N-Q 1 d493863dnq.htm MFS CALIFORNIA MUNICIPAL FUND N-Q MFS CALIFORNIA MUNICIPAL FUND N-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09537

MFS CALIFORNIA MUNICIPAL FUND

(Exact name of registrant as specified in charter)

111 Huntington Avenue, Boston, MA 02199

(Address of principal executive offices) (Zip code)

Susan S. Newton

Massachusetts Financial Services Company

111 Huntington Avenue

Boston, Massachusetts 02199

(Name and address of agents for service)

Registrant’s telephone number, including area code: (617) 954-5000

Date of fiscal year end: November 30

Date of reporting period: February 28, 2013


ITEM 1. SCHEDULE OF INVESTMENTS.


QUARTERLY REPORT

February 28, 2013

 

LOGO

 

MFS® CALIFORNIA MUNICIPAL FUND

 

LOGO


PORTFOLIO OF INVESTMENTS

2/28/13 (unaudited)

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

 

Issuer    Shares/Par     Value ($)  
    
Municipal Bonds - 165.6%                 
Airport Revenue - 8.3%                 
Los Angeles, CA, Department of Airports Rev. (Los Angeles International), “C”, BHAC, 5.25%, 2038    $ 750,000      $ 848,289   
Orange County, CA, Airport Rev., “A”, 5%, 2031      190,000        213,473   
San Diego County, CA, Regional Airport Authority Rev., “A”, 5%, 2021      500,000        594,560   
San Diego County, CA, Regional Airport Authority Rev., “B”, 5%, 2038      305,000        340,133   
San Francisco, CA, City & County Airports Commission, International Airport Rev., “A”, 5%, 2030      285,000        315,874   
San Francisco, CA, City & County Airports Commission, International Airport Rev., “A”, 5%, 2031      150,000        165,143   
San Jose, CA, Airport Rev., “A-2”, 5.25%, 2034      440,000        490,662   
    

 

 

 
      $ 2,968,134   
General Obligations - General Purpose - 9.4%                 
Commonwealth of Puerto Rico, “A”, 5.5%, 2018    $ 370,000      $ 404,129   
State of California, AMBAC, 6%, 2017      1,000,000        1,198,690   
State of California, 5.25%, 2035      455,000        533,801   
State of California, 5.5%, 2040      630,000        742,984   
State of California, 5.25%, 2040      415,000        481,508   
    

 

 

 
      $ 3,361,112   
General Obligations - Schools - 26.0%                 
Alhambra, CA, Unified School District, “B”, ASSD GTY, 5.25%, 2028    $ 500,000      $ 567,910   
Banning, CA, Unified School District (Election of 2006), “B”, ASSD GTY, 5.25%, 2033      500,000        548,155   
Beaumont, CA, Unified School District (Election of 2008), Capital Appreciation, “C”, AGM, 0%, 2040      955,000        244,757   
Chabot-Las Positas, CA, Community College (Election of 2004), “B”, AMBAC, 5%, 2030      60,000        65,461   
El Camino, CA, Community College District (Election of 2002), “C”, 4%, 2037      550,000        580,443   
Lake Tahoe, CA, Unified School District (Election of 2008), Capital Appreciation, AGM, 0%, 2045      515,000        224,504   
Montebello, CA, Unified School District (Election of 2004), “A-1”, ASSD GTY, 5.25%, 2034      355,000        401,225   
Napa Valley, CA, Unified School District, 5%, 2020      225,000        275,231   
Peralta, CA, Community College District, AGM, 5%, 2016      500,000        566,075   
Pittsburg, CA, Unified School District, “B”, AGM, 5.5%, 2034      500,000        563,260   
Pomona, CA, Unified School District, “A”, NATL, 6.55%, 2029      1,000,000        1,280,470   
San Diego County, CA, Southwestern Community College District (Election of 2008), “C”, 5%, 2040      370,000        410,101   
San Diego, CA, Community College (Election of 2002), 5.25%, 2033      125,000        147,660   
San Joaquin, CA, Delta Community College District (Election of 2004), “B”, Capital Appreciation, AGM, 0%, 2018      400,000        355,760   
Santee, CA, School District (Election of 2006), Capital Appreciation, “D”, ASSD GTY, 0%, 2043      765,000        168,912   
Vallejo City, CA, Unified School District, “A”, NATL, 5.9%, 2025      500,000        569,140   
Victor, CA, Elementary School District (Election of 2008), “A”, ASSD GTY, 5.125%, 2034      500,000        561,180   
Washington, CA, Yolo County Unified School District (New High School Project), 5%, 2021      450,000        492,530   
West Contra Costa, CA, Unified School District, “A”, NATL, 5.7%, 2023      500,000        645,195   
West Covina, CA, Unified School District, “A”, NATL, 5.8%, 2021      500,000        598,925   
    

