), 5.25%, 2029 2,000,000 2,115,040
North Carolina Medical Care Commission (Novant Health), "A", MBIA, 5%, 2018 1,975,000 2,028,878
North Carolina Medical Care Commission, Health Care Facilities Rev. (Wakemed),
AMBAC, 5%, 2021 3,500,000 3,677,765
North Carolina Medical Care Commission, Health System Rev. (Health Combined Group),
5%, 2036 3,000,000 3,134,550
North Carolina Medical Care Commission, Hospital Rev.
(Betsy Johnson Health Care System), FSA, 5.125%, 2032 1,500,000 1,567,710
North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial Hospital),
5.5%, 2015 5,790,000 5,879,513
North Carolina Medical Care Commission, Hospital Rev. (Gaston Memorial Hospital),
5.5%, 2019 6,500,000 6,599,905
North Carolina Medical Care Commission, Hospital Rev.
(Mission-St. Joseph Health Systems), 5.5%, 2011 (c) 2,825,000 3,063,713
North Carolina Medical Care Commission, Hospital Rev.
(Pitt County Memorial Hospital), "B", 5%, 2008 (c) 3,000,000 3,095,640
North Carolina Medical Care Commission, Hospital Rev. (Rex Healthcare), AMBAC,
5%, 2017 5,000,000 5,120,700
North Carolina Medical Care Commission, Hospital Rev.
(Southeastern Regional Medical Center), 5.375%, 2032 3,330,000 3,490,473
North Carolina Medical Care Commission, Hospital Rev. (St. Joseph's), MBIA,
5.1%, 2008 (c) 975,000 1,005,732
North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial Hospital),
AMBAC, 0%, 2013 1,000,000 766,280
North Carolina Medical Care Commission, Hospital Rev. (Wilson Memorial Hospital),
AMBAC, 0%, 2015 1,140,000 794,192
North Carolina Medical Care Commission, Hospital Rev. Unrefunded (St. Joseph's),
5.1%, 2018 525,000 539,999
North Carolina Medical Care Health Novant Health Obligations Group, 4.5%, 2036 3,000,000 2,927,970
Northern Hospital District, Surry County, NC, Health Care Facilities Rev., ASST GTY,
5.5%, 2019 1,190,000 1,245,097
Northern Hospital District, Surry County, NC, Health Care Facilities Rev., ASST GTY,
5.1%, 2021 1,000,000 1,043,230
Onslow County, NC, Hospital Authority (Onslow Memorial Hospital Project), MBIA,
5%, 2026 1,315,000 1,397,714
Pitt County, NC, Rev., Pitt County Memorial Hospital, ETM, 5.25%, 2021 (c) 10,135,000 10,735,803
- ------------------------------------------------------------------------------------------------------------------
$ 77,632,322
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.6%
- ------------------------------------------------------------------------------------------------------------------
North Carolina Medical Care Commision, Health Ref First Mortgage (Salemtowne),
5.1%, 2030 $ 600,000 $ 607,062
North Carolina Medical Care Commission, Health Care Facilities Rev.
(Arbor Acres Community), 6.375%, 2012 (c) 1,000,000 1,126,410
North Carolina Medical Care Commission, Health Care Facilities Rev. (Deerfield),
"A", 5%, 2023 1,000,000 1,041,530
North Carolina Medical Care Commission, Health Care Facilities Rev.
(Givens Estates), 6.5%, 2013 (c) 800,000 927,704
North Carolina Medical Care Commission, Health Care Facilities Rev., "A",
6.125%, 2035 750,000 787,583
North Carolina Medical Care Commission, Health Care Facilities Rev., First Mortgage
(Presbyterian Homes), 5.5%, 2031 750,000 779,640
- ------------------------------------------------------------------------------------------------------------------
$ 5,269,929
- ------------------------------------------------------------------------------------------------------------------
Human Services - 0.7%
- ------------------------------------------------------------------------------------------------------------------
Cumberland County, NC, Finance Corp., Installment Payment Rev.
(Detention Center & Mental Health), AMBAC, 5.625%, 2019 $ 2,125,000 $ 2,230,889
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- ------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 $ 860,000 $ 945,802
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Columbus County, NC, Industrial Facilities & Pollution Control Financing
Authority Rev. (International Paper Co.), "A", 5.8%, 2016 $ 2,000,000 $ 2,056,840
- ------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.7%
- ------------------------------------------------------------------------------------------------------------------
Charlotte, NC, Housing Authority Rev., GNMA, 4.8%, 2048 $ 2,000,000 $ 1,996,320
Charlotte, NC, Housing Authority Rev., Mortgage Rocky Branch II, GNMA, 4.65%, 2035 2,000,000 2,015,160
Mecklenburg County, NC (Little Rock Apartments), FNMA, 5.15%, 2022 1,000,000 1,049,580
North Carolina Housing Finance Agency, "H", FHA, 6.05%, 2028 2,525,000 2,549,417
North Carolina Medical Care Commission, Health Care Facilities Rev., "A",
5.8%, 2034 1,000,000 1,080,450
- ------------------------------------------------------------------------------------------------------------------
$ 8,690,927
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 7.1%
- ------------------------------------------------------------------------------------------------------------------
North Carolina Housing Finance Agency Rev., "15-A", FSA, 4.95%, 2032 $ 430,000 $ 437,310
North Carolina Housing Finance Agency Rev., "19-A", 5.1%, 2030 2,390,000 2,454,243
North Carolina Housing Finance Agency Rev., "22-A", 4.8%, 2026 2,000,000 2,046,540
North Carolina Housing Finance Agency Rev., "23-A", 4.8%, 2037 3,000,000 2,999,790
North Carolina Housing Finance Agency Rev., "24-A", 4.75%, 2026 2,000,000 2,041,920
North Carolina Housing Finance Agency Rev., "25-A", 5.75%, 2037 2,000,000 2,132,880
North Carolina Housing Finance Agency Rev., "26-A", 4.7%, 2038 3,295,000 3,281,919
North Carolina Housing Finance Agency Rev., "5-A", 5.55%, 2019 2,580,000 2,631,445
North Carolina Housing Finance Agency Rev., "7-A", 6.15%, 2020 590,000 606,308
North Carolina Housing Finance Agency Rev., "A", 5.25%, 2020 1,310,000 1,327,397
North Carolina Housing Finance Agency Rev., "A", 5.375%, 2023 245,000 252,237
North Carolina Housing Finance Agency Rev., "PP", FHA, 6.15%, 2017 1,085,000 1,113,959
North Carolina Housing Finance Agency Rev., "RR", 5.85%, 2028 1,940,000 1,977,384
- ------------------------------------------------------------------------------------------------------------------
$ 23,303,332
- ------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 8.0%
- ------------------------------------------------------------------------------------------------------------------
Brunswick County, NC, Certificates of Participation, FSA, 5.5%, 2010 (c) $ 1,000,000 $ 1,064,510
Cabarrus County, NC, Installment Financing Contract, 5%, 2021 5,500,000 5,793,425
Carteret County, NC, AMBAC, 5.625%, 2020 1,010,000 1,076,397
Charlotte, NC, Certificates of Participation (Convention Facilities), AMBAC,
0%, 2008 3,000,000 2,819,820
Charlotte, NC, Certificates of Participation (Public Safety Facilities), "D",
5.5%, 2010 (c) 3,000,000 3,191,670
Charlotte, NC, Certificates of Participation (Transit Projects), "E",
5%, 2035 1,990,000 2,072,366
Harnett County, NC, Certificates of Participation, FSA, 5.25%, 2015 1,020,000 1,109,923
Harnett County, NC, Certificates of Participation, FSA, 5.5%, 2016 1,225,000 1,312,624
Pitt County, NC, Certificates of Participation (School Facilities Improvement),
"A", FSA, 5.5%, 2010 (c) 1,250,000 1,327,288
Pitt County, NC, Certificates of Participation (School Facilities Improvement),
"B", FSA, 5.75%, 2010 (c) 1,390,000 1,485,715
Pitt County, NC, Certificates of Participation (School Facilities Improvement),
"B", FSA, 5.75%, 2010 (c) 1,390,000 1,485,715
Randolph County, NC, Certificates of Participation, FSA, 5.6%, 2009 (c) 3,000,000 3,151,140
Rockingham, NC, Certificates of Participation, AMBAC, 5.125%, 2024 350,000 372,327
- ------------------------------------------------------------------------------------------------------------------
$ 26,262,920
- ------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 4.1%
- ------------------------------------------------------------------------------------------------------------------
Cabarrus County, NC, Development Corp., AMBAC, 5.3%, 2019 $ 1,250,000 $ 1,302,875
Forsyth County, NC, Certificates of Participation (Public Facilities & Equipment),
5.25%, 2013 (c) 1,230,000 1,339,027
Iredell County, NC, Public Facilities (School Projects), AMBAC, 5.5%, 2010 (c) 1,000,000 1,064,510
New Hanover County, NC, Certificates of Participation
(New Hanover County Projects), AMBAC, 5.25%, 2011 (c) 1,635,000 1,761,320
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) 3,000,000 3,357,510
Rutherford County, NC, Certificates of Participation (Rutherford County School),
AMBAC, 5%, 2023 840,000 884,537
Winston Salem, NC, Certificates of Participation, "A", 4.75%, 2031 1,000,000 1,026,090
Winston Salem, NC, Certificates of Participation, "C", 5%, 2011 (c) 2,575,000 2,709,904
- ------------------------------------------------------------------------------------------------------------------
$ 13,445,773
- ------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.8%
- ------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., ASST GTY, 5.5%, 2018 $ 1,000,000 $ 1,035,210
Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 1,650,000 1,698,626
- ------------------------------------------------------------------------------------------------------------------
$ 2,733,836
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 1,785,000 $ 1,858,292
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "A", 0%, 2050 2,000,000 136,920
- ------------------------------------------------------------------------------------------------------------------
$ 1,995,212
- ------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 3.9%
- ------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., FSA,
6%, 2018 (u) $10,850,000 $ 12,841,735
- ------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 11.4%
- ------------------------------------------------------------------------------------------------------------------
University of North Carolina, Wilmington, Certificates of Participation
(Student Housing Project), FGIC, 5%, 2028 $ 1,825,000 $ 1,930,686
Appalachian State University, NC, "A", FGIC, 5.125%, 2013 (c) 1,260,000 1,358,267
Appalachian State University, NC, Rev., FSA, 5.6%, 2010 (c) 2,285,000 2,443,945
Appalachian State University, NC, Rev., "C", MBIA, 5%, 2030 1,000,000 1,059,710
East Carolina University, NC, Rev., "A", AMBAC, 5.25%, 2011 (c) 1,375,000 1,470,508
North Carolina Capital Facilities, Finance Agency Rev. (Duke University), "A",
5.25%, 2012 (c) 2,000,000 2,157,940
North Carolina Capital Facilities, Finance Agency Rev. (High Point University),
5.125%, 2018 510,000 531,150
North Carolina Capital Facilities, Finance Agency Rev. (High Point University),
5.125%, 2021 300,000 310,605
North Carolina Capital Facilities, Finance Agency Rev. (Johnson & Wales University),
"A", XLCA, 5.25%, 2022 1,870,000 2,003,724
North Carolina Capital Facilities, Finance Agency Rev. (Johnson & Wales University),
"A", XLCA, 5%, 2033 3,385,000 3,521,686
North Carolina Capital Facilities, Finance Prerefunded (Duke University), "A",
5.125%, 2011 (c) 4,050,000 4,298,873
North Carolina Capital Facilities, Finance Unrefunded (Duke University), "A",
5.125%, 2041 950,000 984,837
Puerto Rico Industrial Tourist Authority (University Plaza), "A", MBIA, 5%, 2020 2,180,000 2,265,020
University of North Carolina, Charlotte Rev., "B", 5%, 2036 1,750,000 1,855,945
University of North Carolina, Greensboro Rev., "A", FSA, 5%, 2020 2,835,000 2,975,673
University of North Carolina, Systems Pool Rev., "C", AMBAC, 5%, 2029 2,000,000 2,103,480
University of North Carolina, University Rev., 5%, 2028 2,000,000 2,101,480
University of North Carolina, Wilmington Rev., "A", AMBAC, 5%, 2019 1,375,000 1,448,219
University of Puerto Rico Rev., "Q", 5%, 2036 2,370,000 2,461,601
- ------------------------------------------------------------------------------------------------------------------
$ 37,283,349
- ------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.8%
- ------------------------------------------------------------------------------------------------------------------
Wake County, NC, Industrial Facilities & Pollution Control Rev.
(Carolina Power & Light Co.), 5.375%, 2017 $ 2,500,000 $ 2,645,150
- ------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 15.2%
- ------------------------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, AMBAC, 6%, 2018 $ 1,245,000 $ 1,462,987
North Carolina Eastern Municipal Power Agency, AMBAC, 6%, 2018 (u) 13,000,000 15,276,170
North Carolina Eastern Municipal Power Agency, "A", ETM, 7.5%, 2010 (c) 2,595,000 2,819,442
North Carolina Eastern Municipal Power Agency, "A", MBIA, 7.5%, 2010 3,005,000 3,297,417
North Carolina Eastern Municipal Power Agency, "A", ETM, 5%, 2017 (c) 3,120,000 3,379,740
North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA, 6%, 2011 5,000,000 5,398,050
North Carolina Municipal Power Agency, Catawba Electric Rev., 6.375%, 2013 1,000,000 1,074,580
North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA,
5.25%, 2019 (u) 10,000,000 10,682,600
North Carolina Municipal Power Agency, Catawba Electric Rev., MBIA,
5.25%, 2020 (u) 6,000,000 6,403,200
- ------------------------------------------------------------------------------------------------------------------
$ 49,794,186
- ------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.3%
- ------------------------------------------------------------------------------------------------------------------
Broad River, NC, Water Authority Rev., MBIA, 5.75%, 2010 (c) $ 1,490,000 $ 1,597,146
Cary, NC, Combined Enterprise Systems Rev., 5%, 2026 1,000,000 1,039,910
Charlotte, NC, Storm Water Fee Rev., 6%, 2010 (c) 3,180,000 3,432,174
Charlotte, NC, Storm Water Fee Rev., 5%, 2034 3,675,000 3,859,595
Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2009 (c) 2,000,000 2,106,940
Charlotte, NC, Water & Sewer Systems Rev., 5.75%, 2010 (c) 3,075,000 3,296,123
Charlotte, NC, Water & Sewer Systems Rev., 5.5%, 2017 1,650,000 1,780,895
Charlotte, NC, Water & Sewer Systems Rev., "A", 4.625%, 2036 2,000,000 2,027,680
Durham County, NC, Enterprise Systems Rev., MBIA, 5%, 2023 1,675,000 1,764,613
Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2011 (c) 1,490,000 1,588,012
Greensboro, NC, Enterprise Systems Rev., "A", 5.125%, 2011 (c) 1,750,000 1,865,115
Greenville, NC, Combined Enterprise Systems Rev., FSA, 5%, 2016 1,005,000 1,064,104
Greenville, NC, Combined Enterprise Systems Rev., FSA, 5.25%, 2019 1,170,000 1,248,624
Harnett County, NC, Water & Sewer Systems Rev., AMBAC, 5%, 2028 700,000 737,373
Kannapolis, NC, Water & Sewer Rev., "B", FSA, 5.25%, 2021 1,000,000 1,055,790
Raleigh, NC, Combined Enterprise Systems Rev., 5%, 2014 (c) 385,000 415,011
Winston Salem, NC, Water & Sewer Systems Rev., 5%, 2033 1,600,000 1,690,960
- ------------------------------------------------------------------------------------------------------------------
$ 30,570,065
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $320,597,372) $338,304,277
- ------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.2%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev.
(Presbyterian University Hospital), "D", 3.7%, due 4/05/07 $ 100,000 $ 100,000
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), 3.77%, due 4/02/07 100,000 100,000
Burke County, GA, Development Authority Pollution Control Rev.
(Oglethorpe Power Corp.), "A", 3.7%, due 4/04/07 970,000 970,000
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants Rev., "A",
3.7%, due 4/05/07 400,000 400,000
Jefferson County, AL, Sewer Rev., Warrants Rev., "B-4", 3.7%, due 4/05/07 1,200,000 1,200,000
Lincoln County, WY, Pollution Control Rev. (Exxon Mobil Corp.), "C",
3.82%, due 4/02/07 1,000,000 1,000,000
New York, NY, Municipal Water Finance Authority, Water & Sewer Systems Rev., "C",
3.76%, due 4/02/07 200,000 200,000
Petersburg, IN, Pollution Control Rev. (Indianapolis Power & Light Co.), "B",
3.73%, due 4/04/07 1,200,000 1,200,000
South Blount County, TN, Utility District Rev., 3.85%, due 4/02/07 1,000,000 1,000,000
State of Oregon, "73G", 3.68%, due 4/04/07 400,000 400,000
Sublette County, WY, Pollution Control Rev. (Exxon Mobil Corp.), 3.75%, due 4/02/07 500,000 500,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 7,070,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $327,667,372) (k) $345,374,277
- ------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.4)% (17,594,245)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $327,780,032
- ------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 7,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $42,478
5/30/19 USD 3,000,000 Citibank 7-Day BMA 3.695% (fixed rate) 11,848
8/22/19 USD 3,000,000 Goldman Sachs 7-Day BMA 3.726% (fixed rate) 10,182
- ------------------------------------------------------------------------------------------------------------------
$64,508
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 101.7%
- ------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 2.0%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Airport Rev. (Pittsburgh International Airport), MBIA,
5.75%, 2014 $1,000,000 $ 1,097,480
Allegheny County, PA, Airport Rev. (Pittsburgh International Airport), FGIC,
6.125%, 2017 500,000 530,575
Susquehanna Area Regional Airport, AMBAC, 5.375%, 2023 500,000 529,665
- ------------------------------------------------------------------------------------------------------------------
$ 2,157,720
- ------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 8.5%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Unrefunded Balance, "C53", FGIC, 5.3%, 2018 $ 285,000 $ 301,430
Allegheny County, PA, Unrefunded Balance, "C53", FGIC, 5.4%, 2019 290,000 307,693
Commonwealth of Puerto Rico, FGIC, 5.5%, 2015 (u) 2,000,000 2,244,540
Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) 2,000,000 2,266,140
Erie County, PA, Convention Center, FGIC, 5%, 2025 500,000 527,300
Erie County, PA, Convention Center, FGIC, 5%, 2026 500,000 526,625
Luzerne County, PA, MBIA, 5.25%, 2012 (c) 500,000 539,470
North Huntingdon Township, PA, AMBAC, 5.25%, 2019 500,000 528,705
Pennsylvania Finance Authority Rev. (Penn Hills), "A", FGIC, 5.45%, 2010 (c) 85,000 90,191
Pennsylvania Finance Authority Rev. (Penn Hills), "A", FGIC, 5.45%, 2019 415,000 438,887
State of Pennsylvania, 6%, 2010 (c) 1,000,000 1,070,580
State of Pennsylvania, 6.25%, 2010 300,000 323,433
- ------------------------------------------------------------------------------------------------------------------
$ 9,164,994
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 0.5%
- ------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA, FGIC, 5.75%, 2009 (c) $ 500,000 $ 524,215
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 18.0%
- ------------------------------------------------------------------------------------------------------------------
Allegheny Valley, PA, School District, "A", MBIA, 5%, 2028 $1,000,000 $ 1,055,400
Ambridge, PA, Area School District, MBIA, 5%, 2014 (c) 750,000 811,815
Butler, PA, School District, FGIC, 5.375%, 2018 500,000 512,115
Chambersburg, PA, School District, FSA, 5%, 2011 (c) 500,000 525,825
Chester County, PA, School Authority (School Intermediate Unit Project), "N", AMBAC,
5%, 2025 750,000 795,780
Downingtown, PA, School District, AMBAC, 5.65%, 2008 (c) 500,000 513,795
Exeter Township, PA, School District, FGIC, 5%, 2025 1,000,000 1,050,450
Garnet Valley, PA, School District, FGIC, 5.5%, 2015 750,000 812,790
Gateway, PA, Allegheny School District, FGIC, 5.2%, 2023 1,000,000 1,068,950
Gateway, PA, Allegheny School District, FGIC, 5%, 2032 1,890,000 1,978,849
North Allegheny, PA, School District, FGIC, 5.05%, 2022 590,000 613,146
North Schuylkill, PA, School District, FGIC, 5%, 2028 650,000 675,500
Palmyra, PA, School District, FGIC, 5.375%, 2016 820,000 883,001
Pennridge, PA, School District, MBIA, 5%, 2013 (c) 50,000 53,369
Pennridge, PA, School District, Unrefunded, MBIA, 5%, 2013 (c) 450,000 480,321
Pennsylvania Public School Building (Garnet Valley School District), AMBAC,
5.5%, 2011 (c) 1,005,000 1,070,395
Perkiomen Valley, PA, School District, FSA, 5%, 2011 (c) 280,000 293,538
Perkiomen Valley, PA, School District, FSA, 5%, 2019 220,000 229,253
Perkiomen Valley, PA, School District, "A", FSA, 5.25%, 2014 (c) 1,000,000 1,091,150
Philadelphia, PA, School District, MBIA, 6%, 2010 (c) 500,000 531,840
Philadelphia, PA, School District, FSA, 5.75%, 2011 (c) 500,000 536,955
South Park, PA, School District, FGIC, 5%, 2019 750,000 780,383
Southeastern Area, PA, Special Schools Authority Rev., 0%, 2007 360,000 353,484
State Public School Building Authority, PA School (Colonial Intermediate Unit 20),
FGIC, 5%, 2030 500,000 527,240
State Public School Building Authority, PA School (Tuscarora School District), FSA,
5%, 2013 (c) 1,000,000 1,068,730
State Public School Building Authority, PA, School Rev. (Haverford Township Project),
XLCA, 5%, 2027 1,000,000 1,061,430
- ------------------------------------------------------------------------------------------------------------------
$ 19,375,504
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 13.1%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev.
(Jefferson Regional Medical Center), "A", 4.75%, 2025 $ 500,000 $ 503,170
Allegheny County, PA, Hospital Development Authority Rev.
(South Hills Health Systems), "B", 6.75%, 2010 (c) 555,000 603,418
Allegheny County, PA, Hospital Development Authority Rev. (UPMC Health Systems),
MBIA, 5%, 2018 500,000 513,940
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), 9.25%, 2030 150,000 177,195
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), "B", 9.25%, 2022 50,000 59,065
Blair County, PA, Hospital Authority Rev. (Altoona), AMBAC, 5.5%, 2008 470,000 480,317
Delaware County, PA, Authority Hospital Rev. (Crozer Keystone Obligations Group),
"A", 5%, 2031 500,000 512,715
Erie County, PA, Hospital Authority Rev. (Hamot Health Foundation), AMBAC,
5.25%, 2017 675,000 723,040
Lancaster County, PA, Hospital Authority Rev., 5.5%, 2013 (c) 500,000 550,890
Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital),
5%, 2018 200,000 204,852
Lebanon County, PA, Health Facilities Authority Rev. (Good Samaritan Hospital),
6%, 2035 350,000 379,404
Lehigh County, PA, General Purpose Authority (Good Shepherd Group), "A",
5.625%, 2034 350,000 375,491
Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), MBIA,
7%, 2016 250,000 289,653
Lehigh County, PA, General Purpose Authority (Lehigh Valley Hospital), 5.25%, 2032 600,000 628,422
Lehigh County, PA, General Purpose Authority (St. Luke's Bethlehem Hospital),
5.375%, 2013 (c) 600,000 653,652
Lehigh County, PA, Hospital Rev. (Lehigh Valley Hospital), FSA, 5.25%, 2019 500,000 530,570
Lycoming County, PA, Authority Hospital Rev.
(Williamsport Hospital Obligation Group), CONNIE LEE, 5.375%, 2010 750,000 757,793
Monroe County, PA, Hospital Authority Rev. (Pocono Medical Center), 6%, 2043 750,000 802,590
Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial Hospital),
5.625%, 2032 400,000 421,156
Pennsylvania Higher Educational Facilities Authority Rev. (UPMC Health),
6.25%, 2018 100,000 109,635
Pennsylvania Higher Educational Facilities Authority Rev. (UPMC Health), 6%, 2031 650,000 705,510
Philadelphia, PA, Health & Educational Facilities Rev. (Jeane Health), ETM,
6.6%, 2010 115,000 119,962
Philadelphia, PA, Health & Educational Facilities Rev. (Temple University),
6.625%, 2023 250,000 250,833
Philadelphia, PA, Hospitals & Higher Education Facilities Authority
(Childrens Hospital), "A", 4.5%, 2033 750,000 731,888
Sayre, PA, Health Care Facilities Authority Rev. (Guthrie Health), 5.875%, 2031 500,000 540,955
Sayre, PA, Health Care Facilities Authority Rev. (Latrobe Hospital), AMBAC,
5.25%, 2012 (c) 585,000 628,389
South Central, PA, General Authority Rev., 5.625%, 2011 (c) 490,000 530,273
South Central, PA, General Authority Rev., Wellspan Health, ETM, 5.625%, 2026 (c) 110,000 117,641
St. Mary's Hospital Authority, PA, Health Systems Rev. (Catholic Health East), "B",
5.375%, 2034 750,000 796,838
West Shore, PA, Hospital Authority (Holy Spirit Hospital), 6.25%, 2032 350,000 374,476
- ------------------------------------------------------------------------------------------------------------------
$ 14,073,733
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 2.0%
- ------------------------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development Authority Rev. (Ann's Choice, Inc.),
6.125%, 2025 $ 250,000 $ 264,993
Chartiers Valley, PA, Industrial & Commercial Development Authority
(Asbury Health Center Project), 5.75%, 2022 250,000 258,750
Cumberland County, PA, Municipal Authority Rev. (Diakon Lutheran Ministries),
5%, 2036 200,000 205,552
Cumberland County, PA, Municipal Authority Rev. (Wesley), "A", 7.25%, 2013 (c) 110,000 129,789
Cumberland County, PA, Municipal Authority Rev. (Wesley), "A", 7.25%, 2013 (c) 40,000 47,196
Lancaster County, PA, Hospital Authority Rev. (Willow Valley Retirement Project),
5.875%, 2031 500,000 525,565
Montgomery County, PA, Industrial Development Acts Retirement Communities, "A",
4.5%, 2036 500,000 479,445
Montgomery County, PA, Industrial Development Authority Rev.
(Whitemarsh Continuing Care), 6.25%, 2035 250,000 264,733
- ------------------------------------------------------------------------------------------------------------------
$ 2,176,023
- ------------------------------------------------------------------------------------------------------------------
Human Services - 0.1%
- ------------------------------------------------------------------------------------------------------------------
Montgomery County, PA, Industrial Development Authority (Wordsworth Academy),
8%, 2024 $ 150,000 $ 150,806
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.0%
- ------------------------------------------------------------------------------------------------------------------
New Morgan, PA, Industrial Development Authority, Solid Waste Disposal Rev.
(New Morgan Landfill Co., Inc./Browning Ferris, Inc.), 6.5%, 2019 $ 530,000 $ 533,503
Westmoreland County, PA, Industrial Development Corp. (Waste Management), LOC,
5.1%, 2018 500,000 507,845
- ------------------------------------------------------------------------------------------------------------------
$ 1,041,348
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.8%
- ------------------------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development Authority Rev. (USX Corp.), 5.4%, 2017 $ 300,000 $ 320,754
Pennsylvania Economic Development Financing Authority Rev. (Amtrak), 6.125%, 2021 150,000 160,518
Pennsylvania Economic Development Financing Authority, Solid Waste Disposal Rev.
(Procter & Gamble), 5.375%, 2031 1,000,000 1,127,300
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 270,000 296,938
- ------------------------------------------------------------------------------------------------------------------
$ 1,905,510
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Erie County, PA, Industrial Development Authority, Pollution Control
(International Paper Co.), "A", 5.3%, 2012 $ 650,000 $ 683,092
- ------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.1%
- ------------------------------------------------------------------------------------------------------------------
Gallery Certificate Trust, PA, Parking Rev., 4.5%, 2013 (n) $ 130,000 $ 129,861
- ------------------------------------------------------------------------------------------------------------------
Parking - 2.0%
- ------------------------------------------------------------------------------------------------------------------
Philadelphia, PA, Public Parking Authority Rev., FSA, 5.625%, 2015 $1,000,000 $ 1,054,270
Pittsburgh, PA, Public Parking Authority Rev., AMBAC, 6%, 2010 (c) 500,000 534,725
Pittsburgh, PA, Public Parking Authority Rev., "A", FGIC, 5%, 2025 500,000 528,015
Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Hotel Room),
AMBAC, 5.25%, 2017 500,000 522,590
- ------------------------------------------------------------------------------------------------------------------
$ 2,639,600
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing Revenue - Local - 0.4%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Residential Financing Authority, Single Family Mortgage Rev.,
"RR", 4.75%, 2025 $ 375,000 $ 378,495
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 6.4%
- ------------------------------------------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency Rev., "96 A", 4.7%, 2037 $ 750,000 $ 743,985
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.1%, 2020 1,405,000 1,435,390
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2021 750,000 771,818
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5.25%, 2033 455,000 458,827
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., 5%, 2034 675,000 682,668
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., "93-A",
5.75%, 2037 730,000 775,121
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., "94-A",
5.1%, 2031 500,000 514,750
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., "95-A",
4.875%, 2031 1,000,000 1,012,060
Pennsylvania Housing Finance Agency, Single Family Mortgage Rev., "A", 4.875%, 2026 500,000 512,030
- ------------------------------------------------------------------------------------------------------------------
$ 6,906,649
- ------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.3%
- ------------------------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority, Resource Recovery Facilities
Rev. (American Ref-Fuel Co.), "A", 6.2%, 2019 $ 300,000 $ 309,951
- ------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 4.0%
- ------------------------------------------------------------------------------------------------------------------
Delaware Valley, PA, Regional Finance Authority, RITES, AMBAC, 7.096%, 2018 (p) $ 500,000 $ 608,530
Northumberland County, PA (Country Careers & Arts Center), 6.65%, 2020 235,000 240,943
Philadelphia, PA, Industrial Development Authority, MBIA, 5.35%, 2012 500,000 510,565
Philadelphia, PA, Industrial Development Authority, FSA, 5.125%, 2026 1,000,000 1,051,250
Philadelphia, PA, Industrial Development Authority, FSA, 5.25%, 2030 750,000 786,765
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 1,000,000 1,093,170
- ------------------------------------------------------------------------------------------------------------------
$ 4,291,223
- ------------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 1.4%
- ------------------------------------------------------------------------------------------------------------------
Pennsylvania Higher Education, Capital Acquistion Rev., MBIA, 5%, 2026 $1,500,000 $ 1,553,220
- ------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Pittsburgh & Allegheny County, PA, Sales Tax Rev. (Public Auditorium Hotel Room),
AMBAC, 5.25%, 2013 $ 500,000 $ 522,360
Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 135,000 142,344
- ------------------------------------------------------------------------------------------------------------------
$ 664,704
- ------------------------------------------------------------------------------------------------------------------
Tax Assessment - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh Mills), 5.6%, 2023 $ 350,000 $ 365,540
Washington County, PA, Redevelopment Authority (Victory Centre Project), "A",
5.45%, 2035 250,000 254,765
- ------------------------------------------------------------------------------------------------------------------
$ 620,305
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 0.4%
- ------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 315,000 $ 327,934
Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 140,000 141,519
- ------------------------------------------------------------------------------------------------------------------
$ 469,453
- ------------------------------------------------------------------------------------------------------------------
Toll Roads - 0.2%
- ------------------------------------------------------------------------------------------------------------------
Pennsylvania Turnpike Commission, 5.5%, 2015 $ 250,000 $ 269,230
- ------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 7.0%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Port Authority Special Rev., MBIA, 6.25%, 2009 (c) $ 500,000 $ 528,590
Commonwealth of Puerto Rico Highway & Transportation Authority, "Y", 5.5%, 2016 (c) 1,020,000 1,151,468
Commonwealth of Puerto Rico Highway & Transportation, Authority, MBIA,
5.5%, 2020 (u) 3,000,000 3,455,580
Pennsylvania Turnpike Commission, MBIA, 5%, 2024 1,775,000 1,865,064
Southeastern Pennsylvania Transportation Authority, Special Rev., FGIC, 5.25%, 2013 500,000 519,360
- ------------------------------------------------------------------------------------------------------------------
$ 7,520,062
- ------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 11.7%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA (Chatham College), 5.95%, 2032 $ 335,000 $ 356,467
Allegheny County, PA, Higher Education Building Authority Rev.
(Duquesne University), "A", XLCA, 5%, 2024 1,000,000 1,061,960
Cumberland County, PA, Municipal Authority (Dickinson College), AMBAC,
5.55%, 2010 (c) 535,000 568,764
Harrisburg, PA, University of Science, "A", 5.4%, 2016 300,000 306,570
Harrisburg, PA, University of Science, "B", 6%, 2036 200,000 205,860
Lycoming County, PA (College of Technology), AMBAC, 5.25%, 2032 750,000 787,028
Pennsylvania Higher Educational Facilities (Allegheny College), 4.75%, 2031 500,000 508,465
Pennsylvania Higher Educational Facilities (Philadelphia University), 5.5%, 2020 500,000 528,315
Pennsylvania Higher Educational Facilities Authority Rev.
(Clarion University Foundation), XLCA, 5%, 2023 1,000,000 1,046,260
Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University),
5.2%, 2032 500,000 526,385
Pennsylvania Higher Educational Facilities Authority Rev. (Marywood University),
MBIA, 5.5%, 2010 (c) 300,000 316,398
Pennsylvania Higher Educational Facilities Authority Rev. (Mercyhurst College), "B",
5%, 2023 500,000 511,170
Pennsylvania Higher Educational Facilities Authority Rev. (Widener University),
5.375%, 2029 300,000 317,565
Pennsylvania Higher Educational Facilities Authority Rev. (Widener University),
5%, 2031 300,000 308,790
Pennsylvania Public School Building Authority (Delaware County College), MBIA,
5.75%, 2010 (c) 500,000 533,285
Pennsylvania State University, 5%, 2029 1,400,000 1,483,692
Pennsylvania State University, "A", 5%, 2029 1,000,000 1,053,700
State Public School Building Authority, PA, Jefferson County
(Dubois Technical School), FGIC, 5%, 2026 1,000,000 1,052,510
Union County, PA, Higher Educational Facilities Financing Authority, University Rev.
(Bucknell University), 5.25%, 2021 1,000,000 1,070,960
- ------------------------------------------------------------------------------------------------------------------
$ 12,544,144
- ------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing Authority
(Germantown Friends School Project), 5.35%, 2031 $ 600,000 $ 631,620
- ------------------------------------------------------------------------------------------------------------------
Utilities - Cogeneration - 0.3%
- ------------------------------------------------------------------------------------------------------------------
Carbon County, PA, Industrial Development Authority Rev. (Panther Creek Partners),
6.65%, 2010 $ 110,000 $ 113,649
Pennsylvania Economic Development Financing Authority Rev., Resources Recovery Rev.
(Colver), "G", 5.125%, 2015 100,000 101,330
Pennsylvania Economic Development Financing Authority Rev., Resources Recovery Rev.
(Northampton Generating), 6.4%, 2009 150,000 151,809
- ------------------------------------------------------------------------------------------------------------------
$ 366,788
- ------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 1.2%
- ------------------------------------------------------------------------------------------------------------------
Lehigh County, PA, Industrial Development Authority Pollution Control Rev.
(PPL Electric Utilities Corp.), "A", FGIC, 4.7%, 2029 $ 500,000 $ 513,605
Lehigh County, PA, Industrial Development Authority Rev.
