UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4096
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MFS MUNICIPAL SERIES TRUST
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: March 31
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Date of reporting period: September 30, 2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
9/30/07 SEMIANNUAL REPORT
MFS(R) MUNICIPAL SERIES TRUST
For the states of: Alabama, Arkansas, California,
Florida, Georgia, Maryland, and Massachusetts
MSTA-SEM
MFS(R) Municipal Series Trust
Alabama, Arkansas, California, Florida,
Georgia, Maryland, and Massachusetts
LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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EXPENSE TABLES 5
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PORTFOLIO OF INVESTMENTS 8
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STATEMENTS OF ASSETS AND LIABILITIES 37
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STATEMENTS OF OPERATIONS 41
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STATEMENTS OF CHANGES IN NET ASSETS 43
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FINANCIAL HIGHLIGHTS 45
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NOTES TO FINANCIAL STATEMENTS 60
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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 69
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PROXY VOTING POLICIES AND INFORMATION 73
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QUARTERLY PORTFOLIO DISCLOSURE 73
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CONTACT INFORMATION BACK COVER
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THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
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NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF
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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% and was fairly stable.
This year we have seen a greater level of volatility than has been experienced
in recent years. The Dow hit several new highs but also experienced swift drops
as a global credit crisis swept through markets, spurred by defaults on U.S.
subprime loans and a liquidity crunch. Still, even with this volatility, the Dow
ended the first three quarters of 2007 with a return near 13%.
U.S. Treasury bonds gained ground, especially in the third quarter as investors
sought less risky asset classes. The spreads of many lower quality debt
investments widened.
In 2007 the U.S. dollar fell against the euro, oil prices have hit their highest
levels yet, and gold has spiked to its steepest price in 28 years. Around the
globe, stocks sold off as risk aversion mounted. As we have said before, markets
can be volatile, and investors should make sure they have an investment plan
that can carry them through 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. In our view, investors who remain committed to a long-term plan are more
likely to achieve their financial goals.
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)
November 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 108.1%
Cash & Other Net Assets (8.1)%
TOP FIVE INDUSTRIES (i)
Utilities - Municipal Owned 17.7%
----------------------------------------------
Healthcare Revenue - Hospitals 15.5%
----------------------------------------------
Water & Sewer Utility Revenue 14.3%
----------------------------------------------
General Obligations - General Purpose 14.3%
----------------------------------------------
State & Local Agencies 9.0%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 58.6%
----------------------------------------------
AA 10.2%
----------------------------------------------
A 4.1%
----------------------------------------------
BBB 8.6%
----------------------------------------------
B 0.2%
----------------------------------------------
Not Rated 18.3%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.8
----------------------------------------------
Average Life (i)(m) 14.0 yrs.
----------------------------------------------
Average Maturity (i)(m) 16.4 yrs.
----------------------------------------------
Average Credit Quality of
Rated Securities (long-term) (a) AA
----------------------------------------------
Average Credit Quality of
Rated Securities (short-term) (a) A-1
----------------------------------------------
MFS(R) Arkansas Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 106.3%
Cash & Other Net Assets (6.3)%
TOP FIVE INDUSTRIES (i)
Universities - Colleges 19.1%
----------------------------------------------
General Obligations - General Purpose 11.7%
----------------------------------------------
Water & Sewer Utility Revenue 11.5%
----------------------------------------------
Healthcare Revenue - Hospitals 9.5%
----------------------------------------------
Utilities - Municipal Owned 9.1%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 63.3%
----------------------------------------------
AA 7.2%
----------------------------------------------
A 6.5%
----------------------------------------------
BBB 9.7%
----------------------------------------------
BB 0.2%
----------------------------------------------
B 0.5%
----------------------------------------------
Not Rated 12.6%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 8.3
----------------------------------------------
Average Life (i)(m) 15.8 yrs.
----------------------------------------------
Average Maturity (i)(m) 17.1 yrs.
----------------------------------------------
Average Credit Quality of
Rated Securities (long-term) (a) AA
----------------------------------------------
Average Credit Quality of
Rated Securities (short-term) (a) A-1
----------------------------------------------
MFS(R) California Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 103.7%
Cash & Other Net Assets (3.7)%
TOP FIVE INDUSTRIES (i)
General Obligations - Schools 16.6%
----------------------------------------------
State & Local Agencies 12.9%
----------------------------------------------
Healthcare Revenue - Hospitals 12.1%
----------------------------------------------
General Obligations - General Purpose 12.0%
----------------------------------------------
Universities - Colleges 8.0%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 49.1%
----------------------------------------------
AA 7.3%
----------------------------------------------
A 16.5%
----------------------------------------------
BBB 14.7%
----------------------------------------------
BB 0.5%
----------------------------------------------
B 0.5%
----------------------------------------------
Not Rated 11.4%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 7.0
----------------------------------------------
Average Life (i)(m) 15.8 yrs.
----------------------------------------------
Average Maturity (i)(m) 19.4 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 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 by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in the "AAA"-rating
category. Percentages are based on the total market value of investments as
of 09/30/07.
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 09/30/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
Portfolio Composition - continued
MFS(R) Florida Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 109.4%
Cash & Other Net Assets (9.4)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 19.9%
----------------------------------------------
Water & Sewer Utility Revenue 15.1%
----------------------------------------------
General Obligations - General Purpose 14.6%
----------------------------------------------
Transportation/Spec Tax 9.2%
----------------------------------------------
General Obligation - Schools 7.0%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 55.2%
----------------------------------------------
AA 8.3%
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A 6.7%
----------------------------------------------
BBB 9.5%
----------------------------------------------
BB 0.6%
----------------------------------------------
B 0.3%
----------------------------------------------
Not Rated 19.4%
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PORTFOLIO FACTS
Average Duration (d)(i) 6.3
----------------------------------------------
Average Life (i)(m) 14.3 yrs.
----------------------------------------------
Average Maturity (i)(m) 16.8 yrs.
----------------------------------------------
Average Credit Quality of
Rated Securities (long-term) (a) AA
----------------------------------------------
Average Credit Quality of
Rated Securities (short-term) (a) A-1
----------------------------------------------
MFS(R) Georgia Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 107.6%
Cash & Other Net Assets (7.6)%
TOP FIVE INDUSTRIES (i)
Water & Sewer Utility Revenue 33.1%
----------------------------------------------
Healthcare Revenue - Hospitals 11.4%
----------------------------------------------
Universities - Colleges 8.7%
----------------------------------------------
General Obligations - Schools 8.6%
----------------------------------------------
Single Family Housing - State 5.9%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 40.8%
----------------------------------------------
AA 22.3%
----------------------------------------------
A 9.6%
----------------------------------------------
BBB 8.0%
----------------------------------------------
BB 0.3%
----------------------------------------------
B 0.3%
----------------------------------------------
Not Rated 18.7%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 7.4
----------------------------------------------
Average Life (i)(m) 12.9 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) Maryland Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 103.2%
Cash & Other Net Assets (3.2)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 19.5%
----------------------------------------------
Universities - Colleges 14.9%
----------------------------------------------
General Obligations - Improvement 11.1%
----------------------------------------------
Water & Sewer Utility Revenue 6.4%
----------------------------------------------
General Obligations - General Purpose 6.3%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 37.4%
----------------------------------------------
AA 17.1%
----------------------------------------------
A 17.4%
----------------------------------------------
BBB 15.3%
----------------------------------------------
BB 0.8%
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B 0.2%
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Not Rated 11.8%
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PORTFOLIO FACTS
Average Duration (d)(i) 7.1
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Average Life (i)(m) 16.0 yrs.
----------------------------------------------
Average Maturity (i)(m) 17.7 yrs.
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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 09/30/07.
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 09/30/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
Portfolio Composition - continued
MFS(R) Massachusetts Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 106.7%
Cash & Other Net Assets (6.7)%
TOP FIVE INDUSTRIES (i)
Universities - Colleges 19.8%
----------------------------------------------
General Obligations - General Purpose 14.3%
----------------------------------------------
Healthcare Revenue - Hospitals 12.1%
----------------------------------------------
Water & Sewer Utility Revenue 7.9%
----------------------------------------------
General Obligations - Schools 7.4%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 41.7%
----------------------------------------------
AA 19.8%
----------------------------------------------
A 10.7%
----------------------------------------------
BBB 9.6%
----------------------------------------------
BB 1.2%
----------------------------------------------
Not Rated 17.0%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 7.1
----------------------------------------------
Average Life (i)(m) 14.4 yrs.
----------------------------------------------
Average Maturity (i)(m) 17.0 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 account any holdings which
have been pre-refunded or pre-paid to an earlier date or which have a
mandatory put date prior to the stated maturity. The average life shown
takes into account these earlier dates.
(r) Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in the "AAA"-rating
category. Percentages are based on the total market value of investments as
of 09/30/07.
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 09/30/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
EXPENSE TABLES
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, APRIL 1, 2007,
THROUGH SEPTEMBER 30, 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 (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other fund expenses. These examples are intended to
help you understand your ongoing costs (in dollars) of investing in the funds
and to compare these costs with the ongoing costs of investing in other mutual
funds.
These examples are based on an investment of $1,000 invested at the beginning
of the period and held for the entire period April 1, 2007 through September
30, 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 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 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). Therefore, the second line for each share class in the tables
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
MFS(R) ALABAMA MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
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Actual 1.13% $1,000.00 $1,012.70 $5.69
A -------------------------------------------------------------------------
Hypothetical (h) 1.13% $1,000.00 $1,019.35 $5.70
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Actual 1.88% $1,000.00 $1,008.90 $9.44
B -------------------------------------------------------------------------
Hypothetical (h) 1.88% $1,000.00 $1,015.60 $9.47
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(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads).
If these transaction costs had been included, your costs would have been
higher.
MFS(R) ARKANSAS MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
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Actual 0.84% $1,000.00 $1,012.30 $4.23
A -------------------------------------------------------------------------
Hypothetical (h) 0.84% $1,000.00 $1,020.80 $4.24
- --------------------------------------------------------------------------------
Actual 1.64% $1,000.00 $1,008.20 $8.23
B -------------------------------------------------------------------------
Hypothetical (h) 1.64% $1,000.00 $1,016.80 $8.27
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MFS(R) CALIFORNIA MUNICIPAL BOND FUND
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Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
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Actual 0.74% $1,000.00 $1,001.50 $3.70
A -------------------------------------------------------------------------
Hypothetical (h) 0.74% $1,000.00 $1,021.30 $3.74
- --------------------------------------------------------------------------------
Actual 1.53% $1,000.00 $997.60 $7.64
B -------------------------------------------------------------------------
Hypothetical (h) 1.53% $1,000.00 $1,017.35 $7.72
- --------------------------------------------------------------------------------
Actual 1.64% $1,000.00 $997.00 $8.19
C -------------------------------------------------------------------------
Hypothetical (h) 1.64% $1,000.00 $1,016.80 $8.27
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MFS(R) FLORIDA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 0.95% $1,000.00 $1,003.20 $4.76
A -------------------------------------------------------------------------
Hypothetical (h) 0.95% $1,000.00 $1,020.25 $4.80
- --------------------------------------------------------------------------------
Actual 1.72% $1,000.00 $999.40 $8.60
B -------------------------------------------------------------------------
Hypothetical (h) 1.72% $1,000.00 $1,016.40 $8.67
- --------------------------------------------------------------------------------
MFS(R) GEORGIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.20% $1,000.00 $1,010.80 $6.03
A -------------------------------------------------------------------------
Hypothetical (h) 1.20% $1,000.00 $1,019.00 $6.06
- --------------------------------------------------------------------------------
Actual 1.95% $1,000.00 $1,007.00 $9.78
B -------------------------------------------------------------------------
Hypothetical (h) 1.95% $1,000.00 $1,015.25 $9.82
- --------------------------------------------------------------------------------
MFS(R) MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.01% $1,000.00 $1,003.10 $5.06
A -------------------------------------------------------------------------
Hypothetical (h) 1.01% $1,000.00 $1,019.95 $5.10
- --------------------------------------------------------------------------------
Actual 1.66% $1,000.00 $999.90 $8.30
B -------------------------------------------------------------------------
Hypothetical (h) 1.66% $1,000.00 $1,016.70 $8.37
- --------------------------------------------------------------------------------
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.12% $1,000.00 $1,008.80 $5.62
A -------------------------------------------------------------------------
Hypothetical (h) 1.12% $1,000.00 $1,019.40 $5.65
- --------------------------------------------------------------------------------
Actual 1.77% $1,000.00 $1,005.50 $8.87
B -------------------------------------------------------------------------
Hypothetical (h) 1.77% $1,000.00 $1,016.15 $8.92
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads). If
these transaction costs had been included, your costs would have been
higher.
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) ALABAMA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by
your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 106.3%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 2.6%
- -------------------------------------------------------------------------------
Alabama Docks Department Facilities Rev.,
MBIA, 5.5%, 2008 (c) $1,000,000 $ 1,039,200
Alabama Port Authority Docks Facility,
MBIA, 5.25%, 2011 (c) 1,000,000 1,057,060
- -------------------------------------------------------------------------------
$ 2,096,260
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 14.1%
- -------------------------------------------------------------------------------
Boaz, AL, School Warrants, "A", XLCA, 5%, 2025 $1,000,000 $ 1,034,613
Boaz, AL, School Warrants, "A", XLCA, 5%, 2029 650,000 667,921
Commonwealth of Puerto Rico, Public
Improvement, "A", 5.25%, 2030 1,000,000 1,032,470
Fairfield, AL, Refunding Warrants, AMBAC,
5.25%, 2025 1,030,000 1,083,055
Gadsden, AL, Warrants, "B", AMBAC, 5.125%, 2028 1,000,000 1,042,900
Homewood, AL, Refunding Capital Warrants,
"A", FSA, 0%, 2036 3,000,000 711,450
Hoover, AL, "B", 6%, 2010 (c) 500,000 531,125
Houston County, AL, AMBAC, 6.25%, 2009 (c) 750,000 804,720
Jefferson County, AL, School Warrants, FSA,
5.5%, 2020 1,750,000 1,816,238
Mobile County, AL, 6%, 2009 (c) 1,345,000 1,404,449
Morgan County, AL, Warrants, AMBAC, 5%, 2028 1,380,000 1,423,180
- -------------------------------------------------------------------------------
$11,552,121
- -------------------------------------------------------------------------------
General Obligations - Improvement - 5.0%
- -------------------------------------------------------------------------------
Birmingham, AL, "A", 5.75%, 2017 $1,000,000 $ 1,066,020
Birmingham, AL, "A", AMBAC, 4.5%, 2032 990,000 956,647
Montgomery, AL, Warrants, MBIA, 5.1%, 2021 1,005,000 1,044,396
Puerto Rico Municipal Finance Agency, "A",
FSA, 5.5%, 2009 (c)(u) 1,000,000 1,046,440
- -------------------------------------------------------------------------------
$ 4,113,503
- -------------------------------------------------------------------------------
General Obligations - Schools - 6.4%
- -------------------------------------------------------------------------------
Bessemer, AL, School Warrants, AMBAC, 5.5%, 2020 $2,015,000 $ 2,126,974
Phenix City, AL, AMBAC, 5.65%, 2010 (c) 1,500,000 1,611,540
Tuscaloosa, AL, AMBAC, 4.375%, 2037 500,000 477,160
Tuscaloosa, AL, Warrants, 5.7%, 2010 (c) 1,000,000 1,055,840
- -------------------------------------------------------------------------------
$ 5,271,514
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 15.3%
- -------------------------------------------------------------------------------
Alabama Special Care Facilities Financing Authority
(Ascension Health Senior Credit), "C-2", 5%, 2036 $ 750,000 $ 757,073
Alabama Special Care Facilities Financing Authority
(Daughters of Charity), ETM, AMBAC, 5%, 2025 (c) 1,500,000 1,501,620
Alexander City, AL, Special Care Facilities
Financing Authority Medical Facilities Rev., "A"
(Russell Hospital Corp.), 5.75%, 2036 500,000 504,205
Birmingham Medical Center, East Alabama,
Special Health Care Facilities, Eastern
Health Systems, "B", 5%, 2013 (c) 500,000 533,600
Birmingham, AL, Baptist Health Systems, "A"
(Baptist Medical Center), 5.625%, 2015 300,000 306,048
Birmingham, AL, Baptist Medical Center,
Special Care Facilities Rev., "A" (Baptist
Health Systems, Inc.), 5%, 2030 200,000 190,764
Health Care Authority for Baptist Health,
"D", 5%, 2021 400,000 404,500
Houston County, AL, Health Care Authority,
AMBAC, 6.125%, 2009 (c) 1,000,000 1,060,270
Huntsville, AL, Health Care Authority Rev.,
5.625%, 2011 (c) 1,050,000 1,132,604
Huntsville, AL, Health Care Authority Rev.,
"A", MBIA, 5%, 2023 1,000,000 1,020,850
Lauderdale County & Florence, AL, Health
Care Authority Rev. (Eliza Coffee Memorial
Hospital), MBIA, 5.75%, 2008 (c) 1,000,000 1,016,550
Lauderdale County & Florence, AL, Health
Care Authority Rev., "A" (Coffee Health
Group), MBIA, 5.75%, 2014 1,000,000 1,044,330
Marshall County, AL, Health Care Authority
Rev., "A", 5.75%, 2032 1,065,000 1,100,369
Montgomery, AL, Medical Clinic Board Health
Care Facility Rev. (Jackson Hospital &
Clinic), 5.25%, 2031 500,000 476,675
Montgomery, AL, Special Care Facilities,
Financing Authority Rev. (Baptist Health),
"A-2", MBIA, 0% to 2007, 5% to 2014 (c) 1,135,000 1,201,727
Valley, AL, Special Care Facilities
Financing Authority, "A" (Lanier Memorial
Hospital), 5.65%, 2022 225,000 226,960
- -------------------------------------------------------------------------------
$12,478,145
- -------------------------------------------------------------------------------
Industrial Revenue - Metals - 0.6%
- -------------------------------------------------------------------------------
Mobile County, AL, Industrial Development
Authority Rev. (Ipsco, Inc.), 6.875%, 2030 $ 500,000 $ 519,810
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 0.5%
- -------------------------------------------------------------------------------
Fairfield, AL, Environment Improvement Rev.
(USX Corp.), 5.4%, 2016 $ 400,000 $ 420,252
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 3.8%
- -------------------------------------------------------------------------------
Butler, AL, Industrial Development Board,
Solid Waste Disposal Rev. (Georgia Pacific
Corp.), 5.75%, 2028 $ 200,000 $ 191,324
Camden, AL, Industrial Development Board
Exempt Facilities Rev., "B" (Weyerhaeuser
Co.), 6.375%, 2024 500,000 535,480
Mobile, AL, Industrial Development Board
Improvement Rev., "A" (International Paper
Co.), 6.35%, 2016 650,000 674,687
Mobile, AL, Industrial Development Board
Improvement Rev., "B" (International Paper
Co.), 6.45%, 2019 350,000 362,915
Phenix City, AL, Industrial Development
Board Environmental Improvement Rev., "A"
(MeadWestvaco Coated), 6.35%, 2035 750,000 781,823
Selma, AL, Industrial Development Board,
"A" (International Paper Co.), 6.7%, 2018 500,000 522,645
- -------------------------------------------------------------------------------
$ 3,068,874
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.4%
- -------------------------------------------------------------------------------
Birmingham, AL, Downtown Redevelopment
Authority Rev. (Social Security
Administrative Building), ETM, 12.5%, 2010(c) $1,025,000 $ 1,157,256
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.5%
- -------------------------------------------------------------------------------
Alabama Housing Finance Authority, Multi-Family
Residential Development Rev., FHA, 7.25%, 2023 $1,030,000 $ 1,035,603
Alabama Housing Finance Authority, Multi-Family
Residential Development Rev., "K"
(South Bay Apartments), FNMA, 5.875%, 2021 960,000 993,802
Birmingham, AL, Multi-Family Housing Rev.,
"C" (Beaconview Apartments), 8%, 2030 (d) 395,000 19,750
- -------------------------------------------------------------------------------
$ 2,049,155
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 1.1%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Filing Corp., Sales
Tax Rev., 0%, 2056 $5,960,000 $ 490,687
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 400,000 414,896
- -------------------------------------------------------------------------------
$ 905,583
- -------------------------------------------------------------------------------
Single Family Housing - State - 0.7%
- -------------------------------------------------------------------------------
Alabama Housing Finance Authority, Collateral Home
Mortgage Bond Program II, "B", 5.15%, 2019 $ 45,000 $ 45,433
Alabama Housing Finance Authority, Single Family
Mortgage Rev., Collateral Home Mortgage Bond
Program II, "A-2", GNMA, 5.4%, 2022 500,000 506,875
Alabama Housing Finance Authority, Single Family
Mortgage Rev., Collateral Home Mortgage Bond
Program II, "B", 5.15%, 2019 50,000 50,482
- -------------------------------------------------------------------------------
$ 602,790
- -------------------------------------------------------------------------------
State & Local Agencies - 8.9%
- -------------------------------------------------------------------------------
Alabama Building Renovation Authority,
AMBAC, 6%, 2014 $1,515,000 $ 1,610,112
Alabama Building Renovation Finance
Authority, FSA, 4.5%, 2031 300,000 291,006
Alabama Public School & College, Capital
Improvement, "A", 5%, 2019 500,000 515,720
Alabama Public School & College, Capital
Improvement, "C", 5.75%, 2017 1,000,000 1,050,940
Alabama Public School & College, Capital
Improvement, "C", 5.75%, 2018 1,035,000 1,087,723
Montgomery County, AL, Public Building
Authority Rev., MBIA, 5%, 2031 500,000 516,970
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2016 (u) 1,000,000 1,113,700
Puerto Rico Public Finance Corp., "A",
AMBAC, 5.375%, 2013 (u) 1,000,000 1,087,460
- -------------------------------------------------------------------------------
$ 7,273,631
- -------------------------------------------------------------------------------
Tax - Other - 1.3%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
"A", 5.5%, 2018 $1,000,000 $ 1,018,690
- -------------------------------------------------------------------------------
Tobacco - 0.5%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 435,000 $ 434,870
- -------------------------------------------------------------------------------
Transportation - Special Tax - 1.1%
- -------------------------------------------------------------------------------
Puerto Rico Highway & Transportation
Authority Rev., ASSD GTY, 5.25%, 2034 $ 775,000 $ 863,528
- -------------------------------------------------------------------------------
Universities - Colleges - 8.3%
- -------------------------------------------------------------------------------
Alabama Board of Education Rev., Refunding
& Improvement (Southern Union State
Community College), MBIA, 5%, 2022 $1,000,000 $ 1,033,910
Alabama Private Colleges & Universities,
Facilities Authority Rev. (Tuskegee
University), ASSD GTY, 4.75%, 2026 700,000 705,768
Auburn University, General Fee Rev., AMBAC,
5%, 2029 1,000,000 1,030,180
Mobile, AL, Spring Hill College, Educational
Building Authority Rev., "A", 5.25%, 2034 1,360,000 1,419,949
University of Alabama, General Rev., MBIA,
5%, 2034 1,000,000 1,022,900
University of Alabama, General Rev., "A",
MBIA, 5%, 2029 1,000,000 1,027,570
University of Alabama, University Rev.,
General Fee, FGIC, 5%, 2021 525,000 546,693
- -------------------------------------------------------------------------------
$ 6,786,970
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 16.8%
- -------------------------------------------------------------------------------
Alabama Municipal Electric Power Authority,
"A", MBIA, 5%, 2023 $1,000,000 $ 1,041,430
Guam Power Authority Rev., AMBAC, 5%, 2018 (u) 9,000,000 9,269,730
Guam Power Authority Rev., "A", AMBAC,
5.25%, 2013 (u) 1,000,000 1,040,010
Puerto Rico Electric Power Authority Rev.,
"II", 5.25%, 2012 (c) 875,000 947,581
Southeastern Alabama Gas District Systems
Rev., "A", AMBAC, 5.5%, 2010 (c) 1,000,000 1,068,050
Tuskegee, AL, Utilities Board, AMBAC, 5.5%, 2022 400,000 406,436
- -------------------------------------------------------------------------------
$13,773,237
- -------------------------------------------------------------------------------
Utilities - Other - 1.3%
- -------------------------------------------------------------------------------
Foley, AL, Utilities Board Utilities Rev.,
FSA, 5%, 2025 $1,000,000 $ 1,040,380
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 14.1%
- -------------------------------------------------------------------------------
Alabama Drinking Water Finance Authority,
Revolving Fund Loan, "A", AMBAC, 6%, 2021 $ 725,000 $ 771,342
Alabama Drinking Water Finance Authority,
Revolving Fund Loan, "C", AMBAC, 5.75%, 2018 1,000,000 1,063,630
Alabama Water Pollution Control Authority,
Revolving Fund Loan, AMBAC, 5.75%, 2019 1,000,000 1,038,430
Alabama Water Pollution Control Authority,
Revolving Fund Loan, "B", AMBAC, 5.5%, 2020 1,380,000 1,389,205
Alabaster, AL, Sewer Rev., MBIA, 5%, 2029 750,000 772,193
Bessemer, AL, Water Rev., Warrants, "A",
AMBAC, 5.75%, 2026 1,000,000 1,011,260
Birmingham, AL, Waterworks & Sewer Board
Rev., "A", FGIC, 5%, 2034 1,365,000 1,408,271
Birmingham, AL, Waterworks & Sewer Board
Rev., "A", FSA, 4.5%, 2035 500,000 480,235
Jasper, AL, Waterworks & Sewer Board, "A",
AMBAC, 5.2%, 2011 (c) 750,000 798,690
Limestone County, AL, Water Authority,
FGIC, 5.5%, 2009 (c) 2,650,000 2,736,417
Ozark, AL, Utilities Board Water & Sewer
Rev., AMBAC, 5%, 2011 (c) 100,000 103,021
- -------------------------------------------------------------------------------
$11,572,694
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $84,219,415) $86,999,263
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.1%
- -------------------------------------------------------------------------------
East Baton Rouge, LA, Pollution Control Rev.
(Exxon Mobil Corp.), 3.94%, due
10/01/07, at Identified Cost $ 100,000 $ 100,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $84,319,415) (k) $87,099,263
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (6.4)% (5,216,341)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $81,882,922
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 4,378
Services
12/01/09 USD 1,500,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (1,970)
Services
1/09/18 USD 1,250,000 Merrill Lynch Capital 5.771% (fixed rate) 3-Month LIBOR 54,063
Services
1/09/23 USD 1,000,000 Citibank 5.920% (fixed rate) 3-Month LIBOR 56,850
2/20/23 USD 1,000,000 Goldman Sachs International 4.093% (fixed rate) 7-Day BMA 19,118
11/01/27 USD 1,000,000 Citibank 4.186% (fixed rate) 7-Day BMA 23,202
1/09/28 USD 1,250,000 Citibank 5.902% (fixed rate) 3-Month LIBOR 71,936
3/05/28 USD 1,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 5,360
- ---------------------------------------------------------------------------------------------------------------------------
$232,937
- ---------------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) ARKANSAS MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.8%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport and Port Revenue - 0.6%
- -------------------------------------------------------------------------------
Little Rock, AR, Airport Rev., "A", FSA, 5.25%, 2019 $ 800,000 $ 818,120
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 9.9%
- -------------------------------------------------------------------------------
Arkansas College Savings, "A", ETM, 0%, 2017 (c) $1,840,000 $ 1,237,308
Commonwealth of Puerto Rico, ETM, 5.5%, 2019 (u) 2,500,000 2,659,825
Commonwealth of Puerto Rico, MBIA, 5.75%, 2020 (u) 6,000,000 6,346,740
Commonwealth of Puerto Rico, Public Improvement,
"A", 5.25%, 2027 2,000,000 2,075,080
Commonwealth of Puerto Rico, Public Improvement,
"A", CIFG, 5%, 2034 1,000,000 1,032,850
- -------------------------------------------------------------------------------
$ 13,351,803
- -------------------------------------------------------------------------------
General Obligations - Improvement - 7.8%
- -------------------------------------------------------------------------------
Puerto Rico Municipal Finance Agency,
5.5%, 2009 (c)(u) $6,500,000 $ 6,801,860
Puerto Rico Municipal Finance Agency, "A", FSA,
5.5%, 2017 (u) 1,470,000 1,538,267
Puerto Rico Public Buildings Authority Rev.
(State Office Building), "F", XLCA, 5.25%, 2025 2,000,000 2,223,460
- -------------------------------------------------------------------------------
$ 10,563,587
- -------------------------------------------------------------------------------
General Obligations - Schools - 5.8%
- -------------------------------------------------------------------------------
Arkansas, Capital Appreciation, College Savings,
"B", ETM, 0%, 2012 (c) $1,200,000 $ 1,007,808
Arkansas, Capital Appreciation, College Savings,
"B", ETM, 0%, 2013 (c) 1,000,000 807,170
Arkansas, Capital Appreciation, College Savings,
"B", ETM, 0%, 2014 (c) 1,150,000 891,446
Arkansas, Capital Appreciation, College Savings,
"B", ETM, 0%, 2015 (c) 1,100,000 815,782
Little Rock, AR, School District Construction,
"C", FSA, 5%, 2017 1,000,000 1,035,230
Little Rock, AR, School District,
"A", FSA, 5.4%, 2010 (c) 1,000,000 1,041,610
Northwest Arkansas Community College District,
Capital Improvement, AMBAC, 5%, 2028 1,380,000 1,433,033
Pine Bluff, AR, School District Construction,
MBIA, 4.75%, 2033 800,000 800,928
- -------------------------------------------------------------------------------
$ 7,833,007
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 9.4%
- -------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev.
(Washington Regional Medical Center),
7.25%, 2010 (c) $ 500,000 $ 540,485
Arkansas Development Finance Authority, Health
Refunding Rev. (Sister of Mercy),
"A", MBIA, 5%, 2013 4,050,000 4,171,257
Batesville, AR, Medical District Rev.
(White River Medical Center), 5.5%, 2024 750,000 757,740
Baxter County, AR, Hospital Rev.
(Baxter Regional Hospital), 5%, 2026 1,000,000 974,890
Baxter County, AR, Hospital Rev., Refunding
& Improvement, "B", 5.6%, 2009(c) 1,500,000 1,556,850
Crittenden County, AR, Hospital Rev., Refunding
& Improvement, 7.15%, 2025 750,000 777,997
Jefferson County, AR, Hospital Rev., Refunding
& Improvement (Regional Medical Center), 5.8%, 2021 1,000,000 1,047,140
Little Rock, AR, Health Facilities Hospital Board
Rev. (Baptist Medical Center), 6.9%, 2009 400,000 420,444
North Little Rock, AR, Health Facilities Board Rev.
(Baptist Health Facilities), 5.7%, 2022 500,000 512,765
Sebastian County, AR, Health Facilities Improvement
Rev.(Sparks Regional Medical Center),
"A", 5.25%, 2021 1,000,000 1,001,280
Washington County, AR, Hospital Rev. (Regional
Medical Center), "A", 5%, 2035 1,000,000 941,760
- -------------------------------------------------------------------------------
$ 12,702,608
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 0.2%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority, Refinery
Facilities Rev. (Hovensa Coker Project),
5.875%, 2022 $ 335,000 $ 344,625
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.2%
- -------------------------------------------------------------------------------
Arkansas Development Finance Authority,
Industrial Facilities Rev. (Potlatch Corp.),
"A", 7.75%, 2025 $ 250,000 $ 275,760
Camden, AR, Environmental Improvement Rev.
(International Paper Co.), "A", 5%, 2018 750,000 743,055
Pine Bluff, AR, Environmental Improvement
(International Paper Co.), "A", 5.55%, 2022 250,000 252,220
Pine Bluff, AR, Environmental Refunding
(International Paper Co.), "A", 6.7%, 2020 300,000 316,908
- -------------------------------------------------------------------------------
$ 1,587,943
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 0.7%
- -------------------------------------------------------------------------------
Fort Smith, AR, Residential Housing Facilities
Board Rev. (Gorman Towers), "A", GNMA, 5.45%, 2037 $1,000,000 $ 1,018,610
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 1.4%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 0%, 2056 $9,770,000 $ 804,364
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 1,010,000 1,047,612
- -------------------------------------------------------------------------------
$ 1,851,976
- -------------------------------------------------------------------------------
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 $ 4,531,000
Lonoke County, AR, Residential Housing Facilities
Rev., "A-2", FNMA, 7.9%, 2011 53,834 54,098
Pulaski County, AR, Public Facilities Board Rev.,
"A", GNMA, 5.75%, 2034 1,825,000 1,849,163
Pulaski County, AR, Public Facilities Board Rev.,
"C", FNMA, 0%, 2014 2,750,000 2,034,698
Sherwood, AR, Residential Housing Facilities Board,
Single Family Rev., MBIA, 7.5%, 2010 (c) 1,250,000 1,380,863
- -------------------------------------------------------------------------------
$ 9,849,822
- -------------------------------------------------------------------------------
Single Family Housing - State - 8.4%
- -------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev.,
Mortgage Backed Securities Program,
"B", GNMA, 5%, 2029 $ 185,000 $ 185,239
Arkansas Development Finance Authority Rev.,
Mortgage Backed Securities Program,
"B", GNMA, 4.45%, 2034 795,000 787,225
Arkansas Development Finance Authority Rev.,
Mortgage Backed Securities Program,
"C", GNMA, 5.35%, 2027 1,560,000 1,578,143
Arkansas Development Finance Authority Rev.,
Mortgage Backed Securities Program,
"C", 5.625%, 2035 1,695,000 1,785,598
Arkansas Development Finance Authority Rev.,
Mortgage Backed Securities Program,
"D", GNMA, 5.85%, 2024 665,000 673,499
Arkansas Development Finance Authority Rev.,
Mortgage Backed Securities Program,
"E", GNMA, 5.4%, 2034 700,000 712,824
Arkansas Development Finance Authority,
Mortgage Backed Securities Program, "C", 5.3%, 2023 310,000 313,574
Arkansas Development Finance Authority, Mortgage
Backed Securities Program, "I", GNMA, 5.3%, 2033 345,000 347,360
Arkansas Development Finance Authority, Mortgage
Rev., "B", GNMA, 4.85%, 2031 950,000 919,989
Arkansas Development Finance Authority, Mortgage
Rev., "B", GNMA, 5.25%, 2035 2,420,000 2,461,769
Arkansas Development Finance Authority, Single
Family Mortgage Rev., "B", GNMA, 5.125%, 2024 445,000 449,481
Arkansas Housing Development Agency, Single Family
Rev., Mortgage Program, 8.375%, 2011 (c) 1,000,000 1,165,790
- -------------------------------------------------------------------------------
$ 11,380,491
- -------------------------------------------------------------------------------
State & Local Agencies - 2.0%
- -------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev.,
Environmental State Agency Facilities,
"A", AMBAC, 5%, 2040 $2,500,000 $ 2,565,550
Arkansas Development Finance Authority, Economic
Development Rev. (Agritecsorbents LLC),
"B", 5%, 2018 175,000 178,715
- -------------------------------------------------------------------------------
$ 2,744,265
- -------------------------------------------------------------------------------
Tax - Other - 3.1%
- -------------------------------------------------------------------------------
Little Rock, AR, Hotel & Restaurant Gross Receipts
Tax Rev., 7.375%, 2015 $2,790,000 $ 3,204,399
Virgin Islands Public Finance Authority Rev.,
"A", 5.5%, 2022 1,000,000 1,016,250
- -------------------------------------------------------------------------------
$ 4,220,649
- -------------------------------------------------------------------------------
Tobacco - 2.2%
- -------------------------------------------------------------------------------
Arkansas Development Finance Authority, Tobacco
Settlement Rev. (Cancer Research Center Project),
AMBAC, 0%, 2026 $2,000,000 $ 829,600
Arkansas Development Finance Authority,Tobacco
Settlement Rev. (Cancer Research Center Project),
AMBAC, 0%, 2027 1,940,000 763,390
Arkansas Development Finance Authority, Tobacco
Settlement Rev. (Cancer Research Center Project),
AMBAC, 0%, 2036 1,200,000 287,004
Arkansas Development Finance Authority, Tobacco
Settlement Rev. (Cancer Research Center Project),
"N", AMBAC, 0%, 2030 1,725,000 578,720
Children's Trust Fund, Tobacco Settlement Rev.,
Puerto Rico, 5.375%, 2033 225,000 224,932
Children's Trust Fund, Tobacco Settlement Rev.,
Puerto Rico, 5.5%, 2039 290,000 290,319
- -------------------------------------------------------------------------------
$ 2,973,965
- -------------------------------------------------------------------------------
Transportation - Special Tax - 2.5%
- -------------------------------------------------------------------------------
Puerto Rico Highway & Transportation Authority,
"B", MBIA, 5.875%, 2010 (c) $2,000,000 $ 2,144,040
Puerto Rico Highway & Transportation Authority,
"G", FGIC, 5%, 2022 500,000 523,575
Puerto Rico Highway & Transportation Authority,
"G", 5%, 2023 750,000 766,463
- -------------------------------------------------------------------------------
$ 3,434,078
- -------------------------------------------------------------------------------
Universities - Colleges - 18.9%
- -------------------------------------------------------------------------------
Arkansas University Rev., Student Fee,
AMBAC, 5%, 2032 $2,495,000 $ 2,583,672
Conway, AR, Public Facilities Board, Capital
Improvement Rev. (Hendrix College), "B", 5%, 2035 1,000,000 1,003,500
Pulaski, AR, Student Tuition & Fee Rev.
(Technical College), FGIC, 5%, 2029 1,820,000 1,865,263
Pulaski, AR, Student Tuition & Fee Rev.
(Technical College), AMBAC, 4.5%, 2031 690,000 668,272
Siloam Springs, AR, Public Education Facilities,
Capital Improvement Rev. (John Brown University),
AMBAC, 5.35%, 2020 500,000 519,680
University of Arkansas, University Construction
Rev. (Monticello), AMBAC, 5%, 2025 1,525,000 1,581,318
University of Arkansas, University Construction
Rev. (UAMS Campus), "B", MBIA, 5%, 2026 1,405,000 1,460,947
University of Arkansas, University Construction
Rev. (UAMS Campus), "B", MBIA, 5%, 2027 1,000,000 1,037,960
University of Arkansas, University Construction
Rev. (UAMS Campus), "B", MBIA, 5%, 2034 3,290,000 3,384,620
University of Arkansas, University Facilities Rev.
(Fayetteville Campus), FGIC, 5%, 2027 3,155,000 3,245,769
University of Arkansas, University Facilities Rev.
(Fayetteville Campus), FGIC, 5%, 2032 2,500,000 2,556,850
University of Arkansas, University Facilities Rev.
(Pine Bluff Campus), "A", AMBAC, 5%, 2030 1,000,000 1,037,240
University of Arkansas, University Facilities Rev.
(UAMS Campus), FGIC, 5%, 2028 2,000,000 2,076,400
University of Central Arkansas Rev., "A",
AMBAC, 5%, 2023 1,100,000 1,105,687
University of Central Arkansas, Student Housing
Rev., "C", FGIC, 5%, 2034 250,000 252,840
University of Puerto Rico Rev., "Q", 5%, 2036 1,145,000 1,148,114
- -------------------------------------------------------------------------------
$ 25,528,132
- -------------------------------------------------------------------------------
Universities - Dormitories - 2.5%
- -------------------------------------------------------------------------------
Arkansas State University, Housing Systems
Rev., AMBAC, 5.15%, 2021 $1,240,000 $ 1,281,404
Arkansas Technical University, Housing Systems
Rev., AMBAC, 5.2%, 2026 1,000,000 1,060,000
Pope County, AR, Residential Housing, Facilities
Board Rev. (Arkansas Technical University Project),
"A", 6%, 2027 500,000 501,755
University of Central Arkansas, Student Housing
Rev., "C", FGIC, 5.25%, 2029 500,000 510,425
- -------------------------------------------------------------------------------
$ 3,353,584
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 0.6%
- -------------------------------------------------------------------------------
Jefferson County, AR, Pollution Control Rev.
(Entergy Arkansas, Inc., Project), 4.6%, 2017 $ 750,000 $ 751,972
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 9.0%
- -------------------------------------------------------------------------------
Benton, AR, Utilities Rev., AMBAC, 5%, 2030 $ 470,000 $ 481,271
Benton, AR, Utilities Rev., AMBAC, 5%, 2036 2,000,000 2,062,020
North Little Rock, AR, Electric Rev., "A",
MBIA, 6.5%, 2010 1,275,000 1,331,483
North Little Rock, AR, Electric Rev., "A",
MBIA, 6.5%, 2015 6,000,000 6,773,280
Puerto Rico Electric Power Authority Rev., "NN",
5.125%, 2013 (c) 1,000,000 1,078,990
Puerto Rico Electric Power Authority, "TT",
5%, 2027 470,000 478,314
- -------------------------------------------------------------------------------
$ 12,205,358
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 11.3%
- -------------------------------------------------------------------------------
Arkansas Development Finance Authority, Economic
Development Rev., "I", AMBAC, 5.65%, 2014 $ 70,000 $ 70,109
Benton Washington Regional Public Water Authority
Rev., XCLA, 4.75%, 2033 1,000,000 995,560
Fort Smith, AR, Water & Sewer Rev., AMBAC,
5.65%, 2009 (c) 1,000,000 1,041,850
Fort Smith, AR, Water & Sewer Rev., "C", FSA,
5.25%, 2020 1,315,000 1,385,103
Fort Smith, AR, Water & Sewer Rev., Refunding &
Construction, "A", FSA, 5%, 2019 2,125,000 2,200,352
Fort Smith, AR, Water & Sewer Rev., Refunding &
Construction, "A", FSA, 5%, 2021 2,750,000 2,831,152
Little Rock, AR, Sewer Rev., "A", FSA, 4.375%, 2033 850,000 801,763
Little Rock, AR, Sewer Rev., Refunding &
Construction, 5%, 2022 1,750,000 1,797,058
Paragould, AR, Water Sewer & Electric Rev., AMBAC,
5.6%, 2010 (c) 765,000 812,170
Rogers, AR Sewer Rev., Improvement, AMBAC, 5%, 2037 1,000,000 1,027,710
South Sebastian County, AR, Water Refunding Rev.,
MBIA, 5%, 2038 1,000,000 1,005,110
Virgin Islands Water & Power Authority Rev.,
ASST GTY, RADIAN, 5.3%, 2018 1,250,000 1,271,725
- -------------------------------------------------------------------------------
$ 15,239,662
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $136,924,736) $141,754,257
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.3%
- -------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "B", 4.04%, due 10/01/07 $ 100,000 $ 100,000
Mt. Vernon Industrial Pollution Control Rev.
(General Electric Co. Project), 4.04%, due 10/01/07 200,000 200,000
Sevier County, TN, Public Building Authority Rev.,
Government Public Improvement III, "A-2",
3.88%, due 10/04/07 100,000 100,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 400,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $137,324,736) (k) $142,154,257
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.1)% (6,842,512)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $135,311,745
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 6,567
Services
12/01/09 USD 2,500,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (3,284)
Services
1/09/23 USD 1,500,000 Citibank 5.920% (fixed rate) 3-Month LIBOR 85,275
2/20/23 USD 1,500,000 Goldman Sachs International 4.093% (fixed rate) 7-Day BMA 28,677
11/01/27 USD 1,500,000 Citibank 4.186% (fixed rate) 7-Day BMA 34,802
3/05/28 USD 2,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 10,720
1/08/28 USD 1,500,000 Citibank 5.902% (fixed rate) 3-Month LIBOR 86,325
- ---------------------------------------------------------------------------------------------------------------------------
$249,082
- ---------------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) CALIFORNIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 102.4%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 2.0%
- -------------------------------------------------------------------------------
Long Beach, CA, Harbor Rev., "A", FGIC, 5.25%, 2018 $ 3,500,000 $ 3,630,200
Palm Springs, CA, Palm Springs International
Airport, 5.55%, 2028 530,000 531,404
Port Oakland, CA, "K", FGIC, 5.75%, 2020 4,000,000 4,176,680
- -------------------------------------------------------------------------------
$ 8,338,284
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 11.9%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) $ 3,000,000 $ 3,385,830
Commonwealth of Puerto Rico, Public Improvement,
FGIC, 5.5%, 2016 (u) 6,600,000 7,417,278
Los Angeles, CA, FGIC, 5.25%, 2014 (u) 10,810,000 11,892,405
State of California, 10%, 2007 1,055,000 1,055,000
State of California, 5.125%, 2025 2,000,000 2,078,080
State of California, 5.25%, 2029 2,000,000 2,074,060
State of California, 5%, 2031 3,980,000 4,051,202
State of California, 5%, 2032 3,000,000 3,062,040
State of California, AMBAC, 7.2%, 2008 1,600,000 1,630,192
State of California, AMBAC, 6.3%, 2010 3,000,000 3,227,880
State of California, AMBAC, 7%, 2010 2,000,000 2,195,560
State of California, XLCA, 5.75%, 2009 (c)(u) 440,000 465,815
State of California, XLCA, 5.75%, 2009 (c)(u) 200,000 211,734
State of California, XLCA, 5.75%, 2009 (c)(u) 1,860,000 1,969,126
State of California, Various Purposes, 4.75%, 2034 3,130,000 3,083,551
State of California, Various Purposes, "91",
5%, 2028 3,000,000 3,076,470
- -------------------------------------------------------------------------------
$ 50,876,223
- -------------------------------------------------------------------------------
General Obligations - Improvement - 0.6%
- -------------------------------------------------------------------------------
Citrus, CA, Community College District, Election
of 2004, "B", MBIA, 4.75%, 2031 $ 2,500,000 $ 2,524,950
- -------------------------------------------------------------------------------
General Obligations - Schools - 16.5%
- -------------------------------------------------------------------------------
Antelope Valley, CA (Union High School),
"A", MBIA, 5%, 2027 $ 1,500,000 $ 1,553,535
Butte Glenn Community College District,
"A", MBIA, 5%, 2026 1,885,000 1,960,155
Campbell, CA, Union High School District,
FSA, 5%, 2021 1,280,000 1,326,784
Campbell, CA, Union High School District, Election
of 2002, "B", FGIC, 5.5%, 2012 (c) 2,270,000 2,510,484
Capistrano, CA, Union High School District, "A",
FGIC, 5.875%, 2020 1,185,000 1,260,591
Chaffey, CA, Union High School District, "C",
FSA, 5%, 2027 1,000,000 1,036,860
Coast Community College District, CA, Capital
Appreciation, Election of 2002, "C", FSA, 0%, 2033 5,000,000 1,266,500
Colton, CA, Joint Union School District, "A",
FGIC, 5.375%, 2026 1,200,000 1,290,444
Colton, CA, Joint Union School District, Election
of 2001, "C", FGIC, 0%, 2032 1,000,000 281,320
Colton, CA, Joint Union School District, Election
of 2001, "C", FGIC, 0%, 2033 3,000,000 798,750
Coronado, CA, Union School District, "A",
5.7%, 2020 1,285,000 1,368,127
Escondido, CA, Union School District, "A", FSA,
5%, 2012 (c) 1,000,000 1,066,970
Folsom Cordova, CA, Union School District,
Facilities Improvement, "A", MBIA, 0%, 2025 1,505,000 653,501
Gilroy Cauni School District, Election of 2002,
"N", FGIC, 5%, 2027 1,190,000 1,240,706
Glendale, CA, Union School District, "B", FSA,
5.5%, 2018 4,275,000 4,392,691
Hillsborough, CA, School District, Capital
Appreciation, Election of 2002, "B", 0%, 2023 2,285,000 1,103,061
Hillsborough, CA, School District, Capital
Appreciation, Election of 2002, "B", 0%, 2024 2,640,000 1,211,390
Inglewood, CA, Union School District, "A", FGIC,
6%, 2009 (c) 1,695,000 1,796,480
Little Lake, CA, City School District, "A",
FSA, 6.125%, 2010 (c) 1,035,000 1,117,107
Live Oak, CA, School District, Santa Cruz County,
Election of 2004, "A", MBIA, 5%, 2033 1,410,000 1,471,123
Los Angeles, CA, Union School District, FSA,
5.25%, 2013 (c)(u) 10,000,000 10,881,300
Los Angeles, CA, Union School District, Election
of 1997, "E", MBIA, 5.125%, 2012 (c) 5,000,000 5,352,100
Moreland, CA, School District, Election of 2002,
"B", FGIC, 0%, 2028 1,440,000 538,373
Moreno Valley, CA, Union School District, Election
of 2004, "A", FSA, 5%, 2014 (c) 1,075,000 1,168,041
Moreno Valley, CA, Union School District, Election
of 2004, "A", FSA, 5%, 2014 (c) 1,715,000 1,863,433
Morgan Hill, CA, Union School District, FGIC,
5.5%, 2010 (c) 2,545,000 2,709,509
Natomas Union School District, Election of 2002
"B", FGIC, 5%, 2028 1,430,000 1,483,182
Oceanside, CA, Union School District, Election
of 2000, "C", MBIA, 5.25%, 2032 1,940,000 2,029,744
Palos Verdes Peninsula, CA, Capital Appreciation,
"N", FSA, 0%, 2029 4,405,000 1,554,701
Perris, CA, Union School District, "A",
FGIC, 0%, 2027 3,100,000 1,217,370
San Gabriel, CA, Union School District, "A",
FSA, 5%, 2024 2,000,000 2,072,680
San Ysidro, CA, School District, AMBAC,
6.125%, 2021 960,000 1,095,946
Santa Clara, CA, Union School District, FGIC,
5.5%, 2019 2,210,000 2,336,324
Santa Clarita, CA, Community College District,
Capital Appreciation, Election of 2006,
MBIA, 0%, 2033 5,625,000 1,501,369
Santa Maria, CA, Joint Union High School District,
"A", FSA, 5.375%, 2015 (c) 1,120,000 1,266,518
Santa Maria, CA, Joint Union High School District,
"A", FSA, 5.375%, 2015 (c) 1,210,000 1,368,292
Sausalito Marin City, CA, School District, Capital
Appreciation, Election of 2004, "B", MBIA, 0%, 2039 1,315,000 250,363
Sausalito Marin City, CA, School District, Capital
Appreciation, Election of 2004, "B", MBIA, 0%, 2040 1,400,000 252,196
Tehachapi, CA, Union School District, "A", FGIC,
5.625%, 2009 (c) 1,100,000 1,154,109
Walnut Valley, CA, Union School District, Election
of 2000, "E", FSA, 0%, 2028 1,535,000 573,890
Washington, CA, Union School District, Election
of 1999, "A", FGIC, 5.625%, 2021 1,000,000 1,073,420
- -------------------------------------------------------------------------------
$ 70,449,439
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 12.0%
- -------------------------------------------------------------------------------
Abag Finance Authority Rev. (San Diego Hospital),
"C", 5.375%, 2020 $ 2,000,000 $ 2,047,220
California Health Facilities Financing Authority
Rev. (Sutter Health), "A", 5%, 2042 3,000,000 3,021,690
California Health Facilities Financing Authority
Rev., Catholic Healthcare West, "G", 5.25%, 2023 2,000,000 2,047,700
California Health Facilities Financing Authority
Rev., Cedars Sinai Medical Center, 5%, 2027 1,000,000 1,010,580
California Health Facilities Financing Authority
Rev., Health Facilities (Adventist Health
Systems), "A", 5%, 2033 1,750,000 1,732,535
California Municipal Finance Authority,
Certificates of Participation (Community
Hospitals, Central California), 5.25%, 2037 2,000,000 1,935,920
California Statewide Communities Development
Authority Rev. (Henry Mayo Newhall Memorial
Hospital), "A", CHFC, 5%, 2018 2,000,000 2,060,740
California Statewide Communities Development
Authority Rev. (Kaiser Permanente), "A", 5.5%, 2032 2,000,000 2,056,900
California Statewide Communities Development
Authority Rev. (Los Angeles Children's Hospital),
5.125%, 2019 4,000,000 4,032,520
California Statewide Communities Development
Authority Rev. (Valleycare Health Systems),
"A", 5.125%, 2031 2,000,000 1,870,820
California Statewide Communities Development
Authority Rev., ETM, CHFC, 0%, 2008 (c) 6,345,000 6,159,345
California Statewide Communities Development
Authority Rev., Health Facilities (Memorial Health
Services), "A", 6%, 2023 1,500,000 1,616,010
California Statewide Communities Development
Authority Rev., "B", 5.625%, 2042 4,000,000 4,134,440
California Valley Health Systems, COP, 6.875%, 2023 455,000 455,100
Central California Joint Powers Health Financing
(Community Hospitals of Central California),
5.625%, 2011 (c) 1,000,000 1,076,700
Kaweah Delta Health Care District Rev.,
6%, 2012 (c) 2,000,000 2,254,040
Rancho Mirage, CA, Joint Powers (Eisenhower
Medical Center), 5.625%, 2014 (c) 3,000,000 3,364,530
Rancho Mirage, CA, Joint Powers (Eisenhower
Medical Center), "A", 5%, 2047 3,000,000 2,921,670
Sierra View, CA, Local Health Care District
Rev., 5.25%, 2037 1,000,000 1,009,790
Tahoe Forest California Hospital District,
"A", 5.85%, 2009 (c) 795,000 842,247
Tahoe Forest California Hospital District,
"A", 5.85%, 2022 205,000 213,194
Turlock, CA, Health Facilities Rev. (Emanuel
Medical Center), 5%, 2024 500,000 489,885
Turlock, CA, Health Facilities Rev. (Emanuel
Medical Center), 5.5%, 2037 1,740,000 1,754,651
Washington Township, CA, Health Care Rev., 5%, 2018 1,000,000 1,017,670
West Contra Costa California Healthcare District,
AMBAC, 5.5%, 2029 2,000,000 2,092,580
- -------------------------------------------------------------------------------
$ 51,218,477
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.8%
- -------------------------------------------------------------------------------
California Health Facilities Financing Authority
Rev. (Paradise Valley Estates), 5.125%, 2022 $ 1,000,000 $ 1,026,490
California Statewide Communities Development
Authority Rev. (Senior Living Presbyterian Homes),
4.875%, 2036 1,000,000 927,470
La Verne, CA, COP (Brethren Hillcrest Homes), "B",
6.625%, 2025 1,000,000 1,060,490
Millbrae, CA, Residential Facilities Rev.
(Magnolia of Millbrae), "A", 7.375%, 2027 440,000 453,543
- -------------------------------------------------------------------------------
$ 3,467,993
- -------------------------------------------------------------------------------
Human Services - 0.4%
- -------------------------------------------------------------------------------
California Statewide Communities Development
Authority (Prides Industries), 7.125%, 2009 (c) $ 1,565,000 $ 1,672,594
- -------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.3%
- -------------------------------------------------------------------------------
California Pollution Control Financing Authority,
Solid Waste Disposal Rev. (Browning Ferris, Inc.),
"A", 5.8%, 2016 $ 2,000,000 $ 2,021,720
California Pollution Control Financing Authority,
Solid Waste Disposal Rev. (Waste Management, Inc.),
"A", 5.125%, 2031 2,250,000 2,294,550
California Pollution Control Financing Authority,
Solid Waste Disposal Rev. (Waste Management, Inc.),
"A-2", 5.4%, 2025 1,250,000 1,251,687
- -------------------------------------------------------------------------------
$ 5,567,957
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 0.5%
- -------------------------------------------------------------------------------
California Enterprise Development Authority Sewer
Facilities Rev. (Anheuser-Busch), 5.3%, 2047 $ 1,000,000 $ 995,010
Virgin Islands Public Finance Authority, Refinery
Facilities Rev. (Hovensa Coker Project),
5.875%, 2022 960,000 987,581
- -------------------------------------------------------------------------------
$ 1,982,591
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.8%
- -------------------------------------------------------------------------------
San Diego County, CA, COP (Burnham Institute for
Medical Research), 5%, 2034 $ 1,000,000 $ 948,970
San Diego County, CA, COP (Burnham Institute),
6.25%, 2009 (c) 2,300,000 2,442,669
- -------------------------------------------------------------------------------
$ 3,391,639
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.1%
- -------------------------------------------------------------------------------
California Statewide Communities Development
Authority Rev. (Irvine Apartments), 5.25%, 2025 $ 6,000,000 $ 6,119,940
San Bernardino County, CA (Equity Residential/
Redlands), "A", 5.2%, 2029 3,000,000 3,062,880
- -------------------------------------------------------------------------------
$ 9,182,820
- -------------------------------------------------------------------------------
Parking - 0.3%
- -------------------------------------------------------------------------------
San Francisco, CA, Union Square, MBIA, 6%, 2020 $ 1,000,000 $ 1,090,470
- -------------------------------------------------------------------------------
Single Family Housing - Local - 2.7%
- -------------------------------------------------------------------------------
California Housing Finance Agency Rev.,
"A", 4.95%, 2036 $ 3,400,000 $ 3,311,668
California Rural Home Mortgage Finance Authority
Rev., GNMA, 7.3%, 2031 15,000 15,018
California Rural Home Mortgage Finance Authority
Rev., GNMA, 5.4%, 2036 2,500,000 2,652,525
California Rural Home Mortgage Finance Authority
Rev., "A", GNMA, 5.75%, 2044 2,000,000 2,125,500
California Rural Home Mortgage Finance Authority
Rev., Mortgage Backed Securities Program, "B4",
GNMA, 6.35%, 2029 30,000 30,228
Pomona, CA, Single Family Mortgage Rev., ETM,
GNMA, 7.375%, 2010 (c) 890,000 938,469
Pomona, CA, Single Family Mortgage Rev., ETM,
GNMA, 7.5%, 2023 (c) 2,000,000 2,565,160
- -------------------------------------------------------------------------------
$ 11,638,568
- -------------------------------------------------------------------------------
Single Family Housing - Other - 0.5%
- -------------------------------------------------------------------------------
California Department of Veterans Affairs Rev.
"A", 4.6%, 2028 $ 2,320,000 $ 2,290,513
- -------------------------------------------------------------------------------
Single Family Housing - State - 1.7%
- -------------------------------------------------------------------------------
California Housing Finance Agency Rev., Home
Mortgage, FSA, 0%, 2019 $ 1,305,000 $ 623,725
California Housing Finance Agency Rev., Home
Mortgage, MBIA, 0%, 2028 3,780,000 1,266,376
California Housing Finance Agency Rev., Home
Mortgage, "I", 4.75%, 2031 3,000,000 2,867,880
California Housing Finance Agency Rev., Home
Mortgage, "N", FGIC, 5.05%, 2026 2,480,000 2,494,905
- -------------------------------------------------------------------------------
$ 7,252,886
- -------------------------------------------------------------------------------
Solid Waste Revenue - 0.8%
- -------------------------------------------------------------------------------
California Pollution Control Financing Authority,
Solid Waste Disposal Rev. (West County Resource
Recovery), "A", 5.125%, 2014 $ 1,000,000 $ 1,006,930
South Bayside Waste Management Authority,
California Solid Waste System Rev., AMBAC,
5.75%, 2020 2,100,000 2,205,021
- -------------------------------------------------------------------------------
$ 3,211,951
- -------------------------------------------------------------------------------
State & Agency - Other - 1.1%
- -------------------------------------------------------------------------------
Pasadena CA, COP, Old Pasadena Parking Facilities
Project, 6.25%, 2018 $ 2,820,000 $ 3,091,369
Sacramento County, CA, COP, Capital Projects,
AMBAC, 5.75%, 2018 1,500,000 1,585,170
- -------------------------------------------------------------------------------
$ 4,676,539
- -------------------------------------------------------------------------------
State & Local Agencies - 12.7%
- -------------------------------------------------------------------------------
Banning, CA, COP, Water Systems Improvement
Project, ETM, AMBAC, 8%, 2019 (c) $ 880,000 $ 1,075,254
California Department of Water Resources, Power
Supply Rev., "C", 5.25%, 2028 2,500,000 2,588,875
California Public Works Board Lease Rev.,
Department of Corrections State Prison,
"A", 7.4%, 2010 5,000,000 5,516,050
California Public Works Board, Department of
Justice, "D", 5.25%, 2020 1,565,000 1,631,231
Fortuna & Susanville, CA, COP, "B", 7.375%, 2017 585,000 593,746
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., "A", FSA, 0% to 2010,
4.55% to 2022 3,000,000 2,627,280
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., Enhanced, "A", 5%, 2045 5,500,000 5,492,740
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., Enhanced,
"B", 5.5%, 2013 (c) 7,000,000 7,660,310
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., Enhanced,
"B", 5.625%, 2013 (c) 5,000,000 5,503,350
Los Angeles, CA, COP, Antelope Valley Courthouse,
"A", AMBAC, 5.25%, 2010 (c) 3,000,000 3,157,200
Los Angeles, CA, COP, Real Property Program,
AMBAC, 5.3%, 2027 3,000,000 3,152,670
Pomona, CA, Public Financing Authority Rev., "A",
AMBAC, 5%, 2042 3,735,000 3,852,466
Pomona, CA, Public Financing Authority Rev., "P",
6.25%, 2010 3,100,000 3,252,148
Sacramento, CA, City Financing Authority Rev.,
Capital Improvement, 5.5%, 2010 (c) 1,635,000 1,735,667
Sacramento, CA, City Financing Authority Rev.,
City Hall & Redevelopment Projects, "A",
FSA, 5%, 2012 (c) 2,000,000 2,142,400
San Francisco, CA, City & County, COP (San Bruno
Jail No. 3), AMBAC, 5.25%, 2033 3,930,000 4,055,721
- -------------------------------------------------------------------------------
$ 54,037,108
- -------------------------------------------------------------------------------
Tax - Other - 2.0%
- -------------------------------------------------------------------------------
Irvine, CA, School District Special Tax Rev.,
Community Facilities District No. 86-1, AMBAC,
5.8%, 2020 $ 3,500,000 $ 3,575,915
Santa Cruz County, CA, Redevelopment Agency Tax
Allocation (Oak/Soquel Community), 5.6%, 2017 1,455,000 1,493,776
Virgin Islands Public Finance Authority Rev.,
"A", 5.5%, 2022 2,000,000 2,032,500
Virgin Islands Public Finance Authority Rev.,
"E", 5.875%, 2018 1,600,000 1,642,608
- -------------------------------------------------------------------------------
$ 8,744,799
- -------------------------------------------------------------------------------
Tax Assessment - 6.4%
- -------------------------------------------------------------------------------
Duarte, CA, Redevelopment Agency Tax Allocation,
Davis Addition Project Area, 6.7%, 2014 $ 260,000 $ 268,148
Fontana, CA, Redevelopment Agency Tax Allocation
(Jurupa Hills Redevelopment Project),
"A", 5.5%, 2027 3,350,000 3,415,090
Huntington Park, CA, Public Financing Rev.
Wastewater Systems Project, "A", 6.2%, 2025 1,940,000 1,967,141
La Mirada, CA, Redevelopment Agency, Special Tax
Rev., Community Facilities District No. 89-1,
5.7%, 2020 1,500,000 1,518,060
Modesto, CA, Irrigation District, COP, Refunding
& Capital Improvements, "B", 5.3%, 2022 1,590,000 1,591,415
Orange County, CA, Community Facilities District,
Special Tax (Rancho Santa Margarita),
"A", 5.55%, 2017 1,000,000 1,009,620
Pittsburg, CA, Redevelopment Agency, Tax Allocation
(Los Medanos Community), "C", AMBAC, 4.5%, 2034 2,550,000 2,442,415
Poway, CA, Community Facilities District, Special
Tax (Parkway Business Center), 6.5%, 2010 715,000 741,233
Poway, CA, Community Facilities District, Special
Tax (Parkway Business Center), 6.75%, 2015 775,000 804,791
Riverside County, CA, Public Financing Authority,
Jurupa Valley, Tax Allocation, MBIA, 4.75%, 2035 2,400,000 2,396,304
Riverside County, CA, Public Financing Authority,
Tax Allocation Rev., XLCA, 5%, 2037 3,000,000 3,051,330
Riverside County, CA, Redevelopment Agency, Tax
Allocation (Jurupa Valley Redevelopment Project),
MBIA, 4.5%, 2031 5,000,000 4,822,150
Riverside County, CA, Redevelopment Agency, Tax
Allocation, "A", XLCA, 5%, 2037 2,000,000 2,052,200
San Diego, CA, Redevelopment Agency, Tax
Allocation (Centre City), "B", AMBAC, 5.3%, 2020 1,250,000 1,308,137
- -------------------------------------------------------------------------------
$ 27,388,034
- -------------------------------------------------------------------------------
Tobacco - 4.7%
- -------------------------------------------------------------------------------
California County, CA, Tobacco Securitization
Agency, Capital Appreciation Asset Backed (Gold
Country), 0%, 2033 $ 3,930,000 $ 818,187
California County, CA, Tobacco Securitization
Corp., Tobacco Settlement, L.A. County, "A",
0% to 2010, 5.65% to 2041 2,500,000 1,890,700
Children's Trust Fund, Tobacco Settlement Rev.,
Puerto Rico, "A", 0%, 2050 2,000,000 125,140
Children's Trust Fund, Tobacco Settlement Rev.,
Puerto Rico, "B", 0%, 2055 2,000,000 69,760
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., "A-1", 6.25%, 2013 (c) 2,935,000 3,217,318
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., "A-1", 5.75%, 2047 10,000,000 9,537,300
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., "A-1", 6.75%, 2013 (c) 2,645,000 3,062,249
Inland Empire, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., Asset Backed, "C-1",
0%, 2036 5,000,000 774,650
Silicon Valley Tobacco Securitization Authority,
CA, Tobacco Settlement Rev. (Turbo-Santa Clara),
"A", 0%, 2036 5,000,000 754,150
- -------------------------------------------------------------------------------
$ 20,249,454
- -------------------------------------------------------------------------------
Toll Roads - 0.6%
- -------------------------------------------------------------------------------
Foothill/Eastern Corridor Agency, California
Toll Road Rev., Capital Appreciation,
"A", 7.1%, 2010 (c) $ 2,500,000 $ 2,743,300
- -------------------------------------------------------------------------------
Universities - Colleges - 7.9%
- -------------------------------------------------------------------------------
Cabrillo, CA, Community College District Capital
Appreciation, "A", MBIA, 0%, 2028 $ 1,000,000 $ 373,870
California Educational Facilities Authority Rev.
(Dominican University), 5%, 2036 1,150,000 1,112,234
California Educational Facilities Authority Rev.
(Fresno Pacific University), "A", 6.75%, 2019 2,000,000 2,124,780
California Educational Facilities Authority Rev.
(L.A. College of Chiropractic), 5.6%, 2017 2,100,000 2,099,895
California Educational Facilities Authority Rev.
(Lutheran University), "C", 5%, 2029 2,500,000 2,486,800
California Educational Facilities Authority Rev.