 

 

 
      $ 9,266,894   
Healthcare Revenue - Hospitals - 26.0%                 
ABAG Finance Authority for Non-Profit Corps., CA, Rev. (Sharp Healthcare), 6.25%, 2039    $ 505,000      $ 597,723   
ABAG Finance Authority for Non-Profit Corps., CA, Rev. (Sharp Healthcare), “A”, 5%, 2026      110,000        127,452   
California Health Facilities Financing Authority Rev. (Cedars-Sinai Medical Center), 5%, 2034      250,000        268,073   
California Health Facilities Financing Authority Rev. (Memorial Health Services), “A”, 5%, 2033      295,000        338,740   
California Health Facilities Financing Authority Rev. (Scripps Health), “A”, 5%, 2032      525,000        598,343   
California Health Facilities Financing Authority Rev. (Scripps Health), “A”, 5%, 2040      255,000        289,379   
California Health Facilities Financing Authority Rev. (Sutter Health), “B”, 5.5%, 2020      500,000        633,125   
California Health Facilities Financing Authority Rev. (Sutter Health), “B”, 5.875%, 2031      500,000        603,035   
California Municipal Finance Authority, COP (Community Hospitals of Central California), 5.25%, 2027      250,000        269,525   
California Statewide Communities Development Authority Rev. (Adventist), ASSD GTY, 5%, 2037      500,000        547,430   
California Statewide Communities Development Authority Rev. (Catholic Healthcare West), “K”, ASSD GTY, 5.5%, 2041      1,000,000        1,107,430   

 

1


Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
Municipal Bonds - continued                 
Healthcare Revenue - Hospitals - continued                 
California Statewide Communities Development Authority Rev. (Enloe Medical Center), “A”, CALHF, 5.5%, 2023    $ 500,000      $ 578,385   
California Statewide Communities Development Authority Rev. (Huntington Memorial Hospital), 5%, 2035      535,000        564,602   
California Statewide Communities Development Authority Rev. (Kaiser Permanente), “A”, 5%, 2042      455,000        511,789   
California Statewide Communities Development Authority Rev. (Santa Ynez Valley Cottage Hospital), 5.25%, 2030      260,000        297,063   
California Statewide Communities Development Authority Rev. (Sutter Health), “A”, 5%, 2032      610,000        684,597   
California Statewide Communities Development Authority Rev. (Trinity Health Corp.), 5%, 2041      450,000        505,103   
Santa Clara County, CA, Financing Authority Rev. (El Camino Hospital), AMBAC, 5.125%, 2041      400,000        416,848   
Upland, CA, COP (San Antonio Community Hospital), 6.375%, 2032      250,000        298,043   
    

 

 

 
             $ 9,236,685   
Healthcare Revenue - Long Term Care - 2.2%                 
ABAG Finance Authority for Non-Profit Corps., CA, Rev. (Episcopal Senior Communities), 6.125%, 2041    $ 150,000      $ 176,783   
California Statewide Communities Development Authority Rev. (Episcopal Communities & Services for Seniors Obligated Group), 5%, 2047      315,000        342,046   
California Statewide Communities Development Authority Rev. (Eskaton Properties, Inc.), 5.25%, 2034      230,000        246,969   
    