(PPL Electric Utilities Corp.), FGIC, 4.75%, 2027 750,000 771,773
- ------------------------------------------------------------------------------------------------------------------
$ 1,285,378
- ------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.7%
- ------------------------------------------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC, 5.25%, 2014 (u) $4,340,000 $ 4,537,253
Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2009 (c) 1,000,000 1,049,080
Philadelphia, PA, Gas Works Rev., FSA, 5.5%, 2011 (c) 500,000 536,465
Philadelphia, PA, Gas Works Rev. (1998 General Ordinance), FSA, 5.25%, 2020 1,000,000 1,065,160
- ------------------------------------------------------------------------------------------------------------------
$ 7,187,958
- ------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.7%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Sewer Rev., MBIA, 5.75%, 2010 (c) $ 750,000 $ 808,140
Bucks County, PA (Suburban Water Co.), FGIC, 5.55%, 2032 1,000,000 1,059,730
Delaware County, PA Water Quality Control Authority, Sewer Rev., FGIC, 5%, 2018 750,000 786,480
Fairview Township, PA, Sewer Rev., FGIC, 5.05%, 2018 750,000 784,838
Johnstown, PA, Redevelopment Authority, Sewer Rev., "A", FSA, 5%, 2014 (c) 1,500,000 1,620,615
Lancaster County, PA, Water & Sewer Authority Rev., MBIA, 5%, 2028 440,000 462,766
Unity Township, PA, Municipal Authority Sewer Rev., FSA, 5%, 2034 1,660,000 1,747,216
University Area Joint Authority, Sewer Rev., MBIA, 5%, 2023 1,500,000 1,555,755
Virgin Islands Water & Power Authority Rev., ASST GTY, 5.3%, 2018 500,000 512,160
Westmoreland County, PA, Municipal Authority Services Rev., FSA, 5.25%, 2015 (c) 1,000,000 1,103,020
- ------------------------------------------------------------------------------------------------------------------
$ 10,440,720
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $105,051,748) $109,462,306
- ------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.7%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev.
(Presbyterian University Hospital), "B", 3.7%, due 4/05/07 $ 450,000 $ 450,000
Allegheny County, PA, Hospital Development Authority Rev.
(Presbyterian University Hospital), "D", 3.7%, due 4/05/07 1,400,000 1,400,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 1,850,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $106,901,748) (k) $111,312,306
- ------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (3.4)% (3,650,273)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $107,662,033
- ------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 2,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $12,137
6/06/17 USD 1,500,000 Merrill Lynch 7-Day BMA 3.579% (fixed rate) 10,521
5/30/19 USD 2,000,000 Citibank 7-Day BMA 3.695% (fixed rate) 7,899
6/12/19 USD 1,500,000 Merrill Lynch 7-Day BMA 3.660% (fixed rate) 11,303
8/22/19 USD 1,000,000 Goldman Sachs 7-Day BMA 3.726% (fixed rate) 3,394
4/27/22 USD 1,000,000 Citibank 7-Day BMA 3.878% (fixed rate) (5,059)
7/23/22 USD 500,000 Merrill Lynch 7-Day BMA 3.889% (fixed rate) (2,398)
9/26/22 USD 2,000,000 Goldman Sachs 7-Day BMA 3.807% (fixed rate) 9,897
- ------------------------------------------------------------------------------------------------------------------
$47,694
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 102.2%
- ------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 3.1%
- ------------------------------------------------------------------------------------------------------------------
Horry County, SC, "A", FSA, 5.7%, 2027 $2,250,000 $ 2,301,273
Richland Lexington, SC, Airport Rev. (Columbia Airport), FSA, 5.125%, 2025 1,500,000 1,576,620
Richland Lexington, SC, Airport Rev. (Columbia Airport), "A", FSA, 5%, 2026 1,000,000 1,035,750
- ------------------------------------------------------------------------------------------------------------------
$ 4,913,643
- ------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 10.5%
- ------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ETM, 5.5%, 2018 (c)(u) $4,000,000 $ 4,285,320
Commonwealth of Puerto Rico, ETM, 5.5%, 2019 (c)(u) 3,500,000 3,749,655
Commonwealth of Puerto Rico, MBIA, 5.75%, 2020 (u) 4,000,000 4,255,640
Hilton Head Island, SC, Rev., MBIA, 5.125%, 2022 1,000,000 1,062,650
Horry County, SC, Hospital Fee Special Obligation, 6%, 2015 915,000 982,015
Puerto Rico Commonwealth, Public Improvement, "A", 5.25%, 2030 1,000,000 1,070,970
Richland Lexington Riverbanks, SC, Parks District, FGIC, 5.8%, 2018 1,000,000 1,047,260
- ------------------------------------------------------------------------------------------------------------------
$ 16,453,510
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 1.8%
- ------------------------------------------------------------------------------------------------------------------
Beaufort County, SC, FGIC, 5.25%, 2018 $1,000,000 $ 1,035,510
Puerto Rico Municipal Finance Agency, FSA, 6%, 2009 (c)(u) 1,700,000 1,806,947
- ------------------------------------------------------------------------------------------------------------------
$ 2,842,457
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 12.1%
- ------------------------------------------------------------------------------------------------------------------
Anderson County, SC, School District, "B", 5.5%, 2010 (c) $1,465,000 $ 1,553,530
Beaufort County, SC, School District, "A", FSA, 4.25%, 2032 1,000,000 959,850
Berkeley County, SC, School District, 5%, 2008 (c) 2,000,000 2,065,840
Chesterfield County, SC, School District, FSA, 5%, 2023 3,000,000 3,132,390
Darlington County, SC, School District, FSA, 5%, 2027 2,770,000 2,923,430
Lexington County, SC, School District, "A", 4.75%, 2028 1,000,000 1,037,170
Orangeburg County, SC, Consolidated School District, FSA, 5.25%, 2020 1,065,000 1,133,522
Orangeburg County, SC, Consolidated School District, FSA, 5.375%, 2022 2,050,000 2,208,117
Richland County, SC, School District, 5.1%, 2021 1,750,000 1,830,553
York County, SC, School District No. 003, FSA, 5%, 2032 2,000,000 2,133,540
- ------------------------------------------------------------------------------------------------------------------
$ 18,977,942
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 20.8%
- ------------------------------------------------------------------------------------------------------------------
Charleston County, SC, Hospital Facilities Rev. (Medical Society Health), ETM, MBIA,
5%, 2022 (c) $2,450,000 $ 2,467,518
Florence County, SC, Hospital Rev. (McLeod Regional Medical Center), "A", FSA,
5%, 2031 2,000,000 2,101,500
Florence County, SC, Hospital Rev. (McLeod Regional Medical Center), "A", FSA,
5.25%, 2034 2,000,000 2,133,640
Greenville, SC, Hospital Systems, Hospital Facilities Rev., 6%, 2020 3,400,000 3,979,700
Greenwood County, SC, Hospital Facilities Rev. (Self Memorial Hospital), 5.5%, 2021 1,000,000 1,053,550
Lexington County, SC, Health Services District, Inc., 5.5%, 2032 250,000 267,968
Lexington County, SC, Health Services District, Inc., 5.5%, 2037 250,000 267,338
Lexington County, SC, Health Services District, Inc., Hospital Rev.,
Refunding & Improvement, FSA, 5.125%, 2021 1,500,000 1,555,995
Lexington County, SC, Health Services District, Inc., Hospital Rev.,
Refunding & Improvement, 5.5%, 2032 1,000,000 1,067,470
South Carolina Jobs & Economic Development Authority Rev.
(Bon Secours Health Systems, Inc.), "A", 5.625%, 2030 1,250,000 1,322,188
South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev.
(Anderson Area Medical Center, Inc.), MBIA, 5.25%, 2015 1,750,000 1,769,548
South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev.
(Georgetown Memorial Hospital), AMBAC, 6%, 2014 1,000,000 1,066,590
South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev.
(Georgetown Memorial Hospital), ASST GTY, 5.25%, 2021 1,500,000 1,565,835
South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev.
(Georgetown Memorial Hospital), AMBAC, 5%, 2023 1,000,000 1,018,280
South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev.
(Palmetto Health Alliance), 6.25%, 2031 750,000 817,193
South Carolina Jobs & Economic Development Authority, Hospital Facilities Rev.
(Tuomey Health), CIFG, 5%, 2030 1,000,000 1,052,110
South Carolina Medical University, Hospital Facilities Rev., "A", MBIA,
5%, 2031 3,100,000 3,233,579
Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2020 2,500,000 2,503,425
Spartanburg County, SC, Health Service Rev., AMBAC, 5.3%, 2025 1,000,000 1,001,370
Spartanburg County, SC, Health Service Rev., FSA, 5.25%, 2032 2,250,000 2,361,308
- ------------------------------------------------------------------------------------------------------------------
$ 32,606,105
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.4%
- ------------------------------------------------------------------------------------------------------------------
Greenville County, SC, Hospital Rev. (Chestnut Hill), "A", 8%, 2015 $1,325,000 $ 1,315,725
South Carolina Jobs & Economic Development Authority, First Mortgage
(Wesley Commons), 5.125%, 2026 400,000 403,644
South Carolina Jobs & Economic Development Authority, Residential Care Facilities
Rev. (Episcopal Home), "A", 6.375%, 2032 400,000 425,644
- ------------------------------------------------------------------------------------------------------------------
$ 2,145,013
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.6%
- ------------------------------------------------------------------------------------------------------------------
York County, SC, Industrial Rev. (Exempt Facilities Hoechst Celanese), 5.7%, 2024 $1,000,000 $ 1,003,860
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.1%
- ------------------------------------------------------------------------------------------------------------------
Calhoun County, SC, Solid Waste Disposal Facilities Rev. (Carolina Eastman Co.), ETM,
6.75%, 2017 (c) $1,000,000 $ 1,215,030
Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 385,000 423,411
- ------------------------------------------------------------------------------------------------------------------
$ 1,638,441
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.0%
- ------------------------------------------------------------------------------------------------------------------
Darlington County, SC, Industrial Development Rev. (Sonoco Products Co.),
6.125%, 2025 $1,500,000 $ 1,505,790
Georgetown County, SC, Environmental Improvement Rev. (International Paper), "A",
5.3%, 2028 500,000 511,285
Richland County, SC, Environmental Improvement Rev. (International Paper), "A",
6.1%, 2023 1,000,000 1,080,480
- ------------------------------------------------------------------------------------------------------------------
$ 3,097,555
- ------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.6%
- ------------------------------------------------------------------------------------------------------------------
Myrtle Beach, SC, Hospitality Fee Rev., "A", FGIC, 5%, 2036 $ 510,000 $ 534,648
South Carolina Jobs & Economic Development Authority Rev. (Myrtle Beach Convention),
"B", MBIA, 5.125%, 2018 570,000 594,293
South Carolina Jobs & Economic Development Authority Rev. (Myrtle Beach Convention),
"B", MBIA, 5.125%, 2019 595,000 623,721
South Carolina Jobs & Economic Development Authority Rev. (Myrtle Beach Convention),
"B", MBIA, 5.125%, 2020 630,000 659,692
- ------------------------------------------------------------------------------------------------------------------
$ 2,412,354
- ------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.7%
- ------------------------------------------------------------------------------------------------------------------
South Carolina Jobs & Economic Development Authority Rev.
(Coastal Housing Foundation LLC), "A", CIFG, 5%, 2035 $1,000,000 $ 1,036,650
- ------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.4%
- ------------------------------------------------------------------------------------------------------------------
North Charleston SC, Housing Authority Rev. (Horizon Village), "A", FHA, 5%, 2038 $1,000,000 $ 1,011,380
North Charleston SC, Housing Authority Rev. (Horizon Village), "A", FHA, 5.1%, 2041 1,210,000 1,223,709
- ------------------------------------------------------------------------------------------------------------------
$ 2,235,089
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 4.9%
- ------------------------------------------------------------------------------------------------------------------
South Carolina Housing, Finance & Development Authority Mortgage Rev., "A-2", AMBAC,
5.05%, 2027 $1,000,000 $ 1,030,510
South Carolina Housing, Finance & Development Authority Mortgage Rev., "A-2", FSA,
5.5%, 2034 970,000 998,014
South Carolina Housing, Finance & Development Authority Mortgage Rev., "A-2", FSA,
5.2%, 2035 985,000 1,010,768
South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA,
6%, 2020 370,000 374,403
South Carolina Housing, Finance & Development Authority Rev., "A-2", FSA,
5.35%, 2024 1,645,000 1,698,545
South Carolina Housing, Finance & Development Authority Rev., "A-2", AMBAC,
5.15%, 2037 1,000,000 1,029,620
South Carolina Housing, Finance & Development Authority Rev., "C-2", FSA, 4.6%, 2032 1,500,000 1,480,050
- ------------------------------------------------------------------------------------------------------------------
$ 7,621,910
- ------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 1.0%
- ------------------------------------------------------------------------------------------------------------------
Greenville County, SC (University Center), "A", AMBAC, 5.25%, 2009 (c) $1,000,000 $ 1,040,750
South Carolina Water Resources Authority Rev. (Local Government Program), "A",
7.25%, 2020 575,000 575,604
- ------------------------------------------------------------------------------------------------------------------
$ 1,616,354
- ------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 4.9%
- ------------------------------------------------------------------------------------------------------------------
North Charleston, SC, Municipal Golf Course Mortgage Rev., 5.5%, 2009 (c) $1,000,000 $ 1,046,920
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 2,750,000 3,006,218
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2019 (u) 2,600,000 2,957,552
Spartanburg, SC, Public Facilities Corp. (Renaissance Park), AMBAC, 5.125%, 2025 685,000 719,243
- ------------------------------------------------------------------------------------------------------------------
$ 7,729,933
- ------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.1%
- ------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "A", 5.25%, 2024 $ 180,000 $ 189,792
- ------------------------------------------------------------------------------------------------------------------
Tax Assessment - 0.3%
- ------------------------------------------------------------------------------------------------------------------
Lancaster County, SC, Assessment Rev. (Sun City Carolina Lakes), 5.45%, 2037 $ 500,000 $ 509,785
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 0.7%
- ------------------------------------------------------------------------------------------------------------------
South Carolina Tobacco Settlement Authority Rev., "B", 6.375%, 2028 $1,000,000 $ 1,070,880
- ------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 3.5%
- ------------------------------------------------------------------------------------------------------------------
South Carolina Transportation Infrastructure Rev., "A", MBIA, 5.375%, 2009 (c) $1,000,000 $ 1,051,090
South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2023 500,000 520,580
South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2027 2,000,000 2,097,040
South Carolina Transportation Infrastructure Rev., "A", AMBAC, 5%, 2033 1,645,000 1,731,001
- ------------------------------------------------------------------------------------------------------------------
$ 5,399,711
- ------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 12.4%
- ------------------------------------------------------------------------------------------------------------------
Clemson University, University Rev., AMBAC, 6.25%, 2009 (c) $1,250,000 $ 1,327,225
College of Charleston, SC, Academic & Administrative Facilities Rev., "B", XLCA,
5%, 2024 800,000 839,912
College of Charleston, SC, Academic & Administrative Facilities Rev., "B", XLCA,
5.125%, 2034 1,510,000 1,599,498
College of Charleston, SC, Higher Education Facility Rev., "A", FGIC, 5.25%, 2028 2,435,000 2,572,626
Educational Facilities Authority Private Non-Profit Institutions of Higher Learning
(Wofford College), "A", 5%, 2036 1,000,000 1,046,440
South Carolina Educational Facilities Authority (Furman University), AMBAC,
5.375%, 2020 1,245,000 1,321,144
South Carolina Educational Facilities Authority (Furman University), AMBAC,
5.5%, 2030 2,000,000 2,125,700
South Carolina Educational Facilities Authority (Furman University), 5%, 2038 1,000,000 1,043,770
South Carolina Jobs & Economic Development Authority, Student Housing Rev.
(Francis Marion University), "A", MBIA, 5%, 2034 1,945,000 2,035,890
University of South Carolina, University Rev., "A", FGIC, 5.625%, 2010 (c) 1,555,000 1,647,180
University of South Carolina, University Rev., "A", AMBAC, 5%, 2034 3,665,000 3,822,668
- ------------------------------------------------------------------------------------------------------------------
$ 19,382,053
- ------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 8.7%
- ------------------------------------------------------------------------------------------------------------------
Camden, SC, Public Utilities Rev., MBIA, 5.5%, 2017 $ 75,000 $ 77,043
Easley, SC, Utility Rev., FSA, 5%, 2027 1,000,000 1,047,560
Easley, SC, Utility Rev., Refunding & Improvement, FSA, 5%, 2034 2,000,000 2,116,520
Greenwood, SC, Combined Public Utility, Refunding & Improvement Systems, MBIA,
5%, 2021 175,000 184,504
Orangeburg County, SC, Solid Waste Disposal Facilities Rev., Electric & Gas, AMBAC,
5.7%, 2024 2,000,000 2,003,120
Piedmont, SC, Municipal Power Agency, FGIC, 6.25%, 2021 2,600,000 3,167,268
Puerto Rico Electric Power Authority, FSA, RITES, 6.014%, 2015 (n)(v) 1,000,000 1,064,340
South Carolina Public Service Authority, "A", MBIA, 5.5%, 2010 (c) 200,000 211,530
South Carolina Public Service Authority, "A", AMBAC, 5%, 2034 2,000,000 2,088,200
South Carolina Public Service Authority, "B", FSA, 5.125%, 2037 1,500,000 1,562,265
- ------------------------------------------------------------------------------------------------------------------
$ 13,522,350
- ------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 8.6%
- ------------------------------------------------------------------------------------------------------------------
Anderson County, SC, Joint Municipal Water, FSA, 5%, 2032 $1,000,000 $ 1,041,320
Anderson County, SC, Water & Sewer Systems Rev., FGIC, 5.125%, 2032 2,000,000 2,114,760
Berkeley County, SC, Water & Sewer Systems Rev., "A", FSA, 4.75%, 2029 1,000,000 1,034,810
Charleston, SC, Waterworks & Sewer Rev., Capital Improvement, "B", 5%, 2028 1,000,000 1,040,890
Columbia, SC, Waterworks & Sewer Systems Rev., 6%, 2010 (c) 2,000,000 2,125,500
Columbia, SC, Waterworks & Sewer Systems Rev., FSA, 5%, 2029 1,020,000 1,076,671
Greenville, SC, Stormwater Systems, FSA, 5%, 2022 595,000 623,625
Rock Hill, SC, Utility Systems Rev., Refunding & Improvement, "A", FSA,
5.375%, 2023 500,000 538,380
Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA, 5.25%, 2030 1,250,000 1,341,113
Spartanburg, SC, Waterworks Rev., "A", FSA, 4.375%, 2028 1,000,000 985,690
York County, SC, Water & Sewer Rev., Refunding & Capital Improvement, MBIA,
5%, 2027 1,490,000 1,561,833
- ------------------------------------------------------------------------------------------------------------------
$ 13,484,592
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $151,660,295) $159,889,979
- ------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.3%
- ------------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), 3.77%, due 4/02/07 $ 300,000 $ 300,000
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants Rev., "A",
3.7%, due 4/05/07 900,000 900,000
State of Oregon, "73G", 3.68%, due 4/04/07 200,000 200,000
Sublette County, WY, Pollution Control Rev. (Exxon Mobil Corp.), 3.75%, due 4/02/07 2,200,000 2,200,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 3,600,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $155,260,295) (k) $163,489,979
- ------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.5)% (7,044,823)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $156,445,156
- ------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $18,205
8/08/17 USD 1,500,000 Goldman Sachs 7-Day BMA 3.736% (fixed rate) (5,540)
5/30/19 USD 2,500,000 Citibank 7-Day BMA 3.695% (fixed rate) 9,874
- ------------------------------------------------------------------------------------------------------------------
$22,539
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) TENNESSEE MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 96.9%
- ------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 1.4%
- ------------------------------------------------------------------------------------------------------------------
Memphis-Shelby County, TN, Airport Authority Facilities Rev., FSA, 5.125%, 2021 $1,500,000 $ 1,546,200
- ------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 4.1%
- ------------------------------------------------------------------------------------------------------------------
Chattanooga, TN, Public Improvement, 5%, 2009 (c) $2,570,000 $ 2,647,691
Commonwealth of Puerto Rico, Unrefunded, Public Improvement, FSA, 5%, 2024 770,000 802,771
Puerto Rico Public Building Authority, 5.5%, 2021 1,000,000 1,117,200
- ------------------------------------------------------------------------------------------------------------------
$ 4,567,662
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Knoxville, TN, Recreational Facilities Improvement, 5.5%, 2008 (c) $ 645,000 $ 664,202
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 12.0%
- ------------------------------------------------------------------------------------------------------------------
Fayette County, TN, School District, AMBAC, 5.6%, 2008 (c) $1,215,000 $ 1,234,805
Gibson County, TN, School District, MBIA, 5.75%, 2009 (c) 455,000 473,637
Gibson County, TN, School District, MBIA, 5.75%, 2016 190,000 197,598
Giles County, TN, School Improvement, FGIC, 5.75%, 2010 (c) 1,980,000 2,092,167
Roane County, TN, Rural School, FGIC, 5.6%, 2008 (c) 915,000 931,863
Roane County, TN, Rural School, FGIC, 5.6%, 2008 (c) 975,000 992,969
Rutherford County, TN, School & Public Improvement, 5%, 2022 1,510,000 1,577,980
Rutherford County, TN, School District, 5.875%, 2010 (c) 1,100,000 1,169,729
Rutherford County, TN, School Improvement, 0%, 2007 (c) 1,500,000 949,050
Rutherford County, TN, School Improvement, 5.875%, 2010 (c) 2,000,000 2,126,780
Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,575,000 1,682,021
- ------------------------------------------------------------------------------------------------------------------
$ 13,428,599
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 15.0%
- ------------------------------------------------------------------------------------------------------------------
Johnson City, TN, Health & Education Financing Authority Rev.
(Johnson City Medical Center Hospital), MBIA, 5.25%, 2016 $1,375,000 $ 1,376,925
Johnson City, TN, Health & Education Financing Authority Rev.
(Johnson City Medical Center Hospital), ETM, MBIA, 5%, 2018 (c) 1,500,000 1,540,950
Johnson City, TN, Health & Educational Facilities, Hospital Rev.
(Mountain States Health), "A", 5.5%, 2036 600,000 642,570
Knox County, TN, Health, Educational, Hospital & Housing Facilities Board Rev.
(Baptist Health Systems), 6.5%, 2031 300,000 313,680
Knox County, TN, Health, Educational, Hospital & Housing Facilities Board Rev.
(Catholic Healthcare Partners), 5.25%, 2030 1,000,000 1,047,020
Knox County, TN, Health, Educational, Hospital & Housing Facilities Board Rev.
(Covenant Health), "A", 0%, 2036 4,000,000 948,640
Knox County, TN, Health, Educational, Hospital & Housing Facilities Board Rev.
(East Tennessee Children's Hospital), 5.75%, 2033 450,000 481,540
Knox County, TN, Health, Educational, Hospital & Housing Facilities Board Rev.
(Fort Sanders), MBIA, 5.75%, 2014 3,250,000 3,615,430
Knox County, TN, Health, Educational, Hospital & Housing Facilities Board Rev.,
"A", FSA, 5%, 2013 (c) 545,000 581,896
Knox County, TN, Health, Educational, Hospital & Housing Facilities Board Rev.,
"A", FSA, 5%, 2022 455,000 476,208
Metropolitan Government Nashville, TN, Davidson Town Unrefunded Hospital,
5.25%, 2008 (c) 460,000 470,943
Metropolitan Government Nashville, TN, Davidson Town, 5.25%, 2008 (c) 540,000 559,013
Shelby County, TN, Health, Educational & Housing Facilities Board Rev.
(Methodist Healthcare), 6.5%, 2012 (c) 625,000 711,025
Shelby County, TN, Health, Educational & Housing Facilities Board Rev.
(Methodist Healthcare), 6.5%, 2012 (c) 375,000 426,615
Shelby County, TN, Health, Educational & Housing Facilities Board Rev.
(St. Judes Children's Research), 5.5%, 2009 (c) 1,750,000 1,850,468
Springfield, TN, Health & Higher Educational Facilities Hospital Rev.
(Northcrest Medical Center), 5.25%, 2013 1,000,000 1,006,890
Sullivan County, TN, Health, Educational & Housing Facilities Board, Hospital Rev.
(Wellmont Health Systems Project), "C", 5.25%, 2036 750,000 785,108
- ------------------------------------------------------------------------------------------------------------------
$ 16,834,921
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.2%
- ------------------------------------------------------------------------------------------------------------------
Shelby County, TN, Health, Educational & Housing Facilities Board Rev.
(Germantown Village), 7.25%, 2034 $ 250,000 $ 255,825
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.2%
- ------------------------------------------------------------------------------------------------------------------
Hardeman County, TN, Correctional Facilities Rev., 7.75%, 2017 $ 945,000 $ 967,945
Virgin Islands Public Finance Authority, Refinery Facilities Rev. (Hovensa Refinery),
5.875%, 2022 320,000 351,926
- ------------------------------------------------------------------------------------------------------------------
$ 1,319,871
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.9%
- ------------------------------------------------------------------------------------------------------------------
McMinn County, TN, Industrial Development Board, Pollution Control Rev.
(Bowater, Inc.), 7.625%, 2016 $1,000,000 $ 1,006,510
- ------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 3.5%
- ------------------------------------------------------------------------------------------------------------------
Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.125%, 2012 (c) $2,000,000 $ 2,104,240
Memphis-Shelby County, TN (Memphis Sports Arena), AMBAC, 5.35%, 2012 (c) 1,665,000 1,785,729
- ------------------------------------------------------------------------------------------------------------------
$ 3,889,969
- ------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.1%
- ------------------------------------------------------------------------------------------------------------------
Chattanooga, TN, Health, Educational & Housing Facilities (Rainbow Creek), GNMA,
6.125%, 2019 $ 410,000 $ 431,099
Knoxville, TN, Community Development Corp., 5%, 2024 1,000,000 1,053,910
Memphis, TN, Health & Educational Facilities Board Rev. (Hickory Point Apartments),
MBIA, 5.85%, 2020 1,000,000 1,043,690
Memphis, TN, Health, Educational & Housing Facilities Board Rev.
(Prescott Place Apartments Project), FNMA, 5.125%, 2038 1,000,000 1,025,140
Metropolitan Government of Nashville & Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Berkshire Place), GNMA, 6%, 2023 500,000 524,775
Metropolitan Government of Nashville & Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Herman Street), FHA, 7.25%, 2032 485,000 486,014
- ------------------------------------------------------------------------------------------------------------------
$ 4,564,628
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 13.1%
- ------------------------------------------------------------------------------------------------------------------
Tennessee Housing Development Agency Mortgage Finance, 5.2%, 2023 $1,500,000 $ 1,571,865
Tennessee Housing Development Agency Mortgage Finance, 5.35%, 2034 175,000 181,174
Tennessee Housing Development Agency Rev., Homeownership Program, 5.45%, 2014 2,535,000 2,623,395
Tennessee Housing Development Agency Rev., Homeownership Program, 4.45%, 2017 645,000 649,509
Tennessee Housing Development Agency Rev., Homeownership Program, 4.45%, 2017 660,000 664,613
Tennessee Housing Development Agency Rev., Homeownership Program, 4.55%, 2018 575,000 579,002
Tennessee Housing Development Agency Rev., Homeownership Program, 4.55%, 2018 690,000 694,802
Tennessee Housing Development Agency Rev., Homeownership Program, 6%, 2020 925,000 947,108
Tennessee Housing Development Agency Rev., Homeownership Program, 5%, 2026 2,000,000 2,049,680
Tennessee Housing Development Agency Rev., Homeownership Program, 5.05%, 2027 760,000 773,946
Tennessee Housing Development Agency Rev., Homeownership Program, 4.85%, 2032 1,000,000 1,011,520
Tennessee Housing Development Agency Rev., Homeownership Program, FSA, 5.4%, 2032 695,000 716,420
Tennessee Housing Development Agency Rev., Homeownership Program, 5.125%, 2034 990,000 1,022,809
Tennessee Housing Development Agency Rev., Homeownership Program, 5.25%, 2034 1,255,000 1,285,898
- ------------------------------------------------------------------------------------------------------------------
$ 14,771,741
- ------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 6.0%
- ------------------------------------------------------------------------------------------------------------------
Blount County, TN, Town Public Building Authority, Local Government Public
Improvement, "B ", AMBAC, 4.375%, 2038 $1,500,000 $ 1,456,425
Blount County, TN, Town Public Building Authority, Local Government Public
Improvement, "B", XLCA, 4.375%, 2035 1,000,000 972,320
Chattanooga, TN, Industrial Development Board, AMBAC, 5.75%, 2018 1,000,000 1,065,560
Tennessee School Bond Authority (Higher Education Facilities), FSA, 5.25%, 2012 (c) 3,000,000 3,220,440
- ------------------------------------------------------------------------------------------------------------------
$ 6,714,745
- ------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.7%
- ------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Rev., "E", 5.875%, 2018 $ 730,000 $ 758,229
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 1.0%
- ------------------------------------------------------------------------------------------------------------------
Guam Economic Development Authority Tobacco Settlement, "B", 5.5%, 2041 $ 350,000 $ 361,361
Tobacco Settlement Financing Corp., 5%, 2031 750,000 758,190
- ------------------------------------------------------------------------------------------------------------------
$ 1,119,551
- ------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 6.1%
- ------------------------------------------------------------------------------------------------------------------
Metropolitan Government of Nashville & Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (McKendree Village, Inc.), 5.125%, 2020 $1,000,000 $ 1,010,480
Metropolitan Government of Nashville & Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Meharry Medical College), AMBAC, 5%, 2024 3,750,000 3,841,425
University of Puerto Rico Rev., "Q", 5%, 2036 1,985,000 2,061,720
- ------------------------------------------------------------------------------------------------------------------
$ 6,913,625
- ------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 7.7%
- ------------------------------------------------------------------------------------------------------------------
Clarksville, TN, Electrical Systems Rev., XLCA, 5%, 2032 $ 500,000 $ 530,395
Jackson, TN, Electrical Systems Rev., MBIA, 5%, 2018 1,000,000 1,004,140
Lawrenceberg, TN, Electrical Rev., MBIA, 5.5%, 2009 (c) 1,255,000 1,305,840
Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev.,
5.125%, 2021 1,500,000 1,572,060
Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., "A",
AMBAC, 5%, 2029 1,500,000 1,577,775
Metropolitan Government of Nashville & Davidson County, TN, Electrical Rev., MBIA,
0%, 2012 3,305,000 2,703,126
- ------------------------------------------------------------------------------------------------------------------
$ 8,693,336
- ------------------------------------------------------------------------------------------------------------------
Utilities - Other - 1.0%
- ------------------------------------------------------------------------------------------------------------------
Tennessee Energy Acquisition, "A", 5.25%, 2026 $1,000,000 $ 1,107,360
- ------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 18.3%
- ------------------------------------------------------------------------------------------------------------------
Hallsdale-Powell Utility District, TN, Water & Sewer Rev., FGIC, 5%, 2027 $3,000,000 $ 3,140,520
Hallsdale-Powell Utility District, TN, Water & Sewer Rev., "A", FGIC, 5%, 2024 1,500,000 1,570,260
Hallsdale-Powell Utility District, TN, Water & Sewer Rev., "N", FGIC, 5%, 2036 1,000,000 1,064,730
Madison, TN, Utility Waterworks Rev., MBIA, 5%, 2019 2,750,000 2,775,520
Memphis, TN, Sewage Systems Rev., 5.75%, 2008 (c) 625,000 645,106
Memphis, TN, Sewage Systems Rev., 5.75%, 2008 (c) 1,145,000 1,181,835
Memphis, TN, Sewage Systems Rev., 5.75%, 2008 (c) 750,000 774,128
Rutherford County, TN, Water Rev., MBIA, 5%, 2027 770,000 820,250
West Knox Utility District, TN, Water & Sewer Rev., ETM, MBIA, 0%, 2007 (c) 1,920,000 1,874,822
West Wilson Utility District, TN, Waterworks Rev., MBIA, 5.25%, 2014 (c) 2,000,000 2,191,980
West Wilson Utility District, TN, Waterworks Rev., MBIA, 4.25%, 2036 1,045,000 1,002,751
White House Utility District, TN, Unrefunded, FSA, 5%, 2021 420,000 436,065
White House Utility District, TN, "Y", FSA, 5%, 2011 (c) 380,000 398,039
White House Utility District, TN, Water & Sewer Rev.
(Robertson & Sumner Counties Waterworks), FSA, 6%, 2010 (c) 1,000,000 1,061,520
White House Utility District, TN, Water & Sewer Rev.
(Robertson & Sumner Counties Waterworks), FSA, 5%, 2012 (c) 1,500,000 1,587,360
- ------------------------------------------------------------------------------------------------------------------
$ 20,524,886
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $103,765,278) $108,681,860
- ------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.7%
- ------------------------------------------------------------------------------------------------------------------
Sevier County, TN, Public Building Authority, 3.69%, due 4/05/07 $ 200,000 $ 200,000
Sevier County, TN, Public Building Authority (Local Government Public Improvement),
3.69%, due 4/05/07 200,000 200,000
Sevier County, TN, Public Building Authority (Local Government Public Improvement),
3.85%, due 4/02/07 120,000 120,000
South Blount County, TN, Utility District Rev., 3.85%, due 4/02/07 300,000 300,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 820,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $104,585,278) (k) $109,501,860
- ------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 2.4% 2,723,893
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $112,225,753
- ------------------------------------------------------------------------------------------------------------------
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) VIRGINIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 102.3%
- ------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 8.8%
- ------------------------------------------------------------------------------------------------------------------
Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, 5.125%, 2024 $ 1,000,000 $ 1,049,760
Metropolitan Washington, DC, Airport Authority Rev., "A", FGIC, 5%, 2025 705,000 733,912
Metropolitan Washington, DC, Airport Authority Rev., "A", FSA, 5%, 2032 1,455,000 1,529,060
Metropolitan Washington, DC, Airport Authority Rev., "A", MBIA, 5%, 2035 3,000,000 3,137,190
Metropolitan Washington, DC, Airport Authority Rev., "B", 5.5%, 2007 (c) 2,465,000 2,510,257
Metropolitan Washington, DC, Airport Authority Rev., "B", 5.75%, 2007 (c) 11,000,000 11,215,160
Norfolk, VA, Airport Authority Rev., "A", FGIC, 5.375%, 2017 1,755,000 1,872,866
Norfolk, VA, Airport Authority Rev., "A", FGIC, 5%, 2022 3,000,000 3,113,430
Virginia Resources Authority, Airport Rev., "B", 5.125%, 2027 720,000 744,430
- ------------------------------------------------------------------------------------------------------------------
$ 25,906,065
- ------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 2.4%
- ------------------------------------------------------------------------------------------------------------------
Newport News, VA, Economic Development, "A", 5%, 2031 $ 1,595,000 $ 1,693,810
Puerto Rico Commonwealth, Public Improvement, "A", 5.25%, 2030 2,000,000 2,141,940
Stafford County, VA, Industrial Development Authority Rev., "B", MBIA, 5%, 2034 3,060,000 3,222,670
- ------------------------------------------------------------------------------------------------------------------
$ 7,058,420
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 12.3%
- ------------------------------------------------------------------------------------------------------------------
Chesterfield County, VA, 6%, 2010 (c) $ 1,900,000 $ 2,018,465
Chesterfield County, VA, 5%, 2011 (c) 2,015,000 2,107,247
Hampton, VA, Public Improvement, 6%, 2010 (c) 3,280,000 3,545,090
Hampton, VA, Public Improvement, 6%, 2010 (c) 3,480,000 3,761,254
Lynchburg, VA, Public Improvement, 5.6%, 2010 (c) 1,765,000 1,884,085
Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 1,230,000 1,293,776
Puerto Rico Municipal Finance Agency, FSA, 6%, 2009 (c)(u) 2,210,000 2,349,031
Richmond, VA, 0%, 2008 2,000,000 1,943,720
Richmond, VA, "A", FSA, 5.125%, 2010 (c) 5,000,000 5,242,350
Richmond, VA, "B", 0%, 2008 5,270,000 5,121,702
Richmond, VA, "B", 0%, 2009 5,175,000 4,840,333
Suffolk, VA, Public Improvement, 5.5%, 2010 (c) 1,880,000 1,996,240
- ------------------------------------------------------------------------------------------------------------------
$ 36,103,293
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 0.4%
- ------------------------------------------------------------------------------------------------------------------
Harrisonburg, VA, Public Recreation Facilities, FSA, 5.75%, 2029 $ 1,000,000 $ 1,084,460
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 14.5%
- ------------------------------------------------------------------------------------------------------------------
Albemarle County, VA, Industrial Development Authority, Hospital Rev.