(Pomona College), "B", 5.875%, 2009 (c) 2,000,000 2,103,280
California Educational Facilities Authority Rev.
(Santa Clara University), "A", MBIA, 5%, 2027 1,340,000 1,379,275
California Educational Facilities Authority Rev.
(University Financing Project), 5%, 2017 685,000 683,438
California Educational Facilities Authority Rev.
(University Financing Project), 5%, 2026 1,315,000 1,268,554
California Educational Facilities Authority Rev.
(University of La Verne), "A", 5%, 2029 1,500,000 1,453,605
California Educational Facilities Authority Rev.,
Pooled College & University Projects,
"B", 6.625%, 2020 1,000,000 1,080,130
California Statewide Communities, Notre Dame de
Namur University, 6.625%, 2033 1,000,000 1,055,220
Chabot Las Positas, CA, Community College, Capital
Appreciation, "C", AMBAC, 0%, 2036 3,800,000 898,054
Chabot Las Positas, CA, Community College, Capital
Appreciation, Election of 2004, "B",
AMBAC, 0%, 2027 5,000,000 1,892,200
Foothill-De Anza, CA, Community College District,
"A", AMBAC, 4.5%, 2031 5,000,000 4,822,550
Foothill-De Anza, CA, Community College District,
Election of 1999, "B", FGIC, 0%, 2025 1,500,000 662,130
Long Beach, CA, Industrial Development Rev.
(CSU Foundation), "A", 5.25%, 2023 1,450,000 1,462,832
San Mateo County, CA (Community College District,
2005 Election), "A", MBIA, 0%, 2026 3,000,000 1,241,580
Santa Monica, CA (Community College District, 2002
Election), "C", MBIA, 0%, 2027 2,000,000 736,840
University of California, "J", FSA, 4.5%, 2035 3,000,000 2,912,100
University of California, COP, San Diego Campus
Projects, "A", 5.25%, 2010 (c) 1,840,000 1,929,111
- -------------------------------------------------------------------------------
$ 33,778,478
- -------------------------------------------------------------------------------
Universities - Dormitories - 0.5%
- -------------------------------------------------------------------------------
California Statewide Communities Development
Authority Rev. (Lancer Educational Student Housing
Project), 5.625%, 2033 $ 2,000,000 $ 1,953,400
- -------------------------------------------------------------------------------
Universities - Secondary Schools - 1.0%
- -------------------------------------------------------------------------------
California Statewide Communities Development
Authority Rev. (Escondido Charter High School),
7.5%, 2011 (c) $ 1,000,000 $ 1,158,790
California Statewide Communities Development
Authority Rev., Aspire Public Schools
(Oakland Project), "A", 7.25%, 2031 945,000 961,623
Los Angeles, CA, COP, 5.7%, 2018 1,900,000 1,948,355
- -------------------------------------------------------------------------------
$ 4,068,768
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 1.5%
- -------------------------------------------------------------------------------
California Pollution Control Financing Authority,
Pollution Control Rev. (Pacific Gas & Electric
Co.), MBIA, 5.35%, 2016 $ 3,500,000 $ 3,704,435
Chula Vista, CA, Industrial Development Rev.
(San Diego Gas), "B", 5%, 2027 2,500,000 2,539,675
- -------------------------------------------------------------------------------
$ 6,244,110
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 1.3%
- -------------------------------------------------------------------------------
Glendale, CA, Electric Works Rev., MBIA,
5.75%, 2010 (c) $ 1,420,000 $ 1,506,478
Glendale, CA, Electric Works Rev., MBIA,
5.75%, 2010 (c) 1,160,000 1,230,644
Northern California Power Agency Public Power
Rev., 5.85%, 2010 880,000 922,319
Virgin Islands Water & Power Authority Rev.,
5.5%, 2017 800,000 824,432
Virgin Islands Water & Power Authority Rev.,
5.3%, 2018 250,000 249,572
Virgin Islands Water & Power Authority Rev.,
"A", 5.125%, 2013 1,000,000 1,004,620
- -------------------------------------------------------------------------------
$ 5,738,065
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 7.8%
- -------------------------------------------------------------------------------
California Department of Water Resources, Central
Valley Project Rev., "X", FGIC, 5%, 2029 $ 2,000,000 2,069,680
California Department of Water Resources, Water
Systems Rev., 7%, 2012 1,090,000 1,260,847
California Department of Water Resources, Water
Systems Rev., ETM, 7%, 2012 (c) 405,000 470,339
Culver City, CA, Wastewater Facilities Rev., "A",
FGIC, 5.6%, 2019 1,000,000 1,055,460
El Monte, CA, Water Authority Rev., Water Systems
Project, AMBAC, 6%, 2010 (c) 1,065,000 1,159,785
Hollister, CA, Joint Powers Financing Authority
Wastewater Rev. (Refining & Improvement Project),
"1", FSA, 5%, 2037 4,000,000 4,107,800
Livermore Amador Valley Water Management Rev.,
"A", AMBAC, 5%, 2031 4,875,000 5,000,872
Napa, CA, Water Rev., AMBAC, 4.375%, 2027 2,000,000 1,937,240
Placerville, CA, Public Financing Authority Rev.
(Wastewater Systems Refining & Improvement
Project), XCLA, 5%, 2034 2,000,000 2,057,860
Southern California Metropolitan Water District
Rev., 5.75%, 2018 (u) 10,000,000 11,346,400
West Sacramento, CA, Financing Authority Rev.,
Water Systems Improvement Project, FGIC, 5%, 2032 2,750,000 2,834,782
- -------------------------------------------------------------------------------
$ 33,301,065
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $422,380,938) $437,080,475
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.4%
- -------------------------------------------------------------------------------
Blount County, TN, Public Building Authority
(Local Public Government), 4.1%, due 10/01/07 $ 1,400,000 $ 1,400,000
California Department of Water Resources, Power
Supply Rev., "C-3", 3.69%, due 10/04/07 600,000 600,000
California Health Facilities Financing Authority
Rev. (Adventist Health System), "A", 3.88%,
due 10/01/07 200,000 200,000
California Health Facilities Financing Authority
Rev. (Adventist Health System), "B", 3.88%,
due 10/01/07 675,000 675,000
California Health Facilities Financing Authority
Rev. (Adventist Health System), "C", 3.88%,
due 10/01/07 1,285,000 1,285,000
Orange County, CA, 3.85%, due 10/01/07 100,000 100,000
Sevier County, TN, Public Building Authority,
3.88%, due 10/04/07 900,000 900,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement III, "A-2",
3.88%, due 10/04/07 500,000 500,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement III, "D-1",
3.88%, due 10/04/07 200,000 200,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES, AT IDENTIFIED COST AND VALUE $ 5,860,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $428,240,938) (k) $442,940,475
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (3.8)% (16,040,762)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $426,899,713
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 19,700
Services
12/01/09 USD 5,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (6,568)
Services
11/01/17 USD 4,000,000 Citibank 3-Month LIBOR 5.558% (fixed rate) (109,960)
2/21/20 USD 4,000,000 Goldman Sachs International 3-Month LIBOR 5.456% (fixed rate) (57,640)
3/05/20 USD 4,000,000 Merrill Lynch Capital 3-Month LIBOR 5.115% (fixed rate) 62,040
Services
10/24/22 USD 5,000,000 Goldman Sachs International 7-Day BMA 4.160% (fixed rate) (140,095)
3/12/28 USD 4,000,000 Goldman Sachs International 7-Day BMA 3.897% (fixed rate) 57,767
- ---------------------------------------------------------------------------------------------------------------------
$(174,756)
- ---------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) FLORIDA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by
your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 107.5%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 4.6%
- -------------------------------------------------------------------------------
Greater Orlando Aviation Authority Rev.,
"A", FGIC, 5.25%, 2018 $1,000,000 $ 1,030,840
Lee County, FL, Airport Rev., "A", FSA,
5.875%, 2018 1,000,000 1,059,270
Miami-Dade County, FL, Aviation Rev., "C",
MBIA, 5.25%, 2018 500,000 510,150
Pensacola, FL, Airport Rev., "B", MBIA,
5.625%, 2014 500,000 510,750
- -------------------------------------------------------------------------------
$ 3,111,010
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 14.4%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement,
MBIA, 5.75%, 2019 (u) $2,000,000 $ 2,115,580
Florida Department of Transportation, 5%, 2017 (u) 6,000,000 6,179,340
Miami-Dade County, FL, Educational Facilities
Authority Rev. (University of Miami), "A",
AMBAC, 5.5%, 2010 (c) 1,400,000 1,478,470
- -------------------------------------------------------------------------------
9,773,390
- -------------------------------------------------------------------------------
General Obligations - Schools - 6.8%
- -------------------------------------------------------------------------------
Florida Board of Education, Capital Outlay,
9.125%, 2014 $2,600,000 $ 3,054,893
Florida Board of Education, Capital Outlay,
ETM, 9.125%, 2014 (c) 400,000 517,528
Florida Board of Education, Public
Education, "J", 5%, 2032 1,000,000 1,027,280
- -------------------------------------------------------------------------------
$ 4,599,701
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 19.6%
- -------------------------------------------------------------------------------
Brevard County, FL, Health Facilities Rev.
(Health First, Inc.), 5%, 2034 $ 500,000 $ 496,370
Citrus County, FL, Hospital Development Authority
Rev. (Citrus Memorial Hospital), 6.25%, 2023 450,000 473,247
Denver, CO, Health & Hospital Authority Rev.,
"A", 6%, 2011 (c) 250,000 272,275
Hillsborough County, FL, Industrial
Development Authority Rev. (University
Community Hospital), MBIA, 6.5%, 2019 1,000,000 1,182,120
Indiana Health & Educational Facilities Authority,
Hospital Rev. (Community Foundation of North
Indiana), "A", 6.375%, 2011 (c) 380,000 420,398
Indiana Health & Educational Facilities Authority,
Hospital Rev. (Community Foundation of North
Indiana), "A", 6.375%, 2031 120,000 124,285
Jacksonville, FL, Health Facilities Rev.
(Ascencion Health), "A", 5.25%, 2032 1,000,000 1,021,960
Lakeland, FL, Hospital Systems Rev.
(Lakeland Regional Health Systems), 5.5%, 2012 (c) 1,000,000 1,096,360
Leesburg, FL, Hospital Rev. (Leesburg Regional
Medical Center), 5.5%, 2032 750,000 759,600
Marion County, FL, Hospital District Rev.,
5.5%, 2009 (c) 480,000 503,006
Marion County, FL, Hospital District Rev.,
5.5%, 2014 20,000 20,576
Marshall County, AL, Health Care Authority
Rev., "A", 6.25%, 2022 500,000 538,365
Martin County, FL, Health Facilities Authority
Rev. (Martin Memorial Medical Center),
"A", 5.75%, 2012 (c) 500,000 552,735
Miami Beach, FL, Health Facilities Authority
Rev. (Mount Sinai Medical Center), "A", 6.7%, 2019 250,000 264,980
Miami Dade County, FL (Public Facilities
Jackson Health Systems), "A", MBIA, 5%, 2029 1,000,000 1,028,120
New Hampshire Health & Educational Facilities
Authority Rev. (Exeter Hospital), 6%, 2024 500,000 535,870
Orange County, FL, Health Facilities Authority
Hospital Rev. (Orlando Regional Healthcare),
5.75%, 2012 (c) 1,000,000 1,097,920
Rhode Island Health & Education Building Corp.
Rev., Hospital Financing (Lifespan Obligated
Group), 6.5%, 2012 (c) 500,000 564,175
South Dakota Health & Education Facilities
Authority Rev. (Prairie Lakes Health Care
System), 5.625%, 2032 500,000 510,520
Tallahassee, FL, Health Facilities Rev.
(Tallahassee Memorial Healthcare), 6.25%, 2020 300,000 309,666
Tallahassee, FL, Health Facilities Rev.
(Tallahassee Memorial Regional Medical
Center), MBIA, 6.625%, 2013 1,000,000 1,002,240
Wisconsin Health & Educational Facilities Authority
Rev. (Marshfield Clinic), "A", 5.375%, 2034 500,000 489,275
- -------------------------------------------------------------------------------
$13,264,063
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.8%
- -------------------------------------------------------------------------------
New Jersey Economic Development Authority
Rev. (Seashore Gardens), 5.375%, 2036 $ 300,000 $ 280,974
Orange County, FL, Health Facilities Authority
Rev. (Orlando Lutheran Towers), 5.7%, 2026 250,000 251,998
- -------------------------------------------------------------------------------
$ 532,972
- -------------------------------------------------------------------------------
Human Services - 0.5%
- -------------------------------------------------------------------------------
Orange County, FL, Health Facilities Authority Rev.
(GF/Orlando Healthcare Facilities), 8.875%, 2021 $ 300,000 $ 330,966
- -------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 1.1%
- -------------------------------------------------------------------------------
Brazos River, TX, Brazoria County Environmental
Rev. (Dow Chemical, Co.), "A-7", 6.625%, 2033 $ 500,000 $ 540,720
Red River Authority, TX, Pollution Control
Rev. (Celanese Project) "B", 6.7%, 2030 200,000 207,690
- -------------------------------------------------------------------------------
$ 748,410
- -------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.5%
- -------------------------------------------------------------------------------
Nevada Department of Business & Industry
Rev. (Republic Services, Inc.), 5.625%, 2026 $ 300,000 $ 319,155
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 1.2%
- -------------------------------------------------------------------------------
Madison County, FL, Rev. (Twin Oaks
Project), "A", 6%, 2025 $ 130,000 $ 131,719
Park Creek Metropolitan District, CO, Rev.
(Custodial Receipts), "CR-2", 7.875%, 2032(n) 160,000 173,962
Tooele County, UT, Hazardous Waste
Treatment Rev. (Union Pacific Corp.), 5.7%, 2026 500,000 510,845
- -------------------------------------------------------------------------------
$ 816,526
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.8%
- -------------------------------------------------------------------------------
Delta County, MI, Economic Development Corp.,
Environmental Improvements Rev. (Mead Westvaco
Escanaba), "A", 6.25%, 2012 (c) $ 500,000 $ 553,855
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.5%
- -------------------------------------------------------------------------------
Palm Beach County, FL, Industrial Development Rev.
(South Florida Fair Project), MBIA, 5.5%, 2020 $1,000,000 $ 1,043,100
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.3%
- -------------------------------------------------------------------------------
Summit County, OH, Port Authority Building
Rev. (Seville Project), "A", 5.1%, 2025 $ 200,000 $ 197,472
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.5%
- -------------------------------------------------------------------------------
Bay County, FL, Housing Finance Authority,
Multi-Family Rev. (Andrews Place II Apartments),
FSA, 5%, 2035 $ 500,000 $ 487,490
Florida Housing Finance Corp., Housing Rev.
(Augustine Club Apartments), "D-1", MBIA,
5.5%, 2010 (c) 500,000 535,875
Florida Housing Finance Corp., Housing Rev.
(Crossing at University Apartments), "Q-1",
AMBAC, 5.1%, 2018 1,020,000 1,029,109
Palm Beach County, FL, Housing Finance Authority
Rev. (Westlake Apartments Project, Phase II),
FSA, 4.3%, 2012 110,000 111,076
Tampa, FL, Housing Finance Authority, Multi-Family
Rev. (Meridian River Development Corp.), 4.75%, 2026 200,000 198,270
- -------------------------------------------------------------------------------
$ 2,361,820
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 4.0%
- -------------------------------------------------------------------------------
Miami-Dade County, FL, Special Obligations,
Capital Appreciation, "A", MBIA, 0%, 2032 $2,000,000 $ 559,560
Pasco County, FL, Sales Tax Rev. (Half Central),
AMBAC, 5%, 2023 1,000,000 1,039,120
Volusia County, FL, Tourist Development Tax
Rev., FSA, 5%, 2034 815,000 836,646
Wyandotte County, KS, Unified Government Special
Obligation Rev. (Sales Tax - Second Lien Area B),
5%, 2020 250,000 252,080
- -------------------------------------------------------------------------------
$ 2,687,406
- -------------------------------------------------------------------------------
Single Family Housing - Local - 3.1%
- -------------------------------------------------------------------------------
Brevard County, FL, Housing Finance
Authority Rev. "B", GNMA, 6.5%, 2022 $ 29,000 $ 29,545
Lee County, FL, Housing Finance Authority Rev.
(Multi-County Program), "A-1", GNMA, 7.2%, 2033 30,000 30,091
Manatee County, FL, Housing Finance Mortgage
Rev. (Single Family, Subordinated), Series 3,
GNMA, 5.3%, 2028 50,000 51,063
Miami-Dade County, FL, Housing Finance Authority
Rev. (Home Ownership Mortgage), "A-1",
GNMA, 5.2%, 2031 390,000 394,446
Palm Beach County, FL, Housing Finance
Authority Rev., "B", GNMA, 5.5%, 2022 45,000 45,316
Pinellas County, FL, Housing Finance
Authority Rev. (Multi-County Program),
"A-1", GNMA, 5.5%, 2035 520,000 537,904
Pinellas County, FL, Housing Finance
Authority Rev. (Multi-County Program),
"B-1", GNMA, 6.2%, 2031 80,000 80,678
Pinellas County, FL, Housing Finance
Authority Rev., "A-1", GNMA, 4.85%, 2037 965,000 924,161
- -------------------------------------------------------------------------------
$ 2,093,204
- -------------------------------------------------------------------------------
Single Family Housing - State - 1.5%
- -------------------------------------------------------------------------------
Florida Housing Finance Corp. Rev.
(Homeowner Mortgage), "1", GNMA, 4.8%, 2031 $ 990,000 $ 953,261
Florida Housing Finance Corp. Rev.
(Homeowner Mortgage), "4", FSA, 5.85%, 2031 45,000 45,159
- -------------------------------------------------------------------------------
$ 998,420
- -------------------------------------------------------------------------------
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 $ 203,108
- -------------------------------------------------------------------------------
State & Local Agencies - 3.1%
- -------------------------------------------------------------------------------
Florida Municipal Loan Council Rev., "C",
MBIA, 5.25%, 2022 $1,000,000 $ 1,057,510
Osceola County, FL, School Board
Certificate, "A", AMBAC, 5.25%, 2012 (c) 1,000,000 1,079,530
- -------------------------------------------------------------------------------
$ 2,137,040
- -------------------------------------------------------------------------------
Tax - Other - 2.6%
- -------------------------------------------------------------------------------
Orange County, FL, Tourist Development Tax
Rev., Subordinated, AMBAC, 5.25%, 2012 (c) $1,500,000 $ 1,603,140
Virgin Islands Public Finance Authority
Rev., "A", 5.25%, 2024 130,000 133,130
- -------------------------------------------------------------------------------
$ 1,736,270
- -------------------------------------------------------------------------------
Tax Assessment - 5.1%
- -------------------------------------------------------------------------------
Arborwood Community Development District, FL,
Special Assessment (Master Infrastructure
Projects), "B", 5.1%, 2014 $ 200,000 $ 192,742
Ave Maria, FL, Stewardship Community, "A",
5.125%, 2038 200,000 172,620
Concord Station Community Development
District, FL, Special Assessment, 5%, 2015 165,000 156,894
Concorde Estates Community Development
District, FL, Special Assessment, "B", 5%, 2011 200,000 196,784
Creekside Community Development District,
FL, Special Assessment, 5.2%, 2038 200,000 173,206
Durbin Crossing Community Development District,
FL, Special Assessment, "B-1", 4.875%, 2010 250,000 245,758
Greyhawk Landing Community Development District,
FL, Special Assessment, "B", 6.25%, 2009 60,000 60,183
Killarney Community Development District,
FL, Special Assessment, "B", 5.125%, 2009 110,000 109,478
Lakes by the Bay South Community Development
District, FL, Rev., "B", 5.3%, 2009 120,000 118,853
Middle Village Community Development District,
FL, Special Assessment, "A", 5.8%, 2022 90,000 87,921
Middle Village Community Development District,
FL, Special Assessment, "B", 5%, 2009 45,000 44,709
New Port Tampa Bay Community Development District,
FL, Special Assessment, "B", 5.3%, 2012 200,000 189,336
North Springs Improvement District, FL, Special
Assessment (Parkland Golf Country Club),
"B-2", 5.125%, 2015 250,000 239,610
Old Palm Community Development District,
FL, Special Assessment (Palm Beach Gardens),
"B", 5.375%, 2014 120,000 117,301
Palm Glades Community Development District,
FL, Special Assessment, "A", 5.3%, 2036 200,000 178,224
Panther Trace II, Community Development District,
FL, Special Assessment, "B", 5%, 2010 130,000 128,357
Parkway Center, Community Development District,
FL, Special Assessment, "B", 5.625%, 2014 100,000 99,103
Renaissance Community Development District,
FL, Special Assessment, "B", 6.25%, 2008 90,000 90,159
Sterling Hill Community Development District,
FL, Special Assessment, 5.5%, 2010 95,000 94,822
Tuscany Reserve Community Development District,
FL, Special Assessment, "B", 5.25%, 2016 245,000 233,755
Villa Portofino West Community Development
District, FL, Special Assessment, "A", 5.35%, 2036 200,000 179,566
Watergrass Community Development District,
FL, Special Assessment, "B", 4.875%, 2010 160,000 157,197
Wentworth Estates Community Development District,
FL, Special Assessment, "B", 5.125%, 2012 175,000 167,844
- -------------------------------------------------------------------------------
$ 3,434,422
- -------------------------------------------------------------------------------
Tobacco - 2.0%
- -------------------------------------------------------------------------------
Golden State, CA, Tobacco Securitization Corp.,
Tobacco Settlement Rev., Asset Backed, "A-1",
5.125%, 2047 $1,000,000 $ 860,330
Louisiana Tobacco Settlement Authority
Rev., "2001B", 5.87%, 2039 250,000 247,363
South Carolina Tobacco Settlement Authority
Rev., "B", 6.375%, 2030 250,000 262,463
- -------------------------------------------------------------------------------
$ 1,370,156
- -------------------------------------------------------------------------------
Transportation - Special Tax - 9.1%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico Highway &
Transportation Authority, MBIA, 5.5%, 2020 (u) $5,000,000 $ 5,657,200
St. Johns County, FL, Transportation Improvement
Rev., AMBAC, 5%, 2027 500,000 516,720
- -------------------------------------------------------------------------------
$ 6,173,920
- -------------------------------------------------------------------------------
Universities - Dormitories - 4.3%
- -------------------------------------------------------------------------------
Florida Board Regents, Housing Rev., MBIA,
5.3%, 2020 $ 610,000 $ 636,986
Florida Board Regents, Housing Rev. (University of
Central Florida), FGIC, 5.25%, 2020 1,185,000 1,239,332
Florida Finance Authority, Capital Loan
Projects Rev., "F", MBIA, 5.125%, 2021 1,000,000 1,048,370
- -------------------------------------------------------------------------------
$ 2,924,688
- -------------------------------------------------------------------------------
Universities - Secondary Schools - 0.3%
- -------------------------------------------------------------------------------
Deerfield, IL, Educational Facilities Authority
Rev. (Chicagoland Jewish High School Project),
6%, 2041 $ 200,000 $ 198,672
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 0.3%
- -------------------------------------------------------------------------------
Port Morrow, OR, Pollution Control Rev.
(Portland General), 5.2%, 2033 $ 200,000 $ 203,138
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 1.5%
- -------------------------------------------------------------------------------
Palm Coast, FL, Utility Systems Rev., MBIA, 5%, 2024 $ 250,000 $ 259,428
St. Lucie West, FL, Utility Rev., MBIA,
5.25%, 2034 720,000 761,371
- -------------------------------------------------------------------------------
$ 1,020,799
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 14.7%
- -------------------------------------------------------------------------------
Florida Community Services Corp., Utility
Rev., AMBAC, 5.5%, 2018 $1,125,000 $ 1,195,133
Miami Beach, FL, Stormwater Rev., FGIC, 5.25%, 2020 1,000,000 1,044,870
Miami-Dade County, FL, Stormwater Utility
Rev., MBIA, 5%, 2028 2,000,000 2,061,740
Pinellas County, FL, Sewer Rev., FSA, 5%, 2032 1,500,000 1,535,850
Polk County, FL, Utility Systems Rev.,
FGIC, 5%, 2023 1,000,000 1,038,250
Polk County, FL, Utility Systems Rev., "A",
FGIC, 5%, 2030 1,000,000 1,029,720
Seminole County, FL, Water & Sewer Rev.,
Unrefunded Balance, MBIA, 6%, 2019 940,000 1,056,739
Tohopekaliga Water Authority, Florida
Utility System Rev., "A", FSA, 5%, 2024 1,000,000 1,037,710
- -------------------------------------------------------------------------------
$10,000,012
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $70,631,507) $72,833,695
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.3%
- -------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "B", 4.04%, due 10/01/07 $ 100,000 $ 100,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 100,000 100,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 200,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $70,831,507) (k) $73,033,695
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (7.8)% (5,287,783)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $67,745,912
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 4,376
Services
12/12/07 USD 1,250,000 Merrill Lynch Capital 7-Day BMA 4.054% (fixed rate) (34,375)
Services
12/01/09 USD 1,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (1,314)
Services
2/21/20 USD 1,000,000 Goldman Sachs International 3-Month LIBOR 5.456% (fixed rate) (14,410)
3/05/20 USD 1,000,000 Merrill Lynch Capital 3-Month LIBOR 5.115% (fixed rate) 15,510
Services
10/24/22 USD 1,500,000 Goldman Sachs International 7-Day BMA 4.160% (fixed rate) (42,028)
11/01/27 USD 1,000,000 Citibank 4.186% (fixed rate) 7-Day BMA 23,202
3/12/28 USD 1,000,000 Goldman Sachs International 7-Day BMA 3.897% (fixed rate) 14,442
- ---------------------------------------------------------------------------------------------------------------------------
$(34,597)
- ---------------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) GEORGIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 105.6%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 5.1%
- -------------------------------------------------------------------------------
Atlanta, GA, Airport Passenger Facilities
Rev., "J", FSA, 5%, 2029 $ 750,000 $ 766,395
Atlanta, GA, Airport Passenger Facilities
Rev., "J", FSA, 5%, 2034 750,000 762,247
Atlanta, GA, Airport Rev., "B", FSA, 5.25%, 2033 1,000,000 1,036,080
Augusta, GA, Airport Rev., "B", 5.35%, 2028 350,000 341,936
- -------------------------------------------------------------------------------
$ 2,906,658
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 2.8%
- -------------------------------------------------------------------------------
Atlanta & Fulton County, GA, Park
Improvement, "A", MBIA, 5%, 2030 $ 500,000 $ 516,200
Macon Bibb County, GA, Urban Development
Rev. (Bibb County Public Facilities
Project), 5.5%, 2022 1,000,000 1,063,500
- -------------------------------------------------------------------------------
$ 1,579,700
- -------------------------------------------------------------------------------
General Obligations - Improvement - 4.2%
- -------------------------------------------------------------------------------
Paulding County, GA (Courthouse Government
Complex), FGIC, 5%, 2032 $ 500,000 $ 520,390
Puerto Rico Municipal Finance Agency, FSA,
6%, 2009 (c)(u) 1,000,000 1,055,230
Suwanee, GA, MBIA, 5.25%, 2012 (c) 750,000 799,477
- -------------------------------------------------------------------------------
$ 2,375,097
- -------------------------------------------------------------------------------
General Obligations - Schools - 8.5%
- -------------------------------------------------------------------------------
Fayette County, GA, School District Rev.,
FSA, 0% to 2010, 4.9% to 2024 $ 575,000 $ 506,310
Forsyth County, GA, School District, 6%, 2010 (c) 750,000 805,005
Fulton County, GA, School District, 6.375%, 2010 1,535,000 1,593,576
Paulding County, GA, School District, 4.75%, 2027 750,000 761,250
Wilkes County, GA, School District, 5%, 2024 1,115,000 1,162,120
- -------------------------------------------------------------------------------
$ 4,828,261
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 11.2%
- -------------------------------------------------------------------------------
Athens Clarke County, GA (United Catholic
Health East Issue), 5.5%, 2012 (c) $ 500,000 $ 544,500
Chatham County, GA, Hospital Authority Rev.
(Memorial Health Medical Center), "A", 6%, 2017 350,000 366,282
Chatham County, GA, Hospital Authority Rev.,
Hospital Improvement (Memorial Health University),
"A", 5.375%, 2026 200,000 201,510
Cobb County, GA, Hospital Authority Revolving,
Refunding & Improvement Rev., Anticipation
Certificates, AMBAC, 5.25%, 2023 750,000 798,615
Coffee County, GA, Hospital Authority Rev.
(Coffee Regional Medical Center, Inc.), 5%, 2026 350,000 343,210
Gainesville & Hall Counties, GA, Hospital
Authority Rev. (Northeast Georgia Health
System, Inc.), 5.5%, 2011 (c) 500,000 531,925
Houston County, GA, Hospital Authority Rev.
Anticipation Certificates, 5.25%, 2042 500,000 503,090
Royston, GA, Hospital Authority Rev. (Ty
Cobb Healthcare System, Inc.), 6.125%, 2009 150,000 150,872
Tift County, GA, Hospital Authority Rev.,
Anticipation Certificates, AMBAC, 5%, 2022 2,000,000 2,076,060
Valdosta & Lowndes County, GA, Hospital
Authority Rev. (Southern Georgia Medical
Center Project), AMBAC, 5.25%, 2027 500,000 523,520
Valdosta & Lowndes County, GA, Hospital
Authority Rev. (Southern Georgia Medical
Center Project), 5%, 2033 300,000 299,133
- -------------------------------------------------------------------------------
$ 6,338,717
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.8%
- -------------------------------------------------------------------------------
Fulton County, GA, Residential Care
Facilities (Canterbury Court), "A", 6.125%, 2034 $ 150,000 $ 153,599
Fulton County, GA, Residential Care Facilities,
First Mortgage (Lenbrook Project), "A", 5%, 2027 150,000 137,306
Georgia Medical Center Hospital Authority Rev.
(Spring Harbor Green Island Project), 5.25%, 2037 200,000 183,160
- -------------------------------------------------------------------------------
$ 474,065
- -------------------------------------------------------------------------------
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 $ 521,810
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 1.7%
- -------------------------------------------------------------------------------
Cartersville, GA, Development Authority
Waste & Water Facilities Rev. (Anheuser
Busch Project), 5.95%, 2032 $ 750,000 $ 774,412
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 160,000 164,597
- -------------------------------------------------------------------------------
$ 939,009
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.5%
- -------------------------------------------------------------------------------
Effingham County, GA, Development Authority, Solid
Waste Disposal Rev. (Fort James), 5.625%, 2018 $ 150,000 $ 148,971
Rockdale County, GA, Development Authority Project
Rev. (Visy Paper Project), "A", 6.125%, 2034 150,000 150,981
Savannah, GA, Economic Development Pollution
(Union Camp Corp.), 6.15%, 2017 1,000,000 1,105,200
- -------------------------------------------------------------------------------
$ 1,405,152
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.5%
- -------------------------------------------------------------------------------
East Point Housing Authority, Multi-Family
Rev. (Laurel Ridge at Washington Road
Apartments LP), FNMA, 5%, 2032 $ 500,000 $ 500,650
Hinesville, GA, Leased Housing Corp., "A",
FHA, 6.7%, 2017 900,000 902,025
- -------------------------------------------------------------------------------
$ 1,402,675
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.5%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 $ 280,000 $ 290,427
- -------------------------------------------------------------------------------
Single Family Housing - State - 5.8%
- -------------------------------------------------------------------------------
Georgia Housing & Finance Authority Rev.,
5.5%, 2032 $1,000,000 $ 1,004,340
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "A", 5.6%, 2032 590,000 603,552
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "A-2", 4.85%, 2037 500,000 480,080
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "C-2", 5.1%, 2022 750,000 755,355
Georgia Housing & Finance Authority Rev.,
Single Family Mortgage, "C-2", 4.55%, 2031 500,000 460,010
- -------------------------------------------------------------------------------
$ 3,303,337
- -------------------------------------------------------------------------------
State & Agency - Other - 2.8%
- -------------------------------------------------------------------------------
County Commissioners of Georgia Assn., Leasing
Program, Rockdale County, GA (Public Purpose
Project), AMBAC, 5.625%, 2010 (c) $ 335,000 $ 356,500
County Commissioners of Georgia Assn., Leasing
Program, Rockdale County, GA, (Public Purpose
Project), AMBAC, 5.625%, 2020 165,000 174,788
Fulton County, GA, Facilities Corp., Fulton County,
GA (Public Purpose Project), AMBAC, 5.9%, 2019 1,000,000 1,075,370
- -------------------------------------------------------------------------------
$ 1,606,658
- -------------------------------------------------------------------------------
State & Local Agencies - 4.0%
- -------------------------------------------------------------------------------
Clayton County, GA, Development Authority
Rev., "A", 6.25%, 2009 (c) $ 500,000 $ 534,050
De Kalb County, GA, Public Safety & Judicial
Facilities Authority Rev., 5%, 2029 400,000 415,580
Fayette County, GA, Public Facilities Authority
(Criminal Justice Center Project), 6.25%, 2010 (c) 755,000 814,162
Gilmer County, GA, Building Authority Rev.,
Courthouse Project, "A", XLCA, 5%, 2029 500,000 518,975
- -------------------------------------------------------------------------------
$ 2,282,767
- -------------------------------------------------------------------------------
Tax - Other - 1.8%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority
Rev., RADIAN, 5.5%, 2018 $1,000,000 $ 1,021,830
- -------------------------------------------------------------------------------
Tax Assessment - 0.5%
- -------------------------------------------------------------------------------
Atlanta, GA, Tax Allocation (Eastside Project),
"B", 5.6%, 2030 $ 150,000 $ 147,366
Atlanta, GA, Tax Allocation (Princeton
Lakes Project), 5.5%, 2031 150,000 142,994
- -------------------------------------------------------------------------------
$ 290,360
- -------------------------------------------------------------------------------
Tobacco - 0.6%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 350,000 $ 349,895
- -------------------------------------------------------------------------------
Transportation - Special Tax - 2.3%
- -------------------------------------------------------------------------------
Puerto Rico Highway & Transportation
Authority Rev., ASSD GTY, 5.25%, 2034 $ 535,000 $ 596,113
Puerto Rico Highway & Transportation
Authority, "Y", 5.5%, 2016 (c) 610,000 687,470
- -------------------------------------------------------------------------------
$ 1,283,583
- -------------------------------------------------------------------------------
Universities - Colleges - 8.6%
- -------------------------------------------------------------------------------
Fulton County, GA (Morehouse College),
AMBAC, 6.25%, 2021 $ 980,000 $ 1,068,710
Fulton County, GA, Development Authority Rev.
(Georgia Tech Foundation Funding), "A", 5%, 2031 265,000 271,519
Fulton County, GA, Development Authority Rev.
(Georgia Tech Foundation), XLCA, 5%, 2032 500,000 515,035
Fulton Cou nty, GA, Development Authority Rev.
(Georgia Tech Foundation), "A", 5.75%, 2017 1,000,000 1,078,870
Private Colleges & University Authority
(Emory University), "A", 5.75%, 2010 (c) 1,000,000 1,073,460
Private Colleges & University Authority
(Mercer University), 5.75%, 2011 (c) 500,000 548,335
Savannah, GA, Economic Development Authority Rev.
(College of Art & Design, Inc.), ETM, 6.2%, 2009 (c) 280,000 286,084
- -------------------------------------------------------------------------------
$ 4,842,013
- -------------------------------------------------------------------------------
Universities - Dormitories - 0.9%
- -------------------------------------------------------------------------------
Georgia Private College & University Authority
Rev. (Mercer Housing Corp.), "A", 6%, 2021 $ 500,000 $ 515,425
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 5.2%
- -------------------------------------------------------------------------------
Georgia Municipal Electric Authority Power
Rev., "A", MBIA, 6.5%, 2020 $1,250,000 $ 1,482,112
Monroe County, GA, Pollution Control Rev.
(Oglethorpe Power Corp.), "A", 6.8%, 2012 1,000,000 1,107,820
Summerville, GA, Public Utility Rev.,
Refunding & Improvement, 5.75%, 2026 350,000 360,647
- -------------------------------------------------------------------------------
$ 2,950,579
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 32.4%
- -------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., FGIC,
5.5%, 2016 (u) $8,000,000 $ 8,918,560
Atlanta, GA, Water & Wastewater Rev., "A",
MBIA, 5%, 2033 500,000 511,050
Augusta, GA, Water & Sewer Rev., FSA, 5.25%, 2034 1,000,000 1,055,010
Clayton County, GA, Water Authority, Water
& Sewer Rev., 6.25%, 2010 (c) 1,000,000 1,075,820
Columbia County, GA, Water & Sewer Rev.,
FGIC, 6.25%, 2010 (c) 470,000 502,543
Fairburn, GA, Utility Rev., 5.75%, 2010 (c) 500,000 535,190
Forsyth County, GA, Water & Sewer
Authority, 6.25%, 2010 (c) 1,105,000 1,186,560
Fulton County, GA, Water & Sewer Rev.,
FGIC, 6.375%, 2014 100,000 109,340
Fulton County, GA, Water & Sewer Rev., ETM,
FGIC, 6.375%, 2014 (c) 2,150,000 2,351,713
Gainesville, GA, Water & Sewer Rev., FGIC,
5.625%, 2009 (c) 1,000,000 1,053,500
Jackson County, GA, Water & Sewer
Authority, "A", AMBAC, 5.75%, 2010 (c) 1,000,000 1,079,800
- -------------------------------------------------------------------------------
$18,379,086
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $57,339,823) $59,887,104
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.4%
- -------------------------------------------------------------------------------
Chicago, IL, Midway Airport Rev., Second
Lien, "A", 4.12%, due 10/01/07 $ 100,000 $ 100,000
Georgia Municipal Electric Authority Rev.,
3.87%, due 10/03/07 100,000 100,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 200,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $57,539,823) (k) $60,087,104
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (6.0)% (3,391,916)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $56,695,188
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 2,189
Services
12/01/09 USD 500,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (657)
Services
1/09/23 USD 750,000 Citibank 5.920% (fixed rate) 3-Month LIBOR 42,637
2/20/23 USD 500,000 Goldman Sachs International 4.093% (fixed rate) 7-Day BMA 9,559
11/01/27 USD 500,000 Citibank 4.186% (fixed rate) 7-Day BMA 11,601
3/05/28 USD 1,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 5,360
- ---------------------------------------------------------------------------------------------------------------------------
$70,689
- ---------------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) MARYLAND MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 101.7%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport and Port Revenue - 0.8%
- -------------------------------------------------------------------------------
Maryland Transportation Authority Rev.
(Baltimore/Washington International
Airport), "A", AMBAC, 5%, 2027 $1,000,000 $ 1,030,820
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 6.2%
- -------------------------------------------------------------------------------
Baltimore, MD, "B", 7.15%, 2009 $2,120,000 $ 2,264,966
Baltimore, MD, UT, Public Improvement,
"A", MBIA, 7%, 2009 1,000,000 1,069,120
Commonwealth of Puerto Rico, Public
Improvement, "A", 5.25%, 2026 2,330,000 2,422,548
Frederick County, MD, Public Facilities,
5.25%, 2009 (c) 2,000,000 2,078,820
- -------------------------------------------------------------------------------
$ 7,835,454
- -------------------------------------------------------------------------------
General Obligations - Improvement - 11.0%
- -------------------------------------------------------------------------------
Howard County, MD, "B", 0%, 2008 $1,000,000 $ 970,050
Howard County, MD, Consolidated Public
Improvement, "A", 5.5%, 2008 (c) 1,750,000 1,780,117
Prince George's County, MD, Consolidated
Public Improvement, "A", 5%, 2013 (c) 2,000,000 2,147,520
Prince George's County, MD, Unrefunded
Balance, Public Improvement, FSA, 5.375%, 2009 (c) 80,000 83,675
Puerto Rico Municipal Finance Agency, FSA,
5.5%, 2009 (c)(u) 2,000,000 2,092,880
Washington Suburban Sanitation District,
General Construction Rev., 5%, 2027 930,000 973,291
Washington Suburban Sanitation District,
General Construction Rev., 5%, 2028 980,000 1,023,669
Washington Suburban Sanitation District,
General Construction Rev., 5%, 2029 1,025,000 1,068,634
Worcester County, MD, Public Improvement,
5.625%, 2010 (c) 1,620,000 1,713,004
Worcester County, MD, Public Improvement,
5.625%, 2010 (c) 2,030,000 2,146,542
- -------------------------------------------------------------------------------
$ 13,999,382
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 19.3%
- -------------------------------------------------------------------------------
Baltimore County, MD, Rev. (Catholic
Health Initiatives), "A", 4.5%, 2033 $1,150,000 $ 1,097,468
Maryland Health & Higher Education
(Peninsula Regional Medical Center), 5%, 2036 1,000,000 996,900
Maryland Health & Higher Educational
Facilities Authority Rev. (Adventist
Healthcare), "A", 5.75%, 2025 1,000,000 1,028,380
Maryland Health & Higher Educational
Facilities Authority Rev. (Anne Arundel
Health Systems), "A", FSA, 5%, 2023 1,000,000 1,038,760
Maryland Health & Higher Educational Facilities
Authority Rev. (Calvert Health Systems), 5.5%, 2039 1,000,000 1,030,550
Maryland Health & Higher Educational
Facilities Authority Rev. (Carroll County
General Hospital), 6%, 2037 1,000,000 1,031,470
Maryland Health & Higher Educational Facilities
Authority Rev. (Catholic Health), "A", 6%, 2020 245,000 259,698
Maryland Health & Higher Educational
Facilities Authority Rev. (Catholic
Health), "A", ETM, 6%, 2020 (c) 755,000 806,816
Maryland Health & Higher Educational
Facilities Authority Rev. (Doctors
Community Hospital), "A", 5%, 2029 750,000 738,217
Maryland Health & Higher Educational
Facilities Authority Rev. (Frederick
Memorial Hospital), 5.125%, 2035 1,000,000 978,900
Maryland Health & Higher Educational
Facilities Authority Rev. (Good Samaritan
Hospital), ETM, 5.7%, 2009 (c) 1,085,000 1,110,693
Maryland Health & Higher Educational Facilities
Authority Rev. (Johns Hopkins Hospital), 5%, 2021 750,000 766,365
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
Medical Institutions), "A", 5%, 2037 750,000 749,955
Maryland Health & Higher Educational
Facilities Authority Rev. (Lifebridge
Health), "A", 5.125%, 2034 1,000,000 1,000,200
Maryland Health & Higher Educational Facilities
Authority Rev. (Medstar Health), 5.5%, 2033 800,000 819,688
Maryland Health & Higher Educational
Facilities Authority Rev. (North Arundel
Hospital), 6.5%, 2010 (c) 500,000 542,890
Maryland Health & Higher Educational Facilities
Authority Rev. (Suburban Hospital), "A", 5.5%, 2016 1,000,000 1,068,330
Maryland Health & Higher Educational
Facilities Authority Rev. (Union Hospital
of Cecil County Issue), 5.625%, 2032 1,000,000 1,029,000
Maryland Health & Higher Educational
Facilities Authority Rev. (Union Hospital
of Cecil County Issue), 5%, 2035 500,000 489,675
Maryland Health & Higher Educational
Facilities Authority Rev. (University of
Maryland Medical System), "A", 5%, 2041 500,000 487,235
Maryland Health & Higher Educational
Facilities Authority Rev. (University of
Maryland Medical Systems), 6.625%, 2010(c) 1,000,000 1,076,210
Maryland Health & Higher Educational
Facilities Authority Rev. (University of
Maryland Medical Systems), "B", AMBAC, 5%, 2024 1,000,000 1,037,290
Maryland Health & Higher Educational
Facilities Authority Rev. (Upper
Chesapeake Hospital), "A", FSA, 5.5%, 2020 2,000,000 2,027,840
Maryland Health & Higher Educational Facilities
Rev. (Helix Health Issue), ETM, AMBAC, 5%, 2027 (c) 1,000,000 1,078,400
Maryland Industrial Development Authority,
Economic Development Rev., RIBS, FSA,
7.518%, 2022 (p) 1,400,000 1,742,384
Montgomery County, MD, Economic Development
(Trinity Healthcare Group), 5.125%, 2022 500,000 511,710
- -------------------------------------------------------------------------------
$ 24,545,024
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.5%
- -------------------------------------------------------------------------------
Gaithersburg, MD, Economic Development
Rev. (Asbury Maryland Obligations Group),
"A", 5.125%, 2036 $ 400,000 $ 381,892
Howard County, MD, Retirement (Ref-Vantage
House Facilities), "B", 5.25%, 2037 300,000 282,048
Maryland Health & Higher Educational
Facilities (King Farm Presbyterian
Community), "A", 5.3%, 2037 300,000 282,582
Maryland Health & Higher Educational Facilities
Authority Rev. (Edenwald), "A", 5.4%, 2037 350,000 338,002
Maryland Health & Higher Educational Facilities
Authority Rev. (Mercy Ridge), "A", 6%, 2013 (c) 150,000 168,316
Westminster, MD, Economic Development Rev.
(Carroll Lutheran Village), "A", 6.25%, 2034 400,000 414,120
- -------------------------------------------------------------------------------
$ 1,866,960
- -------------------------------------------------------------------------------
Human Services - 0.7%
- -------------------------------------------------------------------------------
Maryland St. Economic Development Corp.,
Economic Development Rev. (Lutheran World
Relief Refugee), 5.25%, 2019 $ 300,000 $ 313,455
Maryland St. Economic Development Corp.,
Economic Development Rev. (Lutheran World
Relief Refugee), 5.25%, 2029 565,000 577,289
- -------------------------------------------------------------------------------
$ 890,744
- -------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 1.2%
- -------------------------------------------------------------------------------
Baltimore, MD, Port Facilities Rev.,
Consolidated Coal Sales, "B", 6.5%, 2011 $1,500,000 $ 1,563,375
- -------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.5%
- -------------------------------------------------------------------------------
Northeast Maryland Waste Disposal Authority
Resources Recovery Rev. (Baltimore Resco
Retrofit Project), 5%, 2012 $ 690,000 $ 695,624
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 $ 375,000 $ 385,774
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.8%
- -------------------------------------------------------------------------------
Maryland Industrial Development Authority
Economic Development (Baltimore Aquarium
Project), 5.2%, 2026 $1,000,000 $ 1,036,940
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.5%
- -------------------------------------------------------------------------------
Harford County MD, Economic Development
Rev. (Battelle Memorial Institute
Project), 5.25%, 2034 $1,600,000 $ 1,650,560
Maryland Economic Development Corp.
(Chesapeake Bay Conference Center), "A", 5%, 2031 300,000 272,610
- -------------------------------------------------------------------------------
$ 1,923,170
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.5%
- -------------------------------------------------------------------------------
Baltimore, MD, City Housing Corp. Rev.,
FHA, 7.75%, 2009 $ 225,000 $ 224,937
Howard County, MD, Multi-Family Rev. (Patuxent
Square Apartments), FNMA, 4.75%, 2036 1,000,000 945,860
Maryland Community Development
Administration (Waters Landing II
Apartments), "A", GNMA, 5.875%, 2033 1,500,000 1,555,425
Maryland Community Development
Administration, "A", 5%, 2034 910,000 890,226
Maryland Community Development
Administration, "A", 5.1%, 2044 970,000 949,426
Maryland Community Development
Administration, "A", 5.05%, 2047 1,000,000 983,080
Maryland Community Development
Administration, "B", 5%, 2039 500,000 487,610
Maryland Community Development
Administration, "D", 5%, 2032 1,000,000 984,570
- -------------------------------------------------------------------------------
$ 7,021,134
- -------------------------------------------------------------------------------
Parking - 1.2%
- -------------------------------------------------------------------------------
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
Medical Institutions), AMBAC, 5%, 2034 $1,500,000 $ 1,546,635
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.3%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 $ 335,000 $ 347,475
- -------------------------------------------------------------------------------
Single Family Housing - Local - 0.0%
- -------------------------------------------------------------------------------
Prince George's County, MD, Housing Single
Family Collateral, "A", 7.4%, 2032 $ 15,000 $ 15,071
Prince George's County, MD, Housing Single
Family Collateral, "A", GNMA, 5.6%, 2034 45,000 45,439
- -------------------------------------------------------------------------------
$ 60,510
- -------------------------------------------------------------------------------
Single Family Housing - State - 3.2%
- -------------------------------------------------------------------------------
Maryland Community Development
Administration Housing, "A", 5.875%, 2016 $1,080,000 $ 1,090,508
Maryland Community Development
Administration Residential, "B", 4.75%, 2019 305,000 304,988
Maryland Community Development
Administration, "I", 6%, 2041 975,000 1,039,243
Montgomery County, MD, Housing
Opportunities Commission (Single Family
Mortgage Rev.), "B", 4.55%, 2026 1,505,000 1,416,792
Puerto Rico Housing Finance Authority,
Home Mortgage Rev., Mortgage Backed
Securities, "A", 4.75%, 2023 175,000 171,206
- -------------------------------------------------------------------------------
$ 4,022,737
- -------------------------------------------------------------------------------
State & Agency - Other - 4.1%
- -------------------------------------------------------------------------------
Howard County, MD, COP, 8%, 2019 $ 805,000 $ 1,101,272
Howard County, MD, COP, 8%, 2019 385,000 526,695
Howard County, MD, COP, 8%, 2019 680,000 930,267
Howard County, MD, COP, "B", 8.15%, 2021 450,000 630,365
Puerto Rico Infrastructure Financing
Authority, Special Tax Rev., "B", 5%, 2031 2,000,000 2,019,600
- -------------------------------------------------------------------------------
$ 5,208,199
- -------------------------------------------------------------------------------
State & Local Agencies - 5.6%
- -------------------------------------------------------------------------------
Prince George's County, MD, Lease
Development Authority Rev., MBIA, 0%, 2009 $1,500,000 $ 1,409,625
Puerto Rico Public Finance Corp.,
Commonwealth Appropriations, "E", 5.7%, 2010 (c) 1,235,000 1,296,009
Puerto Rico Public Finance Corp., ETM,
AMBAC, 5.38%, 2016 (u) 3,040,000 3,385,648
Puerto Rico Public Finance Corp., ETM,
"A", AMBAC, 5.38%, 2013 (u) 1,000,000 1,087,460
- -------------------------------------------------------------------------------
$ 7,178,742
- -------------------------------------------------------------------------------
Tax - Other - 1.6%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority
Rev., "A", 5.5%, 2022 $1,000,000 $ 1,016,250
Virgin Islands Public Finance Authority
Rev., "E", 5.875%, 2018 1,000,000 1,026,630
- -------------------------------------------------------------------------------
$ 2,042,880
- -------------------------------------------------------------------------------
Tax Assessment - 1.8%
- -------------------------------------------------------------------------------
Anne Arundel County, MD, Special Obligations
(Arundel Mills Project), 5.125%, 2029 $1,555,000 $ 1,632,097
Brunswick, MD, Special Obligation (Brunswick
Crossing Special Taxing), 5.5%, 2036 250,000 245,687
Prince George's County, MD, Special Obligation
(National Harbor Project), 5.2%, 2034 500,000 475,050
- -------------------------------------------------------------------------------
$ 2,352,834
- -------------------------------------------------------------------------------
Tobacco - 0.7%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 225,000 $ 224,932
Guam Economic Development Authority
Tobacco Settlement, "B", 5.5%, 2041 400,000 398,864
Virgin Islands Tobacco Settlement
Financing Corp., 5%, 2021 215,000 211,384
- -------------------------------------------------------------------------------
$ 835,180
- -------------------------------------------------------------------------------
Transportation - Special Tax - 1.4%
- -------------------------------------------------------------------------------
Maryland Department of Transportation,
Port Administration Facilities Project,
AMBAC, 5.25%, 2020 $1,690,000 $ 1,804,126
- -------------------------------------------------------------------------------
Universities - Colleges - 14.7%
- -------------------------------------------------------------------------------
Annapolis, MD, Economic Development Rev.
(St. Johns College), 5.5%, 2008 (c) $ 570,000 $ 580,933
Annapolis, MD, Economic Development Rev.
(St. Johns College), 5.5%, 2018 180,000 182,378
Anne Arundel County, MD, Economic Development
(Community College Project), 5.25%, 2028 1,600,000 1,653,248
Frederick County, MD, Educational Facilities
Rev. (Mount St. Mary's College), 5%, 2030 1,000,000 950,250
Frederick County, MD, Educational Facilities Rev.
(Mount St. Mary's College), "A", 5.7%, 2010 (c) 850,000 898,841
Maryland Health & Higher Education
(College of Art), 5%, 2030 750,000 751,515
Maryland Health & Higher Education (Loyola
College), "A", 5%, 2040 1,000,000 1,003,260
Maryland Health & Higher Educational Facilities
Authority Rev. (Goucher College), 5.375%, 2025 500,000 522,510
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
University), 5.625%, 2027 1,400,000 1,429,932
Maryland Health & Higher Educational
Facilities Authority Rev. (Johns Hopkins
University), "A", 5%, 2032 2,000,000 2,036,180
Maryland Health & Higher Educational
Facilities Authority Rev. (Loyola
College), "A", 5.125%, 2045 1,600,000 1,612,000
Montgomery County, MD, Rev. Authority
(College Arts Center Project), "A", 5%, 2027 1,950,000 2,023,359
Morgan State University, MD, Academic,
MBIA, 6.05%, 2015 1,500,000 1,655,640
Morgan State University, MD, Academic,
"A", ETM, MBIA, 0%, 2008 (c) 1,400,000 1,363,796
Westminster, MD, Educational Facilities
Rev. (McDaniel College, Inc.), 5.5%, 2012(c) 1,000,000 1,083,770
Westminster, MD, Educational Facilities
Rev. (McDaniel College, Inc.), 5%, 2031 1,000,000 994,420
- -------------------------------------------------------------------------------
$ 18,742,032
- -------------------------------------------------------------------------------
Universities - Dormitories - 5.6%
- -------------------------------------------------------------------------------
Maryland Economic Development Corp.
(Morgan State University Project), "A", 6%, 2034 $1,000,000 $ 1,004,840
Maryland Economic Development Corp. (University
of Maryland College Park Project), AMBAC, 5%, 2019 1,810,000 1,875,450
Maryland Economic Development Corp.,
Collegiate Housing (Salisbury), "A", 6%, 2019 1,000,000 1,028,620
Maryland Economic Development Corp.,
Collegiate Housing Rev. (Towson
University), "A", 5.75%, 2029 1,000,000 1,001,220
Maryland Economic Development Corp.,
Student Housing Rev. (University of
Maryland College Park Projects), CIFG, 5%, 2033 2,120,000 2,179,890
- -------------------------------------------------------------------------------
$ 7,090,020
- -------------------------------------------------------------------------------
Universities - Secondary Schools - 0.7%
- -------------------------------------------------------------------------------
Maryland Health & Higher Educational
Facilities Authority Rev. (Washington
Christian Academy), 5.5%, 2038 $ 500,000 $ 483,415
Maryland Industrial Development Financing
Authority, Economic Development Authority
Rev. (Our Lady of Good Council), "A", 6%, 2035 400,000 404,632
- -------------------------------------------------------------------------------
$ 888,047
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 5.2%
- -------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC, 5.25%, 2015 (u) $3,360,000 $ 3,487,176
Puerto Rico Electric Power Authority Rev.,
"NN", 5.125%, 2013 (c) 1,500,000 1,618,485
Puerto Rico Electric Power Authority Rev.,
RITES, FSA, 6.344%, 2008 (c)(n)(v) 1,400,000 1,476,454
- -------------------------------------------------------------------------------
$ 6,582,115
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 6.3%
- -------------------------------------------------------------------------------
Baltimore, MD, Project Rev., Refunding
Water Projects, "A", FGIC, 5.125%, 2032 $1,000,000 $ 1,031,100
Baltimore, MD, Refunding Wastewater Rev.
Projects, "C", AMBAC, 4.5%, 2036 900,000 882,855
Baltimore, MD, Rev., LEVRRS, MBIA, 7.02%, 2020 (p) 3,000,000 3,719,580
Baltimore, MD, Wastewater Rev. Project,
"A", MBIA, 5.65%, 2020 2,000,000 2,239,860
Puerto Rico Aqueduct & Sewer Authority
Rev., ETM, 10.25%, 2009 (c) 155,000 164,787
- -------------------------------------------------------------------------------
$ 8,038,182
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $125,152,757) $129,534,115
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.6%
- -------------------------------------------------------------------------------
Chicago, IL, Midway Airport Rev., Second
Lien, "A", 4.12%, due 10/01/07 $ 100,000 $ 100,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 200,000 200,000
Sevier County, TN, Public Building Authority Rev.,
Government Public Improvement III,
"A-Z", 3.88%, due 10/04/07 300,000 300,000
Sevier County, TN, Public Building Authority,
Government Public Improvement II,
"F-4", 3.88%, due 10/04/07 100,000 100,000
Sevier County, TN, Public Building Authority,
Government Public Improvement III,
"F", 3.88%, due 10/04/07 95,000 95,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 795,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $125,947,757) (k) $130,329,115
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (2.3)% (2,946,048)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $127,383,067
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 6,566
Services
12/01/09 USD 2,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (2,627)
Services
3/05/20 USD 2,000,000 Merrill Lynch Capital 3-Month LIBOR 5.115% (fixed rate) 31,020
Services
3/12/28 USD 2,000,000 Goldman Sachs International 7-Day BMA 3.897% (fixed rate) 28,884
- ---------------------------------------------------------------------------------------------------------------------
$63,843
- ---------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) MASSACHUSETTS MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 105.0%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 3.9%
- -------------------------------------------------------------------------------
Massachusetts Port Authority Rev., "A",
AMBAC, 5%, 2035 $2,000,000 $ 2,059,360
Massachusetts Port Authority Rev., "A",
MBIA, 5%, 2033 3,000,000 3,064,320
Massachusetts Port Authority Rev., "C",
6%, 2010 (c) 1,000,000 1,061,810
Massachusetts Port Authority Rev., "C",
6.125%, 2010 (c) 1,460,000 1,554,141
Massachusetts Port Authority Rev., ETM,
13%, 2013 (c) 550,000 711,062
- -------------------------------------------------------------------------------
$ 8,450,693
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 14.1%
- -------------------------------------------------------------------------------
Boston, MA, "A", 5.75%, 2010 (c) $3,645,000 $ 3,824,954
Brookline, MA, 5.375%, 2019 1,800,000 1,878,426
Commonwealth of Massachusetts, "B", 5.25%, 2028 2,500,000 2,762,350
Commonwealth of Massachusetts, "B", ETM,
FGIC, 7%, 2009 (c) 765,000 793,695
Commonwealth of Puerto Rico, Public
Improvement, "A", 5.25%, 2030 1,000,000 1,032,470
Greater Lawrence, MA, Sanitation District,
MBIA, 5.625%, 2010 (c) 1,640,000 1,743,008
Lynn, MA, AMBAC, 5.125%, 2018 3,690,000 3,803,062
Massachusetts Consolidated Loan, "A", 6%, 2010 (c) 3,000,000 3,190,980
Massachusetts Consolidated Loan, "B",
5.75%, 2010 (c) 1,000,000 1,056,120
Massachusetts Consolidated Loan, "C",
5.75%, 2010 (c) 1,500,000 1,593,405
Middleborough, MA, FGIC, 5.6%, 2010 (c) 75,000 79,082
Salisbury, MA, MBIA, 5.25%, 2012 (c) 2,790,000 3,003,881
Sutton, MA, MBIA, 5.5%, 2017 1,000,000 1,052,370
Sutton, MA, MBIA, 5.5%, 2019 1,000,000 1,051,150
Westford, MA, FGIC, 5.25%, 2020 2,250,000 2,335,973
Weymouth, MA, MBIA, 5.375%, 2020 1,250,000 1,310,613
- -------------------------------------------------------------------------------
$ 30,511,539
- -------------------------------------------------------------------------------
General Obligations - Improvement - 7.2%
- -------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority,
Transit Improvements, 6.2%, 2016 (u) $9,670,000 $ 10,927,293
Massachusetts Bay Transportation Authority,
Unrefunded Balance, "A", 5.75%, 2018 320,000 338,493
Maynard, MA, MBIA, 5.5%, 2021 1,000,000 1,083,380
Worcester, MA, "A", FSA, 6%, 2016 2,955,000 3,155,615
- -------------------------------------------------------------------------------
$ 15,504,781
- -------------------------------------------------------------------------------
General Obligations - Schools - 7.3%
- -------------------------------------------------------------------------------
Belmont, MA, 5%, 2015 $2,165,000 $ 2,172,902
Dudley-Charlton, MA, Regional School
District, FGIC, 5.25%, 2015 (u) 2,730,000 3,001,526
Dudley-Charlton, MA, Regional School
District, FGIC, 5.25%, 2016 (u) 2,860,000 3,160,157
Dudley-Charlton, MA, Regional School
District, FGIC, 5.25%, 2018 (u) 3,130,000 3,464,816
Narragansett, MA, Regional School
District, AMBAC, 6%, 2019 1,720,000 1,840,761
Tantasquama, MA, Regional School District,
FSA, 5.375%, 2010 (c) 2,000,000 2,118,340
- -------------------------------------------------------------------------------
$ 15,758,502
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 11.9%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Massachusetts Biomedical Research),
"C", 6.375%, 2016 $ 50,000 $ 53,464
Massachusetts Health & Educational
Facilities Authority Rev. (Baystate
Medical Center), "F", 5.75%, 2033 2,000,000 2,065,900
Massachusetts Health & Educational
Facilities Authority Rev. (Berkshire
Health Systems), "E", 6.25%, 2031 1,350,000 1,405,593
Massachusetts Health & Educational
Facilities Authority Rev. (Caritas
Christi), "B", 6.5%, 2012 500,000 532,015
Massachusetts Health & Educational
Facilities Authority Rev. (Caritas
Christi), "B", 6.25%, 2022 20,000 21,045
Massachusetts Health & Educational
Facilities Authority Rev. (Catholic Health
East Issue), 5.5%, 2012 (c) 1,575,000 1,713,632
Massachusetts Health & Educational
Facilities Authority Rev. (Covenant Health
Systems, Inc.), 6.5%, 2017 75,000 81,563
Massachusetts Health & Educational
Facilities Authority Rev. (Covenant Health
Systems, Inc.), 6%, 2031 1,000,000 1,056,040
Massachusetts Health & Educational
Facilities Authority Rev. (Jordan
Hospital), "D", 5.25%, 2018 1,330,000 1,330,359
Massachusetts Health & Educational Facilities
Authority Rev. (Lahey Clinic), "D", 5.25%, 2037 1,310,000 1,333,135
Massachusetts Health & Educational
Facilities Authority Rev. (Milford-
Whitinsville Hospital), "C", 5.25%, 2018 1,500,000 1,506,420
Massachusetts Health & Educational
Facilities Authority Rev. (Milford-
Whitinsville Hospital), "D", 6.35%, 2012 (c) 300,000 337,761
Massachusetts Health & Educational Facilities
Authority Rev. (Milton Hospital), "C", 5.5%, 2016 800,000 816,448
Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center
Hospital), "H", FGIC, 5.375%, 2018 1,000,000 1,062,160
Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center
Hospital), "H", FGIC, 5.375%, 2019 815,000 864,242
Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center
Hospital), "H", FGIC, 5%, 2025 1,135,000 1,165,986
Massachusetts Health & Educational Facilities
Authority Rev. (North Adams Regional
Hospital), "C", 6.625%, 2018 475,000 479,104
Massachusetts Health & Educational
Facilities Authority Rev. (Partners
Healthcare Systems), "C", 5.75%, 2021 100,000 105,740
Massachusetts Health & Educational
Facilities Authority Rev. (Partners
Healthcare Systems), "G", 5%, 2032 2,000,000 2,036,940
Massachusetts Health & Educational
Facilities Authority Rev. (South Shore
Hospital), "F", 5.625%, 2019 2,000,000 2,071,740
Massachusetts Health & Educational
Facilities Authority Rev. (University of
Massachusetts Memorial Hospital), "C", 6.5%, 2021 1,000,000 1,052,290
Massachusetts Industrial Finance Agency
Rev., Capital Appreciation (Massachusetts
Biomedical Research), "A", 0%, 2010 5,300,000 4,768,781
- -------------------------------------------------------------------------------
$ 25,860,358
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.5%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Linden Ponds, Inc.), "A", 5.75%, 2035 $ 500,000 $ 503,395
Massachusetts Development Finance Agency
Rev. (Loomis Communities, Inc.), "A", 6.9%, 2032 530,000 558,779
- -------------------------------------------------------------------------------
$ 1,062,174
- -------------------------------------------------------------------------------
Human Services - 0.5%
- -------------------------------------------------------------------------------
Massachusetts Health & Educational
Facilities Authority Rev. (Learning Center
for Deaf Children), "C", 6.1%, 2019 $1,000,000 $ 1,015,230
- -------------------------------------------------------------------------------
Industrial Revenue - Airlines - 1.4%
- -------------------------------------------------------------------------------
Massachusetts Port Authority Rev. (U.S.
Airways), MBIA, 5.875%, 2016 $1,900,000 $ 1,977,463
Massachusetts Port Authority Rev., Special
Facilities (U.S. Airways Project), "A",
MBIA, 5.625%, 2011 1,140,000 1,152,255
- -------------------------------------------------------------------------------
$ 3,129,718
- -------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.8%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Waste Management, Inc.), 5.5%, 2027 $ 750,000 $ 780,570
Massachusetts Development Finance Agency
Rev. (Waste Management, Inc.), "B", 6.9%, 2029 1,000,000 1,047,980
- -------------------------------------------------------------------------------
$ 1,828,550
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 2.1%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency Rev.,
Resource Recovery (Fluor Corp.), 5.625%, 2019 $1,675,000 $ 1,732,134
Massachusetts Industrial Finance Agency
Rev. (Welch Foods, Inc.), 5.6%, 2017 2,100,000 2,145,780
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 595,000 612,094
- -------------------------------------------------------------------------------
$ 4,490,008
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 1.9%
- -------------------------------------------------------------------------------
Martha's Vineyard, MA, Land Bank Rev.,
AMBAC, 5%, 2029 $ 785,000 $ 810,717
Massachusetts Development Finance Agency
Rev. (WGBH Educational Foundation), "A",
AMBAC, 5.375%, 2012 (c) 3,000,000 3,235,920
- -------------------------------------------------------------------------------
$ 4,046,637
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 6.3%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Credit Housing-Chelsea Homes), "I-
A", LOC, 5%, 2024 $1,185,000 $ 1,183,554
Massachusetts Development Finance Agency Rev.