 

 

 
             $ 765,798   
Miscellaneous Revenue - Other - 3.0%                 
ABAG Finance Authority for Non-Profit Corps., CA, Rev. (Jackson Lab), 5%, 2037    $ 400,000      $ 441,992   
ABAG Finance Authority for Non-Profit Corps., CA, Rev. (Jackson Lab), 5.75%, 2037      385,000        440,482   
California Infrastructure & Economic Development Bank Rev. (Walt Disney Family Museum), 5.25%, 2033      160,000        171,694   
    

 

 

 
             $ 1,054,168   
Port Revenue - 4.1%                 
Alameda Corridor Transportation Authority, California Rev., “A”, AGM, 5%, 2028    $ 305,000      $ 362,343   
Port of Oakland, CA, Rev., “P”, 5%, 2033      1,000,000        1,103,400   
    

 

 

 
             $ 1,465,743   
Sales & Excise Tax Revenue - 1.9%                 
California Economic Recovery, “A”, 5%, 2020    $ 250,000      $ 304,100   
Puerto Rico Sales Tax Financing Corp., Sales Tax Rev., Capital Appreciation, “A”, 0% to 2016, 6.75% to 2032      250,000        264,673   
Puerto Rico Sales Tax Financing Corp., Sales Tax Rev., Capital Appreciation, “A”, AMBAC, 0%, 2054      1,280,000        112,499   
    

 

 

 
             $ 681,272   
Single Family Housing Revenue - Local - 0.0%                 
California Rural Home Mortgage Finance Authority Rev., Mortgage Backed Securities Program, “A”, GNMA, 6.35%, 2029    $ 5,000      $ 5,155   
Single Family Housing - Other - 1.5%                 
California Department of Veterans Affairs, Home Purchase Rev., “A”, 4.5%, 2028    $ 500,000      $ 538,465   
Single Family Housing - State - 3.5%                 
California Housing Finance Agency Rev. (Home Mortgage), “E”, 4.75%, 2030    $ 305,000      $ 305,796   
California Housing Finance Agency Rev. (Home Mortgage), “K”, 5.3%, 2023      255,000        264,636   
California Housing Finance Agency Rev. (Home Mortgage), “L”, 5.45%, 2033      555,000        568,337   
California Housing Finance Agency Rev. (Home Mortgage), “L”, FNMA, 5.5%, 2038      120,000        122,785   
    

 

 

 
             $ 1,261,554   
Solid Waste Revenue - 1.4%                 
Salinas Valley, CA, Solid Waste Authority Rev., AMBAC, 5.125%, 2022    $ 500,000      $ 501,700   
State & Agency - Other - 1.4%                 
Sacramento County, CA, Public Facilities Project, COP, AMBAC, 4.75%, 2027    $ 500,000      $ 499,985   

 

2


Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
Municipal Bonds - continued                 
State & Local Agencies - 15.7%                 
Compton, CA, Public Finance Authority, AMBAC, 5%, 2032    $ 500,000      $ 365,685   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., FGIC, 5%, 2035      255,000        267,309   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., BHAC, 5%, 2038      1,000,000        1,044,940   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, “A”, FGIC, 5%, 2038      1,000,000        1,041,630   
Los Angeles County, CA, Schools Regionalized Business Service Corp., Pooled Financing, Capital Appreciation, “A”, AMBAC, 0%, 2018      2,020,000        1,668,318   
Los Angeles County, CA, Schools Regionalized Business Service Corp., Pooled Financing, Capital Appreciation, “A”, AMBAC, 0%, 2023      1,220,000        755,412   
Los Angeles, CA, Municipal Improvement Corp. Lease Rev., “B”, ASSD GTY, 5.5%, 2030      390,000        449,358   
    

 

 