(Martha Jefferson Hospital), 5.25%, 2023 $ 3,000,000 $ 3,127,650
Arlington County, VA, Industrial Development Authority Rev.
(Virginia Hospital Center Arlington Health Systems), 5.25%, 2011 (c) 2,600,000 2,784,262
Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), AMBAC,
5.25%, 2023 11,000,000 11,245,410
Fredericksburg, VA, Industrial Development Rev. (Medicorp Health Systems), "B",
5.125%, 2033 750,000 771,105
Harrisonburg, VA, Industrial Development Authority, Hospital Rev.
(Rockingham Memorial Hospital), AMBAC, 4.5%, 2041 3,000,000 2,923,020
Henrico County, VA, Economic Development Authority Rev.
(Bon Secours Health Systems, Inc.), "A", 5.6%, 2030 2,000,000 2,118,140
Henrico County, VA, Industrial Development Authority Rev.
(Bon Secours Health Systems, Inc.), MBIA, 6.25%, 2020 1,500,000 1,786,095
Loudoun County, VA, Industrial Development Authority, Hospital Rev.
(Loudoun Hospital Center), "A", 6.1%, 2012 (c) 1,000,000 1,118,980
Lynchburg, VA, Industrial Development Authority, Healthcare Facilities Rev.
(Central Health), 5.2%, 2008 (c) 855,000 873,263
Lynchburg, VA, Industrial Development Authority, Healthcare Facilities Rev.,
Unrefunded Balance (Central Health), 5.2%, 2018 145,000 148,012
Medical College of Virginia, Hospital Authority Rev., MBIA, 5.125%, 2018 3,000,000 3,100,020
Peninsula Ports Authority, VA, Health System Rev. (Riverside Health System),
5%, 2018 3,580,000 3,670,395
Peninsula Ports Authority, VA, Hospital Facility Rev. (Whittaker Memorial), FHA,
8.7%, 2023 2,005,000 2,286,562
Prince William County, VA, Industrial Development Authority, Hospital Rev.
(Potomac Hospital Corp.), 5.2%, 2026 1,000,000 1,055,450
Roanoke, VA, Industrial Development Authority, Hospital Rev.
(Roanoke Memorial Hospital), "B", ETM, MBIA, 6.125%, 2017 (c) 3,000,000 3,494,760
Winchester VA, Industrial Development Hospital Valley Health Systems Obligated,
5.25%, 2037 2,000,000 2,144,840
- ------------------------------------------------------------------------------------------------------------------
$ 42,647,964
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.5%
- ------------------------------------------------------------------------------------------------------------------
Albemarlecnty VA, Industrial Development Ref Westminster Canterbury, 5%, 2031 $ 500,000 $ 501,625
Henrico County, VA, Economic Development Authority, Residential Care Facilities
(United Methodist Homes), "A", 6.7%, 2027 750,000 798,037
Lynchburg, VA, Industrial Development Authority, Residential Care Facilities Rev.
(Westminster-Canterbury of Lynchburg, Inc.), 5%, 2031 750,000 754,050
Norfolk, VA, Redevelopment & Housing Authority Rev.
(Fort Norfolk Retirement Community), "A", 6.125%, 2035 750,000 784,912
Prince William County, VA, Industrial Development Authority, Residential Care
Facilities (Westminster Presbyterian Retirement Community, Inc.), 5.125%, 2026 750,000 766,275
Suffolk, VA, Industrial Development Authority, Retirement Facilities Rev.
(Lake Prince Center, Inc.), 5.3%, 2031 750,000 764,077
- ------------------------------------------------------------------------------------------------------------------
$ 4,368,976
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.1%
- ------------------------------------------------------------------------------------------------------------------
Charles City County, VA, Industrial Development Authority, Solid Waste Disposal
Facility Rev. (Waste Management, Inc.), 6.25%, 2027 $ 1,500,000 $ 1,621,755
Henrico County, VA, Industrial Development Authority Rev. (Browning Ferris, Inc.),
5.45%, 2014 1,750,000 1,738,642
- ------------------------------------------------------------------------------------------------------------------
$ 3,360,397
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 1.3%
- ------------------------------------------------------------------------------------------------------------------
Loudoun County, VA, Industrial Development Authority Rev.
(Dulles Airport Marriott Hotel), 7.125%, 2015 $ 2,000,000 $ 2,026,680
Peninsula Ports Authority, VA, Coal Terminal Rev. (Dominion Terminal Associates),
6%, 2033 1,000,000 1,095,040
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 750,000 824,827
- ------------------------------------------------------------------------------------------------------------------
$ 3,946,547
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.2%
- ------------------------------------------------------------------------------------------------------------------
Bedford County, VA, Industrial Development Authority Rev.
(Nekooska Packaging Corp.), 5.6%, 2025 $ 1,000,000 $ 1,009,000
Hopewell, VA, Industrial Development Authority, Environmental Impact Rev.
(Smurfit-Stone Container), 5.25%, 2015 740,000 744,936
Isle Wight County, VA, Industrial Development Authority, Solid Waste Disposal
Facilities Rev. (Union Camp Corp.), 6.1%, 2027 2,750,000 2,807,200
West Point, VA, Industrial Development Authority, Solid Waste Disposal Rev.
(Chesapeake Corp.), "A", 6.375%, 2019 1,750,000 1,757,315
- ------------------------------------------------------------------------------------------------------------------
$ 6,318,451
- ------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.5%
- ------------------------------------------------------------------------------------------------------------------
Alexandria, VA, Redevelopment & Housing Finance Authority Rev.
(Jefferson Village Apartments), "B", 9%, 2018 $ 3,545,000 $ 3,558,826
Arlington County, VA, Industrial Development Authority Rev. (Colonial Village),
FNMA, 5.15%, 2031 3,000,000 3,114,990
Virginia Housing Development Authority Rev., "B", 5.95%, 2016 1,345,000 1,353,756
Virginia Housing Development Authority Rev., "G", 5.625%, 2020 2,000,000 2,066,080
Virginia Housing Development Authority Rev., "I", 5.15%, 2017 3,000,000 3,065,430
- ------------------------------------------------------------------------------------------------------------------
$ 13,159,082
- ------------------------------------------------------------------------------------------------------------------
Parking - 0.6%
- ------------------------------------------------------------------------------------------------------------------
Norfolk, VA, Parking Systems Rev., MBIA, 5%, 2020 $ 1,630,000 $ 1,680,465
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.2%
- ------------------------------------------------------------------------------------------------------------------
Virginia Housing Development Authority Commonwealth, "C", 4.4%, 2022 $ 1,270,000 $ 1,259,154
Virginia Housing Development Authority Commonwealth, "C", 4.75%, 2032 1,795,000 1,814,583
Virginia Housing Development Authority, "A", 5%, 2031 2,000,000 2,048,120
Virginia Housing Development Authority, "C", 4.66%, 2027 1,285,000 1,260,521
- ------------------------------------------------------------------------------------------------------------------
$ 6,382,378
- ------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 1.7%
- ------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, COP, 6.1%, 2017 $ 3,090,000 $ 3,478,907
Virginia Biotechnology Research Park Lease Rev. (Consolidated Laboratories),
5%, 2021 1,500,000 1,566,795
- ------------------------------------------------------------------------------------------------------------------
$ 5,045,702
- ------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 23.3%
- ------------------------------------------------------------------------------------------------------------------
Blue Ridge, VA, Regional Jail Authority, MBIA, 5.2%, 2021 $ 1,830,000 $ 1,883,802
Caroline County, VA, Industrial Development Authority Lease Rev., AMBAC,
5.125%, 2034 1,000,000 1,060,070
Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA,
6.25%, 2011 3,985,000 4,080,640
Chesapeake, VA, Industrial Development Authority (Chesapeake Court House), MBIA,
5.25%, 2017 2,000,000 2,044,540
Chesterfield County, VA, Industrial Development Authority, Public Facilities Lease
Rev., 7.5%, 2008 830,000 830,374
Dinwiddie County, VA, Industrial Development Authority Lease Rev., "B", MBIA,
5%, 2030 2,500,000 2,624,150
Fairfax County, VA, Economic Development Authority, 4.5%, 2026 2,325,000 2,342,205
Fairfax County, VA, Economic Development Authority Rev. (U.S. Route 28), MBIA,
5%, 2029 1,000,000 1,054,850
Fairfax County, VA, Economic Development Authority, Fairfax Public Improvement
Project, 5%, 2030 1,000,000 1,049,860
Fairfax County, VA, Economic Development Authority, Parking Rev.
(Vienna II Metrorail), 6%, 2009 (c) 1,650,000 1,770,796
Fairfax County, VA, Economic Development Authority, Parking Rev.
(Vienna II Metrorail), 6%, 2009 (c) 1,750,000 1,878,117
Fairfax County, VA, Redevelopment & Housing Authority Rev.
(Mott & Gum Springs Community Centers), 5.5%, 2017 2,225,000 2,258,753
Front Royal & Warren County, VA, Industrial Development Authority Lease Rev.,
School & Capital Improvement, "B", FSA, 5%, 2035 2,875,000 3,020,188
King George County, VA, Industrial Development Authority Lease Rev., FSA, 5%, 2036 2,000,000 2,093,780
Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.125%, 2012 (c) 1,000,000 1,078,990
Middlesex County, VA, Industrial Development Authority Rev., AMBAC, 5.25%, 2012 (c) 2,000,000 2,169,980
Montgomery County, VA, Industrial Development, "B", AMBAC, 6%, 2011 (c) 1,000,000 1,091,680
Montgomery County, VA, Industrial Development, "C", AMBAC, 6%, 2011 (c) 1,120,000 1,222,682
New River Valley, VA, Regional Jail Authority, MBIA, 5.125%, 2019 3,405,000 3,496,629
Orange County, VA, Industrial Development Authority (Orange County Project), AMBAC,
5%, 2034 1,000,000 1,045,410
Powhatan County, VA, Economic Development Authority Lease Rev.
(Virginia Capital Projects), AMBAC, 5.25%, 2033 1,000,000 1,063,580
Prince William County, VA, Lease Partnerships, 5%, 2021 1,500,000 1,573,485
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2013 (u) 4,000,000 4,372,680
Puerto Rico Public Finance Corp., AMBAC, 5.375%, 2016 (u) 1,000,000 1,119,170
Richmond, VA, Public Facilities, COP (Megahertz Project), "A", AMBAC, 5%, 2022 1,600,000 1,662,240
Southwest Virginia Regional Jail Authority Rev., MBIA, 5%, 2035 1,720,000 1,801,459
Virginia College Building Authority (21st Century College Program), 6%, 2009 (c) 2,000,000 2,101,940
Virginia Public Building Authority Rev., "B", MBIA, 0%, 2007 3,750,000 3,705,675
Virginia Resources Authority Rev., 5%, 2021 (u) 2,780,000 2,949,135
Virginia Resources Authority Rev., 5%, 2023 (u) 3,040,000 3,214,131
Virginia Resources Authority Rev., 5%, 2033 (u) 5,020,000 5,272,004
Virginia Resources Authority,
Infrastructure Rev., "A", 5%, 2017 1,360,000 1,416,998
- ------------------------------------------------------------------------------------------------------------------
$ 68,349,993
- ------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.6%
- ------------------------------------------------------------------------------------------------------------------
Greater Richmond Convention Center Authority, Hotel Tax Rev.
(Convention Center Expansion), 6.125%, 2010 (c) $ 3,500,000 $ 3,793,440
Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 1,000,000 1,031,110
- ------------------------------------------------------------------------------------------------------------------
$ 4,824,550
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 1.1%
- ------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 445,000 $ 463,272
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.5%, 2039 965,000 1,010,085
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, "B", 0%, 2055 2,000,000 73,320
Virgin Islands Tobacco Settlement Financing Corp., 5%, 2021 540,000 545,859
Virginia Tobacco Settlement Financing Corp., 5.625%, 2037 1,000,000 1,062,850
- ------------------------------------------------------------------------------------------------------------------
$ 3,155,386
- ------------------------------------------------------------------------------------------------------------------
Toll Roads - 0.4%
- ------------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA, Toll Road Rev., "B", 0%, 2008 (c) $ 1,500,000 $ 1,107,015
- ------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.0%
- ------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., "J", MBIA,
5%, 2029 $ 1,210,000 $ 1,278,341
Virginia Commonwealth Board Program (Oak Grove Connector), "A", 5.25%, 2007 (c) 1,500,000 1,517,715
- ------------------------------------------------------------------------------------------------------------------
$ 2,796,056
- ------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 3.0%
- ------------------------------------------------------------------------------------------------------------------
Amherst, VA, Industrial Development Authority Rev.
(Educational Facilities Sweet Briar), 5%, 2026 $ 1,770,000 $ 1,823,507
Danville, VA, Industrial Development Authority, Educational Facilities Rev.
(Averett University), 6%, 2022 500,000 520,270
Loudoun County, VA, Industrial Development Authority, University Facilities Rev.
(George Washington University), 6.25%, 2012 2,710,000 2,712,575
University of Virginia (University Revenue), "B", 5%, 2027 2,690,000 2,826,410
Virginia College Building Authority, Educational Facilities Rev.
(Hampton University), 6%, 2010 (c) 1,000,000 1,075,300
- ------------------------------------------------------------------------------------------------------------------
$ 8,958,062
- ------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 1.6%
- ------------------------------------------------------------------------------------------------------------------
Chesapeake, VA, Industrial Development Authority Rev.
(Virginia Electric & Power Co.), 5.25%, 2008 $ 750,000 $ 753,772
Halifax County, VA, Industrial Development Authority
(Old Dominion Electric Cooperative), AMBAC, 5.625%, 2028 3,000,000 3,235,950
Mecklenburg County, VA, Industrial Development Authority Rev. (UAE Mecklenburg LP),
6.5%, 2017 700,000 767,144
- ------------------------------------------------------------------------------------------------------------------
$ 4,756,866
- ------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 7.6%
- ------------------------------------------------------------------------------------------------------------------
Bristol, VA, Utility Systems Rev., ETM, FSA, 5.75%, 2016 (c) $ 240,000 $ 276,096
Guam Power Authority Rev., AMBAC, 5.25%, 2015 (u) 2,020,000 2,109,365
Puerto Rico Electric Power Authority Rev., FSA, 5.625%, 2010 (c)(u) 2,540,000 2,719,324
Puerto Rico Electric Power Authority Rev., FSA, 5.75%, 2010 (c)(u) 5,000,000 5,371,950
Puerto Rico Electric Power Authority Rev., FSA, 5.3%, 2020 (u) 2,500,000 2,636,125
Richmond, VA, Public Utilities Rev., FSA, 5%, 2027 1,000,000 1,058,010
Richmond, VA, Public Utilities Rev., FSA, 5%, 2033 6,950,000 7,209,444
Richmond, VA, Public Utilities Rev., FSA, 5%, 2035 1,000,000 1,055,280
- ------------------------------------------------------------------------------------------------------------------
$ 22,435,594
- ------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.2%
- ------------------------------------------------------------------------------------------------------------------
Fairfax County, VA, Water Authority Rev., 5%, 2014 (c) $ 1,000,000 $ 1,078,800
Fairfax County, VA, Water Authority Rev., 5%, 2014 (c) 3,155,000 3,403,614
Fairfax County, VA, Water Authority Rev., 5%, 2032 2,000,000 2,075,020
Fairfax County, VA, Water Authority Rev., Unrefunded, 5%, 2027 3,210,000 3,352,460
Prince William County, VA, Water & Sewer Rev., FGIC, 5.5%, 2009 (c) 2,000,000 2,099,480
Puerto Rico Aqueduct & Sewer Authority Rev., ETM, 10.25%, 2009 (c) 145,000 153,880
Spotsylvania County, VA, Water & Sewer Rev., FSA, 5%, 2022 1,450,000 1,506,086
Virginia Beach, VA, Storm Water Utilities Rev., 6%, 2020 1,000,000 1,079,470
Virginia Resources Authority Sewer Systems Rev. (Hopewell Regional Wastewater),
5.75%, 2021 1,335,000 1,433,803
Virginia Resources Authority, Clean Water Rev., 5.4%, 2010 (c) 1,135,000 1,200,705
Virginia Resources Authority, Clean Water Rev., 6%, 2010 (c) 2,750,000 2,962,850
Virginia Resources Authority, Infrastructure Rev., FSA, 5.5%, 2010 (c) 350,000 372,109
Virginia Resources Authority, Infrastructure Rev., FSA, 5.5%, 2010 (c) 630,000 669,797
Virginia Resources Authority, Infrastructure Rev., MBIA, 5.5%, 2011 (c) 660,000 712,041
Virginia Resources Authority, Infrastructure Rev., MBIA, 5.5%, 2011 (c) 700,000 755,195
Virginia Resources Authority, Infrastructure Rev., MBIA, 5.5%, 2011 (c) 710,000 765,983
Virginia Resources Authority, Infrastructure Rev., MBIA, 5.5%, 2011 (c) 750,000 809,137
Virginia Resources Authority, Infrastructure Rev., MBIA, 5.5%, 2019 230,000 247,411
Virginia Resources Authority, Infrastructure Rev., FSA, 5.5%, 2019 90,000 95,496
Virginia Resources Authority, Infrastructure Rev., MBIA, 5.5%, 2020 240,000 258,072
Virginia Resources Authority, Water & Sewer Systems Rev. (Tuckahoe Creek Project),
5%, 2035 2,015,000 2,111,317
- ------------------------------------------------------------------------------------------------------------------
$ 27,142,726
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $287,768,815) $300,588,448
- ------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.8%
- ------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev.
(Presbyterian University Hospital), "C", 3.7%, due 4/05/07 $ 100,000 $ 100,000
Allegheny County, PA, Hospital Development Authority Rev.
(Presbyterian University Hospital), "D", 3.7%, due 4/05/07 900,000 900,000
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), 3.77%, due 4/02/07 100,000 100,000
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), "B-2", 3.77%, due 4/02/07 100,000 100,000
Burke County, GA, Development Authority Pollution Control Rev.
(Oglethorpe Power Corp.), "A", 3.7%, due 4/04/07 200,000 200,000
California Health Facilities Financing Authority Rev. (Adventist Health System),
"B", 3.68%, due 4/02/07 500,000 500,000
Chicago, IL, Midway Airport Rev., Second Lien, "B", 3.81%, due 4/02/07 100,000 100,000
Lincoln County, WY, Pollution Control Rev. (Exxon Mobil Corp.), "C",
3.82%, due 4/02/07 100,000 100,000
Massachusetts Water Resources Authority, 3.65%, due 4/04/07 100,000 100,000
Petersburg, IN, Pollution Control Rev. (Indianapolis Power & Light Co.), "B",
3.73%, due 4/04/07 900,000 900,000
Sevier County, TN, Public Building Authority, 3.69%, due 4/05/07 400,000 400,000
Sevier County, TN, Public Building Authority Rev., Government Public Improvement,
"B-4", 3.85%, due 4/02/07 50,000 50,000
State of Oregon, "73G", 3.68%, due 4/04/07 1,600,000 1,600,000
Triborough Bridge & Tunnel Authority, NY, Rev., "F", 3.65%, due 4/05/07 200,000 200,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 5,350,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $293,118,815) (k) $305,938,448
- ------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.1)% (11,948,276)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $293,990,172
- ------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 6,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 36,410
9/12/19 USD 4,000,000 Goldman Sachs 5.145% (fixed rate) 3-Month LIBOR (33,371)
8/15/22 USD 3,750,000 Goldman Sachs 5.286% (fixed rate) 3-Month LIBOR (10,315)
- ------------------------------------------------------------------------------------------------------------------
$ (7,276)
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
PORTFOLIO OF INVESTMENTS
3/31/07
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 103.9%
- ------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 16.2%
- ------------------------------------------------------------------------------------------------------------------
Charleston, WV, Public Improvements, 7.2%, 2009 $1,140,000 $ 1,225,135
Commonwealth of Puerto Rico, Public Improvement, ETM, MBIA, 5.75%, 2019 (c)(u) 6,000,000 6,383,460
Commonwealth of Puerto Rico, Public Improvement, 5.25%, 2023 1,500,000 1,588,965
Commonwealth of Puerto Rico, Public Improvement, "A", CIFG, 5%, 2034 2,000,000 2,102,720
Puerto Rico Commonwealth Public Improvement, "A", CIFG, 5%, 2025 1,000,000 1,061,630
Puerto Rico Public Buildings Authority Rev. (State Office Building), "F", XLCA,
5.25%, 2025 2,000,000 2,287,720
Puerto Rico Public Buildings Authority Rev., "B", 5.25%, 2007 (c) 3,115,000 3,173,873
West Virginia Highway Improvements, FGIC, 5.625%, 2010 (c) 2,000,000 2,134,560
West Virginia Sewer Improvements, FGIC, 5.5%, 2017 2,565,000 2,681,733
- ------------------------------------------------------------------------------------------------------------------
$ 22,639,796
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 2.4%
- ------------------------------------------------------------------------------------------------------------------
Brooke County, WV, Board of Education, FGIC, 5%, 2016 $1,390,000 $ 1,449,186
Puerto Rico Municipal Finance Agency, FSA, 5.5%, 2009 (c)(u) 1,800,000 1,893,330
- ------------------------------------------------------------------------------------------------------------------
$ 3,342,516
- ------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 5.3%
- ------------------------------------------------------------------------------------------------------------------
Jefferson County, WV, Board of Education, ETM, FGIC, 6.85%, 2009 (c) $1,680,000 $ 1,795,332
Monongalia County, WV, Board of Education, MBIA, 5%, 2027 2,350,000 2,484,138
Monongalia County, WV, Board of Education, MBIA, 5%, 2033 3,000,000 3,156,540
- ------------------------------------------------------------------------------------------------------------------
$ 7,436,010
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 8.9%
- ------------------------------------------------------------------------------------------------------------------
Kanawha County, WV, Building Commission Rev. (St. Francis Hospital), ETM,
7.5%, 2007 (c) $ 30,000 $ 30,756
Monongalia County, WV, Building Community Hospital Rev.
(Monongalia General Hospital), "A", 5.25%, 2035 2,000,000 2,081,240
Ohio County, WV, County Commission Health System Rev. (Ohio Valley Medical Center),
5.75%, 2013 750,000 741,555
Randolph County, WV, Community Health Systems Rev. (Davis Health Systems, Inc.),
FSA, 5.2%, 2021 1,000,000 1,065,770
Weirton, WV, Municipal Hospital Building, Commission Rev.
(Weirton Hospital Medical Center), 6.375%, 2031 600,000 631,338
West Virginia Hospital Finance Authority, Hospital Rev., ETM, 6.5%, 2023 (c) 2,000,000 2,439,000
West Virginia Hospital Finance Authority, Hospital Rev.
(Fairmont General Hospital), 6.625%, 2019 300,000 300,669
West Virginia Hospital Finance Authority, Hospital Rev.
(General Division Medical Office Building), 7.25%, 2014 1,510,000 1,514,515
West Virginia Hospital Finance Authority, Hospital Rev.
(West Virginia University Hospital), AMBAC, 5%, 2018 1,000,000 1,016,800
West Virginia Hospital Finance Authority, Rev., "A", AMBAC, 5%, 2022 2,500,000 2,644,775
- ------------------------------------------------------------------------------------------------------------------
$ 12,466,418
- ------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 2.2%
- ------------------------------------------------------------------------------------------------------------------
Harrison County, WV, Building Commission Rev. (Maplewood Retirement), AMBAC,
5.25%, 2008 (c) $2,625,000 $ 2,717,479
West Virginia Economic Development (Edgewood Summit), 5.5%, 2029 300,000 308,928
- ------------------------------------------------------------------------------------------------------------------
$ 3,026,407
- ------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- ------------------------------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery Facilities Rev.
(Hovensa Refinery), 5.875%, 2022 $ 350,000 $ 384,919
- ------------------------------------------------------------------------------------------------------------------
Parking - 0.9%
- ------------------------------------------------------------------------------------------------------------------
West Virginia Economic Development Authority, Auto Lease Rev.
(Capitol Parking Garage), AMBAC, 5.8%, 2020 $1,260,000 $ 1,335,991
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 1.0%
- ------------------------------------------------------------------------------------------------------------------
Charlestown, WV, Residential Mortgage Rev., 6.2%, 2011 $ 50,000 $ 50,225
Kanawha County, WV, 0%, 2014 (c) 1,920,000 1,315,565
- ------------------------------------------------------------------------------------------------------------------
$ 1,365,790
- ------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.5%
- ------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Finance Authority Home Mortgage Rev., Mortgage Backed
Securities, "A", 4.75%, 2023 $ 670,000 $ 673,156
West Virginia Housing Development Fund Rev., 5.25%, 2018 950,000 973,883
West Virginia Housing Development Fund Rev., 5.3%, 2023 850,000 868,071
West Virginia Housing Development Fund Rev., "A", 4.625%, 2032 1,000,000 981,720
- ------------------------------------------------------------------------------------------------------------------
$ 3,496,830
- ------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 26.5%
- ------------------------------------------------------------------------------------------------------------------
Huntington, WV, Municipal Development Authority, Rev., MBIA, 5.1%, 2018 $1,740,000 $ 1,792,235
West Virginia Building Commission, "A", AMBAC, 5.375%, 2018 (u) 9,040,000 10,129,862
West Virginia Building Commission, "B", AMBAC, 5.375%, 2018 (u) 2,500,000 2,801,400
West Virginia Building Commission, Lease Rev., ETM, MBIA, 0%, 2007 (c) 3,150,000 3,122,248
West Virginia Building Commission, Lease Rev., ETM, MBIA, 0%, 2008 (c) 3,050,000 2,914,275
West Virginia Building Commission, Lease Rev., ETM, MBIA, 0%, 2009 (c) 1,000,000 920,490
West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA,
5.5%, 2013 1,000,000 1,089,590
West Virginia Economic Development Authority (Correctional Juvenile & Public),
5%, 2020 1,000,000 1,044,350
West Virginia Economic Development Authority (Correctional Juvenile & Public), MBIA,
5%, 2026 2,100,000 2,191,371
West Virginia Economic Development Authority (State Office Building), "B", MBIA,
5.25%, 2030 1,355,000 1,442,601
West Virginia Economic Development Authority, Auto Lease Rev., 5.2%, 2033 1,000,000 1,052,620
West Virginia Economic Development Authority, Department of Environmental
Protection, 5.5%, 2022 2,000,000 2,164,900
West Virginia Economic Development Authority, Lease Rev. (State Office Building),
"B", MBIA, 5.25%, 2025 645,000 687,873
West Virginia Hospital Finance Authority, Hospital Rev. (Veterans Nursing Home),
5.5%, 2034 1,000,000 1,034,630
West Virginia School Building Authority, Miscellaneous Tax Rev., FSA, 5.25%, 2007(c) 2,550,000 2,610,461
West Virginia School Building Authority, Rev., "A", FGIC, 5%, 2020 2,000,000 2,154,380
- ------------------------------------------------------------------------------------------------------------------
$ 37,153,286
- ------------------------------------------------------------------------------------------------------------------
Tax - Other - 0.4%
- ------------------------------------------------------------------------------------------------------------------
Virgin Islands, Public Finance Authority Rev., "A", 5.625%, 2025 $ 500,000 $ 515,555
- ------------------------------------------------------------------------------------------------------------------
Tax Assessment - 0.3%
- ------------------------------------------------------------------------------------------------------------------
Morgantown, West Virginia, Tax Increment Revenue, Parking Garage Project, "A",
5%, 2033 $ 500,000 $ 494,390
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 0.5%
- ------------------------------------------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico, 5.375%, 2033 $ 660,000 $ 687,100
- ------------------------------------------------------------------------------------------------------------------
Toll Roads - 1.8%
- ------------------------------------------------------------------------------------------------------------------
West Virginia Parkways, Economic Development & Tourism Authority, Rev., ETM, FGIC,
0%, 2007 (c) $2,000,000 $ 1,982,380
West Virginia Parkways, Economic Development & Tourism Authority, Rev., ETM, FGIC,
0%, 2008 (c) 610,000 582,855
- ------------------------------------------------------------------------------------------------------------------
$ 2,565,235
- ------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.4%
- ------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Highway & Transportation Authority Rev., "J", MBIA,
5%, 2029 $1,820,000 $ 1,922,794
- ------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 22.4%
- ------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Industrial Tourist Education (University Plaza), MBIA,
5%, 2021 $1,270,000 $ 1,318,349
Fairmont State College, West Virginia, College Rev., "A", FGIC, 5%, 2032 3,210,000 3,353,230
Fairmont State College, West Virginia, College Rev., "A", FGIC, 5.375%, 2027 1,500,000 1,611,780
Fairmont State College, West Virginia, College Rev., "A", FGIC, 5%, 2032 2,250,000 2,344,185
Fairmont State College, West Virginia, College Rev., "B", FGIC, 5.25%, 2022 5,130,000 5,465,143
Shepherd University Board of Governors, West Virginia Rev.
(Residence Facilities Projects), MBIA, 5%, 2035 1,675,000 1,760,760
West Liberty State College, Capital Improvement, 6%, 2028 500,000 532,995
West Virginia Department of Higher Education (Marshall University), FGIC,
5.25%, 2019 1,680,000 1,766,570
West Virginia Department of Higher Education
(Student Union James C. Wilson College), 5.125%, 2022 1,500,000 1,586,505
West Virginia Department of Higher Education, "B", FGIC, 5%, 2029 3,000,000 3,136,710
West Virginia Department of Higher Education, "A", MBIA, 5%, 2010 595,000 617,057
West Virginia University, Dormitory Rev., AMBAC, 5%, 2007 (c) 2,000,000 2,035,560
West Virginia University, University Systems Rev. (Marshall University), FGIC,
6%, 2020 2,705,000 2,895,946
West Virginia University, University Systems Rev. (West Virginia University), MBIA,
5.5%, 2020 1,700,000 1,943,406
West Virginia, West Virginia University Improvement Rev., "C", FGIC, 5%, 2028 1,000,000 1,052,930
- ------------------------------------------------------------------------------------------------------------------
$ 31,421,126
- ------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 0.5%
- ------------------------------------------------------------------------------------------------------------------
Mason County, WV, Pollution Control Rev. (Appalachian Power Co.), 5.5%, 2022 $ 750,000 $ 775,875
- ------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 10.4%
- ------------------------------------------------------------------------------------------------------------------
Berkeley County, WV, Public Service Sewer District, "A", 5%, 2047 $1,000,000 $ 1,009,290
Berkeley County, WV, Public Service Sewer District, Sewer Capacity Impact Fee,
5%, 2022 300,000 299,679
Fairmont, WV, Waterworks Rev., AMBAC, 5.25%, 2022 200,000 225,378
West Virginia Water Development Authority Loan Program, "B", AMBAC, 4.75%, 2035 500,000 511,295
West Virginia Water Development Authority Loan Program, "B", AMBAC, 5.125%, 2024 2,140,000 2,287,596
West Virginia Water Development Authority Rev., ETM, 7.1%, 2009 (c) 80,000 83,776
West Virginia Water Development Authority Rev., AMBAC, 6.25%, 2020 1,000,000 1,077,760
West Virginia Water Development Authority Rev., AMBAC, 5.25%, 2023 1,000,000 1,071,680
West Virginia Water Development Authority Rev., AMBAC, 5%, 2026 2,850,000 2,992,757
West Virginia Water Development Authority, "A", FGIC, 5%, 2033 1,500,000 1,573,500
West Virginia Water Development Authority, Infrastructure Rev., FSA, 5.5%, 2010 (c) 390,000 413,451
West Virginia Water Development Authority, Infrastructure Rev., FSA, 5.5%, 2010 (c) 895,000 948,816
West Virginia Water Development Authority, Infrastructure Rev., "A", AMBAC,
5%, 2033 1,950,000 2,045,550
- ------------------------------------------------------------------------------------------------------------------
$ 14,540,528
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $139,801,651) $145,570,566
- ------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 3.1%
- ------------------------------------------------------------------------------------------------------------------
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants Rev., "A",
3.7%, due 4/05/07 $1,700,000 $ 1,700,000
Lincoln County, WY, Pollution Control Rev. (Exxon Mobil Corp.), "C",
3.82%, due 4/02/07 900,000 900,000
New York, NY, Municipal Water Finance Authority, Water & Sewer Systems Rev., "A",
3.67%, due 4/02/07 100,000 100,000
Pinellas County, FL, Health Facilities Authority Rev.
(Pooled Hospital Loan Program), 3.8%, due 4/02/07 1,200,000 1,200,000
Sevier County, TN, Public Building Authority, Government Public Improvement II,
"F-4", 3.69%, due 4/05/07 315,000 315,000
Sevier County, TN, Public Building Authority, Government Public Improvement III,
"F", 3.69%, due 4/05/07 100,000 $ 100,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 4,315,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $144,116,651) (k) $149,885,566
- ------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (7.0)% (9,824,459)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $140,061,107
- ------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 3,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $18,205
8/08/17 USD 2,000,000 Goldman Sachs 7-Day BMA 3.736% (fixed rate) (7,386)
5/30/19 USD 2,250,000 Citibank 7-Day BMA 3.695% (fixed rate) 8,886
8/22/19 USD 1,000,000 Goldman Sachs 7-Day BMA 3.726% (fixed rate) 3,394
7/23/22 USD 1,000,000 Merrill Lynch 7-Day BMA 3.889% (fixed rate) (4,796)
9/26/22 USD 1,500,000 Goldman Sachs 7-Day BMA 3.807% (fixed rate) 7,423
- ------------------------------------------------------------------------------------------------------------------
$25,726
- ------------------------------------------------------------------------------------------------------------------
At March 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under
these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
Portfolio Footnotes:
(c) Refunded bond.
(k) Each fund held securities fair valued in accordance with the policies adopted by the Board of Trustees. All of
these security values were provided by an independent pricing service using an evaluated bid. As of March 31,
2007, the following funds held securities that were fair valued.
FUND MARKET VALUE % OF MARKET VALUE
---------------------------------------------------------------------------------------------------------
Mississippi Fund $ 87,922,949 98.43%
New York Fund 165,554,778 98.75%
North Carolina Fund 338,304,277 97.95%
Pennsylvania Fund 109,462,306 98.34%
South Carolina Fund 159,889,979 97.80%
Tennessee Fund 108,681,860 99.25%
Virginia Fund 300,588,448 98.25%
West Virginia Fund 145,570,566 97.12%
(n) Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be sold in
the ordinary cours e of business in transactions exempt from registration, normally to qualified institutional
buyers. At period end, the aggregate valu e of this security was $129,861, representing 0.1% of net assets for
the Pennsylvania Fund.
(p) Primary inverse floater.
(u) Underlying security deposited into special purpose trust ("the trust") by investment banker upon creation of
self-deposited inve rse floaters.
(v) Externally deposited inverse floater.
The following abbreviations are used in this report and are defined:
BMA Bond Market Assn.