(Morville House Apartments), "A", LOC, 4.95%, 2023 2,500,000 2,484,950
Massachusetts Housing Finance Agency Rev.,
"A", 5%, 2028 1,000,000 983,270
Massachusetts Housing Finance Agency Rev.,
"E", 5%, 2028 1,000,000 992,190
Massachusetts Housing Finance Agency Rev.,
"F", 5.125%, 2034 720,000 727,841
Massachusetts Housing Finance Agency Rev.,
"P", 5%, 2023 1,240,000 1,233,118
Massachusetts Housing Finance Agency Rev.,
"P", 5.1%, 2033 1,565,000 1,553,716
Massachusetts Housing Finance Agency Rev.,
"P", 5.2%, 2045 1,445,000 1,433,035
Massachusetts Housing Finance Agency Rev.,
Rental Mortgage, "A", AMBAC, 5.7%, 2020 1,475,000 1,516,993
Massachusetts Housing Finance Agency, "A",
5.2%, 2037 1,500,000 1,518,075
- -------------------------------------------------------------------------------
$ 13,626,742
- -------------------------------------------------------------------------------
Parking - 0.6%
- -------------------------------------------------------------------------------
Rail Connections, Inc., Massachusetts Rev.
(Route 128 Parking Garage), "A", 6%, 2009 (c) $ 450,000 $ 477,639
Rail Connections, Inc., Massachusetts Rev.
(Route 128 Parking Garage), "A", 6%, 2009 (c) 500,000 530,710
Rail Connections, Inc., Massachusetts Rev.
(Route 128 Parking Garage), "A", 6%, 2009 (c) 250,000 265,355
- -------------------------------------------------------------------------------
$ 1,273,704
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 2.8%
- -------------------------------------------------------------------------------
Massachusetts Bay Transportation
Authority, Sales Tax Rev., 0%, 2031 $5,000,000 $ 1,522,900
Massachusetts School Building Authority,
Dedicated Sales Tax, "A", AMBAC, 4.5%, 2035 3,000,000 2,898,120
Route 3 North Transit Improvement
Associates Rev., MBIA, 5.625%, 2010 (c) 1,500,000 1,580,565
- -------------------------------------------------------------------------------
$ 6,001,585
- -------------------------------------------------------------------------------
Single Family Housing - State - 3.1%
- -------------------------------------------------------------------------------
Massachusetts Housing Finance Agency,
Single Family Housing Rev., "102", 5%, 2029 $1,500,000 $ 1,480,365
Massachusetts Housing Finance Agency,
Single Family Housing Rev., "118", 4.75%, 2030 1,500,000 1,434,915
Massachusetts Housing Finance Agency,
Single Family Housing Rev., "122", 4.85%, 2031 2,000,000 1,936,260
Massachusetts Housing Finance Agency, Single
Family Housing Rev., "128", FSA, 4.875%, 2038 2,000,000 1,917,960
- -------------------------------------------------------------------------------
$ 6,769,500
- -------------------------------------------------------------------------------
Solid Waste Revenue - 1.2%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency,
Resource Recovery Rev. (Ogden Haverhill
Associates), "A", 6.7%, 2014 $ 600,000 $ 636,468
Massachusetts Industrial Finance Agency,
Resource Recovery Rev. (Ogden Haverhill
Associates), "A", 5.5%, 2013 25,000 25,265
Massachusetts Industrial Finance Agency,
Resource Recovery Rev. (Ogden Haverhill
Associates), "A", 5.6%, 2019 1,925,000 1,911,448
- -------------------------------------------------------------------------------
$ 2,573,181
- -------------------------------------------------------------------------------
State & Agency - Other - 0.6%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Visual & Performing Arts Project), 6%, 2015 $1,235,000 $ 1,405,751
- -------------------------------------------------------------------------------
State & Local Appropriation - 2.6%
- -------------------------------------------------------------------------------
Puerto Rico Public Finance Corp., ETM,
AMBAC, 5.375%, 2016 (u) $5,000,000 $ 5,568,500
- -------------------------------------------------------------------------------
Student Loan Revenue - 0.8%
- -------------------------------------------------------------------------------
Massachusetts Educational Financing Authority,
Education Loan Rev., "E", AMBAC, 5%, 2015 $ 90,000 $ 91,160
Massachusetts Educational Financing
Authority, Education Loan Rev., "Issue E",
AMBAC, 5.3%, 2016 1,490,000 1,513,035
Massachusetts Educational Financing
Authority, Education Loan Rev., "Issue G",
"A", MBIA, 6.05%, 2017 45,000 45,968
- -------------------------------------------------------------------------------
$ 1,650,163
- -------------------------------------------------------------------------------
Tax - Other - 2.0%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority
Rev., "A", 5.5%, 2022 $2,950,000 $ 2,997,938
Virgin Islands Public Finance Authority
Rev., "E", 5.875%, 2018 1,420,000 1,457,815
- -------------------------------------------------------------------------------
$ 4,455,753
- -------------------------------------------------------------------------------
Tax Assessment - 0.3%
- -------------------------------------------------------------------------------
Massachusetts Bay Transportation Authority
Rev., 5.25%, 2010 (c) $ 370,000 $ 386,387
Massachusetts Bay Transportation Authority
Rev., 5.25%, 2030 245,000 252,034
- -------------------------------------------------------------------------------
$ 638,421
- -------------------------------------------------------------------------------
Tobacco - 0.5%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 650,000 $ 649,805
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.5%, 2039 400,000 400,440
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "A", 0%, 2050 2,000,000 125,140
- -------------------------------------------------------------------------------
$ 1,175,385
- -------------------------------------------------------------------------------
Universities - Colleges - 19.5%
- -------------------------------------------------------------------------------
Massachusetts College Building Authority
Project Rev., "A", XLCA, 5.25%, 2023 $1,000,000 $ 1,051,190
Massachusetts College Building Authority
Project Rev., "A", XLCA, 5%, 2043 2,110,000 2,147,917
Massachusetts Development Finance Agency
Rev. (Wheelock College), "C", 5.25%, 2037 1,500,000 1,479,915
Massachusetts Development Finance Agency
Rev. (Boston College), "P", 5%, 2042 2,500,000 2,555,950
Massachusetts Development Finance Agency
Rev. (Boston University), XLCA, 6%, 2059 1,500,000 1,765,020
Massachusetts Development Finance Agency
Rev. (Curry College), "A", ACA, 5%, 2036 2,000,000 1,917,980
Massachusetts Development Finance Agency
Rev. (Hampshire College), 5.7%, 2034 1,000,000 1,039,690
Massachusetts Development Finance Agency
Rev. (Massachusetts College of Pharmacy),
"B", 6.625%, 2010 (c) 50,000 53,781
Massachusetts Development Finance Agency
Rev. (Massachusetts College of Pharmacy),
"C", 5.75%, 2033 1,000,000 1,062,500
Massachusetts Development Finance Agency
Rev. (Mount Holyoke College), 5.125%, 2021 1,000,000 1,037,640
Massachusetts Development Finance Agency
Rev. (Olin College), "B", XLCA, 5.25%, 2033 3,000,000 3,134,190
Massachusetts Development Finance Agency Rev.
(Western New England College), 6.125%, 2012 (c) 1,115,000 1,252,937
Massachusetts Development Finance Agency Rev.
Higher Education (Smith College), 5.5%, 2010 (c) 1,210,000 1,283,084
Massachusetts Health & Educational
Facilities Authority Rev. (Simmons
College), "D", AMBAC, 6.05%, 2010 (c) 1,745,000 1,885,158
Massachusetts Health & Educational
Facilities Authority Rev. (Umass
Worcester), "B", FGIC, 5.125%, 2019 1,005,000 1,046,356
Massachusetts Health & Educational
Facilities Authority Rev. (Umass
Worcester), "B", FGIC, 5.125%, 2011 (c) 775,000 820,082
Massachusetts Health & Educational
Facilities Authority Rev. (University of
Massachusetts), "A", FGIC, 5.75%, 2010 (c) 2,395,000 2,567,105
Massachusetts Health & Educational
Facilities Authority Rev. (University of
Massachusetts), "A", FGIC, 5.85%, 2010 (c) 1,200,000 1,289,616
Massachusetts Health & Educational
Facilities Authority Rev. (University of
Massachusetts), "C", MBIA, 5.25%, 2031 3,000,000 3,227,280
Massachusetts Health & Educational
Facilities Authority Rev. (University of
Massachusetts), "D", FGIC, 5%, 2029 1,500,000 1,549,125
Massachusetts Health & Educational Facilities
Authority Rev. (Wellesley College), 5%, 2033 1,000,000 1,023,980
Massachusetts Health & Educational Facilities
Authority Rev. (Wheelock College),
"B", MBIA, 5.5%, 2021 3,275,000 3,431,185
Massachusetts Health & Educational Facilities
Authority Rev. (Williams College), "H", 5%, 2028 1,000,000 1,033,170
Massachusetts Health & Educational
Facilities Authority Rev. (University of
Massachusetts), "A", FGIC, 5.625%, 2010(c) 2,170,000 2,318,298
Massachusetts Industrial Finance Agency
Rev. (Brandeis University), "C", MBIA, 0%, 2009 1,000,000 929,310
Massachusetts Industrial Finance Agency
Rev. (Brandeis University), "C", MBIA, 0%, 2010 1,000,000 894,710
Massachusetts Industrial Finance Agency
Rev. (Brandeis University), "C", MBIA, 0%, 2011 500,000 430,195
- -------------------------------------------------------------------------------
$ 42,227,364
- -------------------------------------------------------------------------------
Universities - Secondary Schools - 5.0%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Belmont Hill School), 4.375%, 2031 $2,260,000 $ 2,108,942
Massachusetts Development Finance Agency
Rev. (Belmont Hill School), 4.5%, 2036 1,000,000 928,270
Massachusetts Development Finance Agency
Rev. (Deerfield Academy), "A", 5%, 2028 1,000,000 1,031,950
Massachusetts Development Finance Agency
Rev. (Dexter School), 4.75%, 2032 1,130,000 1,105,886
Massachusetts Development Finance Agency
Rev. (Dexter School), 5%, 2037 1,000,000 1,016,710
Massachusetts Development Finance Agency
Rev. (Middlesex School), 5.125%, 2023 500,000 524,770
Massachusetts Development Finance Agency
Rev. (Xaverian Brothers High School), 5.55%, 2019 1,000,000 1,025,250
Massachusetts Development Finance Agency
Rev. (Xaverian Brothers High School), 5.65%, 2029 1,000,000 1,021,670
Massachusetts Industrial Finance Agency
Rev. (Concord Academy), 5.5%, 2027 2,000,000 2,042,560
- -------------------------------------------------------------------------------
$ 10,806,008
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 0.3%
- -------------------------------------------------------------------------------
Massachusetts Development Finance Agency
Rev. (Devens Electric Systems), 5.625%, 2016 $ 725,000 $ 764,621
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 7.8%
- -------------------------------------------------------------------------------
Massachusetts Water Pollution Abatement
Trust Rev., Unrefunded Balance, "5", 5.75%, 2017 $ 25,000 $ 26,220
Massachusetts Water Pollution Abatement
Trust, "10", 5%, 2014 (c) 855,000 923,621
Massachusetts Water Pollution Abatement
Trust, "10", 5%, 2029 160,000 165,598
Massachusetts Water Pollution Abatement
Trust, "10", 5%, 2034 145,000 149,385
Massachusetts Water Pollution Abatement
Trust, "A", 5%, 2012 (c) 1,435,000 1,524,544
Massachusetts Water Pollution Abatement
Trust, "A", 5%, 2032 75,000 76,737
Massachusetts Water Resources Authority,
FGIC, 6.5%, 2019 (u) 8,020,000 9,455,500
Massachusetts Water Resources Authority,
"A", FSA, 4.375%, 2032 2,000,000 1,908,040
Massachusetts Water Resources Authority,
General, Rev., "A", FGIC, 6%, 2010 (c) 1,000,000 1,074,640
Massachusetts Water Resources Authority,
General, Rev., "J", FSA, 5%, 2023 500,000 516,845
Springfield, MA, Water & Sewer Commission,
General, Rev., "A", AMBAC, 5%, 2021 1,000,000 1,063,230
- -------------------------------------------------------------------------------
$ 16,884,360
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $217,019,630) $227,479,228
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.5%
- -------------------------------------------------------------------------------
Bell County, TX, Health Facilities
Development Corp. Rev. (Scott & White
Memorial Hospital), 4.04%, due 10/01/07 $ 100,000 $ 100,000
Chicago, IL, Midway Airport Rev., Second
Lien, "A", 4.12%, due 10/01/07 100,000 100,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 800,000 800,000
Sublette County, WY, Pollution Control
Rev. (Exxon Mobil Corp.), 3.94%, due 10/01/07 100,000 100,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 1,100,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $218,119,630) (k) $228,579,228
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.5)% (11,990,723)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $216,588,505
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 10,944
Services
12/01/09 USD 3,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (3,940)
Services
1/09/18 USD 2,250,000 Merrill Lynch Capital 5.771% (fixed rate) 3-Month LIBOR 97,313
Services
1/09/23 USD 2,750,000 Citibank 5.920% (fixed rate) 3 Month LIBOR 156,337
11/01/27 USD 2,000,000 Citibank 4.186% (fixed rate) 7-Day BMA 46,403
- ---------------------------------------------------------------------------------------------------------------------
$307,057
- ---------------------------------------------------------------------------------------------------------------------
At September 30, 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 September 30, 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 $ 86,999,263 99.89%
Arkansas Fund 141,754,257 99.72%
California Fund 440,369,763 99.42%
Florida Fund 72,833,695 99.73%
Georgia Fund 59,887,104 99.67%
Maryland Fund 129,534,115 99.39%
Massachusetts Fund 227,479,228 99.52%
(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 $173,962
and $1,476,454, representing 0.3% and 1.2% 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
- -------------------------------------------------------------------------------
ACA ACA Financial Guaranty Corp.
AMBAC AMBAC Indemnity Corp.
ASSD GTY Assured Guaranty Insurance Co.
ASST GTY Asset Guaranty Insurance Co.
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.
RADIAN Radian Asset Insurance, Inc.
XLCA XL Capital Insurance Co.
Inverse Floaters
- -------------------------------------------------------------------------------
LEVRRS Leveraged Reverse Rate Security
RIBS Residual Interest Bonds
RITES Residual Interest Tax-Exempt Security
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
At 9/30/07 (unaudited)
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 $84,319,415 $137,324,736 $428,240,938 $70,831,507
Unrealized appreciation (depreciation) 2,779,848 4,829,521 14,699,537 2,202,188
- ------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $87,099,263 $142,154,257 $442,940,475 $73,033,695
Cash 63,669 51,982 78,521 107,859
Receivable for investments sold 55,000 -- 5,548,526 130,131
Receivable for fund shares sold 53,982 1,549 311,249 72,162
Interest receivable 1,314,179 1,852,302 5,795,075 1,333,295
Unrealized appreciation on interest rate swaps 234,907 252,366 139,507 57,530
Other assets 276 386 997 271
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $88,821,276 $144,312,842 $454,814,350 $74,734,943
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------
Distributions payable $121,824 $225,974 $675,650 $124,651
Payable for investments purchased -- -- 4,566,043 --
Payable to the holder of the floating rate certificate
from trust assets 6,515,570 8,261,760 21,515,378 6,507,505
Payable for fund shares reacquired 135,467 365,482 463,926 154,139
Unrealized depreciation on interest rate swaps 1,970 3,284 314,263 92,127
Payable to affiliates -
Management fee 2,690 4,444 14,022 2,225
Shareholder servicing costs 14,262 17,157 42,372 11,653
Distribution and service fees 2,996 10,834 52,597 1,803
Administrative services fee 246 333 812 222
Payable for independent trustees' compensation 9,865 9,609 19,431 9,469
Payable for interest expense and fees 117,746 81,496 222,093 65,380
Accrued expenses and other liabilities 15,718 20,724 28,050 19,857
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities $6,938,354 $9,001,097 $27,914,637 $6,989,031
- ------------------------------------------------------------------------------------------------------------------------------
Net assets $81,882,922 $135,311,745 $426,899,713 $67,745,912
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- ------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $78,572,501 $129,555,911 $415,720,405 $65,578,744
Unrealized appreciation (depreciation) on investments 3,012,785 5,078,603 14,524,781 2,167,591
Accumulated net realized gain (loss) on investments 164,479 425,458 (3,886,948) (9,639)
Accumulated undistributed net investment income 133,157 251,773 541,475 9,216
- ------------------------------------------------------------------------------------------------------------------------------
Net assets $81,882,922 $135,311,745 $426,899,713 $67,745,912
- ------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) - continued
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
Net assets
Class A $72,696,524 $128,039,194 $358,232,957 $59,144,947
Class B 9,186,398 7,272,551 38,698,874 8,600,965
Class C -- -- 29,967,882 --
- ------------------------------------------------------------------------------------------------------------------------------
Total net assets $81,882,922 $135,311,745 $426,899,713 $67,745,912
- ------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 7,021,171 12,843,159 62,196,586 5,971,793
Class B 887,369 728,779 6,718,337 868,393
Class C -- -- 5,185,038 --
- ------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 7,908,540 13,571,938 74,099,961 6,840,186
- ------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $10.35 $9.97 $5.76 $9.90
- ------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $10.87 $10.47 $6.05 $10.39
- ------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $10.35 $9.98 $5.76 $9.90
- ------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $-- $-- $5.78 $--
- ------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed
on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Assets and Liabilities (unaudited) - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $57,539,823 $125,947,757 $218,119,630
Unrealized appreciation (depreciation) 2,547,281 4,381,358 10,459,598
- ------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $60,087,104 $130,329,115 $228,579,228
Cash 40,386 68,785 1,251
Receivable for investments sold 105,000 171,101 960,317
Receivable for fund shares sold 108,526 17,758 79,492
Interest receivable 1,040,675 1,883,878 3,239,107
Unrealized appreciation on interest rate swaps 71,346 66,470 310,997
Other assets 215 389 592
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $61,453,252 $132,537,496 $233,170,984
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------
Distributions payable $72,337 $175,613 $360,862
Payable to the holder of the floating rate certificate from trust assets 4,512,840 4,714,091 15,772,915
Payable for fund shares reacquired 53,262 127,011 211,440
Unrealized depreciation on interest rate swaps 657 2,627 3,940
Payable to affiliates -
Management fee 1,862 4,187 7,115
Shareholder servicing costs 9,879 16,590 30,098
Distribution and service fees 2,171 5,884 10,237
Administrative services fee 203 320 467
Payable for independent trustees' compensation 11,180 13,978 14,280
Payable for interest expense and fees 71,502 68,568 137,999
Accrued expenses and other liabilities 22,171 25,560 33,126
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities $4,758,064 $5,154,429 $16,582,479
- ------------------------------------------------------------------------------------------------------------------------------
Net assets $56,695,188 $127,383,067 $216,588,505
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- ------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $54,001,165 $122,274,883 $205,031,972
Unrealized appreciation (depreciation) on investments 2,617,970 4,445,201 10,766,655
Accumulated net realized gain (loss) on investments 137,060 596,218 669,284
Accumulated undistributed (distributions in excess of) net investment income (61,007) 66,765 120,594
- ------------------------------------------------------------------------------------------------------------------------------
Net assets $56,695,188 $127,383,067 $216,588,505
- ------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) - continued
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
Net assets
Class A $49,153,847 $113,345,073 $189,372,272
Class B 7,541,341 14,037,994 27,216,233
- ------------------------------------------------------------------------------------------------------------------------------
Total net assets $56,695,188 $127,383,067 $216,588,505
- ------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 4,584,214 10,213,702 17,038,302
Class B 700,775 1,265,617 2,444,718
- ------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 5,284,989 11,479,319 19,483,020
- ------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $10.72 $11.10 $11.11
- ------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $11.25 $11.65 $11.66
- ------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $10.76 $11.09 $11.13
- ------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed
on redemptions of Class A and Class B shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF OPERATIONS
Six months ended 9/30/07 (unaudited)
These statements describe how much each fund earned in investment income and accrued in expenses. They also describe any gains
or losses generated by each fund's operations.
ALABAMA ARKANSAS CALIFORNIA FLORIDA
FUND FUND FUND FUND
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------
Interest $2,322,167 $3,746,577 $11,822,835 $1,991,999
- ------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $228,058 $374,341 $1,202,193 $195,767
Distribution and service fees 139,920 99,495 520,240 38,127
Shareholder servicing costs 33,741 48,949 148,510 28,058
Administrative services fee 11,532 15,966 41,095 10,553
Independent trustees' compensation 2,120 3,179 6,684 2,085
Custodian fee 4,246 6,419 19,086 4,064
Shareholder communications 4,943 7,307 16,183 5,223
Auditing fees 27,691 27,691 27,691 27,691
Legal fees 972 1,914 4,193 2,879
Interest expense and fees 130,860 164,909 439,603 131,574
Miscellaneous 22,029 20,944 39,500 19,650
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses $606,112 $771,114 $2,464,978 $465,671
- ------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (200) (147) (429) (229)
Reduction of expenses by investment adviser (103,865) (170,482) (547,510) (89,159)
- ------------------------------------------------------------------------------------------------------------------------------
Net expenses $502,047 $600,485 $1,917,039 $376,283
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,820,120 $3,146,092 $9,905,796 $1,615,716
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $(13,891) $43,612 $(3,252,277) $84,899
Swap transactions (141,276) 66,359 261,306 (14,625)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $(155,167) $109,971 $(2,990,971) $70,274
- ------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(909,222) $(1,889,629) $(6,665,103) $(1,402,820)
Swap transactions 233,957 231,467 (234,088) (63,295)
- ------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(675,265) $(1,658,162) $(6,899,191) $(1,466,115)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(830,432) $(1,548,191) $(9,890,162) $(1,395,841)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $989,688 $1,597,901 $15,634 $219,875
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations (unaudited) - continued
SIX MONTHS ENDED 9/30/07 (UNAUDITED)
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------
Interest $1,613,357 $3,544,761 $6,123,297
- ------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $159,190 $359,285 $598,740
Distribution and service fees 101,492 278,411 476,240
Shareholder servicing costs 23,334 51,607 80,120
Administrative services fee 9,430 15,517 22,771
Independent trustees' compensation 2,087 3,603 6,306
Custodian fee 3,144 6,412 11,188
Shareholder communications 4,531 8,316 10,757
Auditing fees 27,636 27,691 27,691
Legal fees 6,048 3,159 2,335
Interest expense and fees 92,008 95,605 319,899
Miscellaneous 18,380 23,464 23,848
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses $447,280 $873,070 $1,579,895
- ------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (248) (203) (342)
Reduction of expenses by investment adviser (72,500) (163,629) (272,683)
- ------------------------------------------------------------------------------------------------------------------------------
Net expenses $374,532 $709,238 $1,306,870
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,238,825 $2,835,523 $4,816,427
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $73,759 $17,536 $277,866
Swap transactions 101,117 93,089 (157,419)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $174,876 $110,625 $120,447
- ------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(884,254) $(2,670,922) $(3,348,994)
Swap transactions 52,942 35,583 283,593
- ------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(831,312) $(2,635,339) $(3,065,401)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(656,436) $(2,524,714) $(2,944,954)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $582,389 $310,809 $1,871,473
- ------------------------------------------------------------------------------------------------------------------------------
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
SIX MONTHS ENDED 9/30/07 (UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,820,120 $3,146,092 $9,905,796 $1,615,716
Net realized gain (loss) on investments (155,167) 109,971 (2,990,971) 70,274
Net unrealized gain (loss) on investments (675,265) (1,658,162) (6,899,191) (1,466,115)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $989,688 $1,597,901 $15,634 $219,875
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(1,628,962) $(2,967,957) $(8,047,773) $(1,359,143)
Class B (178,735) (150,266) (766,773) (183,107)
Class C -- -- (532,531) --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1,807,697) $(3,118,223) $(9,347,077) $(1,542,250)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(1,280,219) $362,623 $(8,249,224) $(5,428,027)
- -------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(2,098,228) $(1,157,699) $(17,580,667) $(6,750,402)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
At beginning of period 83,981,150 136,469,444 444,480,380 74,496,314
At end of period $81,882,922 $135,311,745 $426,899,713 $67,745,912
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in
net assets at end of period $133,157 $251,773 $541,475 $9,216
- -------------------------------------------------------------------------------------------------------------------------------
GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND
SIX MONTHS ENDED 9/30/07 (UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,238,825 $2,835,523 $4,816,427
Net realized gain (loss) on investments 174,876 110,625 120,447
Net unrealized gain (loss) on investments (831,312) (2,635,339) (3,065,401)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $582,389 $310,809 $1,871,473
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(1,048,893) $(2,417,459) $(3,999,759)
Class B (133,484) (271,116) (526,931)
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1,182,377) $(2,688,575) $(4,526,690)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(1,894,508) $(4,352,272) $(1,219,989)
- ------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(2,494,496) $(6,730,038) $(3,875,206)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
At beginning of period 59,189,684 134,113,105 220,463,711
At end of period $56,695,188 $127,383,067 $216,588,505
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of) net
investment income included in net assets at end of period $(61,007) $66,765 $120,594
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
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)
- -------------------------------------------------------------------------------------------------------------------------------
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
Financial Statements
FINANCIAL HIGHLIGHTS
MFS(R) ALABAMA MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.45 $10.47 $10.62 $10.88 $10.82 $10.31
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.23 $0.49(z) $0.46 $0.48 $0.48 $0.48
Net realized and unrealized gain (loss)
on investments (0.10) (0.01)(z) (0.15) (0.22) 0.06 0.54
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.13 $0.48 $0.31 $0.26 $0.54 $1.02
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.23) $(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 $(0.23) $(0.50) $(0.46) $(0.52) $(0.48) $(0.51)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.35 $10.45 $10.47 $10.62 $10.88 $10.82
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.27(n) 4.66 2.97 2.40 5.11 10.06
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.38(a) 1.40 1.33 1.21 1.17 1.18
Expenses after expense reductions (f) 1.13(a) 1.15 1.08 0.96 0.96 0.98
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.81(a) 0.86 0.87 0.84 0.88 0.88
Net investment income 4.49(a) 4.70(z) 4.37 4.46 4.38 4.49
Portfolio turnover 7 9 9 17 10 21
Net assets at end of period (000 Omitted) $72,697 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.45 $10.47 $10.62 $10.88 $10.82 $10.31
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.19 $0.41(z) $0.38 $0.40 $0.39 $0.40
Net realized and unrealized gain (loss)
on investments (0.10) (0.01)(z) (0.15) (0.23) 0.07 0.54
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.09 $0.40 $0.23 $0.17 $0.46 $0.94
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.19) $(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 $(0.19) $(0.42) $(0.38) $(0.43) $(0.40) $(0.43)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.35 $10.45 $10.47 $10.62 $10.88 $10.82
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.89(n) 3.88 2.20 1.63 4.32 9.14
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.13(a) 2.15 2.08 1.96 1.91 1.93
Expenses after expense reductions (f) 1.88(a) 1.90 1.83 1.71 1.71 1.73
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.56(a) 1.61 1.62 1.59 1.63 1.63
Net investment income 3.74(a) 3.93(z) 3.61 3.71 3.63 3.74
Portfolio turnover 7 9 9 17 10 21
Net assets at end of period (000 Omitted) $9,186 $10,421 $13,443 $15,118 $17,339 $16,163
- -------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.08 $10.04 $10.17 $10.41 $10.40 $9.97
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.23 $0.50(z) $0.45 $0.45 $0.45 $0.47
Net realized and unrealized gain (loss)
on investments (0.11) (0.01)(z) (0.13) (0.23) 0.01 0.46
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.12 $0.49 $0.32 $0.22 $0.46 $0.93
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.23) $(0.45) $(0.45) $(0.46) $(0.45) $(0.50)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.97 $10.08 $10.04 $10.17 $10.41 $10.40
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.23(n) 5.02 3.17 2.14 4.53 9.51
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.09(a) 1.14 1.10 1.00 0.99 1.02
Expenses after expense reductions (f) 0.84(a) 0.89 0.85 0.75 0.79 0.82
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.60(a) 0.66 0.67 0.65 0.72 0.73
Net investment income 4.68(a) 4.98(z) 4.45 4.47 4.31 4.59
Portfolio turnover 4 10 10 13 19 15
Net assets at end of period (000 Omitted) $128,039 $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
SIX MONTHS YEARS ENDED 3/31
ENDED ------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.09 $10.05 $10.18 $10.42 $10.41 $9.98
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.19 $0.43(z) $0.38 $0.38 $0.37 $0.39
Net realized and unrealized gain (loss)
on investments (0.11) (0.01)(z) (0.14) (0.24) 0.01 0.46
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.08 $0.42 $0.24 $0.14 $0.38 $0.85
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.19) $(0.38) $(0.37) $(0.38) $(0.37) $(0.42)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.98 $10.09 $10.05 $10.18 $10.42 $10.41
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.82(n) 4.21 2.39 1.37 3.68 8.62
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.90(a) 1.91 1.87 1.76 1.80 1.83
Expenses after expense reductions (f) 1.64(a) 1.66 1.62 1.51 1.60 1.63
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.40(a) 1.43 1.44 1.41 1.53 1.54
Net investment income 3.88(a) 4.21(z) 3.68 3.71 3.50 3.77
Portfolio turnover 4 10 10 13 19 15
Net assets at end of period (000 Omitted) $7,273 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $5.88 $5.84 $5.88 $5.98 $5.96 $5.70
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.14 $0.27(z) $0.28 $0.29 $0.28 $0.28
Net realized and unrealized gain (loss)
on investments (0.13) 0.03(z) (0.03) (0.11) 0.02 0.27
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.01 $0.30 $0.25 $0.18 $0.30 $0.55
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.13) $(0.26) $(0.28) $(0.28) $(0.28) $(0.29)
From net realized gain on investments -- -- (0.01) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.13) $(0.26) $(0.29) $(0.28) $(0.28) $(0.29)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.76 $5.88 $5.84 $5.88 $5.98 $5.96
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.15(n) 5.30 4.22 3.14 5.22 9.79
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.99(a) 1.11 1.09 0.97 0.96 0.96
Expenses after expense reductions (f) 0.74(a) 0.86 0.84 0.72 0.76 0.76
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.54(a) 0.60 0.63 0.61 0.67 0.67
Net investment income 4.68(a) 4.66(z) 4.69 4.91 4.71 4.73
Portfolio turnover 15 16 9 12 8 22
Net assets at end of period (000 Omitted) $358,233 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $5.88 $5.84 $5.88 $5.98 $5.96 $5.70
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.11 $0.23(z) $0.23 $0.25 $0.23 $0.23
Net realized and unrealized gain (loss)
on investments (0.12) 0.03(z) (0.03) (0.11) 0.03 0.27
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.01) $0.26 $0.20 $0.14 $0.26 $0.50
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.11) $(0.22) $(0.23) $(0.24) $(0.24) $(0.24)
From net realized gain on investments -- -- (0.01) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.11) $(0.22) $(0.24) $(0.24) $(0.24) $(0.24)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.76 $5.88 $5.84 $5.88 $5.98 $5.96
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) (0.24)(n) 4.51 3.44 2.38 4.38 8.93
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.78(a) 1.88 1.85 1.70 1.76 1.75
Expenses after expense reductions (f) 1.53(a) 1.62 1.60 1.45 1.56 1.55
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.33(a) 1.37 1.39 1.34 1.47 1.46
Net investment income 3.89(a) 3.91(z) 3.94 4.17 3.91 3.94
Portfolio turnover 15 16 9 12 8 22
Net assets at end of period (000 Omitted) $38,699 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS C 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $5.90 $5.86 $5.90 $6.00 $5.98 $5.72
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.11 $0.22(z) $0.23 $0.24 $0.23 $0.23
Net realized and unrealized gain (loss)
on investments (0.13) 0.03(z) (0.04) (0.11) 0.02 0.27
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.02) $0.25 $0.19 $0.13 $0.25 $0.50
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.10) $(0.21) $(0.22) $(0.23) $(0.23) $(0.24)
From net realized gain on investments -- -- (0.01) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.10) $(0.21) $(0.23) $(0.23) $(0.23) $(0.24)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.78 $5.90 $5.86 $5.90 $6.00 $5.98
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) (0.30)(n) 4.36 3.29 2.22 4.27 8.78
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.90(a) 2.01 1.99 1.87 1.86 1.86
Expenses after expense reductions (f) 1.64(a) 1.76 1.74 1.62 1.65 1.66
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.44(a) 1.50 1.53 1.51 1.56 1.57
Net investment income 3.78(a) 3.77(z) 3.79 4.01 3.81 3.83
Portfolio turnover 15 16 9 12 8 22
Net assets at end of period (000 Omitted) $29,968 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.09 $10.05 $10.09 $10.24 $10.19 $9.78
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.23 $0.46(z) $0.45 $0.47 $0.47 $0.48
Net realized and unrealized gain (loss)
on investments (0.20) 0.02(z) (0.04) (0.15) 0.05 0.44
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.03 $0.48 $0.41 $0.32 $0.52 $0.92
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(0.44) $(0.45) $(0.47) $(0.47) $(0.51)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.90 $10.09 $10.05 $10.09 $10.24 $10.19
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.32(n) 4.92 4.14 3.25 5.20 9.40
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.20(a) 1.19 1.11 0.94 0.98 0.88
Expenses after expense reductions (f) 0.95(a) 0.94 0.86 0.69 0.77 0.68
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.58(a) 0.64 0.64 0.57 0.64 0.62
Net investment income 4.66(a) 4.53(z) 4.46 4.68 4.58 4.78
Portfolio turnover 0 9 17 18 31 27
Net assets at end of period (000 Omitted) $59,145 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.09 $10.05 $10.09 $10.24 $10.19 $9.78
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.19 $0.38(z) $0.38 $0.40 $0.39 $0.40
Net realized and unrealized gain (loss)
on investments (0.20) 0.03(z) (0.04) (0.16) 0.05 0.43
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.01) $0.41 $0.34 $0.24 $0.44 $0.83
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.18) $(0.37) $(0.38) $(0.39) $(0.39) $(0.42)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.90 $10.09 $10.05 $10.09 $10.24 $10.19
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) (0.06)(n) 4.12 3.35 2.45 4.36 8.64
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.97(a) 1.96 1.87 1.71 1.77 1.68
Expenses after expense reductions (f) 1.72(a) 1.71 1.62 1.46 1.57 1.48
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.35(a) 1.40 1.40 1.34 1.44 1.42
Net investment income 3.89(a) 3.77(z) 3.70 3.92 3.78 3.97
Portfolio turnover 0 9 17 18 31 27
Net assets at end of period (000 Omitted) $8,601 $10,906 $14,970 $18,382 $22,312 $25,175
- -------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.83 $10.80 $10.99 $11.22 $11.17 $10.63
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.24 $0.47(z) $0.46 $0.48 $0.49 $0.49
Net realized and unrealized gain (loss)
on investments (0.13) 0.01(z) (0.18) (0.23) 0.05 0.55
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.11 $0.48 $0.28 $0.25 $0.54 $1.04
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(0.45) $(0.47) $(0.48) $(0.49) $(0.50)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.72 $10.83 $10.80 $10.99 $11.22 $11.17
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.08(n) 4.55 2.53 2.27 4.93 9.97
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.45(a) 1.47 1.39 1.24 1.20 1.22
Expenses after expense reductions (f) 1.20(a) 1.22 1.14 0.99 0.99 1.02
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.88(a) 0.93 0.93 0.88 0.91 0.92
Net investment income 4.39(a) 4.37(z) 4.22 4.35 4.35 4.43
Portfolio turnover 7 6 5 18 12 25
Net assets at end of period (000 Omitted) $49,154 $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
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.87 $10.84 $11.00 $11.23 $11.18 $10.64
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.20 $0.40(z) $0.41 $0.40 $0.40 $0.40
Net realized and unrealized gain (loss)
on investments (0.13) 0.00(w)(z) (0.18) (0.24) 0.06 0.56
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.07 $0.40 $0.23 $0.16 $0.46 $0.96
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.18) $(0.37) $(0.39) $(0.39) $(0.41) $(0.42)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.76 $10.87 $10.84 $11.00 $11.23 $11.18
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.70(n) 3.77 2.05 1.51 4.15 9.15
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.20(a) 2.22 2.14 1.99 1.94 1.97
Expenses after expense reductions (f) 1.95(a) 1.97 1.89 1.74 1.74 1.77
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.63(a) 1.68 1.68 1.63 1.66 1.67
Net investment income 3.64(a) 3.63(z) 3.72 3.60 3.60 3.68
Portfolio turnover 7 6 5 18 12 25
Net assets at end of period (000 Omitted) $7,541 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not Annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount as less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period
and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the
table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.30 $11.27 $11.49 $11.74 $11.69 $11.21
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.25 $0.50(z) $0.50 $0.52 $0.51 $0.52
Net realized and unrealized gain (loss)
on investments (0.22) 0.04(z) (0.15) (0.25) 0.06 0.50
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.03 $0.54 $0.35 $0.27 $0.57 $1.02
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.23) $(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 $(0.23) $(0.51) $(0.57) $(0.52) $(0.52) $(0.54)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.10 $11.30 $11.27 $11.49 $11.74 $11.69
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.31(n) 4.88 3.06 2.36 4.96 9.21
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.26(a) 1.29 1.19 1.14 1.17 1.15
Expenses after expense reductions (f) 1.01(a) 1.04 0.94 0.89 0.96 0.95
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.87(a) 0.91 0.94 0.89 0.96 0.95
Net investment income 4.43(a) 4.48(z) 4.38 4.48 4.35 4.51
Portfolio turnover 4 16 9 12 21 12
Net assets at end of period (000 Omitted) $113,345 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.29 $11.26 $11.49 $11.74 $11.68 $11.20
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.21 $0.43(z) $0.43 $0.44 $0.43 $0.45
Net realized and unrealized gain (loss)
on investments (0.21) 0.03(z) (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 $(0.20) $(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 $(0.20) $(0.43) $(0.49) $(0.44) $(0.44) $(0.46)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.09 $11.29 $11.26 $11.49 $11.74 $11.68
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) (0.01)(n) 4.21 2.30 1.69 4.37 8.52
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.92(a) 1.95 1.84 1.79 1.81 1.80
Expenses after expense reductions (f) 1.66(a) 1.70 1.59 1.54 1.61 1.60
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.52(a) 1.56 1.59 1.54 1.61 1.60
Net investment income 3.78(a) 3.83(z) 3.72 3.83 3.70 3.86
Portfolio turnover 4 16 9 12 21 12
Net assets at end of period (000 Omitted) $14,038 $16,515 $21,011 $25,716 $31,697 $34,033
- -------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(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 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.25 $11.22 $11.31 $11.52 $11.49 $10.90
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.25 $0.51(z) $0.48 $0.51 $0.51 $0.52
Net realized and unrealized gain (loss)
on investments (0.15) 0.02(z) (0.05) (0.22) 0.03 0.60
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.53 $0.43 $0.29 $0.54 $1.12
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.24) $(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 $(0.24) $(0.50) $(0.52) $(0.50) $(0.51) $(0.53)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.11 $11.25 $11.22 $11.31 $11.52 $11.49
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.88(n) 4.80 3.83 2.63 4.82 10.42
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.37(a) 1.39 1.34 1.19 1.23 1.21
Expenses after expense reductions (f) 1.12(a) 1.14 1.09 0.94 1.02 1.01
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.82(a) 0.87 0.90 0.84 0.95 0.92
Net investment income 4.52(a) 4.57(z) 4.23 4.48 4.39 4.56
Portfolio turnover 12 5 10 11 14 15
Net assets at end of period (000 Omitted) $189,372 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.27 $11.24 $11.33 $11.54 $11.51 $10.92
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.22 $0.44(z) $0.41 $0.43 $0.43 $0.44
Net realized and unrealized gain (loss)
on investments (0.16) 0.02(z) (0.05) (0.21) 0.04 0.60
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.06 $0.46 $0.36 $0.22 $0.47 $1.04
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(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 $(0.20) $(0.43) $(0.45) $(0.43) $(0.44) $(0.45)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.13 $11.27 $11.24 $11.33 $11.54 $11.51
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.55(n) 4.12 3.16 1.97 4.14 9.69
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.02(a) 2.04 1.99 1.84 1.87 1.86
Expenses after expense reductions (f) 1.77(a) 1.79 1.74 1.59 1.67 1.66
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.47(a) 1.52 1.55 1.49 1.60 1.57
Net investment income 3.87(a) 3.92(z) 3.58 3.83 3.74 3.91
Portfolio turnover 12 5 10 11 14 15
Net assets at end of period (000 Omitted) $27,216 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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
(unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Alabama Municipal Bond Fund (Alabama Fund), MFS Arkansas Municipal Bond
Fund (Arkansas Fund), MFS California Municipal Bond Fund (California Fund),
MFS Florida Municipal Bond Fund (Florida Fund), MFS Georgia Municipal Bond
Fund (Georgia Fund), MFS Maryland Municipal Bond Fund (Maryland Fund), and MFS
Massachusetts Municipal Bond Fund (Massachusetts Fund) are each a series of
MFS Municipal Series Trust which is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Because each fund invests primarily in the securities of a single state and
its political subdivisions, each fund is vulnerable to the effects of changes
in the legal and economic environment of the particular state. Municipal
securities backed by current or anticipated revenues from a specific project
or specific assets can be negatively affected by the discontinuance of the
taxation supporting the projects or assets or the inability to collect
revenues for the project or from the assets. If the Internal Revenue Service
determines an issuer of a municipal security has not complied with applicable
tax requirements, the security could decline in value, interest from the
security could become taxable and each fund may be required to issue Form
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. 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 the fund and another party. Net cash
payments are exchanged at specified intervals and are recorded as a realized
gain or loss in the Statements 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 Statements of Operations. A liquidation payment received
or made upon early termination is recorded as a realized gain or loss in the
Statements 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 Statements 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 September 30, 2007, 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:
PAYABLE TO THE HOLDER WEIGHTED AVERAGE INTEREST EXPENSE AND
OF THE FLOATING RATE INTEREST RATE ON FLOATING FEES IN CONNECTION WITH
CERTIFICATE FROM RATE CERTIFICATES ISSUED SELF-DEPOSITED INVERSE
FUND TRUST ASSETS BY THE TRUST FLOATER TRANSACTIONS
Alabama Fund $6,515,570 3.83% $130,860
Arkansas Fund 8,261,760 3.81% 164,909
California Fund 21,515,378 3.91% 439,603
Florida Fund 6,507,505 3.84% 131,574
Georgia Fund 4,512,840 3.92% 92,008
Maryland Fund 4,714,091 3.85% 95,605
Massachusetts Fund 15,772,915 3.93% 319,899
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.
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 six months ended September 30, 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 made during the current period will be
determined at fiscal year end. The tax character of distributions declared to
shareholders is as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
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
The federal tax cost and the tax basis components of distributable earnings were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
AS OF 9/30/07 FUND FUND FUND FUND FUND FUND FUND
Cost of investments $77,631,974 $128,378,837 $407,342,854 $64,358,863 $52,976,712 $120,880,578 $202,789,459
- -----------------------------------------------------------------------------------------------------------------------=----------
Gross appreciation $3,499,267 $5,918,522 $16,690,712 $2,654,726 $2,767,638 $5,553,943 $10,461,442
Gross depreciation (547,548) (404,862) (2,608,469) (487,399) (170,086) (819,497) (444,588)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $2,951,719 $5,513,660 $14,082,243 $2,167,327 $2,597,552 $4,734,446 $10,016,854
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
AS OF 3/31/07 FUND FUND FUND FUND FUND FUND FUND
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)
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
The aggregate cost above includes prior fiscal year end tax adjustments.
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)
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 six months ended September
30, 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
$103,663 $170,152 $546,450 $88,985 $72,359 $163,311 $272,154
The management fee incurred for the six months ended September 30, 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 six months ended
September 30, 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
$6,603 $25,634 $26,960 $4,510 $1,659 $8,778 $28,643
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 PLAN FEE TABLE:
CLASS A
-----------------------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN (d) RATE (e) FEE
Alabama Fund 0.10% 0.25% 0.35% 0.25% $91,577
Arkansas Fund 0.10% 0.25% 0.35% 0.10% 64,147
California Fund 0.10% 0.25% 0.35% 0.10% 182,387
Florida Fund 0.10% 0.25% 0.35% -- --
Georgia Fund 0.10% 0.25% 0.35% 0.25% 62,648
Maryland Fund 0.10% 0.25% 0.35% 0.35% 201,832
Massachusetts Fund 0.10% 0.25% 0.35% 0.35% 329,739
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% $48,343
Arkansas Fund 0.75% 0.25% 1.00% 0.87% 35,348
California Fund 0.75% 0.25% 1.00% 0.89% 186,174
Florida Fund 0.75% 0.25% 1.00% 0.77% 38,127
Georgia Fund 0.75% 0.25% 1.00% 1.00% 38,844
Maryland Fund 0.75% 0.25% 1.00% 1.00% 76,579
Massachusetts Fund 0.75% 0.25% 1.00% 1.00% 146,501
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% $151,679
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
Total Distribution and Service Fees $139,920 $99,495 $520,240 $38,127 $101,492 $278,411 $476,240
(d) In accordance with the distribution plan for certain classes, each fund
pays distribution and/or service fees up to these annual percentage rates
of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the
distribution plan for the six months ended September 30, 2007 based on
each class' average daily net assets. 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 each fund's Board of Trustees may determine.
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 Arkansas Fund and California Fund Class A service
fee is not yet in effect and will be implemented on such date as each
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 Florida Fund's 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 Arkansas Fund and
California Fund 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 each fund's Board
of Trustees may determine.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months of purchase.
Class B shares are subject to a contingent deferred sales charge in the event
of a shareholder redemption within six years of purchase. All contingent
deferred sales charges are paid to MFD and during the six months ended
September 30, 2007, were as follows:
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
CDSC IMPOSED FUND FUND FUND FUND FUND FUND FUND
Class A $2 $-- $8,122 $-- $-- $-- $--
Class B 12,772 17,246 27,767 12,513 5,730 8,942 30,263
Class C N/A N/A 2,771 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 fund's Board of Trustees. For the six months ended September 30, 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 $18,576 $30,483 $98,040 $15,972 $12,973 $29,291 $48,768
Percentage of average daily net assets 0.0449% 0.0449% 0.0450% 0.0450% 0.0449% 0.0450% 0.0449%
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 and unaffiliated service providers. For the six months ended September 30, 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
$15,165 $18,466 $50,470 $12,086 $10,361 $22,316 $31,352
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 average daily net assets. Each fund's annual
fixed amount is $17,500. The administrative services fee incurred for the six months ended September 30, 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
0.0279% 0.0235% 0.0189% 0.0297% 0.0327% 0.0238% 0.0210%
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 six months ended
September 30, 2007.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$417 $392 $957 $390 $425 $814 $827
The liability for deferred retirement benefits payable to certain retired independent trustees amounted to the following for
each fund at September 30, 2007, and is included in payable for independent trustees' compensation.
ALABAMA ARKANSAS CALIFORNIA FLORIDA GEORGIA MARYLAND MASSACHUSETTS
FUND FUND FUND FUND FUND FUND FUND
$9,659 $9,268 $18,808 $9,254 $10,952 $13,632 $13,574
OTHER - These funds and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which
provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief
Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds
can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the six months ended September
30, 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
$206 $336 $1,080 $177 $144 $324 $539
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
$202 $330 $1,060 $174 $141 $318 $529
(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 $6,334,061 $8,790,970 $76,064,211 $-- $4,066,643 $4,778,109 $26,906,054
- -------------------------------------------------------------------------------------------------------------------
Sales $6,655,838 $5,151,396 $67,919,014 $4,545,902 $5,567,177 $9,180,149 $28,031,728
- -------------------------------------------------------------------------------------------------------------------
(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
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------ ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 219,616 $2,265,218 669,802 $7,025,464 667,449 $6,666,520 1,572,202 $15,852,374
Class B 12,820 132,289 29,502 309,032 11,351 113,777 44,510 445,846
- ---------------------------------------------------------------------------------------------------------------------------------
232,436 $2,397,507 699,304 $7,334,496 678,800 $6,780,297 1,616,712 $16,298,220
Shares issued to
shareholders in
reinvestment of
distributions
Class A 92,770 $959,316 195,465 $2,049,643 168,187 $1,677,864 309,341 $3,114,374
Class B 10,989 113,637 27,098 284,136 9,077 90,711 22,326 224,998
- ---------------------------------------------------------------------------------------------------------------------------------
103,759 $1,072,953 222,563 $2,333,779 177,264 $1,768,575 331,667 $3,339,372
Shares reacquired
Class A (327,475) $(3,376,829) (917,325) $(9,608,003) (639,255) $(6,358,002) (1,396,838) $(14,049,706)
Class B (133,407) (1,373,850) (344,019) (3,598,864) (182,800) (1,828,247) (235,505) (2,374,691)
- ---------------------------------------------------------------------------------------------------------------------------------
(460,882) $(4,750,679) (1,261,344) $(13,206,867) (822,055) $(8,186,249) (1,632,343) $(16,424,397)
Net change
Class A (15,089) $(152,295) (52,058) $(532,896) 196,381 $1,986,382 484,705 $4,917,042
Class B (109,598) (1,127,924) (287,419) (3,005,696) (162,372) (1,623,759) (168,669) (1,703,847)
- ---------------------------------------------------------------------------------------------------------------------------------
(124,687) $(1,280,219) (339,477) $(3,538,592) 34,009 $362,623 316,036 $3,213,195
CALIFORNIA FUND FLORIDA FUND
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 4,117,267 $23,936,360 19,060,380 $112,028,736 223,841 $2,222,266 628,039 $6,315,187
Class B 167,030 962,129 439,370 2,576,697 22,148 219,461 51,412 517,499
Class C 463,096 2,703,718 682,033 4,026,468 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
4,747,393 $27,602,207 20,181,783 $118,631,901 245,989 $2,441,727 679,451 $6,832,686
Shares issued to
shareholders in
reinvestment of
distributions
Class A 788,902 $4,578,870 1,284,059 $7,531,550 68,561 $684,285 150,268 $1,515,757
Class B 81,306 472,171 204,868 1,201,571 8,530 85,161 21,190 213,659
Class C 51,450 299,643 106,824 628,361 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
921,658 $5,350,684 1,595,751 $9,361,482 77,091 $769,446 171,458 $1,729,416
CALIFORNIA FUND FLORIDA FUND
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares reacquired
Class A (5,087,841) $(29,365,142) (7,938,517) $(46,583,688) (624,685) $(6,216,392) (1,476,778) $(14,895,683)
Class B (1,541,671) (8,944,708) (2,623,694) (15,379,345) (243,390) (2,422,808) (480,511) (4,837,458)
Class C (496,269) (2,892,265) (724,167) (4,258,879) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(7,125,781) $(41,202,115) (11,286,378) $(66,221,912) (868,075) $(8,639,200) (1,957,289) $(19,733,141)
Net change
Class A (181,672) $(849,912) 12,405,922 $72,976,598 (332,283) $(3,309,841) (698,471) $(7,064,739)
Class B (1,293,335) (7,510,408) (1,979,456) (11,601,077) (212,712) (2,118,186) (407,909) (4,106,300)
Class C 18,277 111,096 64,690 395,950 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(1,456,730) $(8,249,224) 10,491,156 $61,771,471 (544,995) $(5,428,027) (1,106,380) (11,171,039)
GEORGIA FUND MARYLAND FUND
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 107,148 $1,147,511 432,423 $4,704,786 289,220 $3,222,513 999,185 $11,309,806
Class B 8,370 89,433 25,557 278,353 12,048 133,914 89,512 1,009,393
- ---------------------------------------------------------------------------------------------------------------------------------
115,518 $1,236,944 457,980 $4,983,139 301,268 $3,356,427 1,088,697 $12,319,199
Shares issued to
shareholders in
reinvestment of
distributions
Class A 61,772 $661,671 131,267 $1,424,086 131,812 $1,472,283 280,526 $3,171,970
Class B 7,630 82,031 16,436 178,906 13,289 148,374 37,398 422,520
- ---------------------------------------------------------------------------------------------------------------------------------
69,402 $743,702 147,703 $1,602,992 145,101 $1,620,657 317,924 $3,594,490
Shares reacquired
Class A (295,196) $(3,149,847) (636,783) $(6,903,492) (616,061) $(6,865,426) (1,101,793) $(12,451,798)
Class B (67,310) (725,307) (195,213) (2,121,928) (222,133) (2,463,930) (529,716) (5,988,774)
- ---------------------------------------------------------------------------------------------------------------------------------
(362,506) $(3,875,154) (831,996) $(9,025,420) (838,194) $(9,329,356) (1,631,509) (18,440,572)
Net change
Class A (126,276) $(1,340,665) (73,093) $(774,620) (195,029) $(2,170,630) 177,918 $2,029,978
Class B (51,310) (553,843) (153,220) (1,664,669) (196,796) (2,181,642) (402,806) (4,556,861)
- ---------------------------------------------------------------------------------------------------------------------------------
(177,586) $(1,894,508) (226,313) $(2,439,289) (391,825) $(4,352,272) (224,888) $(2,526,883)
MASSACHUSETTS FUND
-----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 1,045,905 $11,597,200 1,205,445 $13,563,508
Class B 44,782 497,315 113,872 1,284,027
- ------------------------------------------------------------------------
1,090,687 $12,094,515 1,319,317 $14,847,535
Shares issued to
shareholders in
reinvestment of
distributions
Class A 184,366 $2,050,846 394,127 $4,439,231
Class B 28,213 314,437 69,026 778,775
- -------------------------------------------------------------------------------
212,579 $2,365,283 463,153 $5,218,006
Shares reacquired
Class A (997,120) $(11,061,601) (2,349,203) $(26,419,103)
Class B (416,342) (4,618,186) (680,034) (7,664,911)
- -------------------------------------------------------------------------------
(1,413,462) $(15,679,787) (3,029,237) $(34,084,014)
Net change
Class A 233,151 $2,586,445 (749,631) $(8,416,364)
Class B (343,347) (3,806,434) (497,136) (5,602,109)
- -------------------------------------------------------------------------------
(110,196) $(1,219,989) (1,246,767) $(14,018,473)
(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 0.30%. In addition, a commitment fee, based on the average
daily, unused portion of the committed line of credit, is allocated among the
participating funds at the end of each calendar quarter. For the six months
ended September 30, 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 $210 $337 $1,074 $191 $134 $361 $529
Interest Expense -- -- -- -- -- -- --
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of each Fund's investment
advisory agreement with MFS. The Trustees consider matters bearing on the
Funds and their advisory arrangements at their meetings throughout the year,
including a review of performance data at each regular meeting. In addition,
the independent Trustees met several times over the course of three months
beginning in May and ending in July, 2007 ("contract review meetings") for the
specific purpose of considering whether to approve the continuation of the
investment advisory agreements for the Funds and the other investment
companies that the Board oversees (the "MFS Funds"). The independent Trustees
were assisted in their evaluation of the Funds' investment advisory agreements
by independent legal counsel, from whom they received separate legal advice
and with whom they met separately from MFS during various contract review
meetings. The independent Trustees were also assisted in this process by the
MFS Funds' Independent Chief Compliance Officer, a full-time senior officer
appointed by and reporting to the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreements, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light
of the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for each Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreements and other arrangements with the Funds.
In connection with their contract review meetings, the Trustees received and
relied upon materials that included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Funds for various
time periods ended December 31, 2006 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a
group of funds identified by objective criteria suggested by MFS ("MFS peer
funds"), (ii) information provided by Lipper Inc. on the Funds' advisory fees
and other expenses and the advisory fees and other expenses of comparable
funds identified by Lipper (the "Lipper expense group"), as well as the
advisory fees and other expenses of MFS peer funds, (iii) information provided
by MFS on the advisory fees of comparable portfolios of other clients of MFS,
including institutional separate accounts and other clients, (iv) information
as to whether and to what extent applicable expense waivers, reimbursements or
fee "breakpoints" are observed for the Funds, (v) information regarding MFS'
financial results and financial condition, including MFS' and certain of its
affiliates' estimated profitability from services performed for the Funds and
the MFS Funds as a whole, (vi) MFS' views regarding the outlook for the mutual
fund industry and the strategic business plans of MFS, (vii) descriptions of
various functions performed by MFS for the Funds, such as compliance
monitoring and portfolio trading practices, and (viii) information regarding
the overall organization of MFS, including information about MFS' senior
management and other personnel providing investment advisory, administrative
and other services to the Funds and other MFS Funds. The comparative
performance, fee and expense information prepared and provided by Lipper Inc.
was not independently verified and the independent Trustees did not
independently verify any information provided to them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreements with the Funds was based on a comprehensive consideration of all
information provided to the Trustees and not the result of any single factor.
Some of the factors that figured particularly in the Trustees' deliberations
are described below, although individual Trustees may have evaluated the
information presented differently from one another, giving different weights
to various factors. It is also important to recognize that the fee
arrangements for the Funds and other MFS Funds are the result of years of
review and discussion between the independent Trustees and MFS, that certain
aspects of such arrangements may receive greater scrutiny in some years than
in others, and that the Trustees' conclusions may be based, in part, on their
consideration of these same arrangements during the course of the year and in
prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed
each Fund's total return investment performance as well as the performance of
peer groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of each Fund's Class A shares in
comparison to the performance of funds in its respective Lipper performance
universe over the three-year period ended December 31, 2006, which the
Trustees believed was a long enough period to reflect differing market
conditions.
In assessing the reasonableness of each Fund's advisory fee, the Trustees
considered, among other information, each Fund's advisory fee and the total
expense ratio of each Fund's Class A shares as a percentage of average daily
net assets and the advisory fee and total expense ratios of peer groups of
funds based on information provided by Lipper Inc. and MFS. The Trustees
considered whether the Funds were subject to any fee waivers or reductions or
expense limitations. The Trustees considered that MFS observes an advisory fee
reduction that will remain in effect for each Fund through February 28, 2009
as part of MFS' settlement with the New York Attorney General concerning
market timing and related matters.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information
provided by MFS as to the generally broader scope of services provided by MFS
to the Funds in comparison to institutional accounts, the higher demands
placed on MFS' investment personnel and trading infrastructure as a result of
the daily cash in-flows and out-flows of the Funds, and the impact on MFS and
expenses associated with the more extensive regulatory regime to which the
Funds are subject in comparison to institutional accounts.
The Trustees also considered whether each Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that each Fund's advisory fee rate schedule is
not currently subject to any breakpoints. Taking into account the advisory fee
reduction noted above for the Funds, the Trustees determined not to recommend
any advisory fee breakpoints for the Funds at this time.
The Trustees also considered information prepared by MFS relating to MFS'
costs and profits with respect to each Fund, the MFS Funds considered as a
group, and other investment companies and accounts advised by MFS, as well as
MFS' methodologies used to determine and allocate its costs to the MFS Funds,
the Funds and other accounts and products for purposes of estimating
profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreements, that the advisory fees charged to each Fund
represent reasonable compensation in light of the services being provided by
MFS to the Funds.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Funds.
The Trustees also considered current and developing conditions in the
financial services industry, including the entry into the industry of large
and well-capitalized companies which are spending, and appear to be prepared
to continue to spend, substantial sums to engage personnel and to provide
services to competing investment companies. In this regard, the Trustees also
considered the financial resources of MFS and its ultimate parent, Sun Life
Financial Inc. The Trustees also considered the advantages and possible
disadvantages to the Funds of having an adviser that also serves other
investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the
Funds by MFS and its affiliates under agreements and plans other than the
investment advisory agreements, including any 12b-1 fees the Funds pay to MFS
Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Funds' behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Funds'
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various
other factors. Additionally, the Trustees considered so-called "fall-out
benefits" to MFS such as reputational value derived from serving as investment
manager to the Funds.
Based on their evaluation of factors that they deemed to be material,
including those factors described above, the Board of Trustees, including a
majority of the independent Trustees, concluded that each Fund's investment
advisory agreement with MFS should be continued for an additional one-year
period, commencing August 1, 2007.
MFS ALABAMA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 4th
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 2nd quintile for each of the one- and five-
year periods ended December 31, 2006 relative to the Lipper performance
universe. Because of the passage of time, these performance results may differ
from the performance results for more recent periods, including those shown
elsewhere in this report.
The Trustees expressed concern to MFS about the substandard investment
performance of the Fund. In the course of their deliberations, the Trustees
took into account information provided by MFS in connection with the contract
review meetings, as well as during investment review meetings conducted with
portfolio management personnel during the course of the year regarding the
Fund's performance and its Lipper performance universe. After reviewing these
and related factors, the Trustees concluded, within the context of their
overall conclusions regarding the investment advisory agreement, that they
were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS ARKANSAS MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 3rd quintile for the one-year period and the
2nd quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings,
as well as during investment review meetings conducted with portfolio
management personnel during the course of the year regarding the Fund's
performance. After reviewing these and related factors, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that they were satisfied with MFS' responses
and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate and total
expense ratio were each lower than the Lipper expense group median.
MFS CALIFORNIA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 2nd quintile for each of the one- and five-
year periods ended December 31, 2006 relative to the Lipper performance
universe. Because of the passage of time, these performance results may differ
from the performance results for more recent periods, including those shown
elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings,
as well as during investment review meetings conducted with portfolio
management personnel during the course of the year regarding the Fund's
performance. After reviewing these and related factors, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that they were satisfied with MFS' responses
and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate and total
expense ratio were each lower than the Lipper expense group median.
MFS FLORIDA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 3rd quintile for the one-year period and the
2nd quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings,
as well as during investment review meetings conducted with portfolio
management personnel during the course of the year regarding the Fund's
performance. After reviewing these and related factors, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that they were satisfied with MFS' responses
and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate and total
expense ratio were each lower than the Lipper expense group median.
MFS GEORGIA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 3rd quintile for the one-year period and the
2nd quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings,
as well as during investment review meetings conducted with portfolio
management personnel during the course of the year regarding the Fund's
performance. After reviewing these and related factors, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that they were satisfied with MFS' responses
and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was higher
than the Lipper expense group median.
MFS MARYLAND MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 1st quintile for each of the one- and five-
year periods ended December 31, 2006 relative to the Lipper performance
universe. Because of the passage of time, these performance results may differ
from the performance results for more recent periods, including those shown
elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings,
as well as during investment review meetings conducted with portfolio
management personnel during the course of the year regarding the Fund's
performance. After reviewing these and related factors, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that they were satisfied with MFS' responses
and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was higher
than the Lipper expense group median.
MFS MASSACHUSETTS MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the
5th quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 2nd quintile for the one-year period and the
1st quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings,
as well as during investment review meetings conducted with portfolio
management personnel during the course of the year regarding the Fund's
performance. After reviewing these and related factors, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that they were satisfied with MFS' responses
and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
ACCESS TO DISCLOSURES ON MFS WEBSITE
A discussion regarding the Board's most recent review and renewal of each
Fund's investment advisory agreement will be available on or before November 1,
2007, by clicking on each Fund's name under "Select a fund" on the MFS Web site
(mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures
is available without charge, upon request, by calling 1-800-225-2606, by
visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site
at http://www.sec.gov.
Information regarding how each fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The trust will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The trust's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site at http://
www.sec.gov, and copies of this information may be obtained, upon payment of a
duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section at the above
address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT US
WEB SITE
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
ACCOUNT SERVICE AND
LITERATURE
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
MAILING ADDRESS
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA
02205-5824
OVERNIGHT MAIL
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116-3741
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to MFS.COM, log in to
your account via MFS Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
500 Boylston Street, Boston, MA 02116
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
9/30/07 SEMIANNUAL REPORT
MFS(R) MUNICIPAL SERIES TRUST
For the states of: Mississippi, New York,
North Carolina, Pennsylvania, South Carolina,
Tennessee, Virginia, and West Virginia
MSTB-SEM
MFS(R) Municipal Series Trust
Mississippi, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Virginia, and West Virginia
LETTER FROM THE CEO 1
- ---------------------------------------------------
PORTFOLIO COMPOSITION 2
- ---------------------------------------------------
EXPENSE TABLES 5
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS 8
- ---------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 41
- ---------------------------------------------------
STATEMENTS OF OPERATIONS 45
- ---------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 47
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS 50
- ---------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 69
- ---------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 79
- ---------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 84
- ---------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 84
- ---------------------------------------------------
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% and was fairly stable.
This year we have seen a greater level of volatility than has been experienced
in recent years. The Dow hit several new highs but also experienced swift drops
as a global credit crisis swept through markets, spurred by defaults on U.S.
subprime loans and a liquidity crunch. Still, even with this volatility, the
Dow ended the first three quarters of 2007 with a return near 13%.
U.S. Treasury bonds gained ground, especially in the third quarter as investors
sought less risky asset classes. The spreads of many lower quality debt
investments widened.
In 2007 the U.S. dollar fell against the euro, oil prices have hit their
highest levels yet, and gold has spiked to its steepest price in 28 years.
Around the globe, stocks sold off as risk aversion mounted. As we have said
before, markets can be volatile, and investors should make sure they have an
investment plan that can carry them through 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. In our view, investors who remain committed to a long-term plan are more
likely to achieve their financial goals.
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)
November 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 103.6%
Cash & Other Net Assets (3.6)%
TOP FIVE INDUSTRIES (i)
State & Local Agencies 17.2%
----------------------------------------------
General Obligations - General Purpose 15.7%
----------------------------------------------
Healthcare Revenue - Hospitals 14.5%
----------------------------------------------
Universities - Colleges 12.1%
----------------------------------------------
Water & Sewer Utility Revenue 11.3%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 75.6%
----------------------------------------------
AA 1.2%
----------------------------------------------
A 6.6%
----------------------------------------------
BBB 8.5%
----------------------------------------------
Not Rated 8.1%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.9
----------------------------------------------
Average Life (i)(m) 13.3 yrs.
----------------------------------------------
Average Maturity (i)(m) 15.8 yrs.
----------------------------------------------
Average Credit Quality of
Rated Securities (long-term) (a) AA+
----------------------------------------------
Average Credit Quality of
Rated Securities (short-term) (a) A-1
----------------------------------------------
MFS(R) New York Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 105.6%
Cash & Other Net Assets (5.6)%
TOP FIVE INDUSTRIES (i)
State & Local Agencies 15.2%
----------------------------------------------
Toll Roads 13.0%
----------------------------------------------
Water & Sewer Utility Revenue 12.3%
----------------------------------------------
Transportation - Special Tax 9.2%
----------------------------------------------
General Obligations - General Purpose 6.8%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 40.9%
----------------------------------------------
AA 19.1%
----------------------------------------------
A 11.4%
----------------------------------------------
BBB 7.1%
----------------------------------------------
BB 2.3%
----------------------------------------------
B 0.9%
----------------------------------------------
CCC 0.1%
----------------------------------------------
Not Rated 18.2%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 8.1
----------------------------------------------
Average Life (i)(m) 15.7 yrs.