 
             $ 5,592,652   
Tax Assessment - 12.6%                 
Fontana, CA, Public Finance Authority, Tax Allocation Rev. (Sub Lien North Fontana Redevelopment), “A”, AMBAC, 5%, 2029    $ 1,000,000      $ 1,029,610   
Fullerton, CA, Community Facilities District, Special Tax (Amerige Heights), 5%, 2032      155,000        166,631   
Huntington Beach, CA, Community Facilities District, Special Tax (Grand Coast Resort), “2000-1”, 6.45%, 2031      100,000        100,633   
Huntington Park, CA, Public Financing Authority Rev., “A”, AGM, 5.25%, 2019      500,000        529,305   
Irvine, CA, Limited Obligation Improvement (Reassessment District #12-1), 4%, 2022      115,000        126,937   
Irvine, CA, Limited Obligation Improvement (Reassessment District #12-1), 5%, 2023      60,000        70,280   
Sacramento, CA, City Financing Authority, Special Tax Rev. (Westlake and Regency Park), “A”, AGM, 5%, 2027      65,000        71,206   
San Diego, CA, Community Facilities District No. 3, Special Tax, 5%, 2036      160,000        169,374   
San Diego, CA, Redevelopment Agency, Tax Allocation (Centre City), “A”, AMBAC, 5.25%, 2025      500,000        528,500   
San Dieguito, CA, Public Facilities Authority, ‘‘A’’, AMBAC, 5%, 2032      500,000        527,800   
San Francisco, CA, City & County Redevelopment Successor Agency, Community Facilities District No. 6 (Mission Bay South Public Improvements), “A”, 5%, 2030      165,000        176,753   
San Francisco, CA, City & County Redevelopment Successor Agency, Community Facilities District No. 6 (Mission Bay South Public Improvements), “A”, 5%, 2033      130,000        138,632   
San Jose, CA, Redevelopment Agency, Tax Allocation (Merged Area Redevelopment Project), “C”, NATL, 4.25%, 2030      900,000        840,996   
    

 

 

 
             $ 4,476,657   
Tobacco - 4.2%                 
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., “A-1”, 5.125%, 2047    $ 1,000,000      $ 843,010   
Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., “A-1”, 5.75%, 2047      715,000        666,573   
    

 

 

 
             $ 1,509,583   
Toll Roads - 0.7%                 
Foothill/Eastern Corridor Agency, CA, Toll Road Rev., NATL, 5.125%, 2019    $ 250,000      $ 250,408   
Transportation - Special Tax - 3.3%                 
Commonwealth of Puerto Rico Highway & Transportation Authority, Highway Rev., “Y”, AGM, 5.5%, 2016 (c)    $ 450,000      $ 525,011   
San Francisco, CA, Bay Area Rapid Transit District, Sales Tax Rev., “A”, 5%, 2036      220,000        257,688   
San Francisco, CA, Municipal Transportation Agency Rev., “B”, 5%, 2037      335,000        377,043   
    

 

 

 
             $ 1,159,742   
Universities - Colleges - 6.1%                 
California Educational Facilities Authority Rev. (Dominican University of California), 5%, 2025    $ 120,000      $ 125,993   
California Educational Facilities Authority Rev. (University of San Francisco), 6.125%, 2030      285,000        349,695   
California Public Works Board Lease Rev. (The Regents of the University of California), 5%, 2028      375,000        452,423   
California State University Rev., “A”, 5%, 2024      370,000        450,260   
University Enterprises, Inc. (Auxiliary Organization), “A”, FGIC, 4.375%, 2030      500,000        505,870   
University of California Rev., “G”, 4%, 2029      265,000        291,063   
    

 

 

 
             $ 2,175,304   

 

3


Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
Municipal Bonds - continued                 
Universities - Secondary Schools - 1.4%                 
California Statewide Communities Development Authority, School Facility Rev. (Alliance for College-Ready Public Schools), “A”, 6.1%, 2032    $ 150,000      $ 157,463   
California Statewide Communities Development Authority, School Facility Rev. (Alliance for College-Ready Public Schools), “A”, 6.375%, 2047      315,000        330,605   
    