COP Certificate of Participation
ETM Escrowed to Maturity
LOC Letter of Credit
LIBOR London Interbank Offered Rate
Insurers Inverse Floaters
- ---------------------------------------------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corp. RITES Residual Interest Tax-Exempt Security
ASST GTY Asset Guaranty Insurance Co.
CIFG CDC IXIS Financial Guaranty
CONNIE LEE Connie Lee Insurance Co.
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Assn.
FSA Financial Security Assurance Inc.
GNMA Government National Mortgage Assn.
MBIA MBIA Insurance Corp.
XLCA XL Capital Insurance Co.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
At 3/31/07
These statements represent each fund's balance sheet, which details the assets and liabilities comprising the total value of each
fund.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $85,769,506 $157,360,416 $327,667,372 $106,901,748
Unrealized appreciation (depreciation) 3,553,443 10,294,362 17,706,905 4,410,558
- ---------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $89,322,949 $167,654,778 $345,374,277 $111,312,306
Cash -- 51,554 50,760 34,939
Receivable for investments sold 20,390 1,233,316 -- 590,000
Receivable for fund shares sold 14,421 57,179 1,396,068 569,144
Interest receivable 1,200,660 2,555,420 5,240,371 1,666,536
Receivable from investment adviser -- -- -- 16,461
Unrealized appreciation on interest rate swaps 19,481 24,992 64,508 55,151
Other assets 2,425 4,187 8,665 2,623
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $90,580,326 $171,581,426 $352,134,649 $114,247,160
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------------
Payable to custodian $37 $-- $-- $--
Distributions payable 120,846 223,408 369,452 125,687
Payable for investments purchased -- -- 1,861,615 --
Payable to the holder of the floating rate certificate
from trust assets 5,360,000 10,350,000 21,425,000 6,170,000
Payable for fund shares reacquired 76,442 359,532 351,620 102,308
Unrealized depreciation on interest rate swaps 4,245 -- -- 7,457
Payable to affiliates -
Management fee 2,092 3,959 8,081 2,653
Shareholder servicing costs 6,460 12,897 11,685 8,612
Distribution and service fees 908 5,854 12,622 12,466
Administrative services fee 194 303 543 227
Payable for independent trustees' compensation 9,068 11,472 14,209 8,966
Payable for interest expense and fees 58,470 137,424 206,863 80,192
Accrued expenses and other liabilities 63,054 77,600 92,927 66,559
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities $5,701,816 $11,182,449 $24,354,617 $6,585,127
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $84,878,510 $160,398,977 $327,780,032 $107,662,033
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- ---------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $81,488,782 $150,130,633 $309,476,778 $103,105,951
Unrealized appreciation (depreciation) on investments 3,568,679 10,319,354 17,771,413 4,458,252
Accumulated net realized gain (loss) on investments (198,611) 171,743 964,482 170,749
Accumulated undistributed (distributions in excess of)
net investment income 19,660 (222,753) (432,641) (72,919)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $84,878,510 $160,398,977 $327,780,032 $107,662,033
- ---------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
Net Assets
Class A $75,470,126 $118,923,734 $268,107,653 $73,812,781
Class B 9,408,384 25,653,596 26,519,900 33,849,252
Class C -- 15,821,647 33,152,479 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total net assets $84,878,510 $160,398,977 $327,780,032 $107,662,033
- ---------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 7,704,881 10,667,392 22,609,197 7,207,390
Class B 959,260 2,308,490 2,239,489 3,296,547
Class C -- 1,421,261 2,797,561 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 8,664,141 14,397,143 27,646,247 10,503,937
- ---------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $9.80 $11.15 $11.86 $10.24
- ---------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $10.29 $11.71 $12.45 $10.75
- ---------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $9.81 $11.11 $11.84 $10.27
- ---------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $-- $11.13 $11.85 $--
- ---------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on
redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Assets and Liabilities - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
AT 3/31/07 FUND FUND FUND FUND
ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $155,260,295 $104,585,278 $293,118,815 $144,116,651
Unrealized appreciation (depreciation) 8,229,684 4,916,582 12,819,633 5,768,915
- ---------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $163,489,979 $109,501,860 $305,938,448 $149,885,566
Cash 58,737 70,785 81,561 11,749
Receivable for investments sold -- 1,010,000 -- --
Receivable for fund shares sold 282,005 493,446 67,622 98,568
Interest receivable 2,598,196 1,575,583 4,724,130 2,274,240
Unrealized appreciation on interest rate swaps 28,079 -- 36,410 37,908
Other assets 4,341 3,249 8,084 3,775
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $166,461,337 $112,654,923 $310,856,255 $152,311,806
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions payable $176,847 $177,365 $418,336 $150,330
Payable for investments purchased -- -- -- 2,163,120
Payable to the holder of the floating rate certificate
from trust assets 9,275,000 -- 15,670,000 9,670,000
Payable for fund shares reacquired 329,396 159,043 400,017 66,410
Unrealized depreciation on interest rate swaps 5,540 -- 43,686 12,182
Payable to affiliates -
Management fee 3,855 2,762 7,246 3,451
Shareholder servicing costs 10,008 6,667 16,709 7,947
Distribution and service fees 5,602 3,913 9,783 4,565
Administrative services fee 297 233 495 273
Payable for independent trustees' compensation 14,071 11,528 14,381 14,070
Payable for interest expense and fees 128,646 -- 193,774 89,357
Accrued expenses and other liabilities 66,919 67,659 91,656 68,994
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities $10,016,181 $429,170 $16,866,083 $12,250,699
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $156,445,156 $112,225,753 $293,990,172 $140,061,107
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- ---------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $147,969,007 $106,733,526 $280,518,592 $133,787,617
Unrealized appreciation (depreciation) on investments 8,252,223 4,916,582 12,812,357 5,794,641
Accumulated net realized gain (loss) on investments 102,810 568,928 1,265,396 451,330
Accumulated undistributed (distributions in excess of)
net investment income 121,116 6,717 (606,173) 27,519
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $156,445,156 $112,225,753 $293,990,172 $140,061,107
- ---------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
Net Assets
Class A $135,766,359 $99,302,077 $269,067,789 $129,973,788
Class B 20,678,797 12,923,676 12,545,474 10,087,319
Class C -- -- 12,376,909 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total net assets $156,445,156 $112,225,753 $293,990,172 $140,061,107
- ---------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 11,043,312 9,383,777 23,539,553 11,352,163
Class B 1,683,028 1,222,158 1,098,347 881,469
Class C -- -- 1,083,035 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 12,726,340 10,605,935 25,720,935 12,233,632
- ---------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $12.29 $10.58 $11.43 $11.45
- ---------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $12.90 $11.11 $12.00 $12.02
- ---------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $12.29 $10.57 $11.42 $11.44
- ---------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $-- $-- $11.43 $--
- ---------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on
redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF OPERATIONS
Year ended 3/31/07
These statements describe how much each fund earned in investment income and
accrued in expenses. They also describe any gains or losses generated by each
fund's operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
NET INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------------------------------------
Interest $4,618,825 $9,300,755 $17,958,092 $5,698,565
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $466,964 $893,996 $1,813,867 $595,890
Distribution and service fees 76,335 734,018 1,559,507 385,686
Shareholder servicing costs 99,088 192,498 348,037 130,789
Administrative services fee 23,785 37,765 67,864 28,009
Independent trustees' compensation 3,884 6,062 12,283 6,190
Custodian fee 39,625 67,328 104,609 54,089
Shareholder communications 8,707 18,820 31,078 15,480
Auditing fees 40,805 40,805 40,805 41,605
Legal fees 6,691 9,518 7,219 7,052
Interest expense and fees 204,304 399,460 821,947 236,409
Miscellaneous 47,455 65,559 77,342 52,604
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses $1,017,643 $2,465,829 $4,884,558 $1,553,803
- ---------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (6,372) (10,982) (20,101) (9,911)
Reduction of expenses by investment adviser (212,699) (407,208) (826,203) (391,307)
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses $798,572 $2,047,639 $4,038,254 $1,152,585
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,820,253 $7,253,116 $13,919,838 $4,545,980
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $97,831 $311,386 $949,526 $405,122
Swap transactions 30,387 152,895 316,622 (144,406)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $128,218 $464,281 $1,266,148 $260,716
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $294,296 $115,995 $(594,771) $432,169
Swap transactions (22,733) (91,693) (144,496) (63,863)
- ---------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $271,563 $24,302 $(739,267) $368,306
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $399,781 $488,583 $526,881 $629,022
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $4,220,034 $7,741,699 $14,446,719 $5,175,002
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
YEAR ENDED 3/31/07 FUND FUND FUND FUND
NET INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------------------------------------
Interest $8,675,008 $6,075,800 $16,696,040 $7,987,590
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses - Management fee $857,474 $624,813 $1,646,844 $790,021
Distribution and service fees 698,217 495,638 1,226,792 576,714
Shareholder servicing costs 173,188 124,345 329,647 156,631
Administrative services fee 36,562 28,958 62,413 34,370
Independent trustees' compensation 6,815 6,187 12,249 7,119
Custodian fee 52,185 43,019 110,818 43,307
Shareholder communications 14,026 12,753 26,540 14,450
Auditing fees 40,805 40,805 40,805 40,805
Legal fees 6,603 2,612 6,827 6,809
Interest expense and fees 352,183 -- 598,180 371,506
Miscellaneous 49,473 46,989 73,102 47,726
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses $2,287,531 $1,426,119 $4,134,217 $2,089,458
- ---------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (11,941) (10,537) (21,450) (6,444)
Reduction of expenses by investment adviser (390,572) (284,598) (750,126) (359,848)
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses $1,885,018 $1,130,984 $3,362,641 $1,723,166
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $6,789,990 $4,944,816 $13,333,399 $6,264,424
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $160,211 $355,358 $453,910 $956,555
Swap transactions 93,201 70,630 292,322 268,185
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $253,412 $425,988 $746,232 $1,224,740
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(65,483) $(705,649) $(906,842) $(1,019,492)
Swap transactions (126,520) 151,684 5,695 (72,841)
- ---------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(192,003) $(553,965) $(901,147) $(1,092,333)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $61,409 $(127,977) $(154,915) $132,407
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $6,851,399 $4,816,839 $13,178,484 $6,396,831
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any
shareholder transactions.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
YEAR ENDED 3/31/07
CHANGE IN NET ASSETS
FROM OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,820,253 $7,253,116 $13,919,838 $4,545,980
Net realized gain (loss) on investments 128,218 464,281 1,266,148 260,716
Net unrealized gain (loss) on investments 271,563 24,302 (739,267) 368,306
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $4,220,034 $7,741,699 $14,446,719 $5,175,002
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(3,270,278) $(5,127,904) $(11,182,764) $(2,996,195)
Class B (361,313) (990,363) (1,057,404) (1,242,788)
Class C -- (567,073) (1,144,699) --
From net realized gain on investments
Class A -- (556,342) (660,858) --
Class B -- (125,175) (73,300) --
Class C -- (72,128) (80,834) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,631,591) $(7,438,985) $(14,199,859) $(4,238,983)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(1,771,453) $(5,489,028) $(7,423,527) $(4,345,538)
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(1,183,010) $(5,186,314) $(7,176,667) $(3,409,519)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 86,061,520 165,585,291 334,956,699 111,071,552
At end of period $84,878,510 $160,398,977 $327,780,032 $107,662,033
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $19,660 $(222,753) $(432,641) $(72,919)
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
YEAR ENDED 3/31/07
CHANGE IN NET ASSETS
FROM OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $6,789,990 $4,944,816 $13,333,399 $6,264,424
Net realized gain (loss) on investments 253,412 425,988 746,232 1,224,740
Net unrealized gain (loss) on investments (192,003) (553,965) (901,147) (1,092,333)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $6,851,399 $4,816,839 $13,178,484 $6,396,831
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(5,495,872) $(4,052,871) $(11,631,198) $(5,366,646)
Class B (821,365) (523,277) (529,064) (388,328)
Class C -- -- (468,928) --
From net realized gain on investments
Class A -- (44,099) (69,200) (817,240)
Class B -- (6,370) (3,504) (68,586)
Class C -- -- (3,300) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(6,317,237) $(4,626,617) $(12,705,194) $(6,640,800)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(1,470,342) $(4,007,457) $(13,995,838) $(6,498,685)
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(936,180) $(3,817,235) $(13,522,548) $(6,742,654)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 157,381,336 116,042,988 307,512,720 146,803,761
At end of period $156,445,156 $112,225,753 $293,990,172 $140,061,107
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of)
net investment income included in net assets at end of period $121,116 $6,717 $(606,173) $27,519
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
YEAR ENDED 3/31/06
CHANGE IN NET ASSETS
FROM OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,838,529 $7,198,028 $14,258,999 $4,423,018
Net realized gain (loss) on investments 286,632 809,461 1,019,442 343,891
Net unrealized gain (loss) on investments (1,103,224) (2,621,239) (3,747,594) (599,785)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $3,021,937 $5,386,250 $11,530,847 $4,167,124
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(3,413,002) $(5,263,309) $(11,694,658) $(2,989,205)
Class B (412,712) (1,168,804) (1,306,917) (1,394,784)
Class C -- (642,938) (1,170,926) --
From net realized gain on investments
Class A -- (564,709) (1,065,305) --
Class B -- (152,917) (135,859) --
Class C -- (82,521) (127,766) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,825,714) $(7,875,198) $(15,501,431) $(4,383,989)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(4,252,560) $(12,844,892) $(14,095,028) $1,890,721
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(5,056,337) $(15,333,840) $(18,065,612) $1,673,856
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 91,117,857 180,919,131 353,022,311 109,397,696
At end of period $86,061,520 $165,585,291 $334,956,699 $111,071,552
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income
included in net assets at end of period $(122,532) $(506,387) $(585,389) $(210,389)
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
YEAR ENDED 3/31/06
CHANGE IN NET ASSETS
FROM OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $6,758,875 $4,974,219 $13,515,722 $6,088,091
Net realized gain (loss) on investments 690,541 481,186 1,195,139 401,417
Net unrealized gain (loss) on investments (2,164,942) (1,720,907) (4,166,118) (1,928,663)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $5,284,474 $3,734,498 $10,544,743 $4,560,845
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(5,659,836) $(4,261,947) $(12,295,006) $(5,562,081)
Class B (1,056,777) (664,458) (688,908) (467,115)
Class C -- -- (466,544) --
From net realized gain on investments
Class A -- (373,368) -- --
Class B -- (67,191) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(6,716,613) $(5,366,964) $(13,450,458) $(6,029,196)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,560,303) $(7,850,463) $(6,612,020) $(521,038)
- ---------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(3,992,442) $(9,482,929) $(9,517,735) $(1,989,389)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
At beginning of period 161,373,778 125,525,917 317,030,455 148,793,150
At end of period $157,381,336 $116,042,988 $307,512,720 $146,803,761
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income
included in net assets at end of period $(93,191) $(255,988) $(824,572) $(284,008)
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $9.73 $9.82 $10.02 $10.02 $9.61
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.45(z) $0.44 $0.46 $0.46 $0.46
Net realized and unrealized gain (loss) on investments 0.05(z) (0.09) (0.19) 0.01 0.44
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.50 $0.35 $0.27 $0.47 $0.90
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.43) $(0.44) $(0.47) $(0.47) $(0.49)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.80 $9.73 $9.82 $10.02 $10.02
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 5.20 3.59 2.76 4.77 9.48
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.11 1.07 0.93 0.82 0.84
Expenses after expense reductions (f) 0.86 0.82 0.68 0.62 0.64
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.62 0.64 0.58 0.62 0.64
Net investment income 4.59(z) 4.48 4.70 4.61 4.70
Portfolio turnover 12 9 19 12 22
Net assets at end of period (000 Omitted) $75,470 $75,597 $79,574 $82,507 $87,724
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
--------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $9.74 $9.84 $10.03 $10.04 $9.62
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.38(z) $0.37 $0.39 $0.38 $0.38
Net realized and unrealized gain (loss) on investments 0.04(z) (0.10) (0.19) (0.01)(g) 0.44
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.42 $0.27 $0.20 $0.37 $0.82
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.35) $(0.37) $(0.39) $(0.38) $(0.40)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.81 $9.74 $9.84 $10.03 $10.04
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.41 2.71 2.08 3.80 8.67
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.87 1.83 1.70 1.64 1.67
Expenses after expense reductions (f) 1.62 1.58 1.45 1.44 1.47
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.38 1.40 1.35 1.44 1.47
Net investment income 3.83(z) 3.72 3.93 3.79 3.86
Portfolio turnover 12 9 19 12 22
Net assets at end of period (000 Omitted) $9,408 $10,465 $11,544 $13,177 $12,900
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) The per share amount is not in accordance with the net realized and unrealized gain/loss for the period because of the
timing of sales of fund shares and the per share amount of realized and unrealized gains and losses at such time.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.01 per share to net investment income, a decrease of $0.01 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.07% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NEW YORK MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.13 $11.30 $11.53 $11.49 $10.94
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.52(z) $0.49 $0.51 $0.51 $0.52
Net realized and unrealized gain (loss) on investments 0.03(z) (0.12) (0.24) 0.04 0.56
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.55 $0.37 $0.27 $0.55 $1.08
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.48) $(0.49) $(0.50) $(0.51) $(0.53)
From net realized gain on investments (0.05) (0.05) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.53) $(0.54) $(0.50) $(0.51) $(0.53)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.15 $11.13 $11.30 $11.53 $11.49
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 5.07 3.30 2.45 4.90 10.05
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.32 1.28 1.14 1.13 1.17
Expenses after expense reductions (f) 1.06 1.03 0.89 0.93 0.97
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.82 0.85 0.79 0.86 0.87
Net investment income 4.66(z) 4.36 4.47 4.39 4.56
Portfolio turnover 8 12 20 13 17
Net assets at end of period (000 Omitted) $118,924 $118,476 $125,861 $131,642 $132,843
- ------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.09 $11.27 $11.49 $11.45 $10.93
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.43(z) $0.41 $0.42 $0.42 $0.43
Net realized and unrealized gain (loss) on investments 0.04(z) (0.14) (0.22) 0.04 0.54
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.47 $0.27 $0.20 $0.46 $0.97
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.40) $(0.40) $(0.42) $(0.42) $(0.45)
From net realized gain on investments (0.05) (0.05) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.45) $(0.45) $(0.42) $(0.42) $(0.45)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.11 $11.09 $11.27 $11.49 $11.45
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.29 2.43 1.77 4.12 8.96
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.07 2.03 1.89 1.87 1.92
Expenses after expense reductions (f) 1.82 1.78 1.64 1.67 1.72
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.57 1.60 1.54 1.60 1.62
Net investment income 3.91(z) 3.61 3.70 3.62 3.80
Portfolio turnover 8 12 20 13 17
Net assets at end of period (000 Omitted) $25,654 $30,046 $35,328 $41,509 $40,867
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NEW YORK MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS C 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.11 $11.29 $11.51 $11.47 $10.93
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.43(z) $0.41 $0.42 $0.42 $0.43
Net realized and unrealized gain (loss) on investments 0.04(z) (0.14) (0.22) 0.04 0.56
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.47 $0.27 $0.20 $0.46 $0.99
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.40) $(0.40) $(0.42) $(0.42) $(0.45)
From net realized gain on investments (0.05) (0.05) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.45) $(0.45) $(0.42) $(0.42) $(0.45)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.13 $11.11 $11.29 $11.51 $11.47
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.29 2.43 1.78 4.12 9.14
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.07 2.03 1.89 1.87 1.92
Expenses after expense reductions (f) 1.82 1.78 1.64 1.67 1.72
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.57 1.60 1.54 1.60 1.62
Net investment income 3.92(z) 3.61 3.72 3.63 3.81
Portfolio turnover 8 12 20 13 17
Net assets at end of period (000 Omitted) $15,822 $17,064 $19,730 $21,907 $14,005
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.02 per share to net investment income, a decrease of $0.02 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.22% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.85 $11.99 $12.30 $12.24 $11.68
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.51(z) $0.51 $0.53 $0.53 $0.54
Net realized and unrealized gain (loss) on investments 0.03(z) (0.09) (0.27) 0.07 0.58
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.54 $0.42 $0.26 $0.60 $1.12
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.50) $(0.51) $(0.53) $(0.53) $(0.56)
From net realized gain on investments (0.03) (0.05) (0.04) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.53) $(0.56) $(0.57) $(0.54) $(0.56)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.86 $11.85 $11.99 $12.30 $12.24
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.60 3.49 2.15 5.01 9.71
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.36 1.32 1.10 1.12 1.11
Expenses after expense reductions (f) 1.11 1.08 0.85 0.92 0.91
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.86 0.89 0.85 0.92 0.91
Net investment income 4.34(z) 4.24 4.38 4.30 4.50
Portfolio turnover 12 8 9 9 20
Net assets at end of period (000 Omitted) $268,108 $270,124 $279,875 $305,185 $316,687
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.83 $11.98 $12.29 $12.23 $11.67
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.44(z) $0.43 $0.45 $0.45 $0.47
Net realized and unrealized gain (loss) on investments 0.02(z) (0.10) (0.27) 0.07 0.57
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.46 $0.33 $0.18 $0.52 $1.04
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.42) $(0.43) $(0.45) $(0.45) $(0.48)
From net realized gain on investments (0.03) (0.05) (0.04) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.45) $(0.48) $(0.49) $(0.46) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.84 $11.83 $11.98 $12.29 $12.23
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.93 2.73 1.49 4.33 9.01
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.01 1.98 1.75 1.76 1.76
Expenses after expense reductions (f) 1.76 1.73 1.50 1.56 1.56
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.51 1.54 1.50 1.56 1.56
Net investment income 3.70(z) 3.59 3.72 3.64 3.85
Portfolio turnover 12 8 9 9 20
Net assets at end of period (000 Omitted) $26,520 $32,610 $40,251 $50,363 $59,116
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS C 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.84 $11.98 $12.29 $12.23 $11.67
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.44(z) $0.43 $0.45 $0.45 $0.46
Net realized and unrealized gain (loss) on investments 0.02(z) (0.09) (0.27) 0.07 0.58
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.46 $0.34 $0.18 $0.52 $1.04
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.42) $(0.43) $(0.45) $(0.45) $(0.48)
From net realized gain on investments (0.03) (0.05) (0.04) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.45) $(0.48) $(0.49) $(0.46) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.85 $11.84 $11.98 $12.29 $12.23
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.93 2.82 1.49 4.33 9.01
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.01 1.98 1.76 1.77 1.76
Expenses after expense reductions (f) 1.76 1.73 1.51 1.57 1.56
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.51 1.54 1.51 1.57 1.56
Net investment income 3.69(z) 3.61 3.76 3.67 3.84
Portfolio turnover 12 8 9 9 20
Net assets at end of period (000 Omitted) $33,152 $32,223 $32,897 $35,256 $31,836
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.02 per share to net investment income, a decrease of $0.02 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.16% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.15 $10.17 $10.31 $10.21 $9.73
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.45(z) $0.43 $0.44 $0.42 $0.45
Net realized and unrealized gain (loss) on investments 0.06(z) (0.02) (0.14) 0.10 0.51
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.51 $0.41 $0.30 $0.52 $0.96
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.42) $(0.43) $(0.44) $(0.42) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.24 $10.15 $10.17 $10.31 $10.21
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 5.17 4.08 2.97 5.12 10.12
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.18 1.13 1.03 1.05 1.03
Expenses after expense reductions (f) 0.82 0.77 0.69 0.75 0.55
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.60 0.60 0.60 0.64 0.48
Net investment income 4.45(z) 4.24 4.33 4.12 4.47
Portfolio turnover 9 9 20 24 19
Net assets at end of period (000 Omitted) $73,813 $72,429 $67,942 $75,083 $68,705
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.18 $10.20 $10.34 $10.24 $9.75
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.38(z) $0.36 $0.36 $0.34 $0.36
Net realized and unrealized gain (loss) on investments 0.06(z) (0.03) (0.14) 0.10 0.53
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.44 $0.33 $0.22 $0.44 $0.89
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.35) $(0.35) $(0.36) $(0.34) $(0.40)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.27 $10.18 $10.20 $10.34 $10.24
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.37 3.30 2.19 4.38 9.21
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.94 1.89 1.80 1.85 1.85
Expenses after expense reductions (f) 1.58 1.53 1.46 1.55 1.37
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.36 1.36 1.37 1.44 1.30
Net investment income 3.69(z) 3.49 3.56 3.32 3.62
Portfolio turnover 9 9 20 24 19
Net assets at end of period (000 Omitted) $33,849 $38,642 $41,455 $48,480 $46,941
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.02 per share to net investment income, a decrease of $0.02 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.15% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $12.25 $12.36 $12.61 $12.53 $12.00
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.55(z) $0.54 $0.56 $0.55 $0.58
Net realized and unrealized gain (loss) on investments 0.00(w)(z) (0.11) (0.25) 0.10 0.54
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.55 $0.43 $0.31 $0.65 $1.12
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.51) $(0.54) $(0.56) $(0.57) $(0.59)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.29 $12.25 $12.36 $12.61 $12.53
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.57 3.48 2.52 5.30 9.51
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.37 1.34 1.23 1.21 1.23
Expenses after expense reductions (f) 1.12 1.09 0.98 1.01 1.03
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.89 0.92 0.89 0.94 0.95
Net investment income 4.45(z) 4.35 4.50 4.39 4.68
Portfolio turnover 10 13 15 16 21
Net assets at end of period (000 Omitted) $135,766 $131,167 $130,342 $137,911 $129,844
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $12.24 $12.36 $12.60 $12.52 $11.99
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.47(z) $0.46 $0.48 $0.47 $0.50
Net realized and unrealized gain (loss) on investments 0.01(z) (0.12) (0.24) 0.10 0.54
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.48 $0.34 $0.24 $0.57 $1.04
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.43) $(0.46) $(0.48) $(0.49) $(0.51)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.29 $12.24 $12.36 $12.60 $12.52
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.98 2.73 1.94 4.62 8.81
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.02 1.99 1.88 1.86 1.88
Expenses after expense reductions (f) 1.77 1.74 1.63 1.66 1.68
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.54 1.57 1.54 1.59 1.60
Net investment income 3.80(z) 3.70 3.85 3.74 4.03
Portfolio turnover 10 13 15 16 21
Net assets at end of period (000 Omitted) $20,679 $26,214 $31,032 $36,817 $37,603
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.04 per share to net investment income, a decrease of $0.04 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.29% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) TENNESSEE MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.56 $10.71 $10.96 $10.90 $10.43
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.47(z) $0.45 $0.45 $0.45 $0.47
Net realized and unrealized gain (loss) on investments (0.01)(z) (0.12) (0.18) 0.06 0.49
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.46 $0.33 $0.27 $0.51 $0.96
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.44) $(0.44) $(0.44) $(0.45) $(0.49)
From net realized gain on investments (0.00)(w) (0.04) (0.08) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.44) $(0.48) $(0.52) $(0.45) $(0.49)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.58 $10.56 $10.71 $10.96 $10.90
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.43 3.13 2.53 4.80 9.34
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.17 1.19 1.16 1.14 1.17
Expenses after expense reductions (f) 0.92 0.94 0.91 0.94 0.97
Net investment income 4.44(z) 4.17 4.16 4.08 4.35
Portfolio turnover 15 5 11 19 16
Net assets at end of period (000 Omitted) $99,302 $98,825 $104,837 $118,990 $115,819
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) TENNESSEE MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $10.56 $10.70 $10.95 $10.89 $10.42
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.40(z) $0.38 $0.38 $0.38 $0.40
Net realized and unrealized gain (loss) on investments (0.02)(z) (0.11) (0.18) 0.06 0.49
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.38 $0.27 $0.20 $0.44 $0.89
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.37) $(0.37) $(0.37) $(0.38) $(0.42)
From net realized gain on investments (0.00)(w) (0.04) (0.08) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.37) $(0.41) $(0.45) $(0.38) $(0.42)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.57 $10.56 $10.70 $10.95 $10.89
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.66 2.56 1.87 4.12 8.64
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.82 1.84 1.81 1.79 1.82
Expenses after expense reductions (f) 1.57 1.59 1.56 1.59 1.62
Net investment income 3.78(z) 3.52 3.51 3.43 3.70
Portfolio turnover 15 5 11 19 16
Net assets at end of period (000 Omitted) $12,924 $17,217 $20,689 $24,306 $27,546
- ------------------------------------------------------------------------------------------------------------------------------
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.03 per share to net investment income, a decrease of $0.03 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.27% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) VIRGINIA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.41 $11.52 $11.73 $11.61 $11.14
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.51(z) $0.51 $0.53 $0.53 $0.53
Net realized and unrealized gain (loss) on investments (0.00)(w)(z) (0.12) (0.21) 0.12 0.47
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.51 $0.39 $0.32 $0.65 $1.00
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.49) $(0.50) $(0.53) $(0.53) $(0.53)
From net realized gain on investments (0.00)(w) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.49) $(0.50) $(0.53) $(0.53) $(0.53)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.43 $11.41 $11.52 $11.73 $11.61
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.57 3.45 2.83 5.70 9.10
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.32 1.30 1.10 1.13 1.13
Expenses after expense reductions (f) 1.07 1.05 0.85 0.93 0.93
Expenses after expense reduction and excluding interest
expense and fees (f)(l) 0.87 0.90 0.85 0.93 0.93
Net investment income 4.51(z) 4.38 4.63 4.53 4.62
Portfolio turnover 8 13 11 11 13
Net assets at end of period (000 Omitted) $269,068 $277,633 $285,185 $301,218 $308,164
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) VIRGINIA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.40 $11.51 $11.72 $11.60 $11.13
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.44(z) $0.43 $0.46 $0.45 $0.46
Net realized and unrealized gain (loss) on investments (0.00)(w)(z) (0.11) (0.21) 0.12 0.46
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.44 $0.32 $0.25 $0.57 $0.92
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
From net realized gain on investments (0.00)(w) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.42 $11.40 $11.51 $11.72 $11.60
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.89 2.78 2.16 5.02 8.40
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.97 1.95 1.75 1.77 1.78
Expenses after expense reductions (f) 1.72 1.70 1.50 1.57 1.58
Expenses after expense reduction and excluding interest
expense and fees (f)(l) 1.52 1.55 1.50 1.57 1.58
Net investment income 3.87(z) 3.73 3.98 3.88 3.97
Portfolio turnover 8 13 11 11 13
Net assets at end of period (000 Omitted) $12,545 $16,885 $19,637 $23,564 $25,470
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) VIRGINIA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS C 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.41 $11.52 $11.72 $11.61 $11.13
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.44(z) $0.43 $0.46 $0.45 $0.45
Net realized and unrealized gain (loss) on investments (0.00)(w)(z) (0.11) (0.20) 0.11 0.48
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.44 $0.32 $0.26 $0.56 $0.93
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
From net realized gain on investments (0.00)(w) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.43 $11.41 $11.52 $11.72 $11.61
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.89 2.78 2.25 4.93 8.49
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.97 1.95 1.75 1.77 1.78
Expenses after expense reductions (f) 1.72 1.70 1.50 1.57 1.58
Expenses after expense reduction and excluding interest
expense and fees (f)(l) 1.52 1.55 1.50 1.57 1.58
Net investment income 3.86(z) 3.72 3.98 3.88 3.97
Portfolio turnover 8 13 11 11 13
Net assets at end of period (000 Omitted) $12,377 $12,995 $12,208 $13,338 $12,758
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.02 per share to net investment income, a decrease of $0.02 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.17% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
YEARS ENDED 3/31
----------------------------------------------------------------
CLASS A 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.47 $11.58 $11.82 $11.77 $11.32
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.51(z) $0.48 $0.51 $0.51 $0.55
Net realized and unrealized gain (loss) on investments 0.01(z) (0.11) (0.25) 0.05 0.46
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.52 $0.37 $0.26 $0.56 $1.01
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.47) $(0.48) $(0.50) $(0.51) $(0.56)
From net realized gain on investments (0.07) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.54) $(0.48) $(0.50) $(0.51) $(0.56)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.45 $11.47 $11.58 $11.82 $11.77
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.59 3.21 2.28 4.84 9.04
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.40 1.34 1.25 1.21 1.26
Expenses after expense reductions (f) 1.15 1.09 1.00 1.01 1.06
Expenses after expense reduction and excluding interest
expense and fees (f)(l) 0.89 0.92 0.89 0.93 0.96
Net investment income 4.41(z) 4.16 4.35 4.33 4.71
Portfolio turnover 13 7 14 17 13
Net assets at end of period (000 Omitted) $129,974 $134,416 $134,459 $140,599 $139,564
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND - CONTINUED
YEARS ENDED 3/31
---------------------------------------------------------------
CLASS B 2007 2006 2005 2004 2003
Net asset value, beginning of period $11.46 $11.58 $11.82 $11.76 $11.31
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.43(z) $0.41 $0.43 $0.43 $0.47
Net realized and unrealized gain (loss) on investments 0.01(z) (0.13) (0.24) 0.06 0.46
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.44 $0.28 $0.19 $0.49 $0.93
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.39) $(0.40) $(0.43) $(0.43) $(0.48)
From net realized gain on investments (0.07) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.46) $(0.40) $(0.43) $(0.43) $(0.48)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.44 $11.46 $11.58 $11.82 $11.76
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 3.92 2.45 1.62 4.25 8.34
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.06 1.99 1.90 1.86 1.91
Expenses after expense reductions (f) 1.80 1.74 1.65 1.66 1.71
Expenses after expense reduction and excluding interest
expense and fees (f)(l) 1.55 1.57 1.54 1.58 1.61
Net investment income 3.76(z) 3.51 3.71 3.68 4.06
Portfolio turnover 13 7 14 17 13
Net assets at end of period (000 Omitted) $10,087 $12,388 $14,334 $17,744 $19,443
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.03 per share to net investment income, a decrease of $0.03 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.25% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS AND ORGANIZATION
MFS Mississippi Municipal Bond Fund (Mississippi Fund), MFS New York Municipal
Bond Fund (New York Fund), MFS North Carolina Municipal Bond Fund (North
Carolina Fund), MFS Pennsylvania Municipal Bond Fund (Pennsylvania Fund), MFS
South Carolina Municipal Bond Fund (South Carolina Fund), MFS Tennessee
Municipal Bond Fund (Tennessee Fund), MFS Virginia Municipal Bond Fund
(Virginia Fund), and MFS West Virginia Municipal Bond Fund (West Virginia Fund)
are each a series of MFS Municipal Series Trust which is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Because
each fund invests primarily in the securities of a single state and its
political subdivisions, each fund is vulnerable to the effects of changes in
the legal and economic environment of the particular state. Municipal
securities backed by current or anticipated revenues from a specific project or
specific assets can be negatively affected by the discontinuance of the
taxation supporting the projects or assets or the inability to collect revenues
for the project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, the security could decline in value, interest from the security
could become taxable and each fund may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. 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
an evaluated bid as reported by an independent pricing service. 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. Values
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.
The Board of Trustees has delegated primary responsibility for determining or
causing to be determined the value of each 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 each fund's valuation
policies and procedures, market quotations are not considered to be readily
available for many types of debt instruments and certain types of derivatives.
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 each 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 each fund's net asset value may be deemed to
have a material affect on the value of securities traded in foreign markets.
Accordingly, each 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 each 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 each fund's net asset value may differ from
quoted or published prices for the same investments.
In September 2006, FASB Statement No. 157, Fair Value Measurements (the
"Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for measuring
fair value and expanded disclosures about fair value measurements. Management
is evaluating the application of the Statement to each fund, and believes the
impact will be limited to expanded disclosures resulting from the adoption of
this Statement in each fund's financial statements.
DERIVATIVE RISK - Each fund may invest in derivatives for hedging or non-
hedging purposes. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. When the funds use derivatives as an investment to
gain market exposure, or for hedging purposes, gains and losses from derivative
instruments may be substantially greater than the derivative's original cost.