----------------------------------------------
Average Maturity (i)(m) 17.0 yrs.
----------------------------------------------
Average Credit Quality of
Rated Securities (long-term) (a) AA-
----------------------------------------------
Average Credit Quality of
Rated Securities (short-term) (a) A-1
----------------------------------------------
MFS(R) North Carolina Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 106.8%
Cash & Other Net Assets (6.8)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 23.1%
----------------------------------------------
Universities - Colleges 16.1%
----------------------------------------------
Utilities - Municipal Owned 15.8%
----------------------------------------------
Water & Sewer Utility Revenue 9.0%
----------------------------------------------
Single Family Housing - State 7.6%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 41.9%
----------------------------------------------
AA 30.9%
----------------------------------------------
A 6.1%
----------------------------------------------
BBB 8.9%
----------------------------------------------
Not Rated 12.2%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.8
----------------------------------------------
Average Life (i)(m) 14.5 yrs.
----------------------------------------------
Average Maturity (i)(m) 16.7 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 09/30/07.
From time to time "cash and 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 09/30/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
Portfolio Composition - continued
MFS(R) Pennsylvania Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 105.3%
Cash & Other Net Assets (5.3)%
TOP FIVE INDUSTRIES (i)
General Obligations - Schools 18.4%
----------------------------------------------
Healthcare Revenue - Hospitals 16.2%
----------------------------------------------
Universities - Colleges 12.1%
----------------------------------------------
Water & Sewer Utility Revenue 9.8%
----------------------------------------------
General Obligations - General Purpose 8.6%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 61.5%
----------------------------------------------
AA 15.1%
----------------------------------------------
A 4.4%
----------------------------------------------
BBB 10.2%
----------------------------------------------
BB 0.9%
----------------------------------------------
B 0.6%
----------------------------------------------
Not Rated 7.3%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.6
----------------------------------------------
Average Life (i)(m) 14.4 yrs.
----------------------------------------------
Average Maturity (i)(m) 17.0 yrs.
----------------------------------------------
Average Credit Quality of
Rated Securities (long-term) (a) AA
----------------------------------------------
Average Credit Quality of
Rated Securities (short-term) (a) A-1
----------------------------------------------
MFS(R) South Carolina Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 106.1%
Cash & Other Net Assets (6.1)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 19.4%
----------------------------------------------
Universities - Colleges 13.6%
----------------------------------------------
Water & Sewer Utility Revenue 12.9%
----------------------------------------------
General Obligations - General Purpose 11.0%
----------------------------------------------
General Obligations - Schools 9.7%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 64.0%
----------------------------------------------
AA 9.1%
----------------------------------------------
A 7.4%
----------------------------------------------
BBB 4.1%
----------------------------------------------
B 0.6%
----------------------------------------------
Not Rated 14.8%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 7.3
----------------------------------------------
Average Life (i)(m) 17.9 yrs.
----------------------------------------------
Average Maturity (i)(m) 19.0 yrs.
----------------------------------------------
Average Credit Quality of
Rated Securities (long-term) (a) AA+
----------------------------------------------
Average Credit Quality of
Rated Securities (short-term) (a) A-1
----------------------------------------------
MFS(R) Tennessee Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 98.2%
Cash & Other Net Assets 1.8%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 18.2%
----------------------------------------------
Water & Sewer Utility Revenue 16.8%
----------------------------------------------
Single Family Housing - State 12.4%
----------------------------------------------
General Obligations - Schools 10.6%
----------------------------------------------
Utilities - Municipal Owned 7.2%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 56.8%
----------------------------------------------
AA 27.5%
----------------------------------------------
A 3.9%
----------------------------------------------
BBB 8.2%
----------------------------------------------
BB 0.3%
----------------------------------------------
B 1.0%
----------------------------------------------
Not Rated 2.3%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.9
----------------------------------------------
Average Life (i)(m) 12.9 yrs.
----------------------------------------------
Average Maturity (i)(m) 16.8 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 maturity. The average life shown
takes into account these earlier dates.
(r) Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in the "AAA"-rating
category. Percentages are based on the total market value of investments as
of 09/30/07.
From time to time "cash and 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 09/30/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
Portfolio Composition - continued
MFS(R) Virginia Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 102.5%
Cash & Other Net Assets (2.5)%
TOP FIVE INDUSTRIES (i)
State & Local Agencies 21.1%
----------------------------------------------
General Obligations - Improvement 13.0%
----------------------------------------------
Water & Sewer Utility Revenue 12.8%
----------------------------------------------
Healthcare Revenue - Hospitals 10.2%
----------------------------------------------
Utilities - Municipal Owned 9.2%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 52.2%
----------------------------------------------
AA 21.0%
----------------------------------------------
A 6.2%
----------------------------------------------
BBB 6.6%
----------------------------------------------
BB 1.1%
----------------------------------------------
B 1.5%
----------------------------------------------
CCC 0.3%
----------------------------------------------
Not Rated 11.1%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 7.1
----------------------------------------------
Average Life (i)(m) 14.0 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) West Virginia Municipal Bond Fund
PORTFOLIO STRUCTURE (i)
Bonds 105.2%
Cash & Other Net Assets (5.2)%
TOP FIVE INDUSTRIES (i)
Universities - Colleges 23.3%
----------------------------------------------
State & Local Agencies 23.2%
----------------------------------------------
General Obligations - General Purpose 14.4%
----------------------------------------------
Water & Sewer Utility Revenue 10.7%
----------------------------------------------
Healthcare Revenue - Hospitals 7.6%
----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 70.8%
----------------------------------------------
A 7.7%
----------------------------------------------
BBB 4.2%
----------------------------------------------
BB 0.2%
----------------------------------------------
B 0.5%
----------------------------------------------
Not Rated 16.6%
----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 6.6
----------------------------------------------
Average Life (i)(m) 15.2 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) 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 09/30/07.
From time to time "cash and 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 09/30/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
EXPENSE TABLES
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, APRIL 1, 2007,
THROUGH SEPTEMBER 30, 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 (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other fund expenses. These examples are intended to
help you understand your ongoing costs (in dollars) of investing in the funds
and to compare these costs with the ongoing costs of investing in other mutual
funds.
These examples are based on an investment of $1,000 invested at the beginning
of the period and held for the entire period April 1, 2007 through September
30, 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 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 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). 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 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 0.80% $1,000.00 $1,009.90 $4.02
A -------------------------------------------------------------------------
Hypothetical (h) 0.80% $1,000.00 $1,021.00 $4.04
- --------------------------------------------------------------------------------
Actual 1.57% $1,000.00 $1,007.10 $7.88
B -------------------------------------------------------------------------
Hypothetical (h) 1.57% $1,000.00 $1,017.15 $7.92
- --------------------------------------------------------------------------------
MFS(R) NEW YORK MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.02% $1,000.00 $1,012.70 $5.13
A -------------------------------------------------------------------------
Hypothetical (h) 1.02% $1,000.00 $1,019.90 $5.15
- --------------------------------------------------------------------------------
Actual 1.77% $1,000.00 $1,009.80 $8.89
B -------------------------------------------------------------------------
Hypothetical (h) 1.77% $1,000.00 $1,016.15 $8.92
- --------------------------------------------------------------------------------
Actual 1.77% $1,000.00 $1,009.80 $8.89
C -------------------------------------------------------------------------
Hypothetical (h) 1.77% $1,000.00 $1,016.15 $8.92
- --------------------------------------------------------------------------------
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.08% $1,000.00 $1,008.70 $5.42
A -------------------------------------------------------------------------
Hypothetical (h) 1.08% $1,000.00 $1,019.60 $5.45
- --------------------------------------------------------------------------------
Actual 1.73% $1,000.00 $1,005.40 $8.67
B -------------------------------------------------------------------------
Hypothetical (h) 1.73% $1,000.00 $1,016.35 $8.72
- --------------------------------------------------------------------------------
Actual 1.73% $1,000.00 $1,005.40 $8.67
C -------------------------------------------------------------------------
Hypothetical (h) 1.73% $1,000.00 $1,016.35 $8.72
- --------------------------------------------------------------------------------
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 0.83% $1,000.00 $1,008.20 $4.17
A -------------------------------------------------------------------------
Hypothetical (h) 0.83% $1,000.00 $1,020.85 $4.19
- --------------------------------------------------------------------------------
Actual 1.61% $1,000.00 $1,004.40 $8.07
B -------------------------------------------------------------------------
Hypothetical (h) 1.61% $1,000.00 $1,016.95 $8.12
- --------------------------------------------------------------------------------
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.07% $1,000.00 $1,008.10 $5.37
A -------------------------------------------------------------------------
Hypothetical (h) 1.07% $1,000.00 $1,019.65 $5.40
- --------------------------------------------------------------------------------
Actual 1.72% $1,000.00 $1,004.00 $8.62
B -------------------------------------------------------------------------
Hypothetical (h) 1.72% $1,000.00 $1,016.40 $8.67
- --------------------------------------------------------------------------------
MFS(R) TENNESSEE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 0.87% $1,000.00 $1,011.50 $4.38
A -------------------------------------------------------------------------
Hypothetical (h) 0.87% $1,000.00 $1,020.65 $4.39
- --------------------------------------------------------------------------------
Actual 1.52% $1,000.00 $1,008.20 $7.63
B -------------------------------------------------------------------------
Hypothetical (h) 1.52% $1,000.00 $1,017.40 $7.67
- --------------------------------------------------------------------------------
MFS(R) VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.03% $1,000.00 $1,009.00 $5.17
A -------------------------------------------------------------------------
Hypothetical (h) 1.03% $1,000.00 $1,019.85 $5.20
- --------------------------------------------------------------------------------
Actual 1.68% $1,000.00 $1,006.60 $8.43
B -------------------------------------------------------------------------
Hypothetical (h) 1.68% $1,000.00 $1,016.60 $8.47
- --------------------------------------------------------------------------------
Actual 1.68% $1,000.00 $1,005.80 $8.42
C -------------------------------------------------------------------------
Hypothetical (h) 1.68% $1,000.00 $1,016.60 $8.47
- --------------------------------------------------------------------------------
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Expenses
Annualized Beginning Ending Paid During
Share Expense Account Value Account Value Period (p)
Class Ratio 4/01/07 9/30/07 4/01/07-9/30/07
- --------------------------------------------------------------------------------
Actual 1.13% $1,000.00 $1,008.30 $5.67
A -------------------------------------------------------------------------
Hypothetical (h) 1.13% $1,000.00 $1,019.35 $5.70
- --------------------------------------------------------------------------------
Actual 1.78% $1,000.00 $1,005.90 $8.93
B -------------------------------------------------------------------------
Hypothetical (h) 1.78% $1,000.00 $1,016.10 $8.97
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads). If
these transaction costs had been included, your costs would have been
higher.
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by
your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 102.2%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport and Port Revenue - 1.8%
- -------------------------------------------------------------------------------
Jackson, MS, Municipal Airport Authority,
Airport Rev., "A", AMBAC, 5%, 2031 $1,510,000 $ 1,540,905
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 15.5%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public
Improvement, FGIC, 5.5%, 2016 (u) $6,220,000 $ 6,990,223
Commonwealth of Puerto Rico, Public
Improvement, "A", CIFG, 5%, 2025 500,000 523,250
Commonwealth of Puerto Rico, Public
Improvement, "A", 5.25%, 2027 800,000 830,032
Hinds County, MS, MBIA, 6.25%, 2010 1,660,000 1,758,687
Hinds County, MS, MBIA, 6.25%, 2011 1,285,000 1,390,344
Mississippi Development Bank Special
Obligations (Jackson, Mississippi) FSA,
5.25%, 2020 620,000 682,440
Mississippi Development Bank Special
Obligations, Harrison County Mississippi
Highway Construction, "N", FGIC, 5%, 2026 1,000,000 1,034,050
- -------------------------------------------------------------------------------
$13,209,026
- -------------------------------------------------------------------------------
General Obligations - Improvement - 3.4%
- -------------------------------------------------------------------------------
Mississippi Capital Improvement, "I", 6%, 2009 (c) $1,000,000 $ 1,050,060
Mississippi Development Bank Special
Obligation (Greenville Board), 5%, 2027 250,000 234,880
Puerto Rico Municipal Finance Agency, "A",
FSA, 5.5%, 2009 (c)(u) 1,500,000 1,569,660
- -------------------------------------------------------------------------------
$ 2,854,600
- -------------------------------------------------------------------------------
General Obligations - Schools - 5.9%
- -------------------------------------------------------------------------------
Biloxi, MS, Public School District, MBIA, 5%, 2021 $1,000,000 $ 1,024,770
Jackson, MS, Public School District, "B",
AMBAC, 5.75%, 2010 (c) 1,000,000 1,062,850
Jackson, MS, Public School District, "B",
AMBAC, 0%, 2022 2,000,000 918,440
Jackson, MS, Public School District, "B",
AMBAC, 0%, 2023 1,000,000 430,210
Madison County, MS, School District, "A",
MBIA, 5.875%, 2016 1,500,000 1,566,375
- -------------------------------------------------------------------------------
$ 5,002,645
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 14.2%
- -------------------------------------------------------------------------------
Corinth & Alcorn County, MS, Hospital Rev.
(Magnolia Regional Health Center), 5.5%, 2021 $ 400,000 $ 402,588
Gulfport, MS, Hospital Facilities Rev.
(Memorial Hospital), MBIA, 6.125%, 2015 2,250,000 2,252,588
Gulfport, MS, Hospital Facilities Rev.
(Memorial Hospital), MBIA, 6.2%, 2018 1,000,000 1,001,170
Gulfport, MS, Hospital Facilities Rev.
(Memorial Hospital), 5.75%, 2031 500,000 509,200
Hinds County, MS, Rev. (Methodist Hospital
& Rehabilitation), AMBAC, 5.6%, 2012 1,760,000 1,824,504
Jones County, MS, Hospital Rev. (South
Central Regional Medical Center), 5.5%, 2007 (c) 1,000,000 1,002,950
Mississippi Development Bank Special
Obligation (Covington Hospital Nursing Home),
"A", AMBAC, 5%, 2031 500,000 512,420
Mississippi Hospital Equipment & Facilities
Authority Rev. (Baptist Memorial
Healthcare), "B-1", 5%, 2024 1,000,000 1,010,430
Mississippi Hospital Equipment & Facilities
Authority Rev. (Delta Regional Medical
Center), MBIA, 5%, 2035 1,000,000 1,018,600
Mississippi Hospital Equipment & Facilities
Authority Rev. (Forrest County General
Hospital) FSA, 5.625%, 2011 (c) 1,000,000 1,071,920
Mississippi Hospital Equipment & Facilities
Authority Rev. (Mississippi Baptist Health
Systems, Inc.), "A", 5%, 2026 500,000 496,950
Mississippi Hospital Equipment & Facilities
Authority Rev. Refunding & Improvement,
Hospital South Central, 5.25%, 2031 500,000 491,230
Mississippi Hospital Equipment & Facilities
Authority Rev., Refunding & Improvement,
Southwest Regional Medical Center, 5.5%, 2019 250,000 255,053
Mississippi Hospital Equipment & Facilities
Authority, Refunding & Improvement,
Southwest Regional Medical Center, 5.75%, 2023 250,000 256,250
- -------------------------------------------------------------------------------
$12,105,853
- -------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.3%
- -------------------------------------------------------------------------------
Mississippi Business Finance Corp. (Solid
Waste Management, Inc.), 4.4%, 2027 $ 250,000 $ 248,350
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 0.8%
- -------------------------------------------------------------------------------
Mississippi Business Finance Corp.
(Northrop Grumman Ship Systems), 4.55%, 2028 $ 500,000 $ 467,165
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 210,000 216,033
- -------------------------------------------------------------------------------
$ 683,198
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 3.2%
- -------------------------------------------------------------------------------
Jones County, MS, Solid Waste Disposal Rev.
(International Paper Co.) "A", 5.8%, 2021 $ 500,000 $ 506,275
Lowndes County, MS, Solid Waste Disposal &
Pollution Control Rev. (Weyerhaeuser Co.),
6.8%, 2022 1,250,000 1,450,463
Warren County, MS, Environmental Improvement Rev.
(International Paper Co.), "A", 4.4%, 2015 750,000 725,535
- -------------------------------------------------------------------------------
$ 2,682,273
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.3%
- -------------------------------------------------------------------------------
Mississippi Development Bank, Special Obligation
(Diamond Lakes Utilities), 6.25%, 2017 $1,050,000 $ 1,063,608
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.9%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 $ 720,000 $ 746,813
- -------------------------------------------------------------------------------
Single Family Housing - State - 5.2%
- -------------------------------------------------------------------------------
Mississippi Home Corp. Rev., Single Family
Rev., "A", GNMA, 6.3%, 2031 $ 175,000 $ 181,836
Mississippi Home Corp. Rev., Single Family
Rev., "A-2", GNMA, 6.5%, 2032 240,000 241,776
Mississippi Home Corp. Rev., Single Family
Rev., "A-2", GNMA, 5.3%, 2023 575,000 583,079
Mississippi Home Corp. Rev., Single Family
Rev., "A-2", GNMA, 6.95%, 2031 235,000 242,163
Mississippi Home Corp. Rev., Single Family
Rev., "B", GNMA, 5.3%, 2035 680,000 689,989
Mississippi Home Corp. Rev., Single Family
Rev., "B-2", GNMA, 6.375%, 2032 390,000 399,399
Mississippi Home Corp. Rev., Single Family
Rev., "B-2", GNMA, 6.45%, 2033 410,000 419,196
Mississippi Home Corp. Rev., Single Family
Rev., "C", GNMA, 4.95%, 2025 745,000 740,537
Mississippi Home Corp. Rev., Single Family
Rev., "C-1", GNMA, 4.7%, 2038 1,000,000 948,280
- -------------------------------------------------------------------------------
$ 4,446,255
- -------------------------------------------------------------------------------
State & Local Agencies - 16.9%
- -------------------------------------------------------------------------------
Lamar County, MS, (Jail Project), MBIA, 5.1%, 2021 $ 430,000 $ 444,603
Mississippi Development Bank Special Obligations
(City of Jackson, MS), AMBAC, 4.375%, 2031 1,500,000 1,410,885
Mississippi Development Bank Special
Obligations (Correctional Facilities),
"A", AMBAC, 5.125%, 2025 1,000,000 1,040,660
Mississippi Development Bank Special
Obligations (Department of Finance &
Administration), AMBAC, 4.5%, 2028 395,000 388,222
Mississippi Development Bank Special
Obligations (DeSoto County Regional Utility
Authority), 5.25%, 2031 905,000 927,236
Mississippi Development Bank Special
Obligations (Hinds County Public
Improvements), FSA, 5.25%, 2015 (c) 1,110,000 1,224,896
Mississippi Development Bank Special
Obligations (Mississippi, Ltd. Tax Hospital
Rev.), 5.1%, 2020 1,000,000 1,033,070
Mississippi Development Bank Special
Obligations (Natchez Mississippi Convention
Center) AMBAC, 6%, 2013 (c) 750,000 847,890
Mississippi Development Bank Special
Obligations (Public Improvement Board), 5%, 2023 750,000 745,020
Mississippi Development Bank Special
Obligations (Southaven, MS, Recreation
Facilities), 6.2%, 2009 (c) 400,000 412,272
Mississippi Development Bank Special
Obligations (Southaven, MS, Recreation
Facilities), 5.875%, 2014 375,000 386,153
Mississippi Development Bank Special
Obligations (Tunica County Building
Project), AMBAC, 5%, 2026 1,695,000 1,761,800
Mississippi Development Bank Special
Obligations (Tupelo Fairgrounds), "A",
AMBAC, 5%, 2017 785,000 811,447
Puerto Rico Public Finance Corp., "A",
AMBAC, 5.375%, 2013 (u) 1,000,000 1,087,460
Walnut Grove, MS, Correctional Authority,
AMBAC, 6%, 2019 (c) 1,750,000 1,870,190
- -------------------------------------------------------------------------------
$14,391,804
- -------------------------------------------------------------------------------
Tax - Other - 0.2%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority
Rev., "A", 5.25%, 2024 $ 135,000 $ 138,251
- -------------------------------------------------------------------------------
Tobacco - 0.7%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 225,000 $ 224,933
Guam Economic Development Authority Tobacco
Settlement, "B", 5.5%, 2041 350,000 349,006
- -------------------------------------------------------------------------------
$ 573,939
- -------------------------------------------------------------------------------
Transportation - Special Tax - 2.7%
- -------------------------------------------------------------------------------
Mississippi Development Bank Special
Obligations, Madison County (Highway
Construction), FGIC, 5%, 2027 $1,000,000 $ 1,036,480
Mississippi Development Bank Special Obligations,
Madison County (Road & Bridge) AMBAC, 5.1%, 2019 1,175,000 1,263,243
- -------------------------------------------------------------------------------
$ 2,299,723
- -------------------------------------------------------------------------------
Universities - Colleges - 12.0%
- -------------------------------------------------------------------------------
Jackson State University, Educational Building
Corp. Rev. (Campus Facilities), "A", FGIC, 5%, 2029 $3,100,000 $ 3,185,560
Jackson State University, Educational
Building Corp. Rev. (Student Recreation
Center), AMBAC, 5.125%, 2027 750,000 776,385
Medical Center, Educational Building Corp.
Rev. (University of Mississippi Medical
Center), "B", AMBAC, 5.5%, 2023 1,000,000 1,122,500
Mississippi State University Educational
Building Corp. Rev., AMBAC, 5.5%, 2016 1,000,000 1,060,710
Mississippi State University Educational
Building Corp. Rev., AMBAC, 5%, 2021 250,000 257,168
Mississippi Valley State University,
Educational Building Corp., MBIA, 5.5%, 2010 (c) 890,000 939,591
University of Mississippi, Educational
Building Corp. (Performing Arts Center),
AMBAC, 5.25%, 2009 (c) 1,000,000 1,031,390
University of Southern Mississippi, Educational
Building Corp. Rev. (Athletics Facilities
Improvment Project), FSA, 5%, 2034 750,000 773,258
University of Southern Mississippi, Educational
Building Corp. Rev., "B", FSA, 5%, 2032 1,000,000 1,033,240
- -------------------------------------------------------------------------------
$10,179,802
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.0%
- -------------------------------------------------------------------------------
Guam Power Authority Rev., "A", AMBAC,
5.25%, 2013 (u) $2,000,000 $ 2,080,020
Mississippi Development Bank Special
Obligations (Municipal Energy Agency Power
Supply Project), "A", XLCA, 5%, 2026 1,000,000 1,034,650
Mississippi Development Bank Special Obligations
(Okolona Electric System), 5.2%, 2016 (c) 1,010,000 1,067,166
Puerto Rico Electric Power Authority Rev.,
"II", 5.25%, 2012 (c) 875,000 947,581
- -------------------------------------------------------------------------------
$ 5,129,417
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 11.2%
- -------------------------------------------------------------------------------
Jackson, MS, Water & Sewer Systems Rev.,
FGIC, 5.25%, 2009 (c) $ 420,000 $ 433,776
Mississippi Development Bank Special
Obligations (Combined Water Sewer & Solid
Waste Management) FSA, 5.25%, 2021 1,270,000 1,363,637
Mississippi Development Bank Special
Obligations (Combined Water Sewer & Solid
Waste Management) FSA, 5.05%, 2027 1,610,000 1,692,432
Mississippi Development Bank Special
Obligations (Gulfport Water & Sewer
Project) FSA, 5.625%, 2012 (c) 500,000 552,675
Mississippi Development Bank Special
Obligations (Gulfport Water & Sewer
Project), "A", FGIC, 5.25%, 2012 (c) 2,000,000 2,144,440
Mississippi Development Bank Special
Obligations (Jackson Water & Sewer System
Project) FSA, 5%, 2029 2,000,000 2,051,580
Mississippi Development Bank Special
Obligations (Jackson Water & Sewer System
Project), FGIC, 5%, 2032 250,000 256,330
Mississippi Development Bank Special
Obligations, Grenada, MS, Water & Sewer
Systems Project, "N", FSA, 5%, 2030 1,000,000 1,035,630
- -------------------------------------------------------------------------------
$ 9,530,500
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $84,367,998) $86,826,962
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 3.0%
- -------------------------------------------------------------------------------
East Baton Rouge, LA, Pollution Control
Rev. (Exxon Mobil Corp.), 3.94%, due 10/01/07 $ 400,000 $ 400,000
Jackson County, MS, Pollution Control Rev.
(Chevron USA, Inc.), 4%, due 10/01/07 200,000 200,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "B", 4.04%, due 10/01/07 1,000,000 1,000,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "C", 4.04%, due 10/01/07 700,000 700,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 200,000 200,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 2,500,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $86,867,998) (k) $89,326,962
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.2)% (4,378,383)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $84,948,579
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 4,378
Services
12/01/09 USD 1,500,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (1,970)
Services
2/21/20 USD 1,000,000 Goldman Sachs International 3-Month LIBOR 5.456% (fixed rate) (14,410)
3/05/28 USD 1,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 5,360
- ---------------------------------------------------------------------------------------------------------------------------
$ (6,642)
- ---------------------------------------------------------------------------------------------------------------------------
At September 30, 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
9/30/07 (unaudited)
MFS(R) NEW YORK MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.8%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 2.7%
- -------------------------------------------------------------------------------
New York, NY, City Industrial Development
Agency, Special Facilities Rev. (Terminal
One Group), 5.5%, 2024 $ 1,000,000 $ 1,061,800
Port Authority NY & NJ (132nd Series), 5%, 2033 2,000,000 2,057,820
Port Authority NY & NJ, Special Obligation Rev.
(JFK International), MBIA, 6.25%, 2015 1,000,000 1,146,290
- -------------------------------------------------------------------------------
$ 4,265,910
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 6.7%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) $ 2,700,000 $ 3,047,247
New York, NY, "A", 6%, 2010 (c) 990,000 1,061,141
New York, NY, "C-1", 5.25%, 2025 1,000,000 1,052,880
New York, NY, "D", 5%, 2028 2,000,000 2,055,080
New York, NY, "G", 5%, 2028 2,000,000 2,055,580
New York, NY, "J", FGIC, 5.5%, 2026 5,000 5,035
New York, NY, "B", 5.375%, 2010 (c) 210,000 222,699
New York, NY, "B", 5.375%, 2017 1,040,000 1,092,250
New York, NY, Unrefunded, "A", 6%, 2019 10,000 10,672
- -------------------------------------------------------------------------------
$ 10,602,584
- -------------------------------------------------------------------------------
General Obligations - Improvement - 0.1%
- -------------------------------------------------------------------------------
Erie County, NY, Public Improvement, "A",
FGIC, 5%, 2019 $ 140,000 $ 145,488
- -------------------------------------------------------------------------------
General Obligations - Schools - 5.0%
- -------------------------------------------------------------------------------
Genesee Valley, NY, Central School District
(Angelica Belmont), FGIC, 5.25%, 2028 $ 1,720,000 $ 1,817,128
North Babylon, NY, Union Free School
District, "A", FGIC, 5.5%, 2018 2,415,000 2,529,060
Port Byron, NY, Central School District,
ETM, AMBAC, 7.4%, 2012 (c) 500,000 583,560
Port Byron, NY, Central School District,
ETM, AMBAC, 7.4%, 2013 (c) 500,000 597,940
Port Byron, NY, Central School District,
ETM, AMBAC, 7.4%, 2014 (c) 500,000 611,845
Port Byron, NY, Central School District,
ETM, AMBAC, 7.4%, 2015 (c) 500,000 623,315
Washingtonville, NY, Central School
Central District, FGIC, 7.35%, 2008 550,000 564,977
Washingtonville, NY, Central School
Central District, FGIC, 7.35%, 2009 550,000 585,739
- -------------------------------------------------------------------------------
$ 7,913,564
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 6.2%
- -------------------------------------------------------------------------------
Chautauqua County, NY, Industrial Development
Agency, Civic Facilities Rev. (Women's Christian
Assn.), "A", 6.35%, 2017 $ 140,000 $ 141,905
Chautauqua County, NY, Industrial
Development Agency, Civic Facilities Rev.
(Women's Christian Assn.), "A", 6.4%, 2029 480,000 480,984
Fulton County, NY, Industrial Development
Agency, Civic Facilities Rev. (Nathan
Littauer Hospital), "A", 5.75%, 2009 470,000 472,524
Genesee County, NY, Industrial Development
Agency, Civic Facilities Rev. (United
Medical Center Project), 5%, 2032 500,000 453,490
Monroe County, NY, Industrial Development
Agency, Civic Facilities Rev. (Highland
Hospital of Rochester), 5%, 2025 1,000,000 991,780
New York Dormitory Authority Rev. (North Shore
Long Island Jewish Group), 5.5%, 2013 (c) 250,000 273,935
New York Dormitory Authority Rev. (White
Plains Hospital), FHA, 5.375%, 2043 1,500,000 1,583,055
New York Dormitory Authority Rev., Non State
Supported Debt (Kaleida Health), FHA, 4.6%, 2027 1,000,000 968,290
New York Dormitory Authority Rev., Non State
Supported Debt (Mt. Sinai NYU Health), 5.5%, 2026 250,000 250,735
New York Dormitory Authority Rev., Non
State Supported Debt (Mt. Sinai NYU Health),
"C", 5.5%, 2026 500,000 501,470
New York Dormitory Authority Rev., Non
State Supported Debt (NYU Hospitals
Center), "A", 5%, 2026 800,000 778,120
New York, NY, Health & Hospital Corp.
Rev., "A", 5.25%, 2017 760,000 778,757
New York, NY, Industrial Development
Agency, Civic Facilities Rev. (Staten Island
University Hospital), "B", 6.375%, 2031 490,000 500,672
Suffolk County, NY, Industrial Development
Agency, Civic Facilities Rev. (Huntington
Hospital), "C", 5.875%, 2032 1,000,000 1,025,700
Yonkers, NY, Industrial Development Agency,
Civic Facilities Rev. (St. John's Riverside
Hospital), "A", 7.125%, 2031 500,000 526,850
- -------------------------------------------------------------------------------
$ 9,728,267
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.7%
- -------------------------------------------------------------------------------
East Rochester, NY, Housing Authority Rev.
(Woodland Village Project), 5.5%, 2033 $ 400,000 $ 391,332
Suffolk County, NY, Industrial Development
Agency, Civic Facilities Rev. (Gurwin
Jewish Phase II), 6.7%, 2039 385,000 411,349
Westchester County, NY, Industrial Development
Agency, Civic Facilities Rev., Continuing Care
Retirement (Kendal On Hudson), "A", 6.5%, 2034 300,000 311,952
- -------------------------------------------------------------------------------
$ 1,114,633
- -------------------------------------------------------------------------------
Human Services - 0.9%
- -------------------------------------------------------------------------------
Nassau County, NY, Industrial Development
Agency, Civic Facility Rev. (Special Needs
Facility), "B-1", 6.5%, 2017 $ 205,000 $ 211,216
New York Dormitory Authority Rev. (Jewish
Board of Families & Children), AMBAC, 5%, 2023 695,000 722,717
New York, NY, Industrial Development
Agency (PSCH, Inc.), 6.375%, 2033 500,000 521,150
- -------------------------------------------------------------------------------
$ 1,455,083
- -------------------------------------------------------------------------------
Industrial Revenue - Airlines - 0.3%
- -------------------------------------------------------------------------------
New York, NY, City Industrial Development
Agency, Special Facilities Rev. (American
Airlines, Inc.), 5.4%, 2020 $ 100,000 $ 92,680
New York, NY, Industrial Development Agencies
Rev. (American Airlines, Inc.), 7.625%, 2025 350,000 395,976
- -------------------------------------------------------------------------------
$ 488,656
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 1.3%
- -------------------------------------------------------------------------------
New York, NY, City Industrial Development
Agency Rev., Liberty Bonds
(IAC/InterActiveCorp), 5%, 2035 $ 500,000 $ 478,245
Onondaga County, NY, Industrial
Development Agency, Sewer Facilities Rev.
(Bristol-Meyers Squibb Co.), 5.75%, 2024 1,000,000 1,115,470
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 430,000 442,354
- -------------------------------------------------------------------------------
$ 2,036,069
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.3%
- -------------------------------------------------------------------------------
Essex County, NY, Industrial Development
Agency, Pollution Control Rev.
(International Paper Corp.), 5.55%, 2014 $ 750,000 $ 792,398
Essex County, NY, Industrial Development
Agency, Pollution Control Rev.
(International Paper Corp.), 6.15%, 2021 470,000 476,810
Essex County, NY, Industrial Development
Agency, Pollution Control Rev.
(International Paper Corp.), 6.45%, 2023 700,000 723,408
- -------------------------------------------------------------------------------
$ 1,992,616
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.9%
- -------------------------------------------------------------------------------
New York Liberty Development Corp. Rev.
(National Sports Museum), "A", 6.12%, 2019 $ 500,000 $ 510,630
Seneca Nation Indians, NY, Capital Improvements
Authority Special Obligation, 5%, 2023 (n) 1,000,000 959,990
- -------------------------------------------------------------------------------
$ 1,470,620
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.7%
- -------------------------------------------------------------------------------
New York, NY, Industrial Development Agency,
Civic Facilities Rev. (United Jewish Appeal),
"A", 5%, 2027 $ 1,000,000 $ 1,035,800
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.8%
- -------------------------------------------------------------------------------
New York Housing Finance Agency Rev.,
Multi-Family Housing, "A", 5.1%, 2041 $ 830,000 $ 834,972
New York, NY, City Housing Development
Corp., "C", 5%, 2026 500,000 508,955
New York, NY, City Housing Development
Corp., "E", 4.65%, 2025 1,000,000 984,350
New York, NY, Housing Development Corp.,
Multi-Family Housing Rev., 5.5%, 2034 2,000,000 2,037,100
- -------------------------------------------------------------------------------
$ 4,365,377
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 1.6%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 0%, 2056 $11,315,000 $ 931,564
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 1,000,000 1,037,240
Schenectady, NY, Metroplex Development
Authority Rev., "A", MBIA, 5.375%, 2021 475,000 507,889
- -------------------------------------------------------------------------------
$ 2,476,693
- -------------------------------------------------------------------------------
Single Family Housing - State - 2.9%
- -------------------------------------------------------------------------------
New York Mortgage Agency Rev., 4.6%, 2015 $ 2,000,000 $ 2,021,800
New York Mortgage Agency Rev., 5.1%, 2024 2,000,000 2,023,120
New York Mortgage Agency Rev., "130", 4.75%, 2030 500,000 479,075
- -------------------------------------------------------------------------------
$ 4,523,995
- -------------------------------------------------------------------------------
Solid Waste Revenue - 0.5%
- -------------------------------------------------------------------------------
Niagara County, NY, Industrial Development
Agency, Solid Waste Disposal Rev.
(American Ref-fuel), "C", 5.625%, 2024 $ 850,000 $ 867,519
- -------------------------------------------------------------------------------
State & Agency - Other - 3.9%
- -------------------------------------------------------------------------------
New York Dormitory Authority (City
University), AMBAC, 5.75%, 2018 $ 800,000 $ 899,896
New York Dormitory Authority (Pace
University), MBIA, 6%, 2010 (c) 1,700,000 1,827,959
New York Dormitory Authority (State
University), 5.375%, 2010 (c) 1,500,000 1,585,305
New York Dormitory Authority (Upstate
Community Colleges), "A", FSA, 6%, 2010 (c) 1,010,000 1,086,023
New York Municipal Bond Bank Agency, Special
Program Rev., "A", AMBAC, 5.25%, 2015 715,000 754,647
- -------------------------------------------------------------------------------
$ 6,153,830
- -------------------------------------------------------------------------------
State & Local Agencies - 15.0%
- -------------------------------------------------------------------------------
New York Dormitory Authority (City
University), "A", 5.625%, 2016 $ 2,450,000 $ 2,739,247
New York Dormitory Authority (Judicial
Institute at Pace), AMBAC, 5.5%, 2020 2,500,000 2,634,175
New York Dormitory Authority (School
Program), 6.25%, 2020 1,690,000 1,821,245
New York Dormitory Authority (State
University), 5.875%, 2017 1,130,000 1,292,856
New York Dormitory Authority Rev., Mental
Health Services, "A", MBIA, 5.75%, 2010 (c) 5,000 5,259
New York Dormitory Authority Rev., Mental
Health Services, "B", MBIA, 5.25%, 2011 (c) 385,000 409,440
New York Dormitory Authority Rev., Mental
Health Services, "D", FSA, 5.25%, 2010 (c) 35,000 36,704
New York Dormitory Authority Rev., Mental
Health Services, "B", FSA, 5.25%, 2010 (c) 35,000 36,704
New York Dormitory Authority Rev., Mental
Health Services, "B", 5.25%, 2031 725,000 753,181
New York Dormitory Authority Rev., Mental
Health Services, "D", MBIA, 5.25%, 2011 (c) 105,000 111,665
New York Dormitory Authority Rev., Mental
Health Services, "D", FSA, 5.25%, 2030 35,000 36,134
New York Dormitory Authority, Mental
Health Services Facilities Improvement,
"B", MBIA, 5.25%, 2011 (c) 785,000 834,832
New York Municipal Bond Bank Agency,
Special School Purpose Rev., 5.25%, 2022 1,000,000 1,053,390
New York Urban Development Corp.
(Correctional Facilities), AMBAC, 0%, 2009 5,000,000 4,781,100
New York Urban Development Corp. (State
Facilities), AMBAC, 5.6%, 2015 2,750,000 3,010,453
New York, NY City, Industrial Development
Agency Rev. (Yankee Stadium,), 5%, 2046 2,000,000 2,049,040
Tobacco Settlement Financing Corp., NY,
"A-1", 5.5%, 2018 2,000,000 2,126,300
- -------------------------------------------------------------------------------
$ 23,731,725
- -------------------------------------------------------------------------------
Tax - Other - 4.1%
- -------------------------------------------------------------------------------
Hudson Yards Infrastructure Corp., "A", 4.5%, 2047 $ 1,000,000 $ 957,320
Hudson Yards Infrastructure Corp., "A",
FSA, 5%, 2047 2,500,000 2,567,600
New York, NY, Transitional Finance Authority
Building Aid Rev., "S-2", 4.5%, 2031 2,000,000 1,960,260
New York, NY, Transitional Finance
Authority Rev., "A", 5%, 2026 1,000,000 1,036,730
- -------------------------------------------------------------------------------
$ 6,521,910
- -------------------------------------------------------------------------------
Tobacco - 1.9%
- -------------------------------------------------------------------------------
Erie County, NY, Tobacco Asset
Securitization Corp., 0%, 2047 $ 8,000,000 $ 606,640
Guam Economic Development Authority
Tobacco Settlement, "B", 5.5%, 2041 400,000 398,864
New York County Tobacco Trust II, 5.625%, 2035 800,000 807,576
Rockland Tobacco Asset Securitization
Corp., NY, Tobacco Asset Backed, "C", 0%, 2060 5,000,000 95,800
TSASC, Inc., NY, "1", 5%, 2034 750,000 704,858
Westchester, NY, Tobacco Asset
Securitization Corp., 5.125%, 2045 500,000 469,665
- -------------------------------------------------------------------------------
$ 3,083,403
- -------------------------------------------------------------------------------
Toll Roads - 12.7%
- -------------------------------------------------------------------------------
New York Thruway Authority, General Rev.,
"E", 5.25%, 2008 (c) $ 200,000 $ 202,868
Niagara Falls, NY, Bridge Commission Toll
Rev., FGIC, 5.25%, 2015 (u) 7,000,000 7,519,820
Triborough Bridge & Tunnel Authority Rev.,
NY, ETM, 6%, 2012 (c) 1,000,000 1,057,930
Triborough Bridge & Tunnel Authority Rev.,
NY, ETM, 5.5%, 2017 (c)(u) 10,000,000 11,039,100
Triborough Bridge & Tunnel Authority Rev.,
NY, Unrefunded, "A", MBIA, 5%, 2032 310,000 317,713
- -------------------------------------------------------------------------------
$ 20,137,431
- -------------------------------------------------------------------------------
Transportation - Special Tax - 9.1%
- -------------------------------------------------------------------------------
Metropolitan Transportation Authority
Rev., NY, FGIC, 5.875%, 2010 (c) $ 2,000,000 $ 2,114,960
Metropolitan Transportation Authority
Rev., NY, FGIC, 5%, 2025 2,500,000 2,586,150
Metropolitan Transportation Authority
Rev., NY, "A", 5%, 2026 1,500,000 1,555,500
Metropolitan Transportation Authority
Rev., NY, "B", 4.5%, 2032 2,000,000 1,955,720
Metropolitan Transportation Authority
Rev., NY, Dedicated Tax Fund Rev., 5.5%, 2015 (c) 750,000 840,675
Metropolitan Transportation Authority
Rev., NY, ETM, 7.375%, 2008 (c) 385,000 396,184
Metropolitan Transportation Authority
Rev., NY, ETM, AMBAC, 5.75%, 2013 (c) 825,000 876,315
New York Thruway Authority, General Rev.,
Highway & Bridges, "A", FSA, 5.8%, 2010 (c) 20,000 21,298
New York Thruway Authority, General Rev., Highway
& Bridges, "B-1", FGIC, 5.4%, 2010 (c) 2,000,000 2,110,820
Puerto Rico Highway & Transportation
Authority Rev., "Y", 5%, 2016 (c) 1,700,000 1,853,119
- -------------------------------------------------------------------------------
$ 14,310,741
- -------------------------------------------------------------------------------
Universities - Colleges - 4.6%
- -------------------------------------------------------------------------------
Albany, NY, Industrial Development Agency
Rev. (Albany Law School), 5%, 2031 $ 1,000,000 $ 945,470
Amherst, NY, Industrial Development Agency
Rev. (Daemen College), "A", 6%, 2011 (c) 1,000,000 1,107,870
Cattaraugus County, NY, Industrial
Development Agency Rev. (Jamestown
Community College), "A", 6.4%, 2010 (c) 500,000 546,410
New York Dormitory Authority Rev. (Fordham
University), AMBAC, 7.2%, 2015 5,000 5,007
New York Dormitory Authority Rev. (St.
John's University), "A", MBIA, 5%, 2017 300,000 315,042
New York Dormitory Authority Rev. (Yeshiva
University), AMBAC, 5.125%, 2034 1,000,000 1,046,000
Onondaga County, NY, Industrial Development
Agency Rev. (Le Moyne College), 5.625%, 2021 750,000 792,555
Schenectady, NY, Industrial Development
Agency, Civic Facilities Rev. (Union
College), "A", AMBAC, 5%, 2032 2,000,000 2,056,100
Seneca County, NY, Industrial Development
Agency, Civic Facilities Rev. (New York
Chiropractic), 5%, 2027 500,000 495,010
Utica, NY, Industrial Development Agency, Civic
Facilities Rev. (Utica College), "A", 5.3%, 2008 35,000 35,285
- -------------------------------------------------------------------------------
$ 7,344,749
- -------------------------------------------------------------------------------
Universities - Dormitories - 0.7%
- -------------------------------------------------------------------------------
New York Dormitory Authority Rev. (New
York University), "A", FGIC, 5%, 2029 $ 1,000,000 $ 1,034,620
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 1.4%
- -------------------------------------------------------------------------------
New York Environmental Facilities, Water
Facilities Rev. (NY American Water Co.),
8.85%, 2015 $ 2,250,000 $ 2,257,043
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 3.7%
- -------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC, 5.25%, 2014 (u) $ 1,000,000 $ 1,039,030
Long Island Power Authority, Electrical
Systems Rev., "C", 5.5%, 2013 (c) 400,000 440,352
New York Power Authority Rev., 5.25%, 2040 3,000,000 3,086,580
New York Power Authority Rev., "A", 5%, 2021 1,000,000 1,043,930
Virgin Islands Water & Power Authority
Rev., 5.5%, 2017 200,000 206,108
- -------------------------------------------------------------------------------
$ 5,816,000
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 12.1%
- -------------------------------------------------------------------------------
New York Environmental Facilities Corp.,
Clean Water & Drinking Rev., 5%, 2024 $ 1,005,000 $ 1,042,091
New York Environmental Facilities Corp.,
Clean Water & Drinking Rev., 5%, 2025 1,500,000 1,562,490
New York Environmental Facilities Corp.,
Clean Water & Drinking Rev., 5%, 2029 2,000,000 2,080,620
New York Environmental Facilities Corp.,
Pollution Control Rev., 5.75%, 2010 175,000 185,329
New York Environmental Facilities Corp.,
Pollution Control Rev., 6.875%, 2010 110,000 110,267
New York Environmental Facilities Corp.,
Pollution Control Rev., 7.25%, 2010 45,000 45,122
New York Environmental Facilities Corp.,
Pollution Control Rev., ETM, 5.75%, 2010 (c) 945,000 1,000,519
New York Environmental Facilities Corp.,
Pollution Control Rev., ETM, 5.75%, 2010 (c) 1,115,000 1,180,506
New York Environmental Facilities Corp.,
Water Facilities Rev., 6%, 2031 1,005,000 1,064,114
New York Environmental Facilities Corp.,
Water Facilities Rev. (Spring Valley Water
Co.), "B", AMBAC, 6.15%, 2024 1,500,000 1,501,785
New York, NY, Municipal Water & Sewer
Finance Authority Rev., FGIC, 5.25%, 2011 (c) 2,000,000 2,121,800
New York, NY, Municipal Water & Sewer
Finance Authority Rev., 4.75%, 2036 3,000,000 3,002,100
New York, NY, Municipal Water & Sewer
Finance Authority Rev., "A", 5%, 2027 1,500,000 1,550,190
New York, NY, Municipal Water & Sewer
Finance Authority Rev., "A", ETM, 6%, 2010 (c) 620,000 660,058
New York, NY, Municipal Water & Sewer
Finance Authority Rev., ETM, AMBAC,
6.75%, 2014 (c) 1,000,000 1,119,790
Suffolk County, NY, Water Authority Rev.,
MBIA, 5.1%, 2012 660,000 703,850
Suffolk County, NY, Water Authority Rev.,
ETM, MBIA, 5.1%, 2012 (c) 235,000 250,926
- -------------------------------------------------------------------------------
$ 19,181,557
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $156,268,039) $164,055,883
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.1%
- -------------------------------------------------------------------------------
East Baton Rouge, LA, Pollution Control
Rev. (Exxon Mobil Corp.), 3.94%, due 10/01/07 $ 300,000 $ 300,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 400,000 400,000
Pinellas County, FL, Health Facilities
Authority Rev. (Pooled Hospital Loan Program),
4.03%, due 10/01/07 1,000,000 1,000,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement III, "A-2",
3.88%, due 10/04/07 100,000 100,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 1,800,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $158,068,039) (k) $165,855,883
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.9)% (7,766,472)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $158,089,411
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 6,567
Services
12/01/09 USD 2,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (2,627)
Services
1/09/18 USD 2,000,000 Merrill Lynch Capital 5.771% (fixed rate) 3-Month LIBOR 86,500
Services
1/09/23 USD 3,000,000 Citibank 5.920% (fixed rate) 3-Month LIBOR 170,550
11/01/27 USD 2,000,000 Citibank 4.186% (fixed rate) 7-Day BMA 46,403
1/09/28 USD 1,250,000 Citibank 5.902% (fixed rate) 3-Month LIBOR 71,937
3/05/28 USD 2,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 10,720
- ---------------------------------------------------------------------------------------------------------------------
$390,050
- ---------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 105.2%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 4.6%
- -------------------------------------------------------------------------------
Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2029 $ 2,000,000 $ 2,052,800
Charlotte, NC, Airport Rev., "A", MBIA, 5%, 2034 4,485,000 4,592,901
Charlotte, NC, Airport Rev., "B", MBIA,
5.875%, 2019 1,000,000 1,040,550
Charlotte, NC, Airport Rev., "B", MBIA,
5.875%, 2020 3,775,000 3,924,830
Raleigh Durham, NC, Airport Authority
Rev., "A", FGIC, 5.25%, 2018 2,700,000 2,829,276
- -------------------------------------------------------------------------------
$ 14,440,357
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 1.7%
- -------------------------------------------------------------------------------
Charlotte, NC, 5.5%, 2010 (c) $ 3,100,000 $ 3,310,955
Commonwealth of Puerto Rico, Public
Improvement, "A", 5.25%, 2030 2,000,000 2,064,940
- -------------------------------------------------------------------------------
$ 5,375,895
- -------------------------------------------------------------------------------
General Obligations - Improvement - 1.5%
- -------------------------------------------------------------------------------
New Hanover County, NC, Public
Improvement, 5.8%, 2010 (c) $ 4,200,000 $ 4,552,338
- -------------------------------------------------------------------------------
General Obligations - Schools - 4.0%
- -------------------------------------------------------------------------------
Brunswick County, NC, FGIC, 5%, 2020 $ 2,800,000 $ 2,945,796
Cumberland County, NC, 5.8%, 2010 (c) 4,400,000 4,708,572
Johnston County, NC, FGIC, 5.6%, 2010 (c) 2,000,000 2,132,060
New Hanover County, NC, Public
Improvement, 5%, 2021 1,435,000 1,491,065
New Hanover County, NC, School
Improvement, 5%, 2019 1,255,000 1,319,432
- -------------------------------------------------------------------------------
$ 12,596,925
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 22.7%
- -------------------------------------------------------------------------------
Albemarle, NC, Hospital Authority Health
Care Facilities Rev., 5.25%, 2038 $ 2,000,000 $ 1,891,940
Catawba County, NC, Hospital Rev. (Catawba
Memorial Hospital), AMBAC, 5%, 2017 1,200,000 1,235,496
Charlotte-Mecklenburg, NC, Hospital
Authority Health Care System Rev.
(Carolina Health Care System), "A", 5%, 2011 (c) 805,000 847,488
Charlotte-Mecklenburg, NC, Hospital
Authority Health Care System Rev.
(Carolina Health Care System), "A", 5%, 2031 1,000,000 1,014,770
Charlotte-Mecklenburg, NC, Hospital
Authority Health Care System Rev.
(Carolina Health Care System), "A", 5%, 2031 2,695,000 2,715,455
Cumberland County, NC, Hospital Facilities
Rev. (Cumberland Hospital), MBIA, ETM, 0%, 2009 1,800,000 1,677,672
New Hanover County, NC, Hospital Rev. (New
Hanover Regional Medical Center), MBIA, 5%, 2019 6,225,000 6,376,641
North Carolina Medical Care Commission (Cleveland
County Healthcare), "A", AMBAC, 5%, 2035 1,305,000 1,338,682
North Carolina Medical Care Commission
(Morehead Memorial Hospital), FHA, 5%, 2026 2,000,000 2,076,540
North Carolina Medical Care Commission
(Northeast Medical Center), 5.25%, 2014 (c) 2,000,000 2,044,960
North Carolina Medical Care Commission
(Novant Health), "A", MBIA, 5%, 2018 1,975,000 2,015,962
North Carolina Medical Care Commission, Health
Care Facilities Rev. (Novant Health Obligation
Group), 5%, 2039 2,000,000 2,023,200
North Carolina Medical Care Commission, Health
Care Facilities Rev. (Wakemed), AMBAC, 5%, 2021 3,500,000 3,645,775
North Carolina Medical Care Commission, Health
System Rev. (Health Combined Group), 5%, 2036 3,000,000 3,032,940
North Carolina Medical Care Commission,
Hospital Rev. (Betsy Johnson Health Care
System), FSA, 5.125%, 2032 1,500,000 1,543,215
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Memorial Hospital), 5.5%, 2015 5,790,000 5,823,293
North Carolina Medical Care Commission, Hospital
Rev. (Gaston Memorial Hospital), 5.5%, 2019 6,500,000 6,537,375
North Carolina Medical Care Commission,
Hospital Rev. (Mission-St. Joseph
Health Systems), 5.5%, 2011 (c) 2,825,000 3,050,831
North Carolina Medical Care Commission,
Hospital Rev. (Rex Healthcare), AMBAC, 5%, 2017 3,000,000 3,049,230
North Carolina Medical Care Commission,
Hospital Rev. (Southeastern Regional
Medical Center), 5.375%, 2032 3,330,000 3,379,184
North Carolina Medical Care Commission, Hospital
Rev. (Wilson Memorial Hospital), AMBAC, 0%, 2013 1,000,000 785,130
North Carolina Medical Care Commission, Hospital
Rev. (Wilson Memorial Hospital), AMBAC, 0%, 2015 1,140,000 812,934
North Carolina Medical Care Commission, Hospital
Rev., Unrefunded (St. Joseph's), MBIA, 5.1%, 2018 525,000 536,135
Northern Hospital District, Surry County, NC,
Health Care Facilities Rev., ASST GTY, 5.5%, 2019 1,125,000 1,166,130
Northern Hospital District, Surry County, NC,
Health Care Facilities Rev., ASST GTY, 5.1%, 2021 1,000,000 1,030,170
Onslow County, NC, Hospital Authority (Onslow
Memorial Hospital Project), MBIA, 5%, 2026 1,315,000 1,373,084
Pitt County, NC, Rev., Pitt County
Memorial Hospital, ETM, 5.25%, 2021 (c) 10,135,000 10,587,122
- -------------------------------------------------------------------------------
$ 71,611,354
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.7%
- -------------------------------------------------------------------------------
North Carolina Medical Care Commission,
Health Care Facilities Rev. (Arbor Acres
Community), 6.375%, 2012 (c) $ 1,000,000 $ 1,118,590
North Carolina Medical Care Commission, Health
Care Facilities Rev. (Deerfield), "A", 5%, 2023 1,000,000 980,480
North Carolina Medical Care Commission,
Health Care Facilities Rev. (Givens Estates),
6.5%, 2013 (c) 800,000 921,840
North Carolina Medical Care Commission,
Health Care Facilities Rev. (Presbyterian
Homes), 5.5%, 2031 750,000 751,050
North Carolina Medical Care Commission, Health
Care Facilities Rev., "A", 6.125%, 2035 750,000 761,108
North Carolina Medical Care Commission, Retirement
Facilities Rev., (Brookwood), 5.25%, 2032 750,000 702,143
- -------------------------------------------------------------------------------
$ 5,235,211
- -------------------------------------------------------------------------------
Human Services - 0.7%
- -------------------------------------------------------------------------------
Cumberland County, NC, Finance Corp.,
Installment Payment Rev. (Detention Center
& Mental Health), AMBAC, 5.625%, 2019 $ 2,125,000 $ 2,215,801
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 $ 860,000 $ 884,708
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.7%
- -------------------------------------------------------------------------------
Columbus County, NC, Industrial Facilities
& Pollution Control Financing Authority
Rev. (International Paper Co.), "A", 5.8%, 2016 $ 2,000,000 $ 2,036,740
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 3.1%
- -------------------------------------------------------------------------------
Charlotte, NC, Housing Authority Rev.,
GNMA, 4.8%, 2048 $ 2,000,000 $ 1,864,900
Charlotte, NC, Housing Authority Rev., Mortgage
Rocky Branch II, GNMA, 4.65%, 2035 2,000,000 1,874,960
Elizabeth City, NC, Multifamily Housing Rev.
(Walker Landing), "A", GNMA, 5.125%, 2049 1,500,000 1,480,905
Mecklenburg County, NC (Little Rock
Apartments), FNMA, 5.15%, 2022 1,000,000 1,022,290
North Carolina Housing Finance Agency,
"H", FHA, 6.05%, 2028 2,525,000 2,531,010
North Carolina Medical Care Commission, Health
Care Facilities Rev., "A", (ARC), 5.8%, 2034 1,000,000 1,036,850
- -------------------------------------------------------------------------------
$ 9,810,915
- -------------------------------------------------------------------------------
Single Family Housing - State - 7.5%
- -------------------------------------------------------------------------------
North Carolina Housing Finance Agency
Rev., "15-A", FSA, 4.95%, 2032 $ 430,000 $ 422,226
North Carolina Housing Finance Agency
Rev., "19-A", 5.1%, 2030 2,390,000 2,410,148
North Carolina Housing Finance Agency
Rev., "22-A", 4.8%, 2026 2,000,000 1,937,360
North Carolina Housing Finance Agency
Rev., "23-A", 4.8%, 2037 2,100,000 2,001,573
North Carolina Housing Finance Agency
Rev., "24-A", 4.75%, 2026 2,000,000 1,953,740
North Carolina Housing Finance Agency
Rev., "25-A", 5.75%, 2037 2,000,000 2,122,700
North Carolina Housing Finance Agency
Rev., "5-A", 5.55%, 2019 2,555,000 2,583,514
North Carolina Housing Finance Agency
Rev., "7-A", 6.15%, 2020 590,000 600,060
North Carolina Housing Finance Agency
Rev., "A", 5.25%, 2020 1,310,000 1,326,231
North Carolina Housing Finance Agency
Rev., "A", 5.375%, 2023 245,000 248,619
North Carolina Housing Finance Agency
Rev., "PP", FHA, 6.15%, 2017 1,070,000 1,084,627
North Carolina Housing Finance Agency
Rev., "RR", 5.85%, 2028 1,935,000 1,955,879
North Carolina Housing Finance Agency
Rev., "26-A", 4.7%, 2038 3,295,000 3,067,151
North Carolina Housing Finance Agency
Rev., "29-A", 4.85%, 2038 2,000,000 1,940,780
- -------------------------------------------------------------------------------
$ 23,654,608
- -------------------------------------------------------------------------------
State & Agency - Other - 5.9%
- -------------------------------------------------------------------------------
Brunswick County, NC, Certificates of
Participation, FSA, 5.5%, 2010 $ 1,000,000 $ 1,058,940
Cabarrus County, NC, Installment Financing
Contract, 5%, 2021 5,500,000 5,735,785
Carteret County, NC, AMBAC, 5.625%, 2020 1,010,000 1,069,267
Charlotte, NC, Certificates of
Participation (Convention Facilities),
AMBAC, 0%, 2008 3,000,000 2,876,940
Charlotte, NC, Certificates of Participation
(Public Safety Facilities), "D", 5.5%, 2010 (c) 3,000,000 3,175,260
Charlotte, NC, Certificates of Participation
(Transit Projects), "E", 5%, 2035 1,990,000 2,034,337
Harnett County, NC, Certificates of
Participation, FSA, 5.5%, 2010 (c) 1,225,000 1,307,871
Harnett County, NC, Certificates of
Participation, FSA, 5.25%, 2015 1,020,000 1,101,549
Rockingham, NC, Certificates of
Participation, AMBAC, 5.125%, 2024 350,000 368,536
- -------------------------------------------------------------------------------
$ 18,728,485
- -------------------------------------------------------------------------------
State & Local Agencies - 4.2%
- -------------------------------------------------------------------------------
Cabarrus County, NC, Development Corp.,
AMBAC, 5.3%, 2019 $ 1,250,000 $ 1,291,988
Forsyth County, NC, Certificates of Participation
(Public Facilities & Equipment), 5.25%, 2013 (c) 1,230,000 1,335,104
Iredell County, NC, Public Facilities
(School Projects), AMBAC, 5.5%, 2010 (c) 1,000,000 1,058,940
New Hanover County, NC, Certificates of
Participation (New Hanover County
Projects), AMBAC, 5.25%, 2011 (c) 1,635,000 1,755,679
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2016 (u) 3,000,000 3,341,100
Rutherford County, NC, Certificates of
Participation (Rutherford County School),
AMBAC, 5%, 2023 840,000 875,003
Winston Salem, NC, Certificates of
Participation, "A", 4.75%, 2031 900,000 899,946
Winston Salem, NC, Certificates of
Participation, "C", 5%, 2011 (c) 2,575,000 2,701,999
- -------------------------------------------------------------------------------
$ 13,259,759
- -------------------------------------------------------------------------------
Tax - Other - 0.9%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority
Rev., RADIAN, 5.5%, 2018 $ 1,000,000 $ 1,021,830
Virgin Islands Public Finance Authority
Rev., "A", 5.5%, 2022 1,650,000 1,676,813
- -------------------------------------------------------------------------------
$ 2,698,643
- -------------------------------------------------------------------------------
Tobacco - 0.6%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 1,745,000 $ 1,744,477
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "A", 0%, 2050 2,000,000 125,140
- -------------------------------------------------------------------------------
$ 1,869,617
- -------------------------------------------------------------------------------
Transportation - Special Tax - 4.0%
- -------------------------------------------------------------------------------
Puerto Rico Highway & Transportation
Authority Rev., 6%, 2018 (u) $10,850,000 $ 12,729,437
- -------------------------------------------------------------------------------
Universities - Colleges - 15.8%
- -------------------------------------------------------------------------------
Appalachian State University, NC, "A",
FGIC, 5.125%, 2013 (c) $ 1,260,000 $ 1,354,966
Appalachian State University, NC, Rev.,
FSA, 5.6%, 2010 (c) 2,285,000 2,430,577
Appalachian State University, NC, Rev.,
"C", MBIA, 5%, 2030 1,000,000 1,041,120
East Carolina University, NC, Rev., "A",
AMBAC, 5.25%, 2011 (c) 1,375,000 1,464,966
North Carolina Capital Facilities, Finance Agency
Rev. (Duke University), "A", 5.25%, 2012 (c) 2,000,000 2,151,520
North Carolina Capital Facilities, Finance Agency
Rev. (Duke University), "B", 4.25%, 2042 2,220,000 2,010,965
North Carolina Capital Facilities, Finance Agency
Rev. (Duke University), "B", 4.75%, 2042 3,000,000 2,994,720
North Carolina Capital Facilities, Finance Agency
Rev. (High Point University), 5.125%, 2018 510,000 525,025
North Carolina Capital Facilities, Finance Agency
Rev. (High Point University), 5.125%, 2021 300,000 306,966
North Carolina Capital Facilities, Finance
Agency Rev. (Johnson & Wales University),
"A", XLCA, 5.25%, 2022 1,870,000 1,981,433
North Carolina Capital Facilities, Finance
Agency Rev. (Johnson & Wales University),
"A", XLCA, 5%, 2033 3,385,000 3,469,896
North Carolina Capital Facilities, Finance
Prerefunded (Duke University) "A",
5.125%, 2011 (c) 4,050,000 4,285,589
North Carolina Capital Facilities, Finance
Unrefunded (Duke University) "A", 5.125%, 2041 950,000 971,489
Puerto Rico Industrial Tourist Authority
(University Plaza), "A", MBIA, 5%, 2020 2,180,000 2,246,294
University of North Carolina, Chapel Hill
Rev., "A", 4.75%, 2034 5,000,000 5,019,850
University of North Carolina, Charlotte
Rev., "B", FSA, 5%, 2036 1,750,000 1,795,220
University of North Carolina, Greensboro
Rev., "A", FSA, 5%, 2020 2,835,000 2,947,011
University of North Carolina, Systems Pool
Rev., "B", MBIA, 5%, 2033 2,930,000 3,041,780
University of North Carolina, Systems Pool
Rev., "C", AMBAC, 5%, 2029 2,000,000 2,071,720
University of North Carolina, University
Rev., 5%, 2028 2,000,000 2,070,580
University of North Carolina, Wilmington
Rev., "A", AMBAC, 5%, 2019 1,375,000 1,436,738
University of North Carolina, Wilmington,
Certificates of Participation (Student
Housing Project), FGIC, 5%, 2028 1,825,000 1,892,397
University of Puerto Rico Rev., "Q", 5%, 2036 2,370,000 2,376,446
- -------------------------------------------------------------------------------
$ 49,887,268
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 0.8%
- -------------------------------------------------------------------------------
Wake County, NC, Industrial Facilities &
Pollution Control Rev. (Carolina Power &
Light Co.), 5.375%, 2017 $ 2,500,000 $ 2,612,625
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 15.6%
- --------------------------------------------------------------------------------
North Carolina Eastern Municipal Power
Agency, AMBAC, 6%, 2018 $ 1,245,000 $ 1,447,958
North Carolina Eastern Municipal Power
Agency, AMBAC, 6%, 2018 (u) 13,000,000 15,119,262
North Carolina Eastern Municipal Power
Agency, "A", ETM, 7.5%, 2010 (c) 2,595,000 2,782,359
North Carolina Eastern Municipal Power
Agency, "A", MBIA, 7.5%, 2010 3,005,000 3,255,286
North Carolina Eastern Municipal Power
Agency, "A", ETM, 5%, 2017 (c) 3,120,000 3,353,314
North Carolina Municipal Power Agency,
Catawba Electric Rev., MBIA, 6%, 2011 5,000,000 5,360,850
North Carolina Municipal Power Agency,
Catawba Electric Rev., 6.375%, 2013 1,000,000 1,059,570
North Carolina Municipal Power Agency,
Catawba Electric Rev., MBIA,
5.25%, 2019 (u) 10,000,000 10,570,900
North Carolina Municipal Power Agency,
Catawba Electric Rev., 5.25%, 2020 (u) 6,000,000 6,336,720
- -------------------------------------------------------------------------------
$ 49,286,219
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 8.9%
- -------------------------------------------------------------------------------
Broad River, NC, Water Authority Rev.,
MBIA, 5.75%, 2010 (c) $ 1,490,000 $ 1,587,208
Cary, NC, Combined Enterprise Systems
Rev., 5%, 2011 (c) 1,000,000 1,055,590
Charlotte, NC, Storm Water Fee Rev., 6%, 2010 (c) 3,180,000 3,407,465
Charlotte, NC, Storm Water Fee Rev., 5%, 2034 3,675,000 3,781,649
Charlotte, NC, Water & Sewer Systems Rev.,
5.75%, 2010 (c) 3,075,000 3,275,613
Charlotte, NC, Water & Sewer Systems Rev.,
5.5%, 2017 1,650,000 1,766,325
Charlotte, NC, Water & Sewer Systems Rev.,
"A", 4.625%, 2036 1,900,000 1,859,929
Durham County, NC, Enterprise Systems
Rev., MBIA, 5%, 2023 1,675,000 1,739,236
Greensboro, NC, Enterprise Systems Rev.,
"A", 5.125%, 2011 (c) 1,490,000 1,582,931
Greensboro, NC, Enterprise Systems Rev.,
"A", 5.125%, 2011 (c) 1,750,000 1,859,148
Greenville, NC, Combined Enterprise
Systems Rev., FSA, 5%, 2016 1,005,000 1,059,712
Greenville, NC, Combined Enterprise
Systems Rev., FSA, 5.25%, 2019 1,170,000 1,237,673
Harnett County, NC, Water & Sewer Systems
Rev., AMBAC, 5%, 2028 700,000 726,845
Kannapolis, NC, Water & Sewer Rev., "B",
FSA, 5.25%, 2021 1,000,000 1,049,860
Raleigh, NC, Combined Enterprise Systems
Rev., 5%, 2014 (c) 385,000 414,233
Winston Salem, NC, Water & Sewer Systems
Rev., 5%, 2033 1,600,000 1,658,608
- -------------------------------------------------------------------------------
$ 28,062,025
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $318,866,322) $331,548,930
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.3%
- -------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), 3.94%, due 10/01/07 $ 400,000 $ 400,000
Mt. Vernon Industrial Pollution Control Rev.