 

 

 
             $ 488,068   
Utilities - Cogeneration - 0.9%                 
California Pollution Control Financing Authority, Water Furnishing Rev. (Poseidon Resources Desalination Project), 5%, 2045    $ 305,000      $ 314,611   
Utilities - Municipal Owned - 11.3%                 
California Department of Water Resources, Power Supply Rev., “L”, 5%, 2019    $ 805,000      $ 987,582   
California Department of Water Resources, Power Supply Rev., “N”, 5%, 2020      205,000        254,134   
Imperial Irrigation District Electric Rev., “A”, 5%, 2017      500,000        587,755   
Northern California Power Agency, Capital Facilities Rev., “A”, 5.25%, 2024      390,000        446,445   
Sacramento, CA, Municipal Utility District Rev., “U”, AGM, 5%, 2019      750,000        893,228   
Sacramento, CA, Municipal Utility District Rev., “X”, 5%, 2025      370,000        445,014   
Vernon, CA, Electric System Rev., “A”, 5.5%, 2041      370,000        403,737   
    

 

 

 
             $ 4,017,895   
Utilities - Other - 2.9%                 
California M-S-R Energy Authority Gas Rev., “A”, 6.5%, 2039    $ 245,000      $ 342,292   
Southern California Public Power Authority (Natural Gas Project No. 1), “A”, 5%, 2033      585,000        684,813   
    

 

 

 
             $ 1,027,105   
Water & Sewer Utility Revenue - 17.8%                 
Atwater, CA, Public Financing Authority Wastewater Rev., ASSD GTY, 5%, 2034    $ 500,000      $ 511,125   
Bay Area, CA, Water Supply & Conservation Agency, “A”, 5%, 2034      225,000        264,078   
California Department of Water Resources (Center Valley Project), “A-E”, 5%, 2028      500,000        591,165   
Chino Basin, CA, Regional Financing Authority Rev. (Inland Empire Utilities Agency), “A”, AMBAC, 5%, 2038 (f)      1,000,000        1,121,820   
Commonwealth of Puerto Rico Aqueduct & Sewer Authority Rev., “A”, 5.75%, 2037      110,000        113,513   
Escondido CA, Joint Powers Financing Authority Rev., (Water System Financing), 5%, 2041      460,000        502,798   
Los Angeles, CA, Department of Water & Power Waterworks Rev., “C”, NATL, 5%, 2029      500,000        525,385   
Madera, CA, Irrigation Financing Authority Rev., 6.5%, 2040      440,000        496,676   
Norco, CA, Financing Authority Enterprise Rev., AGM, 5.625%, 2039      215,000        238,416   
San Francisco, CA, City & County Public Utilities Commission Water Rev., “A”, 5%, 2023      445,000        552,605   
San Francisco, CA, City & County Public Utilities Commission Water Rev., “A”, 5.25%, 2031      335,000        393,846   
Sonoma County, CA, Water Agency Rev., “A”, AGM, 5%, 2036      600,000        637,062   
Southern California Metropolitan Water District Rev., “A”, 5%, 2028      325,000        376,197   
    

 

 

 
             $ 6,324,686   
Total Municipal Bonds            $ 58,943,376   
Money Market Funds - 0.8%                 
MFS Institutional Money Market Portfolio, 0.13%, at Net Asset Value (v)      299,693      $ 299,693   
Floating Rate Demand Notes - 0.6%                 
Lincoln County, WY, Pollution Control Rev. (Exxon Mobil Corp.), “A”, 0.1%, due 3/01/13    $ 200,000      $ 200,000   
Total Investments            $ 59,443,069   
Other Assets, Less Liabilities - 1.6%              578,134   
VMTPS, at liquidation value (issued by the fund) - (68.6)%              (24,425,000
Net Assets applicable to common shares - 100.0%            $ 35,596,203   

 

(c) Refunded bond.
(f) All or a portion of the security has been segregated as collateral for open futures contracts.