Derivative instruments include swap agreements.
SWAP AGREEMENTS - Each fund may enter into swap agreements. A swap is an
exchange of cash payments between each fund and another party. Net cash
payments are exchanged at specified intervals and are recorded as a realized
gain or loss in the Statement of Operations. The value of the swap is adjusted
daily and the change in value, including accruals of periodic amounts of
interest to be paid or received, is recorded as unrealized appreciation or
depreciation in the Statement of Operations. A liquidation payment received or
made upon early termination is recorded as a realized gain or loss in the
Statement of Operations. Collateral, in the form of cash or securities, may be
required to be held in segregated accounts with each fund's custodian in
connection with these agreements. Risk of loss may exceed amounts recognized on
the Statement of Assets and Liabilities. These risks include the possible lack
of a liquid market, failure of the counterparty to perform under the terms of
the agreements, and unfavorable market movement of the underlying instrument.
All swap agreements entered into by each fund with the same counterparty are
generally governed by a single master agreement, which provides for the netting
of all amounts owed by the parties under the agreement upon the occurrence of
an event of default, thereby reducing the credit risk to which such party is
exposed. Each fund holds interest rate swap agreements which involve the
periodic exchange of cash flows, such as the exchange of fixed rate interest
payments for floating rate interest payments based on a notional principal
amount. The interest rates may be based on a specific financial index or the
exchange of two distinct floating rate payments. Each fund may enter into an
interest rate swap in order to manage its exposure to interest rate
fluctuations.
INVERSE FLOATERS - The funds invest in municipal inverse floating rate
securities which are structured by the issuer (known as primary market inverse
floating rate securities) or by an investment banker utilizing municipal bonds
which have already been issued (known as secondary market inverse floating rate
securities) to have variable rates of interest which typically move in the
opposite direction of short term interest rates. A secondary market inverse
floating rate security is created when an investment banker transfers a fixed
rate municipal bond to a special purpose trust, and causes the trust to (a)
issue floating rate certificates to third parties, in an amount equal to a
fraction of the par amount of the deposited bonds (these certificates usually
pay tax-exempt interest at short-term interest rates that typically reset
weekly; and the certificate holders typically, on seven days notice, have the
option to tender their certificates to the investment banker or another party
for redemption at par plus accrued interest), and (b) issue inverse floating
rate certificates (sometimes referred to as "inverse floaters"). If the holder
of the inverse floater transfers the municipal bonds to an investment banker
for the purpose of depositing the municipal bonds into the special purpose
trust, the inverse floating rate certificates that are issued by the trust are
referred to as "self-deposited inverse floaters." If the bonds held by the
trust are purchased by the investment banker for deposit into the trust from
someone other than the purchasers of the inverse floaters, the inverse floating
rate certificates that are issued by the trust are referred to as "externally
deposited inverse floaters." Such self-deposited inverse floaters held by the
funds are accounted for as secured borrowings, with the municipal bonds
reflected in the investments of the funds and amounts owed to the holder of the
floating rate certificate under the provisions of the trust, which amounts are
paid solely from the assets of the trust, reflected as liabilities of the funds
in the Statements of Assets and Liabilities under the caption, "Payable to the
holder of the floating rate certificate from trust assets". Interest expense
and fees relate to payments made to the holder of the floating rate certificate
from trust assets in connection with self-deposited inverse floater
transactions. Interest expense and fees are recorded as incurred. At March 31,
2007, the value of bonds transferred to the trust, each fund's payable to the
holder of the floating rate certificate from trust assets, the weighted average
interest rate on the floating rate certificates issued by the trust, and the
interest expense and fees in connection with self-deposited inverse floaters
were as follows:
WEIGHTED AVERAGE
PAYABLE TO THE HOLDER INTEREST RATE ON INTEREST EXPENSE AND
VALUE OF BONDS OF THE FLOATING RATE FLOATING RATE FEES IN CONNECTION
TRANSFERRED TO CERTIFICATE FROM CERTIFICATES ISSUED WITH SELF-DEPOSITED
FUND THE TRUST TRUST ASSETS BY THE TRUST INVERSE FLOATERS
Mississippi Fund $11,789,203 $5,360,000 3.83% $204,304
New York Fund $22,738,359 $10,350,000 4.18% $399,460
North Carolina Fund $48,561,215 $21,425,000 4.01% $821,947
Pennsylvania Fund $13,596,683 $6,170,000 3.85% $236,409
South Carolina Fund $20,061,332 $9,275,000 4.22% $352,183
Tennessee Fund $-- $-- -- $--
Virginia Fund $33,406,691 $15,670,000 4.00% $598,180
West Virginia Fund $21,208,052 $9,670,000 4.19% $371,506
Primary and externally deposited inverse floaters held by each fund are not
accounted for as secured borrowings.
INDEMNIFICATIONS - Under each fund's organizational documents, its officers and
trustees may be indemnified against certain liabilities and expenses arising
out of the performance of their duties to each fund. Additionally, in the
normal course of business, each fund enters into agreements with service
providers that may contain indemnification clauses. Each fund's maximum
exposure under these agreements is unknown as this would involve future claims
that may be made against each fund that have not yet occurred.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement purposes in
accordance with U.S. generally accepted accounting principles. All premium and
original issue discount is amortized or accreted for tax reporting purposes as
required by federal income tax regulations.
Each fund may receive proceeds from litigation settlements. Any proceeds
received from litigation involving portfolio holdings are reflected in the
Statement of Operations in realized gain/loss if the security has been disposed
of by the fund or in unrealized gain/loss if the security is still held by the
fund. Any other proceeds from litigation not related to portfolio holdings are
reflected as other income in the Statement of Operations.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions made directly to the security issuer,
which are generally non-recurring, incurred to protect or enhance the value of
high-yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
As a result of a change in the estimate for the amortization of premium and
accretion of discount on certain debt securities, interest has been increased,
with a corresponding reduction to net unrealized appreciation (depreciation) as
follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
YEAR ENDED 3/31/07 FUND FUND FUND FUND FUND FUND FUND FUND
Interest income 57,503 359,703 541,901 163,194 450,953 308,306 497,713 351,885
Net unrealized appreciation
(depreciation) (57,503) (359,703) (541,901) (163,194) (450,953) (308,306) (497,713) (351,885)
FEES PAID INDIRECTLY - Each fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
each fund. This amount, for the year ended March 31, 2007, is shown as a
reduction of total expenses on the Statements of Operations.
TAX MATTERS AND DISTRIBUTIONS - Each fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue Code,
and to distribute all of its taxable and tax-exempt income, including realized
capital gains. Accordingly, no provision for federal income tax is required in
the financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from U.S. generally accepted accounting
principles. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These adjustments have no impact on net assets or net asset value
per share. Temporary differences which arise from recognizing certain items of
income, expense, gain or loss in different periods for financial statement and
tax purposes will reverse at some time in the future. Distributions in excess
of net investment income or net realized gains are temporary overdistributions
for financial statement purposes resulting from differences in the recognition
or classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to amortization and accretion of debt
securities and secured borrowings.
The tax character of distributions declared to shareholders is as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
YEAR ENDED 3/31/07 FUND FUND FUND FUND FUND FUND FUND FUND
Ordinary income (including
any short-term capital gains) $-- $104,521 $346,482 $-- $-- $-- $-- $--
Tax-exempt income 3,631,591 6,685,340 13,384,867 4,238,983 6,317,237 4,576,148 12,629,190 5,754,974
Long-term capital gain -- 649,124 468,510 -- -- 50,469 76,004 885,826
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $3,631,591 $7,438,985 $14,199,859 $4,238,983 $6,317,237 $4,626,617 $12,705,194 $6,640,800
YEAR ENDED 3/31/06
Ordinary income (including
any short-term capital gains) $-- $-- $398,095 $-- $-- $178,774 $-- $--
Tax-exempt income 3,825,714 7,075,051 14,172,501 4,383,989 6,716,613 4,915,444 13,450,458 6,029,196
Long-term capital gain -- 800,147 930,835 -- -- 272,746 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $3,825,714 $7,875,198 $15,501,431 $4,383,989 $6,716,613 $5,366,964 $13,450,458 $6,029,196
The federal tax cost and the tax basis components of distributable earnings were as follows:
NORTH
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA
AS OF 3/31/07 FUND FUND FUND FUND
Cost of investments $80,380,249 $147,064,459 $305,653,096 $100,587,067
- ---------------------------------------------------------------------------------------------------------------
Gross appreciation 3,650,988 10,245,221 18,476,883 4,615,856
Gross depreciation (68,288) (4,902) (180,702) (60,617)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) $3,582,700 $10,240,319 $18,296,181 $4,555,239
Undistributed ordinary income $-- $187,567 $-- $--
Undistributed tax-exempt income 327,310 335,398 661,555 282,638
Undistributed long-term capital gain -- 40,347 380,172 27,487
Capital loss carryforwards (226,449) -- -- --
Post-October capital loss deferral -- -- -- --
Other temporary differences (293,833) (535,287) (1,034,654) (309,282)
SOUTH WEST
CAROLINA TENNESSEE VIRGINIA VIRGINIA
AS OF 3/31/07 FUND FUND FUND FUND
Cost of investments $145,484,884 $104,345,745 $276,721,154 $134,095,112
- ---------------------------------------------------------------------------------------------------------------
Gross appreciation 8,816,561 5,274,076 13,623,858 6,193,497
Gross depreciation (86,466) (117,961) (76,564) (73,043)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) $8,730,095 $5,156,115 $13,547,294 $6,120,454
Undistributed ordinary income $-- $244,063 $299,075 $39,337
Undistributed tax-exempt income 663,073 389,769 436,285 499,730
Undistributed long-term capital gain -- 85,332 242,917 65,284
Capital loss carryforwards (395,472) -- -- --
Post-October capital loss deferral -- -- -- (2,702)
Other temporary differences (521,547) (383,052) (1,053,991) (448,613)
As of March 31, 2007, certain funds had capital loss carryforwards available to offset future realized gains. Such losses expire
as follows:
MISSISSIPPI SOUTH CAROLINA
EXPIRATION DATE FUND FUND
3/31/09 $-- $(395,472)
3/31/13 (196,772) --
3/31/14 (29,677) --
-----------------------------------------------------------------
Total $(226,449) $(395,472)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (the "Interpretation") was issued, and is
effective for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective
date. On December 22, 2006, the SEC delayed the implementation of the Interpretation for regulated investment companies for an
additional six months. This Interpretation prescribes a minimum threshold for financial statement recognition of the benefit of
a tax position taken or expected to be taken in a tax return, and requires certain expanded disclosures. Management has
evaluated the application of the Interpretation to each fund, and has determined that there is no impact resulting from the
adoption of this Interpretation on each fund's financial statements.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - Each fund offers multiple classes of shares, which differ in their
respective distribution and service fees. All shareholders bear the common expenses of each fund based on the value of settled
shares outstanding of each class, without distinction between share classes. Dividends are declared separately for each class.
Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert
to Class A shares approximately eight years after purchase.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - Each fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to
provide overall investment management and related administrative services and facilities to each fund. The management fee is
computed daily and paid monthly at an annual rate of 0.55% of each of the fund's average daily net assets. As part of a
settlement agreement with the New York Attorney General concerning market timing and related matters, MFS has agreed to reduce
the management fee to 0.30% of each fund's average daily net assets for the period March 1, 2004 through February 28, 2009. For
the year ended March 31, 2007, this waiver amounted to the following for each fund and is reflected as a reduction of total
expenses in the Statement of Operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$212,257 $406,362 $824,485 $270,859 $389,761 $284,006 $748,566 $359,100
For the Pennsylvania Fund, the investment adviser has agreed in writing to pay a portion of the funds operating expenses
exclusive of management, distribution and service, and certain other fees and expenses, such that operating expenses do not
exceed 0.20% annually of the fund's average daily net assets. This written agreement will continue through July 31, 2007, unless
changed or rescinded by the Board of Trustees. For the year ended March 31, 2007 this reduction amounted to $119,883 and is
reflected as a reduction of total expenses in the Statement of Operations.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly owned subsidiary of MFS, as distributor, received the following
amounts for the year ended March 31, 2007, as its portion of the initial sales charge on sales of Class A shares of each fund.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$32,832 $16,940 $53,525 $32,091 $29,874 $13,099 $39,624 $37,374
The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940.
Each fund's distribution plan provides that each fund will pay MFD for services provided by MFD and financial intermediaries in
connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to
MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the
distribution and/or service fees to financial intermediaries.
Distribution Fee Plan Table:
CLASS A
------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Mississippi Fund 0.10% 0.25% 0.35% -- $--
New York Fund 0.10% 0.25% 0.35% 0.25% 297,143
North Carolina Fund 0.10% 0.25% 0.35% 0.35% 936,079
Pennsylvania Fund 0.10% 0.25% 0.35% 0.10% 71,884
South Carolina Fund 0.10% 0.25% 0.35% 0.35% 463,522
Tennessee Fund 0.10% 0.25% 0.35% 0.35% 344,823
Virginia Fund 0.10% 0.25% 0.35% 0.35% 951,716
West Virginia Fund 0.10% 0.25% 0.35% 0.35% 462,909
CLASS B
------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Mississippi Fund 0.75% 0.25% 1.00% 0.76% $76,335
New York Fund 0.75% 0.25% 1.00% 1.00% 277,832
North Carolina Fund 0.75% 0.25% 1.00% 1.00% 299,029
Pennsylvania Fund 0.75% 0.25% 1.00% 0.86% 313,802
South Carolina Fund 0.75% 0.25% 1.00% 1.00% 234,695
Tennessee Fund 0.75% 0.25% 1.00% 1.00% 150,815
Virginia Fund 0.75% 0.25% 1.00% 1.00% 145,797
West Virginia Fund 0.75% 0.25% 1.00% 1.00% 113,805
CLASS C
------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
New York Fund 0.75% 0.25% 1.00% 1.00% $159,043
North Carolina Fund 0.75% 0.25% 1.00% 1.00% 324,399
Virginia Fund 0.75% 0.25% 1.00% 1.00% 129,279
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Total Distribution
and Service Fees $76,335 $734,018 $1,559,507 $385,686 $698,217 $495,638 $1,226,792 $576,714
(d) In accordance with the distribution plan for certain classes, each fund pays distribution and/or service fees up to these
annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the year ended March 31, 2007
based on each class' average daily net assets. Payment of the Mississippi Fund's 0.25% annual Class A service fee and 0.10%
annual Class A distribution fee is not yet in effect and will be implemented on such date as the fund's Board of Trustees
may determine. For one year from the date of sale of Class B shares of the Mississippi Fund, assets attributable to such
Class B shares are subject to the 0.25% annual Class B service fee. On assets attributable to all other Class B shares of
the Mississippi Fund, the service fee is not currently in effect, but may be implemented on such date as the fund's Board of
Trustees may determine. Payment of the New York Fund's 0.10% annual Class A distribution fee is not yet in effect and will
be implemented on such date as the fund's Board of Trustees may determine. Payment of the Pennsylvania Fund's 0.10% annual
Class A distribution fee is not yet in effect and will be implemented on such date as the fund's Board of Trustees may
determine. 0.10% of the Class A service fee is currently being paid by the Pennsylvania Fund. Payment of the remaining 0.15%
of the Pennsylvania Fund's Class A service fee is not yet in effect and will be implemented on such date as the fund's Board
of Trustees may determine. For one year from the date of sale of Class B shares of the Pennsylvania Fund, assets
attributable to such Class B shares are subject to the 0.25% annual Class B service fee. On assets attributable to all other
Class B shares of the Pennsylvania Fund, 0.10% of the Class B service fee is currently in effect and the remaining portion
of the Class B service fee is not in effect but may be implemented on such date as the fund's Board of Trustees may
determine.
Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption
within 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event of a shareholder
redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the year ended March
31, 2007, were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND FUND
Class A $-- $975 $-- $-- $961 $-- $-- $--
Class B 14,850 48,374 35,676 77,802 33,719 16,725 39,247 20,258
Class C N/A 124 1,564 N/A N/A N/A 628 N/A
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from each fund
for its services as shareholder servicing agent calculated as a percentage of the average daily net assets of each fund as
determined periodically under the supervision of each fund's Board of Trustees. For the year ended March 31, 2007, each fund
paid MFSC the following fee, which equated to the following annual percentage of each fund's average daily net assets for
shareholder services.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Expenses paid $70,801 $135,726 $275,172 $90,486 $129,923 $94,905 $250,086 $120,114
Percentage of average
daily net assets 0.0834% 0.0835% 0.0834% 0.0835% 0.0833% 0.0836% 0.0835% 0.0836%
MFSC also receives payment from each fund for out-of-pocket expenses, sub-accounting and other shareholder servicing costs
which may be paid to affiliated and unaffiliated service providers. For the year ended March 31, 2007, these out-of-pocket
expenses, sub-accounting and other shareholder servicing costs amounted to the following. Each fund may also pay shareholder
servicing related costs directly to non-related parties.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$24,646 $47,358 $35,742 $32,436 $36,771 $25,038 $65,011 $30,934
ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services
to each fund. Under an administrative services agreement, each fund partially reimburses MFS the costs incurred to provide these
services. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. Each fund's annual fixed
amount is $17,500.
The administrative services fee incurred for the year ended March 31, 2007 was equivalent to the following annual effective
rates of each fund's average daily net assets:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Percentage of average daily
net assets 0.0280% 0.0232% 0.0206% 0.0259% 0.0235% 0.0255% 0.0208% 0.0239%
TRUSTEES' AND OFFICERS' COMPENSATION - Each fund pays compensation to independent trustees in the form of a retainer, attendance
fees, and additional compensation to Board and Committee chairpersons. The funds do not pay compensation directly to trustees or
officers of each fund who are also officers of the investment adviser, all of whom receive remuneration for their services to
each fund from MFS. Certain officers and trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Each fund has an unfunded, defined benefit plan for certain retired independent trustees which resulted in the following pension
expense for the funds. These amounts are included in independent trustees' compensation for the year ended March 31, 2007.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$689 $802 $1,618 $700 $1,590 $745 $1,611 $1,586
The liability for deferred retirement benefits payable to certain retired independent trustees amounted to the following for
each fund at March 31, 2007, and is included in the payable for independent trustees' compensation.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$8,962 $11,422 $14,003 $8,858 $13,963 $11,418 $14,026 $13,958
OTHER - These funds and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which
provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief
Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can
terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the year ended March 31, 2007, the
fee paid to Tarantino LLC amounted to the following:
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$558 $1,062 $2,167 $705 $1,021 $746 $1,945 $938
MFS has agreed to reimburse each fund for a portion of the payments made by the funds to Tarantino LLC in the following amounts,
which are shown as a reduction of total expenses in the Statements of Operations. Additionally, MFS has agreed to bear all
expenses associated with office space, other administrative support, and supplies provided to the ICCO.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$442 $846 $1,718 $565 $811 $592 $1,560 $748
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term
obligations were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Purchases $10,678,074 $13,000,645 $41,729,973 $9,606,837 $16,758,151 $17,097,360 $24,364,377 $19,021,606
- ----------------------------------------------------------------------------------------------------------------------------------
Sales $12,574,349 $20,324,505 $54,144,584 $15,364,206 $20,476,120 $22,503,761 $39,916,709 $27,358,487
- ----------------------------------------------------------------------------------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST
Each fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial
interest. Transactions in each fund's shares were as follows:
MISSISSIPPI FUND NEW YORK FUND
---------------------------------------------------- -----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/07 3/31/06 3/31/07 3/31/06
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 663,986 $6,491,928 866,381 $8,546,452 1,133,622 $12,597,179 653,127 $7,390,698
Class B 46,864 458,803 24,252 239,436 86,951 964,688 138,910 1,569,384
Class C -- -- -- -- 126,256 1,407,588 134,687 1,526,215
- -----------------------------------------------------------------------------------------------------------------------------------
710,850 $6,950,731 890,633 $8,785,888 1,346,829 $14,969,455 926,724 $10,486,297
Shares issued to
shareholders in
reinvestment of
distributions
Class A 193,423 $1,891,276 185,126 $1,824,861 307,695 $3,437,943 324,484 $3,670,111
Class B 19,122 187,141 21,153 208,716 64,570 718,927 74,060 834,700
Class C -- -- -- -- 35,669 397,818 39,815 449,550
- -----------------------------------------------------------------------------------------------------------------------------------
212,545 $2,078,417 206,279 $2,033,577 407,934 $4,554,688 438,359 $4,954,361
Shares reacquired
Class A (925,165) $(9,025,658) (1,380,138) $(13,645,231) (1,418,323) $(15,814,182) (1,469,796) $(16,663,402)
Class B (181,260) (1,774,943) (144,591) (1,426,794) (551,167) (6,130,622) (640,793) (7,238,245)
Class C -- -- -- -- (275,976) (3,068,367) (387,465) (4,383,903)
- -----------------------------------------------------------------------------------------------------------------------------------
(1,106,425) $(10,800,601) (1,524,729) $(15,072,025) (2,245,466) $(25,013,171) (2,498,054) $(28,285,550)
Net change
Class A (67,756) $(642,454) (328,631) $(3,273,918) 22,994 $220,940 (492,185) $(5,602,593)
Class B (115,274) (1,128,999) (99,186) (978,642) (399,646) (4,447,007) (427,823) (4,834,161)
Class C -- -- -- -- (114,051) (1,262,961) (212,963) (2,408,138)
- -----------------------------------------------------------------------------------------------------------------------------------
(183,030) $(1,771,453) (427,817) $(4,252,560) (490,703) $(5,489,028) (1,132,971) $(12,844,892)
NORTH CAROLINA FUND PENNSYLVANIA FUND
------------------------------------------------------ -----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/07 3/31/06 3/31/07 3/31/06
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 1,898,273 $22,539,331 1,314,537 $15,818,825 1,220,775 $12,466,087 1,258,762 $12,897,989
Class B 73,925 876,814 132,671 1,590,635 123,402 1,261,103 275,025 2,820,655
Class C 388,647 4,606,363 271,600 3,270,481 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
2,360,845 $28,022,508 1,718,808 $20,679,941 1,344,177 $13,727,190 1,533,787 $15,718,644
Shares issued to
shareholders in
reinvestment of
distributions
Class A 656,787 $7,802,661 698,501 $8,393,304 181,751 $1,854,890 185,707 $1,901,237
Class B 53,048 629,177 69,832 838,029 76,588 783,496 87,173 894,888
Class C 76,393 906,938 79,561 954,980 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
786,228 $9,338,776 847,894 $10,186,313 258,339 $2,638,386 272,880 $2,796,125
Shares reacquired
Class A (2,742,695) $(32,545,431) (2,554,557) $(30,727,514) (1,329,719) $(13,551,451) (990,703) $(10,143,698)
Class B (643,462) (7,631,237) (807,609) (9,719,958) (700,221) (7,159,663) (631,297) (6,480,350)
Class C (388,669) (4,608,143) (375,266) (4,513,810) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
(3,774,826) $(44,784,811) (3,737,432) $(44,961,282) (2,029,940) $(20,711,114) (1,622,000) $(16,624,048)
Net change
Class A (187,635) $(2,203,439) (541,519) $(6,515,385) 72,807 $769,526 453,766 $4,655,528
Class B (516,489) (6,125,246) (605,106) (7,291,294) (500,231) (5,115,064) (269,099) (2,764,807)
Class C 76,371 905,158 (24,105) (288,349) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
(627,753) $(7,423,527) (1,170,730) $(14,095,028) (427,424) $(4,345,538) 184,667 $1,890,721
SOUTH CAROLINA FUND TENNESSEE FUND
------------------------------------------------------ -----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/07 3/31/06 3/31/07 3/31/06
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 1,237,791 $15,208,672 1,132,204 $14,046,582 1,107,252 $11,714,106 493,536 $5,305,262
Class B 61,731 755,885 85,307 1,056,145 21,584 228,692 79,543 857,100
- -----------------------------------------------------------------------------------------------------------------------------------
1,299,522 $15,964,557 1,217,511 $15,102,727 1,128,836 $11,942,798 573,079 $6,162,362
Shares issued to
shareholders in
reinvestment of
distributions
Class A 307,423 $3,777,261 307,593 $3,815,307 204,944 $2,169,008 210,399 $2,255,583
Class B 44,911 551,237 54,579 676,705 29,765 314,601 40,963 439,012
- -----------------------------------------------------------------------------------------------------------------------------------
352,334 $4,328,498 362,172 $4,492,012 234,709 $2,483,609 251,362 $2,694,595
Shares reacquired
Class A (1,208,409) $(14,841,104) (1,274,850) $(15,823,297) (1,284,714) $(13,567,118) (1,135,271) (12,170,537)
Class B (564,676) (6,922,293) (510,226) (6,331,745) (460,389) (4,866,746) (422,094) (4,536,883)
- -----------------------------------------------------------------------------------------------------------------------------------
(1,773,085) $(21,763,397) (1,785,076) $(22,155,042) (1,745,103) $(18,433,864) (1,557,365) (16,707,420)
Net change
Class A 366,805 $4,144,829 164,947 $2,038,592 27,482 $315,996 (431,336) $(4,609,692)
Class B (458,034) (5,615,171) (370,340) (4,598,895) (409,040) (4,323,453) (301,588) (3,240,771)
- -----------------------------------------------------------------------------------------------------------------------------------
(121,229) $(1,470,342) (205,393) $(2,560,303) (381,558) $(4,007,457) (732,924) $(7,850,463)
VIRGINIA FUND WEST VIRGINIA FUND
------------------------------------------------------ -----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/07 3/31/06 3/31/07 3/31/06
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 1,287,431 $14,716,384 1,481,053 $17,100,137 652,133 $7,488,745 767,854 $8,913,846
Class B 49,323 563,135 138,191 1,599,934 35,587 409,605 78,236 910,206
Class C 132,391 1,510,841 152,773 1,767,443 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
1,469,145 $16,790,360 1,772,017 $20,467,514 687,720 $7,898,350 846,090 $9,824,052
Shares issued to
shareholders in
reinvestment of
distributions
Class A 603,956 $6,905,165 610,984 $7,063,585 372,205 $4,278,867 325,732 $3,779,345
Class B 27,108 309,555 33,680 389,119 24,063 276,549 23,338 270,745
Class C 27,058 309,239 26,043 300,916 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
658,122 $7,523,959 670,707 $7,753,620 396,268 $4,555,416 349,070 $4,050,090
Shares reacquired
Class A (2,681,174) $(30,616,172) (2,517,056) $(29,092,777) (1,390,871) $(15,981,170) (981,278) $(11,390,785)
Class B (458,840) (5,235,603) (396,940) (4,587,647) (258,739) (2,971,281) (258,946) (3,004,395)
Class C (215,473) (2,458,382) (99,697) (1,152,730) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
(3,355,487) $(38,310,157) (3,013,693) $(34,833,154) (1,649,610) $(18,952,451) (1,240,224) (14,395,180)
Net change
Class A (789,787) $(8,994,623) (425,019) $(4,929,055) (366,533) $(4,213,558) 112,308 $1,302,406
Class B (382,409) (4,362,913) (225,069) (2,598,594) (199,089) (2,285,127) (157,372) (1,823,444)
Class C (56,024) (638,302) 79,119 915,629 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
(1,228,220) $(13,995,838) (570,969) $(6,612,020) (565,622) $(6,498,685) (45,064) $(521,038)
(6) LINE OF CREDIT
Each fund and other funds managed by MFS participate in a $1 billion unsecured committed line of credit provided by a
syndication of banks under a credit agreement. In addition, these funds and other funds managed by MFS have established
uncommitted borrowing arrangements with certain banks. Borrowings may be made for temporary financing needs. Interest is charged
to each fund, based on its borrowings, generally at a rate equal to the Federal Reserve funds rate plus 0.35%. In addition, a
commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating
funds at the end of each calendar quarter. For the year ended March 31, 2007, each fund's commitment fee and interest expense on
the line of credit were as follows, and are included in miscellaneous expense on the Statements of Operations.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
Commitment Fee $517 $1,013 $2,013 $669 $951 $704 $1,849 $894
Interest Expense -- -- -- -- -- -- -- --
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and the Shareholders of MFS Municipal Series Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of MFS Mississippi Municipal Bond
Fund, MFS New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund,
MFS Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund,
MFS Tennessee Municipal Bond Fund, MFS Virginia Municipal Bond Fund and MFS
West Virginia Municipal Bond Fund, certain of the portfolios constituting MFS
Municipal Series Trust (the "Trust") as of March 31, 2007, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Trust is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Trust's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of March 31, 2007, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
aforementioned portfolios of MFS Municipal Series Trust as of March 31, 2007,
the results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and their
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States
of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 14, 2007
TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust, as of May 1, 2007, are listed below,
together with their principal occupations during the past five years. (Their
titles may have varied during that period.) The address of each Trustee and
officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING
POSITION(s) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j)
- ----------------------- ---------------- --------------- -----------------------------------------------
INTERESTED TRUSTEES
Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services Company, Chief
(born 10/20/63) Executive Officer, President, Chief Investment
Officer and Director
Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services Company,
(born 8/08/46) Chairman (since February 2004); MIT Sloan
School (education), Senior Lecturer (since
2006); Secretary of Economic Affairs, The
Commonwealth of Massachusetts (January 2002 to
December 2002); Fidelity Investments, Vice
Chairman (June 2000 to December 2001); Fidelity
Management & Research Company (investment
adviser), President (March 1997 to July 2001);
Bell Canada Enterprises (telecommunications),
Director; Medtronic, Inc. (medical technology),
Director; Telesat (satellite communications),
Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair of February 1992 Private investor; Eastern Enterprises
(born 5/01/36) Trustees (diversified services company), Chairman,
Trustee and Chief Executive Officer (until
November 2000)
Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and compliance matters
(born 11/29/41) (since July 2002); PricewaterhouseCoopers LLP
(professional services firm), Partner (November
2000 until June 2002)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital, Chief of Cardiac
(born 3/11/37) Surgery (2005); Harvard Medical School,
Professor of Cardiac Surgery; Physician
Director of Medical Device Technology for
Partners HealthCare
David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining products and
(born 5/30/42) service provider), Vice Chairman/Director
(since April 2001); Portman Limited (mining),
Director (since 2005); Encinitos Ventures
(private investment company), Principal (1997
to April 2001); Lincoln Electric Holdings, Inc.
(welding equipment manufacturer), Director
William R. Gutow Trustee December 1993 Private investor and real estate consultant;
(born 9/27/41) Capitol Entertainment Management Company (video
franchise), Vice Chairman; Atlantic Coast Tan
(tanning salons), Vice Chairman (since 2002)
Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial services and
(born 12/21/44) insurance), Vice Chairman and Chief Operating
Officer (until May 2001); The Equitable Life
Assurance Society (insurance), President and
Chief Operating Officer (until May 2001)
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys), Partner
(born 6/23/35)
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc. (acquisition planning
(born 9/23/38) specialists), President; Wellfleet Investments
(investor in health care companies), Managing
General Partner (since 1993); Cambridge
Nutraceuticals (professional nutritional
products), Chief Executive Officer (until May
2001)
Laurie J. Thomsen Trustee March 2005 Private investor; Prism Venture Partners
(born 8/05/57) (venture capital), Co-founder and General
Partner (until June 2004); St. Paul Travelers
Companies (commercial property liability
insurance), Director
Robert W. Uek Trustee January 2006 Retired (since 1999); PricewaterhouseCoopers
(born 5/18/41) LLP (professional services firm), Partner
(until 1999); Consultant to investment company
industry (since 2000); TT International Funds
(mutual fund complex), Trustee (2000 until
2005); Hillview Investment Trust II Funds
(mutual fund complex), Trustee (2000 until
2005)
OFFICERS
Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services Company,
(born 12/01/58) Executive Vice President and Chief Regulatory
Officer (since March 2004); Fidelity Management
& Research Company, Vice President (prior to
March 2004); Fidelity Group of Funds, President
and Treasurer (prior to March 2004)
Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services Company,
(born 12/30/64) Senior Vice President (since September 2004);
PricewaterhouseCoopers LLP, Partner (prior to
September 2004)
Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Vice
(born 1/18/74) and Assistant Clerk President and Senior Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law firm),
Associate (prior to April 2003)
Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services Company,
(born 11/21/63) and Assistant Clerk Special Counsel (since December 2004); Dechert
LLP (law firm), Counsel (prior to December 2004)
David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company, Vice
(born 8/10/68) President (since June 2005); JP Morgan Investor
Services, Vice President (prior to June 2005)
Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services Company, Vice
(born 7/10/68) and Assistant Clerk President and Senior Counsel (since September
2005); John Hancock Advisers, LLC, Vice
President and Chief Compliance Officer
(September 2004 to August 2005), Senior
Attorney (prior to September 2004); John
Hancock Group of Funds, Vice President and
Chief Compliance Officer (September 2004 to
December 2004)
Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services Company, Vice
(born 10/27/70) President (since May 2005); JP Morgan
Investment Management Company, Vice President
(prior to May 2005)
Brian E. Langenfeld(k) Assistant Secretary June 2006 Massachusetts Financial Services Company,
(born 3/07/73) and Assistant Clerk Assistant Vice President and Counsel (since May
2006); John Hancock Advisers, LLC, Assistant
Vice President and Counsel (May 2005 to April
2006); John Hancock Advisers, LLC, Attorney and
Assistant Secretary (prior to May 2005)
Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services Company,
(born 11/13/57) Senior Vice President
Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services Company,
(born 3/07/50) and Assistant Clerk Senior Vice President and Associate General
Counsel (since April 2005); John Hancock
Advisers, LLC, Senior Vice President, Secretary
and Chief Legal Officer (prior to April 2005);
John Hancock Group of Funds, Senior Vice
President, Secretary and Chief Legal Officer
(prior to April 2005)
Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services Company, Vice
(born 11/05/70) and Assistant Clerk President and Senior Counsel (since June 2004);
Bingham McCutchen LLP (law firm), Associate
(prior to June 2004)
Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services Company,
(born 5/01/52) Executive Vice President, General Counsel and
Secretary (since January 2006); Wilmer Cutler
Pickering Hale and Dorr LLP (law firm), Partner
(prior to January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of compliance services),
(born 3/07/44) Compliance Officer Principal (since June 2004); CRA Business
Strategies Group (consulting services),
Executive Vice President (April 2003 to June
2004); David L. Babson & Co. (investment
adviser), Managing Director, Chief
Administrative Officer and Director (prior to
March 2003)
James O. Yost(k) Assistant Treasurer September 1990 Massachusetts Financial Services Company,
(born 6/12/60) Senior Vice President
- ------------
(h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously since appointment unless
indicated otherwise.
(j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., "public
companies").
(k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which
is the principal federal law governing investment companies like the fund, as a result of position with MFS. The address of MFS
is 500 Boylston Street, Boston, Massachusetts 02116.
(n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant retained by MFS pursuant to
its settlement with the SEC concerning market timing and related matters. The terms of that settlement required that
compensation an d expenses related to the independent compliance consultant be borne exclusively by MFS and, therefore, MFS paid
Mr. Butler for the service s he rendered to the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total
of $351,119.29.
The Trust held a shareholders' meeting in 2005 to elect Trustees, and will hold a shareholders' meeting at least once every five
years thereafter, to elect Trustees.
Each Trustee (except Mr. Butler and Mr. Uek) has been elected by shareholders and each Trustee and officer holds office until his or
her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Messrs. Butler, Gutow,
Sherratt and Uek and Ms. Thomsen are members of the Trust's Audit Committee.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or a subsidiary is the
investment adviser or distributor, and, in the case of the officers, with certain affiliates of MFS. As of January 1, 2007, the
Trustees served as board members of 97 funds within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available without charge upon request
by calling 1-800-225-2606.