(General Electric Co. Project), 4.04%,
due 10/01/07 200,000 200,000
Sevier County, TN, Public Building Authority
Rev., Govenment Public Improvement III,
"A-2", 3.88%, due 10/04/07 100,000 100,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement II,
"B-1", 3.88%, due 10/04/07 100,000 100,000
South Blount County, TN, Utility District
Rev., 4.1%, due 10/01/07 300,000 300,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 1,100,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $319,966,322) (k) $332,648,930
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.5)% (17,349,559)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $315,299,371
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 15,322
Services
12/01/09 USD 5,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (6,567)
Services
11/01/17 USD 3,000,000 Citibank 3-Month LIBOR 5.558% (fixed rate) (82,470)
3/05/28 USD 4,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 21,441
- ---------------------------------------------------------------------------------------------------------------------
$(52,274)
- ---------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or securities to cover
any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) PENNSYLVANIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by
your fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.9%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 2.0%
- -------------------------------------------------------------------------------
Allegheny County, PA, Airport Rev. (Pittsburgh
International Airport), MBIA, 5.75%, 2014 $ 1,000,000 $ 1,090,012
Allegheny County, PA, Airport Rev. (Pittsburgh
International Airport), FGIC, 6.125%, 2017 500,000 525,695
Susquehanna Area Regional Airport, AMBAC,
5.375%, 2023 500,000 522,100
- -------------------------------------------------------------------------------
$ 2,137,807
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 8.5%
- -------------------------------------------------------------------------------
Allegheny County, PA, Unrefunded Balance,
"C53", FGIC, 5.3%, 2018 $ 285,000 $ 298,874
Allegheny County, PA, Unrefunded Balance,
"C53", FGIC, 5.4%, 2019 290,000 304,781
Commonwealth of Puerto Rico, FGIC, 5.5%, 2015 (u) 2,000,000 2,233,240
Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) 2,000,000 2,257,220
Erie County, PA, Convention Center, FGIC,
5%, 2025 500,000 521,020
Erie County, PA, Convention Center, FGIC,
5%, 2026 500,000 520,070
Luzerne County, PA, MBIA, 5.25%, 2012 (c) 500,000 538,705
North Huntingdon Township, PA, AMBAC, 5.25%, 2019 500,000 523,850
Pennsylvania Finance Authority Rev. (Penn
Hills), "A", FGIC, 5.45%, 2010 (c) 85,000 89,863
Pennsylvania Finance Authority Rev. (Penn
Hills), "A", FGIC, 5.45%, 2019 415,000 434,439
State of Pennsylvania, 6%, 2010 (c) 1,000,000 1,063,130
State of Pennsylvania, 6.25%, 2010 300,000 320,823
- -------------------------------------------------------------------------------
$ 9,106,015
- -------------------------------------------------------------------------------
General Obligations - Improvement - 0.5%
- -------------------------------------------------------------------------------
Pittsburgh, PA, FGIC, 5.75%, 2009 (c) $ 500,000 $ 520,980
- -------------------------------------------------------------------------------
General Obligations - Schools - 18.1%
- -------------------------------------------------------------------------------
Allegheny Valley, PA, School District,
"A", MBIA, 5%, 2028 $ 1,000,000 $ 1,039,820
Ambridge, PA, Area School District, MBIA,
5%, 2014 (c) 750,000 812,145
Butler, PA, School District, FGIC, 5.375%, 2018 500,000 507,905
Chambersburg, PA, School District, FSA,
5%, 2011 (c) 500,000 524,905
Conneaut, PA, School District, "A", FSA,
4.375%, 2035 1,000,000 927,530
Conneaut, PA, School DIstrict, "B", FSA, 0%, 2031 1,150,000 362,733
Conneaut, PA, School DIstrict, "B", FSA, 0%, 2033 760,000 216,159
Exeter Township, PA, School District,
FGIC, 5%, 2025 1,000,000 1,038,890
Garnet Valley, PA, School District, FGIC,
5.5%, 2015 750,000 807,998
Gateway, PA, Allegheny School District,
FGIC, 5.2%, 2023 1,000,000 1,056,610
Gateway, PA, Allegheny School District,
FGIC, 5%, 2032 1,890,000 1,947,475
North Allegheny, PA, School District,
FGIC, 5.05%, 2022 590,000 607,924
North Schuylkill, PA, School District,
FGIC, 5%, 2028 650,000 667,745
Palmyra, PA, School District, FGIC, 5.375%, 2016 820,000 878,040
Pennridge, PA, School District, MBIA, 5%, 2013 (c) 50,000 53,336
Pennridge, PA, School District,
Unrefunded, MBIA, 5%, 2013 (c) 450,000 480,024
Pennsylvania Public School Building (Garnet
Valley School District), AMBAC, 5.5%, 2011 (c) 1,005,000 1,065,943
Perkiomen Valley, PA, School District,
FSA, 5%, 2011 (c) 280,000 292,928
Perkiomen Valley, PA, School District,
FSA, 5%, 2019 220,000 226,659
Perkiomen Valley, PA, School District,
"A", FSA, 5.25%, 2014 (c) 1,000,000 1,090,100
Philadelphia, PA, School District, MBIA,
6%, 2010 (c) 500,000 528,170
Philadelphia, PA, School District, FSA,
5.75%, 2011 (c) 500,000 534,210
South Park, PA, School District, FGIC, 5%, 2019 750,000 774,720
Southeastern Area, PA, Special Schools
Authority Rev., 0%, 2007 360,000 360,000
State Public School Building Authority, PA School
(Colonial Intermediate Unit 20), FGIC, 5%, 2030 500,000 518,230
State Public School Building Authority, PA School
(Tuscarora School District), FSA, 5%, 2013 (c) 1,000,000 1,068,200
State Public School Building Authority,
PA, School Rev. (Haverford Township Project),
XLCA, 5%, 2027 1,000,000 1,041,940
- -------------------------------------------------------------------------------
$ 19,430,339
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 16.0%
- -------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development
Authority Rev. (Jefferson Regional Medical
Center), "A", 4.75%, 2025 $ 850,000 $ 770,695
Allegheny County, PA, Hospital Development
Authority Rev. (South Hills Health
Systems), "B", 6.75%, 2010 (c) 555,000 597,791
Allegheny County, PA, Hospital Development
Authority Rev. (UPMC Health Systems),
MBIA, 5%, 2018 500,000 510,795
Allegheny County, PA, Hospital Development
Authority Rev. (West Penn Allegheny
Health), 9.25%, 2010 (c) 150,000 177,351
Allegheny County, PA, Hospital Development
Authority Rev. (West Penn Allegheny
Health), "A", 5%, 2028 500,000 467,195
Allegheny County, PA, Hospital Development
Authority Rev. (West Penn Allegheny
Health), "B", 9.25%, 2010 (c) 50,000 59,117
Blair County, PA, Hospital Authority Rev.
(Altoona), AMBAC, 5.5%, 2008 470,000 476,749
Delaware County, PA, Authority Hospital Rev.
(Crozer Keystone Obligations Group), "A", 5%, 2031 500,000 472,480
Erie County, PA, Hospital Authority Rev.
(Hamot Health Foundation), AMBAC, 5.25%, 2017 675,000 718,187
Lancaster County, PA, Hospital Authority
Rev., 5.5%, 2013 (c) 500,000 547,940
Lebanon County, PA, Health Facilities Authority
Rev. (Good Samaritan Hospital), 5%, 2018 200,000 198,978
Lebanon County, PA, Health Facilities Authority
Rev. (Good Samaritan Hospital), 6%, 2035 350,000 358,778
Lehigh County, PA, General Purpose Authority
(Good Shepherd Group), "A", 5.625%, 2034 350,000 365,008
Lehigh County, PA, General Purpose Authority
(Lehigh Valley Hospital), MBIA, 7%, 2016 250,000 286,248
Lehigh County, PA, General Purpose Authority
(Lehigh Valley Hospital), 5.25%, 2032 600,000 606,030
Lehigh County, PA, General Purpose Authority
(St. Luke's Bethlehem Hospital), 5.375%, 2013 (c) 600,000 652,866
Lehigh County, PA, Hospital Rev. (Lehigh
Valley Hospital), FSA, 5.25%, 2019 500,000 526,170
Lycoming County, PA, Authority Hospital
Rev. (Williamsport Hospital Obligation
Group), CONNIE LEE, 5.375%, 2010 750,000 751,530
Monroe County, PA, Hospital Authority Rev.
(Pocono Medical Center), 6%, 2014 (c) 750,000 844,013
Monroe County, PA, Hospital Authority Rev.
(Pocono Medical Center), 5%, 2027 250,000 238,390
Monroe County, PA, Hospital Authority Rev.
(Pocono Medical Center), 5.125%, 2037 250,000 237,465
Mount Lebanon, PA, Hospital Authority Rev.
(St. Clair Memorial Hospital), 5.625%, 2032 400,000 412,280
Pennsylvania Higher Educational Facilities
Authority Rev. (UPMC Health), 6.25%, 2018 100,000 107,091
Pennsylvania Higher Educational Facilities
Authority Rev. (UPMC Health), 6%, 2031 650,000 684,613
Philadelphia, PA, Health & Educational
Facilities Rev. (Jeane Health), ETM, 6.6%, 2010 90,000 93,983
Philadelphia, PA, Health & Educational
Facilities Rev. (Temple University), 6.625%, 2023 250,000 250,560
Philadelphia, PA, Hospitals & Higher
Education Facilities Authority (Children's
Hospital), MBIA, 4.5%, 2037 1,000,000 951,160
Philadelphia, PA, Hospitals & Higher
Education Facilities Authority (Children's
Hospital), "A", 4.5%, 2033 750,000 710,535
Philadelphia, PA, Hospitals & Higher
Education Facilities Authority (Temple
University Health System), 5.5%, 2026 1,000,000 1,008,160
Sayre, PA, Health Care Facilities Authority
Rev. (Guthrie Health), "A", 5.875%, 2011 (c) 385,000 420,770
Sayre, PA, Health Care Facilities Authority
Rev. (Guthrie Health), "A", 5.875%, 2031 115,000 120,264
Sayre, PA, Health Care Facilities Authority
Rev. (Latrobe Hospital), AMBAC, 5.25%, 2012 (c) 585,000 627,249
South Central, PA, General Authority Rev.,
5.625%, 2011 (c) 490,000 528,171
South Central, PA, General Authority Rev.,
Wellspan Health, ETM, 5.625%, 2026 110,000 118,104
St. Mary's Hospital Authority, PA, Health Systems
Rev. (Catholic Health East), "B", 5.375%, 2014 (c) 750,000 828,930
West Shore, PA, Hospital Authority (Holy
Spirit Hospital), 6.25%, 2032 350,000 359,912
- -------------------------------------------------------------------------------
$ 17,085,558
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.5%
- -------------------------------------------------------------------------------
Bucks County, PA, Industrial Development
Authority, Retirement Community Rev.
(Ann's Choice, Inc.), 6.125%, 2025 $ 250,000 $ 255,623
Chartiers Valley, PA, Industrial &
Commercial Development Authority (Asbury
Health Center Project), 5.75%, 2022 250,000 252,460
Cumberland County, PA, Municipal Authority
Rev. (Diakon Lutheran Ministries), 5%, 2036 200,000 190,796
Cumberland County, PA, Municipal
Authority, Retirement Community Rev.
(Wesley), "A", 7.25%, 2035 110,000 128,843
Cumberland County, PA, Municipal
Authority, Retirement Community Rev.
(Wesley), "A", 7.25%, 2035 40,000 46,852
Lancaster County, PA, Hospital Authority Rev.
(Willow Valley Retirement Project), 5.875%, 2031 500,000 515,455
Montgomery County, PA, Industrial
Development Authority Rev. (Whitemarsh
Continuing Care), 6.25%, 2035 250,000 256,015
- -------------------------------------------------------------------------------
$ 1,646,044
- -------------------------------------------------------------------------------
Human Services - 0.1%
- -------------------------------------------------------------------------------
Montgomery County, PA, Industrial
Development Authority (Wordsworth
Academy), 8%, 2024 $ 150,000 $ 150,564
- -------------------------------------------------------------------------------
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 $ 533,419
Westmoreland County, PA, Industrial Development
Corp. (Waste Management), LOC, 5.1%, 2018 500,000 504,200
- -------------------------------------------------------------------------------
$ 1,037,619
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 1.7%
- -------------------------------------------------------------------------------
Bucks County, PA, Industrial Development
Authority Rev. (USX Corp.), 5.4%, 2017 $ 300,000 $ 315,189
Pennsylvania Economic Development Financing
Authority Rev. (Amtrak), 6.125%, 2021 150,000 157,419
Pennsylvania Economic Development Financing
Authority, Solid Waste Disposal Rev.
(Procter & Gamble), 5.375%, 2031 1,000,000 1,067,130
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 270,000 277,757
- -------------------------------------------------------------------------------
$ 1,817,495
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.6%
- -------------------------------------------------------------------------------
Erie County, PA, Industrial Development
Authority, Pollution Control
(International Paper Co.), "A", 5.3%, 2012 $ 650,000 $ 675,500
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.1%
- -------------------------------------------------------------------------------
Gallery Certificate Trust, PA, Parking
Rev., FSA, 4.5%, 2013 (n) $ 130,000 $ 130,025
- -------------------------------------------------------------------------------
Parking - 2.0%
- -------------------------------------------------------------------------------
Philadelphia, PA, Public Parking Authority
Rev., FSA, 5.625%, 2015 $ 1,000,000 $ 1,046,760
Pittsburgh, PA, Public Parking Authority
Rev., AMBAC, 6%, 2010 (c) 500,000 531,210
Pittsburgh, PA, Public Parking Authority
Rev., "A", FGIC, 5%, 2025 500,000 521,400
- -------------------------------------------------------------------------------
$ 2,099,370
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.5%
- -------------------------------------------------------------------------------
Pittsburgh & Allegheny County, PA, Sales
Tax Rev. (Public Auditorium Hotel Room),
AMBAC, 5.25%, 2017 $ 500,000 $ 518,675
- -------------------------------------------------------------------------------
Single Family Housing - Local - 1.2%
- -------------------------------------------------------------------------------
Allegheny County, PA, Residential
Financing Authority, Single Family
Mortgage Rev., "RR", 4.75%, 2025 $ 375,000 $ 366,094
Allegheny County, PA, Residential
Financing Authority, Single Family
Mortgage Rev., "VV", GNMA, 4.95%, 2037 900,000 873,927
- -------------------------------------------------------------------------------
$ 1,240,021
- -------------------------------------------------------------------------------
Single Family Housing - State - 6.2%
- -------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency Rev.,
"96 A", 4.7%, 2037 $ 750,000 $ 703,073
Pennsylvania Housing Finance Agency,
Single Family Mortgage Rev., 5.1%, 2020 1,405,000 1,415,523
Pennsylvania Housing Finance Agency,
Single Family Mortgage Rev., 5.25%, 2021 750,000 763,005
Pennsylvania Housing Finance Agency,
Single Family Mortgage Rev., 5.25%, 2033 410,000 411,140
Pennsylvania Housing Finance Agency,
Single Family Mortgage Rev., 5%, 2034 600,000 607,140
Pennsylvania Housing Finance Agency,
Single Family Mortgage Rev., "93-A", 5.75%, 2037 720,000 759,132
Pennsylvania Housing Finance Agency,
Single Family Mortgage Rev., "94-A", 5.1%, 2031 500,000 503,750
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., "95-A", 4.875%, 2031 1,000,000 969,060
Pennsylvania Housing Finance Agency, Single
Family Mortgage Rev., "A", 4.875%, 2026 500,000 493,105
- -------------------------------------------------------------------------------
$ 6,624,928
- -------------------------------------------------------------------------------
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 $ 304,662
- -------------------------------------------------------------------------------
State & Local Agencies - 4.0%
- -------------------------------------------------------------------------------
Delaware Valley, PA, Regional Finance
Authority, RITES, AMBAC, 6.625%, 2018 (p) $ 500,000 $ 611,190
Northumberland County, PA (Country Careers
& Arts Center), 6.65%, 2020 225,000 227,693
Philadelphia, PA, Industrial Development
Authority, MBIA, 5.35%, 2012 500,000 508,150
Philadelphia, PA, Industrial Development
Authority, FSA, 5.125%, 2026 1,000,000 1,039,910
Philadelphia, PA, Industrial Development
Authority, FSA, 5.25%, 2030 750,000 775,928
Puerto Rico Public Finance Corp., ETM,
"A", AMBAC, 5.375%, 2013 (u) 1,000,000 1,087,460
- -------------------------------------------------------------------------------
$ 4,250,331
- -------------------------------------------------------------------------------
Student Loan Revenue - 1.4%
- -------------------------------------------------------------------------------
Pennsylvania Higher Education, Capital
Acquistion Rev., MBIA, 5%, 2026 $ 1,500,000 $ 1,538,835
- -------------------------------------------------------------------------------
Tax - Other - 0.6%
- -------------------------------------------------------------------------------
Pittsburgh & Allegheny County, PA, Sales
Tax Rev. (Public Auditorium Hotel Room),
AMBAC, 5.25%, 2013 $ 500,000 $ 519,125
Virgin Islands Public Finance Authority
Rev., "A", 5.25%, 2024 135,000 138,251
- -------------------------------------------------------------------------------
$ 657,376
- -------------------------------------------------------------------------------
Tax Assessment - 0.2%
- -------------------------------------------------------------------------------
Washington County, PA, Redevelopment Authority
(Victory Centre Project), "A", 5.45%, 2035 $ 250,000 $ 241,655
- -------------------------------------------------------------------------------
Tobacco - 0.4%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 305,000 $ 304,909
Virgin Islands Tobacco Settlement
Financing Corp., 5%, 2021 130,000 127,813
- -------------------------------------------------------------------------------
$ 432,722
- -------------------------------------------------------------------------------
Toll Roads - 0.3%
- -------------------------------------------------------------------------------
Pennsylvania Turnpike Commission, 5.5%, 2015 $ 250,000 $ 267,448
- -------------------------------------------------------------------------------
Transportation - Special Tax - 6.9%
- -------------------------------------------------------------------------------
Allegheny County, PA, Port Authority
Special Rev., MBIA, 6.25%, 2009 (c) $ 500,000 $ 523,795
Pennsylvania Turnpike Commission, MBIA, 5%, 2024 1,775,000 1,845,414
Puerto Rico Highway & Transportation
Authority, MBIA, 5.5%, 2020 (u) 3,000,000 3,394,320
Puerto Rico Highway & Transportation
Authority, "Y", 5.5%, 2016 (c) 1,020,000 1,149,540
Southeastern Pennsylvania Transportation
Authority, Special Rev., FGIC, 5.25%, 2013 500,000 515,990
- -------------------------------------------------------------------------------
$ 7,429,059
- -------------------------------------------------------------------------------
Universities - Colleges - 12.0%
- -------------------------------------------------------------------------------
Allegheny County, PA, (Chatham College),
5.95%, 2032 $ 335,000 $ 347,040
Allegheny County, PA, Higher Education
Building Authority Rev. (Duquesne
University), "A", XLCA, 5%, 2024 1,000,000 1,045,340
Cumberland County, PA, Municipal Authority
(Dickinson College), AMBAC, 5.55%, 2010 (c) 535,000 566,399
Harrisburg, PA, University of Science,
"A", 5.4%, 2016 300,000 301,038
Lycoming County, PA, (College of
Technology), AMBAC, 5.25%, 2032 750,000 775,830
Pennsylvania Higher Educational Facilities
(Allegheny College), 4.75%, 2031 500,000 492,310
Pennsylvania Higher Educational Facilities
(Philadelphia University), 5.5%, 2020 500,000 516,300
Pennsylvania Higher Educational Facilities
Authority Rev. (Clarion University
Foundation), XLCA, 5%, 2023 1,000,000 1,035,740
Pennsylvania Higher Educational Facilities
Authority Rev. (Drexel University), 5.2%, 2032 500,000 515,025
Pennsylvania Higher Educational Facilities
Authority Rev. (Marywood University),
MBIA, 5.5%, 2010 (c) 300,000 314,949
Pennsylvania Higher Educational Facilities
Authority Rev. (Mercyhurst College), "B", 5%, 2023 500,000 501,350
Pennsylvania Higher Educational Facilities
Authority Rev. (Widener University),
5.375%, 2029 300,000 306,018
Pennsylvania Higher Educational Facilities
Authority Rev. (Widener University), 5%, 2031 300,000 293,445
Pennsylvania Public School Building Authority
(Delaware County College), MBIA, 5.75%, 2010 500,000 530,110
Pennsylvania State University, 5%, 2029 1,400,000 1,458,408
Pennsylvania State University, "A", 5%, 2029 1,000,000 1,037,190
State Public School Building Authority,
PA, Jefferson County (Dubois Technical
School), FGIC, 5%, 2026 1,000,000 1,039,780
Union County, PA, Higher Educational
Facilities Financing Authority, University
Rev. (Bucknell University), 5.25%, 2021 1,000,000 1,057,070
Wilkes-Barre, PA, Finance Authority Rev.
(Wilkes University), 5%, 2037 750,000 713,415
- -------------------------------------------------------------------------------
$ 12,846,757
- -------------------------------------------------------------------------------
Universities - Secondary Schools - 0.6%
- -------------------------------------------------------------------------------
Pennsylvania Economic Development
Financing Authority (Germantown Friends
School Project), 5.35%, 2031 $ 600,000 $ 620,892
- -------------------------------------------------------------------------------
Utilities - Cogeneration - 0.3%
- -------------------------------------------------------------------------------
Carbon County, PA, Industrial Development
Authority Rev. (Panther Creek Partners),
6.65%, 2010 $ 100,000 $ 102,002
Pennsylvania Economic Development
Financing Authority Rev., Resources
Recovery Rev. (Colver), "G", 5.125%, 2015 100,000 99,670
Pennsylvania Economic Development Financing
Authority Rev., Resources Recovery Rev.
(Northampton Generating), 6.4%, 2009 150,000 150,261
- -------------------------------------------------------------------------------
$ 351,933
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 0.5%
- -------------------------------------------------------------------------------
Lehigh County, PA, Industrial Development
Authority Pollution Control Rev. (PPL
Electric Utilities Corp.), "A", FGIC, 4.7%, 2029 $ 500,000 $ 502,780
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 6.7%
- -------------------------------------------------------------------------------
Guam Power Authority Rev., AMBAC, 5.25%, 2014 (u) $ 4,340,000 $ 4,509,390
Philadelphia, PA, Gas Works Rev., FSA,
5.5%, 2009 (c) 1,000,000 1,043,610
Philadelphia, PA, Gas Works Rev., FSA,
5.5%, 2011 (c) 500,000 534,585
Philadelphia, PA, Gas Works Rev. (1998
General Ordinance), FSA, 5.25%, 2013 (c) 1,000,000 1,084,900
- -------------------------------------------------------------------------------
$ 7,172,485
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 9.7%
- -------------------------------------------------------------------------------
Allegheny County, PA, Sewer Rev., MBIA,
5.75%, 2010 (c) $ 750,000 $ 804,668
Bucks County, PA, (Suburban Water Co.),
FGIC, 5.55%, 2032 1,000,000 1,043,980
Delaware County, PA, Water Quality Control
Authority, Sewer Rev., FGIC, 5%, 2018 750,000 780,803
Fairview Township, PA, Sewer Rev., FGIC,
5.05%, 2018 750,000 779,333
Johnstown, PA, Redevelopment Authority,
Sewer Rev., "A", FSA, 5%, 2014 (c) 1,500,000 1,621,005
Lancaster County, PA, Water & Sewer
Authority Rev., MBIA, 5%, 2028 440,000 456,280
Unity Township, PA, Municipal Authority
Sewer Rev., FSA, 5%, 2034 1,660,000 1,716,390
University Area Joint Authority, Sewer
Rev., MBIA, 5%, 2023 1,500,000 1,542,225
Virgin Islands Water & Power Authority
Rev., ASST GTY, RADIAN, 5.3%, 2018 500,000 508,690
Westmoreland County, PA, Municipal Authority
Services Rev., FSA, 5.25%, 2015 (c) 1,000,000 1,102,040
- -------------------------------------------------------------------------------
$ 10,355,414
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $108,154,612) $111,193,289
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.4%
- -------------------------------------------------------------------------------
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "B", 3.93%, due 10/04/07 $ 150,000 $ 150,000
Allegheny County, PA, Hospital Development
Authority Rev. (Presbyterian University
Hospital), "D", 3.93%, due 10/04/07 200,000 200,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 100,000 100,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 450,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $108,604,612) (k) $111,643,289
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.3)% (4,560,298)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $107,082,991
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 4,377
Services
12/01/09 USD 1,500,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (1,970)
Services
12/12/17 USD 1,750,000 Merrill Lynch Capital 7-Day BMA 4.054% (fixed rate) (48,125)
Services
2/21/20 USD 1,000,000 Goldman Sachs International 3-Month LIBOR 5.456% (fixed rate) (14,410)
3/05/20 USD 1,000,000 Merrill Lynch Capital 3-Month LIBOR 5.115% (fixed rate) 15,511
Services
10/24/22 USD 1,500,000 Goldman Sachs International 7-Day BMA 4.160% (fixed rate) (42,029)
3/12/28 USD 1,000,000 Goldman Sachs International 7-Day BMA 3.897% (fixed rate) 14,442
- ---------------------------------------------------------------------------------------------------------------------
$(72,204)
- ---------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or securities to cover
any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) SOUTH CAROLINA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 104.4%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 3.2%
- -------------------------------------------------------------------------------
Horry County, SC, "A", FSA, 5.7%, 2027 $2,250,000 $ 2,298,195
Richland Lexington, SC, Airport Rev.
(Columbia Airport), FSA, 5.125%, 2025 1,500,000 1,547,940
Richland Lexington, SC, Airport Rev.
(Columbia Airport), "A", FSA, 5%, 2026 1,000,000 1,020,990
- -------------------------------------------------------------------------------
$ 4,867,125
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 10.7%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico, ETM,
5.5%, 2018 (c)(u) $4,000,000 $ 4,255,720
Commonwealth of Puerto Rico, ETM,
5.5%, 2019 (c)(u) 3,500,000 3,723,755
Commonwealth of Puerto Rico, MBIA,
5.75%, 2010 (c)(u) 4,000,000 4,231,160
Commonwealth of Puerto Rico, Public
Improvement, "A", 5.25%, 2030 1,000,000 1,032,470
Hilton Head Island, SC, Rev., MBIA, 5.125%, 2022 1,000,000 1,051,460
Horry County, SC, Hospital Fee Special
Obligation, 6%, 2015 915,000 973,286
Richland Lexington Riverbanks, SC, Parks
District, FGIC, 5.8%, 2018 1,000,000 1,037,790
- -------------------------------------------------------------------------------
$ 16,305,641
- -------------------------------------------------------------------------------
General Obligations - Improvement - 1.9%
- -------------------------------------------------------------------------------
Beaufort County, SC, FGIC, 5.25%, 2018 $1,000,000 $ 1,028,190
Puerto Rico Municipal Finance Agency, FSA,
6%, 2016 (u) 1,700,000 1,793,891
- -------------------------------------------------------------------------------
$ 2,822,081
- -------------------------------------------------------------------------------
General Obligations - Schools - 9.6%
- -------------------------------------------------------------------------------
Anderson County, SC, School District, "B",
5.5%, 2010 (c) $1,465,000 $ 1,544,213
Beaufort County, SC, School District, "A",
FSA, 4.25%, 2032 1,000,000 910,870
Chesterfield County, SC, School District,
FSA, 5%, 2023 3,000,000 3,102,930
Darlington County, SC, School District,
FSA, 5%, 2027 2,770,000 2,891,825
Lexington County, SC, School District,
"A", 4.75%, 2028 1,000,000 1,006,090
Orangeburg County, SC, Consolidated School
District, FSA, 5.25%, 2020 1,065,000 1,123,596
Orangeburg County, SC, Consolidated School
District, FSA, 5.375%, 2022 2,050,000 2,182,779
Richland County, SC, School District, 5.1%, 2021 1,750,000 1,811,320
- -------------------------------------------------------------------------------
$ 14,573,623
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 19.0%
- -------------------------------------------------------------------------------
Charleston County, SC, Hospital Facilities Rev.
(Medical Society Health), ETM, MBIA, 5%, 2022 (c) $2,450,000 $ 2,469,526
Florence County, SC, Hospital Rev. (McLeod
Regional Medical Center), "A", FSA, 5%, 2031 2,000,000 2,066,100
Florence County, SC, Hospital Rev. (McLeod
Regional Medical Center), "A", FSA, 5.25%, 2034 2,000,000 2,094,920
Greenville, SC, Hospital Systems, Hospital
Facilities Rev., 6%, 2020 3,400,000 3,880,386
Greenwood County, SC, Hospital Facilities
Rev. (Self Memorial Hospital), 5.5%, 2021 1,000,000 1,037,670
Lexington County, SC, Health Services
District, Inc., Hospital Rev., 5.5%, 2014 (c) 250,000 275,593
Lexington County, SC, Health Services
District, Inc., Hospital Rev., 5.5%, 2014 (c) 250,000 275,593
Lexington County, SC, Health Services
District, Inc., Hospital Rev., 5%, 2032 1,500,000 1,493,775
Lexington County, SC, Health Services
District, Inc., Hospital Rev., Refunding &
Improvement, 5.5%, 2013 (c) 1,000,000 1,097,710
Lexington County, SC, Health Services
District, Inc., Hospital Rev., Refunding &
Improvement, FSA, 5.125%, 2021 1,500,000 1,546,170
South Carolina Jobs & Economic Development
Authority Rev. (Bon Secours Health
Systems, Inc.), "A", 5.625%, 2030 1,250,000 1,287,650
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev.
(Georgetown Memorial Hospital), AMBAC, 6%, 2014 1,000,000 1,057,090
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Georgetown
Memorial Hospital), RADIAN, 5.25%, 2021 1,500,000 1,542,240
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Georgetown
Memorial Hospital), AMBAC, 5%, 2023 1,000,000 1,013,670
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev. (Palmetto
Health Alliance), 6.25%, 2031 750,000 782,963
South Carolina Jobs & Economic Development
Authority, Hospital Facilities Rev.
(Tuomey Health), CIFG, 5%, 2030 1,000,000 1,029,480
Spartanburg County, SC, Health Service
Rev., AMBAC, 5.3%, 2020 2,500,000 2,503,450
Spartanburg County, SC, Health Service
Rev., AMBAC, 5.3%, 2025 1,000,000 1,001,380
Spartanburg County, SC, Health Service
Rev., FSA, 5.25%, 2032 2,250,000 2,327,783
- -------------------------------------------------------------------------------
$ 28,783,149
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 1.9%
- -------------------------------------------------------------------------------
Greenville County, SC, Hospital Rev.
(Chestnut Hill), "A", 8%, 2015 $1,275,000 $ 1,250,112
South Carolina Jobs & Economic Development
Authority, 6%, 2042 500,000 497,050
South Carolina Jobs & Economic Development
Authority, First Mortgage (Lutheran Homes
of South Carolina), 5.625%, 2042 400,000 374,908
South Carolina Jobs & Economic Development
Authority, Health & Facilities Rev., First
Mortgage (Wesley Commons), 5.125%, 2026 400,000 371,768
South Carolina Jobs & Economic Development
Authority, Residential Care Facilities
Rev. (Episcopal Home), "A", 6.375%, 2032 400,000 417,140
- -------------------------------------------------------------------------------
$ 2,910,978
- -------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.7%
- -------------------------------------------------------------------------------
York County, SC, Industrial Rev. (Hoechst
Celanese), 5.7%, 2024 $1,000,000 $ 999,850
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 1.1%
- -------------------------------------------------------------------------------
Calhoun County, SC, Solid Waste Disposal
Facilities Rev. (Carolina Eastman Co.),
ETM, 6.75%, 2017 (c) $1,000,000 $ 1,201,970
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 385,000 396,061
- -------------------------------------------------------------------------------
$ 1,598,031
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 2.0%
- -------------------------------------------------------------------------------
Darlington County, SC, Industrial
Development Rev. (Sonoco Products Co.),
6.125%, 2025 $1,500,000 $ 1,502,790
Georgetown County, SC, Environmental Improvement
Rev. (International Paper), "A", 5.3%, 2028 500,000 482,455
Richland County, SC, Environmental Improvement
Rev. (International Paper), "A", 6.1%, 2023 1,000,000 1,046,260
- -------------------------------------------------------------------------------
$ 3,031,505
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 1.6%
- -------------------------------------------------------------------------------
Myrtle Beach, SC, Hospitality Fee Rev.,
"A", FGIC, 5%, 2036 $ 510,000 $ 525,392
South Carolina Jobs & Economic Development
Authority Rev. (Myrtle Beach Convention),
"B", MBIA, 5.125%, 2018 570,000 590,155
South Carolina Jobs & Economic Development
Authority Rev. (Myrtle Beach Convention),
"B", MBIA, 5.125%, 2019 595,000 618,990
South Carolina Jobs & Economic Development
Authority Rev. (Myrtle Beach Convention),
"B", MBIA, 5.125%, 2020 630,000 654,564
- -------------------------------------------------------------------------------
$ 2,389,101
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.7%
- -------------------------------------------------------------------------------
South Carolina Jobs & Economic Development
Authority Rev. (Coastal Housing Foundation
LLC), "A", CIFG, 5%, 2035 $1,000,000 $ 1,018,760
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.4%
- -------------------------------------------------------------------------------
North Charleston SC, Housing Authority
Rev. (Horizon Village), "A", FHA, 5%, 2038 $1,000,000 $ 977,030
North Charleston SC, Housing Authority
Rev. (Horizon Village), "A", FHA, 5.1%, 2041 1,210,000 1,181,323
- -------------------------------------------------------------------------------
$ 2,158,353
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.5%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 $ 735,000 $ 762,371
- -------------------------------------------------------------------------------
Single Family Housing - State - 4.8%
- -------------------------------------------------------------------------------
South Carolina Housing, Finance & Development
Authority Mortgage Rev., "A-2", FSA, 5.5%, 2034 $ 880,000 $ 897,679
South Carolina Housing, Finance & Development
Authority Mortgage Rev., "A-2", FSA, 5.2%, 2035 985,000 994,653
South Carolina Housing, Finance & Development
Authority Rev., 5.55%, 2038 1,000,000 1,018,750
South Carolina Housing, Finance & Development
Authority Rev., "A-2", FSA, 6%, 2020 370,000 373,134
South Carolina Housing, Finance & Development
Authority Rev., "A-2", FSA, 5.35%, 2024 1,645,000 1,673,310
South Carolina Housing, Finance & Development
Authority Rev., "A-2", AMBAC, 5.15%, 2037 1,000,000 994,790
South Carolina Housing, Finance & Development
Authority Rev., "C-2", FSA, 4.6%, 2032 1,500,000 1,384,035
- -------------------------------------------------------------------------------
$ 7,336,351
- -------------------------------------------------------------------------------
State & Agency - Other - 0.4%
- -------------------------------------------------------------------------------
South Carolina Water Resources Authority Rev.
(Local Government Program), "A", 7.25%, 2020 $ 545,000 $ 546,482
- -------------------------------------------------------------------------------
State & Local Agencies - 5.1%
- -------------------------------------------------------------------------------
North Charleston, SC, Municipal Golf
Course Mortgage Rev., 5.5%, 2009 (c) $1,000,000 $ 1,040,510
Puerto Rico Public Finance Corp., AMBAC,
5.375%, 2019 (u) 2,600,000 2,909,816
Puerto Rico Public Finance Corp., ETM,
"A", AMBAC, 5.375%, 2013 (c)(u) 2,750,000 2,990,515
Spartanburg, SC, Public Facilities Corp.
(Renaissance Park), AMBAC, 5.125%, 2025 685,000 711,845
- -------------------------------------------------------------------------------
$ 7,652,686
- -------------------------------------------------------------------------------
Tax - Other - 0.1%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority
Rev., "A", 5.25%, 2024 $ 180,000 $ 184,334
- -------------------------------------------------------------------------------
Tax Assessment - 0.3%
- -------------------------------------------------------------------------------
Lancaster County, SC, Assessment Rev. (Sun
City Carolina Lakes), 5.45%, 2037 $ 500,000 $ 475,845
- -------------------------------------------------------------------------------
Tobacco - 0.7%
- -------------------------------------------------------------------------------
South Carolina Tobacco Settlement
Authority Rev., "B", 6.375%, 2028 $1,000,000 $ 1,026,550
- -------------------------------------------------------------------------------
Transportation - Special Tax - 3.5%
- -------------------------------------------------------------------------------
South Carolina Transportation
Infrastructure Rev., "A", MBIA, 5.375%, 2009 (c) $1,000,000 $ 1,045,940
South Carolina Transportation
Infrastructure Rev., "A", AMBAC, 5%, 2023 500,000 515,865
South Carolina Transportation
Infrastructure Rev., "A", AMBAC, 5%, 2027 2,000,000 2,067,940
South Carolina Transportation
Infrastructure Rev., "A", AMBAC, 5%, 2033 1,645,000 1,700,864
- -------------------------------------------------------------------------------
$ 5,330,609
- -------------------------------------------------------------------------------
Universities - Colleges - 13.3%
- -------------------------------------------------------------------------------
Clemson University, University Rev.,
AMBAC, 6.25%, 2009 (c) $1,250,000 $ 1,314,900
College of Charleston, SC, Academic &
Administrative Facilities Rev., "B", XLCA,
5%, 2024 800,000 830,976
College of Charleston, SC, Academic &
Administrative Facilities Rev., "B", XLCA,
5.125%, 2034 1,510,000 1,572,121
College of Charleston, SC, Higher
Education Facility Rev., "A", FGIC, 5.25%, 2028 2,435,000 2,539,729
Educational Facilities Authority Private
Non-Profit Institutions of Higher Learning
(Wofford College), "A"', 5%, 2036 1,000,000 1,006,010
South Carolina Educational Facilities Authority
(Furman University), AMBAC, 5.375%, 2020 1,245,000 1,307,511
South Carolina Educational Facilities Authority
(Furman University), AMBAC, 5.5%, 2030 2,000,000 2,106,260
South Carolina Educational Facilities Authority
(Furman University), 5%, 2038 2,000,000 2,017,300
South Carolina Jobs & Economic Development
Authority, Student Housing Rev. (Francis
Marion University), "A", MBIA, 5%, 2034 1,945,000 2,001,502
University of South Carolina, University
Rev., "A", FGIC, 5.625%, 2010 (c) 1,555,000 1,637,384
University of South Carolina, University
Rev., "A", AMBAC, 5%, 2034 3,665,000 3,765,274
- -------------------------------------------------------------------------------
$ 20,098,967
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 9.2%
- -------------------------------------------------------------------------------
Camden, SC, Public Utilities Rev., MBIA,
5.5%, 2017 $ 75,000 $ 76,302
Easley, SC, Utility Rev., FSA, 5%, 2027 1,000,000 1,035,310
Easley, SC, Utility Rev., Refunding &
Improvement, FSA, 5%, 2034 2,000,000 2,075,860
Greenwood, SC, Combined Public Utility,
Refunding & Improvement Systems, MBIA, 5%, 2021 175,000 182,810
Orangeburg County, SC, Solid Waste Disposal
Facilities Rev., Electric & Gas, AMBAC, 5.7%, 2024 2,000,000 2,002,940
Piedmont, SC, Municipal Power Agency,
FGIC, 6.25%, 2021 2,700,000 3,224,205
Puerto Rico Electric Power Authority, FSA,
RITES, 6.344%, 2015 (n)(v) 1,000,000 1,054,610
Puerto Rico Electric Power Authority,
"TT", 5%, 2027 530,000 539,376
South Carolina Public Service Authority,
"A", MBIA, 5.5%, 2010 (c) 200,000 210,312
South Carolina Public Service Authority,
"A", AMBAC, 5%, 2034 2,000,000 2,054,880
South Carolina Public Service Authority,
"B", FSA, 5.125%, 2037 1,500,000 1,540,995
- -------------------------------------------------------------------------------
$ 13,997,600
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 12.7%
- -------------------------------------------------------------------------------
Anderson County, SC, Joint Municipal
Water, FSA, 5%, 2032 $1,000,000 $ 1,026,860
Anderson County, SC, Water & Sewer Systems
Rev., FGIC, 5.125%, 2032 2,000,000 2,081,000
Beaufort-Jasper, SC, Waterworks & Sewer
Systems Rev., 4.5%, 2031 1,000,000 985,720
Berkeley County, SC, Water & Sewer Systems
Rev., "A", FSA, 4.75%, 2029 1,000,000 1,008,890
Cayce, SC, Waterworks & Sewer Rev., Refunding &
Improvement, "A", 4.625%, 2027 500,000 498,365
Charleston, SC, Waterworks & Sewer Rev.,
Capital Improvement, "B", 5%, 2028 1,000,000 1,027,760
Columbia, SC, Waterworks & Sewer Systems
Rev., 6%, 2010 (c) 2,000,000 2,108,900
Columbia, SC, Waterworks & Sewer Systems
Rev., FSA, 5%, 2029 1,020,000 1,059,219
Greenville, SC, Stormwater Systems, FSA, 5%, 2022 595,000 618,015
Lugoff-Elgin, SC, Water Authority Waterworks
Systems Rev., MBIA, 5.125%, 2032 920,000 959,726
Richland County, SC, Broad River Sewer
Systems Rev., "B", XLCA, 4.5%, 2035 1,000,000 969,320
Rock Hill, SC, Utility Systems Rev., Refunding &
Improvement, "A", FSA, 5.375%, 2023 500,000 530,745
Spartanburg, SC, Water & Sewer Authority
Rev., "B", MBIA, 5.25%, 2030 1,250,000 1,313,725
Spartanburg, SC, Waterworks Rev., "A",
FSA, 4.375%, 2028 2,000,000 1,945,500
Sumter, SC, Waterworks & Sewer Systems
Rev., 5%, 2025 1,540,000 1,616,245
York County, SC, Water & Sewer Rev., Refunding &
Capital Improvement, MBIA, 5%, 2027 1,490,000 1,545,786
- -------------------------------------------------------------------------------
$ 19,295,776
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $152,323,480) $158,165,768
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.8%
East Baton Rouge, LA, Pollution Control
Rev. (Exxon Mobil Corp.), 3.94%, due 10/01/07 $ 900,000 $ 900,000
Pinellas County, FL, Health Facilities Authority
Rev. (Pooled Hospital Loan Program), 4.03%,
due 10/01/07 100,000 100,000
Sevier County, TN, Public Building Authority
(Local Government Public Improvement), 4.1%,
due 10/01/07 140,000 140,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 1,140,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $153,463,480) (k) $159,305,768
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.2)% (7,839,902)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $151,465,866
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 6,566
Services
12/01/09 USD 2,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (2,627)
Services
11/01/17 USD 2,000,000 Citibank 3-Month LIBOR 5.558% (fixed rate) (54,980)
- ---------------------------------------------------------------------------------------------------------------
$(51,041)
- ---------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) TENNESSEE MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 96.4%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport and Port Revenue - 1.4%
- -------------------------------------------------------------------------------
Memphis-Shelby County, TN, Airport Authority
Facilities Rev., FSA, 5.125%, 2021 $1,500,000 $ 1,531,650
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 3.3%
- -------------------------------------------------------------------------------
Chattanooga, TN, Public Improvement, 5%, 2009 (c) $1,570,000 $ 1,617,932
Commonwealth of Puerto Rico, Unrefunded
Public Improvement, FSA, 5%, 2024 770,000 794,324
Puerto Rico Public Buildings Authority, 5.5%, 2021 1,000,000 1,100,020
- -------------------------------------------------------------------------------
$ 3,512,276
- -------------------------------------------------------------------------------
General Obligations - Schools - 10.3%
- -------------------------------------------------------------------------------
Gibson County, TN, School District, MBIA,
5.75%, 2009 (c) $ 455,000 $ 470,047
Gibson County, TN, School District, MBIA,
5.75%, 2016 190,000 195,947
Giles County, TN, School Improvement,
FGIC, 5.75%, 2010 (c) 1,980,000 2,077,753
Roane County, TN, Rural School, FGIC,
5.6%, 2008 (c) 915,000 924,022
Roane County, TN, Rural School, FGIC,
5.6%, 2008 (c) 975,000 984,614
Rutherford County, TN, School & Public
Improvement, 5%, 2022 1,510,000 1,560,419
Rutherford County, TN, School District,
5.875%, 2010 (c) 1,100,000 1,161,347
Rutherford County, TN, School Improvement,
5.875%, 2010 (c) 2,000,000 2,111,540
Williamson County, TN, Rural School,
6.125%, 2010 (c) 1,575,000 1,668,240
- -------------------------------------------------------------------------------
$ 11,153,929
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 17.9%
- -------------------------------------------------------------------------------
Johnson City, TN, Health & Education Financing
Authority Rev. (Johnson City Medical Center
Hospital), MBIA, 5.25%, 2016 $1,375,000 $ 1,376,980
Johnson City, TN, Health & Education Financing
Authority Rev. (Johnson City Medical Center
Hospital), ETM, MBIA, 5%, 2018 (c) 1,500,000 1,534,245
Johnson City, TN, Health & Educational Facilities,
Hospital Rev. (Mountain States Health),
"A", 5.5%, 2036 600,000 607,002
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.
(Baptist Health Systems), 6.5%, 2031 300,000 311,100
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.
(Catholic Healthcare Partners), 5.25%, 2030 1,000,000 1,019,770
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.
(Covenant Health), "A", 0%, 2036 4,000,000 888,080
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.
(East Tennessee Children's Hospital), 5.75%, 2033 450,000 459,653
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.
(Fort Sanders), MBIA, 5.75%, 2014 3,250,000 3,601,033
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.
(University Health Systems, Inc.), 5.25%, 2036 1,000,000 991,230
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.,
"A", FSA, 5%, 2013 (c) 545,000 580,605
Knox County, TN, Health, Educational,
Hospital & Housing Facilities Board Rev.,
"A", FSA, 5%, 2022 455,000 468,918
Metropolitan Government Nashville, TN,
Davidson Town, 5.25%, 2008 (c) 540,000 555,617
Metropolitan Government Nashville, TN,
Davidson Town Unrefunded Hospital,
5.25%, 2008 (c) 460,000 473,303
Shelby County, TN, Health, Educational &
Housing Facilities Board Rev. (Methodist
Healthcare), 6.5%, 2012 (c) 375,000 422,640
Shelby County, TN, Health, Educational &
Housing Facilities Board Rev. (Methodist
Healthcare), 6.5%, 2012 (c) 625,000 704,400
Shelby County, TN, Health, Educational &
Housing Facilities Board Rev. (Methodist
Healthcare), 5%, 2031 500,000 507,395
Shelby County, TN, Health, Educational &
Housing Facilities Board Rev. (Methodist
Healthcare), 5%, 2036 1,000,000 1,011,220
Shelby County, TN, Health, Educational &
Housing Facilities Board Rev. (St. Judes
Children's Research), 5.5%, 2009 (c) 1,750,000 1,840,650
Springfield, TN, Health & Higher
Educational Facilities Hospital Rev.
(Northcrest Medical Center), 5.25%, 2013 1,000,000 1,001,480
Sumner County, TN, Health, Educational &
Housing Facilities Board Rev. (Sumner
Regional Health), "A", 5.5%, 2046 1,000,000 990,420
- -------------------------------------------------------------------------------
$ 19,345,741
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.7%
- -------------------------------------------------------------------------------
Blount County, TN, Health & Educational Facilities
Board Rev. (Asbury, Inc.), "A", 5.125%, 2023 $ 500,000 $ 473,625
Shelby County, TN, Health, Educational &
Housing Facilities Board Rev. (Germantown
Village), "A", 7.25%, 2034 250,000 254,800
- -------------------------------------------------------------------------------
$ 728,425
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 1.1%
- -------------------------------------------------------------------------------
Hardeman County, TN, Correctional
Facilities Rev., 7.75%, 2017 $ 890,000 $ 913,380
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 320,000 329,194
- -------------------------------------------------------------------------------
$ 1,242,574
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 0.9%
- -------------------------------------------------------------------------------
McMinn County, TN, Industrial Development
Board, Pollution Control Rev. (Bowater,
Inc.), 7.625%, 2016 $1,000,000 $ 1,004,170
- -------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 3.7%
- -------------------------------------------------------------------------------
Memphis-Shelby County, TN (Memphis Sports
Arena), AMBAC, 5.125%, 2012 (c) $2,000,000 $ 2,142,260
Memphis-Shelby County, TN (Memphis Sports
Arena), AMBAC, 5.35%, 2012 (c) 1,665,000 1,800,681
- -------------------------------------------------------------------------------
$ 3,942,941
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.2%
- -------------------------------------------------------------------------------
Chattanooga, TN, Health, Educational & Housing
Facilities (Rainbow Creek), GNMA, 6.125%, 2019 $ 400,000 $ 416,076
Knoxville, TN, Community Development
Corp., 5%, 2024 1,000,000 1,042,320
Memphis, TN, Health, Educational & Housing
Facilities Board Rev. (Hickory Point
Apartments), MBIA, 5.85%, 2020 1,000,000 1,028,070
Memphis, TN, Health, Educational & Housing
Facilities Board Rev. (Prescott Place
Apartments Project), FNMA, 5.125%, 2038 1,000,000 1,006,760
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Berkshire
Place), GNMA, 6%, 2023 500,000 517,955
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Herman
Street), FHA, 7.25%, 2032 485,000 486,698
- -------------------------------------------------------------------------------
$ 4,497,879
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 1.1%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 0%, 2056 $7,755,000 $ 638,469
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 525,000 544,551
- -------------------------------------------------------------------------------
$ 1,183,020
- -------------------------------------------------------------------------------
Single Family Housing - State - 12.2%
- -------------------------------------------------------------------------------
Tennessee Housing Development Agency
Mortgage Finance, 5.2%, 2023 $1,500,000 $ 1,546,020
Tennessee Housing Development Agency Rev.,
Homeownership Program, 5.45%, 2014 2,535,000 2,607,704
Tennessee Housing Development Agency Rev.,
Homeownership Program, 4.45%, 2017 645,000 639,653
Tennessee Housing Development Agency Rev.,
Homeownership Program, 4.45%, 2017 660,000 654,298
Tennessee Housing Development Agency Rev.,
Homeownership Program, 4.55%, 2018 575,000 568,014
Tennessee Housing Development Agency Rev.,
Homeownership Program, 4.55%, 2018 690,000 681,299
Tennessee Housing Development Agency Rev.,
Homeownership Program, 6%, 2020 900,000 912,474
Tennessee Housing Development Agency Rev.,
Homeownership Program, 5%, 2026 1,995,000 1,998,850
Tennessee Housing Development Agency Rev.,
Homeownership Program, 5.05%, 2027 735,000 736,786
Tennessee Housing Development Agency Rev.,
Homeownership Program, 4.85%, 2032 1,000,000 965,360
Tennessee Housing Development Agency Rev.,
Homeownership Program, FSA, 5.4%, 2032 685,000 697,001
Tennessee Housing Development Agency Rev.,
Homeownership Program, 5.25%, 2034 1,145,000 1,167,476
- -------------------------------------------------------------------------------
$ 13,174,935
- -------------------------------------------------------------------------------
State & Local Agencies - 5.9%
- -------------------------------------------------------------------------------
Chattanooga, TN, Industrial Development
Board, AMBAC, 5.75%, 2018 $1,000,000 $ 1,059,640
Tennessee School Board Authority, "C",
FSA, 5%, 2032 2,000,000 2,077,040
Tennessee School Bond Authority (Higher
Education Facilities), FSA, 5.25%, 2012 (c) 3,000,000 3,209,730
- -------------------------------------------------------------------------------
$ 6,346,410
- -------------------------------------------------------------------------------
Tax - Other - 0.7%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority
Rev., "E", 5.875%, 2018 $ 730,000 $ 749,440
- -------------------------------------------------------------------------------
Tobacco - 1.0%
- -------------------------------------------------------------------------------
Guam Economic Development Authority
Tobacco Settlement, "B", 5.5%, 2041 $ 350,000 $ 349,006
Tobacco Settlement Financing Corp., 5%, 2031 750,000 696,023
- -------------------------------------------------------------------------------
$ 1,045,029
- -------------------------------------------------------------------------------
Transportation - Special Tax - 1.0%
- -------------------------------------------------------------------------------
Puerto Rico Highway & Transportation
Authority Rev., ASSD GTY, 5.25%, 2034 $1,005,000 $ 1,119,801
- -------------------------------------------------------------------------------
Universities - Colleges - 6.3%
- -------------------------------------------------------------------------------
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (McKendree
Village, Inc.), 5.125%, 2020 $1,000,000 $ 1,003,700
Metropolitan Government of Nashville &
Davidson County, TN, Health, Educational &
Housing Facilities Board Rev. (Meharry
Medical College), AMBAC, 5%, 2024 3,750,000 3,812,513
University of Puerto Rico Rev., "Q", 5%, 2036 1,985,000 1,990,399
- -------------------------------------------------------------------------------
$ 6,806,612
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 7.1%
- -------------------------------------------------------------------------------
Clarksville, TN, Electrical Systems Rev.,
XLCA, 5%, 2032 $ 500,000 $ 516,965
Lawrenceberg, TN, Electrical Rev., MBIA,
5.5%, 2009 (c) 1,255,000 1,297,908
Metropolitan Government of Nashville & Davidson
County, TN, Electrical Rev., 5.125%, 2021 1,500,000 1,557,765
Metropolitan Government of Nashville & Davidson
County, TN, Electrical Rev., "A", AMBAC, 5%, 2029 1,500,000 1,553,715
Metropolitan Government of Nashville & Davidson
County, TN, Electrical Rev., MBIA, 0%, 2012 3,305,000 2,765,227
- -------------------------------------------------------------------------------
$ 7,691,580
- -------------------------------------------------------------------------------
Utilities - Other - 1.0%
- -------------------------------------------------------------------------------
Tennessee Energy Acquisition, "A", 5.25%, 2026 $1,000,000 $ 1,027,830
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 16.6%
- -------------------------------------------------------------------------------
Hallsdale-Powell Utility District, TN,
Water & Sewer Rev., "A", FGIC, 5%, 2024 $1,500,000 $ 1,554,615
Hallsdale-Powell Utility District, TN,
Water & Sewer Rev., "A", FGIC, 5%, 2027 3,000,000 3,103,260
Hallsdale-Powell Utility District, TN,
Water & Sewer Rev., "N", FGIC, 5%, 2036 1,000,000 1,037,500
Harpeth Valley Utility District, TN, Davidson &
Williamson Counties Rev., FGIC, 5.25%, 2037 1,000,000 1,049,710
Madison, TN, Utility Waterworks Rev.,
MBIA, 5%, 2019 2,750,000 2,759,211
Rutherford County, TN, Water Rev., MBIA, 5%, 2027 770,000 807,899
West Knox Utility District, TN, Water &
Sewer Rev., ETM, MBIA, 0%, 2007 (c) 1,920,000 1,908,864
West Wilson Utility District, TN,
Waterworks Rev., MBIA, 5.25%, 2014 (c) 2,000,000 2,186,380
White House Utility District, TN, "Y",
FSA, 5%, 2011 (c) 380,000 396,724
White House Utility District, TN,
Unrefunded, FSA, 5%, 2021 420,000 431,348
White House Utility District, TN, Water &
Sewer Rev. (Robertson & Sumner Counties
Waterworks), FSA, 6%, 2010 (c) 1,000,000 1,053,010
White House Utility District, TN, Water &
Sewer Rev. (Robertson & Sumner Counties
Waterworks), FSA, 5%, 2012 (c) 1,500,000 1,583,100
- -------------------------------------------------------------------------------
$ 17,871,621
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $100,287,412) $103,975,863
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.1%
- -------------------------------------------------------------------------------
Sevier County, TN, Public Building
Authority, 3.88%, due 10/04/07 $ 600,000 $ 600,000
Sevier County, TN, Public Building
Authority, 3.88%, due 10/04/07 100,000 100,000
Sevier County, TN, Public Building
Authority Rev. (Local Government Public
Improvement), "E-5", 3.88%, due 10/04/07 1,090,000 1,090,000
Sevier County, TN, Public Building Authority Rev.,
Government Public Improvement II, "B-1", 3.88%,
due 10/04/07 400,000 400,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 2,190,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $102,477,412) (k) $106,165,863
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.5% 1,671,292
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $107,837,155
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
1/09/18 USD 2,250,000 Merrill Lynch Capital 5.771% (fixed rate) 3-Month LIBOR $ 97,313
Services
1/09/23 USD 2,000,000 Citibank 5.920% (fixed rate) 3-Month LIBOR 113,700
2/20/23 USD 2,000,000 Goldman Sachs International 4.093% (fixed rate) 7-Day BMA 38,235
1/09/28 USD 2,000,000 Citibank 5.902% (fixed rate) 3-Month LIBOR 115,100
3/05/28 USD 2,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 10,720
- ---------------------------------------------------------------------------------------------------------------------
$375,068
- ---------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) VIRGINIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 100.8%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
Airport & Port Revenue - 5.3%
- -------------------------------------------------------------------------------
Metropolitan Washington, DC, Airport
Authority Rev., "A", FGIC, 5.125%, 2024 $1,000,000 $ 1,031,461
Metropolitan Washington, DC, Airport
Authority Rev., "A", FGIC, 5%, 2025 705,000 720,736
Metropolitan Washington, DC, Airport
Authority Rev., "A", FSA, 5%, 2032 1,455,000 1,477,116
Metropolitan Washington, DC, Airport
Authority Rev., "A", MBIA, 5%, 2035 3,000,000 3,035,460
Norfolk, VA, Airport Authority Rev., "A",
FGIC, 5.375%, 2017 1,755,000 1,857,439
Norfolk, VA, Airport Authority Rev., "A",
FGIC, 5%, 2022 3,000,000 3,077,970
Virginia Port Authority Facilities Rev.,
FGIC, 5%, 2036 3,000,000 3,050,670
Virginia Resources Authority, Airport
Rev., "B", 5.125%, 2027 720,000 736,150
- -------------------------------------------------------------------------------
$ 14,987,002
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 2.4%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public
Improvement, "A", 5.25%, 2030 $2,000,000 $ 2,064,940
Newport News, VA, Economic Development,
"A", 5%, 2031 1,595,000 1,655,116
Stafford County, VA, Industrial Development
Authority Rev., "B", MBIA, 5%, 2034 3,060,000 3,167,069
- -------------------------------------------------------------------------------
$ 6,887,125
- -------------------------------------------------------------------------------
General Obligations - Improvement - 12.9%
- -------------------------------------------------------------------------------
Arlington County, VA, 4.5%, 2028 $ 375,000 $ 374,977
Chesterfield County, VA, 6%, 2010 (c) 1,900,000 2,002,391
Chesterfield County, VA, 5%, 2011 (c) 2,015,000 2,104,688
Hampton, VA, Public Improvement, 6%, 2010 (c) 3,280,000 3,519,046
Hampton, VA, Public Improvement, 6%, 2010 (c) 3,480,000 3,733,622
Lynchburg, VA, Public Improvement, 5.6%, 2010 (c) 1,765,000 1,873,477
Puerto Rico Municipal Finance Agency, FSA,
6%, 2009 (c)(u) 2,210,000 2,332,058
Puerto Rico Municipal Finance Agency, "A",
FSA, 5.5%, 2009 (c)(u) 1,230,000 1,287,121
Richmond, VA, 0%, 2008 2,000,000 1,979,640
Richmond, VA, "A", FSA, 5.125%, 2010 (c) 5,000,000 5,220,500
Richmond, VA, "B", 0%, 2008 5,270,000 5,216,351
Richmond, VA, "B", 0%, 2009 5,175,000 4,941,504
Suffolk, VA, Public Improvement, 5.5%, 2010 (c) 1,880,000 1,985,374
- -------------------------------------------------------------------------------
$ 36,570,749
- -------------------------------------------------------------------------------
General Obligations - Schools - 0.4%
- -------------------------------------------------------------------------------
Harrisonburg, VA, Public Recreation
Facilities, FSA, 5.75%, 2029 $1,000,000 $ 1,079,630
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 10.0%
- -------------------------------------------------------------------------------
Albemarle County, VA, Industrial
Development Authority, Hospital Rev.
(Martha Jefferson Hospital), 5.25%, 2035 $3,000,000 $ 3,043,350
Arlington County, VA, Industrial Development
Authority Rev. (Virginia Hospital Center
Arlington Health Systems), 5.25%, 2011 (c) 2,600,000 2,774,460
Fredericksburg, VA, Industrial Development
Rev. (Medicorp Health Systems), "B", 5.125%, 2033 750,000 756,015
Henrico County, VA, Economic Development
Authority Rev. (Bon Secours Health
Systems, Inc.), "A", 5.6%, 2030 2,000,000 2,060,740
Henrico County, VA, Industrial Development
Authority Rev. (Bon Secours Health
Systems, Inc.), MBIA, 6.25%, 2020 1,500,000 1,755,840
Loudoun County, VA, Industrial Development
Authority, Hospital Rev. (Loudoun Hospital
Center), "A", 6.1%, 2012 (c) 1,000,000 1,112,530
Lynchburg, VA, Industrial Development
Authority, Healthcare Facilities Rev.,
Unrefunded Balance (Central Health), 5.2%, 2018 145,000 146,882
Medical College of Virginia, Hospital
Authority Rev., MBIA, 5.125%, 2018 3,000,000 3,085,050
Peninsula Ports Authority, VA, Health
System Rev. (Riverside Health System), 5%, 2018 3,580,000 3,645,944
Peninsula Ports Authority, VA, Hospital Facility
Rev. (Whittaker Memorial), FHA, 8.7%, 2023 1,990,000 2,213,238
Prince William County, VA, Industrial
Development Authority, Hospital Rev.
(Potomac Hospital Corp.), 5.2%, 2026 1,000,000 1,020,970
Roanoke, VA, Industrial Development Authority,
Hospital Rev. (Roanoke Memorial Hospital),
"B", ETM, MBIA, 6.125%, 2017 (c) 3,000,000 3,447,870
Virginia Small Business Financing Authority
Hospital Rev., (Wellmont Health Project),
"A", 5.25%, 2037 1,500,000 1,473,270
Winchester VA, Industrial Development Hospital
Valley Health Systems Obligated, 5.25%, 2037 2,000,000 2,049,880
- -------------------------------------------------------------------------------
$ 28,586,039
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 2.3%
- -------------------------------------------------------------------------------
Fairfax County, VA, Economic Development
Authority, Residential Care Facilities
(Goodwin House, Inc.), 5.125%, 2042 $1,000,000 $ 953,940
Henrico County, VA, Economic Development
Authority, Residential Care Facilities
(United Methodist Homes), "A", 6.7%, 2027 750,000 784,297
James City County, VA, Economic
Development (Virginia United Methodist
Homes, Inc.), "A", 5.5%, 2037 1,000,000 944,130
Lexington, Va, Industrial Development
Authority Residential Care Facilitis
(Kendal at Lexington), "A", 5.5%, 2037 1,000,000 945,810
Lynchburg, VA, Industrial Development Authority,
Residential Care Facilities Rev. (Westminster-
Canterbury of Lynchburg, Inc.), 5%, 2031 750,000 676,672
Norfolk, VA, Redevelopment & Housing
Authority Rev. (Fort Norfolk Retirement
Community), "A", 6.125%, 2035 750,000 770,033
Prince William County, VA, Industrial
Development Authority, Residential Care
Facilities (Westminster Presbyterian
Retirement Community, Inc.), 5.125%, 2026 750,000 717,802
Suffolk, VA, Industrial Development
Authority, Retirement Facilities Rev.
(Lake Prince Center, Inc.), 5.3%, 2031 750,000 702,698
- -------------------------------------------------------------------------------
$ 6,495,382
- -------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 1.2%
- -------------------------------------------------------------------------------
Charles City County, VA, Industrial Development
Authority, Solid Waste Disposal Facility Rev.
(Waste Management, Inc.), 6.25%, 2027 $1,500,000 $ 1,598,835
Henrico County, VA, Industrial Development
Authority Rev. (Browning Ferris, Inc.),
5.45%, 2014 1,750,000 1,765,505
- -------------------------------------------------------------------------------
$ 3,364,340
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 1.3%
- -------------------------------------------------------------------------------
Loudoun County, VA, Industrial Development
Authority Rev. (Dulles Airport Marriott
Hotel), 7.125%, 2015 $2,000,000 $ 2,009,620
Peninsula Ports Authority, VA, Coal Terminal Rev.
(Dominion Terminal Associates), 6%, 2033 1,000,000 1,050,350
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.875%, 2022 750,000 771,547
- -------------------------------------------------------------------------------
$ 3,831,517
- -------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.2%
- -------------------------------------------------------------------------------
Bedford County, VA, Industrial Development
Authority Rev. (Nekooska Packaging Corp.),
5.6%, 2025 $1,000,000 $ 970,000
Hopewell, VA, Industrial Development
Authority, Environmental Impact Rev.
(Smurfit-Stone Container), 5.25%, 2015 740,000 732,141
West Point, VA, Industrial Development
Authority, Solid Waste Disposal Rev.