 

4


Portfolio of Investments (unaudited) – continued

 

(v) Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

COP   Certificate of Participation
VMTPS   Variable Rate Municipal Term Preferred Shares

 

Insurers      
AGM    Assured Guaranty Municipal
AMBAC    AMBAC Indemnity Corp.
ASSD GTY    Assured Guaranty Insurance Co.
BHAC    Berkshire Hathaway Assurance Corp.
CALHF    California Housing Finance Agency
FGIC    Financial Guaranty Insurance Co.
FNMA    Federal National Mortgage Assn.
GNMA    Government National Mortgage Assn.
NATL    National Public Finance Guarantee Corp.

Derivative Contracts at 2/28/12

Futures Contracts Outstanding at 2/28/12

 

Description    Currency      Contracts      Value    Expiration Date    Unrealized
Appreciation
(Depreciation)
 
Asset Derivatives               
Interest Rate Futures               
U.S. Treasury Bond 30 yr (Short)      USD         4       $575,125    June - 2013      $1,575   
              

 

 

 
Liability Derivatives               
Interest Rate Futures               
U.S. Treasury Note 10 yr (Short)      USD         20       $2,630,938    June - 2013      $(656
              

 

 

 
                 $919   
              

 

 

 

At February 28, 2013, the fund had liquid securities with an aggregate value of $41,507 to cover any commitments for certain derivative contracts.

See attached supplemental information. For more information see notes to financial statements as disclosed in the most recent semiannual or annual report.

 

5


Supplemental Information

2/28/13 (unaudited)

(1) Investment Valuations

Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Futures contracts are generally valued at last posted settlement price as provided by a third-party pricing service on the market on which they are primarily traded. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation as provided by a third-party pricing service on the market on which such futures contracts are primarily traded. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as 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 most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party 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 generally relies on third-party 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 an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in total investments, such as futures contracts. The following is a summary of the levels used as of February 28, 2013 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Municipal Bonds      $—         $58,943,376         $—         $58,943,376   
Short Term Securities              200,000                 200,000   
Mutual Funds      299,693                         299,693   
Total Investments      $299,693         $59,143,376         $—         $59,443,069   
Other Financial Instruments                            
Futures Contracts      $919         $—         $—         $919   

For further information regarding security characteristics, see the Portfolio of Investments.

(2) Portfolio Securities

The cost and unrealized appreciation and depreciation in the value of the investments owned by the fund, as computed on a federal income tax basis, are as follows:

 

Aggregate cost      $54,834,052   
Gross unrealized appreciation      4,832,417   
Gross unrealized depreciation      (223,400
Net unrealized appreciation (depreciation)      $4,609,017   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

 

6


Supplemental Information (unaudited) – continued

 

(3) Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be an affiliated issuer:

 

Underlying Affiliated Fund    Beginning
Shares/Par
Amount
    

Acquisitions
Shares/Par

Amount

    

Dispositions
Shares/Par

Amount

    

Ending

Shares/Par
Amount

 
MFS Institutional Money Market Portfolio      1,001,732         1,564,239         (2,266,278      299,693   
Underlying Affiliated Fund   

Realized

Gain (Loss)

     Capital Gain
Distributions
    

Dividend

Income

    

Ending

Value

 
MFS Institutional Money Market Portfolio      $—         $—         $224         $299,693   

 

7


ITEM 2. 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 Form N-Q, 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 registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 3. EXHIBITS.

File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto.


Notice

A copy of the Agreement and 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 CALIFORNIA MUNICIPAL FUND

 

By (Signature and Title)*    JOHN M. CORCORAN
  John M. Corcoran, President

Date: April 12, 2013

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)*    JOHN M. CORCORAN
  John M. Corcoran, President (Principal Executive Officer)

Date: April 12, 2013

 

By (Signature and Title)*    DAVID L. DILORENZO
  David L. DiLorenzo, Treasurer (Principal Financial Officer and Accounting Officer)

Date: April 12, 2013

 

* Print name and title of each signing officer under his or her signature.