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110
DISTRIBUTOR Effective April 1, 2007, the custodian changed to:
MFS Fund Distributors, Inc. JPMorgan Chase Bank
500 Boylston Street, Boston, MA 02116-3741 One Chase Manhattan Plaza
New York, NY 10081
PORTFOLIO MANAGER
Michael Dawson INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche LLP
200 Berkeley Street, Boston, MA 02116
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board's most recent review and renewal of each
Fund's investment advisory agreement is available by clicking on the fund's
name under "Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site at http://
www.sec.gov, and copies of this information may be obtained, upon payment of a
duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section at the above
address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
FEDERAL TAX INFORMATION (UNAUDITED)
The funds will notify shareholders of amounts for use in preparing 2007 income
tax forms in January 2008. The following information is provided pursuant to
provisions of the Internal Revenue Code.
The funds below designated the following amounts as capital gain dividends paid
during the fiscal year.
CAPITAL
GAINS
New York Fund $681,156
North Carolina Fund 512,309
Pennsylvania Fund 28,874
Tennessee Fund 96,932
Virginia Fund 114,566
West Virginia Fund 907,139
Of the dividends paid from net investment income during the fiscal year, the
following percentages were designated as exempt interest dividends for federal
income tax purposes. If each fund had earned income on private activity bonds,
a portion of the dividends paid may be considered a tax preference item for
purposes of computing a shareholder's alternative minimum tax.
EXEMPT INTEREST
DIVIDENDS
Mississippi Fund 100.00%
New York Fund 100.00%
North Carolina Fund 100.00%
Pennsylvania Fund 100.00%
South Carolina Fund 100.00%
Tennessee Fund 100.00%
Virginia Fund 100.00%
West Virginia Fund 100.00%
MFS(R) PRIVACY NOTICE
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about the investment products and services that we
offer, and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information.
We maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. We may share nonpublic
personal information with third parties or certain of our affiliates in
connection with servicing your account or processing your transactions. We may
share information with companies or financial institutions that perform
marketing services on our behalf or with other financial institutions with
which we have joint marketing arrangements, subject to any legal requirements.
Authorization to access your nonpublic personal information is limited to
appropriate personnel who provide products, services, or information to you. We
maintain physical, electronic, and procedural safeguards to help protect the
personal information we collect about you.
If you have any questions about the MFS privacy policy, please call
1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
CONTACT US
WEB SITE
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
ACCOUNT SERVICE AND
LITERATURE
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
MAILING ADDRESS
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA
02205-5824
OVERNIGHT MAIL
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116-3741
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS(R) send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to mfs.com, log in to
your account via MFS(R) Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS(R) TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
500 Boylston Street, Boston, MA 02116
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
Annual report
MFS(R) MUNICIPAL INCOME FUND
LETTER FROM THE CEO 1
- ------------------------------------------------------------
PORTFOLIO COMPOSITION 2
- ------------------------------------------------------------
MANAGEMENT REVIEW 3
- ------------------------------------------------------------
PERFORMANCE SUMMARY 4
- ------------------------------------------------------------
EXPENSE TABLE 6
- ------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 8
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 30
- ------------------------------------------------------------
STATEMENT OF OPERATIONS 32
- ------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 33
- ------------------------------------------------------------
FINANCIAL HIGHLIGHTS 34
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 37
- ------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 47
- ------------------------------------------------------------
TRUSTEES AND OFFICERS 48
- ------------------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 54
- ------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 54
- ------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 54
- ------------------------------------------------------------
FEDERAL TAX INFORMATIO 54
- ------------------------------------------------------------
MFS(R) PRIVACY NOTICE 55
- ------------------------------------------------------------
CONTACT INFORMATION BACK COVER
- ------------------------------------------------------------
THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
- ------------------------------------------------------------------------------
NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR
NCUA/NCUSIF
- ------------------------------------------------------------------------------
3/31/07
LMB-ANN
LETTER FROM THE CEO
[Photo of Robert J. Manning]
Dear Shareholders:
The past year has been a great example of why investors should keep their eyes
on the long term.
In 2006 the Dow Jones Industrial Average returned 19%. In February 2007 it hit
its all-time high of 12,787. Less than a week later, stocks sold off around the
globe. By March 5 the Dow was off 5.8%. That is a sign of volatile markets and a
reason investors should make sure they have an investment plan that can ride out
the peaks and troughs.
If you are focused on a long-term investment strategy, the short-term ups and
downs of the markets should not necessarily dictate portfolio action on your
part. Both the bond and stock markets are inherently cyclical. In our view,
investors who remain committed to a long-term plan are more likely to achieve
their financial goals. We believe you should not let the headlines guide you in
your investment decisions and that there is no sense in reacting to short-term
volatility.
In any market environment, we believe individual investors are best served by
following a three-pronged investment strategy of allocating their holdings
across the major asset classes, diversifying within each class, and regularly
rebalancing their portfolios to maintain their desired allocations. Of course,
these strategies cannot guarantee a profit or protect against a loss. Investing
and planning for the long term require diligence and patience, two traits that
in our experience are essential to capitalizing on the many opportunities the
financial markets can offer -- through both up and down economic cycles.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
May 15, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE (i)
Bonds 103.6%
Cash & Other Net Assets (3.6)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 20.5%
------------------------------------------------
General Obligations - Schools 9.0%
------------------------------------------------
General Obligations - General Purpose 8.2%
------------------------------------------------
Utilities - Municipal Owned 5.9%
------------------------------------------------
State & Local Agencies 5.8%
------------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 41.1%
------------------------------------------------
AA 9.9%
------------------------------------------------
A 14.6%
------------------------------------------------
BBB 17.9%
------------------------------------------------
BB 3.1%
------------------------------------------------
B 1.7%
------------------------------------------------
CCC 0.4%
------------------------------------------------
CC (o) 0.0%
------------------------------------------------
Not Rated 11.3%
------------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 5.7
------------------------------------------------
Average Life (i)(m) 13.5 yrs.
------------------------------------------------
Average Maturity (i)(m) 16.6 yrs.
------------------------------------------------
Average Credit Quality of Rated
Securities (long-term) (a) AA-
------------------------------------------------
Average Credit Quality of Rated
Securities (short-term) (a) A2
------------------------------------------------
(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond's price is likely to fluctuate with
general changes in interest rates, e.g., if rates rise 1.00%, a bond with a
5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this presentation, the bond component includes both accrued
interest amounts and the equivalent exposure from any derivative holdings,
if applicable.
(m) The average maturity shown is calculated using the final stated maturity on
the portfolio's holdings without taking into account any holdings which have
been pre- refunded or pre-paid to an earlier date or which have a mandatory
put date prior to the stated maturity. The average life shown takes into
account these earlier dates.
(o) Less than 0.1%.
(r) Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based on
the rating assigned by Fitch, Inc. For those portfolios that hold a security
which is not rated by any of the three agencies, the security is considered
Not Rated. Holdings in U.S. Treasuries and government agency mortgage-backed
securities, if any, are included in the "AAA"-rating category. Percentages
are based on the total market value of investments as of 3/31/07.
From time to time "Cash & Other Net Assets" may be negative due to timing of
cash receipts and/or equivalent exposure from any derivative holdings.
Percentages are based on net assets as of 3/31/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
MANAGEMENT REVIEW
SUMMARY OF RESULTS
For the twelve months ended March 31, 2007, Class A shares of the MFS Municipal
Income Fund provided a total return of 5.00%, at net asset value. This compares
with a return of 5.44% for the fund's benchmark, the Lehman Brothers Municipal
Bond Index (the Lehman Index).
DETRACTORS FROM PERFORMANCE
Yield curve(y) positioning had a negative effect on the fund's relative
performance. Overweighting the short portion of the curve (represented by bonds
with durations(d) of 0- to 4- years) detracted as this area underperformed the
benchmark. Additionally, underweighting the intermediate to longer end of the
curve (represented by bond with durations between 8- and 14- years) hindered
relative results.
CONTRIBUTORS TO PERFORMANCE
The fund benefited from holding lower-quality "BBB"-rated(s) securities and
below-investment-grade debt. During the period, spreads in these credit sectors
narrowed due to stronger demand for higher yielding securities, causing prices
to appreciate. (The Lehman Index is composed primarily of higher-grade
securities with no bonds rated lower than "BBB").
The fund's overall positioning in the healthcare sector bolstered relative
returns.
Respectfully,
Geoffrey Schechter
Portfolio Manager
(d) Duration is a measure of how much a bond's price is likely to fluctuate with
general changes in interest rates, e.g., if rates rise 1.00%, a bond with a
5 year duration is likely to lose about 5.00% of its value.
(s) Bonds rated "BBB", "Baa", or higher are considered investment grade; bonds
rated "BB", "Ba", or below are considered non-investment grade. The primary
source for bond quality ratings is Moody's Investors Service. If not
available, ratings by Standard & Poor's are used, else ratings by Fitch,
Inc. For securities which are not rated by any of the three agencies, the
security is considered Not Rated.
(y) A yield curve graphically depicts the yields of different maturity bonds of
the same credit quality and type. A normal yield curve is upward sloping,
with short term-rates lower than long term rates.
The views expressed in this report are those of the portfolio manager only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market and
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or an indication of
trading intent on behalf of any MFS portfolio. References to specific securities
are not recommendations of such securities, and may not be representative of any
MFS portfolio's current or future investments.
PERFORMANCE SUMMARY THROUGH 3/31/07
The following chart illustrates the historical performance of the fund's
original share class in comparison to its benchmark. Performance results include
any applicable contingent deferred sales charge and reflect the percentage
change in net asset value, including reinvestment of dividends and capital gains
distributions. The performance of other share classes will be greater than or
less than that of the class depicted below. Benchmark comparisons are unmanaged;
do not reflect sales charges, commissions or expenses; and cannot be invested in
directly. (See Notes to Performance Summary.)
PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES, WHEN
SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT PERFORMANCE MAY
BE LOWER OR HIGHER THAN QUOTED. FOR MOST RECENT MONTH-END PERFORMANCE, PLEASE
VISIT MFS.COM. THE PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF
ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF
FUND SHARES.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
MFS Municipal Lehman Brothers
Income Fund Municipal
- Class A Bond Index
3/97 $ 9,525 $10,000
3/98 10,631 11,072
3/99 11,179 11,757
3/00 11,051 11,748
3/01 12,052 13,031
3/02 12,387 13,522
3/03 13,378 14,859
3/04 14,307 15,730
3/05 14,805 16,149
3/06 15,425 16,765
3/07 16,196 17,676
TOTAL RETURNS THROUGH 3/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- ----------------------------------------------------------------------------
A 9/07/93 5.00% 5.51% 5.45%
- ----------------------------------------------------------------------------
B 12/29/86 4.34% 4.75% 4.67%
- ----------------------------------------------------------------------------
C 1/03/94 4.34% 4.77% 4.68%
- ----------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- ----------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index (f) 5.44% 5.50% 5.86%
- ----------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- ----------------------------------------------------------------------------
A 0.01% 4.49% 4.94%
With Initial Sales Charge (4.75%)
- ----------------------------------------------------------------------------
B 0.34% 4.41% 4.67%
With CDSC (Declining over six years
from 4% to 0%) (x)
- ----------------------------------------------------------------------------
C 3.34% 4.77% 4.68%
With CDSC (1% for 12 months) (x)
- ----------------------------------------------------------------------------
CDSC - Contingent Deferred Sales Charge.
(f) Source: FactSet Research Systems Inc.
(x) Assuming redemption at the end of the applicable period.
INDEX DEFINITION
Lehman Brothers Municipal Bond Index - a market-value-weighted index
representative of the tax-exempt bond market.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
A portion of income may be subject to state, federal, and/or alternative minimum
tax. Capital gains, if any, are subject to a capital gains tax.
From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
EXPENSE TABLE
Fund expenses borne by the shareholders during the period, October 1, 2006
through March 31, 2007
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period October 1, 2006 through March 31, 2007.
ACTUAL EXPENSES
The first line for each share class in the following table provides information
about actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the following table provides information
about hypothetical account values and hypothetical expenses based on the fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the fund's actual return. The hypothetical account values
and expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 10/01/06-
Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 0.93% $1,000.00 $1,017.30 $4.68
A -----------------------------------------------------------------------
Hypothetical (h) 0.93% $1,000.00 $1,020.29 $4.68
- --------------------------------------------------------------------------------
Actual 1.70% $1,000.00 $1,014.70 $8.54
B -----------------------------------------------------------------------
Hypothetical (h) 1.70% $1,000.00 $1,016.45 $8.55
- --------------------------------------------------------------------------------
Actual 1.68% $1,000.00 $1,013.60 $8.43
C -----------------------------------------------------------------------
Hypothetical (h) 1.68% $1,000.00 $1,016.55 $8.45
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
3/31/07
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized
by broad-based asset classes.
Municipal Bonds - 100.6%
- -------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 3.2%
- -------------------------------------------------------------------------------------------------------------------
Chicago, IL, O'Hare International Airport Rev. (Second Lien
Passenger Facility D), AMBAC, 5.5%, 2019 $ 350,000 $ 372,950
Chicago, IL, O'Hare International Airport Rev. (Third Lien
Passenger Facility B), FSA, 5.75%, 2022 (u) 3,000,000 3,277,701
Chicago, IL, O'Hare International Airport Rev., Third Lien,
"A", MBIA, 5%, 2029 950,000 1,005,784
Indianapolis, IN, Local Public Improvement (Airport Authority
Project), "I", MBIA, 5%, 2034 200,000 206,992
Louisville & Jefferson County, KY, Regional Airport Authority,
"A", MBIA, 6.5%, 2017 3,000,000 3,076,590
Miami-Dade County, FL, Aviation Rev., "A", CIFG, 5%, 2038 500,000 517,480
New York, NY, City Industrial Development Agency, Special
Facilities Rev. (Terminal One Group), 5.5%, 2024 195,000 209,826
Oklahoma City, OK, Airport Trust, "B", FSA, 5.75%, 2017 1,080,000 1,138,201
------------
$ 9,805,524
- -------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 8.1%
- -------------------------------------------------------------------------------------------------------------------
Chicago, IL (Lakefront Millennium Parking Facilities), MBIA,
5%, 2009 (c) $ 4,000,000 $ 4,166,600
Chicago, IL (Lakefront Millennium Parking Facilities), MBIA,
5.7%, 2012 (c) 645,000 712,028
Commonwealth of Puerto Rico, FGIC, 5.5%, 2015 (u) 6,000,000 6,733,620
Commonwealth of Puerto Rico, Public Improvement, "A",
5.25%, 2027 235,000 252,233
Country Club Hills, IL, "N", MBIA, 5%, 2031 710,000 751,116
Cranston, RI, FGIC, 6.375%, 2009 (c) 200,000 215,384
Houston County, AL, AMBAC, 6.25%, 2009 (c) 850,000 918,893
Interlocken Metropolitan District, CO, Improvement, "C", XLCA,
0%, 2027 510,000 161,099
Kane Kendall County, IL, Capital Appreciation, "E", FGIC,
0%, 2023 1,360,000 610,055
Kane Kendall County, IL, Capital Appreciation, "E", FGIC,
0%, 2025 1,335,000 536,203
Massachusetts Consolidated Loan, "C", 5.875%, 2009 (c) 3,205,000 3,399,544
Mobile County, AL, 6%, 2009 (c) 800,000 841,496
New York, NY, "J", MBIA, 5%, 2017 2,000,000 2,069,580
Southlake, TX, AMBAC, 0%, 2009 (c) 3,185,000 1,268,554
Southlake, TX, AMBAC, 0%, 2009 (c) 3,150,000 1,173,470
State of Illinois, MBIA, 5.5%, 2025 110,000 114,987
State of Wisconsin, "C", 6%, 2010 (c) 1,200,000 1,280,568
------------
$ 25,205,430
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 1.5%
- -------------------------------------------------------------------------------------------------------------------
Birmingham, AL, "A", 5.75%, 2017 $ 1,000,000 $ 1,071,080
Worcester, MA, FSA, 6%, 2010 (c) 3,475,000 3,738,718
------------
$ 4,809,798
- -------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 8.9%
- -------------------------------------------------------------------------------------------------------------------
Adams 12 Five Star Schools, CO, "B", FGIC, 0%, 2025 $ 490,000 $ 201,106
De Soto, TX, Independent School District, School Building,
PSF, 0%, 2031 380,000 112,567
De Soto, TX, Independent School District, School Building,
PSF, 0%, 2034 285,000 71,575
De Soto, TX, Independent School District, School Building,
PSF, 0%, 2036 380,000 85,580
Dudley-Charlton, MA, Regional School District, FGIC,
5.25%, 2017 (u) 2,990,000 3,334,777
Ennis, TX, Independent School District, Capital Appreciation,
"N", PSF, 0%, 2031 380,000 114,502
Ferris, TX, Independent School District, PSF, 5.5%, 2034 640,000 689,101
Florida Board of Education Capital Outlay, Public Education,
"A", 5%, 2008 (c) 1,000,000 1,025,640
Fresno, CA, Unified School District, MBIA, 6.55%, 2020 1,225,000 1,426,868
Goose Creek, TX, Consolidated School District, PSF,
5%, 2009 (c) 2,500,000 2,576,800
Keller, TX, Independent School District, PSF, 6%, 2017 225,000 240,775
Knox County, KY, Independent School District, XLCA,
5.5%, 2014 (c) 640,000 715,731
Lancaster, TX, Independent School District, "N", FSA,
4.5%, 2028 1,105,000 1,099,022
Lancaster, TX, Independent School District, "N", FSA,
4.5%, 2030 300,000 297,447
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 0%, 2014 (c) 485,000 180,003
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 0%, 2014 (c) 430,000 150,061
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 0%, 2025 275,000 115,899
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 0%, 2026 275,000 109,802
Leander, TX, Independent School District, PSF, 0%, 2018 2,500,000 1,301,525
Leander, TX, Independent School District, Capital
Appreciation, Refunding, School Building, FGIC, 0%, 2026 900,000 342,819
Leander, TX, Independent School District, Capital
Appreciation, Refunding, School Building, FGIC, 0%, 2031 910,000 258,413
Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2027 215,000 252,098
Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2028 215,000 252,913
Manistee, MI, Area Public Schools, FGIC, 5.75%, 2009 (c) 700,000 729,386
Palos Verdes Peninsula, CA, Capital Appreciation, "N",
FSA, 0%, 2029 1,115,000 411,335
Phenix City, AL, AMBAC, 5.65%, 2010 (c) 1,500,000 1,618,665
Philadelphia, PA, School District, MBIA, 6%, 2010 (c) 750,000 797,760
Prosper, TX, Independent School District, Capital Appreciation
School Building, "N", PSF, 0%, 2031 515,000 149,211
Roma, TX, Independent School District, PSF, 5.875%, 2010 (c) 1,705,000 1,823,975
San Jose Evergreen, CA, Community College District, Election
2004, "A", MBIA, 0%, 2028 740,000 252,910
Schertz-Cibolo-Universal City, TX, Independent School
District, Capital Appreciation, School Building, "A",
PSF, 0%, 2029 230,000 79,373
Schertz-Cibolo-Universal City, TX, Independent School
District, Capital Appreciation, School Building, "A",
PSF, 0%, 2030 4,035,000 1,318,436
Wattsburg, PA, Public School Building Authority Rev.,
Capital Appreciation, MBIA, 0%, 2029 2,150,000 800,144
Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,665,000 1,778,137
Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,765,000 1,884,932
Wylie, TX, Independent School District, PSF, 5.25%, 2029 1,080,000 1,141,873
------------
$ 27,741,161
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 20.2%
- -------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), 9.25%, 2030 $ 650,000 $ 767,845
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), "B", 9.25%, 2022 350,000 413,455
Baldwin County, AL, Eastern Shore Health Care Authority Rev.
(Thomas Hospital), 5.75%, 2008 (c) 600,000 623,616
Baxter County, AR, Hospital Rev., 5.375%, 2014 1,000,000 1,028,920
Chemung County, NY, Civic Facilities Rev. (St. Joseph's
Hospital-Elmira), "A", 6%, 2013 515,000 518,481
Colorado Health Facilities Authority Rev. (Portercare
Adventist Health Systems), 6.625%, 2011 (c) 500,000 566,845
Cuyahoga County, OH, Hospital Facilities Rev. (Canton, Inc.),
7.5%, 2030 900,000 996,921
Denver, CO, Health & Hospital Authority Rev., "A",
5.375%, 2018 300,000 305,586
Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 500,000 531,600
Fulton County, NY, Industrial Development Agency, Civic
Facilities Rev. (Nathan Littauer Hospital), "A", 5.75%, 2009 160,000 161,819
Gainesville & Hall County, GA, Hospital Authority Rev.
(Northeast Georgia Health System, Inc.), 5.5%, 2031 445,000 462,876
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital),
5.75%, 2031 525,000 542,876
Henrico County, VA, Industrial Development Authority Rev. (Bon
Secours), RIBS, FSA, 7.924%, 2027 (p) 5,000,000 6,679,200
Highlands County, FL, Health Facilities Authority Rev.
(Adventist Health Systems), "C", 5.25%, 2036 465,000 491,579
Highlands County, FL, Health Facilities Authority Rev.
(Adventist/Sunbelt Hospital), 6%, 2011 (c) 350,000 387,583
Illinois Health Facilities Authority Rev. (Condell Medical
Center), 6.35%, 2015 1,000,000 1,060,640
Illinois Health Facilities Authority Rev. (Decatur Memorial
Hospital), 5.75%, 2024 350,000 370,675
Illinois Health Facilities Authority Rev. (Passavant Memorial
Area Hospital Associates), 6%, 2010 (c) 335,000 363,311
Illinois Health Facilities Authority Rev. (Riverside Health
Systems), 5.75%, 2012 (c) 650,000 716,963
Illinois Health Facilities Authority Rev. (Sinai Health), FHA,
5.15%, 2037 640,000 667,437
Indiana Health Facilities Financing Authority, Hospital Rev.
(Clarian Health), "A", 5%, 2039 260,000 266,534
Indiana Health Facilities Financing Authority, Hospital Rev.
(Deaconess Hospital), "A", AMBAC, 5.375%, 2034 565,000 606,533
Indiana Health Facilities Financing Authority, Hospital Rev.
(Munster Medical Research Foundation, Inc.), "A", 6.375%, 2021 1,700,000 1,807,423
Indiana Health Facilities Financing Authority, Hospital Rev.
(Munster Medical Research Foundation, Inc.), "A", 6.375%, 2031 500,000 533,005
Indiana Health Facilities Financing Authority, Hospital Rev.
(Riverview Hospital), 5.25%, 2014 400,000 409,956
Indiana Health Facilities Financing Authority, Hospital Rev.
(Riverview Hospital), 6.125%, 2031 250,000 269,278
Kentucky Economic Development Finance Authority (Norton
Healthcare), "A", 6.5%, 2010 (c) 490,000 540,220
Kentucky Economic Development Finance Authority, Prerefunded
(Norton Healthcare), "A", 6.625%, 2010 (c) 195,000 215,777
Kentucky Economic Development Finance Authority, Unrefunded
(Norton Healthcare), "A", 6.5%, 2020 760,000 820,222
Kentucky Economic Development Finance Authority, Unrefunded
(Norton Healthcare), "A", 6.625%, 2028 55,000 59,561
Knox County, TN, Health Educational Hospital & Housing
Facilities Board Rev. (Covenant Health), "A", 0%, 2035 730,000 182,507
Knox County, TN, Health Educational Hospital & Housing
Facilities Board Rev. (Covenant Health), "A", 0%, 2037 315,000 70,850
Knox County, TN, Health Educational Hospital & Housing
Facilities Board Rev. (Covenant Health), "A", 0%, 2036 460,000 109,094
Knox County, TN, Health Educational Hospital Facility (Baptist
Health Systems, East Tennessee), 6.375%, 2022 1,000,000 1,038,230
Lauderdale County & Florence, AL (Coffee Health Group), "A",
MBIA, 5.25%, 2019 1,100,000 1,138,478
Macomb County, MI, Hospital Finance Authority Rev. (Mount
Clemens General Hospital), 5.75%, 2025 1,000,000 1,045,540
Marion County, FL, Hospital District Rev. (Monroe Hospital),
5.625%, 2019 750,000 779,625
Marshall County, AL, Health Care Authority Rev., "A",
6.25%, 2022 500,000 548,625
Martin County, FL, Health Facilities Authority Rev. (Martin
Memorial Medical Center), "A", 5.75%, 2022 850,000 909,203
Maryland Health & Higher Educational Facilities Authority Rev.
(Medstar Health), 5.5%, 2033 305,000 322,745
Maryland Health & Higher Educational Facilities Authority Rev.
(University of Maryland Medical System), 6.75%, 2010 (c) 1,000,000 1,103,110
Massachusetts Health & Educational Facilities Authority Rev.
(Caritas Christi), "A", 5.7%, 2015 1,000,000 1,036,730
Massachusetts Health & Educational Facilities Authority Rev.
(Caritas Christi), "B", 6.5%, 2012 400,000 437,948
Massachusetts Health & Educational Facilities Authority Rev.
(Partners Healthcare Systems), "C", 5.75%, 2021 400,000 432,204
Mecosta County, MI, General Hospital Rev., 6%, 2018 300,000 308,205
Miami Beach, FL, Health Facilities Authority Rev. (Mount Sinai
Medical Center), "A", 6.7%, 2019 750,000 824,220
Miami Dade County, FL (Public Facilities Jackson Health
Systems), "A", MBIA, 5%, 2029 4,040,000 4,210,044
Michigan Hospital Finance Authority Rev. (Memorial Healthcare
Center), 5.75%, 2015 800,000 834,296
Monroe County, MI, Hospital Finance Authority, Hospital Rev.
(Mercy Memorial Hospital Corp.), 5.5%, 2035 670,000 703,212
Montgomery, AL, Medical Clinic Board Health Care Facility Rev.
(Jackson Hospital & Clinic), 5.25%, 2031 145,000 150,743
Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial
Hospital), 5.625%, 2032 375,000 394,834
Nassau County, NY, Industrial Development Agency, Civic
Facilities Rev. (North Shore Health System), 5.875%, 2011 280,000 290,814
New Hampshire Health & Educational Facilities Authority Rev.
(Covenant Health), 6.5%, 2017 820,000 910,725
New Hampshire Health & Educational Facilities Authority Rev.
(Exeter Hospital), 6%, 2024 500,000 546,435
New Jersey Health Care Facilities (Palisades Medical Center),
6.5%, 2021 500,000 545,470
New Jersey Health Care Facilities, Financing Authority Rev.
(Saint Barnabas Health), Capital Appreciation, "B", 0%, 2036 3,135,000 710,767
New Jersey Health Care Facilities, Financing Authority Rev.
(Saint Barnabas Health), Capital Appreciation, "B", 0%, 2037 2,090,000 449,078
North Texas Health Facilities Development Corp. Rev.
(United Regional Health Care System, Inc.), 6%, 2023 1,000,000 1,081,500
Ohio County, WV, County Commission Health System Rev.
(Ohio Valley Medical Center), 5.75%, 2013 900,000 889,866
Oklahoma Development Finance Authority Rev.
(Comanche County Hospital), "B", 6%, 2014 600,000 660,540
Oklahoma Development Finance Authority Rev.
(Comanche County Hospital), "B", 6.6%, 2031 255,000 279,353
Rhode Island Health & Education Building Corp. Rev., Hospital
Financing (Lifespan Obligated Group), 6.5%, 2012 (c) 1,500,000 1,702,560
Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare
Systems, Inc.), 6.5%, 2027 290,000 298,369
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6%, 2012 (c) 300,000 333,996
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6%, 2012 (c) 500,000 556,660
South Carolina Jobs & Economic Development Authority, Hospital
Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 500,000 544,795
Steubenville, OH, Hospital Rev. (Trinity Hospital),
6.375%, 2020 300,000 325,140
Stillwater, OK, Medical Center Authority (Stillwater Medical
Center), 6.5%, 2007 (c) 1,000,000 1,023,080
Suffolk County, NY, Industrial Development Agency, Civic
Facilities Rev. (Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,058,510
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial
Healthcare), 6.25%, 2020 1,000,000 1,055,250
Tom Green County, TX, Health Facilities Rev. (Shannon Health
System), 6.75%, 2021 400,000 433,880
Upper Illinois River Valley Development, Health Facilities
Rev. (Morris Hospital), 6.625%, 2031 500,000 544,710
Valley, AL, Special Care Facilities Financing (Lanier Memorial
Hospital), 5.5%, 2007 500,000 502,645
Wapello County, IA, Hospital Authority Rev. (Ottumwa Regional
Health Center), 6.375%, 2012 (c) 750,000 848,085
Weirton, WV, Municipal Hospital Building, Commission Rev.
(Weirton Hospital Medical Center), 6.375%, 2031 500,000 526,115
West Plains, MO, Industrial Development Authority Rev.
(Ozarks Medical Center), 6.75%, 2024 195,000 201,575
West Shore, PA, Hospital Authority (Holy Spirit Hospital),
6.25%, 2032 1,000,000 1,069,930
Wichita, KS, Hospital Authority Rev. (Via Christi Health
System), 6.25%, 2019 1,500,000 1,653,330
Wisconsin Health & Educational Facilities Authority Rev.
(Agnesian Healthcare, Inc.), 6%, 2017 325,000 345,023
Wisconsin Health & Educational Facilities Authority Rev.
(Aurora Health Care, Inc.), 6.875%, 2030 750,000 857,610
Wisconsin Health & Educational Facilities Authority Rev.
(Wheaton Franciscan Healthcare), 5.25%, 2031 1,025,000 1,072,786
Wisconsin Health & Educational Facilities Authority Rev.
(Wheaton Franciscan Services), 6.25%, 2012 (c) 1,000,000 1,120,870
Yonkers, NY, Industrial Development Agency, Civic Facilities
Rev. (St. John's Riverside Hospital), 6.8%, 2016 385,000 410,271
------------
$ 62,616,918
- -------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.9%
- -------------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 8.125%, 2016 $ 505,000 $ 492,168
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 8.5%, 2026 1,130,000 1,085,681
Colorado Health Facilities Authority Rev. (Evangelical),
6.9%, 2010 (c) 305,000 344,095
Colorado Health Facilities Authority Rev. (Evangelical),
6.9%, 2025 195,000 217,004
Cumberland County, PA, Municipal Authority Rev. (Wesley), "A",
7.25%, 2013 (c) 270,000 318,573
Cumberland County, PA, Municipal Authority Rev. (Wesley), "A",
7.25%, 2013 (c) 105,000 123,890
Eden Prairie, MN, Multi-Family Housing Rev. (Coll-Rolling
Hills), "A", GNMA, 6%, 2021 200,000 216,410
Indiana Health Facilities Financing Authority Rev. (Hoosier
Care), 7.125%, 2034 795,000 818,930
Iowa Finance Authority, Health Care Facilities Rev.
(Care Initiatives Project), 9.25%, 2011 (c) 480,000 586,670
Iowa Finance Authority, Health Care Facilities Rev.
(Care Initiatives Project), "A", 5.5%, 2025 275,000 288,525
Millbrae, CA, Residential Facilities Rev. (Magnolia of
Millbrae), "A", 7.375%, 2027 920,000 952,136
Montana Facility Finance Authority Rev. (Senior Living St.
Johns Lutheran), "A", 6.125%, 2036 170,000 177,509
Shelby County, TN, Health, Educational & Housing Facilities
Board Rev. (Germantown Village), 7.25%, 2034 385,000 393,971
------------
$ 6,015,562
- -------------------------------------------------------------------------------------------------------------------
Human Services - 0.6%
- -------------------------------------------------------------------------------------------------------------------
Louisiana Local Government Environmental Facilities &
Community Development (Westside Rehab Center Project), "B",
6.5%, 2013 $ 450,000 $ 454,257
Nassau County, NY, Industrial Development Civic (Special Needs
Facilities), 6.1%, 2012 225,000 231,212
Orange County, FL, Health Facilities Authority Rev. (GF/
Orlando Healthcare Facilities), 9%, 2031 1,000,000 1,097,510
------------
$ 1,782,979
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Los Angeles, CA, Regional Airport Lease Rev. (AMR Corp.), "C",
7%, 2012 $ 300,000 $ 323,898
New York, NY, Industrial Development Agencies Rev.
(American Airlines, Inc.), 7.625%, 2025 970,000 1,170,431
Tulsa, OK, Municipal Airport Trust Rev. (American Airlines,
Inc.), "B", 5.65%, 2035 1,000,000 1,017,620
------------
$ 2,511,949
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.7%
- -------------------------------------------------------------------------------------------------------------------
Brazos River, TX, Harbor Navigation District (Dow Chemical
Co.), 5.7%, 2033 $ 1,000,000 $ 1,064,550
Red River Authority, TX, Pollution Control Rev. (Celanese
Project), "B", 6.7%, 2030 1,000,000 1,088,580
------------
$ 2,153,130
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.5%
- -------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid Waste
Disposal Rev. (Waste Management, Inc.), "A-2", 5.4%, 2025 $ 215,000 $ 227,225
Carbon County, UT, Solid Waste Disposal Rev. (Laidlaw
Environmental), 7.45%, 2017 2,500,000 2,567,200
Charles City County, VA, Industrial Development Authority,
Solid Waste Disposal Facility Rev. (Waste Management, Inc.),
6.25%, 2027 500,000 540,585
Colorado Housing & Finance Authority, Solid Waste Rev.
(Waste Management, Inc.), 5.7%, 2018 230,000 253,058
Gloucester County, NJ, Solid Waste Resource Recovery Rev.
(Waste Management, Inc.), 6.85%, 2029 150,000 159,890
Massachusetts Development Finance Agency Rev.
(Waste Management, Inc.), "B", 6.9%, 2029 300,000 319,374
Nevada Department of Business & Industry Rev.
(Republic Services, Inc.), 5.625%, 2026 450,000 489,875
------------
$ 4,557,207
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Metals - 0.0%
- -------------------------------------------------------------------------------------------------------------------
Burns Harbor, IN, Solid Waste Disposal Facilities Rev.
(Bethlehem Steel), 8%, 2024 (d) $ 3,000,000 $ 30
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 2.7%
- -------------------------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development Authority Rev.
(USX Corp.), 5.4%, 2017 $ 500,000 $ 534,590
Gulf Coast, TX, Industrial Development Authority (Valero
Energy Corp.), 5.6%, 2031 500,000 516,065
Gulf Coast, TX, Industrial Development Authority Rev.
(Microgy Holdings LLC Project), 7%, 2036 320,000 343,411
Hardeman County, TN, Correctional Facilities Corp.
(Corrections Corp. of America), 7.375%, 2017 500,000 511,545
Massachusetts Development Finance Agency Rev., Resource
Recovery (Flour Corp.), 5.625%, 2019 2,895,000 3,019,775
Massachusetts Industrial Finance Agency Rev.
(Welch Foods, Inc.), 5.6%, 2017 1,300,000 1,337,778
Park Creek Metropolitan District, CO, Rev. (Custodial
Receipts), "CR-2", 7.875%, 2032 (n) 400,000 443,168
Pennsylvania Economic Development Financing Authority Rev.
(Amtrak), 6.125%, 2021 550,000 588,566
Tooele County, UT, Hazardous Waste Treatment Rev.
(Union Pacific Corp.), 5.7%, 2026 980,000 1,017,240
------------
$ 8,312,138
- -------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.2%
- -------------------------------------------------------------------------------------------------------------------
Butler, AL, Industrial Development Board, Solid Waste Disposal
Rev. (Georgia Pacific Corp.), 5.75%, 2028 $ 260,000 $ 266,427
Delta County, MI, Economic Development Corp., Environmental
Improvements Rev. (Mead Westvaco Escanaba), "A",
6.25%, 2012 (c) 900,000 1,002,267
Mobile, AL, Industrial Development Board Improvement Rev., "B"
(International Paper Co.), 6.45%, 2019 2,000,000 2,109,300
Navajo County, AZ, Industrial Development Authority Rev.