(Chesapeake Corp.), "A", 6.375%, 2019 1,750,000 1,722,770
- -------------------------------------------------------------------------------
$ 3,424,911
- -------------------------------------------------------------------------------
Multi-Family Housing Revenue - 4.6%
- -------------------------------------------------------------------------------
Alexandria, VA, Redevelopment & Housing
Finance Authority Rev. (Jefferson Village
Apartments), "B", 9%, 2018 $3,545,000 $ 3,557,159
Arlington County, VA, Industrial
Development Authority Rev. (Colonial
Village), FNMA, 5.15%, 2031 3,000,000 3,064,170
Virginia Housing Development Authority
Rev., "B", 5.95%, 2016 1,345,000 1,347,300
Virginia Housing Development Authority
Rev., "G", 5.625%, 2020 2,000,000 2,041,600
Virginia Housing Development Authority
Rev., "I", 5.15%, 2017 3,000,000 3,047,490
- -------------------------------------------------------------------------------
$ 13,057,719
- -------------------------------------------------------------------------------
Parking - 0.6%
- -------------------------------------------------------------------------------
Norfolk, VA, Parking Systems Rev., MBIA, 5%, 2020 $1,630,000 $ 1,669,658
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.8%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 $2,135,000 $ 2,214,507
- -------------------------------------------------------------------------------
Single Family Housing - State - 2.8%
- -------------------------------------------------------------------------------
Virginia Housing Development Authority
Commonwealth, "C", 4.4%, 2022 $1,270,000 $ 1,199,515
Virginia Housing Development Authority
Commonwealth, "C", 4.75%, 2032 1,795,000 1,706,794
Virginia Housing Development Authority,
"A", 5%, 2031 2,000,000 1,972,520
Virginia Housing Development Authority,
"C", 4.66%, 2027 1,285,000 1,209,673
Virginia Housing Development Authority,
"B", 4.75%, 2032 2,000,000 1,906,940
- -------------------------------------------------------------------------------
$ 7,995,442
- -------------------------------------------------------------------------------
State & Agency - Other - 1.8%
- -------------------------------------------------------------------------------
Fairfax County, VA, COP, 6.1%, 2017 $3,090,000 $ 3,457,463
Virginia Biotechnology Research Park Lease
Rev. (Consolidated Laboratories), 5%, 2021 1,500,000 1,555,410
- -------------------------------------------------------------------------------
$ 5,012,873
- -------------------------------------------------------------------------------
State & Local Agencies - 20.8%
- -------------------------------------------------------------------------------
Blue Ridge, VA, Regional Jail Authority,
MBIA, 5.2%, 2021 $1,830,000 $ 1,870,004
Caroline County, VA, Industrial Development
Authority Lease Rev., AMBAC, 5.125%, 2034 1,000,000 1,041,610
Chesapeake, VA, Industrial Development Authority
(Chesapeake Court House), MBIA, 6.25%, 2011 3,985,000 4,071,993
Chesapeake, VA, Industrial Development Authority
(Chesapeake Court House), MBIA, 5.25%, 2017 2,000,000 2,042,100
Chesterfield County, VA, Industrial
Development Authority, Public Facilities
Lease Rev., 7.5%, 2008 470,000 470,160
Dinwiddie County, VA, Industrial Development
Authority Lease Rev., "B", MBIA, 5%, 2030 2,500,000 2,571,175
Fairfax County, VA, Economic Development Authority
Rev. (U.S. Route 28), MBIA, 5%, 2029 1,000,000 1,034,140
Fairfax County, VA, Economic Development
Authority, Fairfax Public Improvement
Project, 5%, 2030 1,000,000 1,031,940
Fairfax County, VA, Economic Development
Authority, Parking Rev. (Vienna II
Metrorail), 6%, 2009 (c) 1,650,000 1,757,712
Fairfax County, VA, Economic Development
Authority, Parking Rev. (Vienna II
Metrorail), 6%, 2009 (c) 1,750,000 1,864,240
Front Royal & Warren County, VA, Industrial
Development Authority Lease Rev., School &
Capital Improvement, "B", FSA, 5%, 2035 2,875,000 2,963,320
King George County, VA, Industrial Development
Authority Lease Rev., FSA, 5%, 2036 2,000,000 2,058,440
Middlesex County, VA, Industrial Development
Authority Rev., AMBAC, 5.125%, 2012 (c) 1,000,000 1,076,320
Middlesex County, VA, Industrial Development
Authority Rev., AMBAC, 5.25%, 2012 (c) 2,000,000 2,163,620
Montgomery County, VA, Industrial
Development, "B", AMBAC, 6%, 2011 (c) 1,000,000 1,084,150
Montgomery County, VA, Industrial
Development, "C", AMBAC, 6%, 2011 (c) 1,120,000 1,214,248
New River Valley, VA, Regional Jail
Authority, MBIA, 5.125%, 2019 3,405,000 3,476,880
Orange County, VA, Industrial Development
Authority (Orange County Project), AMBAC,
5%, 2012 (c) 1,000,000 1,064,990
Powhatan County, VA, Economic Development
Authority Lease Rev. (Virginia Capital
Projects), AMBAC, 5.25%, 2033 1,000,000 1,047,890
Prince William County, VA, Lease
Partnerships, 5%, 2021 1,500,000 1,558,605
Puerto Rico Public Finance Corp., ETM,
AMBAC, 5.375%, 2016 (c)(u) 1,000,000 1,113,700
Puerto Rico Public Finance Corp., ETM,
"A", AMBAC, 5.375%, 2013 (c)(u) 4,000,000 4,349,840
Richmond, VA, Public Facilities, COP
(Megahertz Project), "A", AMBAC, 5%, 2022 1,600,000 1,648,160
Southwest Virginia Regional Jail Authority
Rev., MBIA, 5%, 2035 1,720,000 1,773,131
Virginia College Building Authority (21st
Century College Program), 6%, 2009 (c) 2,000,000 2,083,840
Virginia Resources Authority Rev., 5%, 2021 (u) 2,780,000 2,917,888
Virginia Resources Authority Rev., 5%, 2023 (u) 3,040,000 3,179,110
Virginia Resources Authority Rev., 5%, 2033 (u) 5,020,000 5,170,851
Virginia Resources Authority,
Infrastructure Rev., "A", 5%, 2017 1,360,000 1,408,960
- -------------------------------------------------------------------------------
$ 59,109,017
- -------------------------------------------------------------------------------
Tax - Other - 1.7%
- -------------------------------------------------------------------------------
Greater Richmond Convention Center
Authority, Hotel Tax Rev. (Convention
Center Expansion), 6.125%, 2010 (c) $3,500,000 $ 3,764,530
Virgin Islands, Public Finance Authority
Rev., "A", 5.625%, 2025 1,000,000 1,016,480
- -------------------------------------------------------------------------------
$ 4,781,010
- -------------------------------------------------------------------------------
Tobacco - 1.9%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 435,000 $ 434,869
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.5%, 2039 965,000 966,061
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, "B", 0%, 2055 2,000,000 69,760
Virgin Islands Tobacco Settlement
Financing Corp., 5%, 2021 510,000 501,422
Virginia Tobacco Settlement Financing
Corp., 5.625%, 2015 (c) 1,000,000 1,119,560
Virginia Tobacco Settlement Financing
Corp., "B-1", 5%, 2047 2,850,000 2,396,166
- -------------------------------------------------------------------------------
$ 5,487,838
- -------------------------------------------------------------------------------
Toll Roads - 0.4%
- -------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA, Toll Road
Rev., "B", 0%, 2008 (c) $1,500,000 $ 1,128,480
- -------------------------------------------------------------------------------
Transportation - Special Tax - 1.5%
- -------------------------------------------------------------------------------
Puerto Rico Highway & Transportation
Authority Rev., ASSD GTY, 5.25%, 2034 $2,685,000 $ 2,991,708
Puerto Rico Highway & Transportation
Authority Rev., "J", MBIA, 5%, 2029 1,210,000 1,255,472
- -------------------------------------------------------------------------------
$ 4,247,180
- -------------------------------------------------------------------------------
Universities - Colleges - 3.6%
- -------------------------------------------------------------------------------
Amherst, VA, Industrial Development
Authority Rev. (Educational Facilities
Sweet Briar), 5%, 2026 $1,770,000 $ 1,752,831
Danville, VA, Industrial Development
Authority, Educational Facilities Rev.
(Averett University), 6%, 2022 500,000 511,145
University of Virginia (University Rev.),
"B", 5%, 2027 2,690,000 2,789,046
Virginia College Building Authority,
Educational Facilities Rev., 5%, 2026 2,000,000 1,980,720
Virginia College Building Authority,
Educational Facilities Rev. (Hampton
University), 6%, 2010 (c) 1,000,000 1,067,400
Virginia College Building Authority,
Educational Facilitiess Rev. (Roanoke
College), 4.5%, 2037 2,400,000 2,212,440
- -------------------------------------------------------------------------------
$ 10,313,582
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 1.6%
- -------------------------------------------------------------------------------
Chesapeake, VA, Industrial Development Authority
Rev. (Virginia Electric & Power Co.), 5.25%, 2008 $ 750,000 $ 750,900
Halifax County, VA, Industrial Development
Authority (Old Dominion Electric
Cooperative), AMBAC, 5.625%, 2028 3,000,000 3,190,140
Mecklenburg County, VA, Industrial Development
Authority Rev. (UAE Mecklenburg LP), 6.5%, 2017 700,000 754,908
- -------------------------------------------------------------------------------
$ 4,695,948
- -------------------------------------------------------------------------------
Utilities - Municipal Owned - 9.1%
- -------------------------------------------------------------------------------
Bristol, VA, Utility Systems Rev., ETM,
FSA, 5.75%, 2016 (c) $ 240,000 $ 274,080
Guam Power Authority Rev., AMBAC, 5.25%, 2015 (u) 2,020,000 2,096,457
Puerto Rico Electric Power Authority Rev.,
FSA, 5.3%, 2010 (c)(u) 2,500,000 2,642,750
Puerto Rico Electric Power Authority Rev.,
FSA, 5.625%, 2010 (c)(u) 2,540,000 2,705,075
Puerto Rico Electric Power Authority Rev.,
FSA, 5.75%, 2010 (c)(u) 5,000,000 5,341,200
Richmond, VA, Public Utilities Rev., FSA,
5%, 2012 (c) 5,000,000 5,279,350
Richmond, VA, Public Utilities Rev., FSA, 5%, 2027 1,000,000 1,043,310
Richmond, VA, Public Utilities Rev., FSA,
4.5%, 2033 5,550,000 5,442,829
Richmond, VA, Public Utilities Rev., FSA, 5%, 2035 1,000,000 1,033,830
- -------------------------------------------------------------------------------
$ 25,858,881
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 12.6%
- -------------------------------------------------------------------------------
Fairfax County, VA, Water Authority Rev.,
5%, 2014 (c) $1,000,000 $ 1,076,830
Fairfax County, VA, Water Authority Rev.,
5%, 2014 (c) 3,155,000 3,397,399
Fairfax County, VA, Water Authority Rev., 5%, 2032 2,000,000 2,050,900
Fairfax County, VA, Water Authority Rev.,
Unrefunded, 5%, 2027 3,210,000 3,312,848
Loudoun County, VA, Water & Sewer Rev.,
4.375%, 2037 3,600,000 3,355,272
Prince William County, VA, Water & Sewer
Rev., FGIC, 5.5%, 2009 (c) 2,000,000 2,087,220
Puerto Rico Aqueduct & Sewer Authority
Rev., ETM, 10.25%, 2009 (c) 120,000 127,577
Spotsylvania County, VA, Water & Sewer
Rev., FSA, 5%, 2022 1,450,000 1,493,370
Spotsylvania County, VA, Water & Sewer
Rev., FSA, 4.5%, 2032 1,500,000 1,473,585
Spotsylvania County, VA, Water & Sewer
Rev., FSA, 4.75%, 2035 1,500,000 1,505,685
Upper Occoquan, VA, Sewer Authority, "A",
FSA, 4.5%, 2029 2,600,000 2,578,472
Virginia Beach, VA, Storm Water Utilities
Rev., 6%, 2020 1,000,000 1,074,740
Virginia Resources Authority Sewer Systems
Rev. (Hopewell Regional Wastewater), 5.75%, 2021 1,335,000 1,415,274
Virginia Resources Authority, Clean Water
Rev., 5.4%, 2010 (c) 1,135,000 1,195,144
Virginia Resources Authority, Clean Water
Rev., 6%, 2010 (c) 2,750,000 2,942,225
Virginia Resources Authority,
Infrastructure Rev., FSA, 5.5%, 2010 (c) 350,000 370,125
Virginia Resources Authority,
Infrastructure Rev., FSA, 5.5%, 2010 (c) 630,000 666,225
Virginia Resources Authority,
Infrastructure Rev., MBIA, 5.5%, 2011 (c) 660,000 708,682
Virginia Resources Authority,
Infrastructure Rev., MBIA, 5.5%, 2011 (c) 710,000 762,370
Virginia Resources Authority,
Infrastructure Rev., MBIA, 5.5%, 2011 (c) 700,000 751,632
Virginia Resources Authority,
Infrastructure Rev., MBIA, 5.5%, 2011 (c) 750,000 805,320
Virginia Resources Authority,
Infrastructure Rev., MBIA, 5.5%, 2019 230,000 245,127
Virginia Resources Authority,
Infrastructure Rev., FSA, 5.5%, 2019 90,000 94,741
Virginia Resources Authority,
Infrastructure Rev., MBIA, 5.5%, 2020 240,000 255,451
Virginia Resources Authority, Water & Sewer
Systems Rev. (Tuckahoe Creek Project), 5%, 2035 2,015,000 2,075,410
- -------------------------------------------------------------------------------
$ 35,821,624
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $278,035,235) $286,620,454
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.2%
- -------------------------------------------------------------------------------
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 $ 100,000 $ 100,000
Massachusetts Water Resources Authority,
3.88%, due 10/03/07 100,000 100,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement III,
"A-2", 3.88%, due 10/04/07 100,000 100,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement III,
"A-2", 3.88%, due 10/04/07 100,000 100,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement,
"B-4", 4.1%, due 10/01/07 50,000 50,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 450,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $278,485,235) (k) $287,070,454
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (1.0)% (2,757,887)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $284,312,567
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 13,133
Services
12/01/09 USD 5,000,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (6,568)
Services
1/09/18 USD 3,250,000 Merrill Lynch Capital 5.771% (fixed rate) 3-Month LIBOR 140,563
Services
1/09/23 USD 3,000,000 Citibank 5.920% (fixed rate) 3-Month LIBOR 170,550
2/20/23 USD 3,000,000 Goldman Sachs International 4.093% (fixed rate) 7-Day BMA 57,353
11/01/27 USD 3,000,000 Citibank 4.186% (fixed rate) 7-Day BMA 69,605
1/09/28 USD 3,000,000 Citibank 5.902% (fixed rate) 3-Month LIBOR 172,650
3/05/28 USD 3,000,000 Citibank 4.058% (fixed rate) 7-Day BMA 16,080
- ---------------------------------------------------------------------------------------------------------------------------
$633,366
- ---------------------------------------------------------------------------------------------------------------------------
At September 30, 2007, the fund had sufficient cash and/or other liquid
securities to cover any commitments under these derivative contracts.
SEE PORTFOLIO FOOTNOTES AND NOTES TO FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
MFS(R) WEST VIRGINIA MUNICIPAL BOND FUND
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Municipal Bonds - 103.5%
- -------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------
General Obligations - General Purpose - 14.2%
- -------------------------------------------------------------------------------
Charleston, WV, Public Improvements, 7.2%, 2009 $1,140,000 $ 1,212,195
Commonwealth of Puerto Rico, Public
Improvement, MBIA, 5.75%, 2010 (c)(u) 6,000,000 6,346,740
Commonwealth of Puerto Rico, Public
Improvement, 5.25%, 2023 1,500,000 1,552,440
Commonwealth of Puerto Rico, Public
Improvement, "A", CIFG, 5%, 2025 1,000,000 1,046,500
Commonwealth of Puerto Rico, Public
Improvement, "A", CIFG, 5%, 2034 2,000,000 2,065,700
Puerto Rico Public Buildings Authority Rev.
(State Office Building), "F", XLCA, 5.25%, 2025 2,000,000 2,223,460
West Virginia Highway Improvements, FGIC,
5.625%, 2010 (c) 2,000,000 2,124,180
West Virginia Sewer Improvements, FGIC, 5.5%, 2017 2,565,000 2,660,623
- -------------------------------------------------------------------------------
$ 19,231,838
- -------------------------------------------------------------------------------
General Obligations - Improvement - 2.4%
- -------------------------------------------------------------------------------
Brooke County, WV, Board of Education,
FGIC, 5%, 2016 $1,390,000 $ 1,443,376
Puerto Rico Municipal Finance Agency, "A",
FSA, 5.5%, 2009 (c)(u) 1,800,000 1,883,592
- -------------------------------------------------------------------------------
$ 3,326,968
- -------------------------------------------------------------------------------
General Obligations - Schools - 5.4%
- -------------------------------------------------------------------------------
Jefferson County, WV, Board of Education,
ETM, FGIC, 6.85%, 2009 (c) $1,680,000 $ 1,775,491
Monongalia County, WV, Board of Education,
MBIA, 5%, 2027 2,350,000 2,449,170
Monongalia County, WV, Board of Education,
MBIA, 5%, 2033 3,000,000 3,099,210
- -------------------------------------------------------------------------------
$ 7,323,871
- -------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 7.4%
- -------------------------------------------------------------------------------
Kanawha County, WV, Building Commission
Rev. (St. Francis Hospital), ETM, 7.5%, 2007 (c) $ 30,000 $ 30,187
Ohio County, WV, County Commission Health System
Rev. (Ohio Valley Medical Center), 5.75%, 2013 750,000 732,713
Randolph County, WV, Community Health Systems
Rev. (Davis Health Systems, Inc.), FSA, 5.2%, 2021 1,000,000 1,055,310
Weirton, WV, Municipal Hospital Building,
Commission Rev. (Weirton Hospital Medical
Center), 6.375%, 2031 600,000 620,136
West Virginia Hospital Finance Authority,
Hospital Rev. (Fairmont General Hospital),
6.625%, 2019 300,000 301,476
West Virginia Hospital Finance Authority,
Hospital Rev. (General Division Medical
Office Building), 7.25%, 2014 1,365,000 1,367,607
West Virginia Hospital Finance Authority,
Hospital Rev. (West Virginia University
Hospital), AMBAC, 5%, 2018 1,000,000 1,011,070
West Virginia Hospital Finance Authority,
Hospital Rev., "A", AMBAC, 5%, 2022 2,500,000 2,605,075
West Virginia Hospital Finance Authority,
Hospital Rev., ETM, 6.5%, 2023 (c) 2,000,000 2,393,580
- -------------------------------------------------------------------------------
$ 10,117,154
- -------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 2.2%
- -------------------------------------------------------------------------------
Harrison County, WV, Building Commission Rev.
(Maplewood Retirement), AMBAC, 5.25%, 2008 (c) $2,625,000 $ 2,699,576
West Virginia Economic Development
(Edgewood Summit), 5.5%, 2029 300,000 295,092
- -------------------------------------------------------------------------------
$ 2,994,668
- -------------------------------------------------------------------------------
Industrial Revenue - Other - 0.3%
- -------------------------------------------------------------------------------
Virgin Islands Public Finance Authority,
Refinery Facilities Rev. (Hovensa Coker
Project), 5.88%, 2022 $ 350,000 $ 360,056
- -------------------------------------------------------------------------------
Parking - 1.0%
- -------------------------------------------------------------------------------
West Virginia Economic Development
Authority, Auto Lease Rev. (Capitol
Parking Garage), AMBAC, 5.8%, 2020 $1,260,000 $ 1,327,145
- -------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.8%
- -------------------------------------------------------------------------------
Puerto Rico Sales Tax Financing Corp.,
Sales Tax Rev., 5.25%, 2057 $1,015,000 $ 1,052,799
- -------------------------------------------------------------------------------
Single Family Housing - Local - 1.0%
- -------------------------------------------------------------------------------
Charlestown, WV, Residential Mortgage
Rev., 6.2%, 2011 $ 50,000 $ 50,047
Kanawha County, WV, 0%, 2014 (c) 1,920,000 1,348,474
- -------------------------------------------------------------------------------
$ 1,398,521
- -------------------------------------------------------------------------------
Single Family Housing - State - 5.0%
- -------------------------------------------------------------------------------
Puerto Rico Housing Finance Authority,
Home Mortgage Rev., Mortgage Backed
Securities, "A", 4.75%, 2023 $ 670,000 $ 655,474
West Virginia Housing Development Fund
Rev., 5.25%, 2018 915,000 932,184
West Virginia Housing Development Fund
Rev., 5.3%, 2023 820,000 829,397
West Virginia Housing Development Fund
Rev., "A", 4.625%, 2032 1,000,000 934,510
West Virginia Housing Development Fund
Rev., "B", 5.15%, 2032 3,410,000 3,420,094
- -------------------------------------------------------------------------------
$ 6,771,659
- -------------------------------------------------------------------------------
State & Local Agencies - 22.9%
- -------------------------------------------------------------------------------
Huntington, WV, Municipal Development
Authority, Rev., MBIA, 5.1%, 2018 $1,740,000 $ 1,780,142
West Virginia Building Commission Lease Rev.
(WV Regional Jail), "A", AMBAC, 5.375%, 2018 (u) 9,040,000 10,024,637
West Virginia Building Commission, "B",
AMBAC, 5.375%, 2018 (u) 2,500,000 2,772,300
West Virginia Building Commission, Lease
Rev., ETM, MBIA, 0%, 2008 (c) 3,050,000 2,971,127
West Virginia Building Commission, Lease
Rev., ETM, MBIA, 0%, 2009 (c) 1,000,000 940,300
West Virginia Economic Development Authority
(Correctional Juvenile & Public), MBIA, 5.5%, 2013 1,000,000 1,087,030
West Virginia Economic Development Authority
(Correctional Juvenile & Public), 5%, 2020 1,000,000 1,031,610
West Virginia Economic Development Authority
(Correctional Juvenile & Public), MBIA, 5%, 2026 2,100,000 2,167,725
West Virginia Economic Development Authority
(State Office Building), "B", MBIA, 5.25%, 2030 1,355,000 1,419,457
West Virginia Economic Development Authority,
Auto Lease Rev., 5.2%, 2033 1,000,000 1,021,930
West Virginia Economic Development Authority,
Department of Environmental Protection, 5.5%, 2022 2,000,000 2,133,020
West Virginia Economic Development Authority,
Lease Rev. (State Office Building),
"B", MBIA, 5.25%, 2025 645,000 679,643
West Virginia Hospital Finance Authority,
Hospital Rev. (Veterans Nursing Home), 5.5%, 2034 1,000,000 1,002,090
West Virginia School Building Authority,
Rev., "A", FGIC, 5%, 2020 2,000,000 2,126,740
- -------------------------------------------------------------------------------
$ 31,157,751
- -------------------------------------------------------------------------------
Tax - Other - 0.4%
- -------------------------------------------------------------------------------
Virgin Islands, Public Finance Authority
Rev., "A", 5.625%, 2025 $ 500,000 $ 508,240
- -------------------------------------------------------------------------------
Tax Assessment - 0.6%
- -------------------------------------------------------------------------------
Morgantown, WV, Tax Increment Rev.,
Parking Garage Project, "A", 5%, 2033 $ 500,000 $ 471,700
Ohio County, WV, Commision Tax Increment
Rev., (Forst Henry Centre), "A", 5.85%, 2034 300,000 297,570
- -------------------------------------------------------------------------------
$ 769,270
- -------------------------------------------------------------------------------
Tobacco - 0.5%
- -------------------------------------------------------------------------------
Children's Trust Fund, Tobacco Settlement
Rev., Puerto Rico, 5.375%, 2033 $ 645,000 $ 644,806
- -------------------------------------------------------------------------------
Toll Roads - 0.4%
- -------------------------------------------------------------------------------
Commonwealth of Puerto Rico, Public
Improvement, ETM, FGIC, 0%, 2008 (c) $ 610,000 $ 594,225
- -------------------------------------------------------------------------------
Transportation - Special Tax - 1.4%
- -------------------------------------------------------------------------------
Puerto Rico Highway & Transportation
Authority Rev., "J", MBIA, 5%, 2029 $1,820,000 $ 1,888,396
- -------------------------------------------------------------------------------
Universities - Colleges - 22.9%
- -------------------------------------------------------------------------------
Fairmont State College, West Virginia,
College Rev., "A", FGIC, 5%, 2032 $3,210,000 $ 3,302,159
Fairmont State College, West Virginia,
College Rev., "A", FGIC, 5.375%, 2027 1,500,000 1,591,410
Fairmont State College, West Virginia,
College Rev., "A", FGIC, 5%, 2032 2,250,000 2,308,927
Fairmont State College, West Virginia,
College Rev., "B", FGIC, 5.25%, 2022 5,130,000 5,406,507
Puerto Rico Industrial Tourist Education
(University Plaza), MBIA, 5%, 2021 1,270,000 1,306,957
Shepherd University Board of Governors,
West Virginia Rev. (Residence Facilities
Projects), MBIA, 5%, 2035 1,675,000 1,728,667
West Liberty State College, Capital
Improvement, 6%, 2028 500,000 521,595
West Virginia Department of Higher
Education (Marshall University), FGIC, 5.25%, 2019 1,680,000 1,751,585
West Virginia Department of Higher Education
(Student Union James C. Wilson College),
5.125%, 2022 1,500,000 1,568,505
West Virginia Department of Higher
Education, "B", FGIC, 5%, 2029 3,000,000 3,090,480
West Virginia Department of Higher
Education, "A", MBIA, 5%, 2010 595,000 614,700
West Virginia University, Dormitory Rev.,
AMBAC, 5%, 2007 (c) 2,000,000 2,022,120
West Virginia University, University Systems
Rev. (Marshall University), FGIC, 6%, 2010 (c) 2,705,000 2,888,642
West Virginia University, University Systems
Rev. (West Virginia University), MBIA,
5.5%, 2020 1,700,000 1,913,146
West Virginia, West Virginia University
Improvement Rev., "C", FGIC, 5%, 2028 1,000,000 1,037,610
- -------------------------------------------------------------------------------
$ 31,053,010
- -------------------------------------------------------------------------------
Utilities - Investor Owned - 4.2%
- -------------------------------------------------------------------------------
Mason County, WV, Pollution Control Rev.
(Appalachian Power Co.), 5.5%, 2022 $ 750,000 $ 763,155
West Virginia Economic Development Authority
Solid Waste Disposal Facilities Rev.,
AMBAC, 4.9%, 2037 5,000,000 4,991,900
- -------------------------------------------------------------------------------
$ 5,755,055
- -------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 10.5%
- -------------------------------------------------------------------------------
Berkeley County, WV, Public Service Sewer
District, "A", 5%, 2047 $1,000,000 $ 941,140
Berkeley County, WV, Public Service Sewer
District, Sewer Capacity Impact Fee, 5%, 2022 300,000 289,866
Fairmont, WV, Waterworks Rev., AMBAC, 5.25%, 2022 200,000 220,576
West Virginia Water Development Authority
Loan Program, "B", AMBAC, 4.75%, 2035 500,000 496,150
West Virginia Water Development Authority
Loan Program, "B", AMBAC, 5.125%, 2024 2,140,000 2,259,326
West Virginia Water Development Authority
Rev., AMBAC, 6.25%, 2020 1,000,000 1,068,170
West Virginia Water Development Authority
Rev., AMBAC, 5.25%, 2023 1,000,000 1,065,150
West Virginia Water Development Authority
Rev., AMBAC, 5%, 2026 2,850,000 2,956,448
West Virginia Water Development Authority,
"A", FGIC, 5%, 2033 1,500,000 1,544,130
West Virginia Water Development Authority,
Infrastructure Rev., FSA, 5.5%, 2010 (c) 390,000 411,766
West Virginia Water Development Authority,
Infrastructure Rev., FSA, 5.5%, 2010 (c) 895,000 944,950
West Virginia Water Development Authority,
Infrastructure Rev., "A", AMBAC, 5%, 2033 1,950,000 2,010,314
West Virginia Water Development Authority,
Rev., ETM, 7.1%, 2009 (c) 55,000 56,878
- -------------------------------------------------------------------------------
$ 14,264,864
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $136,713,304) $140,540,296
- -------------------------------------------------------------------------------
Floating Rate Demand Notes - 2.0%
- -------------------------------------------------------------------------------
East Baton Rouge, LA, Pollution Control Rev.
(Exxon Mobil Corp.), 3.94%, due 10/01/07 $ 700,000 $ 700,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "C", 4.04%, due 10/01/07 200,000 200,000
Lincoln County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), "A", 4.04%, due 10/01/07 100,000 100,000
Sevier County, TN, Public Building Authority
(Local Government Public Improvement),
4.1%, due 10/01/07 100,000 100,000
Sevier County, TN, Public Building Authority
Rev., Government Public Improvement III,
"A-2", 3.88%, due 10/04/07 1,100,000 1,100,000
Sublette County, WY, Pollution Control Rev.
(Exxon Mobil Corp.), 3.94%, due 10/01/07 500,000 500,000
- -------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 2,700,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $139,413,304) (k) $143,240,296
- -------------------------------------------------------------------------------
Other Assets, Less Liabilities - (5.5)% (7,444,871)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $135,795,425
- -------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
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 Capital 7-Day BMA 2.795% (fixed rate) $ 6,567
Services
12/01/09 USD 2,500,000 Merrill Lynch Capital 7-Day BMA 3.180% (fixed rate) (3,284)
Services
11/01/17 USD 2,000,000 Citibank 3 Month LIBOR 5.558% (fixed rate) (54,980)
2/21/20 USD 2,000,000 Goldman Sachs International 3 Month LIBOR 5.456% (fixed rate) (28,820)
3/05/20 USD 2,000,000 Merrill Lynch Capital 3 Month LIBOR 5.115% (fixed rate) 31,020
Services
3/12/28 USD 2,000,000 Goldman Sachs International 7-Day BMA 3.897% (fixed rate) 28,884
- ----------------------------------------------------------------------------------------------------------------------
$(20,613)
- ----------------------------------------------------------------------------------------------------------------------
At September 30, 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 (unaudited) - continued
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
September 30, 2007 the following funds held securities that were fair
valued.
FUND MARKET VALUE % OF MARKET VALUE
- --------------------------------------------------------------------------------
Mississippi Fund $ 86,826,962 97.20%
New York Fund 164,055,883 98.91%
North Carolina Fund 331,548,930 99.67%
Pennsylvania Fund 111,193,289 99.60%
South Carolina Fund 158,165,768 99.28%
Tennessee Fund 103,975,863 97.94%
Virginia Fund 286,620,454 99.84%
West Virginia Fund 140,540,296 98.12%
(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
$959,990, $130,025, and $1,054,610, representing 0.6%, 0.1%, and 0.7% of
net assets for the New York Fund, Pennsylvania Fund, and South Carolina
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
LOC Letter of Credit
LIBOR London Interbank Offered Rate
Insurers
- -------------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corp.
ASSD GTY Assured Guaranty Insurance Co.
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.
RADIAN Radian Asset Assurance, Inc.
XLCA XL Capital Insurance Co.
Inverse Floaters
- -------------------------------------------------------------------------------
RITES Residual Interest Tax-Exempt Security
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
At 9/30/07 (unaudited)
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 $86,867,998 $158,068,039 $319,966,322 $108,604,612
Unrealized appreciation (depreciation) 2,458,964 7,787,844 12,682,608 3,038,677
- -------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $89,326,962 $165,855,883 $332,648,930 $111,643,289
Cash 18,977 5,994 49,703 27,932
Receivable for investments sold 45,788 -- 65,000 --
Receivable for fund shares sold 74,208 237,980 59,108 335,285
Interest receivable 1,165,490 2,477,542 5,225,472 1,688,127
Receivable from investment adviser -- -- -- 2,755
Unrealized appreciation on interest rate swaps 9,738 392,677 36,763 34,330
Other assets 279 466 847 342
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $90,641,442 $168,970,542 $338,085,823 $113,732,060
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------------------
Distributions payable $129,224 $221,095 $359,567 $124,425
Payable to the holder of the floating rate certificate
from trust assets 5,369,389 10,390,083 21,510,180 6,179,154
Payable for fund shares reacquired 76,693 45,987 501,983 70,344
Unrealized depreciation on interest rate swaps 16,380 2,627 89,037 106,534
Payable to affiliates -
Management fee 2,790 5,191 10,358 3,518
Shareholder servicing costs 12,600 25,672 26,991 18,212
Distribution and service fees 1,647 7,440 15,943 33,428
Administrative services fee 251 371 629 287
Payable for independent trustees' compensation 8,766 11,282 14,319 8,810
Payable for interest expense and fees 63,482 146,412 220,595 86,293
Accrued expenses and other liabilities 11,641 24,971 36,850 18,064
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities $5,692,863 $10,881,131 $22,786,452 $6,649,069
- -------------------------------------------------------------------------------------------------------------------------------
Net assets $84,948,579 $158,089,411 $315,299,371 $107,082,991
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $82,535,206 $149,230,100 $300,916,890 $103,907,921
Unrealized appreciation (depreciation) on investments 2,452,322 8,177,894 12,630,334 2,966,473
Accumulated net realized gain (loss) on investments (111,126) 740,712 1,829,673 200,193
Accumulated undistributed (distributions in excess of)
net investment income 72,177 (59,295) (77,526) 8,404
- -------------------------------------------------------------------------------------------------------------------------------
Net assets $84,948,579 $158,089,411 $315,299,371 $107,082,991
- -------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
Net Assets
Class A $76,404,712 $120,169,827 $261,121,370 $76,060,176
Class B 8,543,867 22,068,583 23,675,245 31,022,815
Class C -- 15,851,001 30,502,756 --
- -------------------------------------------------------------------------------------------------------------------------------
Total net assets $84,948,579 $158,089,411 $315,299,371 $107,082,991
- -------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 7,889,440 10,873,561 22,282,769 7,522,867
Class B 881,074 2,003,281 2,023,081 3,060,390
Class C -- 1,436,363 2,604,607 --
- -------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 8,770,514 14,313,205 26,910,457 10,583,257
- -------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $9.68 $11.05 $11.72 $10.11
- -------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $10.16 $11.60 $12.30 $10.61
- -------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $9.70 $11.02 $11.70 $10.14
- -------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $-- $11.04 $11.71 $--
- -------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed
on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Assets and Liabilities (unaudited) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
Investments -
Identified cost $153,463,480 $102,477,412 $278,485,235 $139,413,304
Unrealized appreciation (depreciation) 5,842,288 3,688,451 8,585,219 3,826,992
- -------------------------------------------------------------------------------------------------------------------------------
Total investments, at value $159,305,768 $106,165,863 $287,070,454 $143,240,296
Cash 91,870 33,667 83,572 8,004
Receivable for investments sold -- -- 8,785,933 170,000
Receivable for fund shares sold 48,930 96,540 8,934 121,290
Interest receivable 2,616,984 1,506,726 4,284,521 2,339,987
Unrealized appreciation on interest rate swaps 6,566 375,068 639,934 66,471
Other assets 460 349 780 407
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $162,070,578 $108,178,213 $300,874,128 $145,946,455
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------------------
Distributions payable $180,810 $181,770 $400,373 $158,526
Payable for investments purchased 497,065 -- -- --
Payable to the holder of the floating rate certificate
from trust assets 9,303,676 -- 15,704,685 9,704,237
Payable for fund shares reacquired 367,993 106,338 140,824 44,454
Unrealized depreciation on interest rate swaps 57,607 -- 6,568 87,084
Payable to affiliates -
Management fee 4,975 3,542 9,339 4,456
Shareholder servicing costs 19,593 12,711 32,983 15,926
Distribution and service fees 7,058 4,912 12,565 5,863
Administrative services fee 360 288 578 334
Payable for independent trustees' compensation 14,003 11,327 14,537 14,008
Payable for interest expense and fees 137,110 -- 208,299 94,585
Accrued expenses and other liabilities 14,462 20,170 30,810 21,557
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities $10,604,712 $341,058 $16,561,561 $10,151,030
- -------------------------------------------------------------------------------------------------------------------------------
Net assets $151,465,866 $107,837,155 $284,312,567 $135,795,425
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $145,135,738 $103,445,254 $274,342,250 $131,197,393
Unrealized appreciation (depreciation) on investments 5,791,247 4,063,519 9,218,585 3,806,379
Accumulated net realized gain (loss) on investments 353,662 260,510 451,885 591,777
Accumulated undistributed net investment income 185,219 67,872 299,847 199,876
- -------------------------------------------------------------------------------------------------------------------------------
Net assets $151,465,866 $107,837,155 $284,312,567 $135,795,425
- -------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
Net Assets
Class A $133,846,895 $96,876,513 $260,848,099 $126,532,643
Class B 17,618,971 10,960,642 10,705,764 9,262,782
Class C -- -- 12,758,704 --
- -------------------------------------------------------------------------------------------------------------------------------
Total net assets $151,465,866 $107,837,155 $284,312,567 $135,795,425
- -------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
Class A 11,038,165 9,244,107 23,094,907 11,185,617
Class B 1,453,886 1,046,690 948,555 819,232
Class C -- -- 1,129,850 --
- -------------------------------------------------------------------------------------------------------------------------------
Total shares of beneficial interest outstanding 12,492,051 10,290,797 25,173,312 12,004,849
- -------------------------------------------------------------------------------------------------------------------------------
Class A shares
Net asset value per share
(net assets/shares of beneficial interest outstanding) $12.13 $10.48 $11.29 $11.31
- -------------------------------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $12.73 $11.00 $11.85 $11.87
- -------------------------------------------------------------------------------------------------------------------------------
Class B shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $12.12 $10.47 $11.29 $11.31
- -------------------------------------------------------------------------------------------------------------------------------
Class C shares
Net asset value and offering price per share
(net assets/shares of beneficial interest outstanding) $-- $-- $11.29 $--
- -------------------------------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed
on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF OPERATIONS
Six months ended 9/30/07 (unaudited)
These statements describe how much each fund earned in investment income and accrued in expenses. They also describe any gains
or losses generated by each fund's operations.
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------------------------
Interest $2,262,154 $4,409,957 $8,684,788 $2,781,643
- -------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $231,990 $436,829 $884,534 $296,067
Distribution and service fees 33,720 347,890 747,568 180,018
Shareholder servicing costs 32,913 62,840 114,724 43,317
Administrative services fee 11,650 17,864 31,444 13,593
Independent trustees' compensation 2,026 3,276 6,471 3,131
Custodian fee 4,502 8,330 16,720 5,553
Shareholder communications 5,457 9,871 15,551 8,360
Auditing fees 27,691 27,691 27,691 27,691
Legal fees 3,459 4,829 3,594 1,462
Interest expense and fees 108,046 211,049 432,563 124,549
Miscellaneous 16,032 26,815 30,961 23,240
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses $477,486 $1,157,284 $2,311,821 $726,981
- -------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (219) (613) (212) (235)
Reduction of expenses by investment adviser (105,655) (198,944) (402,843) (153,656)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses $371,612 $957,727 $1,908,766 $573,090
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,890,542 $3,452,230 $6,776,022 $2,208,553
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $6,919 $358,275 $311,048 $(98,198)
Swap transactions 80,566 210,694 554,143 127,642
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $87,485 $568,969 $865,191 $29,444
- -------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(1,094,479) $(2,506,518) $(5,024,297) $(1,371,881)
Swap transactions (21,878) 365,058 (116,782) (119,898)
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(1,116,357) $(2,141,460) $(5,141,079) $(1,491,779)
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(1,028,872) $(1,572,491) $(4,275,888) $(1,462,335)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $861,670 $1,879,739 $2,500,134 $746,218
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Operations (unaudited) - continued
SIX MONTHS ENDED 9/30/07
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------------------------
Interest $4,119,133 $2,824,608 $8,535,239 $3,767,705
- -------------------------------------------------------------------------------------------------------------------------------
Expenses -
Management fee $421,358 $300,663 $793,940 $377,711
Distribution and service fees 330,645 229,279 583,205 271,553
Shareholder servicing costs 55,357 38,489 103,090 48,170
Administrative services fee 17,398 13,734 28,692 16,070
Independent trustees' compensation 3,663 3,186 6,461 3,641
Custodian fee 7,383 5,439 15,104 7,016
Shareholder communications 7,889 6,152 14,907 7,344
Auditing fees 27,691 27,691 27,691 27,691
Legal fees 1,638 2,693 3,283 2,919
Interest expense and fees 177,653 -- 308,356 195,544
Miscellaneous 22,201 19,628 32,473 20,025
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses $1,072,876 $646,954 $1,917,202 $977,684
- -------------------------------------------------------------------------------------------------------------------------------
Fees paid indirectly (241) (262) (268) (213)
Reduction of expenses by investment adviser (191,899) (136,908) (361,584) (172,003)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses $880,736 $509,784 $1,555,350 $805,468
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,238,397 $2,314,824 $6,979,889 $2,962,237
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis) -
Investment transactions $35,803 $9,553 $(202,735) $(8,704)
Swap transactions 215,049 (317,971) (610,776) 149,151
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $250,852 $(308,418) $(813,511) $140,447
- -------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -
Investments $(2,387,396) $(1,228,131) $(4,234,414) $(1,941,923)
Swap transactions (73,580) 375,068 640,642 (46,339)
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(2,460,976) $(853,063) $(3,593,772) $(1,988,262)
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $(2,210,124) $(1,161,481) $(4,407,283) $(1,847,815)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,028,273 $1,153,343 $2,572,606 $1,114,422
- -------------------------------------------------------------------------------------------------------------------------------
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
SIX MONTHS ENDED 9/30/07 (UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,890,542 $3,452,230 $6,776,022 $2,208,553
Net realized gain (loss) on investments 87,485 568,969 865,191 29,444
Net unrealized gain (loss) on investments (1,116,357) (2,141,460) (5,141,079) (1,491,779)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $861,670 $1,879,739 $2,500,134 $746,218
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(1,675,829) $(2,576,262) $(5,438,563) $(1,570,934)
Class B (162,196) (428,254) (425,970) (556,296)
Class C -- (284,256) (556,374) --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1,838,025) $(3,288,772) $(6,420,907) $(2,127,230)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $1,046,424 $(900,533) $(8,559,888) $801,970
- -------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $70,069 $(2,309,566) $(12,480,661) $(579,042)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
At beginning of period 84,878,510 160,398,977 327,780,032 107,662,033
At end of period $84,948,579 $158,089,411 $315,299,371 $107,082,991
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of) net
investment income included in net assets at end of period $72,177 $(59,295) $(77,526) $8,404
- -------------------------------------------------------------------------------------------------------------------------------
Statement of Changes in Net Assets - continued
SOUTH CAROLINA TENNESSEE VIRGINIA WEST VIRGINIA
FUND FUND FUND FUND
SIX MONTHS ENDED 9/30/07 (UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,238,397 $2,314,824 $6,979,889 $2,962,237
Net realized gain (loss) on investments 250,852 (308,418) (813,511) 140,447
Net unrealized gain (loss) on investments (2,460,976) (853,063) (3,593,772) (1,988,262)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations $1,028,273 $1,153,343 $2,572,606 $1,114,422
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income
Class A $(2,830,604) $(2,046,639) $(5,640,975) $(2,623,819)
Class B (343,690) (207,030) (206,405) (166,061)
Class C -- -- (226,489) --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3,174,294) $(2,253,669) $(6,073,869) $(2,789,880)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(2,833,269) $(3,288,272) $(6,176,342) $(2,590,224)
- -------------------------------------------------------------------------------------------------------------------------------
Total change in net assets $(4,979,290) $(4,388,598) $(9,677,605) $(4,265,682)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
At beginning of period 156,445,156 112,225,753 293,990,172 140,061,107
At end of period $151,465,866 $107,837,155 $284,312,567 $135,795,425
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in net assets
at end of period $185,219 $67,872 $299,847 $199,876
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Statements of Changes in Net Assets - continued
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA
FUND FUND FUND FUND
YEAR ENDED 3/31/07
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
Financial Statements
FINANCIAL HIGHLIGHTS
MFS(R) MISSISSIPPI MUNICIPAL BOND FUND
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $9.80 $9.73 $9.82 $10.02 $10.02 $9.61
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.22 $0.45(z) $0.44 $0.46 $0.46 $0.46
Net realized and unrealized gain (loss)
on investments (0.12) 0.05(z) (0.09) (0.19) 0.01 0.44
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.50 $0.35 $0.27 $0.47 $0.90
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(0.43) $(0.44) $(0.47) $(0.47) $(0.49)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.68 $9.80 $9.73 $9.82 $10.02 $10.02
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.99(n) 5.20 3.59 2.76 4.77 9.48
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.06(a) 1.11 1.07 0.93 0.82 0.84
Expenses after expense reductions (f) 0.80(a) 0.86 0.82 0.68 0.62 0.64
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.55(a) 0.62 0.64 0.58 0.62 0.64
Net investment income 4.57(a) 4.59(z) 4.48 4.70 4.61 4.70
Portfolio turnover 6 12 9 19 12 22
Net assets at end of period (000 Omitted) $76,405 $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
SIX MONTHS YEARS ENDED 3/31
ENDED ------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $9.81 $9.74 $9.84 $10.03 $10.04 $9.62
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.18 $0.38(z) $0.37 $0.39 $0.38 $0.38
Net realized and unrealized gain (loss)
on investments (0.11) 0.04(z) (0.10) (0.19) (0.01)(g) 0.44
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.07 $0.42 $0.27 $0.20 $0.37 $0.82
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.18) $(0.35) $(0.37) $(0.39) $(0.38) $(0.40)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.70 $9.81 $9.74 $9.84 $10.03 $10.04
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.71(n) 4.41 2.71 2.08 3.80 8.67
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.82(a) 1.87 1.83 1.70 1.64 1.67
Expenses after expense reductions (f) 1.57(a) 1.62 1.58 1.45 1.44 1.47
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.31(a) 1.38 1.40 1.35 1.44 1.47
Net investment income 3.81(a) 3.83(z) 3.72 3.93 3.79 3.86
Portfolio turnover 6 12 9 19 12 22
Net assets at end of period (000 Omitted) $8,544 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) The per share amount is not in accordance with the net realized and unrealized gain/loss for the period because of the
timing of sales of fund shares and the 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.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.15 $11.13 $11.30 $11.53 $11.49 $10.94
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.25 $0.52(z) $0.49 $0.51 $0.51 $0.52
Net realized and unrealized gain (loss)
on investments (0.11) 0.03(z) (0.12) (0.24) 0.04 0.56
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.14 $0.55 $0.37 $0.27 $0.55 $1.08
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.24) $(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 $(0.24) $(0.53) $(0.54) $(0.50) $(0.51) $(0.53)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.05 $11.15 $11.13 $11.30 $11.53 $11.49
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.27(n) 5.07 3.30 2.45 4.90 10.05
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.27(a) 1.32 1.28 1.14 1.13 1.17
Expenses after expense reductions (f) 1.02(a) 1.06 1.03 0.89 0.93 0.97
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.75(a) 0.82 0.85 0.79 0.86 0.87
Net investment income 4.55(a) 4.66(z) 4.36 4.47 4.39 4.56
Portfolio turnover 12 8 12 20 13 17
Net assets at end of period (000 Omitted) $120,170 $118,924 $118,476 $125,861 $131,642 $132,843
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
MFS(R) NEW YORK MUNICIPAL BOND FUND - CONTINUED
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.11 $11.09 $11.27 $11.49 $11.45 $10.93
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.21 $0.43(z) $0.41 $0.42 $0.42 $0.43
Net realized and unrealized gain (loss)
on investments (0.10) 0.04(z) (0.14) (0.22) 0.04 0.54
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.11 $0.47 $0.27 $0.20 $0.46 $0.97
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(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 $(0.20) $(0.45) $(0.45) $(0.42) $(0.42) $(0.45)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.02 $11.11 $11.09 $11.27 $11.49 $11.45
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.98(n) 4.29 2.43 1.77 4.12 8.96
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.02(a) 2.07 2.03 1.89 1.87 1.92
Expenses after expense reductions (f) 1.77(a) 1.82 1.78 1.64 1.67 1.72
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.51(a) 1.57 1.60 1.54 1.60 1.62
Net investment income 3.80(a) 3.91(z) 3.61 3.70 3.62 3.80
Portfolio turnover 12 8 12 20 13 17
Net assets at end of period (000 Omitted) $22,069 $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
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS C 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.13 $11.11 $11.29 $11.51 $11.47 $10.93
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.21 $0.43(z) $0.41 $0.42 $0.42 $0.43
Net realized and unrealized gain (loss)
on investments (0.10) 0.04(z) (0.14) (0.22) 0.04 0.56
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.11 $0.47 $0.27 $0.20 $0.46 $0.99
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(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 $(0.20) $(0.45) $(0.45) $(0.42) $(0.42) $(0.45)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.04 $11.13 $11.11 $11.29 $11.51 $11.47
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.98(n) 4.29 2.43 1.78 4.12 9.14
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.02(a) 2.07 2.03 1.89 1.87 1.92
Expenses after expense reductions (f) 1.77(a) 1.82 1.78 1.64 1.67 1.72
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.51(a) 1.57 1.60 1.54 1.60 1.62
Net investment income 3.80(a) 3.92(z) 3.61 3.72 3.63 3.81
Portfolio turnover 12 8 12 20 13 17
Net assets at end of period (000 Omitted) $15,851 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.86 $11.85 $11.99 $12.30 $12.24 $11.68
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.25 $0.51(z) $0.51 $0.53 $0.53 $0.54
Net realized and unrealized gain (loss)
on investments (0.15) 0.03(z) (0.09) (0.27) 0.07 0.58
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.54 $0.42 $0.26 $0.60 $1.12
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.24) $(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 $(0.24) $(0.53) $(0.56) $(0.57) $(0.54) $(0.56)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.72 $11.86 $11.85 $11.99 $12.30 $12.24
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.87(n) 4.60 3.49 2.15 5.01 9.71
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.33(a) 1.36 1.32 1.10 1.12 1.11
Expenses after expense reductions (f) 1.08(a) 1.11 1.08 0.85 0.92 0.91
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.81(a) 0.86 0.89 0.85 0.92 0.91
Net investment income 4.34(a) 4.34(z) 4.24 4.38 4.30 4.50
Portfolio turnover 7 12 8 9 9 20
Net assets at end of period (000 Omitted) $261,121 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.84 $11.83 $11.98 $12.29 $12.23 $11.67
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.22 $0.44(z) $0.43 $0.45 $0.45 $0.47
Net realized and unrealized gain (loss)
on investments (0.16) 0.02(z) (0.10) (0.27) 0.07 0.57
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.06 $0.46 $0.33 $0.18 $0.52 $1.04
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(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 $(0.20) $(0.45) $(0.48) $(0.49) $(0.46) $(0.48)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.70 $11.84 $11.83 $11.98 $12.29 $12.23
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.54(n) 3.93 2.73 1.49 4.33 9.01
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.98(a) 2.01 1.98 1.75 1.76 1.76
Expenses after expense reductions (f) 1.73(a) 1.76 1.73 1.50 1.56 1.56
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.46(a) 1.51 1.54 1.50 1.56 1.56
Net investment income 3.69(a) 3.70(z) 3.59 3.72 3.64 3.85
Portfolio turnover 7 12 8 9 9 20
Net assets at end of period (000 Omitted) $23,675 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS C 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.85 $11.84 $11.98 $12.29 $12.23 $11.67
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.22 $0.44(z) $0.43 $0.45 $0.45 $0.46
Net realized and unrealized gain (loss)
on investments (0.16) 0.02(z) (0.09) (0.27) 0.07 0.58
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.06 $0.46 $0.34 $0.18 $0.52 $1.04
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(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 $(0.20) $(0.45) $(0.48) $(0.49) $(0.46) $(0.48)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.71 $11.85 $11.84 $11.98 $12.29 $12.23
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.54(n) 3.93 2.82 1.49 4.33 9.01
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.98(a) 2.01 1.98 1.76 1.77 1.76
Expenses after expense reductions (f) 1.73(a) 1.76 1.73 1.51 1.57 1.56
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.46(a) 1.51 1.54 1.51 1.57 1.56
Net investment income 3.69(a) 3.69(z) 3.61 3.76 3.67 3.84
Portfolio turnover 7 12 8 9 9 20
Net assets at end of period (000 Omitted) $30,503 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.24 $10.15 $10.17 $10.31 $10.21 $9.73
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.22 $0.45(z) $0.43 $0.44 $0.42 $0.45
Net realized and unrealized gain (loss)
on investments (0.14) 0.06(z) (0.02) (0.14) 0.10 0.51
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.08 $0.51 $0.41 $0.30 $0.52 $0.96
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.21) $(0.42) $(0.43) $(0.44) $(0.42) $(0.48)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.11 $10.24 $10.15 $10.17 $10.31 $10.21
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.82(n) 5.17 4.08 2.97 5.12 10.12
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.12(a) 1.18 1.13 1.03 1.05 1.03
Expenses after expense reductions (f) 0.83(a) 0.82 0.77 0.69 0.75 0.55
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.60(a) 0.60 0.60 0.60 0.64 0.48
Net investment income 4.35(a) 4.45(z) 4.24 4.33 4.12 4.47
Portfolio turnover 4 9 9 20 24 19
Net assets at end of period (000 Omitted) $76,060 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.27 $10.18 $10.20 $10.34 $10.24 $9.75
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.18 $0.38(z) $0.36 $0.36 $0.34 $0.36
Net realized and unrealized gain (loss)
on investments (0.14) 0.06(z) (0.03) (0.14) 0.10 0.53
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.04 $0.44 $0.33 $0.22 $0.44 $0.89
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.17) $(0.35) $(0.35) $(0.36) $(0.34) $(0.40)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.14 $10.27 $10.18 $10.20 $10.34 $10.24
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.44(n) 4.37 3.30 2.19 4.38 9.21
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.90(a) 1.94 1.89 1.80 1.85 1.85
Expenses after expense reductions (f) 1.61(a) 1.58 1.53 1.46 1.55 1.37
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.38(a) 1.36 1.36 1.37 1.44 1.30
Net investment income 3.57(a) 3.69(z) 3.49 3.56 3.32 3.62
Portfolio turnover 4 9 9 20 24 19
Net assets at end of period (000 Omitted) $31,023 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $12.29 $12.25 $12.36 $12.61 $12.53 $12.00
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.26 $0.55(z) $0.54 $0.56 $0.55 $0.58
Net realized and unrealized gain (loss)
on investments (0.16) 0.00(w)(z) (0.11) (0.25) 0.10 0.54
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.55 $0.43 $0.31 $0.65 $1.12
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.26) $(0.51) $(0.54) $(0.56) $(0.57) $(0.59)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.13 $12.29 $12.25 $12.36 $12.61 $12.53
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.81(n) 4.57 3.48 2.52 5.30 9.51
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.32(a) 1.37 1.34 1.23 1.21 1.23
Expenses after expense reductions (f) 1.07(a) 1.12 1.09 0.98 1.01 1.03
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.84(a) 0.89 0.92 0.89 0.94 0.95
Net investment income 4.32(a) 4.45(z) 4.35 4.50 4.39 4.68
Portfolio turnover 7 10 13 15 16 21
Net assets at end of period (000 Omitted) $133,847 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $12.29 $12.24 $12.36 $12.60 $12.52 $11.99
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.22 $0.47(z) $0.46 $0.48 $0.47 $0.50
Net realized and unrealized gain (loss)
on investments (0.17) 0.01(z) (0.12) (0.24) 0.10 0.54
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.05 $0.48 $0.34 $0.24 $0.57 $1.04
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(0.43) $(0.46) $(0.48) $(0.49) $(0.51)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.12 $12.29 $12.24 $12.36 $12.60 $12.52
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.40(n) 3.98 2.73 1.94 4.62 8.81
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.97(a) 2.02 1.99 1.88 1.86 1.88
Expenses after expense reductions (f) 1.72(a) 1.77 1.74 1.63 1.66 1.68
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.49(a) 1.54 1.57 1.54 1.59 1.60
Net investment income 3.67(a) 3.80(z) 3.70 3.85 3.74 4.03
Portfolio turnover 7 10 13 15 16 21
Net assets at end of period (000 Omitted) $17,619 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(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 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.58 $10.56 $10.71 $10.96 $10.90 $10.43
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.23 $0.47(z) $0.45 $0.45 $0.45 $0.47
Net realized and unrealized gain (loss)
on investments (0.11) (0.01)(z) (0.12) (0.18) 0.06 0.49
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.12 $0.46 $0.33 $0.27 $0.51 $0.96
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(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 $(0.22) $(0.44) $(0.48) $(0.52) $(0.45) $(0.49)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.48 $10.58 $10.56 $10.71 $10.96 $10.90
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.15(n) 4.43 3.13 2.53 4.80 9.34
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.12(a) 1.17 1.19 1.16 1.14 1.17
Expenses after expense reductions (f) 0.87(a) 0.92 0.94 0.91 0.94 0.97
Net investment income 4.32(a) 4.44(z) 4.17 4.16 4.08 4.35
Portfolio turnover 11 15 5 11 19 16
Net assets at end of period (000 Omitted) $96,877 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $10.57 $10.56 $10.70 $10.95 $10.89 $10.42
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.19 $0.40(z) $0.38 $0.38 $0.38 $0.40
Net realized and unrealized gain (loss)
on investments (0.10) (0.02)(z) (0.11) (0.18) 0.06 0.49
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.09 $0.38 $0.27 $0.20 $0.44 $0.89
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.19) $(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 $(0.19) $(0.37) $(0.41) $(0.45) $(0.38) $(0.42)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.47 $10.57 $10.56 $10.70 $10.95 $10.89
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.82(n) 3.66 2.56 1.87 4.12 8.64
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.77(a) 1.82 1.84 1.81 1.79 1.82
Expenses after expense reductions (f) 1.52(a) 1.57 1.59 1.56 1.59 1.62
Net investment income 3.67(a) 3.78(z) 3.52 3.51 3.43 3.70
Portfolio turnover 11 15 5 11 19 16
Net assets at end of period (000 Omitted) $10,961 $12,924 $17,217 $20,689 $24,306 $27,546
- -------------------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.43 $11.41 $11.52 $11.73 $11.61 $11.14
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.28 $0.51(z) $0.51 $0.53 $0.53 $0.53
Net realized and unrealized gain (loss)
on investments (0.18) (0.00)(w)(z) (0.12) (0.21) 0.12 0.47
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.10 $0.51 $0.39 $0.32 $0.65 $1.00
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.24) $(0.49) $(0.50) $(0.53) $(0.53) $(0.53)
From net realized gain on investments -- (0.00)(w) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.24) $(0.49) $(0.50) $(0.53) $(0.53) $(0.53)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.29 $11.43 $11.41 $11.52 $11.73 $11.61
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.90(n) 4.57 3.45 2.83 5.70 9.10
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.28(a) 1.32 1.30 1.10 1.13 1.13
Expenses after expense reductions (f) 1.03(a) 1.07 1.05 0.85 0.93 0.93
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.81(a) 0.87 0.90 0.85 0.93 0.93
Net investment income 4.90(a) 4.51(z) 4.38 4.63 4.53 4.62
Portfolio turnover 15 8 13 11 11 13
Net assets at end of period (000 Omitted) $260,848 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.42 $11.40 $11.51 $11.72 $11.60 $11.13
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.24 $0.44(z) $0.43 $0.46 $0.45 $0.46
Net realized and unrealized gain (loss)
on investments (0.17) (0.00)(w)(z) (0.11) (0.21) 0.12 0.46
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.07 $0.44 $0.32 $0.25 $0.57 $0.92
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
From net realized gain on investments -- (0.00)(w) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.20) $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.29 $11.42 $11.40 $11.51 $11.72 $11.60
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.66(n) 3.89 2.78 2.16 5.02 8.40
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.93(a) 1.97 1.95 1.75 1.77 1.78
Expenses after expense reductions (f) 1.68(a) 1.72 1.70 1.50 1.57 1.58
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.46(a) 1.52 1.55 1.50 1.57 1.58
Net investment income 4.25(a) 3.87(z) 3.73 3.98 3.88 3.97
Portfolio turnover 15 8 13 11 11 13
Net assets at end of period (000 Omitted) $10,706 $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
SIX MONTHS YEARS ENDED 3/31
ENDED -------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.43 $11.41 $11.52 $11.72 $11.61 $11.13
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.24 $0.44(z) $0.43 $0.46 $0.45 $0.45
Net realized and unrealized gain (loss)
on investments (0.18) (0.00)(w)(z) (0.11) (0.20) 0.11 0.48
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.06 $0.44 $0.32 $0.26 $0.56 $0.93
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
From net realized gain on investments -- (0.00)(w) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.20) $(0.42) $(0.43) $(0.46) $(0.45) $(0.45)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.29 $11.43 $11.41 $11.52 $11.72 $11.61
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.58(n) 3.89 2.78 2.25 4.93 8.49
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.93(a) 1.97 1.95 1.75 1.77 1.78
Expenses after expense reductions (f) 1.68(a) 1.72 1.70 1.50 1.57 1.58
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.46(a) 1.52 1.55 1.50 1.57 1.58
Net investment income 4.25(a) 3.86(z) 3.72 3.98 3.88 3.97
Portfolio turnover 15 8 13 11 11 13
Net assets at end of period (000 Omitted) $12,759 $12,377 $12,995 $12,208 $13,338 $12,758
- -------------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(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 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 of 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 semiannual period and
the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming
reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED --------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.45 $11.47 $11.58 $11.82 $11.77 $11.32
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.25 $0.51(z) $0.48 $0.51 $0.51 $0.55
Net realized and unrealized gain (loss)
on investments (0.16) 0.01(z) (0.11) (0.25) 0.05 0.46
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.09 $0.52 $0.37 $0.26 $0.56 $1.01
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.23) $(0.47) $(0.48) $(0.50) $(0.51) $(0.56)
From net realized gain on investments -- (0.07) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.23) $(0.54) $(0.48) $(0.50) $(0.51) $(0.56)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.31 $11.45 $11.47 $11.58 $11.82 $11.77
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.83(n) 4.59 3.21 2.28 4.84 9.04
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.38(a) 1.40 1.34 1.25 1.21 1.26
Expenses after expense reductions (f) 1.13(a) 1.15 1.09 1.00 1.01 1.06
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.85(a) 0.89 0.92 0.89 0.93 0.96
Net investment income 4.37(a) 4.41(z) 4.16 4.35 4.33 4.71
Portfolio turnover 7 13 7 14 17 13
Net assets at end of period (000 Omitted) $126,533 $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
SIX MONTHS YEARS ENDED 3/31
ENDED ---------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value, beginning of period $11.44 $11.46 $11.58 $11.82 $11.76 $11.31
- ---------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.21 $0.43(z) $0.41 $0.43 $0.43 $0.47
Net realized and unrealized gain (loss)
on investments (0.14) 0.01(z) (0.13) (0.24) 0.06 0.46
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.07 $0.44 $0.28 $0.19 $0.49 $0.93
- ---------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(0.39) $(0.40) $(0.43) $(0.43) $(0.48)
From net realized gain on investments -- (0.07) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.20) $(0.46) $(0.40) $(0.43) $(0.43) $(0.48)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.31 $11.44 $11.46 $11.58 $11.82 $11.76
- ---------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.59(n) 3.92 2.45 1.62 4.25 8.34
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.03(a) 2.06 1.99 1.90 1.86 1.91
Expenses after expense reductions (f) 1.78(a) 1.80 1.74 1.65 1.66 1.71
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.50(a) 1.55 1.57 1.54 1.58 1.61
Net investment income 3.72(a) 3.76(z) 3.51 3.71 3.68 4.06
Portfolio turnover 7 13 7 14 17 13
Net assets at end of period (000 Omitted) $9,263 $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.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(z) The fund applied a change in estimate for amortization of premium on certain debt securities 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 of 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
(unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Mississippi Municipal Bond Fund (Mississippi Fund), MFS New York Municipal
Bond Fund (New York Fund), MFS North Carolina Municipal Bond Fund (North
Carolina Fund), MFS Pennsylvania Municipal Bond Fund (Pennsylvania Fund), MFS
South Carolina Municipal Bond Fund (South Carolina Fund), MFS Tennessee
Municipal Bond Fund (Tennessee Fund), MFS Virginia Municipal Bond Fund
(Virginia Fund), and MFS West Virginia Municipal Bond Fund (West Virginia Fund)
are each a series of MFS Municipal Series Trust, which is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Because
each fund invests primarily in the securities of a single state and its
political subdivisions, each fund is vulnerable to the effects of changes in
the legal and economic environment of the particular state. Municipal
securities backed by current or anticipated revenues from a specific project or
specific assets can be negatively affected by the discontinuance of the
taxation supporting the projects or assets or the inability to collect revenues
for the project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, the security could decline in value, interest from the security
could become taxable and each fund may be required to issue Form 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.
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 Statements 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 Statements of Operations. A liquidation payment received or
made upon early termination is recorded as a realized gain or loss in the
Statements 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 Statements 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 may 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 September
30, 2007, 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
OF THE FLOATING RATE FLOATING RATE FEES IN CONNECTION
CERTIFICATE FROM CERTIFICATES ISSUED WITH SELF-DEPOSITED
FUND TRUST ASSETS BY THE TRUST INVERSE FLOATERS
Mississippi Fund $5,369,389 3.78% $108,046
New York Fund 10,390,083 3.87% 211,049
North Carolina Fund 21,510,180 3.86% 432,563
Pennsylvania Fund 6,179,154 3.79% 124,549
South Carolina Fund 9,303,676 3.86% 177,653
Tennessee Fund -- -- --
Virginia Fund 15,704,685 3.84% 308,356
West Virginia Fund 9,704,237 3.88% 195,544
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
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.
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 six months ended September 30, 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 made during the current period will be
determined at fiscal year end. The tax character of distributions declared to
shareholders is as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
YEAR ENDED 3/31/07 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
The federal tax cost and the tax basis components of distributable earnings were as follows:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
AS OF 9/30/07 FUND FUND FUND FUND FUND FUND FUND FUND
Cost of investments $81,419,709 $147,724,702 $297,732,849 $102,246,737 $143,587,890 $102,477,412 $261,979,566 $129,254,276
- -----------------------------------------------------------------------------------------------------------------------------------
Gross appreciation $2,850,602 $8,294,657 $14,867,677 $3,662,829 $6,964,669 $4,195,765 $10,583,338 $4,609,570
Gross depreciation (312,738) (553,559) (1,461,776) (445,431) (550,467) (507,314) (1,197,135) (327,787)
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation) $2,537,864 $7,741,098 $13,405,901 $3,217,398 $6,414,202 $3,688,451 $9,386,203 $4,281,783
AS OF 3/31/07
Undistributed
ordinary income $-- $187,567 $-- $-- $-- $244,063 $299,075 $39,337
Undistributed
tax-exempt income 327,310 335,398 661,555 282,638 663,073 389,769 436,285 499,730
Undistributed
long-term capital
gain -- 40,347 380,172 27,487 -- 85,332 242,917 65,284
Capital loss
carryforwards (226,449) -- -- -- (395,472) -- -- --
Post-October capital
loss deferral -- -- -- -- -- -- -- (2,702)
Other temporary
differences (293,833) (535,287) (1,034,654) (309,282) (521,547) (383,052) (1,053,991) (448,613)
Net unrealized
appreciation/
depreciation 3,582,700 10,240,319 18,296,181 4,555,239 8,730,095 5,156,115 13,547,294 6,120,454
The aggregate cost above includes prior fiscal year end tax adjustments.