(Stone Container Corp.), 7.4%, 2026 1,500,000 1,515,870
Navajo County, AZ, Industrial Development Authority Rev.
(Stone Container Corp.), 7.2%, 2027 500,000 511,375
Onondaga County, NY, Industrial Development Authority Rev.,
Solid Waste Disposal Rev. (Solvay Paperboard LLC), 6.8%, 2014 900,000 938,061
West Point, VA, Industrial Development Authority, Solid Waste
Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 550,000 552,299
------------
$ 6,895,599
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.1%
- -------------------------------------------------------------------------------------------------------------------
New York Liberty Development Corp. Rev. (National Sports
Museum), 6.125%, 2019 $ 265,000 $ 277,129
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.0%
- -------------------------------------------------------------------------------------------------------------------
Austin, TX, Convention Center (Convention Enterprises, Inc.),
"A", 6.6%, 2011 (c) $ 300,000 $ 329,787
Austin, TX, Convention Center (Convention Enterprises, Inc.),
"A", 6.7%, 2011 (c) 400,000 441,100
Austin, TX, Convention Enterprises, Inc., Rev., "B",
5.75%, 2034 520,000 555,693
Baltimore, MD, Convention Center Hotel Rev., "A", XLCA,
5.25%, 2039 555,000 597,202
Gallery Certificate Trust, PA, Parking Rev., 4.5%, 2013 (n) 565,000 564,395
San Antonio, TX, Convention Center, Hotel Financial Corp.,
Contract Rev. (Empowerment Zone), "A", AMBAC, 5%, 2034 490,000 507,091
Toledo Lucas County, OH, Port Authority Development Rev.
(Northwest Ohio Bond Fund), "C", 5.125%, 2025 65,000 65,741
------------
$ 3,061,009
- -------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.2%
- -------------------------------------------------------------------------------------------------------------------
Bay County, FL, Housing Finance Authority, Multi-Family Rev.
(Andrews Place II Apartments), FSA, 5%, 2035 $ 150,000 $ 153,734
Bay County, FL, Housing Finance Authority, Multi-Family Rev.
(Andrews Place II Apartments), FSA, 5.1%, 2046 275,000 281,636
California Statewide Communities Development Authority Rev.
(Irvine Apartments), 5.25%, 2025 1,000,000 1,027,810
Charter Mac Equity Issuer Trust, FRN, 6.625%, 2009 (n) 2,000,000 2,096,760
Eaglebend, CO, Affordable Housing Corp., 6.2%, 2007 (c) 1,000,000 1,025,620
GMAC Municipal Mortgage Trust, "B-1", 5.6%, 2039 (n) 1,000,000 1,056,430
GMAC Municipal Mortgage Trust, "C-1", 5.7%, 2040 (n) 500,000 509,030
Indianapolis, IN, Multi-Family Rev. (Cambridge Station
Apartments II), FNMA, 5.25%, 2039 320,000 330,621
Munimae TE Bond Subsidiary LLC, "A-2", 4.9%, 2049 (n) 2,000,000 2,030,040
Newark, NJ, Housing Authority (Port Authority - Newark Marine
Terminal), MBIA, 5.5%, 2009 (c) 215,000 237,756
North Charleston, SC, Housing Authority Rev. (Horizon
Village), "A", FHA, 5.15%, 2048 305,000 308,447
Seattle, WA, Housing Authority Rev., Capped Fund Program (High
Rise Rehab), "I", FSA, 5%, 2025 455,000 464,846
Tampa, FL, Housing Finance Authority, Multi-Family Rev.
(Meridian River Development Corp.), 4.75%, 2026 335,000 341,760
------------
$ 9,864,490
- -------------------------------------------------------------------------------------------------------------------
Parking - 0.1%
- -------------------------------------------------------------------------------------------------------------------
Rail Connections, Inc., MA Rev., "B", 0%, 2009 (c) $ 100,000 $ 60,327
Rail Connections, Inc., MA Rev., "B", 0%, 2009 (c) 210,000 118,457
Rail Connections, Inc., MA Rev., "B", 0%, 2009 (c) 300,000 158,493
------------
$ 337,277
- -------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Austin, TX, Town Community Events Center Venue, FGIC,
6%, 2009 (c) $ 1,015,000 $ 1,074,428
Metropolitan Pier & Expo, IL, McCormick Place Expansion, MBIA,
5.25%, 2042 220,000 232,654
Miami Dade County, FL, Transportation Systems, "N", XLCA,
5%, 2022 1,130,000 1,204,817
------------
$ 2,511,899
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 4.4%
- -------------------------------------------------------------------------------------------------------------------
Adams County, CO, Single Family Mortgage Rev., ETM,
8.875%, 2011 (c) $ 2,510,000 $ 3,026,759
Brevard County, FL, Housing Finance Authority Rev., "B", GNMA,
6.5%, 2022 126,000 128,975
Calcasieu Parish, LA, Public Trust Authority, Single Family
Mortgage Rev., "A", GNMA, 6.05%, 2032 430,000 458,027
California Rural Home Mortgage Finance Authority Rev., GNMA,
6.55%, 2030 80,000 82,174
Chicago, IL, Single Family Mortgage Rev., "C", GNMA,
7.05%, 2030 10,000 10,183
Chicago, IL, Single Family Mortgage Rev., "C", GNMA,
5.5%, 2038 1,500,000 1,623,000
Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 345,000 84,422
Jefferson Parish, LA, Single Family Mortgage Rev., "B-1",
GNMA, 6.625%, 2023 265,000 280,373
Jefferson Parish, LA, Single Family Mortgage Rev., "B-1",
GNMA, 6.75%, 2030 365,000 368,818
Lee County, FL, Housing Finance Authority Rev. (Multi-County
Program), "A-4", GNMA, 7%, 2031 5,000 5,000
Maricopa County, AZ, Single Family Mortgage Rev., "B", GNMA,
6.2%, 2034 35,000 35,217
Nortex Housing Finance Corp., TX, Single Family Mortgage
Backed Securities Rev., "A", GNMA, 5.5%, 2038 785,000 836,551
Oklahoma County Home Finance Mortgage Backed, "N", GNMA,
5.4%, 2038 565,000 599,086
Pima County, AZ, Industrial Development Authority Rev., "B-1",
GNMA, 7.05%, 2030 120,000 121,970
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 6.45%, 2029 450,000 451,521
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.9%, 2035 230,000 248,361
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 6.25%, 2035 105,000 112,119
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.8%, 2036 575,000 633,805
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-1", GNMA, 6.875%, 2026 40,000 40,159
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-1", GNMA, 5.75%, 2037 190,000 207,875
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-3", GNMA, 6%, 2035 310,000 339,245
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-3", GNMA, 5.5%, 2037 330,000 352,074
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-4", GNMA, 5.85%, 2037 350,000 383,478
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.8%, 2027 270,000 283,665
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.7%, 2036 580,000 634,439
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.9%, 2037 140,000 153,766
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-6", GNMA, 5.65%, 2036 440,000 460,112
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B", GNMA, 5.45%, 2027 300,000 312,303
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B-2", GNMA, 6.45%, 2033 255,000 272,796
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B-3", GNMA, 5.25%, 2038 455,000 477,568
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B-4", GNMA, 5.55%, 2038 460,000 500,020
------------
$ 13,523,861
- -------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.1%
- -------------------------------------------------------------------------------------------------------------------
California Housing Finance Agency Rev., Home Mortgage, MBIA,
0%, 2028 $ 1,285,000 $ 431,657
Colorado Housing & Finance Authority Rev., 7.45%, 2016 25,000 25,105
Colorado Housing & Finance Authority Rev., 6.875%, 2028 50,000 50,097
Colorado Housing & Finance Authority Rev., 6.8%, 2030 60,000 60,000
Colorado Housing & Finance Authority Rev., "A-1", 7.4%, 2027 10,000 10,155
Colorado Housing & Finance Authority Rev., "A-2", 7.15%, 2014 7,000 7,134
Colorado Housing & Finance Authority Rev., "A-2", AMBAC,
6.6%, 2028 225,000 236,133
Colorado Housing & Finance Authority Rev., "B-2", 6.1%, 2023 95,000 98,237
Colorado Housing & Finance Authority Rev., "B-3", 6.55%, 2033 85,000 86,640
Colorado Housing & Finance Authority Rev., "C", 6.75%, 2021 35,000 36,953
Colorado Housing & Finance Authority Rev., "C-2", 5.9%, 2023 145,000 149,666
Colorado Housing & Finance Authority Rev., "C-2", FHA,
6.6%, 2032 135,000 144,214
Colorado Housing & Finance Authority Rev., "C-3", FHA,
6.375%, 2033 75,000 77,607
Louisiana Housing Finance Agency, Single Family Mortgage Rev.,
GNMA, 6.4%, 2032 90,000 90,000
Louisiana Housing Finance Agency, Single Family Mortgage Rev.,
"B-2", GNMA, 7.55%, 2031 45,000 45,668
Minnesota Housing Finance Agency Rev., Residential Housing
Finance, "B", 4.8%, 2023 135,000 136,173
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.35%, 2032 165,000 166,696
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 140,000 142,660
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.75%, 2034 85,000 88,902
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), "B", GNMA, 6.7%, 2030 145,000 147,310
New Hampshire Housing Finance Authority Rev., "B",
5.875%, 2030 80,000 80,008
New Hampshire Housing Finance Authority Rev., "B",
6.3%, 2031 65,000 66,966
New Hampshire Housing Finance Authority Rev., "B",
6.5%, 2035 700,000 748,706
New Mexico Mortgage Finance Authority Rev., GNMA,
7.1%, 2030 60,000 60,322
New Mexico Mortgage Finance Authority Rev., GNMA,
6.25%, 2032 290,000 298,259
New Mexico Mortgage Finance Authority Rev., "B-2", GNMA,
6.35%, 2033 150,000 153,215
New Mexico Mortgage Finance Authority Rev., "N", GNMA,
5.95%, 2037 435,000 466,690
North Dakota Housing Finance Agency Rev., Housing Finance,
"A", 5%, 2033 295,000 295,000
Ohio Housing Finance Agency Mortgage Rev., Residential
Mortgage Backed, "C", GNMA, 5.9%, 2035 405,000 421,334
Oklahoma Housing Finance Agency Rev., 6.65%, 2029 340,000 344,158
Texas Affordable Housing Corp., Single Family Mortgage Rev.,
"B", GNMA, 5.25%, 2039 520,000 551,855
Texas Housing & Community Affairs, Residential Mortgage Rev.,
GNMA, 7.1%, 2021 620,000 637,961
Vermont Housing Finance Agency Rev., FSA, 4.95%, 2032 165,000 165,282
------------
$ 6,520,763
- -------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 1.0%
- -------------------------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority,
Resource Recovery Facilities Rev. (American Ref-Fuel Co.),
"A", 6.2%, 2019 $ 500,000 $ 516,585
Hudson County, NJ, Solid Waste System Rev., 5.9%, 2015 805,000 807,938
Massachusetts Development Finance Agency, Resource Recovery
Rev. (Ogden Haverhill Associates), "A", 6.7%, 2014 700,000 756,994
Massachusetts Industrial Finance Agency, Resource Recovery
Rev. (Ogden Haverhill Associates), "A", 5.6%, 2019 1,000,000 1,037,700
------------
$ 3,119,217
- -------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Development Finance Agency (Visual & Performing
Arts), 6%, 2021 $ 1,000,000 $ 1,180,930
State of Michigan, COP, AMBAC, 5.5%, 2010 (c) 1,250,000 1,318,325
------------
$ 2,499,255
- -------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 5.7%
- -------------------------------------------------------------------------------------------------------------------
Alabama Building Renovation Authority, AMBAC, 6%, 2018 $ 760,000 $ 812,349
Alabama Public School & College, Capital Improvement,
"D", 6%, 2015 2,850,000 3,041,748
Chicago, IL, Public Building Commission Rev., FGIC,
5.25%, 2016 (u) 3,000,000 3,325,740
Chicago, IL, Public Building Commission Rev., FGIC,
5.25%, 2017 (u) 2,500,000 2,782,650
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "A", 5%, 2045 325,000 335,121
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B", 5.375%, 2010 (c) 1,500,000 1,579,200
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B", 5.5%, 2013 (c) 1,075,000 1,180,640
Indianapolis, IN, Public Improvement Bond Bank, "C", AMBAC,
6%, 2017 500,000 532,455
New York Urban Development Corp., Correctional Facilities
Service Contract C, AMBAC, 5.875%, 2009 (c) 1,000,000 1,048,270
Stafford, TX, Economic Development Corp., FGIC, 6%, 2015 525,000 603,776
Virginia College Building Authority, VA, Public Higher
Education Financing, "A", 5.75%, 2009 (c) 2,295,000 2,406,698
------------
$ 17,648,647
- -------------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 0.8%
- -------------------------------------------------------------------------------------------------------------------
Access to Loans for Learning, California Student Loan Rev.,
7.95%, 2030 $ 650,000 $ 686,056
Arizona Student Loan Acquisition Authority Rev., 5.8%, 2016 675,000 713,718
Arizona Student Loan Acquisition Authority Rev., 5.85%, 2017 700,000 740,817
Massachusetts Educational Financing Authority, Refunding Issue
G, "A", MBIA, 6.1%, 2018 485,000 498,682
------------
$ 2,639,273
- -------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.1%
- -------------------------------------------------------------------------------------------------------------------
Black Hawk, CO, Device Tax Rev., 5%, 2010 $ 20,000 $ 20,455
Black Hawk, CO, Device Tax Rev., 5%, 2013 15,000 15,485
Black Hawk, CO, Device Tax Rev., 5%, 2015 45,000 46,484
Black Hawk, CO, Device Tax Rev., 5%, 2021 40,000 40,629
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.5%, 2024 250,000 261,495
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.75%, 2029 450,000 489,137
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.5%, 2031 200,000 213,692
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.75%, 2034 300,000 324,165
New York, NY, Transitional Finance Authority Rev., Future Tax
Secured, "A", 6%, 2009 (c) 2,000,000 2,127,520
------------
$ 3,539,062
- -------------------------------------------------------------------------------------------------------------------
Tax Assessment - 2.1%
- -------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh
Mills), 5.1%, 2014 $ 75,000 $ 75,853
Allegheny County, PA, Redevelopment Authority Rev. (Pittsburgh
Mills), 5.6%, 2023 50,000 52,220
Broadview, IL, Tax Increment Rev., 5.25%, 2012 1,000,000 1,023,030
Fishhawk Community Development District, FL, 5.125%, 2009 165,000 165,104
Greyhawk Landing Community Development, FL, Special
Assessment, "B", 6.25%, 2009 100,000 100,959
Katy, TX, Development Authority Rev., "B", 5.8%, 2011 780,000 799,773
Katy, TX, Development Authority Rev., "B", 6%, 2018 1,200,000 1,235,544
Killarney, FL, Community Development District, Special
Assessment, "B", 5.125%, 2009 170,000 170,029
Lakes by the Bay South Community Development District, FL,
Rev., "B", 5.3%, 2009 220,000 220,205
Lancaster County, SC, Assessment Rev. (Sun City Carolina
Lakes), 5.45%, 2037 50,000 50,979
Noblesville, IN, Redevelopment Authority Lease Rental,
5.25%, 2025 455,000 483,219
Panther Trace II, Community Development District Rev., FL,
Special Assessment, "B", 5%, 2010 585,000 582,900
Parkway Center, Community Development District, FL, Special
Assessment, "B", 5.625%, 2014 935,000 954,168
Preserve at Wilderness Lake, FL, Community Development
District, Capital Improvement, "B", 5%, 2009 45,000 44,964
Renaissance Community Development District, FL, Special
Assessment, "B", 6.25%, 2008 120,000 120,754
Tuscany Reserve Community Development District, FL, Special
Assessment, "B", 5.25%, 2016 180,000 182,007
Washington County, PA, Redevelopment Authority (Victory Centre
Project), "A", 5.45%, 2035 120,000 122,287
------------
$ 6,383,995
- -------------------------------------------------------------------------------------------------------------------
Tobacco - 2.1%
- -------------------------------------------------------------------------------------------------------------------
Badger, WI, Tobacco Asset Securitization Corp., 6.125%, 2027 $ 1,005,000 $ 1,074,295
California County, CA, Tobacco Securitization Agency, Capital
Appreciation Asset Backed (Gold Country), 0%, 2033 1,655,000 373,169
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico,
"A", 0%, 2050 4,000,000 273,840
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico,
"B", 0%, 2055 2,000,000 73,320
District of Columbia, Tobacco Settlement, 6.25%, 2024 385,000 409,763
District of Columbia, Tobacco Settlement, Capital
Appreciation, "A", 0%, 2046 2,215,000 210,336
Golden State Tobacco Securitization Corp., California Tobacco
Settlement Rev., Asset Backed, "A-1", 5%, 2033 245,000 242,207
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement, "A-1", 5.125%, 2047 250,000 247,775
Guam Economic Development Authority, 5%, 2022 85,000 85,450
Iowa Tobacco Settlement Authority, Tobacco Settlement Rev.,
Asset Backed, "B", 0% to 2007, 5.6% to 2034 615,000 626,580
Louisiana Tobacco Settlement Authority Rev., 5.5%, 2030 415,000 437,182
New Jersey Tobacco Settlement Authority, 5.75%, 2012 (c) 660,000 706,490
New Jersey Tobacco Settlement Financing Corp., "1-A",
5%, 2041 500,000 487,340
Northern Tobacco Securitization Corp., AK, Asset Backed, "A",
5%, 2046 455,000 441,464
Silicon Valley Tobacco Securitization Authority, CA, Tobacco
Settlement Rev. (Turbo-Santa Clara), "A", 0%, 2036 1,035,000 205,841
Silicon Valley Tobacco Securitization Authority, CA, Tobacco
Settlement Rev. (Turbo-Santa Clara), "A", 0%, 2041 825,000 122,141
South Carolina Tobacco Settlement Authority Rev., "B",
6.375%, 2028 500,000 535,440
Washington Tobacco Settlement Authority, 6.5%, 2026 70,000 76,695
------------
$ 6,629,328
- -------------------------------------------------------------------------------------------------------------------
Toll Roads - 0.6%
- -------------------------------------------------------------------------------------------------------------------
New Jersey Turnpike Authority Rev., Unrefunded, "C", MBIA,
6.5%, 2016 $ 235,000 $ 270,765
New Jersey Turnpike Authority Rev., "C", ETM, MBIA,
6.5%, 2016 (c) 80,000 92,925
Northwest Parkway Public Highway Authority Co. Rev., Capital
Appreciation, "B", AMBAC, 0%, 2018 750,000 431,865
San Joaquin Hills, CA, Transportation Corridor Agency, Toll
Road Rev., ETM, 0%, 2009 (c) 1,000,000 939,750
------------
$ 1,735,305
- -------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 1.1%
- -------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Port Authority Special Rev., MBIA,
6.25%, 2009 (c) $ 1,000,000 $ 1,057,180
New Jersey Economic Development Authority Rev., Transportation
Project Sublease, "A", FSA, 6%, 2009 (c) 325,000 340,451
Pennsylvania Turnpike Commission Oil, "A", AMBAC,
5.25%, 2008 (c) 670,000 693,926
Pennsylvania Turnpike Commission Oil, "A", AMBAC,
5.25%, 2018 180,000 186,133
Pennsylvania Turnpike Commission Oil, "A", ETM, AMBAC,
5.25%, 2018 (c) 1,150,000 1,185,236
------------
$ 3,462,926
- -------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 4.4%
- -------------------------------------------------------------------------------------------------------------------
Alabama Private Colleges & Universities, Facilities Authority
Rev. (Tuskegee University), ASSD GTY, 4.75%, 2026 $ 1,000,000 $ 1,025,530
Amherst, NY, Industrial Development Agency Rev. (Daemen
College), "A", 6%, 2011 (c) 1,000,000 1,113,540
Arkansas Technical University Rev., Housing Systems, "N",
AMBAC, 5%, 2036 165,000 173,828
California Educational Facilities Authority Rev. (L.A. College
of Chiropractic), 5.6%, 2017 250,000 251,713
Harrisburg, PA, University of Science, "A", 5.4%, 2016 150,000 153,285
Harrisburg, PA, University of Science, "B", 6%, 2036 350,000 360,255
Houston, TX, Community College Systems, MBIA, 7.875%, 2025 1,650,000 1,957,428
Illinois Finance Authority Rev. (University of Chicago), "A",
5%, 2034 215,000 224,675
Massachusetts Development Finance Agency Rev.
(Boston University), XLCA, 6%, 2059 1,250,000 1,536,250
Massachusetts Development Finance Agency Rev.
(Massachusetts College of Pharmacy), "B", 6.625%, 2010 (c) 100,000 108,675
Massachusetts Development Finance Agency Rev. (Olin College),
"B", XLCA, 5.25%, 2033 2,000,000 2,126,540
New York Dormitory Authority Rev. (Vassar College),
4.25%, 2039 240,000 227,484
Northern Illinois University Rev., Auxiliary Facilities
Systems, AMBAC, 5.875%, 2018 1,370,000 1,424,293
Oregon Facilities Authority Rev. (Linfield College), "A",
5%, 2030 165,000 170,064
Savannah, GA, Economic Development Authority Rev. (College of
Art & Design, Inc.), 6.5%, 2009 (c) 500,000 540,660
St. Joseph County, IN, Educational Facilities Rev. (University
of Notre Dame), 6.5%, 2026 1,000,000 1,307,330
Upland, IN, Economic Development Rev. (Taylor University),
6%, 2018 435,000 479,905
Upland, IN, Economic Development Rev. (Taylor University),
6.25%, 2023 520,000 572,988
------------
$ 13,754,443
- -------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 1.3%
- -------------------------------------------------------------------------------------------------------------------
California Statewide Communities, Development Authority Rev.
(Escondido Charter High School), 7.5%, 2011 (c) $ 500,000 $ 585,990
Maine Finance Authority, Educational Rev. (Waynflete School),
6.4%, 2019 1,000,000 1,054,750
Maine Finance Authority, Educational Rev. (Waynflete School),
6.5%, 2029 1,000,000 1,059,220
Maryland Health & Higher Educational Facilities Authority Rev.
(Washington Christian Academy), 5.5%, 2038 100,000 102,242
Michigan Municipal Bond Authority Rev. (YMCA Service Learning
Academy), 7.625%, 2021 400,000 431,876
New Hampshire Health & Education (Derryfield School),
6.5%, 2010 205,000 210,176
Pima County, AZ, Industrial Development Authority Education
Rev. (Arizona Charter Schools), "C", 6.75%, 2031 495,000 524,705
------------
$ 3,968,959
- -------------------------------------------------------------------------------------------------------------------
Utilities - Cogeneration - 0.2%
- -------------------------------------------------------------------------------------------------------------------
Carbon County, PA, Industrial Development Authority Rev.
(Panther Creek Partners), 6.65%, 2010 $ 550,000 $ 568,244
- -------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 4.8%
- -------------------------------------------------------------------------------------------------------------------
Apache County, AZ, Industrial Development Authority, Pollution
Control Rev. (Tucson Electric Power Co.), 5.875%, 2033 $ 1,000,000 $ 1,005,860
Brazos River Authority, TX, Pollution Control Rev. (TXU
Electric Company), "C", 5.75%, 2036 120,000 123,236
California Pollution Control Financing Authority, Pollution
Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 1,600,000 1,705,664
Clark County, NV, Industrial Development Rev. (Southwest Gas
Corp.), "A", AMBAC, 4.85%, 2035 730,000 735,052
Connecticut Development Authority, Pollution Control Rev.
(Connecticut Light & Power Co.), 5.85%, 2028 1,000,000 1,045,530
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), 6.375%, 2022 1,000,000 1,023,660
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), "A", 6.3%, 2016 565,000 576,232
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), "A", 5.8%, 2022 500,000 505,935
Lehigh County, PA, Industrial Development Authority Pollution
Control Rev. (PPL Electric Utilities Corp.), "A", FGIC,
4.7%, 2029 320,000 328,707
Matagorda County, TX, District Pollution Control Rev. (AEP
Texas Central), "N", AMBAC, 4.4%, 2030 1,160,000 1,127,184
Matagorda County, TX, Pollution Control Rev. (Reliant Energy),
5.95%, 2030 750,000 773,903
Mecklenburg County, VA, Industrial Development Authority Rev.
(UAE Mecklenburg LP), 6.5%, 2017 700,000 767,144
New Hampshire Industrial Development Authority, Pollution
Control Rev. (Connecticut Light & Power), 5.9%, 2016 500,000 508,225
Pima County, AZ, Industrial Development Authority Rev. (Tucson
Electric Power Co.), "A", 6.1%, 2025 2,000,000 2,013,200
Port Morrow, OR, Pollution Control Rev. (Portland General
Electric), 5.2%, 2033 350,000 358,134
Sabine River Authority, TX, Pollution Control Rev. (TXU
Electric Co.), "A", 5.5%, 2022 500,000 509,250
West Feliciana Parish, LA, Pollution Control Rev. (Entergy
Gulf States), 6.6%, 2028 1,665,000 1,672,126
------------
$ 14,779,042
- -------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 5.8%
- -------------------------------------------------------------------------------------------------------------------
Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2011 $ 1,500,000 $ 1,685,580
California Department of Water Resources Power Supply Rev.,
"A", 5.125%, 2012 (c) 750,000 809,948
Easley, SC, Utility Rev., Refunding & Improvement, FSA,
5%, 2034 320,000 338,643
Georgia Municipal Electric Power Authority Rev., MBIA,
6.375%, 2016 2,000,000 2,366,800
Georgia Municipal Electric Power Authority Rev., MBIA,
6.5%, 2020 7,350,000 8,841,977
North Carolina Municipal Power Agency, Catawba Electric Rev.,
6.375%, 2013 750,000 805,935
North Carolina Municipal Power Agency, Catawba Electric Rev.,
MBIA, 5.25%, 2019 (u) 3,000,000 3,204,780
------------
$ 18,053,663
- -------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 4.8%
- -------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., RITES, FGIC,
6.432%, 2016 (n)(v) $ 1,000,000 $ 1,245,100
Forsyth County, GA, Water & Sewage Authority, 6.25%, 2010 (c) 1,170,000 1,266,314
Magnolia, TX, Water & Sewer System Rev., 5.15%, 2031 140,000 143,612
Massachusetts Water Resources Authority, ETM, 6.5%, 2019 (c) 5,965,000 7,093,817
Mississippi Development Bank Special Obligations, Grenada, MS,
Water & Sewer Systems Project, "N", FSA, 5%, 2030 490,000 516,445
New York Environmental Facilities, 5%, 2016 430,000 440,987
New York Environmental Facilities, ETM, 5%, 2016 (c) 570,000 583,617
Pittsburgh, PA, Water & Sewer Authority Rev., "C", FSA,
5.25%, 2022 2,000,000 2,025,940
Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA,
5.25%, 2030 255,000 273,587
West Virginia Water Development Authority Loan Program, "B",
AMBAC, 4.75%, 2035 110,000 112,485
West Wilson Utility District, TN, Waterworks Rev., MBIA,
5.25%, 2014 (c) 480,000 526,075
Westmoreland County, PA, Municipal Authority Services Rev.,
FSA, 5.25%, 2015 (c) 520,000 573,570
------------
$ 14,801,549
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $294,671,406) $312,086,761
- -------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.2%
- -------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development Authority Rev.
(Presbyterian University Hospital), "B", 3.7%, due 4/05/07 $ 100,000 $ 100,000
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), 3.77%, due 4/02/07 197,000 197,000
East Baton Rouge, LA, Pollution Control Rev. (Exxon Mobil
Corp.), 3.75%, due 4/02/07 200,000 200,000
Illinois Health Facilities Authority Rev. (University of
Chicago Hospital), 3.77%, due 4/02/07 100,000 100,000
Jefferson County, AL, Sewer Rev., Capital Improvement Warrants
Rev., "A", 3.7%, due 4/05/07 100,000 100,000
Jefferson County, AL, Sewer Rev., Warrants Rev., "B-4",
3.7%, due 4/05/07 300,000 300,000
Petersburg, IN, Pollution Control Rev. (Indianapolis Power &
Light Co.), "B", 3.73%, due 4/04/07 2,550,000 2,550,000
State of Oregon, "73G", 3.68%, due 4/04/07 300,000 300,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST $ 3,847,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $298,518,406) (k) $315,933,761
- -------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (1.8)% (5,719,252)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $310,214,509
- -------------------------------------------------------------------------------------------------------------------
(c) Refunded bond.
(d) Non-income producing security - in default.
(k) As of March 31, 2007, the fund held securities fair valued in accordance with the policies adopted by the Board of Trustees,
aggregating $312,086,761 and 98.78% of market value. All of these security values were provided by an independent pricing
service using an evaluated bid.
(n) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the
ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period
end, the aggregate value of these securities was $7,944,923, representing 2.6% of net assets.
(p) Primary inverse floater.
(u) Underlying security deposited into special purpose trust ("the trust") by investment banker upon creation of self-deposited
inverse floaters.
(v) Externally deposited inverse floater.
The following abbreviations are used in this report and are defined:
BMA Bond Market Assn.
COP Certificate of Participation
ETM Escrowed to Maturity
FRN Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end.
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
SWAP AGREEMENTS AT 3/31/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 6,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $36,410
At March 31, 2007, the fund has sufficient cash and/or other liquid securities to cover any commitments under these derivative
contracts.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/07
This statement represents your fund's balance sheet, which details the assets and liabilities
comprising the total value of the fund.
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value (identified cost, $298,518,406) $315,933,761
Cash 214,711
Receivable for investments sold 75,690
Receivable for fund shares sold 1,006,006
Interest receivable 4,435,048
Unrealized appreciation on interest rate swap agreements 36,410
Other assets 8,111
- -------------------------------------------------------------------------------------------------------
Total assets $321,709,737
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Distributions payable $499,767
Payable for investments purchased 230,227
Payable to the holder of the floating rate certificate from
trust assets 10,245,000
Payable for fund shares reacquired 245,586
Payable to affiliates
Management fee 7,636
Shareholder servicing costs 20,900
Distribution and service fees 10,182
Administrative services fee 517
Payable for independent trustees' compensation 28,449
Payable for interest expense and fees 97,172
Accrued expenses and other liabilities 109,792
- -------------------------------------------------------------------------------------------------------
Total liabilities $11,495,228
- -------------------------------------------------------------------------------------------------------
Net assets $310,214,509
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $295,034,743
Unrealized appreciation (depreciation) on investments 17,451,765
Accumulated net realized gain (loss) on investments (2,557,307)
Accumulated undistributed (distributions in excess of) net
investment income 285,308
- -------------------------------------------------------------------------------------------------------
Net assets $310,214,509
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 36,241,232
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $248,226,360
Shares outstanding 29,016,533
- -------------------------------------------------------------------------------------------------------
Net asset value per share $8.55
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $8.98
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $26,918,510
Shares outstanding 3,141,918
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $8.57
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $35,069,639
Shares outstanding 4,082,781
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $8.59
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales
charge may be imposed on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Year ended 3/31/07
This statement describes how much your fund earned in investment income and accrued in expenses. It also describes
any gains and/or losses generated by fund operations.
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------
Interest income $18,096,163
Other income 1,901
- ------------------------------------------------------------------------------------------------------
Total investment income $18,098,064
- ------------------------------------------------------------------------------------------------------
Expenses
Management fee $1,701,583
Distribution and service fees 1,269,809
Shareholder servicing costs 354,089
Administrative services fee 64,186
Independent trustees' compensation 13,511
Custodian fee 130,819
Shareholder communications 36,263
Auditing fees 44,254
Legal fees 10,602
Interest expense and fees 462,670
Miscellaneous 101,539
- ------------------------------------------------------------------------------------------------------
Total expenses $4,189,325
- ------------------------------------------------------------------------------------------------------
Fees paid indirectly (13,920)
Reduction of expenses by investment adviser (775,058)
- ------------------------------------------------------------------------------------------------------
Net expenses $3,400,347
- ------------------------------------------------------------------------------------------------------
Net investment income $14,697,717
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $682,382
Swap transactions 110,887
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $793,269
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $(339,494)
Swap transactions (193,145)
- ------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(532,639)
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $260,630
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $14,958,347
- ------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any
distributions, and any shareholder transactions.
YEARS ENDED 3/31
----------------------------------------
2007 2006
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income $14,697,717 $14,460,172
Net realized gain (loss) on investments 793,269 629,325
Net unrealized gain (loss) on investments (532,639) (2,743,791)
- -------------------------------------------------------------------------------------------------------
Change in net assets from operations $14,958,347 $12,345,706
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
From net investment income
Class A $(11,328,364) $(11,422,176)
Class B (1,227,213) (1,578,544)
Class C (1,360,395) (1,359,481)
- -------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(13,915,972) $(14,360,201)
- -------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,410,081) $(6,094,125)
- -------------------------------------------------------------------------------------------------------
Total change in net assets $(1,367,706) $(8,108,620)
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
At beginning of period 311,582,215 319,690,835
At end of period (including undistributed net investment
income of $285,308 and accumulated distributions in
excess of net investment income of $126,026) $310,214,509 $311,582,215
- -------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all
distributions) held for the entire period.
CLASS A YEARS ENDED 3/31
---------------------------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $8.53 $8.58 $8.70 $8.54 $8.32
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.42(z) $0.41 $0.42 $0.41 $0.41
Net realized and unrealized gain (loss)
on investments 0.00(w)(z) (0.06) (0.13) 0.17 0.25
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.42 $0.35 $0.29 $0.58 $0.66
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.40) $(0.40) $(0.41) $(0.42) $(0.44)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.55 $8.53 $8.58 $8.70 $8.54
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 5.00 4.18 3.49 6.94 8.00
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.19 1.17 1.04 1.04 1.05
Expenses after expense reductions (f) 0.94 0.92 0.79 0.88 0.90
Expenses after expense reductions and
excluding interest expense and fees (f)(l) 0.79 0.81 0.79 0.88 0.90
Net investment income 4.91(z) 4.71 4.90 4.80 4.85
Portfolio turnover 10 9 8 9 13
Net assets at end of period (000 Omitted) $248,226 $240,212 $241,850 $264,797 $274,442
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS B YEARS ENDED 3/31
---------------------------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $8.54 $8.59 $8.72 $8.55 $8.33
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.36(z) $0.34 $0.36 $0.35 $0.35
Net realized and unrealized gain (loss)
on investments 0.00(w)(z) (0.05) (0.14) 0.18 0.24
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.36 $0.29 $0.22 $0.53 $0.59
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.33) $(0.34) $(0.35) $(0.36) $(0.37)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.57 $8.54 $8.59 $8.72 $8.55
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.34 3.40 2.60 6.27 7.19
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.95 1.92 1.79 1.79 1.80
Expenses after expense reductions (f) 1.70 1.67 1.54 1.63 1.65
Expenses after expense reductions and
excluding interest expense and fees (f)(l) 1.55 1.56 1.54 1.63 1.65
Net investment income 4.16(z) 3.96 4.15 4.05 4.10
Portfolio turnover 10 9 8 9 13
Net assets at end of period (000 Omitted) $26,919 $36,752 $43,930 $52,594 $59,591
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS C YEARS ENDED 3/31
--------------------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $8.56 $8.61 $8.73 $8.56 $8.34
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.36(z) $0.35 $0.36 $0.35 $0.35
Net realized and unrealized gain (loss)
on investments 0.01(z) (0.06) (0.13) 0.18 0.24
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.37 $0.29 $0.23 $0.53 $0.59
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.34) $(0.34) $(0.35) $(0.36) $(0.37)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.59 $8.56 $8.61 $8.73 $8.56
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 4.34 3.41 2.72 6.27 7.18
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.94 1.92 1.79 1.79 1.80
Expenses after expense reductions (f) 1.69 1.67 1.54 1.63 1.65
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.54 1.56 1.54 1.63 1.65
Net investment income 4.16(z) 4.09 4.15 4.05 4.10
Portfolio turnover 10 9 8 9 13
Net assets at end of period (000 Omitted) $35,070 $34,618 $33,911 $37,508 $39,420
- ------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities in the current year that
resulted in an increase of $0.03 per share to net investment income, a decrease of $0.03 per share to net realized and
unrealized gain (loss) on investments, and an increase of 0.30% to the net investment income ratio for each class for the
year ended March 31, 2007. The change in estimate had no impact on net assets, net asset value per share or total return of
each class.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS AND ORGANIZATION
MFS Municipal Income Fund (the fund) is a series of MFS Municipal Series Trust
(the trust). The trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Municipal
securities backed by current or anticipated revenues from a specific project or
specific assets can be negatively affected by the discontinuance of the
taxation supporting the projects or assets or the inability to collect revenues
for the project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, the security could decline in value, interest from the security
could become taxable and the fund may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. 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
an evaluated bid as reported by an independent pricing service. 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. Values
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.
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 and certain types of derivatives.
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.
In September 2006, FASB Statement No. 157, Fair Value Measurements (the
"Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for measuring
fair value and expanded disclosures about fair value measurements. Management
is evaluating the application of the Statement to the fund, and believes the
impact will be limited to expanded disclosures resulting from the adoption of
this Statement in the fund's financial statements.
DERIVATIVE RISK - The fund may invest in derivatives for hedging or non-
hedging purposes. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. When the fund uses derivatives as an investment to
gain market exposure, or for hedging purposes, gains and losses from derivative
instruments may be substantially greater than the derivative's original cost.
Derivative instruments include swap agreements.
SWAP AGREEMENTS - The fund may enter into swap agreements. A swap is an
exchange of cash payments between the fund and another party. Net cash payments
are exchanged at specified intervals and are recorded as a realized gain or
loss in the Statement of Operations. The value of the swap is adjusted daily
and the change in value, including accruals of periodic amounts of interest to
be paid or received, is recorded as unrealized appreciation or depreciation in
the Statement of Operations. A liquidation payment received or made upon early
termination is recorded as a realized gain or loss in the Statement of
Operations. Collateral, in the form of cash or securities, may be required to
be held in segregated accounts with the fund's custodian in connection with
these agreements. Risk of loss may exceed amounts recognized on the Statement
of Assets and Liabilities. These risks include the possible lack of a liquid
market, failure of the counterparty to perform under the terms of the
agreements, and unfavorable market movement of the underlying instrument. All
swap agreements entered into by the fund with the same counterparty are
generally governed by a single master agreement, which provides for the netting
of all amounts owed by the parties under the agreement upon the occurrence of
an event of default, thereby reducing the credit risk to which such party is
exposed. The fund holds interest rate swap agreements which involve the
periodic exchange of cash flows, such as the exchange of fixed rate interest
payments for floating rate interest payments based on a notional principal
amount. The interest rates may be based on a specific financial index or the
exchange of two distinct floating rate payments. The fund may enter into an
interest rate swap in order to manage its exposure to interest rate
fluctuations.
INVERSE FLOATERS - The fund invests in municipal inverse floating rate
securities which are structured by the issuer (known as primary market inverse
floating rate securities) or by an investment banker utilizing municipal bonds
which have already been issued (known as secondary market inverse floating rate
securities) to have variable rates of interest which typically move in the
opposite direction of short term interest rates. A secondary market inverse
floating rate security is created when an investment banker transfers a fixed
rate municipal bond to a special purpose trust, and causes the trust to (a)
issue floating rate certificates to third parties, in an amount equal to a
fraction of the par amount of the deposited bonds (these certificates usually
pay tax-exempt interest at short-term interest rates that typically reset
weekly; and the certificate holders typically, on seven days notice, have the
option to tender their certificates to the investment banker or another party
for redemption at par plus accrued interest), and (b) issue inverse floating
rate certificates (sometimes referred to as "inverse floaters"). If the holder
of the inverse floater transfers the municipal bonds to an investment banker
for the purpose of depositing the municipal bonds into the special purpose
trust, the inverse floating rate certificates that are issued by the trust are
referred to as "self-deposited inverse floaters." If the bonds held by the
trust are purchased by the investment banker for deposit into the trust from
someone other than the purchasers of the inverse floaters, the inverse floating
rate certificates that are issued by the trust are referred to as "externally
deposited inverse floaters." Certain self-deposited inverse floaters held by
the fund are accounted for as secured borrowings, with the municipal bonds
reflected in the investments of the fund and amounts owed to the holder of the
floating rate certificate under the provisions of the trust, which amounts are
paid solely from the assets of the trust, reflected as liabilities of the fund
in the Statement of Assets and Liabilities under the caption, "Payable to the
holder of the floating rate certificate from trust assets". Interest expense
and fees relate to payments made to the holder of the floating rate certificate
from trust assets in connection with self-deposited inverse floater
transactions. Interest expense and fees are recorded as incurred. At March 31,
2007, the value of bonds transferred to the trust was $22,659,257. The fund's
payable to the holder of the floating rate certificate from trust assets was
$10,245,000. The weighted average interest rate on the floating rate
certificates issued by the trust was 3.98%. For the year ended March 31, 2007,
interest expense and fees in connection with self-deposited inverse floaters
was $462,670. Primary and externally deposited inverse floaters held by the
fund are not accounted for as secured borrowings.
INDEMNIFICATIONS - Under the fund's organizational documents, its officers and
trustees may be indemnified against certain liabilities and expenses arising
out of the performance of their duties to the fund. Additionally, in the normal
course of business, the fund enters into agreements with service providers that
may contain indemnification clauses. The fund's maximum exposure under these
agreements is unknown as this would involve future claims that may be made
against the fund that have not yet occurred.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement purposes in
accordance with U.S. generally accepted accounting principles. All premium and
original issue discount is amortized or accreted for tax reporting purposes as
required by federal income tax regulations.
The fund may receive proceeds from litigation settlements. Any proceeds
received from litigation involving portfolio holdings are reflected in the
Statement of Operations in realized gain/loss if the security has been disposed
of by the fund or in unrealized gain/loss if the security is still held by the
fund. Any other proceeds from litigation not related to portfolio holdings are
reflected as other income in the Statement of Operations.
Legal fees and other related expenses incurred to preserve and protect the
value of a security owned are added to the cost of the security; other legal
fees are expensed. Capital infusions made directly to the security issuer,
which are generally non-recurring, incurred to protect or enhance the value of
high-yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
As a result of the change in estimate for the amortization of premium and
accretion of discount on certain debt securities, interest income has been
increased by $933,492, with a corresponding reduction to net unrealized
appreciation (depreciation).
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount, for the year ended March 31, 2007, is shown as a reduction
of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue Code,
and to distribute all of its taxable and tax-exempt income, including realized
capital gains. Accordingly, no provision for federal income tax is required in
the financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from U.S. generally accepted accounting
principles. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These adjustments have no impact on net assets or net asset value
per share. Temporary differences which arise from recognizing certain items of
income, expense, gain or loss in different periods for financial statement and
tax purposes will reverse at some time in the future. Distributions in excess
of net investment income or net realized gains are temporary overdistributions
for financial statement purposes resulting from differences in the recognition
or classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to amortization and accretion of debt
securities and secured borrowings.
The tax character of distributions declared to shareholders is as follows:
3/31/07 3/31/06
Ordinary income (including any short-
term capital gains) $24,400 $--
Tax-exempt income 13,891,572 14,360,201
- --------------------------------------------------------------------------
Total distributions $13,915,972 $14,360,201
The federal tax cost and the tax basis components of distributable earnings were
as follows:
AS OF 3/31/07
Cost of investments $287,503,025
----------------------------------------------------------
Gross appreciation $21,533,454
Gross depreciation (3,347,718)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $18,185,736
Undistributed tax-exempt income $1,462,420
Capital loss carryforwards (3,323,431)
Other temporary differences (1,144,959)
As of March 31, 2007, the fund had capital loss carryforwards available to
offset future realized gains. Such losses expire as follows:
3/31/12 $(3,323,431)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the "Interpretation") was issued, and is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years as
of the effective date. On December 22, 2006, the SEC delayed the implementation
of the Interpretation for regulated investment companies for an additional six
months. This Interpretation prescribes a minimum threshold for financial
statement recognition of the benefit of a tax position taken or expected to be
taken in a tax return, and requires certain expanded disclosures. Management
has evaluated the application of the Interpretation to the fund, and has
determined that there is no impact resulting from the adoption of this
Interpretation on the fund's financial statements.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - The fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. Differences in per
share dividend rates are generally due to differences in separate class
expenses. Class B shares will convert to Class A shares approximately eight
years after purchase.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
management and related administrative services and facilities to the fund. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
the fund's average daily net assets. As part of a settlement agreement with the
New York Attorney General concerning market timing and related matters, MFS has
agreed to reduce the management fee to 0.30% of the fund's average daily net
assets for the period March 1, 2004 through February 28, 2009. For the year
ended March 31, 2007, this waiver amounted to $773,447 and is reflected as a
reduction of total expenses in the Statement of Operations.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $38,270 for the year ended March 31, 2007, as its
portion of the initial sales charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a distribution plan for certain class shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay MFD for services
provided by MFD and financial intermediaries in connection with the
distribution and servicing of certain share classes. One component of the plan
is a distribution fee paid to MFD and another component of the plan is a
service fee paid to MFD. MFD may subsequently pay all, or a portion, of the
distribution and/or service fees to financial intermediaries.
Distribution Fee Plan Table:
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Class A 0.10% 0.25% 0.35% 0.25% $607,993
Class B 0.75% 0.25% 1.00% 1.00% 313,683
Class C 0.75% 0.25% 1.00% 1.00% 348,133
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $1,269,809
(d) In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees up
to these annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the year ended March
31, 2007 based on each class' average daily net assets. Payment of the 0.10% annual Class A distribution fee is
not yet implemented and will commence on such date as the fund's Board of Trustees may determine.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months of purchase.
Class B shares are subject to a contingent deferred sales charge in the event of
a shareholder redemption within six years of purchase. All contingent deferred
sales charges are paid to MFD and during the year ended March 31, 2007, were as
follows:
AMOUNT
Class A $45,914
Class B $58,195
Class C $3,885
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned
subsidiary of MFS, receives a fee from the fund for its services as shareholder
servicing agent calculated as a percentage of the average daily net assets of
the fund as determined periodically under the supervision of the fund's Board
of Trustees. For the year ended March 31, 2007, the fee was $257,937, which
equated to 0.0834% annually of the fund's average daily net assets. MFSC also
receives payment from the fund for out-of-pocket expenses, sub-accounting and
other shareholder servicing costs which may be paid to affiliated and
unaffiliated service providers. For the year ended March 31, 2007, these
out-of-pocket expenses, sub-accounting and other shareholder servicing costs
amounted to $74,985. The fund may also pay shareholder servicing related costs
directly to non-related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to the fund.
Under an administrative services agreement, the fund partially reimburses MFS
the costs incurred to provide these services. The fund is charged a fixed
amount plus a fee based on calendar year average net assets. The fund's annual
fixed amount is $17,500. The administrative services fee incurred for the year
ended March 31, 2007 was equivalent to an annual effective rate of 0.0207% of
the fund's average daily net assets.
TRUSTEES' AND OFFICERS' COMPENSATION - The fund pays compensation to
independent trustees in the form of a retainer, attendance fees, and additional
compensation to Board and Committee chairpersons. The fund does not pay
compensation directly to trustees or officers of the fund who are also officers
of the investment adviser, all of whom receive remuneration for their services
to the fund from MFS. Certain officers and trustees of the fund are officers or
directors of MFS, MFD, and MFSC. The fund has an unfunded, defined benefit plan
for certain retired independent trustees which resulted in a pension expense of
$2,929. This amount is included in independent trustees' compensation for the
year ended March 31, 2007. The liability for deferred retirement benefits
payable to certain retired independent trustees amounted to $28,254 at March
31, 2007, and is included in payable for independent trustees' compensation.
OTHER - This fund and certain other MFS funds (the funds) have entered into a
services agreement (the Agreement) which provides for payment of fees by the
funds to Tarantino LLC in return for the provision of services of an
Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an
officer of the funds and the sole member of Tarantino LLC. The funds can
terminate the Agreement with Tarantino LLC at any time under the terms of the
Agreement. For the year ended March 31, 2007, the fee paid to Tarantino LLC was
$2,036. MFS has agreed to reimburse the fund for a portion of the payments made
by the funds to Tarantino LLC in the amount of $1,611, which is shown as a
reduction of total expenses in the Statement of Operations. Additionally, MFS
has agreed to bear all expenses associated with office space, other
administrative support, and supplies provided to the ICCO.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$32,952,431 and $39,653,722, respectively.
(5) SHARES OF BENEFICIAL INTEREST
The fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
fund shares were as follows:
YEAR ENDED YEAR ENDED
3/31/07 3/31/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 4,077,868 $34,806,575 3,325,237 $28,649,761
Class B 277,826 2,379,647 537,071 4,625,461
Class C 673,589 5,779,551 633,255 5,472,817
- ----------------------------------------------------------------------------------------------------------
5,029,283 $42,965,773 4,495,563 $38,748,039
Shares issued to shareholders in
reinvestment of distributions
Class A 732,144 $6,262,765 734,629 $6,332,181
Class B 74,877 641,277 90,476 781,204
Class C 103,647 890,072 104,388 902,609
- ----------------------------------------------------------------------------------------------------------
910,668 $7,794,114 929,493 $8,015,994
Shares reacquired
Class A (3,968,355) $(33,877,957) (4,066,222) $(34,988,521)
Class B (1,515,106) (12,956,565) (1,435,040) (12,389,239)
Class C (738,293) (6,335,446) (634,387) (5,480,398)
- ----------------------------------------------------------------------------------------------------------
(6,221,754) $(53,169,968) (6,135,649) $(52,858,158)
Net change
Class A 841,657 $7,191,383 (6,356) $(6,579)
Class B (1,162,403) (9,935,641) (807,493) (6,982,574)
Class C 38,943 334,177 103,256 895,028
- ----------------------------------------------------------------------------------------------------------
(281,803) $(2,410,081) (710,593) $(6,094,125)
(6) LINE OF CREDIT
The fund and other funds managed by MFS participate in a $1 billion unsecured
committed line of credit provided by a syndication of banks under a credit
agreement. In addition, the fund and other funds managed by MFS have
established uncommitted borrowing arrangements with certain banks. Borrowings
may be made for temporary financing needs. Interest is charged to each fund,
based on its borrowings, generally at a rate equal to the Federal Reserve funds
rate plus 0.35%. In addition, a commitment fee, based on the average daily,
unused portion of the committed line of credit, is allocated among the
participating funds at the end of each calendar quarter. For the year ended
March 31, 2007, the fund's commitment fee and interest expense on the line of
credit were $1,885 and $0, respectively, and are included in miscellaneous
expense and interest expense and fees, respectively, on the Statement of
Operations.
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Trustees of MFS Municipal Series Trust and the Shareholders of
MFS Municipal Income Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Municipal Income Fund (one of the
portfolios constituting MFS Municipal Series Trust) (the "Trust") as of March
31, 2007, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Trust is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Trust's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of March 31, 2007, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Municipal Income Fund as of March 31, 2007, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and its financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 14, 2007
TRUSTEES AND OFFICERS --
IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust, as of May 1, 2007, are listed below, together with their principal
occupations during the past five years. (Their titles may have varied during that period.) The address of each
Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING
POSITION(s) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j)
- ------------------- --------------- --------------- ----------------------------
INTERESTED TRUSTEES
Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services
(born 10/20/63) Company, Chief Executive Officer,
President, Chief Investment
Officer and Director
Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services
(born 8/08/46) Company, Chairman (since February
2004); MIT Sloan School (education),
Senior Lecturer (since 2006);
Secretary of Economic Affairs, The
Commonwealth of Massachusetts
(January 2002 to December 2002);
Fidelity Investments, Vice Chairman
(June 2000 to December 2001);
Fidelity Management & Research
Company (investment adviser),
President (March 1997 to July 2001);
Bell Canada Enterprises
(telecommunications), Director;
Medtronic, Inc. (medical
technology), Director; Telesat
(satellite communications), Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair February 1992 Private investor; Eastern
(born 5/01/36) of Trustees Enterprises (diversified services
company), Chairman, Trustee and
Chief Executive Officer (until
November 2000)
Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and
(born 11/29/41) compliance matters (since July
2002); PricewaterhouseCoopers LLP
(professional services firm),
Partner (November 2000 until June
2002)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital,
(born 3/11/37) Chief of Cardiac Surgery (2005);
Harvard Medical School, Professor
of Cardiac Surgery; Physician
Director of Medical Device
Technology for Partners HealthCare
David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining
(born 5/30/42) products and service provider),
Vice Chairman/Director (since April
2001); Portman Limited (mining),
Director (since 2005); Encinitos
Ventures (private investment
company), Principal (1997 to April
2001); Lincoln Electric Holdings,
Inc. (welding equipment
manufacturer), Director
William R. Gutow Trustee December 1993 Private investor and real estate
(born 9/27/41) consultant; Capitol Entertainment
Management Company (video
franchise), Vice Chairman;
Atlantic Coast Tan (tanning
salons), Vice Chairman (since
2002)
Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial
(born 12/21/44) services and insurance), Vice
Chairman and Chief Operating
Officer (until May 2001); The
Equitable Life Assurance Society
(insurance), President and Chief
Operating Officer (until May 2001)
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys),
(born 6/23/35) Partner
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc.
(born 9/23/38) (acquisition planning
specialists), President; Wellfleet
Investments (investor in health care
companies), Managing General Partner
(since 1993); Cambridge
Nutraceuticals (professional
nutritional products), Chief
Executive Officer (until May 2001)
Laurie J. Thomsen Trustee March 2005 Private investor; Prism Venture
(born 8/05/57) Partners (venture capital), Co-
founder and General Partner (until
June 2004); St. Paul Travelers
Companies (commercial property
liability insurance), Director
Robert W. Uek Trustee January 2006 Retired (since 1999);
(born 5/18/41) PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 1999); Consultant to
investment company industry (since
2000); TT International Funds
(mutual fund complex), Trustee (2000
until 2005); Hillview Investment
Trust II Funds (mutual fund
complex), Trustee (2000 until 2005)
OFFICERS
Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services
(born 12/01/58) Company, Executive Vice President
and Chief Regulatory Officer
(since March 2004); Fidelity
Management & Research Company,
Vice President (prior to March
2004); Fidelity Group of Funds,
President and Treasurer (prior to
March 2004)
Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services
(born 12/30/64) Company, Senior Vice President
(since September 2004);
PricewaterhouseCoopers LLP,
Partner (prior to September 2004)
Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 1/18/74) and Assistant Clerk Company, Vice President and Senior
Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law
firm), Associate (prior to April
2003)
Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/21/63) and Assistant Clerk Company, Special Counsel (since
December 2004); Dechert LLP (law
firm), Counsel (prior to December
2004)
David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 8/10/68) Company, Vice President (since
June 2005); JP Morgan Investor
Services, Vice President (prior to
June 2005)
Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services
(born 7/10/68) and Assistant Clerk Company, Vice President and Senior
Counsel (since September 2005); John
Hancock Advisers, LLC, Vice
President and Chief Compliance
Officer (September 2004 to August
2005), Senior Attorney (prior to
September 2004); John Hancock Group
of Funds, Vice President and Chief
Compliance Officer (September 2004
to December 2004)
Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 10/27/70) Company, Vice President (since May
2005); JP Morgan Investment
Management Company, Vice President
(prior to May 2005)
Brian E. Langenfeld(k) Assistant Secretary June 2006 Massachusetts Financial Services
(born 3/07/73) and Assistant Clerk Company, Assistant Vice President
and Counsel (since May 2006); John
Hancock Advisers, LLC, Assistant
Vice President and Counsel (May 2005
to April 2006); John Hancock
Advisers, LLC, Attorney and
Assistant Secretary (prior to May
2005)
Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services
(born 11/13/57) Company, Senior Vice President
Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services
(born 3/07/50) and Assistant Clerk Company, Senior Vice President and
Associate General Counsel (since
April 2005); John Hancock Advisers,
LLC, Senior Vice President,
Secretary and Chief Legal Officer
(prior to April 2005); John Hancock
Group of Funds, Senior Vice
President, Secretary and Chief Legal
Officer (prior to April 2005)
Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/05/70) and Assistant Clerk Company, Vice President and Senior
Counsel (since June 2004); Bingham
McCutchen LLP (law firm), Associate
(prior to June 2004)
Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services
(born 5/01/52) Company, Executive Vice President,
General Counsel and Secretary
(since January 2006); Wilmer
Cutler Pickering Hale and Dorr LLP
(law firm), Partner (prior to
January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of
(born 3/07/44) Compliance Officer compliance services), Principal
(since June 2004); CRA Business
Strategies Group (consulting
services), Executive Vice
President (April 2003 to June
2004); David L. Babson & Co.
(investment adviser), Managing
Director, Chief Administrative
Officer and Director (prior to
March 2003)
James O. Yost(k) Assistant Treasurer September 1990 Massachusetts Financial Services
(born 6/12/60) Company, Senior Vice President
- ------------
(h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously
since appointment unless indicated otherwise.
(j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as
the 1940 Act), which is the principal federal law governing investment companies like the fund, as a
result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
(n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant
retained by MFS pursuant to its settlement with the SEC concerning market timing and related matters. The
terms of that settlement required that compensation and expenses related to the independent compliance
consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to
the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29.
The Trust held a shareholders' meeting in 2005 to elect Trustees, and will hold a shareholders' meeting at
least once every five years thereafter, to elect Trustees.
Each Trustee (except Mr. Butler and Mr. Uek) has been elected by share- holders and each Trustee and officer
holds office until his or her successor is chosen and qualified or until his or her earlier death,
resignation, retirement or removal. Messrs. Butler, Gutow, Sherratt and Uek and Ms. Thomsen are members of the
Trust's Audit Committee.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or
a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain
affiliates of MFS. As of January 1, 2007, the Trustees served as board members of 97 funds within the MFS
Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available
without charge upon request by calling 1-800-225-2606.
- -------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110
DISTRIBUTOR Effective April 1, 2007, the custodian changed to:
MFS Fund Distributors, Inc. JPMorgan Chase Bank
500 Boylston Street, Boston, MA 02116-3741 One Chase Manhattan Plaza
New York, NY 10081
PORTFOLIO MANAGER INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Geoffrey Schechter Deloitte & Touche
200 Berkeley Street, Boston, MA 02116
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board's most recent review and renewal of the Fund's
investment advisory agreement is available by clicking on the fund's name under
"Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov
or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
FEDERAL TAX INFORMATION (unaudited)
The fund will notify shareholders of amounts for use in preparing 2007 income
tax forms in January 2008. The following information is provided pursuant to
provisions of the Internal Revenue Code.
Of the dividends paid from net investment income during the fiscal year, 99.82%
is designated as exempt interest dividends for federal income tax purposes. If
the fund has earned income on private activity bonds, a portion of the dividends
paid may be considered a tax preference item for purposes of computing a
shareholder's alternative minimum tax.
MFS(R) PRIVACY NOTICE
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about the investment products and services that we
offer, and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information.
We maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. We may share nonpublic
personal information with third parties or certain of our affiliates in
connection with servicing your account or processing your transactions. We may
share information with companies or financial institutions that perform
marketing services on our behalf or with other financial institutions with which
we have joint marketing arrangements, subject to any legal requirements.
Authorization to access your nonpublic personal information is limited to
appropriate personnel who provide products, services, or information to you. We
maintain physical, electronic, and procedural safeguards to help protect the
personal information we collect about you.
If you have any questions about the MFS privacy policy, please call
1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA
1-800-637-8255 02205-5824
24 hours a day
OVERNIGHT MAIL
ACCOUNT SERVICE AND MFS Service Center, Inc.
LITERATURE 500 Boylston Street
Boston, MA 02116-3741
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS(R) send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to mfs.com, log in to
your account via MFS(R) Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS(R) TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a Code of Ethics pursuant to Section 406 of the
Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the Registrant's
principal executive officer and principal financial and accounting officer. The
Registrant has not amended any provision in its Code of Ethics (the "Code") that
relates to an element of the Code's definitions enumerated in paragraph (b) of
Item 2 of this Form N-CSR.
A copy of the Code of Ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Messrs. Robert E. Butler and Robert W. Uek and Ms. Laurie J. Thomsen, members of
the Audit Committee, have been determined by the Board of Trustees in their
reasonable business judgment to meet the definition of "audit committee
financial expert" as such term is defined in Form N-CSR. In addition, Messrs.
Butler and Uek and Ms. Thomsen are "independent" members of the Audit Committee
(as such term has been defined by the Securities and Exchange Commission in
regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The
Securities and Exchange Commission has stated that the designation of a person
as an audit committee financial expert pursuant to this Item 3 on the Form N-CSR
does not impose on such a person any duties, obligations or liability that are
greater than the duties, obligations or liability imposed on such person as a
member of the Audit Committee and the Board of Trustees in the absence of such
designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
ITEMS 4(A) THROUGH 4(D) AND 4(G):
The Board of Trustees has appointed Deloitte & Touche LLP ("Deloitte") to serve
as independent accountants to each series of the Registrant (collectively, the
"Funds"). The tables below set forth the audit fees billed to the Funds as well
as fees for non-audit services provided to the Funds and/or to the Funds'
investment adviser, Massachusetts Financial Services Company ("MFS") and to
various entities either controlling, controlled by, or under common control with
MFS that provide ongoing services to the Funds ("MFS Related Entities").
For the fiscal years ended March 31, 2007 and 2006, audit fees billed to the
Funds by Deloitte were as follows:
Audit Fees
FEES BILLED BY DELOITTE: 2007 2006
---- ----
MFS Alabama Municipal Bond Fund 36,794 32,954
MFS Arkansas Municipal Bond Fund 36,794 32,954
MFS California Municipal Bond Fund 36,794 32,954
MFS Florida Municipal Bond Fund 36,794 32,954
MFS Georgia Municipal Bond Fund 36,794 32,954
MFS Maryland Municipal Bond Fund 36,794 32,954
MFS Massachusetts Municipal Bond Fund 36,794 32,954
MFS Mississippi Municipal Bond Fund 36,794 32,954
MFS Municipal Income Fund 40,191 36,117
MFS New York Municipal Bond Fund 36,794 32,954
MFS North Carolina Municipal Bond Fund 36,794 32,954
MFS Pennsylvania Municipal Bond Fund 36,794 32,954
MFS South Carolina Municipal Bond Fund 36,794 32,954
MFS Tennessee Municipal Bond Fund 36,794 32,954
MFS Virginia Municipal Bond Fund 36,794 32,954
MFS West Virginia Municipal Bond Fund 36,794 32,954
-------- --------
TOTAL $592,101 $530,427
For the fiscal years ended March 31, 2007 and 2006, fees billed by Deloitte for
audit-related, tax and other services provided to the Funds and for
audit-related, tax and other services provided to MFS and MFS Related Entities
were as follows:
Audit-Related Fees(1) Tax Fees(2) All Other Fees(3)
FEES BILLED BY DELOITTE: 2007 2006 2007 2006 2007 2006
---- ---- ---- ---- ---- ----
To MFS Alabama
Municipal Bond Fund 0 0 5,427 9,550 379 514
To MFS Arkansas
Municipal Bond Fund 0 0 5,427 9,550 379 519
To MFS California
Municipal Bond Fund 0 0 5,427 9,550 379 548
To MFS Florida
Municipal Bond Fund 0 0 5,427 9,550 379 514
To MFS Georgia
Municipal Bond Fund 0 0 5,427 9,550 379 511
To MFS Maryland
Municipal Bond Fund 0 0 5,427 9,550 379 520
To MFS Massachusetts
Municipal Bond Fund 0 0 5,427 9,550 379 532
To MFS Mississippi
Municipal Bond Fund 0 0 5,427 9,550 379 514
To MFS Municipal
Income Fund 0 0 5,479 9,550 379 539
To MFS New York
Municipal Bond Fund 0 0 5,427 9,550 379 524
To MFS North Carolina
Municipal Bond Fund 0 0 5,427 9,550 379 543
To MFS Pennsylvania
Municipal Bond Fund 0 0 5,427 9,550 379 516
To MFS South Carolina
Municipal Bond Fund 0 0 5,427 9,550 379 522
To MFS Tennessee
Municipal Bond Fund 0 0 5,427 9,550 379 518
To MFS Virginia
Municipal Bond Fund 0 0 5,427 9,550 379 539
To MFS West Virginia
Municipal Bond Fund 0 0 5,427 9,550 379 520
TOTAL FEES BILLED BY DELOITTE
TO ABOVE FUNDS: $0 $0 $86,884 $152,800 $6,064 $8,393
To MFS and MFS Related
Entities of MFS Alabama
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS Arkansas
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS California
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS Florida
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS Georgia
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS Maryland
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS
Massachusetts Municipal
Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS
Mississippi Municipal
Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS Municipal
Income Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS New York
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS North
Carolina Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS
Pennsylvania Municipal
Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS South
Carolina Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS Tennessee
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS Virginia
Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
To MFS and MFS Related
Entities of MFS West
Virginia Municipal Bond Fund* 695,825 931,475 0 0 443,805 469,531
AGGREGATE FEES FOR NON-AUDIT
SERVICES:
2007 2006
---- ----
To MFS Alabama Municipal
Bond Fund, MFS and MFS 1,293,014 1,518,665
Related Entities#
To MFS Arkansas
Municipal Bond Fund, 1,293,014 1,518,670
MFS and MFS Related
Entities#
To MFS California
Municipal Bond Fund, 1,293,014 1,518,699
MFS and MFS Related
Entities#
To MFS Florida
Municipal Bond Fund, 1,293,014 1,518,665
MFS and MFS Related
Entities#
To MFS Georgia
Municipal Bond Fund, 1,293,014 1,518,662
MFS and MFS Related
Entities#
To MFS Maryland
Municipal Bond Fund, 1,293,014 1,518,671
MFS and MFS Related
Entities#
To MFS Massachusetts
Municipal Bond Fund, 1,293,014 1,518,683
MFS and MFS Related
Entities#
To MFS Mississippi
Municipal Bond Fund, 1,293,014 1,518,665
MFS and MFS Related
Entities#
To MFS Municipal
Income Fund, MFS 1,293,066 1,518,690
and MFS Related Entities#
To MFS New York
Municipal Bond Fund, 1,293,014 1,518,675
MFS and MFS Related
Entities#
To MFS North Carolina
Municipal Bond Fund, 1,293,014 1,518,694
MFS and MFS Related
Entities#
To MFS Pennsylvania
Municipal Bond Fund, 1,293,014 1,518,667
MFS and MFS Related
Entities#
To MFS South Carolina
Municipal Bond Fund, 1,293,014 1,518,673
MFS and MFS Related
Entities#
To MFS Tennessee
Municipal Bond Fund, 1,293,014 1,518,669
MFS and MFS Related
Entities#
To MFS Virginia
Municipal Bond Fund, 1,293,014 1,518,690
MFS and MFS Related
Entities#
To MFS West Virginia
Municipal Bond Fund, 1,293,014 1,518,671
MFS and MFS Related
Entities#
* This amount reflects the fees billed to MFS and MFS Related Entities for
non-audit services relating directly to the operations and financial
reporting of the Funds (portions of which services also related to the
operations and financial reporting of other funds within the MFS Funds
complex).
# This amount reflects the aggregate fees billed by Deloitte, for non-audit
services rendered to the Funds and for non-audit services rendered to MFS
and the MFS Related Entities.
(1) The fees included under "Audit-Related Fees" are fees related to assurance
and related services that are reasonably related to the performance of the
audit or review of financial statements, but not reported under "Audit
Fees," including accounting consultations, agreed-upon procedure reports,
attestation reports, comfort letters and internal control reviews.
(2) The fees included under "Tax Fees" are fees associated with tax compliance,
tax advice and tax planning, including services relating to the filing or
amendment of federal, state or local income tax returns, regulated
investment company qualification reviews and tax distribution and analysis.
(3) The fees included under "All Other Fees" are fees for products and services
provided by Deloitte other than those reported under "Audit Fees,"
"Audit-Related Fees" and "Tax Fees," including fees for services related to
sales tax refunds, consultation on internal cost allocations, review of
internal controls and review of Rule 38a-1 compliance program.
ITEM 4(e)(1):
Set forth below are the policies and procedures established by the Audit
Committee of the Board of Trustees relating to the pre-approval of audit and
non-audit related services:
To the extent required by applicable law, pre-approval by the Audit Committee of
the Board is needed for all audit and permissible non-audit services rendered to
the Funds and all permissible non-audit services rendered to MFS or MFS Related
Entities if the services relate directly to the operations and financial
reporting of the Registrant. Pre-approval is currently on an
engagement-by-engagement basis. In the event pre-approval of such services is
necessary between regular meetings of the Audit Committee and it is not
practical to wait to seek pre-approval at the next regular meeting of the Audit
Committee, pre-approval of such services may be referred to the Chair of the
Audit Committee for approval; provided that the Chair may not pre-approve any
individual engagement for such services exceeding $50,000 or multiple
engagements for such services in the aggregate exceeding $100,000 in each period
between regular meetings of the Audit Committee. Any engagement pre-approved by
the Chair between regular meetings of the Audit Committee shall be presented for
ratification by the entire Audit Committee at its next regularly scheduled
meeting
ITEM 4(e)(2):
None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and
All Other Fees paid by the Fund and MFS and MFS Related Entities relating
directly to the operations and financial reporting of the Registrant disclosed
above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X (which permits audit committee approval after the
start of the engagement with respect to services other than audit, review or
attest services, if certain conditions are satisfied).
ITEM 4(f): Not applicable.
ITEM 4(h): The Registrant's Audit Committee has considered whether the provision
by a Registrant's independent registered public accounting firm of non-audit
services to MFS and MFS Related Entities that were not pre-approved by the
Committee (because such services did not relate directly to the operations and
financial reporting of the Registrant) was compatible with maintaining the
independence of the independent registered public accounting firm as the
Registrant's principal auditors.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments of the Registrant is included as part of the report to
shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 407(c)(2)(iv) of Regulation S-K (as required by Item
22(b)(15) of Schedule 14A), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the effectiveness of the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as conducted within 90 days of
the filing date of this report on Form N-CSR, the registrant's principal
financial officer and principal executive officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by the report that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends
to satisfy the Item 2 requirements through filing of an exhibit: Code of
Ethics attached hereto.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2): Attached hereto.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17
CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title
18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification
furnished pursuant to this paragraph will not be deemed "filed" for the
purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise
subject to the liability of that section. Such certification will not be
deemed to be incorporated by reference into any filing under the Securities
Act of 1933 or the Exchange Act, except to the extent that the registrant
specifically incorporates it by reference: Attached hereto.
NOTICE
A copy of the Amended and Restated Declaration of Trust of the Registrant is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of the Registrant by
an officer of the Registrant as an officer and not individually and the
obligations of or arising out of this instrument are not binding upon any of the
Trustees or shareholders individually, but are binding only upon the assets and
property of the respective constituent series of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS MUNICIPAL SERIES TRUST
------------------------------------------------------------------
By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President
Date: May 14, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President (Principal
Executive Officer)
Date: May 14, 2007
By (Signature and Title)* TRACY ATKINSON
-----------------------------------------------------
Tracy Atkinson, Treasurer (Principal
Financial Officer and Accounting Officer)
Date: May 14, 2007
* Print name and title of each signing officer under his or her signature.