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)
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 six months ended September 30, 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
$105,450 $198,558 $402,060 $134,575 $191,526 $136,642 $360,881 $171,669
The management fee incurred for the six months ended September 30, 2007 was equivalent to an annual effective rate of 0.30% of each
fund's average daily net assets.
For the Pennsylvania Fund, the investment adviser has agreed in writing to pay a portion of the 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, 2008, unless changed or
rescinded by the Board of Trustees. For the six months ended September 30, 2007 this reduction amounted to $18,820 and is reflected
as a reduction of total expenses in the Statement of Operations.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received the following amounts
for the six months ended September 30, 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
$20,410 $18,321 $12,234 $14,550 $18,067 $8,616 $15,291 $11,153
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 Plan Fee Table:
CLASS A
-----------------------------------------------------------------------------
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN (d) RATE (e) FEE
Mississippi Fund 0.10% 0.25% 0.35% -- $--
New York Fund 0.10% 0.25% 0.35% 0.25% 148,781
North Carolina Fund 0.10% 0.25% 0.35% 0.35% 463,438
Pennsylvania Fund 0.10% 0.25% 0.35% 0.10% 37,535
South Carolina Fund 0.10% 0.25% 0.35% 0.35% 234,477
Tennessee Fund 0.10% 0.25% 0.35% 0.35% 170,850
Virginia Fund 0.10% 0.25% 0.35% 0.35% 463,246
West Virginia Fund 0.10% 0.25% 0.35% 0.35% 223,526
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% $33,720
New York Fund 0.75% 0.25% 1.00% 1.00% 119,644
North Carolina Fund 0.75% 0.25% 1.00% 1.00% 123,197
Pennsylvania Fund 0.75% 0.25% 1.00% 0.87% 142,483
South Carolina Fund 0.75% 0.25% 1.00% 1.00% 96,168
Tennessee Fund 0.75% 0.25% 1.00% 1.00% 58,429
Virginia Fund 0.75% 0.25% 1.00% 1.00% 57,140
West Virginia Fund 0.75% 0.25% 1.00% 1.00% 48,027
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% $79,465
North Carolina Fund 0.75% 0.25% 1.00% 1.00% 160,933
Virginia Fund 0.75% 0.25% 1.00% 1.00% 62,819
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 $33,720 $347,890 $747,568 $180,018 $330,645 $229,279 $583,205 $271,553
(d) In accordance with the distribution plan for certain classes, each fund pays distribution and/or service fees up to these annual
percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended September 30,
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 six months ended September 30,
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 $-- $-- $9,677 $-- $11 $-- $-- $--
Class B 8,178 24,754 15,083 15,258 21,667 6,900 6,317 6,419
Class C N/A 37 3,091 N/A N/A N/A 852 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 six months ended September 30, 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 $18,891 $35,588 $72,084 $24,109 $34,344 $24,498 $64,681 $30,771
Percentage of average
daily net assets 0.0449% 0.0449% 0.0448% 0.0449% 0.0450% 0.0449% 0.0449% 0.0449%
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 six months ended September 30, 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.
WEST
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$14,022 $27,253 $42,640 $19,208 $21,013 $13,991 $38,409 $17,399
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 average daily net assets. Each fund's annual fixed amount is
$17,500.
The administrative services fee incurred for the six months ended September 30, 2007 was equivalent to the following annual
effective rates of each fund's average daily net assets:
WEST
MISSISSIPPI NEW YORK NORTH CAROLINA PENNSYLVANIA SOUTH CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
0.0277% 0.0226% 0.0196% 0.0253% 0.0228% 0.0252% 0.0199% 0.0235%
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 six months ended September 30, 2007.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$344 $428 $831 $350 $816 $397 $827 $814
The liability for deferred retirement benefits payable to certain retired independent trustees amounted to the following for each
fund at September 30, 2007, and is included in payable for independent trustees' compensation.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$8,526 $10,980 $13,676 $8,429 $13,636 $10,945 $13,697 $13,632
OTHER - These funds and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which provides
for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer
(ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the
Agreement with Tarantino LLC at any time under the terms of the Agreement. For the six months ended September 30, 2007, the fee paid
to Tarantino LLC amounted to the following:
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$209 $393 $798 $266 $380 $271 $706 $340
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 Statement of Operations. Additionally, MFS has agreed to bear all expenses
associated with office space, other administrative support, and supplies provided to the ICCO.
NORTH SOUTH WEST
MISSISSIPPI NEW YORK CAROLINA PENNSYLVANIA CAROLINA TENNESSEE VIRGINIA VIRGINIA
FUND FUND FUND FUND FUND FUND FUND FUND
$205 $386 $783 $261 $373 $266 $703 $334
(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 $5,475,162 $19,179,783 $23,023,797 $7,904,899 $11,751,255 $11,259,403 $45,310,125 $9,749,943
- -----------------------------------------------------------------------------------------------------------------------------------
Sales $5,583,701 $18,966,452 $25,855,405 $4,806,629 $11,375,281 $14,632,095 $55,337,433 $13,288,420
- -----------------------------------------------------------------------------------------------------------------------------------
(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
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 661,856 $6,405,767 663,986 $6,491,928 698,983 $7,706,365 1,133,622 $12,597,179
Class B 29,362 283,586 46,864 458,803 25,608 282,027 86,951 964,688
Class C -- -- -- -- 105,234 1,158,160 126,256 1,407,588
- ---------------------------------------------------------------------------------------------------------------------------------
691,218 $6,689,353 710,850 $6,950,731 829,825 $9,146,552 1,346,829 $14,969,455
Shares issued to
shareholders in
reinvestment of
distributions
Class A 102,506 $994,198 193,423 $1,891,276 134,095 $1,480,327 307,695 $3,437,943
Class B 8,994 87,354 19,122 187,141 25,535 281,033 64,570 718,927
Class C -- -- -- -- 16,140 177,874 35,669 397,818
- ---------------------------------------------------------------------------------------------------------------------------------
111,500 $1,081,552 212,545 $2,078,417 175,770 $1,939,234 407,934 $4,554,688
Shares reacquired
Class A (579,803) $(5,593,666) (925,165) $(9,025,658) (626,909) $(6,907,031) (1,418,323) $(15,814,182)
Class B (116,542) (1,130,815) (181,260) (1,774,943) (356,352) (3,911,375) (551,167) (6,130,622)
Class C -- -- -- -- (106,272) (1,167,913) (275,976) (3,068,367)
- ---------------------------------------------------------------------------------------------------------------------------------
(696,345) $(6,724,481) (1,106,425) $(10,800,601) (1,089,533) $(11,986,319) (2,245,466) $(25,013,171)
Net change
Class A 184,559 $1,806,299 (67,756) $(642,454) 206,169 $2,279,661 22,994 $220,940
Class B (78,186) (759,875) (115,274) (1,128,999) (305,209) (3,348,315) (399,646) (4,447,007)
Class C -- -- -- -- 15,102 168,121 (114,051) (1,262,961)
- ----------------------------------------------------------------------------------------------------------------------------------
106,373 $1,046,424 (183,030) $(1,771,453) (83,938) $(900,533) (490,703) $(5,489,028)
NORTH CAROLINA FUND PENNSYLVANIA FUND
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 584,722 $6,837,126 1,898,273 $22,539,331 762,860 $7,700,654 1,220,775 $12,466,087
Class B 46,998 547,963 73,925 876,814 67,013 677,958 123,402 1,261,103
Class C 157,517 1,843,752 388,647 4,606,363 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
789,237 $9,228,841 2,360,845 $28,022,508 829,873 $8,378,612 1,344,177 $13,727,190
Shares issued to
shareholders in
reinvestment of
distributions
Class A 307,185 $3,603,669 656,787 $7,802,661 97,473 $988,136 181,751 $1,854,890
Class B 19,516 228,664 53,048 629,177 35,183 357,605 76,588 783,496
Class C 34,377 403,143 76,393 906,938 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
361,078 $4,235,476 786,228 $9,338,776 132,656 $1,345,741 258,339 $2,638,386
Shares reacquired
Class A (1,218,335) $(14,219,118) (2,742,695) $(32,545,431) (544,856) $(5,504,523) (1,329,719) $(13,551,451)
Class B (282,922) (3,310,004) (643,462) (7,631,237) (338,353) (3,417,860) (700,221) (7,159,663)
Class C (384,848) (4,495,083) (388,669) (4,608,143) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(1,886,105) $(22,024,205) (3,774,826) $(44,784,811) (883,209) $(8,922,383) (2,029,940) $(20,711,114)
Net change
Class A (326,428) $(3,778,323) (187,635) $(2,203,439) 315,477 $3,184,267 72,807 $769,526
Class B (216,408) (2,533,377) (516,489) (6,125,246) (236,157) (2,382,297) (500,231) (5,115,064)
Class C (192,954) (2,248,188) 76,371 905,158 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(735,790) $(8,559,888) (627,753) $(7,423,527) 79,320 $801,970 (427,424) $(4,345,538)
SOUTH CAROLINA FUND TENNESSEE FUND
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 578,167 $7,006,514 1,237,791 $15,208,672 463,977 $4,855,212 1,107,252 $11,714,106
Class B 11,453 138,604 61,731 755,885 27,419 285,285 21,584 228,692
- ---------------------------------------------------------------------------------------------------------------------------------
589,620 $7,145,118 1,299,522 $15,964,557 491,396 $5,140,497 1,128,836 $11,942,798
Shares issued to
shareholders in
reinvestment of
distributions
Class A 153,629 $1,868,284 307,423 $3,777,261 99,764 $1,045,430 204,944 $2,169,008
Class B 18,923 230,083 44,911 551,237 11,803 123,635 29,765 314,601
- ---------------------------------------------------------------------------------------------------------------------------------
172,552 $2,098,367 352,334 $4,328,498 111,567 $1,169,065 234,709 $2,483,609
Shares reacquired
Class A (736,943) $(8,937,354) (1,208,409) $(14,841,104) (703,411) $(7,350,224) (1,284,714) $(13,567,118)
Class B (259,518) (3,139,400) (564,676) (6,922,293) (214,691) (2,247,610) (460,389) (4,866,746)
- ---------------------------------------------------------------------------------------------------------------------------------
(996,461) $(12,076,754) (1,773,085) $(21,763,397) (918,102) $(9,597,834) (1,745,103) $(18,433,864)
Net change
Class A (5,147) $(62,556) 336,805 $4,144,829 (139,670) $(1,449,582) 27,482 $315,996
Class B (229,142) (2,770,713) (458,034) (5,615,171) (175,469) (1,838,690) (409,040) (4,323,453)
- ---------------------------------------------------------------------------------------------------------------------------------
(234,289) $(2,833,269) (121,229) $(1,470,342) (315,139) $(3,288,272) (381,558) $(4,007,457)
VIRGINIA FUND WEST VIRGINIA FUND
----------------------------------------------------- -----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07 9/30/07 3/31/07
------------------------- ------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 687,354 $7,751,344 1,287,431 $14,716,384 234,469 $2,648,292 652,133 $7,488,745
Class B 26,256 296,169 49,323 563,135 19,330 219,806 35,587 409,605
Class C 104,932 1,185,255 132,391 1,510,841 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
818,542 $9,232,768 1,469,145 $16,790,360 253,799 $2,868,098 687,720 $7,898,350
Shares issued to
shareholders in
reinvestment of
distributions
Class A 296,116 $3,351,042 603,956 $6,905,165 153,723 $1,743,111 372,205 $4,278,867
Class B 11,171 126,368 27,108 309,555 8,518 96,547 24,063 276,549
Class C 12,851 145,382 27,058 309,239 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
320,138 $3,622,792 658,122 $7,523,959 162,241 $1,839,658 396,268 $4,555,416
Shares reacquired
Class A (1,428,116) $(16,117,980) (2,681,174) $(30,616,172) (554,738) $(6,279,453) (1,390,871) $(15,981,170)
Class B (187,219) (2,111,616) (458,840) (5,235,603) (90,085) (1,018,527) (258,739) (2,971,281)
Class C (70,968) (802,306) (215,473) (2,458,382) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(1,686,303) $(19,031,902) (3,355,487) $(38,310,157) (644,823) $(7,297,980) (1,649,610) $(18,952,451)
Net change
Class A (444,646) $(5,015,594) (789,787) $(8,994,623) (166,546) $(1,888,050) (366,533) $(4,213,558)
Class B (149,792) (1,689,079) (382,409) (4,362,913) (62,237) (702,174) (199,089) (2,285,127)
Class C 46,815 528,331 (56,024) (638,302) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(547,623) $(6,176,342) (1,228,220) $(13,995,838) (228,783) $(2,590,224) (565,622) $(6,498,685)
(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 0.30%. In addition, a commitment fee, based on the
average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each
calendar quarter. For the six months ended September 30, 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 $284 $445 $770 $265 $391 $276 $733 $346
Interest Expense -- -- -- -- -- -- -- --
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of each Fund's investment
advisory agreement with MFS. The Trustees consider matters bearing on the Funds
and their advisory arrangements at their meetings throughout the year,
including a review of performance data at each regular meeting. In addition,
the independent Trustees met several times over the course of three months
beginning in May and ending in July, 2007 ("contract review meetings") for the
specific purpose of considering whether to approve the continuation of the
investment advisory agreements for the Funds and the other investment companies
that the Board oversees (the "MFS Funds"). The independent Trustees were
assisted in their evaluation of the Funds' investment advisory agreements by
independent legal counsel, from whom they received separate legal advice and
with whom they met separately from MFS during various contract review meetings.
The independent Trustees were also assisted in this process by the MFS Funds'
Independent Chief Compliance Officer, a full-time senior officer appointed by
and reporting to the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreements, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light of
the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for each Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreements and other arrangements with the Funds.
In connection with their contract review meetings, the Trustees received and
relied upon materials that included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Funds for various
time periods ended December 31, 2006 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a
group of funds identified by objective criteria suggested by MFS ("MFS peer
funds"), (ii) information provided by Lipper Inc. on the Funds' advisory fees
and other expenses and the advisory fees and other expenses of comparable funds
identified by Lipper (the "Lipper expense group"), as well as the advisory fees
and other expenses of MFS peer funds, (iii) information provided by MFS on the
advisory fees of comparable portfolios of other clients of MFS, including
institutional separate accounts and other clients, (iv) information as to
whether and to what extent applicable expense waivers, reimbursements or fee
"breakpoints" are observed for the Funds, (v) information regarding MFS'
financial results and financial condition, including MFS' and certain of its
affiliates' estimated profitability from services performed for the Funds and
the MFS Funds as a whole, (vi) MFS' views regarding the outlook for the mutual
fund industry and the strategic business plans of MFS, (vii) descriptions of
various functions performed by MFS for the Funds, such as compliance monitoring
and portfolio trading practices, and (viii) information regarding the overall
organization of MFS, including information about MFS' senior management and
other personnel providing investment advisory, administrative and other
services to the Funds and other MFS Funds. The comparative performance, fee and
expense information prepared and provided by Lipper Inc. was not independently
verified and the independent Trustees did not independently verify any
information provided to them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreements with the Funds was based on a comprehensive consideration of all
information provided to the Trustees and not the result of any single factor.
Some of the factors that figured particularly in the Trustees' deliberations
are described below, although individual Trustees may have evaluated the
information presented differently from one another, giving different weights to
various factors. It is also important to recognize that the fee arrangements
for the Funds and other MFS Funds are the result of years of review and
discussion between the independent Trustees and MFS, that certain aspects of
such arrangements may receive greater scrutiny in some years than in others,
and that the Trustees' conclusions may be based, in part, on their
consideration of these same arrangements during the course of the year and in
prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed
each Fund's total return investment performance as well as the performance of
peer groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of each Fund's Class A shares in
comparison to the performance of funds in its respective Lipper performance
universe over the three-year period ended December 31, 2006, which the Trustees
believed was a long enough period to reflect differing market conditions.
In assessing the reasonableness of each Fund's advisory fee, the Trustees
considered, among other information, each Fund's advisory fee and the total
expense ratio of each Fund's Class A shares as a percentage of average daily
net assets and the advisory fee and total expense ratios of peer groups of
funds based on information provided by Lipper Inc. and MFS. The Trustees
considered whether the Funds were subject to any fee waivers or reductions or
expense limitations. The Trustees considered that MFS observes an advisory fee
reduction that will remain in effect for each Fund through February 28, 2009 as
part of MFS' settlement with the New York Attorney General concerning market
timing and related matters.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information provided
by MFS as to the generally broader scope of services provided by MFS to the
Funds in comparison to institutional accounts, the higher demands placed on
MFS' investment personnel and trading infrastructure as a result of the daily
cash in-flows and out-flows of the Funds, and the impact on MFS and expenses
associated with the more extensive regulatory regime to which the Funds are
subject in comparison to institutional accounts.
The Trustees also considered whether each Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that each Fund's advisory fee rate schedule is
not currently subject to any breakpoints. Taking into account the advisory fee
reduction noted above for the Funds, and any expense limitations, the Trustees
determined not to recommend any advisory fee breakpoints for the Funds at this
time.
The Trustees also considered information prepared by MFS relating to MFS' costs
and profits with respect to each Fund, the MFS Funds considered as a group, and
other investment companies and accounts advised by MFS, as well as MFS'
methodologies used to determine and allocate its costs to the MFS Funds, the
Funds and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreements, that the advisory fees charged to each Fund
represent reasonable compensation in light of the services being provided by
MFS to the Funds.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Funds.
The Trustees also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and
well-capitalized companies which are spending, and appear to be prepared to
continue to spend, substantial sums to engage personnel and to provide services
to competing investment companies. In this regard, the Trustees also considered
the financial resources of MFS and its ultimate parent, Sun Life Financial Inc.
The Trustees also considered the advantages and possible disadvantages to the
Funds of having an adviser that also serves other investment companies as well
as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the
Funds by MFS and its affiliates under agreements and plans other than the
investment advisory agreements, including any 12b-1 fees the Funds pay to MFS
Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Funds' behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Funds'
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various other
factors. Additionally, the Trustees considered so-called "fall-out benefits" to
MFS such as reputational value derived from serving as investment manager to
the Funds.
Based on their evaluation of factors that they deemed to be material, including
those factors described above, the Board of Trustees, including a majority of
the independent Trustees, concluded that each Fund's investment advisory
agreement with MFS should be continued for an additional one-year period,
commencing August 1, 2007.
MFS MISSISSIPPI MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 2nd quintile for each of the one- and five-
year periods ended December 31, 2006 relative to the Lipper performance
universe. Because of the passage of time, these performance results may differ
from the performance results for more recent periods, including those shown
elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate and total
expense ratio were each lower than the Lipper expense group median.
MFS NEW YORK MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 3rd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 3rd quintile for the one-year period and the
2nd quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS NORTH CAROLINA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 3rd quintile for the one-year period and the
2nd quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
MFS PENNSYLVANIA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 2nd quintile for the one-year period and the
1st quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered that MFS currently observes an expense limitation for the Fund. The
Trustees also considered that, according to the Lipper data (which takes into
account the advisory fee reduction and the expense limitation), the Fund's
effective advisory fee rate and total expense ratio were each lower than the
Lipper expense group median.
MFS SOUTH CAROLINA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 3rd quintile for the one-year period and the
2nd quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was higher
than at the Lipper expense group median.
MFS TENNESSEE MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 4th
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 5th quintile for the one-year period and the
3rd quintile for the five-year period ended December 31, 2006 relative to the
Lipper performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
The Trustees expressed concern to MFS about the substandard investment
performance of the Fund. In the course of their deliberations, the Trustees
took into account information provided by MFS in connection with the contract
review meetings, as well as during investment review meetings conducted with
portfolio management personnel during the course of the year regarding the
Fund's performance and its Lipper performance universe. After reviewing these
and related factors, the Trustees concluded, within the context of their
overall conclusions regarding the investment advisory agreement, that they were
satisfied with MFS' responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was higher
than the Lipper expense group median.
MFS VIRGINIA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 2nd quintile for each of the one- and five-
year periods ended December 31, 2006 relative to the Lipper performance
universe. Because of the passage of time, these performance results may differ
from the performance results for more recent periods, including those shown
elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was higher
than the Lipper expense group median.
MFS WEST VIRGINIA MUNICIPAL BOND FUND
The total return performance of the Fund's Class A shares was in the 2nd
quintile relative to the other funds in the universe for the three-year period
ended December 31, 2006 (the 1st quintile being the best performers and the 5th
quintile being the worst performers). The total return performance of the
Fund's Class A shares was in the 3rd quintile for each of the one- and five-
year periods ended December 31, 2006 relative to the Lipper performance
universe. Because of the passage of time, these performance results may differ
from the performance results for more recent periods, including those shown
elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreements, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees also
considered that, according to the Lipper data (which takes into account the
advisory fee reduction), the Fund's effective advisory fee rate was lower than
the Lipper expense group median, and the Fund's total expense ratio was
approximately at the Lipper expense group median.
ACCESS TO DISCLOSURES ON MFS WEBSITE
A discussion regarding the Board's most recent review and renewal of each
Fund's investment advisory agreement will be available on or before November 1,
2007, by clicking on each Fund's name under "Select a fund" on the MFS Web site
(mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how each fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The trust will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The trust's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site at http://
www.sec.gov, and copies of this information may be obtained, upon payment of a
duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section at the above
address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT US
WEB SITE
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
ACCOUNT SERVICE AND
LITERATURE
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
MAILING ADDRESS
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA
02205-5824
OVERNIGHT MAIL
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116-3741
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to MFS.COM, log in to
your account via MFS Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
500 Boylston Street, Boston, MA 02116
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
Semiannual report
MFS(R) MUNICIPAL INCOME FUND
LETTER FROM THE CEO 1
- -------------------------------------------------------------
PORTFOLIO COMPOSITION 2
- -------------------------------------------------------------
EXPENSE TABLE 3
- -------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 5
- -------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 36
- -------------------------------------------------------------
STATEMENT OF OPERATIONS 38
- -------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 39
- -------------------------------------------------------------
FINANCIAL HIGHLIGHTS 40
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 45
- -------------------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 56
- -------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 60
- -------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 60
- -------------------------------------------------------------
CONTACT INFORMATION BACK COVER
- -------------------------------------------------------------
THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
- ------------------------------------------------------------------------------
NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF
- ------------------------------------------------------------------------------
9/30/07
LMB-SEM
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% and was fairly stable.
This year we have seen a greater level of volatility than has been experienced
in recent years. The Dow hit several new highs but also experienced swift
drops as a global credit crisis swept through markets, spurred by defaults on
U.S. subprime loans and a liquidity crunch. Still, even with this volatility,
the Dow ended the first three quarters of 2007 with a return near 13%.
U.S. Treasury bonds gained ground, especially in the third quarter as
investors sought less risky asset classes. The spreads of many lower quality
debt investments widened.
In 2007 the U.S. dollar fell against the euro, oil prices have hit their
highest levels yet, and gold has spiked to its steepest price in 28 years.
Around the globe, stocks sold off as risk aversion mounted. As we have said
before, markets can be volatile, and investors should make sure they have an
investment plan that can carry them through 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. In our view, investors who remain committed to a long-term plan are more
likely to achieve their financial goals.
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)
November 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 105.9%
Cash & Other Net Assets (5.9)%
TOP FIVE INDUSTRIES (i)
Healthcare Revenue - Hospitals 18.6%
-----------------------------------------------
Utilities - Municipal Owned 11.0%
-----------------------------------------------
General Obligations - Schools 10.2%
-----------------------------------------------
General Obligations - General
Purpose 10.1%
-----------------------------------------------
State & Local Agencies 8.9%
-----------------------------------------------
CREDIT QUALITY OF BONDS (r)
AAA 52.4%
-----------------------------------------------
AA 13.4%
-----------------------------------------------
A 14.6%
-----------------------------------------------
BBB 13.6%
-----------------------------------------------
BB 1.2%
-----------------------------------------------
B 0.5%
-----------------------------------------------
CCC 0.1%
-----------------------------------------------
CC (o) 0.0%
-----------------------------------------------
Not Rated 4.2%
-----------------------------------------------
PORTFOLIO FACTS
Average Duration (d)(i) 7.1
-----------------------------------------------
Average Life (i)(m) 14.3 yrs.
-----------------------------------------------
Average Maturity (i)(m) 16.4 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.
(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 09/30/07.
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 09/30/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
EXPENSE TABLE
Fund Expenses Borne by the Shareholders During the Period,
April 1, 2007 through September 30, 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 (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other fund expenses. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the fund
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period April 1, 2007 through
September 30, 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). 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 4/01/07-
Class Ratio 4/01/07 9/30/07 9/30/07
- --------------------------------------------------------------------------------
Actual 0.90% $1,000.00 $1,010.70 $4.52
A ------------------------------------------------------------------------
Hypothetical (h) 0.90% $1,000.00 $1,020.50 $4.55
- --------------------------------------------------------------------------------
Actual 1.65% $1,000.00 $1,005.80 $8.27
B ------------------------------------------------------------------------
Hypothetical (h) 1.65% $1,000.00 $1,016.75 $8.32
- --------------------------------------------------------------------------------
Actual 1.65% $1,000.00 $1,007.00 $8.28
C ------------------------------------------------------------------------
Hypothetical (h) 1.65% $1,000.00 $1,016.75 $8.32
- --------------------------------------------------------------------------------
Actual (i) 0.62% $1,000.00 $1,019.80 $1.69
A1 ------------------------------------------------------------------------
Hypothetical (h) 0.62% $1,000.00 $1,021.90 $3.13
- --------------------------------------------------------------------------------
Actual (i) 1.39% $1,000.00 $1,017.70 $3.79
B1 ------------------------------------------------------------------------
Hypothetical (h) 1.39% $1,000.00 $1,018.05 $7.01
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(i) For the period of the class' inception, June 25, 2007 through the stated
period end.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads).
If these transaction costs had been included, your costs would have been
higher.
PORTFOLIO OF INVESTMENTS
9/30/07 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Municipal Bonds - 104.4%
- ---------------------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Airport & Port Revenue - 3.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Branson, MO, Regional Airport Transportation Development
District Airport Rev., "B", 6%, 2025 $ 205,000 $ 203,432
Branson, MO, Regional Airport Transportation Development
District Airport Rev., "B", 6%, 2037 100,000 99,714
Branson, MO, Regional Airport Transportation Development
District Airport Rev., "B", 6%, 2037 1,075,000 1,059,337
Chicago, IL, O'Hare International Airport Rev., XLCA, 6%, 2029(u) 6,000,000 6,477,960
Chicago, IL, O'Hare International Airport Rev. (Second Lien
Passenger Facility), "D", AMBAC, 5.5%, 2019 2,195,000 2,314,101
Chicago, IL, O'Hare International Airport Rev. (Third Lien
Passenger Facility), "A", MBIA, 5%, 2029 4,345,000 4,450,844
Chicago, IL, O'Hare International Airport Rev. (Third Lien
Passenger Facility), "B", FSA, 5.75%, 2022 (u) 8,000,000 8,592,560
Chicago, IL, O'Hare International Airport Rev. (Third Lien
Passenger Facility), "B", FSA, 5.75%, 2022 1,125,000 1,208,329
Denver, CO, City & County Airport Rev., AMBAC, 6%, 2017 (u) 5,000,000 5,279,550
Indianapolis, IN, Local Public Improvement (Airport Authority
Project), "I", MBIA, 5%, 2034 900,000 906,453
Louisville & Jefferson County, KY, Regional Airport Authority,
"A", MBIA, 6.5%, 2017 3,000,000 3,066,270
Massachusetts Port Authority Rev., "C", 6.125%, 2010 (c) 1,500,000 1,596,720
Massachusetts Port Authority Rev., ETM, 13%, 2013 (c) 2,465,000 3,186,851
New York, NY, City Industrial Development Agency, Special
Facilities Rev. (Terminal One Group), 5.5%, 2024 875,000 929,075
Niagara, NY, Frontier Transportation Authority Rev. (Buffalo-
Niagara International Airport), MBIA, 5.875%, 2013 1,485,000 1,546,034
Oklahoma City, OK, Airport Trust, "B", FSA, 5.75%, 2017 1,080,000 1,128,589
--------------
$ 42,045,819
- ---------------------------------------------------------------------------------------------------------------------------------
General Obligations - General Purpose - 10.0%
- ---------------------------------------------------------------------------------------------------------------------------------
Chicago, IL, FGIC, 6.125%, 2010 (c) $ 3,785,000 $ 4,074,931
Chicago, IL, AMBAC, 5.5%, 2018 (u) 11,800,000 13,000,768
Chicago, IL (Lakefront Millennium Parking Facilities), MBIA,
5.7%, 2012 (c) 3,000,000 3,299,820
Commonwealth of Massachusetts, 5.375%, 2011 (c)(u) 5,740,000 6,137,036
Commonwealth of Massachusetts, "B", ETM, FGIC, 7%, 2009 (c) 4,680,000 4,855,547
Commonwealth of Puerto Rico, FGIC, 5.5%, 2015 (u) 6,000,000 6,699,720
Commonwealth of Puerto Rico, XLCA, 5.5%, 2017 (u) 2,300,000 2,595,803
Commonwealth of Puerto Rico, Public Improvement, "A",
5.25%, 2027 1,035,000 1,073,854
Country Club Hills, IL, "N", MBIA, 5%, 2031 3,170,000 3,273,279
Cranston, RI, FGIC, 6.375%, 2009 (c) 200,000 213,652
Cranston, RI, FGIC, 6.375%, 2009 (c) 830,000 886,656
Delaware County, OH, 6.25%, 2010 (c) 1,000,000 1,089,890
Houston County, AL, AMBAC, 6.25%, 2009 (c) 4,165,000 4,468,878
Interlocken Metropolitan District, CO, Improvement, "C", XLCA,
0%, 2027 2,370,000 753,826
Kane Kendall County, IL, Capital Appreciation, "E", FGIC,
0%, 2023 1,360,000 616,556
Kane Kendall County, IL, Capital Appreciation, "E", FGIC,
0%, 2025 1,335,000 541,329
Massachusetts Consolidated Loan, "C", 5.875%, 2009 (c) 3,205,000 3,375,634
Mobile County, AL, 6%, 2009 (c) 800,000 835,360
New York, NY, "J", MBIA, 5%, 2017 2,000,000 2,056,340
New York, NY, Urban Development Corp., 5.5%, 2016 13,365,000 13,513,084
Pittsfield, MA, MBIA, 5.5%, 2017 100,000 108,034
Schaumburg, IL, "B", FGIC, 5.25%, 2034 2,000,000 2,105,840
Southlake, TX, AMBAC, 0%, 2009 (c) 1,835,000 978,991
Southlake, TX, AMBAC, 0%, 2009 (c) 3,150,000 1,370,691
Southlake, TX, AMBAC, 0%, 2009 (c) 3,185,000 1,295,021
Southlake, TX, AMBAC, 0%, 2009 (c) 3,150,000 1,197,945
State of California, 5.5%, 2009 (c)(u) 11,650,000 12,236,112
State of California, XLCA, 5.75%, 2009 (c)(u) 2,405,000 2,546,101
State of California, XLCA, 5.75%, 2009 (c)(u) 10,230,000 10,830,194
State of California, XLCA, 5.75%, 2009 (c)(u) 1,115,000 1,180,417
State of California, 5%, 2031 8,715,000 8,870,911
State of Illinois, MBIA, 5.5%, 2025 500,000 518,840
State of Washington, 6.75%, 2010 3,880,000 4,149,427
State of Washington, 6%, 2012 4,360,000 4,795,259
State of Wisconsin, "C", 6%, 2010 (c) 1,200,000 1,272,072
--------------
$ 126,817,818
- ---------------------------------------------------------------------------------------------------------------------------------
General Obligations - Improvement - 2.9%
- ---------------------------------------------------------------------------------------------------------------------------------
Birmingham, AL, "A", 5.75%, 2017 $ 1,000,000 $ 1,066,020
District of Columbia, MBIA, 6.5%, 2010 3,095,000 3,319,016
District of Columbia, ETM, MBIA, 6.5%, 2010 (c) 2,905,000 3,122,904
Massachusetts Bay Transportation Authority, General
Transportation Systems, "A", XLCA, 7%, 2021 10,185,000 12,380,275
Massachusetts Bay Transportation Authority, General
Transportation Systems, "C", XLCA, 6.1%, 2013 10,200,000 11,443,278
Williamson County, TX, AMBAC, 4.75%, 2032 1,370,000 1,371,617
Worcester, MA, FSA, 6%, 2010 (c) 3,475,000 3,710,918
--------------
$ 36,414,028
- ---------------------------------------------------------------------------------------------------------------------------------
General Obligations - Schools - 10.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Adams 12 Five Star Schools, CO, "B", FGIC, 0%, 2025 $ 2,190,000 $ 902,630
Chicago, IL, Board of Education, MBIA, 6.25%, 2015 20,295,000 22,636,023
Chicago, IL, Board of Education, FGIC, 5.25%, 2019 (u) 10,000,000 11,061,700
Clark County, NV, School District, "A", MBIA, 7%, 2010 4,000,000 4,336,640
DeSoto, TX, Independent School District, School Building, PSF,
0%, 2031 1,725,000 509,772
DeSoto, TX, Independent School District, School Building, PSF,
0%, 2034 1,300,000 325,494
DeSoto, TX, Independent School District, School Building, PSF,
0%, 2036 1,630,000 366,017
Dudley-Charlton, MA, Regional School District, FGIC,
5.25%, 2017 (u) 2,990,000 3,310,678
Ferris, TX, Independent School District, PSF, 5.5%, 2034 3,000,000 3,179,370
Florida Board of Education, Capital Outlay, 9.125%, 2014 1,735,000 2,038,556
Florida Board of Education, Capital Outlay, ETM, 9.125%, 2014(c) 265,000 342,862
Forsyth County, GA, School District, 6%, 2010 (c) 865,000 928,439
Fresno, CA, Unified School District, MBIA, 6.55%, 2020 1,225,000 1,416,088
Gilroy, CA, Unified School District, FGIC, 5%, 2027 1,000,000 1,035,690
Goose Creek, TX, Consolidated School District, PSF, 5%, 2009(c) 2,500,000 2,568,925
Grand Blanc, MI, Community Schools (School Building & Site),
FSA, 5%, 2028 1,000,000 1,037,960
Irving, TX, Independent School District, Capital Appreciation,
PSF, 0%, 2026 2,505,000 979,931
Joshua, TX, Independent School District, PSF, 4.75%, 2033 11,585,000 11,638,754
Kane, Cook & DuPage Counties, IL, FSA, 6.375%, 2011 (c) 1,245,000 1,351,809
Kane, Cook & DuPage Counties, IL, FSA, 6.5%, 2011 (c) 1,345,000 1,465,485
Keller, TX, Independent School District, PSF, 6%, 2017 225,000 239,319
Knox County, KY, XLCA, 5.625%, 2014 (c) 1,150,000 1,291,163
Knox County, KY, Independent School District, XLCA,
5.5%, 2014 (c) 640,000 713,562
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 0%, 2014 (c) 2,250,000 855,675
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 0%, 2014 (c) 2,000,000 715,200
Lancaster, TX, Independent School District, Capital
Appreciation, FSA, 5%, 2034 12,000,000 12,371,635
Lane County, OR, School District, 6.25%, 2010 (c) 1,150,000 1,229,500
Lane County, OR, School District, 6.25%, 2010 (c) 1,000,000 1,069,130
Leander, TX, Independent School District, PSF, 0%, 2018 7,385,000 3,907,551
Leander, TX, Independent School District, Capital
Appreciation, Refunding, School Building, "N", PSF, 0%, 2029 4,000,000 1,256,880
Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2027 1,000,000 1,143,690
Manchester, NH, School Facilities Rev., MBIA, 5.5%, 2028 1,000,000 1,143,790
Manistee, MI, Area Public Schools, FGIC, 5.75%, 2009 (c) 700,000 724,388
Palos Verdes Peninsula, CA, Capital Appreciation, "N", FSA,
0%, 2029 5,000,000 1,764,700
Phenix City, AL, AMBAC, 5.65%, 2010 (c) 1,500,000 1,611,540
Philadelphia, PA, School District, MBIA, 6%, 2010 (c) 750,000 792,255
Prosper, TX, Independent School District, Capital
Appreciation, School Building, "N", PSF, 0%, 2031 2,275,000 662,935
Rancho Santiago, CA, Community College District, Election of
2002, MBIA, 5%, 2013 (c) 2,200,000 2,372,326
Rockwall, TX, Independent School District, Unrefunded, Capital
Appreciation, "N", PSF, 0%, 2014 90,000 64,362
Roma, TX, Independent School District, PSF, 5.875%, 2010 (c) 1,705,000 1,813,489
San Jose Evergreen, CA, Community College District, Election
2004, "A", MBIA, 0%, 2028 740,000 251,126
San Marcos, TX, Independent School District, PSF,
5.625%, 2014 (c) 2,000,000 2,235,420
San Marcos, TX, Independent School District, PSF,
5.625%, 2014 (c) 2,000,000 2,235,420
San Rafael, CA, Elementary School District, Election of 1999,
MBIA, 5%, 2028 2,500,000 2,578,725
Santa Clarita Community College District, CA, Election 2006,
MBIA, 0%, 2030 1,610,000 506,587
Sunnyvale, TX, Independent School District, PSF, 5.25%, 2028 1,900,000 2,000,586
Sunnyvale, TX, Independent School District, PSF, 5.25%, 2031 2,000,000 2,097,920
Wattsburg, PA, Public School Building Authority Rev., Capital
Appreciation, MBIA, 0%, 2029 2,150,000 769,528
Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,665,000 1,763,568
Williamson County, TN, Rural School, 6.125%, 2010 (c) 1,765,000 1,869,488
Wylie, TX, Independent School District, PSF, 5.25%, 2029 5,035,000 5,249,491
--------------
$ 128,733,772
- ---------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Hospitals - 18.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Akron Bath Copley, OH, Hospital Rev. (Children's Hospital),
FSA, 5.25%, 2025 $ 1,000,000 $ 1,050,020
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), 9.25%, 2010 (c) 650,000 768,521
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), "A", 5%, 2028 255,000 238,269
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), "A", 5.375%, 2040 3,995,000 3,813,787
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), "B", 9.25%, 2010 (c) 350,000 413,819
Baxter County, AR, Hospital Rev., 5.375%, 2014 2,000,000 2,031,260
Baxter County, AR, Hospital Rev., 5.6%, 2021 1,750,000 1,768,515
California Statewide Communities Development Authority Rev.
(Valleycare Health Systems), "A", 5.125%, 2031 100,000 93,541
California Statewide Communities Development Authority Rev.
(Valleycare Health Systems), "A", 5%, 2022 195,000 188,458
Chemung County, NY, Civic Facilities Rev. (St. Joseph's
Hospital-Elmira), "A", 6%, 2013 515,000 522,514
Colorado Health Facilities Authority Rev. (Portercare
Adventist Health Systems), 6.625%, 2011 (c) 1,750,000 1,968,033
Cuyahoga County, OH, Hospital Facilities Rev. (Canton, Inc.),
7.5%, 2030 900,000 955,512
Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2011(c) 500,000 544,550
District of Columbia, Hospital Rev. (Medlantic Healthcare),
ETM, MBIA, 5.25%, 2019 (c) 6,750,000 6,926,445
Elkhart County, IN, Hospital Authority Rev. (Elkhart General
Hospital, Inc.), 5.25%, 2018 1,000,000 1,021,190
Elkhart County, IN, Hospital Authority Rev. (Elkhart General
Hospital, Inc.), 5.25%, 2020 4,345,000 4,396,792
Florence County, SC, Hospital Rev. (McLeod Regional Medical
Center), "A", FSA, 5.25%, 2034 5,000,000 5,237,300
Fulton County, NY, Industrial Development Agency, Civic
Facilities Rev. (Nathan Littauer Hospital), "A", 5.75%, 2009 160,000 160,859
Gainesville & Hall Counties, GA, Hospital Authority Rev.
(Northeast Georgia Health System, Inc.), 5.5%, 2011 (c) 2,000,000 2,127,700
Glendale, AZ, Industrial Development Authority, (John C.
Lincoln Health), 5%, 2042 1,430,000 1,329,643
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital),
5.75%, 2031 2,100,000 2,138,640
Harris County, TX, Health Facilities Development Corp.
Hospital Rev. (Memorial Herman Healthcare), 6.375%, 2011 (c) 2,000,000 2,204,760
Harris County, TX, Health Facilities Development Corp., "A",
(Texas Children's Hospital), ETM, 5.375%, 2015 (c) 4,300,000 4,484,814
Henrico County, VA, Industrial Development Authority Rev. (Bon
Secours) RIBS, FSA, 7.528%, 2027 (p) 5,000,000 6,488,800
Highlands County, FL, Health Facilities Authority Rev.
(Adventist/Sunbelt Hospital), 6%, 2011 (c) 1,350,000 1,480,734
Huntsville, AL, Health Care Authority Rev., 5.625%, 2011 (c) 2,595,000 2,799,149
Illinois Development Finance Authority Rev. "A" (Provena
Health), MBIA, 5.25%, 2012 1,600,000 1,630,160
Illinois Educational Facilities Authority Rev. (Centegra
Health Systems), 5.25%, 2024 5,500,000 5,583,600
Illinois Health Facilities Authority Rev. (Advocate Health
Care Network), 6.375%, 2010 (c) 1,800,000 1,949,256
Illinois Health Facilities Authority Rev. (Condell Medical
Center), 6.35%, 2015 7,500,000 7,865,400
Illinois Health Facilities Authority Rev. (Decatur Memorial
Hospital), 5.75%, 2024 3,000,000 3,122,370
Illinois Health Facilities Authority Rev. (Passavant Memorial
Area Hospital Associates), 6%, 2010 (c) 1,500,000 1,617,465
Illinois Health Facilities Authority Rev. (Riverside Health
Systems), 5.75%, 2012 (c) 2,625,000 2,886,476
Illinois Health Facilities Authority Rev. (Sinai Health), FHA,
5.15%, 2037 3,040,000 3,087,454
Illinois Health Facilities Authority Rev., "A", (Advocate
Health), MBIA, 5.7%, 2011 660,000 674,117
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Clarian Health), "A", 5%, 2039 1,170,000 1,162,594
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Community Foundation of Northwest Indiana), 5.5%, 2037 6,215,000 6,125,566
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Community Foundation of Northwest Indiana), "A",
6.375%, 2011 (c) 380,000 420,398
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Community Foundation of Northwest Indiana), "A",
6.375%, 2031 120,000 124,285
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Community Foundation of Northwest Indiana), "A",
6.375%, 2011 (c) 185,000 204,667
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Community Foundation of Northwest Indiana), "A",
6.375%, 2021 1,515,000 1,584,084
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Deaconess Hospital), "A", AMBAC, 5.375%, 2034 2,640,000 2,773,294
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Riverview Hospital), 5.25%, 2014 400,000 405,360
Indiana Health & Educational Facilities Authority, Hospital
Rev. (Riverview Hospital), 6.125%, 2031 250,000 258,810
Iowa Finance Authority, Health Care Facilities Rev. (Genesis
Medical Center), 6.125%, 2016 2,195,000 2,300,953
Kentucky Economic Development Finance Authority (Norton
Healthcare), "A", 6.5%, 2010 (c) 2,355,000 2,565,584
Kentucky Economic Development Finance Authority (Norton
Healthcare), "A", 6.625%, 2010 (c) 195,000 213,123
Kentucky Economic Development Finance Authority, Unrefunded
(Norton Healthcare), "A", 6.5%, 2020 3,645,000 3,870,589
Kentucky Economic Development Finance Authority, Unrefunded
(Norton Healthcare), "A", 6.625%, 2028 55,000 58,246
Knox County, TN, Health Educational Hospital Facility (Baptist
Health Systems, East Tennessee), 6.375%, 2022 1,000,000 1,034,970
Knox County, TN, Health, Educational & Housing Facilities
Board Rev. (University Health Systems, Inc.), 5.25%, 2027 975,000 981,523
Knox County, TN, Health, Educational, Hospital & Housing
Facilities Board Rev. (Covenant Health), "A", 0%, 2035 3,205,000 752,534
Knox County, TN, Health, Educational, Hospital & Housing
Facilities Board Rev. (Covenant Health), "A", 0%, 2037 1,375,000 288,613
Knox County, TN, Health, Educational, Hospital & Housing
Facilities Board Rev. (Covenant Health), "A", 0%, 2036 2,010,000 446,260
Knox County, TN, Health, Educational, Hospital & Housing
Facilities Board Rev. (University Health Systems, Inc.),
5.25%, 2036 1,300,000 1,288,599
Lauderdale County & Florence, AL (Coffee Health Group), "A",
MBIA, 5.25%, 2019 1,100,000 1,134,078
Lufkin, TX, Health Facilities Development Corp. Rev. (Memorial
Health System), 5.5%, 2032 295,000 296,478
Lufkin, TX, Health Facilities Development Corp. Rev. (Memorial
Health System), 5.5%, 2037 310,000 310,651
Macomb County, MI, Hospital Finance Authority Rev. (Mount
Clemens General Hospital), 5.75%, 2025 1,000,000 1,023,180
Marion County, FL, Hospital District (Munroe Regional Medical
Center), 5.625%, 2009 (c) 2,880,000 3,024,922
Marion County, FL, Hospital District, Unrefunded (Munroe
Regional Medical Center), 5.625%, 2019 480,000 494,304
Marshall County, AL, Health Care Authority Rev., "A",
6.25%, 2022 500,000 538,365
Marshall County, AL, Health Care, "A", 5.75%, 2015 1,000,000 1,059,590
Martin County, FL, Health Facilities (Martin Memorial Medical
Center), "B", 5.875%, 2012 (c) 2,200,000 2,444,772
Martin County, FL, Health Facilities Authority Rev. (Martin
Memorial Medical Center), "A", 5.75%, 2012 (c) 850,000 939,650
Maryland Health & Higher Educational Facilities Authority Rev.
(Medstar Health), 5.5%, 2033 1,420,000 1,454,946
Maryland Health & Higher Educational Facilities Authority Rev.
(University of Maryland Medical System), 6.75%, 2010 (c) 2,000,000 2,184,520
Massachusetts Health & Educational Facilities Authority Rev.
(Caritas Christi), "A", 5.7%, 2015 3,550,000 3,629,520
Massachusetts Health & Educational Facilities Authority Rev.
(Caritas Christi), "B", 6.5%, 2012 400,000 425,612
Massachusetts Health & Educational Facilities Authority Rev.
(Partners Healthcare Systems), "C", 5.75%, 2021 1,900,000 2,009,060
Massachusetts Health & Educational Facilities Authority Rev.
(Partners Healthcare Systems), "G", 5%, 2032 5,235,000 5,331,690
Mecosta County, MI, General Hospital Rev., 6%, 2018 300,000 305,481
Miami Beach, FL, Health Facilities Authority Rev. (Mount Sinai
Medical Center), "A", 6.7%, 2019 750,000 794,940
Miami Dade County, FL (Public Facilities Jackson Health
Systems), "A", MBIA, 5%, 2029 4,040,000 4,153,605
Michigan Hospital Finance Authority Rev. (Memorial Healthcare
Center), 5.75%, 2015 800,000 822,960
Michigan Hospital Finance Authority Rev. (Mercy Mount
Clemens), MBIA, 5.75%, 2009 (c) 2,900,000 3,030,848
Michigan Hospital Finance Authority Rev. (Sisters of Mercy
Health System), ETM, MBIA, 5.375%, 2014 (c) 515,000 539,957
Michigan Hospital Finance Authority Rev., "A" (Crittenton),
5.625%, 2027 1,000,000 1,042,730
Monroe County, MI, Hospital Finance Authority, Hospital Rev.
(Mercy Memorial Hospital Corp.), 5.5%, 2035 2,995,000 2,824,555
Monroe County, PA, Hospital Authority Rev. (Pocono Medical
Center), 6%, 2014 (c) 750,000 844,013
Montgomery, AL, Medical Clinic Board Health Care Facility Rev.
(Jackson Hospital & Clinic), 5.25%, 2031 585,000 557,710
Mount Lebanon, PA, Hospital Authority Rev. (St. Clair Memorial
Hospital), 5.625%, 2032 1,710,000 1,762,497
Nassau County, NY, Industrial Development Agency, Civic
Facilities Rev. (North Shore Health System), 5.875%, 2011 280,000 288,109
New Hampshire Health & Education Facilities Rev. (Exeter
Hospital), 6%, 2016 1,000,000 1,076,700
New Hampshire Health & Educational Facilities Authority Rev.
(Covenant Health), 6.5%, 2017 765,000 833,184
New Hampshire Health & Educational Facilities Authority Rev.
(Exeter Hospital), 6%, 2024 500,000 535,870
New Jersey Health Care Facilities (Palisades Medical Center),
6.5%, 2021 500,000 532,230
New Jersey Health Care Facilities, Financing Authority Rev.
(Saint Barnabas Health) Capital Appreciation, "B", 0%, 2036 4,695,000 839,372
New Jersey Health Care Facilities, Financing Authority Rev.
(Saint Barnabas Health) Capital Appreciation, "B", 0%, 2038 18,145,000 2,860,559
North Texas Health Facilities Development Corp. Rev. (United
Regional Health Care System, Inc.), 6%, 2013 (c) 5,000,000 5,608,200
Ohio County, WV, County Commission Health System Rev. (Ohio
Valley Medical Center), 5.75%, 2013 900,000 879,255
Oklahoma Development Finance Authority Rev. (Comanche County
Hospital), "B", 6%, 2014 600,000 639,492
Oklahoma Development Finance Authority Rev. (Comanche County
Hospital), "B", 6.6%, 2031 255,000 270,269
Orange County, FL, Health Facilities Authority Hospital Rev.
(Adventist Health Systems), 5.625%, 2012 (c) 1,490,000 1,638,538
Orange County, FL, Health Facilities Authority Rev. (Orlando
Regional Healthcare), 5.75%, 2012 (c) 2,230,000 2,448,362
Peninsula Ports Authority, VA, Hospital Facility Rev.
(Whittaker Memorial), FHA, 8.7%, 2023 1,510,000 1,679,392
Pennsylvania Higher Educational Facilities Authority, Health
Services Rev. (Allegheny Delaware Valley), MBIA, 5.875%, 2016 5,000,000 5,062,850
Philadelphia, PA, Hospitals & Higher Education Facilities
Authority Rev. (Temple University Hospital), "A", 5.5%, 2030 3,210,000 3,224,124
Rhode Island Health & Education Building Corp. Rev., Hospital
Financing (Lifespan Obligated Group), 6.5%, 2012 (c) 1,500,000 1,692,525
Rhode Island Health & Educational Building Corp., Hospital
Financing (Lifespan Obligated Group), 6.375%, 2012 (c) 1,730,000 1,942,479
Rhode Island Health & Educational Building Corp., Hospital
Financing (Lifespan Obligated Group), 6.375%, 2021 270,000 292,993
Rhode Island Health & Educational Building Corp., Hospital
Financing (Lifespan Obligated Group), "A", FSA, 5%, 2032 3,945,000 4,036,287
Richland County, OH, Hospital Facilities Rev. (Medcentral
Health), "B", 6.375%, 2010 (c) 665,000 726,100
Richland County, OH, Hospital Facilities Rev. (Medcentral
Health), "B", 6.375%, 2022 335,000 356,373
Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare
Systems, Inc.), 6.7%, 2016 770,000 792,938
Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare
Systems, Inc.), 6.5%, 2027 290,000 294,135
Shelby County, TN, Educational & Hospital Facilities Board
Hospital Rev., Refunded Balance (Methodist Healthcare),
6.375%, 2012 (c) 1,255,000 1,407,445
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6%, 2012 (c) 300,000 331,425
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6%, 2012 (c) 500,000 552,375
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6.375%, 2012 (c) 745,000 835,495
Skagit County, WA, Public Hospital District No. 001, 5.75%, 2032 445,000 460,188
South Carolina Jobs & Economic Development Authority Rev. (Bon
Secours Health Systems, Inc.), "A", 5.625%, 2030 2,055,000 2,116,897
South Carolina Jobs & Economic Development Authority, Hospital
Facilities Rev. (Palmetto Health Alliance), 6.25%, 2031 500,000 521,975
Southwestern Illinois Development Authority Rev. (Anderson
Hospital), 5.125%, 2036 645,000 606,616
Steubenville, OH, Hospital Rev. (Trinity Hospital), 6.375%, 2010 (c) 1,500,000 1,619,820
Suffolk County, NY, Industrial Development Agency, Civic
Facilities Rev. (Huntington Hospital), "C", 5.875%, 2032 1,000,000 1,025,700
Sumner County, TN, Health, Educational & Housing Facilities
Board Rev. (Sumner Regional Health), "A", 5.5%, 2046 2,000,000 1,980,840
Tallahassee, FL, Health Facilities Rev. (Tallahassee Memorial
Healthcare), 6.25%, 2020 3,000,000 3,096,660
Tom Green County, TX, Health Facilities Rev. (Shannon Health
System), 6.75%, 2021 400,000 421,468
Upper Illinois River Valley Development, Health Facilities
Rev. (Morris Hospital), 6.625%, 2031 500,000 527,470
Valley, AL, Special Care Facilities Financing (Lanier Memorial
Hospital), 5.5%, 2007 500,000 500,390
Vigo County, IN, Hospital Authority Rev. (Union Hospital),
5.8%, 2047 2,715,000 2,694,773
Wapello County, IA, Hospital Authority Rev. (Ottumwa Regional
Health Center), 6.375%, 2012 (c) 750,000 842,543
Weirton, WV, Municipal Hospital Building, Commission Rev.
(Weirton Hospital Medical Center), 6.375%, 2031 500,000 516,780
West Plains, MO, Industrial Development Authority Rev. (Ozarks
Medical Center), 6.75%, 2024 195,000 198,641
West Shore, PA, Hospital Authority (Holy Spirit Hospital),
6.25%, 2032 1,000,000 1,028,320
West Shore, PA, Hospital Authority Rev. (Holy Spirit
Hospital), 6.2%, 2026 1,250,000 1,290,225
Wichita, KS, Hospital Authority Rev. (Via Christi Health
System), 6.25%, 2019 3,095,000 3,357,270
Wichita, KS, Hospital Authority Rev. (Via Christi Health
System), 6.25%, 2020 2,465,000 2,668,042
Wisconsin Health & Educational Facilities Authority Rev.
(Agnesian Healthcare, Inc.), 6%, 2017 845,000 884,901
Wisconsin Health & Educational Facilities Authority Rev.
(Agnesian Healthcare, Inc.), 6%, 2021 650,000 674,811
Wisconsin Health & Educational Facilities Authority Rev.
(Aurora Health Care, Inc.), 6.875%, 2030 2,750,000 2,951,218
Wisconsin Health & Educational Facilities Authority Rev.
(Wheaton Franciscan Healthcare), 5.25%, 2031 3,200,000 3,148,448
Wisconsin Health & Educational Facilities Authority Rev.
(Wheaton Franciscan Services), 5.75%, 2012 (c) 3,000,000 3,277,650
Wisconsin Health & Educational Facilities Authority Rev.
(Wheaton Franciscan Services), 6.25%, 2012 (c) 1,000,000 1,112,560
Yonkers, NY, Industrial Development Agency, Civic Facilities
Rev. (St. John's Riverside Hospital), 6.8%, 2016 355,000 379,239
--------------
$ 232,991,130
- ---------------------------------------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 0.5%
- ---------------------------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Rev. (Advanced
Living Technology), 8.125%, 2016 $ 505,000 $ 484,830
Bell County, TX, Health Facilities Development Rev. (Advanced
Living Technology), 8.5%, 2026 1,130,000 1,054,640
Colorado Health Facilities Authority Rev. (Evangelical),
6.9%, 2010 (c) 305,000 340,834
Colorado Health Facilities Authority Rev. (Evangelical),
6.9%, 2025 195,000 211,357
Cumberland County, PA, Municipal Authority, Retirement
Community Rev. (Wesley), "A", 7.25%, 2013 (c) 270,000 316,251
Cumberland County, PA, Municipal Authority, Retirement
Community Rev. (Wesley), "A", 7.25%, 2013 (c) 105,000 122,987
Eden Prairie, MN, Multi-Family Housing Rev. (Coll-Rolling
Hills), "A", GNMA, 6%, 2021 200,000 213,672
Indiana Health Facilities Financing Authority Rev. (Hoosier
Care, Inc.), 7.125%, 2034 790,000 799,622
Iowa Finance Authority, Health Care Facilities Rev. (Care
Initiatives Project), "A", 5.5%, 2025 1,205,000 1,208,205
Iowa Finance Authority, Health Care Facilities Rev. (Care
Initiatives), 9.25%, 2011 (c) 465,000 558,623
Millbrae, CA, Residential Facilities Rev. (Magnolia of
Millbrae), "A", 7.375%, 2027 890,000 917,394
Montana Facility Finance Authority Rev. (Senior Living St.
Johns Lutheran), "A", 6.125%, 2036 170,000 172,805
Shelby County, TN, Health, Educational & Housing Facilities
Board Rev. (Germantown Village), "A", 7.25%, 2034 385,000 392,392
--------------
$ 6,793,612
- ---------------------------------------------------------------------------------------------------------------------------------
Human Services - 0.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Louisiana Local Government, Environmental Facilities &
Community Development Authority Rev. (Westside Rehab Center
Project), "B", 6.5%, 2013 $ 410,000 $ 419,246
Nassau County, NY, Industrial Development Civic (Special Needs
Facilities), 6.1%, 2012 150,000 151,952
Orange County, FL, Health Facilities Authority Rev. (GF/
Orlando Healthcare Facilities), 9%, 2031 1,000,000 1,104,860
--------------
$ 1,676,058
- ---------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 0.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Denver, CO, City & County Airport Rev. (United Airlines),
5.25%, 2032 $ 720,000 $ 667,181
Denver, CO, City & County Airport Rev. (United Airlines),
5.75%, 2032 615,000 616,851
Los Angeles, CA, Regional Airport Lease Rev. (AMR Corp.), "C",
7%, 2012 300,000 312,168
New York, NY, Industrial Development Agencies Rev. (American
Airlines, Inc.), 7.625%, 2025 970,000 1,097,419
Tulsa, OK, Municipal Airport Trust Rev. (American Airlines,
Inc.), "B", 5.65%, 2035 1,000,000 999,580
--------------
$ 3,693,199
- ---------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.5%
- ---------------------------------------------------------------------------------------------------------------------------------
Brazos River, TX, Harbor Navigation District (Dow Chemical
Co.), 5.7%, 2033 $ 4,500,000 $ 4,718,790
Brazos River, TX, Harbor Navigation District (Dow Chemical
Co.), "B-2", 4.95%, 2033 885,000 862,379
Red River Authority, TX, Pollution Control Rev. (Celanese
Project), "B", 6.7%, 2030 1,000,000 1,038,450
--------------
$ 6,619,619
- ---------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 0.8%
- ---------------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid Waste
Disposal Rev. (Waste Management, Inc.), "A-2", 5.4%, 2025 $ 1,750,000 $ 1,752,363
Carbon County, UT, Solid Waste Disposal Rev. (Laidlaw
Environmental), "A", 7.45%, 2017 2,500,000 2,550,750
Charles City County, VA, Industrial Development Authority,
Solid Waste Disposal Facility Rev. (Waste Management, Inc.),
6.25%, 2027 500,000 532,945
Colorado Housing & Finance Authority, Solid Waste Rev. (Waste
Management, Inc.), 5.7%, 2018 1,960,000 2,064,488
Gloucester County, NJ, Solid Waste Resource Recovery Rev.
(Waste Management, Inc.), 6.85%, 2029 150,000 157,202
Massachusetts Development Finance Agency Rev. (Waste
Management, Inc.), "B", 6.9%, 2029 300,000 314,394
Nevada Department of Business & Industry Rev. (Republic
Services, Inc.), 5.625%, 2026 1,950,000 2,074,508
New Hampshire Business Finance Authority, Solid Waste Disposal
Rev. (Waste Management, Inc.), 5.2%, 2027 665,000 646,673
--------------
$ 10,093,323
- ---------------------------------------------------------------------------------------------------------------------------------
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 - 2.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Bucks County, PA, Industrial Development Authority Rev. (USX
Corp.), 5.4%, 2017 $ 500,000 $ 525,315
Gulf Coast, TX, Industrial Development Authority (Valero
Energy Corp.), 5.6%, 2031 500,000 504,130
Gulf Coast, TX, Industrial Development Authority Rev. (Microgy
Holdings LLC Project), 7%, 2036 320,000 333,184
Hardeman County, TN, Correctional Facilities Corp.
(Corrections Corp. of America), 7.375%, 2017 500,000 509,945
Liberty, NY, Development Corp. Rev. (Goldman Sachs
Headquarters), 5.25%, 2035 4,360,000 4,639,432
Massachusetts Development Finance Agency Rev., Resource
Recovery (Fluor Corp.), 5.625%, 2019 11,545,000 11,938,800
Massachusetts Industrial Finance Agency Rev. (Welch Foods,
Inc.), 5.6%, 2017 1,300,000 1,328,340
Park Creek Metropolitan District, CO, Rev. (Custodial
Receipts), "CR-2", 7.875%, 2032 (n) 400,000 434,904
Pennsylvania Economic Development Financing Authority Rev.
(Amtrak), 6.125%, 2021 550,000 577,203
Port Corpus Christi, TX, Nueces County General Rev. (Union
Pacific Corp.), 5.35%, 2010 670,000 671,273
Tooele County, UT, Hazardous Waste Treatment Rev. (Union
Pacific Corp.), 5.7%, 2026 4,620,000 4,720,208
--------------
$ 26,182,734
- ---------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 1.2%
- ---------------------------------------------------------------------------------------------------------------------------------
Butler, AL, Industrial Development Board, Solid Waste Disposal
Rev. (Georgia Pacific Corp.), 5.75%, 2028 $ 260,000 $ 248,721
Delta County, MI, Economic Development Corp., Environmental
Improvements Rev. (Mead Westvaco Escanaba), "A",
6.25%, 2012 (c) 2,400,000 2,658,504
Georgetown County, SC, Environmental Improvement
(International Paper Co.), 5.7%, 2014 1,400,000 1,493,702
Jay, ME, Solid Waste Disposal Rev., "A" (International Paper
Co.), 5.125%, 2018 1,500,000 1,507,575
Mobile, AL, Industrial Development Board Improvement Rev., "B"
(International Paper Co.), 6.45%, 2019 2,000,000 2,073,800
Navajo County, AZ, Industrial Development Authority Rev.
(Stone Container Corp.), 7.4%, 2026 1,500,000 1,513,185
Navajo County, AZ, Industrial Development Authority Rev.
(Stone Container Corp.), 7.2%, 2027 500,000 511,075
Onondaga County, NY, Industrial Development Authority Rev.,
Solid Waste Disposal Rev. (Solvay Paperboard LLC), 6.8%, 2014 800,000 825,528
Rockdale County, GA, Development Authority Project Rev. (Visy
Paper Project), "A", 6.125%, 2034 2,055,000 2,068,440
Sabine River Authority Rev., Louisiana Water Facilities
(International Paper Co.), 6.2%, 2025 1,250,000 1,300,113
West Point, VA, Industrial Development Authority, Solid Waste
Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 550,000 541,442
--------------
$ 14,742,085
- ---------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.0%
- ---------------------------------------------------------------------------------------------------------------------------------
New York Liberty Development Corp. Rev. (National Sports
Museum), "A", 6.125%, 2019 $ 265,000 $ 270,634
Seneca Nation Indians, NY, Capital Improvements Authority
Special Obligation, 5%, 2023 (n) 185,000 177,598
--------------
$ 448,232
- ---------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 0.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Austin, TX, Convention Center (Convention Enterprises, Inc.),
"A", 6.6%, 2011 (c) $ 300,000 $ 327,114
Austin, TX, Convention Center (Convention Enterprises, Inc.),
"A", 6.7%, 2011 (c) 400,000 437,364
Austin, TX, Convention Enterprises, Inc., Rev., "B", 5.75%, 2034 520,000 509,600
Gallery Certificate Trust, PA, Parking Rev., FSA, 4.5%, 2013(n) 2,690,000 2,690,511
Toledo Lucas County, OH, Port Authority Development Rev.
(Northwest Ohio Bond Fund), "C", 5.125%, 2025 65,000 64,730
--------------
$ 4,029,319
- ---------------------------------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 1.5%
- ---------------------------------------------------------------------------------------------------------------------------------
Bay County, FL, Housing Finance Authority, Multi-Family Rev.
(Andrews Place II Apartments), FSA, 5%, 2035 $ 545,000 $ 531,364
Bay County, FL, Housing Finance Authority, Multi-Family Rev.
(Andrews Place II Apartments), FSA, 5.1%, 2046 1,270,000 1,234,389
California Statewide Communities Development Authority Rev.
(Irvine Apartments), 5.25%, 2025 4,500,000 4,589,955
Charter Mac Equity Issuer Trust, FRN, 6.625%, 2009 (n) 2,000,000 2,076,040
GMAC Municipal Mortgage Trust, "B-1", 5.6%, 2039 (n) 1,000,000 993,020
GMAC Municipal Mortgage Trust, "C-1", 5.7%, 2040 (n) 500,000 501,500
Indianapolis, IN, Multi-Family Rev. (Cambridge Station
Apartments II), FNMA, 5.25%, 2039 1,465,000 1,480,500
Michigan Housing Development Authority, GNMA, 5.2%, 2038 1,200,000 1,208,028
Munimae, TE Bond Subsidiary LLC, "A-2", 4.9%, 2049 (n) 2,000,000 2,023,600
Newark, NJ, Housing Authority (Port Authority - Newark Marine
Terminal), MBIA, 5.5%, 2014 (c) 1,000,000 1,101,820
North Charleston, SC, Housing Authority Rev. (Horizon
Village), "A", FHA, 5.15%, 2048 305,000 297,393
Seattle, WA, Housing Authority Rev., Capped Fund Program (High
Rise Rehab), "I", FSA, 5%, 2025 2,085,000 2,062,899
Tampa, FL, Housing Finance Authority, Multi-Family Rev.
(Meridian River Development Corp.), 4.75%, 2026 1,465,000 1,452,328
--------------
$ 19,552,836
- ---------------------------------------------------------------------------------------------------------------------------------
Parking - 0.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Rail Connections, Inc., MA, Rev., "B", 0%, 2009 (c) $ 375,000 $ 246,814
Rail Connections, Inc., MA, Rev., "B", 0%, 2009 (c) 550,000 338,712
Rail Connections, Inc., MA, Rev., "B", 0%, 2009 (c) 1,185,000 682,370
Rail Connections, Inc., MA, Rev., "B", 0%, 2009 (c) 300,000 161,796
--------------
$ 1,429,692
- ---------------------------------------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 2.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Austin, TX, Town Community Events Center Venue, FGIC,
6%, 2009 (c) $ 1,015,000 $ 1,067,141
Illinois Sales Tax Rev., "O", 0%, 2009 8,965,000 8,430,327
Illinois Sales Tax Rev., "P", 6.5%, 2022 5,000,000 5,933,550
Massachusetts Bay Transportation Authority Mass Sales Tax
Rev., "A-2", 0%, 2028 6,930,000 2,482,742
Metropolitan Atlanta, GA, Rapid Transit Authority Rev., 6.25%, 2018 4,580,000 5,184,056
Metropolitan Pier & Expo, IL, McCormick Place Expansion, MBIA,
5.25%, 2042 3,340,000 3,484,956
Wyandotte County, KS, Unified Government Special Obligation
Rev. (Sales Tax - Second Lien Area B), 5%, 2020 2,165,000 2,183,013
--------------
$ 28,765,785
- ---------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - Local - 4.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Adams County, CO, Single Family Mortgage Rev., ETM,
8.875%, 2011 (c) $ 2,510,000 $ 2,979,295
Brevard County, FL, Housing Finance Authority Rev. "B", GNMA,
6.5%, 2022 126,000 128,368
Calcasieu Parish, LA, Public Trust Authority, Single Family
Mortgage Rev., "A", GNMA, 6.05%, 2032 2,030,000 2,144,005
California Rural Home Mortgage Finance Authority Rev., GNMA,
6.55%, 2030 385,000 393,335
California Rural Home Mortgage Finance Authority Rev., GNMA,
7.3%, 2031 35,000 35,041
California Rural Home Mortgage Finance Authority Rev., "A",
GNMA, 5.75%, 2044 760,000 807,690
Chicago, IL, Single Family Mortgage Rev., "A", GNMA,
5.5%, 2043 2,500,000 2,648,250
Chicago, IL, Single Family Mortgage Rev., "B", GNMA, 6%, 2033 515,000 524,085
Chicago, IL, Single Family Mortgage Rev., "C", GNMA,
7.05%, 2030 35,000 35,459
Chicago, IL, Single Family Mortgage Rev., "C", GNMA, 7%, 2032 80,000 82,139
Chicago, IL, Single Family Mortgage Rev., "C", GNMA,
5.5%, 2038 1,500,000 1,573,050
Chicago, IL, Single Family Mortgage Rev., "C", GNMA,
5.75%, 2042 3,945,000 4,211,011
Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 320,000 85,696
Denver, CO, Single Family Mortgage Rev., GNMA, 7.3%, 2031 85,000 85,042
Escambia County, FL, Single Family Housing Rev., GNMA,
6.95%, 2024 180,000 185,112
Jefferson Parish, LA, Single Family Mortgage Rev., "B-1",
GNMA, 6.625%, 2023 585,000 612,325
Jefferson Parish, LA, Single Family Mortgage Rev., "B-1",
GNMA, 6.75%, 2030 710,000 735,723
Jefferson Parish, LA, Single Family Mortgage Rev., "D-1",
GNMA, 7.5%, 2026 105,000 107,397
Lubbock, TX, Housing Finance Corp. Rev., GNMA, 6.1%, 2030 1,135,000 1,162,138
Manatee County, FL, Housing Finance Mortgage Rev. (Single
Family, Subordinated), Series 3, GNMA, 6.5%, 2023 95,000 95,151
Manatee County, FL, Housing Finance Mortgage Rev. (Single
Family, Subordinated), Series 3, GNMA, 5.3%, 2028 615,000 628,069
Manatee County, FL, Housing Finance Mortgage Rev. (Single
Family, Subordinated), Series 3, GNMA, 5.4%, 2029 210,000 214,967
Maricopa County, AZ, Single Family Mortgage Rev., "B", GNMA,
6.2%, 2034 110,000 111,665
Nortex Housing Financing Corp., TX, Single Family Mortgage
Rev., "A", GNMA, 5.5%, 2038 3,500,000 3,694,530
Oklahoma County, OK, Home Finance Authority, Single Family
Mortgage Rev., "A", GNMA, 5.4%, 2038 2,490,000 2,625,057
Permian Basin Housing Finance Corp., TX, Single Family
Mortgage Backed Securities (Mortgage Backed Project) "A",
GNMA, 5.65%, 2038 1,825,000 1,902,216
Pima County, AZ, Industrial Development Authority Rev., "B-1",
GNMA, 7.05%, 2030 335,000 335,737
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 6.45%, 2029 700,000 701,526
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.9%, 2035 1,000,000 1,059,200
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 6.25%, 2035 435,000 457,063
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.8%, 2036 2,650,000 2,860,702
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.45%, 2038 4,765,000 4,963,796
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-1", GNMA, 6.875%, 2026 160,000 160,688
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-1", GNMA, 5.75%, 2037 840,000 895,339
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-3", GNMA, 6%, 2035 1,300,000 1,399,606
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-3", GNMA, 5.5%, 2037 1,480,000 1,538,549
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-4", GNMA, 5.85%, 2037 345,000 369,561
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.8%, 2027 1,130,000 1,178,906
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.7%, 2036 2,495,000 2,670,573
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.9%, 2037 625,000 671,894
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B-2", GNMA, 6.45%, 2033 1,070,000 1,130,969
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"B-4", GNMA, 5.55%, 2038 1,985,000 2,085,302
St. Tammany Parish, LA, Single Family Mortgage Rev. (Home
Ownership Program), "A", GNMA, 5.25%, 2039 1,199,472 1,220,355
--------------
$ 51,506,582
- ---------------------------------------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.7%
- ---------------------------------------------------------------------------------------------------------------------------------
Arkansas Development Finance Authority Rev., Mortgage Backed
Securities Program, "B", GNMA, 4.45%, 2034 $ 790,000 $ 782,274
California Housing Finance Agency Rev., Home Mortgage, FSA,
0%, 2019 5,365,000 2,564,202
California Housing Finance Agency Rev., Home Mortgage, MBIA,
0%, 2028 2,515,000 842,575
Colorado Housing & Finance Authority Rev., 6.05%, 2016 175,000 177,674
Colorado Housing & Finance Authority Rev., 7.45%, 2016 135,000 137,504
Colorado Housing & Finance Authority Rev., 6.875%, 2028 45,000 45,007
Colorado Housing & Finance Authority Rev., 6.8%, 2030 235,000 241,291
Colorado Housing & Finance Authority Rev. (Single Family
Program), "C-2", 8.4%, 2021 95,000 96,874
Colorado Housing & Finance Authority Rev. (Single Family
Project), "B-2", 7.25%, 2031 230,000 244,502
Colorado Housing & Finance Authority Rev., "A-1", 7.4%, 2027 40,000 40,089
Colorado Housing & Finance Authority Rev., "A-2", 7.15%, 2014 16,000 16,184
Colorado Housing & Finance Authority Rev., "A-2", AMBAC,
6.6%, 2028 945,000 972,150
Colorado Housing & Finance Authority Rev., "B-2", 6.1%, 2023 90,000 92,534
Colorado Housing & Finance Authority Rev., "B-3", 6.55%, 2025 59,000 59,804
Colorado Housing & Finance Authority Rev., "B-3", 6.55%, 2033 80,000 80,993
Colorado Housing & Finance Authority Rev., "C-2", 5.9%, 2023 625,000 640,863
Colorado Housing & Finance Authority Rev., "C-2", FHA,
6.6%, 2032 565,000 597,488
Colorado Housing & Finance Authority Rev., "C-3", 6.75%, 2021 160,000 169,120
Colorado Housing & Finance Authority Rev., "C-3", FHA,
6.375%, 2033 65,000 66,831
Delaware Housing Authority Rev. (Single Family), "C",
6.25%, 2037 1,985,000 2,134,629
Louisiana Housing Finance Agency, Single Family Mortgage Rev.,
GNMA, 6.4%, 2032 290,000 292,361
Louisiana Housing Finance Agency, Single Family Mortgage Rev.,
GNMA, 6.375%, 2033 565,000 580,006
Louisiana Housing Finance Agency, Single Family Mortgage Rev.,
"B-2", GNMA, 7.55%, 2031 205,000 205,732
Minnesota Housing Finance Agency Rev., Residential Housing
Finance, "B", 4.8%, 2023 685,000 684,233
Mississippi Home Corp. Rev., Single Family Rev., "A", GNMA,
6.1%, 2034 2,060,000 2,100,809
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 7.45%, 2031 100,000 102,952
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.35%, 2032 150,000 150,437
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 350,000 369,394
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.75%, 2034 330,000 341,857
Missouri Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), "B", GNMA, 6.7%, 2030 735,000 738,866
New Hampshire Housing Finance Authority Rev., 6.85%, 2030 465,000 479,015
New Hampshire Housing Finance Authority Rev., "B",
5.875%, 2030 375,000 387,274
New Hampshire Housing Finance Authority Rev., "B",
6.3%, 2031 260,000 267,173
New Hampshire Housing Finance Authority Rev., "B",
6.5%, 2035 685,000 720,805
New Mexico Mortgage Finance Authority Rev., GNMA,
7.1%, 2030 245,000 253,359
New Mexico Mortgage Finance Authority Rev., GNMA,
6.8%, 2031 515,000 518,899
New Mexico Mortgage Finance Authority Rev., GNMA,
6.25%, 2032 1,225,000 1,250,909
New Mexico Mortgage Finance Authority Rev., "B-2", GNMA,
6.35%, 2033 595,000 600,873
New Mexico Mortgage Finance Authority Rev., "I", GNMA, 5.75%, 2038 2,000,000 2,139,640
New Mexico Mortgage Finance Authority Rev., "N", GNMA, 5.95%, 2037 1,895,000 2,008,871
Ohio Housing Finance Agency Mortgage Rev., Residential
Mortgage Backed, "C", GNMA, 5.9%, 2035 1,795,000 1,849,909
Oklahoma Housing Finance Agency Rev., 6.8%, 2016 105,000 105,551
Oklahoma Housing Finance Agency Rev., 6.65%, 2029 305,000 305,000
Oregon Health & Community Services (Single Family Mortgage),
"B", 6.25%, 2031 2,415,000 2,593,348
Texas Affordable Housing Corp. (Single Family Mortgage), "B",
GNMA, 5.25%, 2039 520,000 529,256
Texas Housing & Community Affairs, Residential Mortgage Rev.,
GNMA, 7.1%, 2021 4,265,000 4,340,704
Washington Housing Finance Commission Rev., Single Family
Housing, GNMA, 5%, 2023 400,000 403,068
--------------
$ 34,322,889
- ---------------------------------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.6%
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority,
Resource Recovery Facilities Rev. (American Ref-Fuel Co.),
"A", 6.2%, 2019 $ 1,750,000 $ 1,777,195
Hudson County, NJ, Solid Waste System Rev., 5.9%, 2015 805,000 809,613
Massachusetts Development Finance Agency, Resource Recovery
Rev. (Ogden Haverhill Associates), "A", 6.7%, 2014 3,100,000 3,288,418
Massachusetts Industrial Finance Agency, Resource Recovery
Rev. (Ogden Haverhill Associates), "A", 5.6%, 2019 1,000,000 992,960
--------------
$ 6,868,186
- ---------------------------------------------------------------------------------------------------------------------------------
State & Agency - Other - 0.9%
- ---------------------------------------------------------------------------------------------------------------------------------
Kentucky Property & Buildings Commission Rev., 5.85%, 2010 (c) $ 4,000,000 $ 4,204,480
Kentucky Property & Buildings Commission Rev., 5.9%, 2010 (c) 4,500,000 4,735,035
Massachusetts Development Finance Agency (Visual & Performing
Arts), 6%, 2021 1,000,000 1,159,730
State of Michigan, COP, AMBAC, 5.5%, 2010 (c) 1,250,000 1,312,288
--------------
$ 11,411,533
- ---------------------------------------------------------------------------------------------------------------------------------
State & Local Agencies - 8.8%
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Building Renovation Authority, AMBAC, 6%, 2015 $ 1,610,000 $ 1,711,076
Alabama Building Renovation Authority, AMBAC, 6%, 2016 1,705,000 1,811,716
Alabama Building Renovation Authority, AMBAC, 6%, 2018 760,000 807,568
Alabama Public School & College, Capital Improvement, "D", 6%, 2015 2,850,000 3,017,666
Allen County, IN, Jail Building Corp., First Mortgage,
5.75%, 2011 (c) 2,750,000 2,969,615
Chicago, IL, Public Building Commission Rev., FGIC, 5.25%,
2016 (u) 3,000,000 3,314,190
Chicago, IL, Public Building Commission Rev., FGIC, 5.25%, 2017 (u) 2,500,000 2,767,500
Delaware Valley, PA, Regional Finance Authority, RITES, AMBAC,
6.625%, 2018 (p) 16,250,000 19,863,670
Fayette County, GA (Criminal Justice Center), 6.25%, 2010 (c) 1,000,000 1,078,360
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., "A", FSA, 0% to 2010, 4.55% to 2022 3,415,000 2,990,720
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., "A-1", AMBAC, 0% to 2010, 4.6% to 2023 995,000 872,953
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "A", 5%, 2045 2,475,000 2,471,733
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B", 5.5%, 2013 (c) 5,000,000 5,471,650
Indianapolis, IN, Public Improvement Bond Bank, "C", AMBAC,
6%, 2017 500,000 529,120
New York Dormitory Authority Rev. (City University), 5.75%, 2013 5,000,000 5,357,450
New York State Dormitory Authority Rev., State Supported Debt,
Unrefunded, "A", 5.75%, 2010 15,000 15,266
Palm Springs, CA, Finance Lease Rev. (Convention Center), "A",
MBIA, 5.5%, 2035 7,000,000 7,538,300
Pennsylvania Convention Center Authority Rev., ETM, FGIC,
6.7%, 2016 (c) 26,195,000 29,603,231
Philadelphia, PA, Municipal Authority, MBIA, 5.4%, 2017 5,000,000 5,082,400
San Bernardino, CA, Joint Powers Financing Authority Lease
Rev. (California Department of Transportation), 5.5%, 2014 10,000,000 10,031,000
Stafford, TX, Economic Development Corp., FGIC, 6%, 2015 525,000 600,563
Virginia College Building Authority, VA, Public Higher
Education Financing, "A", 5.75%, 2009 (c) 2,295,000 2,390,449
West Valley City, Utah Municipal Building Lease Rev., "A",
AMBAC, 5.5%, 2027 2,000,000 2,168,760
--------------
$ 112,464,956
- ---------------------------------------------------------------------------------------------------------------------------------
Student Loan Revenue - 0.6%
- ---------------------------------------------------------------------------------------------------------------------------------
Access to Loans for Learning, California Student Loan Rev.,
7.95%, 2030 $ 650,000 $ 675,253
Arizona Student Loan Acquisition Authority Rev., 5.8%, 2016 3,175,000 3,322,161
Arizona Student Loan Acquisition Authority Rev., 5.85%, 2017 3,500,000 3,664,255
Massachusetts Educational Financing Authority, Refunding Issue
G, "A", MBIA, 6.1%, 2018 460,000 469,600
--------------
$ 8,131,269
- ---------------------------------------------------------------------------------------------------------------------------------
Tax - Other - 1.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Black Hawk, CO, Device Tax Rev., 5%, 2010 $ 20,000 $ 20,080
Black Hawk, CO, Device Tax Rev., 5%, 2013 15,000 15,015
Black Hawk, CO, Device Tax Rev., 5%, 2015 45,000 44,463
Black Hawk, CO, Device Tax Rev., 5%, 2021 40,000 37,896
Illinois Dedicated Tax Rev. (Civic Center), AMBAC, 6.25%, 2011 3,640,000 3,862,877
New Jersey Economic Development Authority Rev. (Cigarette
Tax), 5.75%, 2029 2,090,000 2,187,645
New Jersey Economic Development Authority Rev. (Cigarette
Tax), 5.5%, 2031 930,000 958,700
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.5%, 2024 1,160,000 1,185,891
New Jersey Economic Development Authority Rev. Cigarette Tax,
5.75%, 2034 1,395,000 1,453,702
New York, NY, Transitional Finance Authority Rev., Future Tax
Secured, "A", 6%, 2009 (c) 2,000,000 2,111,600
Virgin Islands Public Finance Authority Rev., "A", 5.5%, 2022 2,000,000 2,032,500
--------------
$ 13,910,369
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Assessment - 1.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Broadview, IL, Tax Increment Rev., 5.25%, 2012 $ 1,000,000 $ 1,009,200
Fishhawk Community Development District, FL, 5.125%, 2009 150,000 149,106
Grand Bay at Doral Community Development, FL, "B", 6%, 2017 2,800,000 2,718,604
Greyhawk Landing Community Development District, FL, Special
Assessment, "B", 6.25%, 2009 55,000 55,168
Homestead 50 Community Development District, FL, "A",
6%, 2037 1,840,000 1,817,313
Homestead 50 Community Development District, FL, "B",
5.9%, 2013 815,000 811,137
Katy, TX, Development Authority Rev., "B", 5.8%, 2011 660,000 668,686
Katy, TX, Development Authority Rev., "B", 6%, 2018 1,200,000 1,212,324
Killarney Community Development District, FL, Special
Assessment, "B", 5.125%, 2009 135,000 134,359
Lakes by the Bay South Community Development District, FL,
Rev., "B", 5.3%, 2009 175,000 173,327
Lancaster County, SC, Assessment Rev. (Sun City Carolina
Lakes), 5.45%, 2037 50,000 47,585
Magnolia Park Community Development District, FL, Special
Assessment, "A", 6.15%, 2039 1,420,000 1,414,022
Noblesville, IN, Redevelopment Authority Lease Rental,
5.25%, 2025 2,000,000 2,065,460
Panther Trace II, Community Development District, FL, Special
Assessment, "B", 5%, 2010 415,000 409,754
Parkway Center, Community Development District, FL, Special
Assessment, "B", 5.625%, 2014 935,000 926,613
Preserve at Wilderness Lake, FL, Community Development
District, Capital Improvement, "B", 5%, 2009 30,000 29,806
Renaissance Community Development District, FL, Special
Assessment, "B", 6.25%, 2008 105,000 105,186
Tuscany Reserve Community Development District, FL, Special
Assessment, "B", 5.25%, 2016 180,000 171,738
Washington County, PA, Redevelopment Authority (Victory Centre
Project), "A", 5.45%, 2035 120,000 115,994
--------------
$ 14,035,382
- ---------------------------------------------------------------------------------------------------------------------------------
Tobacco - 2.2%
- ---------------------------------------------------------------------------------------------------------------------------------
Badger, WI, Tobacco Asset Securitization Corp., 6.125%, 2027 $ 2,865,000 $ 2,966,020
California County, CA, Tobacco Securitization Agency, Capital
Appreciation Asset Backed (Gold Country), 0%, 2033 7,180,000 1,494,804
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico,
"A", 0%, 2050 14,000,000 875,980
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico,
"B", 0%, 2055 2,000,000 69,760
District of Columbia, Tobacco Settlement, 6.25%, 2024 1,260,000 1,302,626
District of Columbia, Tobacco Settlement, Capital
Appreciation, "A", 0%, 2046 9,730,000 728,777
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., "A-1", 6.25%, 2013 (c) 2,800,000 3,069,332
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Asset Backed, "A-1", 5%, 2033 1,450,000 1,277,871
Guam Economic Development Authority, 5%, 2022 85,000 85,231
Inland Empire, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Asset Backed, "C-1", 0%, 2036 1,580,000 244,789
Iowa Tobacco Settlement Authority, Tobacco Settlement Rev.,
Asset Backed, "B", 0% to 2007, 5.6% to 2034 3,070,000 2,830,202
Louisiana Tobacco Settlement Authority Rev., 5.5%, 2030 1,650,000 1,639,374
Michigan Tobacco Settlement Finance Authority, Tobacco
Settlement Rev., Asset Backed, "A", 6%, 2048 2,940,000 2,928,975
New Jersey Tobacco Settlement Financing Corp., 5.75%, 2012 (c) 2,680,000 2,856,022
Northern Tobacco Securitization Corp., AK, Asset Backed, "A",
5%, 2046 1,000,000 834,140
Rhode Island Tobacco Settlement Financing Corp., "A",
0%, 2052 7,360,000 351,146
Silicon Valley Tobacco Securitization Authority, CA, Tobacco
Settlement Rev. (Turbo-Santa Clara), "A", 0%, 2036 4,405,000 664,406
Silicon Valley Tobacco Securitization Authority, CA, Tobacco
Settlement Rev. (Turbo-Santa Clara), "A", 0%, 2041 3,600,000 377,856
South Carolina Tobacco Settlement Authority Rev., "B",
6.375%, 2028 2,000,000 2,053,100
Virginia Tobacco Settlement Financing Corp., "B-1", 5%, 2047 715,000 601,143
Washington Tobacco Settlement Authority, 6.5%, 2026 220,000 230,718
--------------
$ 27,482,272
- ---------------------------------------------------------------------------------------------------------------------------------
Toll Roads - 1.4%
- ---------------------------------------------------------------------------------------------------------------------------------
E-470 Public Highway Authority Rev., Capital Appreciation "B",
MBIA, 0%, 2010 (c) $ 5,000,000 $ 2,941,600
New Jersey Turnpike Authority Rev., MBIA, 5.375%, 2010 (c)(u) 10,000,000 10,396,400
New Jersey Turnpike Authority Rev., "C", ETM, MBIA,
6.5%, 2016 (c) 80,000 91,862
New Jersey Turnpike Authority Rev., Unrefunded, "C", MBIA,
6.5%, 2016 235,000 268,826
Northwest Parkway Public Highway Authority Co. Rev., Capital
Appreciation "B", AMBAC, 0%, 2018 2,000,000 1,170,140
Northwest Parkway Public Highway Authority Co. Rev., Capital
Appreciation "B", AMBAC, 0%, 2019 2,000,000 1,095,320
Northwest Parkway Public Highway Authority Rev., CO, "C",
FSA, 0%, 2016 1,000,000 917,530
San Joaquin Hills, CA, Transportation Corridor Agency, Toll
Road Rev., ETM, 0%, 2009 (c) 1,000,000 958,210
--------------
$ 17,839,888
- ---------------------------------------------------------------------------------------------------------------------------------
Transportation - Special Tax - 3.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Allegheny County, PA, Port Authority Special Rev., MBIA,
6.25%, 2009 (c) $ 1,000,000 $ 1,047,590
Jacksonville, FL, Transportation Authority, ETM, 9.2%, 2015(c) 2,000,000 2,478,940
Metropolitan, NY, Transportation Authority Rev., AMBAC,
5%, 2030 5,000,000 5,144,100
Metropolitan, NY, Transportation Authority Rev., "A", FSA,
5%, 2030 2,750,000 2,822,188
Metropolitan, NY, Transportation Authority Rev., ETM,
5.75%, 2013 (c) 5,600,000 5,948,320
New Jersey Economic Development Authority Rev., Transportation
Project Sublease "A", FSA, 6%, 2009 (c) 1,650,000 1,713,756
New Jersey Transportation Trust Fund Authority Rev., FSA,
5.5%, 2011 (u) 15,000,000 16,094,850
Pennsylvania Turnpike Commission Oil, "A", AMBAC,
5.25%, 2008 (c) 670,000 690,020
Pennsylvania Turnpike Commission Oil, "A", AMBAC,
5.25%, 2018 180,000 184,671
Pennsylvania Turnpike Commission Oil, "A", ETM, AMBAC, 5.25%,
2018 (c) 1,150,000 1,183,960
Puerto Rico Highway & Transportation Authority Rev., ASSD GTY,
5.25%, 2034 4,570,000 5,092,031
--------------
$ 42,400,426
- ---------------------------------------------------------------------------------------------------------------------------------
Universities - Colleges - 6.7%
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Private Colleges & Universities, Facilities Authority
Rev. (Tuskegee University), ASSD GTY, 4.75%, 2026 $ 1,000,000 $ 1,008,240
Amherst, NY, Industrial Development Agency Rev. (Daemen
College), "A", 6%, 2011 (c) 1,000,000 1,107,870
Anderson, IN, Economic Development Rev. (Anderson University
Project), 5%, 2028 580,000 553,169
Anderson, IN, Economic Development Rev. (Anderson University
Project), 5%, 2032 400,000 374,032
Arkansas Technical University Rev., Housing Systems, AMBAC,
5%, 2036 740,000 763,391
California Educational Facilities Authority Rev. (L.A. College
of Chiropractic), 5.6%, 2017 250,000 249,988
California Statewide Communities Development Authority Rev.
(California Baptist University), "A", 5.5%, 2038 280,000 275,559
Chabot Las Positas, CA, Community College, Capital
Appreciation, Election of 2004, "B", AMBAC, 0%, 2027 2,720,000 1,029,357
College of Charleston, SC, Academic & Administrative
Facilities Rev., "B", XLCA, 5.125%, 2034 2,400,000 2,498,736
Foothill-DE Anza Community College District, CA, Capital
Appreciation, "B", AMBAC, 0%, 2032 4,610,000 1,346,166
Foothill-DE Anza Community College District, CA, Capital
Appreciation, "B", AMBAC, 0%, 2033 3,925,000 1,087,971
Foothill-DE Anza Community College District, CA, Capital
Appreciation, "B", AMBAC, 0%, 2034 5,130,000 1,367,299
Harrisburg, PA, University of Science, "A", 5.4%, 2016 150,000 150,519
Houston, TX, Community College Systems, MBIA, 7.875%, 2025 1,650,000 1,935,219
Illinois Finance Authority Rev. (University of Chicago), "A",
5%, 2034 1,000,000 1,024,060
Los Angeles, CA, Community College, "B", FSA, 5%, 2027 5,000,000 5,191,500
Maryland Health & Higher Educational Facilities Authority Rev.
(Loyola College), "A", 5.125%, 2045 1,355,000 1,365,163
Massachusetts Development Finance Agency Rev. (Boston
University), XLCA, 6%, 2059 6,225,000 7,324,833
Massachusetts Development Finance Agency Rev. (Massachusetts
College of Pharmacy), "B", 6.625%, 2010 (c) 450,000 484,029
Massachusetts Development Finance Agency Rev. (Olin College),
"B", XLCA, 5.25%, 2033 2,000,000 2,089,460
Massachusetts Health & Educational Facilities Authority Rev.
(Harvard University), 6.25%, 2020 (u) 16,820,000 20,309,814
New York Dormitory Authority Rev. (Vassar College),
4.25%, 2039 1,060,000 957,445
Northern Illinois University Rev., Auxiliary Facilities
Systems, AMBAC, 5.875%, 2018 1,370,000 1,414,552
Ohio Higher Educational Facilities Rev. (Mt. Union College
Project), 5%, 2031 700,000 712,173
Ohio State University, 6%, 2009 (c) 500,000 530,625
Rhode Island, Health & Educational Building Corp. (Rhode
Island School of Design), "D", XLCA, 5.5%, 2035 9,140,000 9,808,134
San Leanna, TX, Educational Facilities Corp., Higher Education
Rev. (Saint Edwards University), 5.125%, 2024 365,000 365,664
San Leanna, TX, Educational Facilities Corp., Higher Education
Rev. (Saint Edwards University), 5.125%, 2026 375,000 373,414
San Leanna, TX, Educational Facilities Corp., Higher Education
Rev. (Saint Edwards University), 5.125%, 2027 685,000 679,506
San Leanna, TX, Educational Facilities Corp., Higher Education
Rev. (Saint Edwards University), 5.125%, 2036 255,000 248,809
San Mateo County, CA (Community College District, 2005
Election), "A", MBIA, 0%, 2026 5,100,000 2,110,686
Savannah, GA, Economic Development Authority Rev. (College of
Art & Design, Inc.), 6.5%, 2009 (c) 500,000 536,375
St. Joseph County, IN, Educational Facilities Rev. (University
of Notre Dame), 6.5%, 2026 1,000,000 1,267,450
University of Akron, OH, General Receipts, FGIC, 6%, 2010 (c) 1,000,000 1,062,250
University of Arkansas, University Construction Rev. (UAMS
Campus), "B", MBIA, 5%, 2034 810,000 833,296
University of California, "A", MBIA, 4.5%, 2037 8,545,000 8,286,172
University of New Mexico, MBIA, 5.75%, 2010 (c) 500,000 528,060
Upland, IN, Economic Development Rev. (Taylor University),
6%, 2018 435,000 472,045
Upland, IN, Economic Development Rev. (Taylor University),
6.25%, 2023 520,000 561,330
Virginia College Building Authority, Educational Facilities
Rev., 5%, 2026 2,000,000 1,980,720
Wilkes-Barre, PA, Finance Authority Rev. (Wilkes University),
5%, 2027 1,000,000 979,280
--------------
$ 85,244,361
- ---------------------------------------------------------------------------------------------------------------------------------
Universities - Dormitories - 0.1%
- ---------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev.
(California Baptist University), "A", 5.4%, 2027 $ 245,000 $ 242,915
California Statewide Communities Development Authority Rev.
(Lancer Educational Student Housing Project), 5.625%, 2033 240,000 234,408
Georgia Private College & University Authority Rev. (Mercer
Housing Corp.), "A", 6%, 2021 1,000,000 1,030,850
--------------
$ 1,508,173
- ---------------------------------------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 0.7%
- ---------------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev.
(Escondido Charter High School), 7.5%, 2011 (c) $ 500,000 $ 579,395
District of Columbia Rev. (Gonzaga College High School), FSA,
5.25%, 2032 3,500,000 3,646,720
Maine Finance Authority (Waynflete School), 6.5%, 2024 1,500,000 1,564,440
Maine Finance Authority, Educational Rev. (Waynflete School),
6.4%, 2019 1,000,000 1,041,410
Maine Finance Authority, Educational Rev. (Waynflete School),
6.5%, 2029 1,000,000 1,040,810
Maryland Health & Higher Educational Facilities Authority Rev.
(Washington Christian Academy), 5.5%, 2038 100,000 96,683
Michigan Municipal Bond Authority Rev. (YMCA Service Learning
Academy), 7.625%, 2021 400,000 418,772
New Hampshire Health & Education (Derryfield School),
6.5%, 2010 140,000 143,487
Pima County, AZ, Industrial Development Authority Education
Rev. (Arizona Charter Schools), "C", 6.75%, 2031 490,000 507,738
--------------
$ 9,039,455
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - Cogeneration - 0.0%
- ---------------------------------------------------------------------------------------------------------------------------------
Carbon County, PA, Industrial Development Authority Rev.
(Panther Creek Partners), 6.65%, 2010 $ 455,000 $ 464,109
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 2.2%
- ---------------------------------------------------------------------------------------------------------------------------------
Apache County, AZ, Industrial Development Authority, Pollution
Control Rev. (Tucson Electric Power Co.), 5.875%, 2033 $ 1,000,000 $ 1,004,230
Brazos River Authority, TX, Pollution Control Rev. (TXU
Electric Co. LLC), "C", 5.75%, 2036 120,000 119,693
California Pollution Control Financing Authority, Pollution
Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016 1,600,000 1,693,456
Connecticut Development Authority, Pollution Control Rev.
(Connecticut Light & Power Co.), 5.85%, 2028 1,000,000 1,030,730
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), 6.375%, 2022 1,000,000 1,015,400
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), "A", 6.3%, 2016 565,000 572,345
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), "A", 5.8%, 2022 500,000 502,800
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), "C", 5.8%, 2022 4,880,000 4,907,328
Lehigh County, PA, Industrial Development Authority Pollution
Control Rev. (PPL Electric Utilities Corp.), "A", FGIC, 4.7%, 2029 1,500,000 1,508,340
Matagorda County, TX, Pollution Control Rev. (Reliant Energy),
5.95%, 2030 750,000 750,675
Mecklenburg County, VA, Industrial Development Authority Rev.
(UAE Mecklenburg LP), 6.5%, 2017 700,000 754,908
Michigan Strategic Fund, Limited Obligation Rev. (Detroit
Edison), MBIA, 7%, 2008 3,000,000 3,079,980
New Hampshire Industrial Development Authority, Pollution
Control Rev. (Connecticut Light & Power), 5.9%, 2016 4,000,000 4,045,440
New Hampshire Industrial Development Authority, Pollution
Control Rev. (Connecticut Light & Power), 5.9%, 2018 1,000,000 1,034,380
Pima County, AZ, Industrial Development Authority Rev. (Tucson
Electric Power Co.), "A", 6.1%, 2025 2,000,000 2,010,360
Port Morrow, OR, Pollution Control Rev. (Portland General),
5.2%, 2033 350,000 355,492
Sabine River Authority, TX, Pollution (TXU Electric Co.),
5.75%, 2030 1,500,000 1,496,160
Sabine River Authority, TX, Pollution Control Rev. (TXU
Electric Co.), "A", 5.5%, 2022 500,000 495,845
West Feliciana Parish, LA, Pollution Control Rev. (Entergy
Gulf States), 6.6%, 2028 1,665,000 1,669,745
--------------
$ 28,047,307
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 10.8%
- ---------------------------------------------------------------------------------------------------------------------------------
Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2011 $ 1,500,000 $ 1,674,960
Austin, TX, Utility Systems Rev., AMBAC, 6.75%, 2012 2,500,000 2,851,100
Easley, SC, Utility Rev., Refunding & Improvement, FSA,
5%, 2034 1,410,000 1,463,481
Georgia Municipal Electric Authority Power Rev., AMBAC,
6.5%, 2014 (c) 145,000 168,283
Georgia Municipal Electric Authority Power Rev., AMBAC,
6.5%, 2016 (c) 365,000 423,645
Georgia Municipal Electric Authority Power Rev., AMBAC,
6.5%, 2017 8,000,000 9,290,480
Georgia Municipal Electric Power Authority Rev., MBIA,
6.375%, 2016 2,000,000 2,347,520
Georgia Municipal Electric Power Authority Rev., MBIA,
6.5%, 2020 7,350,000 8,715,116
Hawaii Department of Budget & Finance Rev. (Electric Co. &
Subsidiary), "B", XLCA, 5%, 2022 4,000,000 4,065,240
Intermountain Power Agency, UT, "A", AMBAC, 6%, 2009 (c) 9,000,000 9,383,220
Intermountain Power Agency, UT, "A", ETM, 6.15%, 2014 (c) 27,825,000 28,589,904
Mercer County, ND, Pollution Control Rev. (Antelope Valley
Station), AMBAC, 7.2%, 2013 4,000,000 4,464,200
North Carolina Eastern Municipal Power "A", MBIA, 6.5%, 2018 9,250,000 11,099,723
North Carolina Municipal Power Agency, Catawba Electric Rev.,
6.375%, 2013 2,250,000 2,384,033
North Carolina Municipal Power Agency, Catawba Electric Rev.,
MBIA, 5.25%, 2019 (u) 10,000,000 10,570,900
Northern California Transmission Agency, MBIA, 7%, 2013 4,000,000 4,466,200
Piedmont, SC, Municipal Power Agency, FGIC, 6.25%, 2021 4,150,000 4,955,723
Puerto Rico Electric Power Authority Rev., FSA,
5.25%, 2008 (c)(u) 5,000,000 5,141,050
Puerto Rico Electric Power Authority Rev., FSA,
5.25%, 2008 (c)(u) 6,000,000 6,169,260
Puerto Rico Electric Power Authority Rev., MBIA, 5%, 2019 3,190,000 3,461,501
San Antonio, TX, Electric & Gas, "A", 5%, 2025 1,000,000 1,041,630
South Carolina Public Service Authority, "B", FSA, 5.125%, 2037 8,500,000 8,732,305
Washington Public Power Supply System Rev. (Nuclear Project
#3), 7.125%, 2016 5,145,000 6,329,688
--------------
$ 137,789,162
- ---------------------------------------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 2.8%
- ---------------------------------------------------------------------------------------------------------------------------------
Atlanta, GA, Water & Wastewater Rev., RITES, FGIC,
6.818%, 2016 (n)(v) $ 1,000,000 $ 1,226,690
Forsyth County, GA, Water & Sewage Authority, 6.25%, 2010 (c) 1,170,000 1,256,358
Forsyth County, GA, Water & Sewer Authority Rev.,
6.25%, 2010 (c) 1,000,000 1,073,810
Forsyth County, GA, Water & Sewer Authority Rev.,
6.25%, 2010 (c) 1,055,000 1,132,870
Los Angeles County, CA, Sanitation Districts Financing
Authority Rev., 4.5%, 2038 8,720,000 8,381,838
Magnolia, TX, Water & Sewer System Rev., 5.15%, 2031 140,000 136,598
Massachusetts Water Resources Authority, "A", FSA,
4.375%, 2032 7,800,000 7,441,356
Massachusetts Water Resources Authority, ETM, 6.5%, 2019 (c) 5,965,000 7,023,072
Mississippi Development Bank Special Obligations, Grenada, MS,
Water & Sewer Systems Project, "N", FSA, 5%, 2030 490,000 507,459
New York Environmental Facilities, 5%, 2016 430,000 438,204
New York Environmental Facilities, ETM, 5%, 2016 (c) 570,000 581,674
Pittsburgh, PA, Water & Sewer Authority Rev., "C", FSA,
5.25%, 2022 2,000,000 2,010,700
Spartanburg, SC, Water & Sewer Authority Rev., "B", MBIA,
5.25%, 2030 1,175,000 1,234,902
West Virginia Water Development Authority Loan Program, "B",
AMBAC, 4.75%, 2035 500,000 496,150
West Wilson Utility District, TN, Waterworks Rev., MBIA,
5.25%, 2014 (c) 2,210,000 2,415,950
--------------
$ 35,357,631
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $1,266,303,611) $1,328,853,041
- ---------------------------------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.3%
- ---------------------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), 4.04%, due 10/01/07 $ 100,000 $ 100,000
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), 4.04%, due 10/01/07 100,000 100,000
Bell County, TX, Health Facilities Development Corp. Rev.
(Scott & White Memorial Hospital), "B-1", 4.04%, due 10/01/07 100,000 100,000
Chicago, IL, Midway Airport Rev., Second Lien, "B",
4.12%, due 10/01/07 100,000 100,000
East Baton Rouge, LA, Pollution Control Rev. (Exxon Mobil
Corp.), 3.94%, due 10/01/07 800,000 800,000
Georgia Municipal Electric Authority Rev., 3.87%, due 10/03/07 370,000 370,000
Lincoln County, WY, Pollution Control Rev. (Exxon Mobil
Corp.), "B", 4.04%, due 10/01/07 200,000 200,000
Sevier County, TN, Public Building Authority Rev., Government
Public Improvement II, "E-1", 3.88%, due 10/04/07 500,000 500,000
Sevier County, TN, Public Building Authority Rev., Government
Public Improvement III, "A-2", 3.88%, due 10/04/07 400,000 400,000
Sevier County, TN, Public Building Authority Rev., Government
Public Improvement III, "A-4"', 3.88%, due 10/04/07 505,000 505,000
Sevier County, TN, Public Building Authority Rev., Government
Public Improvement III, "D-1", 3.88%, due 10/04/07 700,000 700,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE DEMAND NOTES,
AT IDENTIFIED COST AND VALUE $ 3,875,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $1,270,178,611) (k) $1,332,728,041
- ---------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (4.7)% (59,740,989)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $1,272,987,052
- ---------------------------------------------------------------------------------------------------------------------------------
SWAP AGREEMENTS AT 9/30/07
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
12/01/07 USD 33,000,000 Merrill Lynch 7-Day BMA 2.795% (fixed rate) $ 72,233
Capital Services
12/01/09 USD 25,000,000 Merrill Lynch 7-Day BMA 3.180% (fixed rate) (32,837)
Capital Services
11/01/17 USD 3,250,000 Citibank 3-Month LIBOR 5.558% (fixed rate) (89,343)
11/01/27 USD 17,000,000 Citibank 4.186% (fixed rate) 7-Day BMA 394,426
--------
$344,479
========
At September 30, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under these
derivative contracts.
(c) Refunded bond.
(d) Non-income producing security - in default.
(k) As of September 30, 2007, the fund held securities fair valued in accordance with the policies adopted by the Board of
Trustees, aggregating $1,328,853,041 and 99.71% 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 $10,123,863 representing 0.8% 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.
LIBOR London Interbank Offered Rate
Insurers
- -------------------------------------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corp.
ASSD GTY Assured Guaranty 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.
PSF Permanent School Fund
XLCA XL Capital Insurance Co.
Inverse Floaters
- -------------------------------------------------------------------------------------------------------
RIBS Residual Interest Bonds
RITES Residual Interest Tax-Exempt Security
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 9/30/07 (unaudited)
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, $1,270,178,611) $1,332,728,041
Cash 78,494
Receivable for investments sold 2,964,440
Receivable for fund shares sold 1,148,713
Interest receivable 18,918,155
Unrealized appreciation on interest rate swap agreements 466,659
Other assets 805
- -------------------------------------------------------------------------------------------------------
Total assets $1,356,305,307
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Distributions payable $1,999,044
Payable for investments purchased 2,981,876
Payable to the holder of the floating rate certificate from
trust assets 76,043,487
Payable for fund shares reacquired 841,644
Unrealized depreciation on interest rate swap agreements 122,180
Payable to affiliates
Management fee 41,807
Shareholder servicing costs 95,543
Distribution and service fees 17,498
Administrative services fee 2,201
Payable for independent trustees' compensation 81,221
Payable for interest expense and fees 1,007,904
Accrued expenses and other liabilities 83,850
- -------------------------------------------------------------------------------------------------------
Total liabilities $83,318,255
- -------------------------------------------------------------------------------------------------------
Net assets $1,272,987,052
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $1,210,244,348
Unrealized appreciation (depreciation) on investments 62,893,909
Accumulated net realized gain (loss) on investments (921,069)
Undistributed net investment income 769,864
- -------------------------------------------------------------------------------------------------------
Net assets $1,272,987,052
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 150,751,889
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $252,541,982
Shares outstanding 29,918,590
- -------------------------------------------------------------------------------------------------------
Net asset value per share $8.44
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $8.86
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $23,804,076
Shares outstanding 2,815,846
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $8.45
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $35,760,093
Shares outstanding 4,219,065
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $8.48
- -------------------------------------------------------------------------------------------------------
Class A1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $929,438,572
Shares outstanding 110,077,606
- -------------------------------------------------------------------------------------------------------
Net asset value per share $8.44
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/95.25Xnet asset value per share) $8.86
- -------------------------------------------------------------------------------------------------------
Class B1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $31,442,329
Shares outstanding 3,720,782
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $8.45
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A and Class A1 shares are reduced. A contingent
deferred sales charge may be imposed on redemptions of Class A, Class B, Class C, Class A1 and
Class B1 shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Six months ended 9/30/07 (unaudited)
This statement describes how much your fund earned in investment income and accrued in expenses.
It also describes any gains and/or losses generated by fund operations.
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------
Interest income $24,207,054
- ------------------------------------------------------------------------------------------------------
Expenses
Management fee $2,306,018
Distribution and service fees 675,936
Shareholder servicing costs 273,893
Administrative services fee 72,408
Independent trustees' compensation 9,384
Custodian fee 31,732
Shareholder communications 51,757
Auditing fees 31,333
Legal fees 10,494
Interest expense and fees 851,885
Miscellaneous 60,553
- ------------------------------------------------------------------------------------------------------
Total expenses $4,375,393
- ------------------------------------------------------------------------------------------------------
Fees paid indirectly (231)
Reduction of expenses by investment adviser (1,050,116)
- ------------------------------------------------------------------------------------------------------
Net expenses $3,325,046
- ------------------------------------------------------------------------------------------------------
Net investment income $20,882,008
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $1,841,807
Swap transactions (205,569)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments $1,636,238
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $(670,492)
Swap transactions 308,069
- ------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $(362,423)
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $1,273,815
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $22,155,823
- ------------------------------------------------------------------------------------------------------
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.
SIX MONTHS ENDED YEAR ENDED
9/30/07 3/31/07
(UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income $20,882,008 $14,697,717
Net realized gain (loss) on investments 1,636,238 793,269
Net unrealized gain (loss) on investments (362,423) (532,639)
- -------------------------------------------------------------------------------------------------------
Change in net assets from operations $22,155,823 $14,958,347
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
From net investment income
Class A $(5,861,380) $(11,328,364)
Class B (492,856) (1,227,213)
Class C (688,986) (1,360,395)
Class A1 (12,972,334) --
Class B1 (381,896) --
- -------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(20,397,452) $(13,915,972)
- -------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $961,014,172 $(2,410,081)
- -------------------------------------------------------------------------------------------------------
Total change in net assets $962,772,543 $(1,367,706)
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
At beginning of period 310,214,509 311,582,215
At end of period (including undistributed net investment
income of $769,864 and $285,308, respectively) $1,272,987,052 $310,214,509
- -------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period
and the past 5 fiscal years (or life of a particular share class, if shorter). Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on
an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 3/31
ENDED ----------------------------------------------------------------------------
CLASS A 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value,
beginning of period $8.55 $8.53 $8.58 $8.70 $8.54 $8.32
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.21 $0.42(z) $0.41 $0.42 $0.41 $0.41
Net realized and unrealized
gain (loss) on investments (0.12) 0.00(w)(z) (0.06) (0.13) 0.17 0.25
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.09 $0.42 $0.35 $0.29 $0.58 $0.66
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(0.40) $(0.40) $(0.41) $(0.42) $(0.44)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.44 $8.55 $8.53 $8.58 $8.70 $8.54
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.07(n) 5.00 4.18 3.49 6.94 8.00
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense
reductions (f) 1.15(a) 1.19 1.17 1.04 1.04 1.05
Expenses after expense
reductions (f) 0.90(a) 0.94 0.92 0.79 0.88 0.90
Expenses after expense
reductions and excluding
interest expense and fees (f)(l) 0.70(a) 0.79 0.81 0.79 0.88 0.90
Net investment income 4.88(a) 4.91(z) 4.71 4.90 4.80 4.85
Portfolio turnover 14 10 9 8 9 13
Net assets at end of period
(000 Omitted) $252,542 $248,226 $240,212 $241,850 $264,797 $274,442
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 3/31
ENDED ----------------------------------------------------------------------------
CLASS B 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value,
beginning of period $8.57 $8.54 $8.59 $8.72 $8.55 $8.33
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.17 $0.36(z) $0.34 $0.36 $0.35 $0.35
Net realized and unrealized
gain (loss) on investments (0.12) 0.00(w)(z) (0.05) (0.14) 0.18 0.24
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.05 $0.36 $0.29 $0.22 $0.53 $0.59
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.17) $(0.33) $(0.34) $(0.35) $(0.36) $(0.37)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.45 $8.57 $8.54 $8.59 $8.72 $8.55
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.58(n) 4.34 3.40 2.60 6.27 7.19
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense
reductions (f) 1.90(a) 1.95 1.92 1.79 1.79 1.80
Expenses after expense
reductions (f) 1.65(a) 1.70 1.67 1.54 1.63 1.65
Expenses after expense
reductions and excluding
interest expense and fees (f)(l) 1.45(a) 1.55 1.56 1.54 1.63 1.65
Net investment income 4.13(a) 4.16(z) 3.96 4.15 4.05 4.10
Portfolio turnover 14 10 9 8 9 13
Net assets at end of period
(000 Omitted) $23,804 $26,919 $36,752 $43,930 $52,594 $59,591
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 3/31
ENDED ----------------------------------------------------------------------------
CLASS C 9/30/07 2007 2006 2005 2004 2003
(UNAUDITED)
Net asset value,
beginning of period $8.59 $8.56 $8.61 $8.73 $8.56 $8.34
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.17 $0.36(z) $0.35 $0.36 $0.35 $0.35
Net realized and unrealized
gain (loss) on investments (0.11) 0.01(z) (0.06) (0.13) 0.18 0.24
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.06 $0.37 $0.29 $0.23 $0.53 $0.59
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.17) $(0.34) $(0.34) $(0.35) $(0.36) $(0.37)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.48 $8.59 $8.56 $8.61 $8.73 $8.56
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 0.70(n) 4.34 3.41 2.72 6.27 7.18
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense
reductions (f) 1.90(a) 1.94 1.92 1.79 1.79 1.80
Expenses after expense
reductions (f) 1.65(a) 1.69 1.67 1.54 1.63 1.65
Expenses after expense
reductions and excluding
interest expense and fees (f)(l) 1.45(a) 1.54 1.56 1.54 1.63 1.65
Net investment income 4.13(a) 4.16(z) 4.09 4.15 4.05 4.10
Portfolio turnover 14 10 9 8 9 13
Net assets at end of period
(000 Omitted) $35,760 $35,070 $34,618 $33,911 $37,508 $39,420
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
PERIOD
ENDED
9/30/07(i)
CLASS A1
Net asset value, beginning of period $8.39
- --------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------
Net investment income (d) $0.12
Net realized and unrealized gain (loss) on investments 0.05(g)
- --------------------------------------------------------------------------------------------------
Total from investment operations $0.17
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------
From net investment income $(0.12)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $8.44
- --------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.98(n)
- --------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.88(a)
Expenses after expense reductions (f) 0.62(a)
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 0.42(a)
Net investment income 5.17(a)
Portfolio turnover 14
Net assets at end of period (000 Omitted) $929,439
- --------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
PERIOD
ENDED
9/30/07(i)
CLASS B1
Net asset value, beginning of period $8.40
- --------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------
Net investment income (d) $0.10
Net realized and unrealized gain (loss) on investments 0.05(g)
- --------------------------------------------------------------------------------------------------
Total from investment operations $0.15
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------
From net investment income $(0.10)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $8.45
- --------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 1.77(n)
- --------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.64(a)
Expenses after expense reductions (f) 1.39(a)
Expenses after expense reductions and excluding
interest expense and fees (f)(l) 1.19(a)
Net investment income 4.40(a)
Portfolio turnover 14
Net assets at end of period (000 Omitted) $31,442
- --------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) The per share amount is not in accordance with the net realized and unrealized gain/loss for the period because of the
timing of sales of fund shares and the per share amount of realized and unrealized gains and losses at such time.
(i) For the period from the class' inception, June 25, 2007 (Classes A1 and B1) through the stated period end.
(l) Interest expense and fees relate to payments made to the holder of the floating rate certificate from trust assets.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(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 year ended March 31,
2007 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 Class
A, Class B and Class C. 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
(unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Municipal Income Fund (the fund) is a series of MFS Municipal Series Trust
which is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Municipal
securities backed by current or anticipated revenues from a specific project or
specific assets can be negatively affected by the discontinuance of the taxation
supporting the projects or assets or the inability to collect revenues for the
project or from the assets. If the Internal Revenue Service determines an issuer
of a municipal security has not complied with applicable tax requirements, the
security could decline in value, interest from the security could become taxable
and the fund may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. 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. 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." Such self-deposited inverse floaters held by the
fund are accounted for as secured borrowings, with the municipal bonds reflected
in the investments of the fund and amounts owed to the holder of the floating
rate certificate under the provisions of the trust, which amounts are paid
solely from the assets of the trust, reflected as liabilities of the fund in the
Statement of Assets and Liabilities under the caption, "Payable to the holder of
the floating rate certificate from trust assets". At September 30, 2007, the
fund's payable to the holder of the floating rate certificate from trust assets
was $76,043,487. The weighted average interest rate on the floating rate
certificates issued by the trust was 3.88%. 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. For the six months ended September 30, 2007,
interest expense and fees in connection with self-deposited inverse floaters was
$851,855. 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.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount, for the six months ended September 30, 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 made
during the current period will be determined at fiscal year end.
The tax character of distributions declared to shareholders is as follows:
3/31/07
Ordinary income (including any short-term capital gains) $24,400
Tax-exempt income 13,891,572
- ---------------------------------------------------------------------
Total distributions $13,915,972
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF 9/30/07
Cost of investments $1,189,530,988
-----------------------------------------------------------
Gross appreciation $75,334,449
Gross depreciation (8,180,883)
-----------------------------------------------------------
Net unrealized appreciation (depreciation) $67,153,566
AS OF 3/31/07
Undistributed tax-exempt income $1,462,420
Capital loss carryforwards (3,323,431)
Other temporary differences (1,144,959)
Net unrealized appreciation (depreciation) 18,185,736
The aggregate cost above includes prior fiscal year end tax adjustments.
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 and Class B1 shares will convert to Class A and Class A1
shares, respectively approximately eight years after purchase.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
management and related administrative services and facilities to the fund. The
management fee is computed daily and paid monthly at an annual rate of 0.55% of
the fund's average daily net assets. As part of a settlement agreement with the
New York Attorney General concerning market timing and related matters, MFS has
agreed to reduce the management fee to 0.30% of the fund's average daily net
assets for the period March 1, 2004 through February 28, 2009. For the six
months ended September 30, 2007, this waiver amounted to $1,048,187 and is
reflected as a reduction of total expenses in the Statement of Operations. The
management fee incurred for the six months ended September 30, 2007 was
equivalent to an annual effective rate of 0.30% of the fund's average daily net
assets.
The investment adviser has agreed in writing to pay a portion of the fund's
operating expenses, exclusive of certain other fees and expenses, such that
total annual fund operating expenses do not exceed the following rates annually
of the fund's average daily net assets with respect to each class:
CLASS A CLASS B CLASS C CLASS A1 CLASS B1
0.74% 1.49% 1.49% 0.49% 1.25%
This written agreement will continue through July 31, 2008 unless changed or
rescinded by the fund's Board of Trustees. For the six months ended September
30, 2007, the fund's actual operating expenses did not exceed the limit and
therefore, the investment advisor did not pay any portion of the fund's
expenses.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $34,145 for the six months ended September 30,
2007, as its portion of the initial sales charge on sales of Class A and Class
A1 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% $310,168
Class B 0.75% 0.25% 1.00% 1.00% 123,992
Class C 0.75% 0.25% 1.00% 1.00% 173,517
Class B1 0.75% 0.25% 1.00% 0.77% 68,259
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $675,936
(d) In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees up
to these annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended
September 30, 2007 based on each class' average daily net assets. For one year from the date of sale of Class B1
shares, assets attributable to such Class B1 shares are subject to the 0.25% annual Class B1 service fee. On
assets attributable to all other Class B1 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. Payment of the 0.10% annual Class A
distribution fee is not yet in effect and will be implemented on such date as the fund's Board of Trustees may
determine.
Certain Class A, Class A1, 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 and Class B1 shares are subject to a contingent
deferred sales charge in the event of a shareholder redemption within six
years of purchase. All contingent deferred sales charges are paid to MFD and
during the six months ended September 30, 2007, were as follows:
AMOUNT
Class A $4,919
Class B $19,967
Class C $3,172
Class A1 --
Class B1 $13,859
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 six months ended September 30, 2007, the fee was $179,386,
which equated to 0.0429% 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 six months ended September 30, 2007,
these out-of-pocket expenses, sub-accounting and other shareholder servicing
costs amounted to $94,507. 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 average daily net assets. The fund's annual fixed amount is
$17,500. The administrative services fee incurred for the six months ended
September 30, 2007 was equivalent to an annual effective rate of 0.0173% 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 $2,709. This amount is included
in independent trustees' compensation for the six months ended September 30,
2007. The liability for deferred retirement benefits payable to certain retired
independent trustees amounted to $81,204 at September 30, 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 six months ended September 30, 2007, the fee paid to Tarantino LLC was
$1,961. MFS has agreed to reimburse the fund for a portion of the payments made
by the funds to Tarantino LLC in the amount of $1,929, 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
$128,928,863 and $158,114,950, 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:
SIX MONTHS ENDED YEAR ENDED
9/30/07 (i) 3/31/07
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 3,801,657 $31,992,363 4,077,868 $34,806,575
Class B 252,122 2,118,307 277,826 2,379,647
Class C 393,233 3,328,170 673,589 5,779,551
Class A1 694,450 5,842,855 -- --
Class B1 23,274 195,633 -- --
- -----------------------------------------------------------------------------------------------------------
5,164,736 $43,477,328 5,029,283 $42,965,773
Shares issued in connection with acquisition of MFS Municipal Bond Fund
Class A1 113,972,241 $956,544,151
Class B1 3,971,203 33,357,434
- -------------------------------------------------------------------------
117,943,444 $989,901,585
Shares issued to shareholders in reinvestment of distributions
Class A 381,421 $3,227,430 732,144 $6,262,765
Class B 31,398 266,258 74,877 641,277
Class C 53,836 457,522 103,647 890,072
Class A1 661,268 5,556,214 -- --
Class B1 18,235 153,388 -- --
- -----------------------------------------------------------------------------------------------------------
1,146,158 $9,660,812 910,668 $7,794,114
Shares reacquired
Class A (3,281,021) $(27,683,766) (3,968,355) $(33,877,957)
Class B (609,592) (5,153,580) (1,515,106) (12,956,565)
Class C (310,785) (2,631,655) (738,293) (6,335,446)
Class A1 (5,250,353) (44,106,948) -- --
Class B1 (291,930) (2,449,604) -- --
- -----------------------------------------------------------------------------------------------------------
(9,743,681) $(82,025,553) (6,221,754) $(53,169,968)
Net change
Class A 902,057 $7,536,027 841,657 $7,191,383
Class B (326,072) (2,769,015) (1,162,403) (9,935,641)
Class C 136,284 1,154,037 38,943 334,177
Class A1 110,077,606 923,836,272 -- --
Class B1 3,720,782 31,256,851 -- --
- -----------------------------------------------------------------------------------------------------------
114,510,657 $961,014,172 (281,803) $(2,410,081)
(i) For the period from the class' inception, June, 25, 2007 (Classes A1 and B1) through the stated period end.
(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
0.30%. In addition, a commitment fee, based on the average daily, unused portion
of the committed line of credit, is allocated among the participating funds at
the end of each calendar quarter. For the six months ended September 30, 2007,
the fund's commitment fee and interest expense on the line of credit were $702
and $0, respectively, and are included in miscellaneous expense and interest
expense and fees, respectively, on the Statement of Operations.
(7) ACQUISITIONS
At close of business on June 22, 2007, the fund acquired all of the assets and
liabilities of MFS Municipal Bond Fund. In connection with the acquisition, the
fund also issued new share Classes A1 and B1 to the acquired fund shareholders,
that differ from existing share Classes A and B in respect to class level
expenses. The acquisition was accomplished by a tax-free exchange of 117,943,444
shares of the fund (valued at $989,901,585) for all of the assets and
liabilities of MFS Municipal Bond Fund. MFS Municipal Bond Fund then converted
all of its outstanding shares for the shares of the fund and distributed those
shares to its shareholders. MFS Municipal Bond Fund's net assets on that date
were $989,901,585, including $45,804,567 of unrealized appreciation, $114,563 of
accumulated net investment loss, and $380,444 of accumulated net realized loss
on investments. These assets were combined with those of the fund. The aggregate
net assets of the fund after the acquisition were $1,291,597,453.
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT
The Investment Company Act of 1940 requires that both the full Board of Trustees
and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of the Fund's investment advisory
agreement with MFS. The Trustees consider matters bearing on the Fund and its
advisory arrangements at their meetings throughout the year, including a review
of performance data at each regular meeting. In addition, the independent
Trustees met several times over the course of three months beginning in May and
ending in July, 2007 ("contract review meetings") for the specific purpose of
considering whether to approve the continuation of the investment advisory
agreement for the Fund and the other investment companies that the Board
oversees (the "MFS Funds"). The independent Trustees were assisted in their
evaluation of the Fund's investment advisory agreement by independent legal
counsel, from whom they received separate legal advice and with whom they met
separately from MFS during various contract review meetings. The independent
Trustees were also assisted in this process by the MFS Funds' Independent Chief
Compliance Officer, a full-time senior officer appointed by and reporting to the
independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreement, the Trustees, including the independent Trustees,
considered such information and factors as they believed, in light of the legal
advice furnished to them and their own business judgment, to be relevant. The
investment advisory agreement for the Fund was considered separately, although
the Trustees also took into account the common interests of all MFS Funds in
their review. As described below, the Trustees considered the nature, quality,
and extent of the various investment advisory, administrative, and shareholder
services performed by MFS under the existing investment advisory agreement and
other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and
relied upon materials that included, among other items: (i) information provided
by Lipper Inc. on the investment performance of the Fund for various time
periods ended December 31, 2006 and the investment performance of a group of
funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a group
of funds identified by objective criteria suggested by MFS ("MFS peer funds"),
(ii) information provided by Lipper Inc. on the Fund's advisory fees and other
expenses and the advisory fees and other expenses of comparable funds identified
by Lipper (the "Lipper expense group"), as well as the advisory fees and other
expenses of MFS peer funds, (iii) information provided by MFS on the advisory
fees of comparable portfolios of other clients of MFS, including institutional
separate accounts and other clients, (iv) information as to whether and to what
extent applicable expense waivers, reimbursements or fee "breakpoints" are
observed for the Fund, (v) information regarding MFS' financial results and
financial condition, including MFS' and certain of its affiliates' estimated
profitability from services performed for the Fund and the MFS Funds as a whole,
(vi) MFS' views regarding the outlook for the mutual fund industry and the
strategic business plans of MFS, (vii) descriptions of various functions
performed by MFS for the Funds, such as compliance monitoring and portfolio
trading practices, and (viii) information regarding the overall organization of
MFS, including information about MFS' senior management and other personnel
providing investment advisory, administrative and other services to the Fund and
the other MFS Funds. The comparative performance, fee and expense information
prepared and provided by Lipper Inc. was not independently verified and the
independent Trustees did not independently verify any information provided to
them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreement was based on a comprehensive consideration of all information provided
to the Trustees and not the result of any single factor. Some of the factors
that figured particularly in the Trustees' deliberations are described below,
although individual Trustees may have evaluated the information presented
differently from one another, giving different weights to various factors. It is
also important to recognize that the fee arrangements for the Fund and other MFS
Funds are the result of years of review and discussion between the independent
Trustees and MFS, that certain aspects of such arrangements may receive greater
scrutiny in some years than in others, and that the Trustees' conclusions may be
based, in part, on their consideration of these same arrangements during the
course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed the
Fund's total return investment performance as well as the performance of peer
groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of the Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2006, which the Trustees believed was a
long enough period to reflect differing market conditions. The total return
performance of the Fund's Class A shares was in the 1st quintile relative to the
other funds in the universe for this three-year period (the 1st quintile being
the best performers and the 5th quintile being the worst performers). The total
return performance of the Fund's Class A shares was in the 2nd quintile for the
one-year period and the 1st quintile for the five-year period ended December 31,
2006 relative to the Lipper performance universe. Because of the passage of
time, these performance results may differ from the performance results for more
recent periods, including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account information
provided by MFS in connection with the contract review meetings, as well as
during investment review meetings conducted with portfolio management personnel
during the course of the year regarding the Fund's performance. After reviewing
these and related factors, the Trustees concluded, within the context of their
overall conclusions regarding the investment advisory agreement, that they were
satisfied with MFS' responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered, among other information, the Fund's advisory fee and the total
expense ratio of the Fund's Class A shares as a percentage of average daily net
assets and the advisory fee and total expense ratios of peer groups of funds
based on information provided by Lipper Inc. and MFS. The Trustees considered
that there is an advisory fee reduction in effect for the Fund through February
28, 2009 as part of MFS' settlement with the New York Attorney General
concerning market timing and related matters. The Trustees also considered that,
according to the Lipper data (which takes into account the advisory fee
reduction), the Fund's effective advisory fee rate and total expense ratio were
each lower than the Lipper expense group median.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information provided
by MFS as to the generally broader scope of services provided by MFS to the Fund
in comparison to institutional accounts, the higher demands placed on MFS'
investment personnel and trading infrastructure as a result of the daily cash
in-flows and out-flows of the Fund, and the impact on MFS and expenses
associated with the more extensive regulatory regime to which the Fund is
subject in comparison to institutional accounts.
The Trustees also considered whether the Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that the Fund's advisory fee rate schedule is not
currently subject to any breakpoints. Taking into account the advisory fee
reduction noted above, the Trustees determined not to recommend any advisory fee
breakpoints for the Fund at this time.
The Trustees also considered information prepared by MFS relating to MFS' costs
and profits with respect to the Fund, the MFS Funds considered as a group, and
other investment companies and accounts advised by MFS, as well as MFS'
methodologies used to determine and allocate its costs to the MFS Funds, the
Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that the advisory fees charged to the Fund
represent reasonable compensation in light of the services being provided by
MFS to the Fund.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Fund.
The Trustees also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and
well-capitalized companies which are spending, and appear to be prepared to
continue to spend, substantial sums to engage personnel and to provide services
to competing investment companies. In this regard, the Trustees also considered
the financial resources of MFS and its ultimate parent, Sun Life Financial Inc.
The Trustees also considered the advantages and possible disadvantages to the
Fund of having an adviser that also serves other investment companies as well as
other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the Fund
by MFS and its affiliates under agreements and plans other than the investment
advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund
Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Fund's behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Fund's
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various other
factors. Additionally, the Trustees considered so-called "fall-out benefits" to
MFS such as reputational value derived from serving as investment manager to the
Fund.
Based on their evaluation of factors that they deemed to be material, including
those factors described above, the Board of Trustees, including a majority of
the independent Trustees, concluded that the Fund's investment advisory
agreement with MFS should be continued for an additional one-year period,
commencing August 1, 2007.
A discussion regarding the Board's most recent review and renewal of the Fund's
investment advisory agreement will be available on or before November 1, 2007 by
clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is available
without charge by visiting the Proxy Voting section of mfs.com or by visiting
the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the Securities
and Exchange Commission (the Commission) for the first and third quarters of
each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The fund's Form N-Q is
available on the EDGAR database on the Commission's Internet Web site at
http://www.sec.gov, and copies of this information may be obtained, upon
payment of a duplicating fee, by electronic request at the following e-mail
address: publicinfo@sec.gov or by writing the Public Reference Section at the
above address.
A shareholder can also obtain the quarterly portfolio holdings report
at mfs.com.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA 02205-5824
1-800-637-8255
24 hours a day OVERNIGHT MAIL
MFS Service Center, Inc.
ACCOUNT SERVICE AND 500 Boylston Street
LITERATURE Boston, MA 02116-3741
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
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Go paperless with eDELIVERY: Arrange to have MFS(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 not amended any provision in its Code of Ethics (the "Code")
that relates to any element of the Code's definition enumerated in paragraph
(b) of Item 2 of this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments for each series of the Registrant is included as part
of the report to shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 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.
(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, as amended, 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: November 15, 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: November 15, 2007
-----------------
By (Signature and Title)* TRACY ATKINSON
-----------------------------------------------------
Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: November 15, 2007
-----------------
* Print name and title of each signing officer under his or her signature.